The internet is often singled out as the main culprit in discussions about the dying throes of the major record label dinosaurs, but they really only have themselves to blame.
Incredibly wealthy and sluggish, these labels consciously did not embrace technology at the dawn of the digital age, failing to recognise that the times were a-changing.
Disruptive technologies, such as community-building applications and peer-to-peer file sharing, which empowered the music fan who was not being catered for, meant that new business models were a necessity.
Erich Ludwig, the chief operations officer at Calabash Music, a fair trade music company that sells online downloads, says the industry still needs to learn to cater to music fans and stop treating them as consumers.
‘Unless they learn how to reach out to people and engage them in this whole process that is the music industry, they are gone,” says Ludwig. ‘I think it is quite obvious that the majors have to change, they have taken the wrong step at every stage in the digital age.”
Calabash Music is one example of the creative, fresh and new business models that are embracing technology and changing the face of the industry by selling independent artists and labels to markets all over the world that were previously beyond their reach.
Like eMusic, which sells about 4,5million tracks belonging to more than 4 000 independent labels a month, Calabash is not competing against the likes of iTunes, which sells a whopping 60-million tracks from all the majors a month.
As a fair trade music company, Calabash works directly with an artist when selling his or her music. Profits from download sales are split 50/50 with the artist, which is a significantly better deal than the 8% to 14% an artist would get from the major record labels.
‘We are trying to break down barriers and allow artists easy access to markets they are not in, as in anything beyond their home market,” says Ludwig. ‘We also allow people to discover music from around the world.”
Calabash was founded in 2001 and has spent the past five years building its catalogue. At the moment it sells the Sheer and Melt catalogues from South Africa, but the big success story is Ghetto Ruff, which Ludwig says is among Calabash’s top five independent labels in the world.
Ludwig says Ghetto Ruff is successful because it is ahead of the game when it comes to embracing new technologies, such as social networking websites, which it uses to market its music. ‘You can now market your music directly to the people who want it,” says Ludwig.
The director of Ghetto Ruff, Lance Stehr, says the success of the film Tsotsi has created a buzz for Ghetto Ruff artists, but maintains that the label backs this up with the most cutting-edge urban black music in South Africa.
Stehr says everybody knows that CD sales are on the way out and that new ways of selling music, such as MP3s and ring tones, are becoming more popular.
It is for these reasons that Ghetto Ruff has partnered with Dataview, which provides the digital platform, to promote the label’s artists.
Andrew Missingham, a British producer and independent creative consultant, says the broadcast model of the old music industry regime will not last.
‘In the old model there are artists at one end and consumers at the other who refer to themselves as music consumers, but they are music fans. They feel like they have a relationship with the musician,” says Missingham.
According to him, the key to the changing industry is the creation of online communities where artists and fans can interact. These communities have serious marketing potential, because music fans trust recommendations that spring out of real networks.
‘That is the music fan of today and tomorrow. They are not passive,” says Ludwig. ‘They may want a little direction as in, hey, check this out, but they don’t want to be told what to listen to by major radio stations.”
It is this phenomenon that has led to the rise of the independent blogger as one of the key marketing tools for musicians.
Following on from the success of bands such as Arcade Fire, Clap Your Hand Say Yeah and Tapes ‘n Tapes, it has almost become a cliché that the sure-fire path to success for an independent band is to leak tracks to the hip bloggers of the day. This leaves people frothing at the mouth in anticipation and running out to buy the debut album the minute it is finally released.
A few choice reviews from the right taste-makers can mean the difference between an album of the year and one that just slips into obscurity.
Mainstream media are also starting to pay attention. Electronic music magazine Urb now has a myspace column where it reviews up-and-coming music that artists have posted on their myspace web pages.
Ludwig says the biggest threat facing musicians today is obscurity, not piracy. ‘Piracy is something that should concern the Madonnas, Brittany Spearses and Jay-Zees of the world,” says Ludwig. ‘Everybody else just give your music away and do your thing. Then you have to follow that up with tours, live shows, merchandise, exclusive tracks that fans have to buy, different ways of building your brand. That’s what the music industry is now, each band is a brand.”
Musicians are also realising that there are people who choose to buy downloads because of the convenience. So they are starting to provide content with the download to replace the album art and linear notes of the conventional album.
One such example is Tune Books, where music fans can download a QuickTime file that delivers a collection of photos, text, lyrics and videos to accompany the songs.
Artists such as Beck, Liars, Neil Young and Bob Dylan have all released albums with bonus DVDs in the past few years, and Beck’s latest, The Information, even delivers a blank album cover with sticker sheets so fans can customise the album art. As Beck told Wired magazine recently, it is time for the album to embrace technology.
The fact that the free DVD and stickers with Beck’s new album means it does not qualify for the charts merely illustrates how out of touch the mainstream music industry is with the times.