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October 11, 2007

The Radiohead Effect: Do We Still Need Record Labels?

Originally uploaded by cherbert.

Ars Technica jumps on the recent tech meme regarding Radiohead's decision to release their new album under a variable pricing model (pay how much you value the music) and the underlying question surrounding that decision: do bands still need record labels?

The Ars Technica article says not so fast, Radiohead hasn't abandoned (perhaps too strong a term to use for now) their record label completely. This nuance has been lost in the cacophony over the debate on whether record labels are now officially dead (or whether they have at least reached a tipping point to their extinction).

I agree with this main premise. It's too simple to say that record labels are dead and I don't think they will ever die off completely but disagree with the reasons that they use to support that position (emphasis added):

Not every ardent music fan has a broadband connection, and most audiophiles aren't  enamored of compressed MP3 files. Also, the vast majority of what we hear on commercial radio stations is heavily influenced by the labels, which means that bands like Nine Inch Nails that have chosen to eschew traditional CD releases will have a more difficult time getting their music on the airwaves.

Let's break that section into two basic issues or problems:

  1. While true that not everyone has broadband connections, mp3 quality is good enough for probably all but 95% of the public. If you really are an ardent fan, you'll actually purchase the CD or (more likely) the vinyl of the album.
  2. True again. Unfortunately commercial radio is heavily influenced (or straight out controlled and corrupted via payola) by the record companies but is in this digital age, who listens to the radio anymore? This assumes that the public does want to listen to the radio to get new music but I think that's incorrect.

Radio listener numbers are plummeting precisely because they play the bubble gum, lowest common denominator crap music that the record labels are trying to push down our throats. If the labels want to further strangle and kill radio as they are doing so successfully now, then artists and bands should get as far away from the radio as possible.

Commercial radio was about pleasing the masses with the most average of music (see Benkler's Wealth of Networks) but now the internet allows bands to reach niche, extremely passionate fan bases without having to play by the old corrupt rules of commercial radio (payola schemes).

But until newer artists are able to attain the same degree of exposure and popularity without the help of the recording companies as they are with their assistance, there is still a significant role for the labels to play.

This is probably true but only temporarily. The internet is quickly becoming the medium of choice for music discovery among techies and hardcore music fans. It's only a matter of time (<5 years) before the general public will join the early adopters and move in the direction away from the radio and towards the internet.

At that point in the near future, marketing and promotion will be the record labels' only bread and butter value proposition that hasn't been destroyed by the internet. So record labels won't die off but they're going to be completely different kinds of businesses (along with their value propositions) as soon as they face up to the music (sorry, bad pun) and stop wasting their time suing their customers for downloading music.


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