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The Future of Record Labels

First, have a look at this article. It’s a remarkably clear-eyed overview of the current state of the record business. The conclusion? Record companies will have to change their business model in order to become relevant in the internet age.

OK, sure, that’s no surprise. But how will they have to change? The article poses some good ideas, many of which I’m rehashing here, but I’d like to take a more personal look at the situation from a musician’s perspective.

If I’m an impoverished musician (aren’t we all?), here are the two things I want from a record label:

(1) Someone to fund the project. This means the recording, production, design, and manufacturing of my album. It’s expensive to make an album and a substantial financial risk — assuming you have enough money in the first place. If you self-produce your album, you better know how you’re going to sell it. Having a record label erases this initial financial outlay.

(2) Someone to market and distribute the finished product. Conceivably a label will have connections all over the industry, both in terms of promotion and placement. I’d rather not worry about ad buys, cold calling, and radio play. If a competent professional can do it instead, sign me up. I’ll be saving a lot of time and cash.

So, ultimately, that’s really what I’d need a record label for: money. Money and connections. I could do all this stuff myself — save up for the recording and manufacturing, create a marketing scheme, distribute the album. But again: it’s expensive and time-consuming. Right?

The good news is, the advent of the digital revolution has made it possible to do most of these steps myself, at little to no cost. I can use Kickstarter or Rockethub to crowdsource funding for the album. If I’m really on a shoestring I can record it on Garageband, free with every Mac. I can design the cover art myself on Photoshop. I can distribute the album digitally through Tunecore and CDBaby. I can begin to market it on Facebook and Myspace.

That’s pretty good, right? But it’s not everything. The process isn’t quite over.

The part I couldn’t do on my own, unless I’m really good at Facebook status updates, is getting my album out there.

Because an underfunded, little-known musician just doesn’t have those mass market record label connections. Radio stations, critics, venues, agents. That’s what the machine, as it has existed until now, is there for. I could have the best, most cheaply made album in the world, but it’s not going to turn into a hit unless people — lots and lots of people — know about it. I need a way to get the word out. I need a way to tour. I need a way to get into the public consciousness. And like it or not, the record labels have those connections.

So if they’re going to survive in the bold new do-it-yourself internet age, they need to find a way to capitalize on those connections. And as the world moves away from physical objects and into cyberspace (except for live music… but that’s another story), that means waking up and learning how to work the internet.

Record companies need to learn how to use their resources and connections — the very things that unknown musicians don’t have — in order to position themselves as an essential part of the process again. In the digital world. This will mean thinking outside the box.

For example, I read something about how the band OK Go, which has become known for its viral music videos, gets paid by its record label to spend months working on video ideas, since just one Youtube hit could equal the publicity of any number of tours.

That’s the kind of thing I’m talking about. Priorities have shifted; it’s a new landscape.

I don’t think we’ve seen the last of record companies, even if they’ll have to exist in a different form. Although it’s terrific that the internet has democratized much of the album process, it’s still nice to have some resources behind you. That’s why companies — banks, firms, (ugh) hedge funds — exist in the first place. And if labels can figure out how to apply that size as a competitive advantage, they’ll stick around.

For better or for worse.