While perusing my favorite social news site, digg.com I stumbled upon this article by Simon Dumenco about the sad state of the music industry and it’s increasingly idiotic moves to shut down online avenues of new music awareness. A good read once you get past the “hipster” band name-dropping in the first few paragraphs (who the heck are The Virgins any way?).
In the midst of the article the author states these simple facts about revenue sharing in the music industry that blew me away:
“the federal government, prompted by the music industry, doubled the ‘performance-royalty’ rate that internet radio stations must pay (to record companies) to stream music — twice as much as satellite radio. Traditional terrestrial radio stations, mind you, don’t have to pay performance royalties: They pay only publishing royalties to songwriters. The new internet-radio royalty rates kicked in as of July, and they threaten to kill not just Pandora but the rest of the fledgling internet-radio market. “
And I thought the financial industry was messed up (lately). So, start pulling out your old car radio and 6-disc CD player because the RIAA and much of the rest of the corporate music industry appears to want to transport us back to 1990 (or at least pre-1999 – thank you Napster!). I’m no huge internet radio fan (mostly because I have an iPod that will play for me pretty much anywhere – with only the music I want to hear, mind you) but I do believe that within the music world and much of the retail consumer markets, the more easily-accessible choices available, the happier the consumers will be (which is really what we all want – happy consumers). All of which would mean internet radio and online distributors of digital music makes serious cents, er…sense to us as consumers. Unfortunately this isn’t good enough for the corporate giants of the music industry who want the golden days of the 80’s and early 90’s back – when everyone still bought whole albums and they could drain every drop of cold, hard cash from every band they could possibly sign. But the times, they are a-changin’ and the RIAA and it’s pals need to get with the program, quick, or they are only going to miss out.
Already bands are doing just fine without ever signing over a cent of their revenue to a record label. Dispatch made it their entire existence without ever signing a deal with a record label (corporate giant or tiny indie) thanks to the the original Napster and LimeWire applications. Mute Math went label-less with their first album and toured for an entire 12+ months, selling albums online and at shows only before ironing out a distribution-only deal with Warner Bros. Last I checked they sold over 10,000 copies in the first month of their album-release tour. (10,000 @ $10 (min.) per copy = $100,000 and that was just in the 1st month of touring and before the eventual deal with Warner Bros to distribute their album to major record stores.)
I find it sad that these record labels are so short-sighted, though from a consumer standpoint we’ll always get what we want in the long-run. I just hate to see an entire industry refuse to catch up with the rest of the 21st Century because they of an unwillingness to lessen their profit margin and invest in new technologies or even develop their own, and in turn cheat consumers out of great music. (sidenote: I find it interesting that iTunes – created by a computer and software manufacturing company – is increasingly driving the sales for the music industry. I hate to see a whole generation of artists miss out on great opportunities to reach the people that might actually enjoy their music because their label is unwilling to change the way they do business. Come on record labels – get your heads in the game!!!