Thursday, March 20, 2008

Why the Big 4 record labels are dead (updated article with corrected information about

Note: this article was updated on 3/20/08 at 12:15 p.m., incorporating new information I just received in a comment from Jessica Morris. -R.B.

I know this is off-topic for this blog, but just wanted to share this thought with my readers.

I just attended a talk this morning at the Silicon Alley Breakfast Club, where one of the panelists was Jessica Morris of

OurStage is a site which permits any musician or filmmaker to put his or her work on line, and have it exposed to the world at large (presently more than a milliion "uniques" per month) for competitive judging, commentary and feedback, the opportunity to win prizes and mentor opportunities, and other good reasons to post their work product.

I asked Jessica if musicians can sell their whole songs there, too. She said sure, it's 99 cents per download, of which the musician gets 80 percent... but she then wrote in and corrected herself: the artist actually gets all 99 cents -- or 100% -- of the total purchase price.

So any musician could go to, get free exposure for his or her music, and even sell his music to the public, receiving all of the purchase price.

And anyone who likes music can go there, listen to their heart's content, buy something if they like it, and be sure that what they spend goes right into the artist's pocket, where it belongs.

Four questions:

1. In such a world, who needs record companies?

2. If people don't need record companies, wouldn't record companies have to somehow make people want to do business with them?

3. Who thinks the RIAA's litigation campaign is a way of making musicians want to do business with the Big Four record companies?

4. Who thinks the RIAA's litigation campaign is a way of making music lovers want to buy their music from the Big Four record companies?

Anyone who can't figure out the rather obvious answers to those 4 questions, doesn't deserve to be running a record company. (Or should I say "running a record company into the ground")?


Keywords: digital copyright law online internet law legal download upload peer to peer p2p file sharing filesharing music movies indie independent label freeculture creative commons pop/rock artists riaa independent mp3 cd favorite songs intellectual property


Anonymous said...

1. Artists that need airplay. Unlike many people think, radio stations are tightened up (still) to record labels. Radio and live are key points in the artists career. This is just one example.

2. They can by providing artists career stimulating opportunities and effectively market the product (because that's what artists make)

3. I do to some extend.

4. People don't care about labels.

Scott said...

Anybody recording artist who thinks they NEED the RIAA labels should look at the life and work of Janis Ian. Her controversial "Society's Child" was her first hit back in 1967. In the many years since then, Janis has been making a comfortable living as a singer, songwriter, and recording artist outside of the music cartel. If you want to know how to do it, look at how she does it.

Moreover, she has been a critic of the RIAA since way before it was cool.

Wikipedia article:

Janis Ian's website:

raybeckerman said...

I'm with you, scott.
Here's a link in link format.

raybeckerman said...

Here are some


articles (pdf)

she wrote.

Anonymous said...

1) We (musicians) used to need record labels because they had the facilities to make a recording and press vinyl records. Plus, they could get you on the radio.

DiskMakers will press your CD for a buck a copy. The radio has been turned off for years.

What you need today is a good publicist, not some top-heavy corporation that will keep 85% of the profit and increasingly want your tour and merchandise income, too.

There is no other industry I know of where you have to get in line to schedule an audit.

No one needs that.

2) Not as long as they own the toll road from Point A to Point B.

3) Lawyers, the talentless record execs they work for, and young musicians who have not yet learned that more than 90 percent of those who pay for access to the toll road will never get to Point B.

4) In the past, which label an album or record came from was the answer to a trivia question.

I guess it still is, but the question has changed to, "If I buy this, will I get sued if someone else hears my copy?" or "Is this the one that did that rootkit thing?"

Labels are more important than ever to the fans.

Justin Olbrantz (Quantam) said...

Geeez. 80 cents? For iTunes, doesn't Apple give like 30 cents to the record labels, and the artist then gets like 1 or 2 cents? That's pretty dead.

In case anyone happens to care about my opinion, I'm betting that the record labels are eventually going to collapse as they are now, and then be reborn simply as publicity/advertisement agencies. It's more than viable for an artist to publish an album without a label, but the labels can still offer something valuable as they control so much of the publicity side.

Jadeic said...

Jack White's 'Raconteurs' are the latest to go it alone and market directly to their fan base.


Scott said...

The labels will be around as long as they have a catalog of recorded music that they can endlessly package and resell. But their catalogs are a wasting asset. Consider: All of the artists from the British Invasion are in their 60s. The ones that didn't croak from drug overdoses are going to start dying of old age in 10 years or so.

If the labels can't attract and keep new talent, they will continue to shrink. Maybe the lawyers who run the business don't really care about that. I bet Cary Sherman will continue to pull down his seven figure salary until he retires, probably a few years before the labels are ready to turn out the lights. What a sweet deal for him.

Whenever the RIAA moans and whines that downloaders are killing their industry, I think it's everybody's responsiblity to shine the light on the truth: that industry executives are killing their own industry through incompetence and hubris. Exhibit A is the RIAA lawsuit campaign.

Macros said...

Hate to say it, but small/new artists DO still need labels.

Without some kind of major exposure, they just don't get the following/sales they need to make a living off music. Get on a TV show (ie. Rockstar), do something unique (ie. webcasts like Sandi Thom) or just plain luckout seems to be the only real way to get the numbers needed.

Artists like Radiohead, NIN & the Raconteurs have a following already. They have the fan base to make Internet sales work. A few songs sold via a site with 80c made each time won't feed anyone for long.

What we need is a site that will take an artist & help them get major exposure. Take a cut, but not 95% like the Big Four do!

Macros said...

Oh, and we need to persuade the kids that buying ringtones isn't a good idea! (Yeah, right!)

When artists are being signed JUST to make a ringtone, there's something seriously messed up with the recording industry!

Startupalooza said...

Thank you Ray for encouraging Artists to think outside of the box. Some thoughts about the way forward.

1. The next generation record company will buy these companies (, etc.) or thes sites will BE the record companies.

2. Artists also need to rethink their place in the creative world. Are they just musicians or a special kind of storyteller? Look at this breakthrough combo of great music and a graphic novel.

3. Musicians are their own best marketers and should organize their own events and revenue-generating opportunities. Sound crazy? Well, there may be issues of vision and guidance - but the important thing to understand is that music sites grow quickly and generate multimillion dollar valuations because they know musicians have their own email lists and marketing machines. Just by being offered a showcase, the musicians are effectively working for the music sites for free. Artists can still do better.....

4. Who knew Artist would be another name for Entrepreneur?

raybeckerman said...

Well folks we just had a visit from the visionary founder and leader of (in New York we like to call it the "Silicon Alley Breakfast Club"), Mr. Alan Brody.

It was a September 2004 panel discussion at the Silicon Alley Breakfast Club that inspired me to become a blogger in the first place, and showed me how to do it.

raybeckerman said...

When Alan speaks........ listen.

Because if you hear what he's saying, you'll get a glimpse into the future.

Anonymous said...

Hello all,

I'd like to clarify a few things from my speech at the ibreakfast yesterday.

First of all, I was misinformed and greatly mistaken in saying that we give 80cents to the artists. Actually, Ourstage currently gives all 99 cents to artists and has no plans to change that anytime soon.

Furthermore, I think there was a little confusion about the length of songs on OurStage. Artists upload full-length versions of their songs and the Fans and Judges can listen to the entire song when streaming the music or when judging. We require that each judge listens to a minimum of 15 seconds of each song before making a decision.

Ray, thanks for your interest and further insight on our discussion yesterday. I've enjoyed reading your reader's comments as well! I hope I've been able to clarify a few details on OurStage and I'd be happy to answer any further questions.

Feel free to email me directly at

raybeckerman said...

Dear Jessica,

Thanks so much for writing in and correcting me. Now I am even MORE impressed! 100% of the song price goes to the artist! That is absolutely wonderful. is clearly providing a wonderful online service. Keep up the good work.

Best regards,


Adelheidi said...

"Without some kind of major exposure, they just don't get the following/sales they need to make a living off music."
Why do the artists need to make a living off their songs? Why can't they shop around for 8 months for a job like I did?

Why can't they get a job someplace that's willing to pay them minimum wage, save up their money, buy a computer (which is a one-time buy, per computer, usually), but some really hot software, buy a microphone and start recording their own music and encouraging their fans to support them? If they're any good, they can make money. If they suck, no one's going to want to pay.

Not to mention, it shouldn't be that hard for said artists to get their music out. They'd just have to email the A-List/B-List bloggers. If the A-List/B-List likes them enough, said blogger(s) will link to the artist's website and possibly donate themselves or encourage any of their readers to donate.

Again, in this day and age, where the minimum you have to purchase are a computer, software and a microphone in order to be heard, why do we need the record labels?

Why are musicians so special that they deserve to make a living off their songs, while book writers starve? Unless of course, said book writer decides to write a textbook. JK Rowling tends to be the exception to book writers, and not the rule.

It's only recently that the idea of an artist (or musician) making a living off their "talent" has come into our society. I'm not sure *when* this idea came about, but I, myself, am guessing around the time Elvis and/or the Beatles came around.

Not to mention, artists mostly make money from doing tours/concerts. They don't get much from CDs or radio play. If I were an artist, and I discovered that I make practically nothing from CDs/MP3s and radio play? I think I'd let people download my music for free, too. At least that way, even though I'm not making money, I'm not getting ripped off by people who are suing my customers, without giving me a dime of the profit.

Btw, Ray, I commend you on not pulling a "Russia" on people who feel that artists still need the RIAA. I sometimes doubt that I could be that honourable.

Rick Boatright said...

Heidi asks:

>Why are musicians so special that
>they deserve to make a living off
>their songs, while book writers
>starve? Unless of course, said book
>writer decides to write a textbook.
>JK Rowling tends to be the
>exception to book writers, and not
>the rule.

There are a number of replies.

The first is that music, requires a full time committment in order to accomplish the levels of performance expected of professionals. The question is really incorrect as asked. There have been full time professional musicians since the beginning of time. Bards, troubadors, orchestra members, performers in circus and theater and nightclubs and etc etc etc have always existed, and possibly always will, even as full time actors and clowns and gymnasts and trapeze artists and contortionists and jugglers exist.

Even "mega stars" existed prior to the recording era. Jenny Lind, Lizt, etc were both household names and fabulously wealthy.

What is new in the 20th century is the ability of a musician, or a small group of musicians to make a full time living WITHOUT performing before a live audiance. The Beatles conversion from a live-gig band to a studio only band was far from the first, but exemplified, in the second half of the 20th century, not only the new niche for ARTISTS but the new niche for RECORD DISTRIBUTION COMPANIES which allowed incomes vastly greater than could be arranged through more normal performance schedules.

The complaint that a band can't "make it" without the support of a label voiced above describes more accurately the difficulty of a band making the TRANSITION from the more traditional troubador role to the newer RECORDING ARTIST role.

I have no doubt, however, that SOMEONE will figure out how to accomplish that without the assistance of a record label, although the assistance of SOME distribution media will be required. YouTube or ourstage have yet to figure out how to monitize wild popularity of a mega-star WITHOUT the intervention of the big labels.

It seems inevitable that eventually SOMEONE will.

Scott said...

The main effect of the internet has been to democratize the mass media. Rather than having a finite number of radio stations, television stations, and publication outlets, there are as many channels as there are IP addresses, with the economic barrier to entry as low as the cost of a PC and an internet connection.

The new paradigm is not that hard to wrap one's mind around. Heidi and iBreakfast are on target with their analyses. The era of the recording artist superstar, which started with Sinatra and is dying before our eyes, will never come again.

The paradigm that the RIAA is trying to defend is totally, completely dead. Dead. DEAD. So why is the RIAA engaging in a self-destructive lawsuit campaign that, in the long run, will accomplish nothing? Only two possible explanations I can think of:

1. The record company execs are stunningly clueless.


2. The record company execs are being led around by a gang of greedy, cynical attorneys who are going to keep their gravy train running for as long as there are hours to be billed.

I'm inclined to think that both are factors, although I'm not sure in what proportion. I'd better stop there.