Strategery
I had an interesting conversation with my brother over Christmas about the record industry. He's a junior in Drexel's Music Industry program and is working for a small label in Philly so this stuff is his bread and butter. Anyway, we started talking the stranglehold the RIAA labels have on the whole music industry and how it's bad for the entirety of the value chain (except the labels of course). On the one hand, you have artists willing to sign away their rights for a chance to make it big; on the other, you have consumers who purchase arguably overpriced music and aren't even supposed to make copies of it to store on their computer or their mp3 player (at least according to my admittedly rudimentary understanding of the DMCA).
The interesting part of the discussion came when we were talking about ways to break the power of the major labels. The big labels have three main advantages as far as I can see:
1. Marketing budget and breadth: The major labels can afford to launch a nationwide (or worldwide) advertising blitz to get the word out on a new artist. Plus they have the connections to land artists promotional appearances.
2. Pooling of risk: Major labels will see much larger returns from a smash hit than will a smaller label. This allows the major labels to take chances on more acts, in the hopes they find one that is commercially viable.
3. Distribution channels: The major companies have relationships with national distributors and retail stores that enable them to get priority placement in stores.
I'm sure there are other advantages, but focusing on these three, I came up with a proposal. Small, regional labels should enter into a loose cooperative to promote and distribute each others acts. Obviously there's a lot more thought needed with this, and I'd be shocked if it wasn't being done somewhere, but it appears to be a way to challenge the status quo,
The main reason the conversation sticks in my head is not the idea itself, but more the nature of the discussion. My interest lies in strategy, and it's nothing something I get to think about on a daily basis in my job as a programmer. It's one of the reasons I started this blog - to have some place to share these ideas.
posted by Dan Turkenkopf @ 2:30 PM
2 comments
2 Comments:
Co-Operative is a wonderful idea. There are some structural challenges, but the basic idea can be made to work.
You may know that the movie studio United Artists started as a distribution company to advance the chances of independent producers and ultimately to give advantages to the talent. The parallel is strong (publisher oligopology, distribution oligopoly that in turn favors oligopoly among providers and retailers).
I think it would work best if you re-created the United Artists initial push...some marquee names will to take the incoming legal and PR attack.
The constraint on this idea is: Co-operatives work best when the memebers are not, essentialy, really competitors. Tat's why Ocean Spray and Sunkist and Farmland Industries work -- yes, all the cranberry farmers are doing the same thing, but its a commodity to a large degree, so they aren't really playing a zero-sum game. The challenge in a non-commodity biz like commercial music is the memebrs would be highly-differentiated, but not quite enough to NOT be competitors (for the same gigs, the same venues, etc.).
NOW: If you made them vertically integrated (like the co-ops I mentioned previously), so they also owned a chain of music stores and a booking agency and a p.r. and ad agency...that might work. Structurally fragile, but if the members were collegial about it, it would rock (pun intended).
jeff angus
I agree with that model and may actually attempt this type of arrangement down the road. One addition would definately be a booking agency. However this agency would stand as a subsidiary of the co-op and be used to book the acts of all the labels involved into venues in one another's markets. Having a singular booking agency would allow the packaging of several label's artists into one tour and help each expand its own fanbase. Artists of the co-operative would share bills with each other, using lesser developed acts as well as local acts to provide support.
On a personal note, this post has inspired me to create my own blog dealing specifically with my experiences in the industry to date and extending into the future. It's located at http://rockbusiness.blogspot.com
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