Disclaimer - I work for a major music company, so I suppose you should take what I say with a grain of salt. But it doesn't make it any less true. And I speak for myself, not for my company.
I find it fascinating to read conjecture passed off as "what we all know." The truth is that record companies lose money on 9 out of 10 releases. They hope that they make up for it on the 1 in 10 that hits the jackpot. The successful labels do this, the unsuccessful ones don't. If a label doesn't produce hits for a couple of years in a row, the senior staff is replaced, and a new team tries to break some acts.
The idea that the artist is exploited is for the most part BS. Even baby bands are represented by lawyers who put plenty goodies in there for the artists. And if by chance the act is a hit, the contract is renegotiated. Yes, record companies often turn down great music. But you wouldn't believe how much great music out there just doesn't sell. If this somehow is the record company's fault, it would be terrific to figure out how, because it would mean more profits.
Record companies get paid for assuming the risk, financing the recording costs and helping to "break the band." Why is it so hard to understand? This is what VC's and some extent what software publishing houses do. Do you think that PhotoShop costs anywhere near $566.99 to manufacture and distribute? Development costs are the biggest chunk.
Most people have never heard the raw demos of their favorite band. Good thing, too. There is a whole bunch of work that goes into the product you see in record stores. You can call it pabulum if you want to, but then you are confusing aesthetic value for economic value. Economic models work because they allocate profits to activities that support getting the product to the consumer. A discussion on the artistic merit of a given model is interesting, but irrelevant. Either a model works, or it doesn't.
The Napster distribution system is effective, but as an economic model it fails because the artist doesn't get paid. Even if the courts side with Napster, this model cannot work in the long run. The allure of Napster is that anything you want to hear is available, because someone somewhere has it. The worst case scenario for the record companies is that they will have to encrypt CD's, making it difficult for consumers to use on their PC's. Even once the encryption is hacked, most people will not crack their music. So when the consumer logs in, suddenly they don't find much of "the new stuff." The reason Napster seems to be working is because the distribution system is terrific. But once it starts cutting into profits, the supply will be choked off, either by the courts, or eventually by the law of supply and demand.
While I don't like the "fear based" response that the industry sometimes takes to new technology, the reason we make money is because we add value to the process, in the economic, if not always in the artistic sense. If and when someone comes up with a web model that destroys the value that record companies add to the process, we will go out of business. So I hope it is my company that figures out this new model, or I guess I'll be out of a job. Until then the big bad majors will survive.
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I find it fascinating to read conjecture passed off as "what we all know." The truth is that record companies lose money on 9 out of 10 releases. They hope that they make up for it on the 1 in 10 that hits the jackpot. The successful labels do this, the unsuccessful ones don't. If a label doesn't produce hits for a couple of years in a row, the senior staff is replaced, and a new team tries to break some acts.
The idea that the artist is exploited is for the most part BS. Even baby bands are represented by lawyers who put plenty goodies in there for the artists. And if by chance the act is a hit, the contract is renegotiated. Yes, record companies often turn down great music. But you wouldn't believe how much great music out there just doesn't sell. If this somehow is the record company's fault, it would be terrific to figure out how, because it would mean more profits.
Record companies get paid for assuming the risk, financing the recording costs and helping to "break the band." Why is it so hard to understand? This is what VC's and some extent what software publishing houses do. Do you think that PhotoShop costs anywhere near $566.99 to manufacture and distribute? Development costs are the biggest chunk.
Most people have never heard the raw demos of their favorite band. Good thing, too. There is a whole bunch of work that goes into the product you see in record stores. You can call it pabulum if you want to, but then you are confusing aesthetic value for economic value. Economic models work because they allocate profits to activities that support getting the product to the consumer. A discussion on the artistic merit of a given model is interesting, but irrelevant. Either a model works, or it doesn't.
The Napster distribution system is effective, but as an economic model it fails because the artist doesn't get paid. Even if the courts side with Napster, this model cannot work in the long run. The allure of Napster is that anything you want to hear is available, because someone somewhere has it. The worst case scenario for the record companies is that they will have to encrypt CD's, making it difficult for consumers to use on their PC's. Even once the encryption is hacked, most people will not crack their music. So when the consumer logs in, suddenly they don't find much of "the new stuff." The reason Napster seems to be working is because the distribution system is terrific. But once it starts cutting into profits, the supply will be choked off, either by the courts, or eventually by the law of supply and demand.
While I don't like the "fear based" response that the industry sometimes takes to new technology, the reason we make money is because we add value to the process, in the economic, if not always in the artistic sense. If and when someone comes up with a web model that destroys the value that record companies add to the process, we will go out of business. So I hope it is my company that figures out this new model, or I guess I'll be out of a job. Until then the big bad majors will survive.