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Posted by: Ivan Milenkovic Nov 21 2011, 08:21 PM

Here's an interesting article I found on the Net, it concerns music industry:

How has record label consolidation affected the industry?

In 2002, five major labels controlled 75 percent of the world market for recorded music. In late 2003, Sony and the Bertelsmann Music Group (BMG) announced plans to merge their operations into a joint venture, leaving only four major record labels to sell and distribute the vast majority of music. The merger is pending regulatory approval in the United States and Europe.

As labels consolidate they look for savings by merging operations and cutting staff. Divisions are brought under the control of one executive and the number of staff is cut to create a more efficient work force. Even divisions with major stars are not immune from this corporate belt tightening. In preparation for its merger with Sony, BMG announced in that it was laying off 110 of 170 employees from the conglomerate's Arista label, despite the fact that the Arista team had had major hits and Grammy nominations for artists like OutKast, Avril Lavigne, Sara McLachlan, Pink, and TLC. When Arista's President L.A. Reid was let go earlier in the year, it was reported that the label was struggling to turn a profit. For industry insiders, the move reinforced the message that in the record industry, success is measured by the bottom line.

Even for companies that aren't merging, the decline in the market has meant cutting staff and artists in order to stay afloat. When Warner Music Group was sold to a private consortium lead by Edgar Bronfman Jr. in early 2004, it announced that the new owners were trimming 1,000 positions in the company in order to cut costs. As recently as March of this year, EMI announced that it would cut 1,500 jobs and one-fifth of its recording artists.

Any comments guys?

Posted by: skennington Nov 21 2011, 08:33 PM

I think Artist creating their own labels is killing them. With all the social media available today, bands/artists can promote themselves therefor limiting the need to ride a labels back after they are known..

Justin Bieber got started on Youtube!

Examples:

Eminem
Kid Cudi
Prince
Oasis

Posted by: Daniel Realpe Nov 21 2011, 10:09 PM

Times are definitely changing, we have to adjust and so do them!

Posted by: GregH Nov 22 2011, 12:41 AM

About 100 years ago, the manufacturing of horse whips for use by people driving wagons (known as buggy whips) was a big industry here in the US. When people started driving automobiles, the buggy whip manufacturers got worried. In some states they managed to pass laws stating that all automobiles must be sold with buggy whips. After a while, it became obvious that buggy whips were a dying industry. I understand that some of the whip manufacturers survived by switching to making windshield wipers.
The record industry of my childhood is dead. Just as the CD replaced vinyl and tape, the internet is making the CD into a specialty item.
The record industry provided at least two major services. Distribution of material and marketing. Now we can all get our material out there (making money with it is a different matter).
But marketing is a different thing all together. Most of us aren’t very good at it. The surviving recording companies may be able to survive by make themselves over as marketing companies.
But first the major labels will have to accept that their kingdom is over. They cannot continue to look for the next Britney Speers and expect to continue to be relevant.

Posted by: Todd Simpson Nov 22 2011, 01:53 AM

The Biz has changed. Labels are being put to a slow death. Value Added Plastic (Cd's) are no longer a viable commodity now that distribution (web/itunes/stream) is network based. That part of The "biz" will continue to contract/shrink for several more years. A record label is basically a Bank. They give an artist a "recoupable" or Up Front money against future CD sales. So the artist still had to pay for everything (recording/touring/videos) the label just gave them a loan for it.

The season of the MICRO NICHE is upon us The trick is to find your niche. Find your audience. Find folks that really dig what you are doing, and give it away until you reach enough critical mass (enough folks that care about your music) and transition to a "Freemium" model ( 20 percent of your customers will do all the buying, 80 percent are freebies) and continue to give music away, but also make "special" versions with extras available for the 2 out of 10 that will pay good money for it. Add this to the other income streams I talked about in previous posts (licensing, speaking engagements, live performance, private performance, merch, etc.) and you can honestly begin to make the transition to making a living with music. It's the critical mass thing that is the really tough bit.

Posted by: Cosmin Lupu Nov 22 2011, 10:14 AM

As Charles Darwin said: 'It is not the strongest nor the most intelligent of species that survives, but the one who's most responsive to change' I think we have to be able to take 2 steps back and look around. What's REALLY going on? How can I adapt to the times I am living in? If we don't do this and keep wondering 'why can't I make any money out of music?' nothing will change!

Posted by: Ben Higgins Nov 22 2011, 10:28 AM

QUOTE (Cosmin Lupu @ Nov 22 2011, 10:14 AM)

Posted by: tonymiro Nov 22 2011, 11:00 AM

From a different perspective, and for once I'll try and be brief (well brief for me):

For studios -
Majors have changed how they pay, on what terms and what work you are likely to get. We get paid considerably less, are sent more and more 'remasters' to do or projects that require considerable intervention.

Audio fidelity standards have fallen. Not because of the change to the structure of the large labels but due to the rise of the 'generalist studio'. Those are the studios who offer to do the complete recording/tracking/mixing/mastering for a single fee. Standard has dropped becuase very few of these generalists actually have the technical and specialist experience and equipment to do these different roles properly. When they do they lack the objectivity that different people bring to these different parts of the process.

Distribution has certainly changed -
Digital releases are much easier to put out and this has lead to a huge increase in the volume of what is available. Arguably digital distribution is contracting in to a small number of very big (re)distributors like cdbaby and itunes plus a lot of tiny one off indies. Now, as Todd says, the issue is how you get people to hear and buy your music. Traditional broadcast channels (radio, MTV etc) still rely on the majors for most of their programming. Many of these broadcast channels will not accept digital only releases for broadcast. With digital only you struggle to get your performance and recording rights for broadcast as the digital nearly always omits important information.

Physical distribution (CDs in shops) is actually more difficult as some of the indie distributors no longer exist.

What is released has changed -
As I said we are sent more and more 'remaster' work. Big labels have focused more and more on re-releasing old material and cut their A&R development significantly. Gone are the days when a big label would let you develop as a band over several LPs - now each and every release needs to be commercially successful or your contract will be revised/cancelled.

Posted by: Cosmin Lupu Nov 22 2011, 11:42 AM

QUOTE (Ben Higgins @ Nov 22 2011, 09:28 AM)

Posted by: Ben Higgins Nov 22 2011, 12:35 PM

QUOTE (Cosmin Lupu @ Nov 22 2011, 11:42 AM)

I was going to say that - but since i knew it from you it was only fair to let you post it