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The new music distribution model
This column originally ran in ComputorEdge on July 9, 2004
(Issue 2228, Advanced Technology)
While the music industry runs around suing everyone engaging in file sharing to try to save their business model, it's doubtful that the record companies even recognize the larger threat to their fat salaries, expense accounts and total control of the music world: The world of direct-to-market online distribution.
Music doesn't need a physical distribution model anymore; MP3.com may have found itself in legal troubles over its My.MP3.com tool (which let users listen to their CD collections anywhere) after the labels found a technologically illiterate judge to shut the service down and award fines, but MP3.com's real value was in letting bands post their music directly online.
At its heyday, MP3.com had tens of thousands of bands signed up for its free services; my brother's San Diego techno band, Rotator, recorded two CDs through MP3.com, which then handled online sales for them.
All of a sudden, Warner Bros. and Sony Music are not only no longer king of the hill, they're effectively obsolete – even if they don't realize it yet.
How the labels came to be
The labels first came into existence shortly after Thomas Edison invented the phonograph. Even before the rise of the 'record," recording rolls – aluminum foil wrapped over a tube with the sound scratched into the surface like the later 78s – were popular. Edison's own company had the patent, and sold the first rolls, making Edison the first label by default.
Others soon licensed the technology, however, and as the record players took off in popularity, record companies not only hustled to sign popular opera and vaudeville singers to recording contracts, but they also hustled the countryside looking for new talent.
In fact, in their infancy, the record companies helped break the control that music hall and booking agents held on the music industry. With a popular record getting played on the new radio stations and then juke boxes, a musician would be in demand by the same booking agents who wouldn't give her the time of day the previous year.
The labels got their records placed in department and musical instrument stores, and eventually even into specialty shops carrying nothing but recordings. That was where the public went to buy music; if you wanted to sell records, you had to go through the record companies.
And so over time, the record labels became the new power brokers. By deciding which bands to sign, which to pitch to the radio stations, the labels controlled who did and did not have access to a large popular audience. Tales of musicians signing over their publishing and royalty rights to the record companies in order to get a contract are legend.
In the 1980s and ‘90s, as fewer and fewer radio stations let their disc jockeys pick the songs to play, the power of the record companies became nearly absolute. Their tight relationship with the program directors at the radio stations had a huge influence over which songs got played on the air.
How else do you explain a Mariah Carey?
Why labels no longer matter
But the rise of the Internet presents a new distribution model for music. Unlike, say, automobiles or washing machines, there is no reason that a song has to exist in physical format – at least not in any form above that of electrons.
And so the need for music stores is diminishing, as the success of Apple's iTunes digital music store shows.
And MP3.com, founded in San Diego by former ComputorEdge contributor Michael Robertson (who is now offering an inexpensive desktop environment for PCs through his Linspire/Lindows company), showed that with the Internet, musicians themselves could reach the listening public directly.
Or at least through MP3.com – so at very minimum, the cost of starting a music label and running a distribution network had been cut by a factor of tens of millions.
Because what MP3.com did do was offer a shared gathering point for musicians and listeners. You can't reach an audience if they don't know you exist, and so MP3.com offered an affordable alternative to the established labels, and greater reach than most independent labels.
Robertson sold MP3.com a few years ago to Vivendi, which has now shut it down and re-sold it to c|net for new branding and a fresh re-launch.
The future of music distribution
In fact, MP3.com is back up in a beta version as this is written in mid-June. Unfortunately, bands that previously had MP3.com accounts have to set them up all over again, and previous listeners have to set up new accounts – your old playlists simply don't exist anymore.
Something else has changed in the interim, too: MP3.com no longer has the field to itself.
SoundClick is probably closest to the old MP3.com model in terms of interface. The layout is straightforward and basic, and there seem to be a huge number of bands with a presence here. As with MP3.com, you can download songs the bands have posted in mp3 format.
MySpace also has a Music section where bands can promote themselves without the hassles of a recording contract.
And in fact, it isn't clear that MP3.com is returning to its old role as gathering place for unsigned bands; from the look of the beta, MP3.com may be positioning itself to compete with iTunes, RealNetworks, MSN and Sony as an online distribution channel for the labels.
But c|net, new owner of MP3.com, has another site at music.download.com where bands can sign up and post music.
What all this means is that bands have more options than ever before in terms of reaching a wider audience than available playing local bars. And unlike signing with a label, you don't have to give up creative control, you don't have to sign over your future.
Nobody's yet made it to stardom via this route, but it's only a matter of time.
Especially if the labels keep shoving new Mariah Careys at us.