New business models leading a quiet revolution

Valerie | 26 May 2009, 08:05

Major record labels are under more pressure than ever to prove their worth - this was the finding of a recent mock court held at the Great Escape festival in Brighton in which record labels were put on trial. With record sales in long-term decline, and the pace of technological change advancing, the music industry is increasingly seeing the emergence of new business models challenging the status quo.

Following the infamous decision by Radiohead to ask fans to decide the value of their music, the “old and new media clash in cyberspace”, and issues around copyright have become hotly contested debates and are now the subject of Chicago Tribune music critic Greg Kot’s new book Ripped: How the Wired Generation Revolutionised Music .

“Ripped” tells the story of a new grassroots music industry, created by the laptop generation, with the fans and bands in charge, which according to a New York Times book review, contends that peer-to-peer file sharing and CD burning has empowered music consumers, while providing musicians with more “opportunities to be heard”.

Earlier this week, new internet start-up OOiZiT.com secured a six figure investment for a social network dedicated to exposing new UK music artists and is planning to introduce a number of innovative new sales and promotional tools designed to help music artists tap into the music industry, without the reliance of A&R representatives spotting them. But speculation of the imminent death of the record label is perhaps premature.

Gary Bongiovanni, editor in chief of Pollstar, a trade publication covering the worldwide concert industry recently said:

“...there is a lot of experimentation going on. People are trying to figure out other products or things they can sell the public to monetise an artist’s career.“

Bongiovanni argues that record labels are turning to live music and developing new marketing models that allow fans to truly engage with their favourite bands. He said:

“Their real income stream is coming from touring, which makes the live show even more important.“

The Guardian reported that record labels such as Universal have taken this a step further by providing a “digital tour pass” that will provide backstage footage and other exclusive material from their favourite bands in what music bosses hope will be a marketing model that can be replicated by other bands to boost an industry in crisis over illegal filesharing.

Paul Brindley, from digital music analysts Music Ally agrees that digital innovations could provide a lifeline to the music industry:

“People might be able to get a track for free on a file-sharing site, but research shows that fans are still willing to pay money for exclusive content. It is a fact of life that the perceived value of music tracks has fallen, which means that increasingly labels are looking at the artists as a brand and trying to capture revenue on the back of that.”