Two Roads Diverged

By, Alex O’Sullivan-Pierce

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“Where we’re going, we don’t need roads.” – Back to the Future

We’ve all heard the song, an oldie at this point, “The Music Industry is in Decline.”  Sales are down, illegal downloading is draining the lifeblood of artists everywhere, and soon there will be no more new music because artists will no longer be able to monetize their work.

Back in 2011, Rolling Stone ran a story, “The New Economics of the Music Industry.” This August, they followed up with a piece, “Nine Ways Musicians Actually Make Money These Days.” Both are excellent and worth a read- if you’re into that kind of thing.

What’s most amazing about the “New Economics” article is the uncertainty of how (and how much) revenue is actually derived by artists from “free” online distribution methods such as Pandora, and YouTube.  While these services are free to consumers, the most popular songs and music videos on these sites attract advertisers who are willing to shell out some dough to have their ads pop up (annoyingly) in between songs.  Now, everyone agrees that for artists this is far less lucrative than collecting royalties from selling CDs at $20 a pop. However, internet traffic does result in a “micro stream” of revenue which is estimated to be around $1 for per 1000 plays/views on Pandora or YouTube which then gets divided between the artist and their label, if they have one.  Not exactly a king’s ransom for musicians in the cloud– but could there be a silver lining?

No one sings the “Music Industry is in Decline” song better, louder or more often than the traditional record label powerhouses: Sony, Warner, EMI, and Universal.  These big boys usually take the hard stance that free distribution channels in addition to outright piracy have resulted in less money in music and the bottom line is fewer people are able to make a living off of music today than was the case 10 years ago.  Certainly this holds true for executives at major labels and artists that have already achieved fame and popularity.  Fewer and fewer people are paying for their music, even if it is digital, and so these labels and their artists see money coming straight out of their pockets.

But how about this hypothetical: an up and coming artist, who gains popularity through free online distribution, builds a viral following and parlays this into playing concerts for live audiences and eventually scores a record deal.  This path should be well worn by now, instead it’s been only lightly explored.  Why? I would guess that it is because this model is, obviously, less profitable for labels than the traditional and so these titans are reluctant to put their resources behind something that would undermine their place in the industry.  I get it, but it looks like reluctance to explore the new terrain is only delaying the inevitable. The power of promotion and distribution used to be the main advantage of signing with a major record label, but these functions no longer require huge money, thank you Internet.  So who is out there blazing these new, low-cost trails and how?

Inspired by the Rolling Stone “9 Ways” article, here are three ideas of traversing the online music landscape that have yet to be fully explored.

1. A Reddit-style video forum exclusively for music videos where (probably unsigned) artists post their videos and viewers vote the best videos up and down the queue, creating a MTV/Billboard like chart of most popular videos.

2. An internet radio station (like Pandora) which sandwiches tracks by up-and-coming artists with hits from the greats.  Example: songs from unsigned reggae artists sprinkled into playlists featuring hits by Toots, Burning Spear and the Marleys.

3. Concert Kick Starter – possibly in conjunction with either 1 or 2 above – attract interest in a live event by offering consumers an opportunity to contribute to their favorite unsigned band – give 5 bucks and get to download an MP3 album. Then if your artist reaches a certain amount of donations/downloads – they use the money play a live show and the downloaders get free tickets.

(Some of these, to a degree, already exist- click here for a list of cool music video sites – but it certainly isn’t a well-defined route for artists to follow to popularity and success.)

These are just ideas, and not very well thought out ones at that.  But if I was an artist, trying to make it out there, I would want my content churning over all the online music channels.  The paths are there, the only question is: who knows the way?

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About Alex OP

Blog Editor for Arther Law's Industry Insider 3L at Brooklyn Law School

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