By ignoring online opportunities and clinging to its big-brother ways, labels find themselves lost in a new world.
Few industries inspire more enmity than the record business. It's been tainted since the birth of rock, with transgressions that include payola, greed, a reactionary aversion to technology and a plantation mentality toward its bread and butter -- the recording artists. Thanks to the Internet and the MP3 revolution, karmic justice has finally been served: The record industry has toppled like a house of cards. To many, its collapse is less a crisis than a beautiful sunset.
Yet as Steve Knopper notes in Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age, this was a business hellbent on destroying itself for at least 30 years. Digital music was merely the final dagger in its heart.
Knopper, a Rolling Stone music business writer, thoughtfully reports on the record racket's slow, painful march into financial ruin and irrelevance, starting with the near-catastrophic sales slump that began in 1979 after the demise of disco. Though the labels persevered, they finally lost control of their product when they chose to ignore the possibilities of the Internet.
Now, it's consumers and recording artists who have the power. Musicians can create, produce and distribute their work without the indentured servitude of record labels. That's great news for younger artists, but even geezers like the Eagles and Paul McCartney have taken advantage of the new technology.
McCartney distributes through Starbucks, and the Eagles sold its 2007 album, Long Road Out of Eden, exclusively through Wal-Mart -- how's that for a hippie dream?
The record industry hates it, but that's the bed it made. Rather than trying to monetize the new technology, the labels chose to fight it. “It became the moment the labels killed themselves," says Jeff Kwatinetz, chief executive of the talent management company the Firm.
When copyrighted content could no longer be controlled, the industry, long obsessed with piracy, spent tens of millions of dollars in court to destroy file-sharing promoters such as Napster.
Had the labels made a deal with Napster, they would have found several immediate advantages: a built-in user base of 26.4 million people as of February 2001 . . . ; an efficient way of communicating with customers; and the flexibility to set prices at a number of levels. The sad fact was employees at major labels had spent years and years downplaying the internet as a marketing tool.
Steve Knopper
