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Musings In Cb

The Impact of the Global Digital Music Economy on the Music Business Paradigm

By Published: May 10, 2006
Conversely, the same relative power does not yet exist for the artists who produce the music... And ultimately, true empowerment for the 21st Century jazz artist also includes the control (and understanding) of the business aspects of music, which as in this case includes contracting the services of other firms to perform certain functions for your organization. Without a balance in power in B2B issues, the jazz artist today will find that regardless of having access to all of the whiz-bang technology to produce records, and a really cool website, he or she is no better off than artists were in the old music economy.

Music Business Paradigm

Even in this new downloadable digital media age, we find that music distribution and distributors are still an issue. Even with all of the consumer conveniences that eCommerce provides the market place; the business to business (B2B) economics do not include any legal requirements that artists must be provided unfiltered access to all the official receipts, accounting records, verifiable distribution and sales data. This issue remains largely unregulated, and therefore it remains unresolved. Some firms who provide the service of digital distribution to independent artist get good grades in this area. However, just a few minutes randomly surfing through some of these businesses websites will show that the majority of others in the digital music distribution and sales business fail miserably.

Again, I honestly believe that all of these digital distribution businesses (including web-only labels and MP3 sites) should be required to be regulated and licensed at least at the state level by the attorney general's office. It is the only way that they will do the proper thing. If the business is legit, there is nothing to worry about and licensing should not matter. It is a relatively simple and honest thing to do. Providing this B2B data is necessary whenever an artist who produces digital products for sale utilizes another business as a digital distribution intermediary (who is paid a commission of some sort — usually from the artist earnings pool) to deliver the digital product seamlessly to the actual music buying customer.

Today, it is literally impossible to verify or truly audit these types of B2B transactions. Artists must "take the word of the intermediary digital distributor business where sales figures and earnings are concerned. Is it just me, or is something wrong with that picture? I like to think that most people are honest, but that is the world I like to live in. Reality says that is not always the case though. So, even if we go with my optimism and for that sake, let us say that "4 out of 5 digital distributors are honest ; we can still do better, that remaining "less than honest one should not have such a broad opportunity to plunder...

Open Music Economy

The economic landscape of the recorded music business is a lot different than it was during the 1960s, 1970s, 1980s, and even most of the 1990s. Today, the big thing is Digital Distribution of your music to the services like iTunes, Rhapsody, etc. This is where we all have to remain on our watch, because this is one of the few places where advantage of the artist is being taken today. Too many jazz artists still seem to know nothing (or very little) about how a website works, much less what is reasonable conduct to expect from a B2B and eCommerce relationship with their digital distributor. This is one of the very few remaining ways that someone else can make money off of you, as a recording artist, in this new age...

Therefore, I believe that there must be some form of legal regulation of certain major aspects involving the business to business (B2B) paradigm which inherently exists between artists and the rest of the industry-related businesses of the 21st Century. Again, from what I have experienced and continue to observe at this writing, is that a significantly huge B2B imbalance still remains in the relationship between the business service providers of digital distribution access and their artist customers. And the sad thing for me to see all over again, is that most independent recording artists likely do not realize what is going on yet...

I term this new mutually shared opportunity between recording artists and the retail distribution entities, an Open Music Economy. Again, I believe that there should be some regulatory processes that are required for someone to even put up a website and engage in proprietary eCommerce as a digital distributor of music. These people who wish to engage in this business of distributing other artists' music, while also collecting and disbursing funds, should be bonded and licensed by the government of their state—at minimum.

Conclusion: Let's find a solution

It is only logical that the various businesses engaged in digital distribution also be regulated and required to apply and qualify for a license like any other legitimate business does. Any formal digital distribution service agreements (verbal or written) offered and accepted should be legally binding, and finally, there should also be an actual conduct of periodic accounting audits that occur to ensure that all monies are being distributed properly.

As it stands now at this original writing of March 22, 2006, there is no way for an independent jazz artist to "audit most of the firms who digitally distribute music. Some may think the above sentences of requirements are harsh. However, the reality in most cases is that there is no way to audit most digital distributors. Any Digital Distributors (or firm that an artist relies upon to sell digital content through an eCommerce system) can tell you that you sold music or you did not. It is up to them to decide whether or not to be honest because you can't check up on them as things stand at this writing...

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