Major Labels Shift Revenue Strategy from Partnership to Ownership

Rocked by shrinking revenues and disappointed in the revenue generated by music services like YouTube, MySpace and imeem, the four major label groups have begun shifting their search for larger revenue streams from licensing and revenue sharing to an ownership model.

The trend began with 360 deals which give labels control of all the artist's revenue streams and investments in a variety of music tech companies. Then came the MySpace Music partnership. Now labels are going further with their own intiaitives and even starting companies that compete directly with the same new services driving music 2.0.

Last week, word leaked that the majors are exploring their own Hulu-like competitor to YouT ube. Yesterday Universal announced an addition to its ongoing effort to boost sagging ringtine revenue by selling direct to fans, and today came word that Universal backed TotalMusic is getting into the playlist business. EMI has retooled its own flagship site to directly serve consumers. All are efforts to drop the middle man, develop more direct relationships with fans and boost revenues.

Much like the era in which the major labels dominated distribution channels and access to radio, they would prefer a return to gatekeeper status. But their efforts may be too little too late, and the collective power of hundreds of startups, thousands of motivated artists and millions of resourceful fans may prove more powerful.

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