In the next few weeks the “music industry” is going to have to face down its mortality. By “industry” I refer to 20th Century labels and the universe surrounding them. That moment, as described by others more informed and eloquent than I, is when EMI must pay off ~$4.7 billion in loans, which it cannot service. No one knows what will happen, but what’s clear is EMI will more than likely cease to exist as an independent entity. Those companies that look at EMI will dig into the cash flow generated by it’s IP portfolio. These potential acquirers will have their analysts, internal and external, generate excel models that show a case for increasing this revenue line. Unfortunately, no labels seem able to afford EMI’s debt slug, so perhaps another PE firm will try its operational hand at squeezing revenue from EMI’s library. Most likely, people will just wait for the bankruptcy and then pick off choice assets in liquidation.
Whatever the case, as a musician without a catalogue, you’re not top of mind for EMI or any other label for that matter. You are a casualty of risk management in a time when the cost structures of labels do not allow risk taking. Labels have always been terrible risk managers, but previously they had monopolized (I use this loosely, call it oligopolized or whatever you want, but basically normal supply and demand pricing was not happening) distribution channels and made huge margins within these channels. This profit center allowed them to neglect the hard parts of success like risk management, a trend over the past 25 years. Now risk management is the name of the game and because the labels cannot afford artist experimentation and potential failure, the task of monetizing your career now falls squarely in the artists camp.
Paired with this new risk taking behavior are commensurate reward. Take for example the success of Metric. Using TopSpin to power their platform they made more money then they ever did on a label. Was it harder, absolutely, but remember in this time of transition between industrial to network economies, supreme effort is the only pathway to growth and success. Simple debt fueled growth doesn’t exist in the mid-term.
At Bandwith we’re in the business, or will be in the months ahead, of maximizing the value of the relationships between artist and fan. Now that you’re in charge of sales, you’re inundated with data which is supposed to help you sell more. However without some engine for making sense of this data, it is simply a pile of disconnected and intimidating information. Bandwith is building the engine for taking the multiple click streams, twits, listen and ticket sales into a single view for quantifying and qualifying your fanbase.
Whatever you do, artists, the future is yours and there are talented technologists, music lovers, entrepreneurs and companies that can help you make money doing what you love. The days of $400k A&R expense accounts may be over, but as EMI and their brethren fade, the good times will continue to roll for the artists that own their business.
