Independent labels take nothing and make something out of it. Major labels buy that something, and try to make more out of it.
The record business is an oxymoron. In the 1960s, there was an upside to selling plastic discs so labels took the risk - they paid for the record, for marketing, promotion, publicity, everything it took to make the artist a star. But now we have to go back to the venture capital model. The business is stopping and everyone's complaining but you can't blame labels. It's a shitty business. You do it because you're passionate, or because it's what you've always known. But if you lived through the nineties, nobody is thinking this is great compared to what it used to be.
The music business is suffering because fewer artists are being invested in. Labels are putting in less money, taking fewer risks and signing half as many artists as they did 10 years ago. Everything is risk averse right now and there are two ways to deal with a business situation like this: either reduce your risk or increase your return. They're reducing their risk to the bone and looking for ways with their 360 deals to increase their return. They're still not making money. Artists are suffering. Labels, or music investors, are suffering.
Whenever you have consolidation, you do that for more economies of scale and leverage in making deals. But when you start losing control, like with the web, you lose some of the benefits. You can't hold films or records back anymore because the internet has made everything available as soon as it's available. Record labels have to learn to make money, and that's moved from a control model to a collaborative world. When I talk about hobbyists, those are consumers wanting to be creators. But maybe one or two of them could become the next superstar, but I can't wait for that.
Whenever you're in a chaotic environment, there are some of the best opportunities. Nobody knows where the music business is going, but I know one thing: it's going to be about fan-artist relationships and how you monetize that. The business isn't going to turn around the way we're doing it now.
