SHREDnews

In the last decade, the music industry has certainly taken an interesting turn. The 1990’s was a hugely profitable time for major labels. Mega pop stars like Britney Spears and The Backstreet Boys went multi-platinum, selling millions of CD’s at $18.95 each or higher. The labels themselves were the gatekeepers of the industry. They alone had the means to record albums, distribute them internationally, and effectively market the artist. All of that changed, however, around 2000, when labels met their worst enemy: new technology.

Ever since then, major labels have been mightily humbled. Internet piracy spread like a deadly virus, severely undermining CD sales and threatening the industry’s main source of income. Labels found new recording technology useful, but so did the general public, who seized the opportunity to set up home studios in their own living rooms and basements. However, without a means of distribution, how much business could indie artists really take away from major labels? Enter iTunes: the world’s most powerful, popular, and accessible online music store.

So how have labels reacted to all of this? One word: slowly. Their first attempt at battling internet piracy was to make examples of music pirates like college students and single mothers in court. However, labels only succeeded in making enemies of the general public over the years. Labels tried desperately to keep the focus on physical CD sales, clinging hopelessly to the glory days of the 90’s. But the new MP3 generation was just too hip for physical CD’s (so hip, actually, that vinyl records actually came back).  With decreasing sales and new musical rivals, labels had no choice but to drop artists and lay off employees. What could they do? How is it possible to battle the unstoppable force of technology? Ten years later, labels are finally coming up with the obvious answer: don’t battle it, use it.

The past few years have seen some improvements on the part of the labels. To start, they eased up on suing individuals and have focused their litigable efforts on internet service providers. Labels traded digital rights management to Apple in exchange for variable pricing on iTunes. To compensate for declining album sales, the industry invented the “360 deal,” which entitles labels to all sources of the artists’ income. This including publishing, merchandise, etc.

Labels have also embraced new musical outlets. Video games like Rock Band and Guitar Hero can feature new artists and help get exposure. Ringtone and ringbacks supplement song sales. iTunes also offers artist subscriptions; customers pay to subscribe, then get new songs and videos as the artist releases them. Streaming subscriptions are getting more popular. Zune owners can download music right to their Zune, and the music expires at the end of the month.

No matter what they do now, the fact remains that major labels have been cut down to size. Unlike indie labels, who are smaller, more in touch with the general public and able to quickly adapt to current times, major labels are always a beat behind. However, in the last few years they have found a new direction. Hopefully, the new, web-friendly generation of label executives will embrace new technology and combat piracy with innovation.