Companies such as Warner Music Group, EMI, Sony Music Entertainment and Universal Music Group—all of which are represented by the British Phonographic Industry (BPI) and have close ties to the IFPI—were developed around content production for analogue distribution channels, which they have dominated for decades. According to the IFPI, these four music majors control around 75 percent of the global music market.

Image taken from DavidAirey.com

On the one hand, the providers have worked with this analogue broadcasting and distribution via fixed format, such as CDs, LPs, and—in the past—cassette tapes, which has been around for ages. These formats are limited, however, to how much data they can carry, and they make for expensive business models. Andersen stated, “Venture capital is required to cover risk in volatile music markets, which is one of the reasons why music majors, such as Universal and Sony, achieve control over artists and markets (radio, clubs, retail) and are able to sell cultural services to listeners at a high price.”[1]

On the other hand, there is now a large part of the global populace that grew up with Internet service providers, having made the Internet and digitization a large part of their being.

These new (new compared to the music majors) providers are not developing content or products, but rather they are selling services using the “technological and business opportunities of digitization. They include Google, Facebook, Yahoo, Ebay… and have acted as a forceful business group.”[2]

The music industry is lobbying against this movement, and while it may not be losing, blunders in their market strategies began long before the advent of the Internet.

Local musician and creator of The Alaska Commons Blog John Arrono traveled with two bands, Thought Crime and Sleep in Fame, from 2000-2005 as the bands’ lead singers. He has been on multiple tours and festivals, and has opened for acts such as Slayer, Hatebreed, Thrice, Face to Face, Machinehead and Papa Roach among others.

Aronno stated that the recording industry made a huge calculated mistake, starting back in the late ‘80s and early ‘90s. Looking to save money, the industry started to sign fewer bands, with an aim to also sign those bands to shorter contracts. In the ‘60s and ‘70s, most bands signed three or five album contracts; nowadays, thousands of bands get signed every year. It is likely that the majority of the bands will be dropped from their label before their first album makes it to the shelves.

Bow Wow Wow, where are you now? Image taken from Wall Flowers Society.

“The strategy was to depend heavily on revenue from hit singles rather than full albums and sustained careers. The brief popularity in the new media of music videos, likewise, took the focus off the music and onto the packaging. They gambled that they could cut costs while maintaining sales by concentrating their efforts on publicizing specific artists,” said Aronno. “The lack of variety, however, has vastly affected popular music. By scaling back on artists and not working to develop their talent into long and profitable careers, they have devastated their own industry.”

The recording industry views this strategy of signing and dropping artists ad nausea in a different light. In 2008, Universal launched Global Talent Services (GTS), a company that provides global services to artists’ managers. According to Universal Music Latin America and Iberian Peninsula Chairman Jesús Lopez, it aims “not to get new revenue, but rather to maximize operations, particularly for those artists who are on the brink of pan-regional development and need support in multiple companies.”[3]

[1] Andersen, Birgitte (2010). “Shackling the digital economy means less for everyone: the impact on the music industry.” Prometheus, 28: 4, 375-383.

[2] Andersen, Birgitte (2010). “Shackling the digital economy means less for everyone: the impact on the music industry.” Prometheus, 28: 4, 375-383.

[3] Cobo, L. (2008). The Face Of Change. Billboard, 120(15), 24-27. Retrieved from EBSCOhost.