IMAGE: Frank Peters — 123RF

All change in the music industry?

An article in The Verge called “Streaming is making the music industry more unequal highlights the fundamental problem in the music industry’s value chain nowadays: the shift from vinyls and CDs to digital distribution has simply accentuated what was already an unfair business model, one that is leading to a situation where only a handful of artists, seemingly chosen at random, are able to make a living from their music.

The root of the problem is having allowed the big record companies (which now control the industry) to dictate the new distribution models. The move from CDs to digital has brought change to every aspect of the music industry — production, marketing, distribution, and even legal aspects — except for one: the profit margins of the record labels.

In the old days, at least it could be argued that these companies faced the costs of finding talent, nurturing it, producing it, distributing it, and selling it, for which they took a handsome cut. Today, they face far fewer costs, but have held on to their generous profit margins.

The record companies, thanks to the powerful lobbies they employ to tell governments what to do, have managed to hold on to the privileged position they enjoyed three decades ago, effectively ignoring the new realities that technology has wrought, and that should have brought musicians and their fans much closer.

These companies are quite happy to sell songs through streaming platforms, as long as the profit structures remain the same as in the days when they sold CDs, even if this means that the amount of money 99 percent of the musicians they supposedly represent earn a pittance in the process.

To hold on to their position, the record companies have played a number of cards: they have refused to allow streaming platforms access to their back catalogues (without access to which Spotify and the like simply makes no sense), and their control over radio and television, which is still the most important marketing tool. The record labels control the distribution channels, set the prices, and are gradually taking over the new channels, and generally continue to run things as before: little wonder that artists are afraid to go it alone.

Today, technology means that musicians are perfectly able to produce work of broadcast quality that can be distributed directly through the internet without the need to involve the record companies. But those companies have arranged things so that anybody who refuses to use their structures finds themselves out in the cold or simply bought off.

Fifteen years on from Napster, consumers have more ways than ever to access music, while it is harder than ever for the people who make that music to live off it.

The blame for this lies not with the new models such as streaming platforms, which have soon discovered the price of accessing the big four’s back catalogue, nor is it the fault of so-called piracy. No, it’s the record labels’ greed in holding onto their privileged position that is suffocating talent.

We are now in a situation whereby despite huge advances in technology, it’s the same old faces who are deciding what we can listen to. Things may have changed, but only so that the record companies can continue to make huge (and now totally undeserved) profits.

(En español, aquí)

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