Posts Tagged ‘record labels’

Step back in time: the vinyl fightback

December 16, 2009

As some of you might know, I am a pretty big music fan, and have invested a rather silly amount of money over the years in increasingly redundant CDs (1200+?).

I still buy the things, but most of the music I listen to ends up coming out of my iPod or via ITunes on my desktop (as uploaded from said CDs). The process of playing a CD through the stereo at home doesn’t induce much romantic nostalgia. Yes, the stereo sounds better than the tinny computer speakers and bud headphones, but feeding the iPod through is just as satisfying.

What really is fun is plonking a record on the turntable, listening for the opening crackle, and also scrutinising the sleeve artwork at its natural scale (i.e. 12″ square). That’s music (and music consumerism/fetishism) at its most sensory (beyond the live forum).

The drama with the vinyl format for too long has been the difficulty of getting the tunes off the vinyl and into the computer/iPod. Of late, I have begun to buy more and more releases on vinyl, and the big drawcard has been stickers like the one above. Many vinyl versions now come with a little card or sticker inserted in the packaging which allows a download of an MP3 version of the same album. Now, my life is easier, and I have the best of both worlds.

And I’m not alone in getting excited about this. Vinyl sales just passed 2m for 2009 in the US – a number not seen since the early days of CDs.

This is a wonderful example of a technology (and thus a sub-segment of an industry) bouncing back from what looked like obsolescence. Too often we assume that technology (and consumers) only progress forward.

It would also seem this is not just a retro fad. The growth has been pretty steady for the past few years. It may well be a niche market, comparable perhaps to boutique beers, original artwork or hardcover books.

I do like the ideas of the original Wired editor Kevin Kelly on why pricier tangible products might be preferred by some consumers rather than ubiquitous and close to free digital versions. He refers to generative value:

“…a quality or attribute that must be generated, grown, cultivated, nurtured. A generative thing can not be copied, cloned, faked, replicated, counterfeited, or reproduced. It is generated uniquely, in place, over time. In the digital arena, generative qualities add value to free copies, and therefore are something that can be sold.”

He goes on to propose eight different generatives. The relevant ones for vinyl records would be embodiment and perhaps also patronage (i.e. you feel you should support the artist, and perhaps technology, involved). It is hard to see how digital music can address such issues.

What are the strategic management implications? Well, it seems to be smaller record labels and certain genres (dance music, garage and indie rock) that have embraced this collision of the physical and the digital. They may build a point of differentiation with fans (and bands). Presumably also those who have persisted with pressing plants, artwork services etc are now reaping the rewards of their persistence and rare capabilities.

What other industries have/will experience(d) such technological regress?


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Revenge of the Rock Band

December 22, 2008

Much has been written over the years about bargaining power issues within the music business. Record labels have consistently been portrayed as exercising an unhealthy level of control over the livelihood of their signed artists. The rock pantheon is littered with tales of bands and songwriters ripped off by the greedy “man behind the desk with the cuban cigars” (as Tim Rogers would put it).

With the big labels’ declining control of recorded music (due to filesharing etc), emerging artists have deemed them less relevant. Artists have some scope to got it alone using myspace and direct contracting with distributors.

It looks like the emergence of the various successful video games built around playing along to your favourite tunes – i.e. Guitar Hero, Rock Band (and their various sequels) – have pushed the power balance further away from the big record labels and towards the musicians themselves.

As this article discusses, the game producers are most interested in dealing with the artists, and the record labels appear to be holding little sway inslash getting their artists’ tracks on the games. Also, it would appear that most of the bigger royalty streams here (use of image, bandname, and the publishing of what is, in effect, a cover rather than the original recording) reside outside of most artists’ contracts with their record label (i.e. it is the artists and their publishers who are getting much of the cash from this).

So, record labels can only sit around and hope that a band’s presence within the Rock Band playlist might significantly boost record sales. The labels have very little bargaining power with the games companies. As an analyst says in the article:

“There are literally probably 2 million songs out there, and fewer than a 1,000 were used in these two games combined in these last two years…If Warner wants to say we’ll take our 20 percent of the market and go away, a lot of bands are going to leave the label if they think they can get better exposure by being on these games.”

This is another instance where a whole link in the Value Chain has been disrupted by technology and shifting consumer behaviours. The record labels underestimated the impact of digital download technology on their sales. And now they look to have missed the boat on potent promotional tool which they should have had in their arsenal. Watch this space for artists taking back even more control in the future…