/ macklemore

Why the Record Industry is Terrified of Two Guys from Seattle

Macklemore-and-Ryan-Lewis

*I’m going to start off now by saying that I’m not some pretentious shit who thinks they understand the music industry. I am a blogger and the following is only my opinion based off of observations that I have made by following the music business. *

Record industry titans should be scared.

Record labels are powerful because of their promotional and distribution channels. In a typical deal, the label pays all of the costs for recording, music videos, design, packaging and more. They’ll give the artist an advance and recuperate their full investment before the artist sees any royalties coming in from their music. If sales from the album are poor, the label usually cuts ties and that is that. This is one of the reasons why downloading music illegally hurts the artists more than the label.

Technology, specifically the internet, has or will revolutionize every single industry on the planet. Newspapers were the first to go when Craigslist destroyed their main business model of classified advertisements. Now we are witnessing retail unfold as big box stores continue to close, niche retail rise (Mashable) and the disadvantages of online shopping removed by features like Amazon’s same day delivery. There’s stealth startups spread across the world, that are looking to fundamentally change every single consumer action you make.

The graphic from Digital Music News tracks the recording industry revenues as calculated by the RIAA from 2001 when it was a 13.7 billion dollar business to 2011 when it was practically cut in half.

IndustryDownfall10

Now every record executive is in a scramble to find the next Skrillex in order to capitalize off of the wave of electronic dance music. So far the highest profile signing and promotional push that I’ve noticed has been Zedd to Interscope. Since signing with Jimmy Ovine, we’ve seen Zedd in almost every publication imaginable and even the first electronic dance music artist to perform on Letterman (see video). Again, record labels are powerful because of their access to these channels.

The Times They Are a-Changin’ – Bob Dylan

This week Macklemore and Ryan Lewis’s ‘Thrift Shop’ knocked the Bruno Mars track ‘Locked Out of Heaven’ to take the number one position on the Billboard Top 100 chart. The Billboard Chart’s are calculated by a mix of data sets by Broadcast Data Systems, SoundScore, sales and streams. It’s based purely off of data, so there would be no way someone like Al Walser could sneak in.

Macklemore and Ryan Lewis beat out tracks by The Lumineers, Justin Timberlake and Taylor Swift. It wasn’t because of radio plays or physical copies of their 2012 album The Heist. Macklemore and Ryan Lewis represent the digital age. ‘Thrift Shop’ took the top spot because of it’s digital sales (431,000 downloads) and streams (1.6 million). Ten years ago, this was impossible.

If Steve Aoki or Diplo weren’t famous dj’s, they could probably be marketing executives wherever the hell they wanted. They’re fucking genius. Neither of them have a hit single or do anything particularly well, but their branding and marketing strategy are unstoppable. Steve Aoki has his #AokiJump, while Diplo has girls all over the world doing the #ExpressYourself, a dance move going with one of his song. Through Twitter, Instagram, Facebook, Youtube and more they’re able to build global fan bases, without the help of a label.

Social media is something claimed to be understood by many, yet how can something truly be understood when the environment changes? A few years ago we were all on Myspace, now it’s Facebook and soon it will be all mobile. Artists who engage fans through these digital channels can self-promote and generate global exposure for their music. Macklemore has over 600,000 Facebook likes.

Social media builds a relationship between fans and artists that never existed before.

To learn more about an artist you used to have to pick up a copy of SPIN or Rollingstone. Now, we can be engaged with them 24/7. These relationships can be developed over time. Artists can create their own fame through the internet.

**In business, the failure to evolve is certain for death. **

The music industry isn’t going to pull a Blockbuster or Borders Books. They’re in tune with what’s happening. They will prevent it at all costs. Yet the outside concern is that their position is weakened and they hold less value than they did. The conversation isn’t going to be about when an artist signs a record deal, but if they even need to.

Can an independent artist get the same level of promotion by distributing through online channels? Can an indie label market an artist through a music blog network, the same way a major label could get them on tv? Is TV still a medium worth pursuing or is the audience elsewhere?

It’s something that’s going to be debated on our Macbooks, talked about in the studio and argued in corporate boardrooms. We live in a time where the possibility to achieve anything is right there in front of us. With crowdsourcing, mobile and social exchanging, we can only be certain that…

Note: I’m currently forming a mastermind group for entrepreneurs. If interested please apply here.

benhebert

I make money online through websites and business consulting. Everyday I'm challenging myself to learn and do more.

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