Building a New Music Industry
by Alex Cosper

As overall music sales continue to disappoint record labels in 2008, it is time for all music fans to think about inventing a new music industry, designed for the new century. Think of where your money should go when you buy music. In an efficient world, the artist makes a good leader of a company that sells music online. In other words, the artist and the label are one in the same in the emerging internet music scene. After all, they are both selling the same product.

As we have seen with the iPod, consumers are generally moving toward programming their own sound. No longer do people need to wait to hear new music. People can sample new music online and purchase music instantly. The tools now exist to make every music fan a music programmer who can create custom playlists. What is missing are two very important components to make the whole music/internet puzzle work: compelling content and meaningful marketing.

Even though an independent artist no longer needs to rely on a record label or radio to deliver music to the masses, there still needs to be more efficient ways to promote music on the internet. Several websites promise to bring online musical communities together, and some have been successful at getting the ball rolling, as we all are witnessing a new music industry forming.

Artists who mix music with other media will likely have an edge over those who only offer music. The whole key to the success of specific songs as digital downloads in the future will involve whether or not the song ties into other elements of lifestyle and pop culture.

Songs themselves are likely to continue manifesting toward serving as marketing tools for broader campaigns. This is not to say music will become much more commercial and less artistic or that in order for a song to be successful it will need to advertise something. We may see more work for hire opportunities in which artists are contracted by businesses to create specific theme songs.

One might ask is there any chance of the record labels surviving the wave of technological and social change or will the labels just get washed out? The big four labels are represented by the Recording Industry Association of America. What the RIAA needs to do is quit picking on the little guys and turn little guys into big guys. Instead of focusing on the problem, the RIAA needs to create a solution that eliminates the problem, and the best way to do that is to let people do what they want to do with music within limits and then charge a licensing fee for the use of the music. At the same time, song downloads for listening pleasure should remain cheap.

Of course, then the argument will be a lot of people will just steal the music and use it how they want anyway. Whatever the flipside is, one way or another there needs to be a plan in which the consumer gets to hear a lot of music for free and gets to have fun with it while artists get paid well for their work.

Punishing consumers for wanting to be creative with music only seems to alienate the music business from its core. So here's what the music biz needs to do to be a big hit again: offer music licenses for $50 that allow people to do whatever they want with the song, including redistribution of the song. If people were allowed to have fun with creating their own music shows or compilations to give or sell to whoever, the bond between labels and fans would strengthen (finally). People want to use popular songs in home movies and other media, but the rules are too stiff at the moment. It's certainly not worth the hassle for the average person.

Music biz leaders need to create a more powerful industry. They are so concerned with making every penny that is owed to them and being in full control that they've hurt their own profit margins. Now the labels need to reinvent themselves in order to see any kind of profit, since a savings account that pays a 2 percent annual return is becoming a better investment than a record label.

The social revolution that is happening this decade is that regular good ol' down to earth people are becoming multi-media producers for themselves. That's why either the existing labels need to adjust their strategies to help empower consumers, or consumers need a better alternative.

By charging a $50 license fee to let people do whatever they want with the music they buy, profits will skyrocket for the labels, who will have a much lower break-even point. They won't have to sell millions of units to make a profit, they can just sell 20,000 licenses. If a song is used in a commercial or a movie the license fee should remain exactly where it is. Industries that create a backbone for other industries tend to do better in the long run than industries that are narrow and self-serving. This is just one idea that could create new revenue streams for music companies.