Some years ago the performers and artists had to go through the record companies to be able to make a living on their singing. The artists were on one side of the producing chain and the audience or the market was on the other side. The record companies handled everything in between. They had the expensive equipment needed to record music. Furthermore, the record companies were the key to a network with people organizing concerts and other events. Lastly, the record companies worked as marketers, they had the resources to make their artists famous.
Today, the costs of producing music are much lower. This implies that musicians can produce their own music. They are not any longer dependent on the record companies in this part of the chain. With the Internet the possibility to build a fan base without the record companies has also increased. If you already have a fan base, it becomes easier to plan a tour. Looking at it from this perspective it seems as if the record companies has played out their roles. There is no need for these in-between hands.
On the other hand, even if the single musician has got new tools for marketing his/her music it does not necessary mean that he/she can do it. It is possible to take care of the whole chain from the artist to the market, but then you have to know a lot more than how to take a CMaj7#5. Since many artists rather would like to be artists than administrators I believe that there is room for a middleman. Therefore I think that the record companies will have a future, but in another form. The word “record company” might not be used as often as “music company” in the future. The music companies will take care of the marketing and the business side of the chain.
So far everything seems to be fine. The industry might change but not that much since the artists would like someone to do the job in-between them and the market. But the new technologies has also resulted in illegal downloading, no one wants to pay anything for the music. Even if you as a customer want to pay and use legal services the illegal services are sometimes easier and have better quality. How should anyone in the music industry earn money now? Sites like iTunes are getting better and the legal alternatives are on their way, but the question is still relevant. How can composers and artists earn money without getting any revenues from the music itself?
I think that the answer is live music and earning money through the artist as a brand. The record companies will have to buy parts of the artists brand and earn money from merchandise etc. The record companies that we have today will have to be a lot smaller and focus on the marketing and administrative parts. I think that a record company (or music company as it might be called more often) will be very similar to an event company today; there must be a closer link to the live performance where the money is.
If the illegal downloading will succeed, and there will be no way that customers will buy music, some actors still has to pay for it. Radio, TV and other companies that use music will still pay the musicians and the composers. Another way to earn money that has been discussed lately, and to some extent practiced is “streaming”. If you pay a monthly fee you will be able to listen as an example all music from one specific artist.
With all the music available on the Internet today, it is difficult to find what music you want to listen to when searching for new music. I believe that it will be possible to earn money by helping customers to choose the right songs based on other songs they like. Not long ago, iTunes came up with “Genius”, an application that will help you to choose similar songs to one playlist in your iTunes library. At the same time you will also get links to iTunes shop with similar songs that you don’t have. This might also make it easier for customers to choose the legal alternative, since the music is well packaged and you will get other services than just the mp3-song.