Brian W. Carver -- Share Alike

How the Recording Industry Will Die

The big-label recording industry, as we know it, will soon die. And the digital music delivery companies will kill them. But not because of piracy. It'll be because they will be better at the only job that is left for the recording industry to do: promotion and marketing.

Technology has made it possible for anyone to record music at home at low cost. Technology has made it possible for anyone to distribute that music world-wide on the internet for almost zero cost. But an unknown artist faces at least one critical problem: How do you get people to know you exist at all? You need marketing. You need promotion. The recording industry thinks that this will continue to be their job in a digital world. But once again they fail to see how technology will make them obsolete.

Right now the new Napster, Real Networks, iTunes, and a dozen other start-ups are trying to figure out how best to recommend new music to people based upon the music that they like. It's like Amazon.com's recommendations or Tivo's suggestions. Granted, some of those technologies are really lousy right now, but a lot of people are economically motivated to make them a lot better and soon. If Napster or iTunes makes these services better, it's money in the bank--they sell more tracks.

And while it's unclear whether the Dept. of Homeland Security will share their know-how, law enforcement agencies are ardently working on basically the same problem: How do you look at a set of relevant data points and predict something about a person? It might be looking at the music they've downloaded and predicting what other songs they will like or it could be looking at what library books they check out and predicting whether they will try to blow up federal buildings. But in both cases we are compiling databases of information and making predictions about human behavior.

And what happens when these technologies get really good? Well, for one thing we should worry some about our privacy and read the terms and agreements we click "I agree" on (and encourage our congress-critters to read the Patriot Act before voting "Aye!"), but the point here is that these advancing technologies have the potential to put the final nail in the recording industry's coffin. That unknown artist who records their own music and distributes it on the internet will also benefit from the advances in these recommendation/promotion technologies. The small group of people that do know about the artist's work inevitably have other likes that connect them to more potential fans. The best of these technologies can scale up exponentially in a friendster-like fashion. So, these potential fans get exposed to the unknown artist's music and if the music is good, they may like it. They may buy it. And the unknown artist's need for traditional promotion and marketing just decreased significantly.

Sure, any artist that goes on world-wide tours and tries to put CDs in every store on several continents is still going to have a manager and will use a lot of currently existing industry infrastructure. But their bargaining position when they come to the table with the recording industry is totally changed. In this quickly-approaching new world they will need a very limited set of promotion and marketing services that they may even contract out on a tour-by-tour or CD-release by CD-release basis. There will be few to no reasons for them to sign away all their rights to an industry that co-opts all their royalties. Technology will shift the power in these relationships to artists and when that happens, an oblivious industry will finally sputter out its last wheezing breath.

Posted by Brian at February 26, 2004 12:36 AM | TrackBack