Can Major Labels Survive The Indie Music Revolution?

At the heart of the music business almost since its inception, major labels have successfully weathered multiple challenges to their industry dominance. But as music once again reinvents itself, can the major labels continue cling to power?

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Guest post by Bobby Owsinski of Music 3.0

Major record labels have always been at the heart of the recorded music business, having the marketing and distribution muscle to make a marginal song or album a hit, or turn a hit into a global phenomena. That’s all changing though, as even though the majors have survived the latest assault on their industry leadership in music streaming, a new revolution in the business is coming. This one they may not survive so easily.

What The Majors Used To Offer

In the past, there were 3 factors that made a major label (Universal Music Group, Sony Music Entertainment and Warner Music Group) so attractive to an artist.

ONE – Back in the days of physical products like vinyl records, cassettes and CDs, distribution was king and the majors had the ability to get product in stores across the United States as well as everywhere else on the globe cheaper and faster than any other way. Today streaming is king and songs are instantly available at any time and anywhere, so those physical distribution attributes are no longer as vital to an artist’s success. In fact, physical product is more icing on the cake in terms of revenue these days – nice to have more of it, but the cake is still good without it.

TWO – Marketing clout was another element that the majors had to offer. Their publicity machines were able to carpet-bomb the traditional media to get the word out on any artist or release, thereby increasing the chances for success. Today traditional media has less and less of a bearing on how well an artist will do thanks to the many online avenues that can be inexpensively reached directly by the artist and management. Sure the label can reach those too, but with social being such a personal medium when done well, an artist needs to be hands-on anyway.

THREE – Radio play used to be integral to any song becoming a hit, and the majors were really good at making that happen. Both in-house promotion departments and management of independant promoters were second to none in getting airplay. If an artist craved a hit, there was no better way to go. Today with radio being almost an afterthought to streaming, it has less and less influence on what music becomes popular. The fact that many program directors actually refer to the streaming charts for input as to what to play tells you that label radio promotion is becoming less and less influential.

Artists Aren’t Buying In

So all that leads up to the biggest question that an artist with some traction has today – “Why sign with a major label?” Physical distribution doesn’t matter and can be had independently if needed, traditional media is a waste of time and money for many artists who can’t reach their intended audience that way, and radio play lags behind streaming in fan influence. So what exactly is the added value that a major label brings in exchange for a big chunk of control and revenue?

Well, for one thing, major labels are still great at taking a hit artist and boosting them to the superstar level. They have a built-in infrastructure for this that hasn’t been easily duplicated, at least until now. That said, as artist branding and niche targeting changes how they market themselves, there may soon come a time when that infrastructure is no longer required.

So aside from the attraction that an artist might have to, say, Columbia (Sony Music) because Bob Dylan had his greatest success there, or Warner Records because of Prince’s legacy there, there are fewer and fewer reasons to sign with a major. This is reflected in the fact that over 80% of indie labels showed growth last year, according to indie label association Merlin whose members account for about a third of the independent sector’s total 40% share of the music market.

While those figures might not be setting off alarm bells in major label executive suites yet, the fact that so many artists are now questioning the value of major should be. As artists get smarter about their branding, marketing, and audience targeting, they’re also questioning the conventional wisdom that a major label can do those tasks any better than they can.

While major labels have rolled nicely into the streaming era and are now thriving again, unless they come up with a new service that can’t be had elsewhere for less, they may face a cloudy future that could get here sooner than many think.