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“The Times They Are A-changin'”

Written on January 2, 2008 by Guillermo de Haro in Uncategorized

EMI is losing many battles and many talent. Now the rumor is coming (via Juan Rebenaque) that Depeche Mode will have new studio album at the end of 2008, but not with EMI. They are thinking about a ‘different way’
Regardles many other considerations being discussed today in the music industry, what we are seeing is a change in the power in the value chain. Many years ago barcoding shifted the power from the production to the distribution companies in the food industry, from Coca-Cola to Wall-Mart. At the beginning Coca-Cola will help atract people to the new big malls. But after some time, having more information and the final customer (the one who pays, the one that have a real need to be satisfied) inside, big distribution companies were able to turn the balance towards their side.
Today is happening something similar in the music industry. The power from the ‘distribution companies’ in the music industry is turning toward the production and the talent. New channels for distribution and lower production costs are helping this happen. Artists like Olivia Newton-John have their own production company and distribute via Internet or negotiate directly with some retailers. Madonna have moved from Warner to work with a company that promotes concerts (where is the money?). Paul McCartney abandoned EMI and signed with Hear Music, a seal created by Starbucks who have the perfect channel to sell his product. Radiohead make the
Margins are bigger, so with less sales the artist makes more money. Also they have the control of all decisions in the chain. One argument against this change is that most of those artists have already a brand that help communicate and market the product. But in 2005 Maria Schneider won the Grammy for ‘Concert in the Garden’, album distributed only via Internet. Schneider, 44 years old and a jazz player, financed her album via ArtistShare, a a music distribution service. The production cost was 87.000 dolars and she has recovered her investment. As she explains, “I am not sharing profits with distributors, music stores and music seals. It is running perfect for me”
Talent is the key today. Because “The times they are A-changin'”…Dylan Dixit!

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