Label Disintermediation: Myth or Reality

‘People’ have been saying that soon there would be no need for record labels because of ‘the Internet’ for years and years. Record labels might be falling on hard times but they’re still the essential route to market for an artist right? Well there has been a flurry of small chinks in the armour over the last couple of years:

• Marillion getting their fans to pay for albums upfront to cover recording and production costs and then mailing out the finished album themselves (literally)
• Artists like the Arctic Monkeys, Lilly Allen and Enter Shikari have used digital tactics (e.g. MySpace, forums, email lists) to reach mainstream audiences.
• Sandi Thom swapping her clapped out transit and half empty small seedy venues for live global webcasts from her cellar, ultimately resulting in a number 1 single
• Prince making his latest album available as a free newspaper cover mount in the UK spurring a series of successful UK live shows
• The Charlatans (now managed Creation-founder, industry maverick Alan McGee) making their latest single and album available free via radio station XFM
• And now Radiohead have opted (thus far at least) not to release their album with EMI but instead to distribute it themselves and, crucially, letting the fans chose how much they think it is worth (plus a small ‘admin’ fee). See Card’s post for more. The concept’s not new (AmieStreet for example have been running a store on the same principle for some time now). But it’s the first time such a high profile, established, artist have done so.

So is it the end for the labels? Of course not. There are two clear trends in the above examples:

• Up and coming artists that want to get a record deal, or who already have one and want to sell more copies of their music (Enter Shikari excepted)
• Established artists that are beyond their prime a don’t fell they are getting enough attention / priority / respect from their labels (or who can’t get a deal anymore) and will do whatever they can to try to reestablish themselves in their ‘rightful positions’ as pop music titans. Of course to get their original status they happily benefited from years of record label investment and would likely be in 9 to 5 jobs now if they hadn’t.

So the labels are still the essential cog in the machine, but two new interesting trends are emerging:

• A new space is emerging for artists that are too good for their bedrooms or garages but not good enough for a traditional record deal
• Post-Prime artists in the evening of their careers may opt for more direct routes to market rather than being treated by their labels as Post-Prime artists in the evening of their careers

Both trends indicate that labels need to consider incorporating enough flexibility into their business models to accommodate them, but it certainly doesn’t mean the labels are about to disappear. Maybe I might even need to tone down my “debunking the Internet myth of the disintermediation of record labels” quote….then again, maybe not….