The Elephants and the Fleas

Though not overly stated, it seems to me that the underlying driver behind this issue (and many others on the agenda) is the need to democratise the way music is produced, distributed, promoted, sold and taught. I chaired the session on the changes in the music industry two years ago, in China, and it struck me again today who quickly the picture is changing. Only two years ago, the notion of a business model based upon subscription was seen by some as futurist pie-in-the-sky. But since then we’ve had Spotify, and a host of subscription services appearing. What was clear, listening to the experts, is that no-one really knows where the industry’s structure, and sustainable business models will end up. When the dust settles, however, the inexorable rise in digital sales (60% of all music sold is now downloaded in South Korea) will inevitably lead to an increasing number of routes from artist to audience. It seems obvious that the small independent organisations are the Fleas in this scenario – the ‘majors’ (Sony, Universal BMG and the like) are the Elephants, and they’re facing a very difficult future. The Fleas are nimble and clearly leading the way on innovation, while the Elephants lumber on, futilely trying to control a market which has long since got away. The Fleas are often driven by a sense of fairness in a business which has traditional been characterised as distinctly unfair.

Manfred Lippe used to cajole the Elephant, as Managing Director of Warner Music in Germany and Austria. He came out of retirement to be a partner in Rebeat.com. In his talk, he described Rebeat as a one-stop shop service for the unsigned artist or band. By downloading their software – and signing a one-year, per track agreement – Rebeat will get the artist’s songs into over 300 online outlets, including iTunes, Napster and AOL, and handle the remuneration which the artists receive, taking 15% for themselves, with the remaining 85% going to the artist. It’s not that long ago that major artists like Paul McCartney were hailed for signing with companies on double figure royalty percentages. My own band, in the dark ages of the 1970’s received 8%! What’s amazing is that the software reduces the whole process of getting your music to market, which used to require a phalanx of lawyers and Artist and Repertoire staff, to filling out a few forms, and hitting the enter button.

Rebeat seems to offer a DIY solution to bands that don’t want the hassle of setting up their direct sales websites with a convenient, and above all, equitable, solution.  They’re growing fast too, with 100,000 tracks on their site. Of course, the majors would say that just getting your stuff out there is not going to create revenue; that their job is about promoting your music to the right audience.

But with so many artists benefiting from social media marketing, and the more direct link with potential audiences it implies, that function too is becoming redundant for the many bands and artists who may not want to be the next Coldplay, but just want a fair and decent reward for their work.

During one of the breaks I spoke with an Australian indie, who believed that the majors have been quietly buying up equity in on-line distribution services (like Spotify, apparently, and for a pittance). They know that they’re not going to be able to survive much longer by selling the product (there’s only so much downsizing you can do) but by owning the ‘pipes’down which it’s sent.

They do say that Elephants are the only animals that can forsee their own death.