The music industry is finally taking practical steps to face a humbling reality: that recorded music is no longer a self-contained business with a stranglehold on its own self-sufficient channels of distribution, but is, rather, one option among many in a cafeteria of digital media.
The social networking site MySpace.com is close to landing a deal with major labels Sony BMG and Warner Music Group to launch MySpace Music.
As reported in the New York Post, the service will offer an admixture of MP3, ringtone and video-game downloads, as well as streaming video content.
The labels will license music to the joint venture with News Corp., which owns MySpace, and will reportedly receive, in addition to licensing fees, a cut of advertising revenue generated by the site.
Universal Music Group-owned Interscope Records recently made a similar move, investing millions in the pop-culture-driven social media site Buzznet.
The increasing integration of legally sanctioned music and the Web is a sign that Big Music, which had been slow and grudging in adapting to the decline of traditional music retail, is finally reading the ones and zeroes on the wall.
Make no mistake, it is essentially a tale of surrender: By cutting a deal with Apple Computer’s iTunes Music Store in 2003, it ceded an enormous chunk of retail revenue to a nonmusic company.
Now the labels are agreeing to become minority stakeholders in various multimedia enterprises; they are, effectively, being folded into the ad-supported fabric of online media.
“They’re not looking at themselves as music labels anymore; they’re media companies,” says Felicia Palmer, president and CEO and 4Control Media, which owns and operates the hip-hop news Web site SOHH.com. “This is definitely the future of where they’re going.”
Not just the labels, either: The British music weekly New Musical Express will broadcast on April 23 its inaugural NME Awards U.S. ceremony on MySpace.
Allie Kleinman, head of development for Steve Rifkind Co., an urban lifestyle marketing and consulting firm, says that until the industry arrives at a possible endgame to its financial crisis — charging consumers an annual fee for unlimited music downloading — working with social networking sites is a reasonable stopgap solution.
The reason: Sites like MySpace are cannibalizing some of the revenue that’s bleeding from the major labels.
Songs by the rapper Akon, Mr. Kleinman points out, are streamed up to 150,000 times a day at his MySpace page — why shouldn’t the content owners see a piece of the ad revenue generated there?
“The industry just hasn’t found a basic solution to the digital revolution,” he says. “The deal with MySpace and social networking platforms — those services paying the labels makes a whole lot of sense.”
That the labels’ forthcoming deal with MySpace is rational doesn’t mean it’s not also extraordinary, in this sense: In the not-too-distant past, the prospect of Sony and Warner executives occupying the same room, let alone forging partnerships, was fantastical.
What’s worse, says Ms. Palmer, the labels have been forced into collaborating with an external rival as opposed to a platform of their own design, mirroring the iTunes capitulation.
“This is about survival,” she says.
Providing content to MySpace, with its 15 million daily unique logins, may work in labels’ favor, says R&B producer Chris Absolam.
But it is, nonetheless, an ad hoc response: “Right now, the record companies are so desperate to make money, they’re jumping into anything they can,” he says.
Mr. Absolam says the deal with MySpace reflects the casual, transactional nature of music consumption among young people that poses a long-term problem for the industry: namely, how to re-establish loyal, stable relations between artists and fans.
Young mobile-phone users willingly pay $2.99 for a popular 30-second ringtone when they could pay just 99 cents for the entire song.
That’s bad news, says Mr. Absolam, because that means consumers are being driven by multimedia trends rather than artists’ identities.
As labels spend less money on artist development and beef up their ad-sales teams and business development divisions, all in an effort to drive content into increasingly diverse media platforms, it’s hard not to see music, as an art form, being drained of exceptionality.
This is not to say that this or that band will no longer be capable of innovation.
It is to say that, perhaps, a musician will one day be considered just another member of “the media.”
“They’re not looking at themselves as music labels anymore; they’re media companies.”
— Felicia Palmer of 4Control Media
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