Is the Music Industry dominated by capitalist giants whose sole interest is making maximum profit?

Is the Music Industry dominated by capitalist giants whose sole interest is making maximum profit?

There is a number of reasons for choosing this topic, it is something that is highly influential for the shape and future of the music industry and it has only been over the last couple of years that artists most notable being Radiohead, have fought back against the monster record labels domination. There is a specific section I will be looking at in particular, the ways in which Indie Record labels compared to the big four, Universal, Sony, Warner and EMI handle their artists and their different attitudes and ambitions towards music. I am also really interested in investigating this topic, as I am unsure of the way my research will unfold and what answers I am able to find. The reason I have chose to compare the way Indie Record Labels look after their artists, as I imagine they are more interested in making good music, rather than making maximum profit and getting to the top of charts, as these are often not realistic goals. This topic compliments recent uproar in the media around sites like pirate bay and limewire making their artists tracks free and easily accessible through file sharing, which is dramatically lowering their profits from the days of CD sales. In many respects it is entering in a desperate time for record labels, both indie and major, with illegal download becoming an even bigger machine; major labels in particular are going to be exhausting all their options to gain the maximum possible profit from all their artists.

Are the big record labels more interested in sales rather than the music itself?
Including Case Study: Radiohead

The first point I am going to investigate around this subject is the actions of Radiohead in 2007 releasing their album “Colour in Rainbows” for digital download for whatever people wanted to pay for it (including a 45p credit card handling charge), which set the road in stone for other acts to follow in their footsteps taking a stand to the dominance of the major record labels. Radiohead are in a very able position to take this stand, where many other bands will not be able to follow as Radiohead have a massive financial backing of their own built up over a number of years, and already have a huge amount of publicity being one of the world’s biggest bands.

It has come to light in recent year that the majors are taking advantage of artists on their labels, especially those young up and coming artists who are seen as wonderful chances to gain a resounding profit margin. Many artists are being exploited but in some respects, upcoming artists have no real choice in the matter as it is the only way their going to get themselves known in the public eye. The big four don’t take risks, so to protect themselves from financial lose, the production costs are left for the artist to deal with, also it gets worse, artists can only begin to see a return from their hard work after profit has been made by the record which can be reduced further if the record label make any expenditure on promotion or marketing. The final shocking fact is that an artist can only see about 5% of any profit made by the record, so the label takes an astonishing 95% after minimal expenditure input. With this information you can see why the steps taken by Radiohead were so influential and important for the future of music.

The Group broke with their previous employers Capitol record label under the stream of EMI, which means they will not have to share any profits with a record label or shops. Radiohead success and impact went further than just releasing their album off their own back, this was not intended to be the main source of income for the group. Later on that year in December, they released the ultimate fan, limited edition box set which retailed at around £40; this was a huge success and sold around 100,000 copies, which results to £4 million pounds take away production costs, still a healthy profit. Another point which highlights Radiohead overwhelming independent success is that In Rainbows made more money in sales before its official release date on 31st December, than there previous album ‘Hail to the thief’ (2003). Warner Chappell (publishing company) who oversaw the work being done by Radiohead stated “It was a financial success”. Even the fans who paid little to nothing for the album and were not interested in the box set, they were still a key part of Radiohead’s new business model as they were now the target audience for future marketing operations because to make the free download they had to sign up with there contact details to the Radiohead online shop. A surprising success was making the album available for free download, maximised profits, by creating a wider audience for their live tours.

Prince who is one of the most famous solo artists of recent years also followed in Radiohead’s footsteps, with a bold move that kicked up quite a storm in the music industry. Prince in 2007 shocked the UK music industry by releasing his album “Planet Earth” away free with the Mail on Sunday before its due release date of 24th July. This courageous move saw the withdrawal of the UK branch of Sony BMG from the distribution agreement, although this was not such a bad thing as Prince still made millions from his album. The uproar stretched even further with many record stores across the UK threatening to remove his back catalogue, also being accused of “devaluing music“, yet he called it “direct marketing”. To put the situation into perspective Prince was estimated to make £300,000 with the album deal with Daily Mail, which is more than a advance he would have made through a record label based on current sales figures, also the idea was to not make the profit off the album itself, it was used more for promotional use of his up and coming UK tour which in fact sold out all 21 venues. The tour was estimated to have made a gross of £15 million, which isn’t including merchandise sales.

To conclude this section of my investigation many artists are beginning to use different platforms to promote, distribute and market their music and many, like Radiohead and in some respects Prince are using their own independent business models to promote their music. These new models are not too dissimilar from those of U2 teaming up with Apple to promote their single Vertigo in 2004 or Paul McCartney releasing his latest album through coffee shop chain Starbucks. One of the most notable messages coming out of my investigation thus far, is that if Major record labels are reluctant to allow for the growth and change of the music industry instead of channelling their sole interest through commercial profit driven pop, they are going to make themselves more susceptible to new competition in a variety of forms which will eventually result in their overall downfall.





Indie (independent) Vs Major; Friend or Bully?
There are a huge menagerie of differences between these two groups, but there is one topic in particular that I am very interested in that makes one of these groups stand out and shine above the other, their attitudes towards music. Indie Record Labels are often small independent business ventures which help and support up and coming and less mainstream bands/artists create their own individual music. My description of an Indie record label would be: Unconventional, new music, vulnerable, lover of music, rebellious and exciting.
Here are some other points of view when I asked a random sample of people for their opinions:
1. Individual, unprofessional, alternative music and cheap gigs.
2. Small, Independent, different, creative and niche.
3. Experimental, more risk-taking, young groups, less funding.
Independent record labels are known for treating the artist a lot of fairly, often choosing to befriend them, more than seeing them as a product they are trying to sell. A participant of from my questionnaire described Indie labels as risk taking and in many respects this is true as they often have nothing to lose, they also share risks with their artists and also share the rewards. There is a case study very close to home I can use; once students from the heart of Norwich, Jack Foster and Archie Lamb created the own record label Takeover Entertainment now a branch of Universal Island records. They started off as an independent record label with the minor financial backing of Norman Lamb Liberal Democrat MP and other elderly relatives; they were a tight knit bunch with a lot of the family involved in the operation. The artist these young entrepreneurs were managing was none other than the now famous Tinchy Stryder. At one point it looked like these two 6th form drop-outs were going to pack it all in, because they were running out money, although their fortunes took a turn for the better when Stryder’s May 2008 hit Stryderman caught the attention of one of the majors (Universal). Stryder’s first opinion of Archie and Jack: “Just the two of them, with nothing behind them, it felt like we were just doing it all together. It didn't feel like I was dealing with some big record label." This is a perfect example of how the music industry works, and shows the difference in attitudes and actions taken by the indie and major labels. All the descriptions collected from participants in my questionnaire come together and describe the early “Takeover Entertainment”, but since they have moved over to a Universal branch, the main difference you can see is the success, two number 1 singles and a handful of top 10 hits. Archie and Jack got a very good deal and were extremely fortunate to stay part of the management team of Tinchy under the new label and also still own the rights to the merchandise chain selling tens of thousands of “star in the hood” clothing every month. To conclude this case study looking at Takeover Entertainment shows the differences of how Independent and Major record labels differ in the actions they take and their ambitions and attitudes towards music itself.