This blog’s first post, “The Honor System,” profiled the artist Radiohead as an innovative example of musicians bypassing big labels and putting their trust (and profits) directly in the hands of consumers Radiohead Bypasses Labels.
Warner, Sony BMG, and Universal have all heeded the advice of McGrane and are working hard to adapt and invent, using Web 2.0 to their advantage (see post entitled “Web 2.0, SoJo, and Horatio Alger”) and striking a landmark deal with MySpace Business Week: Record Labels and MySpace Cut a Deal.
Big labels have also introduced the “360 degree contract,” which is all-encompassing (merchandise, tours, etc.) as opposed to merely CD sales The Economist: A Change of Tune: 360 Degree Contracts.
What ultimately happens to big labels remains to be seen. Yet recent events evidence that several labels are trying, in open-minded and innovative ways, to adapt and ensure their survival. As of now, a Barenaked Ladies chorus is the final arbiter for the industry: “And it’ll be great, just wait–or is it too little, too late?”
1. Consider the effects of competition among big businesses as they attempt to stay relevant to the consumer (e.g. Apple/iTunes, record labels, musicians). Does this competition help or hurt the consumer?
2. Does this kind of “consumer based competition” encourage or discourage innovation? What, in turn, does this do for everyone involved (artists, labels, consumers, etc.)?
3. What would be the effects of consumer based competition (as opposed to relative price fixing) in other industries (e.g banking, credit cards, etc.)?
Focus on and trust your consumer base to drive innovation and a competitive advantage.