The CEO of Rock Blog

The Quest of a Student/Entrepreneur to Add Value in Music and Business

Labels, Artists, and business models

Consumers took the wheel of the music industry when they decided to simply stop consuming.

Record Labels reacted like a Giant getting hit with a rock slingshot to the forehead. Since then, they started “new” business ideas that would guarantee them income while artists get less.

I am thinking that for a while Record Labels were like a franchise…their real customers were their artists. They needed to take care of their artists, regardless of how history has shown that they have done this or not.

Franchise Model

Just like McDonalds has the Franchisor-Franchisee-Lunch Eater relationship, Record Labels had the Corporation-Partnership/Individual Artist- Music Fan relationship.

Old Label Model

Imagine McDonalds started charging 10$ for everything on their dollar menu, reduced the quality of their food even further, and tried to sue eaters for eating elsewhere for free. Would McDonalds be doing as well? Lets further this visualization with the idea that a college student started a revolution where people can get McDonalds food or the food of better restaurants for free as well, and you didn’t even need to leave your house to get it. How’s the stock ticker for McDonald’s looking now?

I am visualizing an MSN Financial Show with the stock price rolling by at a very low number.

That is what has happened with music.

Now imagine McDonalds starting to raise the amount of revenue they get from individual franchisees while reducing what the franchisees get. That is like the Giant falling to the ground and getting decapitated by its own sword. Here is an article that explains the current artist label relationship further.

It is my hope for record labels that they can balance their money making efforts with an awareness for how they treat their two biggest interests (the Artist and the Consumer).


October 20, 2009 - Posted by | Music Business | , , , ,

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