Remake, Remodel: The Evolution Of The Record Label

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the web offered an amazing new way of discovering, acquiring and sharing music – and,
for now, you didn’t have to pay for it.
Napster 1.0 provided an easy way of doing this. But it never managed to agree terms
with the music industry – the finger-pointing and blame game continues and probably
will forever, but it eventually shut down as an unlicensed site in July 2001. It relaunched
as a fully-licensed site in 2003 after being bought by Roxio and continues to
operate today as a subsidiary of Best Buy.
It took until 2003 for a comparatively seamless, user-friendly digital music store to
establish itself – Apple’s iTunes. Steve Jobs had done what no one else had managed –
including the major players of the music industry. He had devised a system which
combined CD-ripping, a music library and a download store with mainstream appeal –
all linked to the iPod which took MP3 players into the mainstream. Despite the obvious
concerns of iTunes’ competitors and record companies alike about its dominance in the
marketplace, its popularity with the consumer cannot be denied and, eight years on,
iTunes is the single biggest music retailer in the US, having overtaken Wal-Mart’s market
share in early 2008 according to NPD Group numbers 1 .
This digital revolution has changed the music industry fundamentally and has raised a
myriad of questions about the future of the business and about the roles of the players
within it. And most of the questions about the make-up of the industry centre on the
role, and the future, of the record company.
This report comes at an interesting time: 12 years since Napster; on the eve of the
iPod’s 10th anniversary and at a time when the ownership and independence of
both EMI and Warner Music are permanent fixtures on the business pages. Over the
forthcoming chapters we will explore the reasons for these changes and the way
they have impacted on the record company.
Traditionally the record company played a leading role through the signing and
development of artists and their music. In the pre-digital days, record companies owned
the means of manufacture as well as the routes to market. So it was essential for artists
to work with record companies if they wanted a meaningful recording career and global
opportunities.
The advent of the internet has changed all that and now we can all make music quickly
and cheaply and then make it available for anyone in the world to listen within a few
clicks of a mouse or a few taps on a mobile.
Given the removal of these once-insurmountable barriers, does this mean that the days
of the record company are numbered? Surely others are now able to fulfill their
functions at a lower cost and more successfully?
The key roles of the record company comprise investment, artist development,
marketing, promotion and sales. To fulfill these roles, they have developed crucial
relationships with artists, retailers and the media.
1 Digital Music Increases Share of Overall Music Sales Volume in the US – last accessed 02.05.11
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