Hey everybody! Despite the growth of digital music streaming over the last couple of years, the music industry is still being hampered by a decrease in overall sales.
Despite this fact, major record labels are continuing to pour significant monies into signing new acts looking for the next “big thing.” In fact, about 20% of the revenue earned annually in the music industry as a whole is invested on new talent, with an equal amount spent each year on marketing. Unfortunately for the major record labels, this rampant spending has not been a recipe for success. In fact, recent statistics have shown that only about 15% of major label debut albums sell 100,000 copies or more. The albums that sell well have to make up for the albums that “flop”; and as a result, the major labels are taking a beating financially.
Because of this problem, I believe that the major labels should strongly consider returning to the traditional business model of investing in artist development to nurture enduring music industry careers as opposed to one hit or one album wonders. Think of it this way- If the major labels took the same money they are spending on so many acts looking for a quick fix and concentrated this investment on fewer acts that would be developed for the long term, not only would the quality of the music be greatly improved, but the revenues would greatly increase because the acts would continue to generate steady profits for a much longer period-say 10 to 15 years because of the polish they received from strong development at the initial stage of their careers.
I believe that if the major labels continue their current practices concerning investment in new talent, independent record labels will reap a tremendous benefit. After all, independent labels have no choice but to invest in long term artist development because they don’t have the budget to sign 20 acts a year and see what sticks after throwing the music on the wall. Time will tell if the major labels will change their ways, but a big shot to the pocketbook would certainly make me think twice if I were in their shoes. See you next time!
