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A Rotten Apple!

How musicians are about to regain control of the music industry.

The iPod generation is as ecstatic about the digital music file and iTunes as previous generations were about the audio cassette and transistor radio. Once again the industry was caught napping and Apple’s rapid domination of the new music market place has shown how quickly a company with initiative and vision can transform the business. The future is looking bleak for the industry as it finds itself at the centre of this new retail paradigm where profits from recorded music sales are being reduced as efficiently as Dolby C reduced tape hiss from cassettes, But for those supplying the musical content, the current Apple deal is rotten to the core.

Apple’s interest in music is not philanthropic but entirely driven by the need to sell hardware and with sales of over 42 million iPods their efficiency is unquestionable. As such the current bleating emanating from the recorded music industry over content pricing is falling largely on deaf ears which should come as no surprise. By the time record companies were ready to move into this exciting new arena the ground rules had been set and Apple’s deal was offered on a take it or leave it basis. In Apple’s model free content (though obviously unachievable) would have been the dream scenario. As it is, iTunes current pricing structure earns the credit card processors more revenue from every download transaction than the writer of the content being purchased and nearly twice as much as an artist signed to an average record company deal.

Apple’s dominance in the download sector has forced record companies into a zero sum game where increasing the download price is not an option. Consumers are only now coming to terms with paying for downloads having been initiated in the early days by sites such as Napster and Kazaa to free, albeit illegal downloading. This, compounded by the industry’s inability to develop an effective unilateral digital rights management policy ensures that any increase in price now would lead inexorably to an increase in illegal file sharing. Though this has set alarm bells ringing there is actually a far more serious issue facing record companies.

The arrival of Gnarls Barkley at No1 this week purely on download sales is an unequivocal indication that artists no longer require physical manufacture and distribution to achieve success and arrive in the spotlight. With these attributes taken out of the equation, the only specialised service record companies have left to offer artists is marketing and with an 85% failure rate, (source Becker and Zeigler) artists would be well advised to consider whether today, the signing away of ownership and rights in their music to record companies through long term agreements is either warranted, necessary or to their long term benefit. Today record companies are only looking to sign artists who have created a “buzz” i.e. those artists already displaying a better understanding of marketing than the record companies themselves and an increasing number of artists are managing to achieve this through a combination of live gigs and harnessing the viral potential of the internet to develop large communities at zero cost. Radio and television are supposed to be driven by popular demand, not pluggers and promotion departments. A No 1 Chart position guarantees exposure and all the tools are there now for an artist to achieve that through their own initiatives. A new and exciting democratic music industry has arrived.

Artists are now in a position to regain control. Affordable recording and instrument technology enable artists to create high quality product without record company sponsorship and the Internet provides a distribution channel that totally bypasses any product manufacturing costs. Gnarls Barkley, Arctic Monkeys and Nizlopi have all reached No 1 in the UK Charts proving that large communities can be established through the internet and then mobilised. Considerable media coverage has been allocated recently to Sandi Thom, who’s been web casting to over 100,000 fans from her bedroom in Tooting. That’s more people than would fill the new Wembley Stadium. So the big question the Industry should be asking itself at present is not how much iTunes should be charging for their music, but what exactly is it today that record companies offer an artist in return for more than 80% of their rights.

The new digital musician in the new digital ecology no longer needs to pass control of their music to the established Record Companies. The example of the new recorded music industry is already evident. eBay provides sellers with the tools to connect to buyers securely and safely without controlling the auction….. Today, artists are looking for an internet service that empowers them to do the same. They want to distribute and market their music on their terms, including price and in the process maintain control of the relationship between themselves and their fans and manage it to develop their community and ultimately their own success. provides artists with these tools and they love it. They receive 100% of the price they set as revenue, whilst retaining 100% control of their web presence and 100% ownership of their songs. As part of an ever expanding music centric community they can create a strong and robust fan base, promoting their band, publicising their next gig, and swapping fans with other artists ….All from one website, providing the control they need, the way they want it, when they want it.

150 years ago musicians controlled their careers and maximised their performances and revenue. Then record companies, distributors and retailers took control. Today the internet has democratised the traditional retail paradigm. The artist is back in control and the deals being offered from both Apple and the established industry are rotten. The tools are now there for artists to create their own success and their only concern now should be to hit the right note musically and commercially.

Greg Walsh
The Ark Group