Label 2.0: Forget what you used to know...

3.  Change your perspective

As we chatted about in my last post, the relationship between artist & label has become, or is certain to become, more balanced as digital music continues to grow.  Although Digital music still comprises only 10% of the U.S. national music market, it is clear that it’s expansion has made labels more - shall we say -  pliable than in years past.  The music industry is moving in what most of us would consider the right direction.

Of course in these times of change, a radical perspective can often help us see the pitfalls, and the possibilities moving forward.  To wit, I came across Techdirt’s blogs about The Economics of Free (via Andrew Dubber’s excellent 20 Things You Must Know About Music Online e-book).  Chris Anderson, the progenitor of the Long Tail theory is basing his next book on the subject and it’s certainly one that bears thinking about – and is quite the opposite of everything the music industry is currently based on. 

The short version goes something like this:  When part of a commodity’s availability approaches infinity, the standard economic treatise of “supply-and-demand” breaks down.  (MP3s are widely available everywhere)  An infinitely available product, if given away for free, grows a market’s size exponentially  (Music is more popular now than ever).  And an infinitely available product increases the value of “less infinite” or scarce products that are connected to or the same as the product.  (More people hearing MP3s means more revenue from Merchandise, Licensing revenue, Tour revenue etc.)

Taken at face value, from Label 1.0’s perspective, this translates to “we’re fucked”.  The business model of Label 1.0 is based around the control of a scarce product (CD) and the very concept of “free-to-consumer” is an extraordinarily alien one. 

As for Label 2.0, it could be said that we can already see the increase in value that The Economics of Free have brought to the “less infinite” products that artists provide. 

The New York Times had an excellent article on “Web Superstar” Jonathan Coulton.  What’s made abundantly clear from this article is access to the artist, a feeling of being part of something, or a direct connection to the artist is now what is valuable to music consumers, and he makes a remarkably comfortable living from providing it.  The music is free, but the music brings with it the desire to know, connect and interact with the creator.  Some of the artists in the article profess to be tired of the constant MySpace message replies and such, but this may be the “business” of music in the future and the ability to deal with it the determinant factor in the success or failure of a musician’s career.   For tips on how to grow a Jonathan Coulton-esque music career, I’d consult this article about documenting your every move. 

There’s a place for Label 2.0.  But what functions will Label 2.0 fulfill in the development of an artist’s career?