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FROM THIS EPISODE

Innovation in the Music Business

This is Celia Hirschman with On the Beat for KCRW.

In a time when the music business is searching for revenue, it's refreshing to hear about innovative ideas taking place in the industry.

Advances in technology coupled with declining recording costs have led to many new opportunities. Artists can now record, manufacture and even distribute their own records at relatively reasonable expense. They are taking up the challenge in record numbers. What started out as a fringe business model, built by hardcore punks, heavy metal kids and rappers, has grown into a mainstream business. The 'do-it-yourself' concept has become so popular, that artists as commercially viable as Natalie Merchant and Jimmy Buffet have their own record and distribution companies. Some artists sell their music through national distributors, while others sell directly to record stores, bypassing the middleman. To put this in perspective, this is not a little online web business, but in fact, some of these highly respected artists now own multi million dollar self managed record companies.

If artists can afford to record an album, tour the country, market and distribute their own music all on their own dime, then why would they need a major label?

Major labels do still offer very important structure for some artists. Their role in helping to develop the artist s creative repertoire, securing commercial radio airplay, buying retail positioning, financing music videos and building bridges to other business connections, cannot be denyed. The fact remains that major labels provide an enormous amount of expertise in many facets of the business. But a growing number of artists have decided to do it themselves, and everybody s watching on the sidelines to see how they fair.

Another innovator, the artist, Prince, has decided to give away his new CD, Musicology, with the purchase of every concert ticket for his current tour.

Sony will release Musicology commercially on April 20, but until then, Prince has replicated the cd and given it to all his core concert going fans. Though this idea wouldn't play out well with unknown artists, it's brilliant for someone like Prince. It bypasses the traditional label, distribution and record store structures, and lets the revenue stream go directly from the consumer to the artist. Perhaps the most interesting part of the marketing plan is the invisible price tag consumers buy a ticket to a Prince concert and get a free new cd. Since consumers are used to paying top dollar for a good seat at a Prince show, hiding the cost of the cd in the ticket price is genius.

And look for the new on the spot live recording systems, coming to a stadium near you. Imagine going to a concert, and buying a CD of the performance you just saw, minutes after the show ended. What began as a service for jam bands lovers, is now growing into a major money making venture. Artists like The Dead, The Who, Peter Gabriel and Incubus are seizing this opportunity and the new revenue stream is showing very promising results.

As record companies continue to complain that profits are declining, inventive artists and entrepeneurs are finding new ways to make business all around them.

My advice is for record companies to throw out their old rule book. It s a new dawn in the business and almost anything goes.

This is Celia Hirschman with On the Beat for KCRW.

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