The Record Business Is Volatile

This is Celia Hirschman with On the Beat for KCRW.

Predicting the future is often a fool's game, especially in the record industry. The business is a complex environment, with many micro-climates – each one affecting the next. One significant shift of a large retailer, a talent agency or technology company can alter the overall infrastructure. With all the changes in the last decade, this is one industry craving stability. But that is definitely not in the cards.

Someone who really understands the insanity of it all is industry insider Peter Malkin. Mr. Malkin made a YouTube video outlining his vision of the new record business. I've linked to it my On the Beat page on KCRW. The video is Mr. Malkin explaining how a young artist might get ahead in today's music world. He literally name checks over 130 different digital companies in less than five minutes, outlining their basic interests. It's rapid machine-gun fire Record Business 101.

Most musicians believe they need to use the tools of the digital landscape. After all, most sites cost nothing and everyone is welcome. But as Malkin subtly points out, a musician can't possibly keep up with this digital explosion. There are just too many sites to constantly update. If this video weren't so funny, it would be tragic.

And though the digital music business is at an all time high, Ted Cohen, head of the influential think-tank Tag Strategic, has announced he'll be ending his career in 14 months. Ted tied his resignation to the belief that 2011 will be year that access will eclipse ownership as the dominant revenue stream. That means that while digital downloads continue to generate revenue, the majority of income for recorded music will come from services offering access. Services like Pandora, Rhapsody, Napster and the long awaited Spotify.

But as the digital revolution takes hold, some artists are feeling the pinch. UK band Squeeze found that the label that holds their catalog, Universal Music, was not releasing their lesser known albums, either digitally or physically. Rather than forcing their fans to resort to illegal downloads, the duo decided to re-record these lesser-known albums again. Side note to bands – check your contract carefully before trying this. Re-recording is not permitted in most major label contracts. In Squeeze's case, the original contract didn't consider a re-recording clause. The new recordings will be serviced by the band to television and film, in hopes of landing income generating synch licensing.

I can also announce that there will be one less peer-to-peer at the dinner table. LimeWire received a court injunction yesterday to stop distributing and supporting their peer-to-peer file-sharing service. After reportedly servicing hundreds of millions of downloads, the tap on this grey market service is over.

This is Celia Hirschman with On the Beat for KCRW.