This is Celia Hirschman with On the Beat for KCRW.
Albert Einstein said the definition of insanity is doing the same thing over and over and expecting different results. Based on that, the record business is in serious need of an intervention. They've been ignoring the deafening warnings about their future, refusing to change.
After years of living large, a new kind of business is coming into focus. In the past, record labels competed fiercely against each other for the right to market music. Today, it's not the competing record labels that are creating problems, but the artists themselves. They're defecting from labels in droves.
When Paul McCartney made a one-off deal with the Starbucks/Hear Music label, the record industry figured it was just an errant shot by a 60 year-old rocker. They said, "Maybe the record won't be that good, and after all, how many more records does he have in him?" The record industry loves hyping records just about as they love tearing them down.
So when McCartney's album sold over half a million copies in just a few weeks, labels began to realize that nontraditional retailers could become competition to their entire record business model. Now, Joni Mitchell has joined the Starbucks brand. And why not? What were the old labels really offering artists that these superstar names couldn't organize themselves? Starbucks Coffee houses sell just as many records, without all the madness and financial infrastructure.
When Prince gave up selling CDs in the UK, opting instead to give them away, the record business was stunned. They were so sure of their own value, it never occurred to them that their artists would end their endless summer.
The reality is the record business is bracing for the great migration. Where superstars leave the loyal grounds of their business compounds, to venture into the worlds unknown, in search of better returns.
Madonna is negotiating a $150 million new deal to give away music on the next iPhone killer by Nokia. Rumors abound that Radiohead, Bjork and many others are contemplating the best options for their future. Artists of this caliber need not depend on the kindness of the record business – there's a lot more opportunity available to them than just selling a few hundred thousand CD's in record stores. And the loyalty oath that record labels foisted on artists decades past, is quickly disappearing with diminishing royalty statements.
In bars and cafes everywhere, record executives are wondering, how will we survive the great migration without the superstars.
The old business model is doomed. Without stars to finance the developing artists, and without a massive surge of catalog title sales, record companies cannot afford to pretend the record business can continue as before.
It's a New Day, with new rules, and new politics.
This is Celia Hirschman with On the Beat for KCRW.