Music 2.0 and the Dance Music Industry

I've been thinking a lot lately about the general state of the music industry. I've been talking to music producers, djs, and music lovers just trying to see where everyone stands on the issue. Here are some of my thoughts:

There has been plenty to read lately about the decline of the recording industry. As the story goes, the decline of the major record labels (Universal Music Group, Sony Music Entertainment, Warner Music Group & EMI) began about a decade ago when they failed to capitalize on their opportunity to control digital distribution through what could have been a very strategic partnership with Napster.

Statistics (also here) from the Recording Industry Association of America (RIAA) and the International Federation of the Phonographic Industry (IFPI) have been commonly cited as evidence that the recording industry is in decline. According to the RIAA, 1999 marks the peak year of CD sales with an estimated $16.4 billion dollars in revenue having been generated that year. In March of last year, The NPD group, released a study that found teens (age 13 to 17) acquired 19% less music in 2008 than they did in 2007. Sounds like a crisis, indeed...

On the other side of the fence, are those who argue that the decline of the recording industry (not to be confused with the music industry as a whole) is the dawn of a new era of prosperity for artists where people are actually consuming more music than ever before. This is an age of direct-to-fan music marketing that allows artists to cut middle-men such as record labels, distributors and retailers out of the picture allowing for substantially larger opportunities for financial gain and control of their artistry.

The era so fervently praised by these evangelists is largely characterized by the proliferation of social media, web-based applications, tools and metrics that allow artists to connect directly with their fans within a virtual link economy where attention has become the new currency. According to Gerd Leonhard (whom I personally admire), the question has become not who will pay for content, but who will pay attention to it.

Another key characteristic of this era is the notion of Free, Feels like Free & Fremium. A lot has been said about the value of media content arguing that the actual value of a copy in today’s economy is actually zero. In Chris Anderson’s recent book, “Free – The Future of a Radical Price”, he argues just this. In a recent interview, published in the Berkleee College of Music Alumni Magazine, Gerd Leonard noted that:

In the link economy, the product is the marketing… If you want to promote yourself as a musician, you publish and make everything available [for free] on the Web so that people can pick it up and go elsewhere with it. If they like you, they do the marketing for you by telling others and sending links around. In the old days, if you were a star, MTV or the Letterman Show would recognize that by putting you on. Today, your fans recognize your value and send your links to friends, who send them to more people.

When musicians start thinking of themselves as brands, like Nike, they will see that they have more assets than just the zeroes and ones that people can download. Other assets are their creativity, the way they express what they experience, their performance, and their presentation.

As an musician and artist, I largely agree with those who argue that we are living in a new era of music prosperity. Indeed, more music really is being consumed than ever before… that’s a great thing.

So, what about the dance music industry? In a business that is largely based around the concept of exclusivity, where the top performing DJs are guaranteed immediate and usually exclusive access to the hottest new tracks, what has really changed in this new era of prosperity? I don’t think so.

Elsewhere in the music business we see massive artists such as the Dresden Dolls, Nine Inch Nails and the Beastie Boys are out there engaging with their fans, giving their customers (your everyday music lovers) free music to get them hooked and talking about them. So why aren’t dance music producers doing the same?

Surely the big producers in the game such as Sander Van Doorn, Markus Schulz, Fedde le Grande, Deadmau5 (the list goes on) want their customers (in this case, primarily DJs) to have access to their product. And yet, exclusivity is often maintained for significant periods of time (in many cases up to a year) where music is unavailable to everyone but for the select few superstar DJs.

Now, granted the formula being used by many of the top dance music labels is working as it exists today. But piracy is just a big of an issue in the dance music industry as it is elsewhere, which means that the value of a copy is just as insignificant as the rest of the music business. Furthermore, there are lots of cases where tracks that are supposed to remain exclusive for promotional purposes are leaked, thus significantly damaging the existing method of record promotion within the business.

So why aren’t more dance music artists looking for less traditional methods of getting their music in the hands of their fans? Why do I receive so many “promotional” e-mails from artists and labels that contain only a link to a download store with a 1:45 long clip of their tracks? This is the wrong way of going about things, and if the dance music industry as a whole doesn’t smarten up, they will be plagued by the same issues that have wrecked the recoding industry majors.

I’ll be using this site as an opportunity to discuss these issues going forward and would like to engage with as many people as possible. What do you think about the state of the dance music industry in relation to the paradigm-shift we’ve seen in the music industry as a whole? How can dance music artists walk the line between promoting to fans vs. DJs? Share your thoughts below!