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 much] 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.
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.
