The Relevancy Of Record Labels In The Digital Age

Mark Mulligan recently posted "Three Key Questions For Record Labels In the Digital Age" on his blog which goes over some points I made in my Music 3.0 Internet Music Guidebook. Here are the questions asked:

1) Are record labels relevant any more? 
Despite all the talk to the contrary, they sure are, just not in the same way as before. Once upon a time (back in the Music 1.0 through 2.5 days) a label was virtually the only way to go because there were so few legitimate alternatives. In Music 3.0, artists have more ways than ever before to do it themselves without label help, but there comes a time when you need a label's infrastructure if you wish to go to the next level popularity and sales-wise.

Take a look at every big seller on the charts today. Almost all of them are on a label, and the ones that aren't on one used a label to propel them to where they didn't need one any more.

Can the labels do a better job? Absolutely. Can an artist or band or artist do it themselves? Yes, until you hit that certain point when you need the infrastructure to really blow up. That being said, the point where you need a label is getting further and further away each day.

2) Are they innovating enough?
I think the industry as a whole stopped innovating by 1980 when it was taken over conglomerates like Vivendi, Time Inc., Thorn and Sony and the bottom line was more important than the nurturing of talent. If there's one thing that could turn the label's fortunes around, talent incubation is it. We'd get better product, artists would view them as a viable alternative because of long-term support, and we might even see some new superstars and trends arise as a result. It's probably a pipe dream to ever expect this to happen though.

3) What role should they play?
Certainly not the 360 deal where they take a piece of everything from merchandise to touring along with record sales. The record labels were only ever good at a few things - marketing, sales and distribution. Even those core competencies have diminished greatly over the years, so why would anyone ever let them assume what is essentially a management role? If anyone is ill-suited to be someone's manager, it's a record label.

But if they would concentrate on marketing, sales and distribution in the digital domain (to be fair, some are trying), they could remake themselves into a viable alternative to DIY. Until then, hello DIY.