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Internet industry makes labels lose luster

By Stephanie DeCamp
sdecamp@mscd.edu

In the ever-merging worlds of music and technology, independent labels — not major ones — may hold the key to success.

What labels have always been responsible for — the way audiences find and acquire music, how musicians attempt to establish a career and the manner in which the business of profit is conducted — has been turned upside down in the past decade. This is largely the result of a little thing called the mp3.

Due to the Internet availability and piracy of mp3s, an estimated 1 million people have turned their backs on the CD-buying market in 2007, according to the NDP Group, which surveys retail trends in the business. Despite a sharp rise in digital sales, the overall amount of music audiences actually paid for in 2007 fell to 47 percent, as stated in a March 8 press release.

Major labels have reacted strongly to this decline in the past, with their efforts paying few dividends. Lawsuits against peer-to-peer file-sharing services such as Napster haven’t garnered concrete monetary results. The latest tactic against file sharing is the advent of “360 deals,” in which the label shares the profits of merchandising and touring in return for higher investment in artist development. But the majority of experts agree that it will be years before the results of this experiment are known. In the meantime, labels keep downsizing, and sales keep dropping.

So, what about the little guy? Small, independent labels have long prided themselves on their devotion to the ideals of art over profit. But in today’s rapid-fire age of information, a band can be at the top of the blogs today, and at the end of the backlash tomorrow.

“The Internet is worldwide word of mouth,” said Virgil Dickenson, founder of Denver-label Suburban Home Records. But he isn’t intimidated. Recently, SHR has invested in the profitable practice of vinyl releases, and the investment has so far been successful enough for Dickenson to consider cutting out CD sales altogether. “Brick and mortar sales,” as Dickenson called them, are just not profitable enough.

Kyle Wofford, of Denver-label What Are Records?, agreed. “A lot of music listeners don’t find value in music anymore,” he said. Because this is the case, his label has also looked to other areas of revenue. Investing in vinyl production and the basics of promotions, Wofford has faith that the business of finding and promoting the music he enjoys will manage to survive. “Everything will settle down in a few years,” he predicted, and until then, there’s solidarity among small labels to continue producing music.

Not everyone agrees with this optimism, however. “If you want to lose all of your money, start a label,” said Matt Fecher, co-creator of the Monolith Music Festival, which is the largest annual festival of its kind at Red Rocks Amphitheatre in Morrison. Most of the people he knows who were at labels are now going into management. As managers can handle most band promotion and revenue streams, he says, festivals are beginning to eclipse labels as the main source for both new and established bands. And promotion companies such as Live Nation have successfully played the “360 deal” to their highest advantage, Fecher noted, even locking in superstars like Madonna.

But Jeff Wiencrot, of Denver band The Rooster Brothers, is not Madonna. And he doesn’t think major labels or “360 deals” are in the artists’ best interest. “Majors pick up and drop bands pretty quickly,” he said. “And I can only assume that 360 deals are still working like that. It’s hard for me to see why, at this point in my career, I would want to pay large parts of my music income out to a company.”

So, where does one look for comfort in such an unpredictable business? Live concerts, grassroots promotion and the overall dedication of the people behind the bands appear to be the only constant in today’s industry. And because of their flexibility, the independent labels are doing as they have always done, toiling for peanuts in the name of the underdog.

“We love the music, and we love the bands,” Fecher said. “At the end of the day, that’s what it’s all about.”