The Labels, The Internet and the Artist

Internet, as a giant copy and distribution machine, may and should continue to afford artists with greater autonomy well into the future. Reports of musicians' success in using this copy-and-distribution tool continue to pour in. For example, Wall Street Journal's John Jurgensen writes about how musicians use the Internet to promote their work ("Singers Bypass Lables for Prime-Time Exposure," May 17, 2007, WSJ, B1). The report focuses on the case of singer and musician Ingrid Michaelson, "a 26-year-old Staten Island native who ... was discovered on MySpace by a management company that specializes in finding little-known acts and placing their works in soundtracks for TV shows, commercials, movies and videogames."

Many shows will only pay unsigned artists about $1,000 for the use of their music on TV, while artists on major labels might garner more than $30,000. Since she has been signed to Secret Road [Music Services, not a label], Ms. Michaelson has been paid up to $15,000 each time her music has been featured on a show or commercial, according to someone familiar with the deals. Secret Road says its cut of Ms. Michaelson's income is in keeping with industry standards of between 15% and 20%.

TV, of course, has become an increasingly powerful force for driving music sales. Apart from "American Idol" and "Saturday Night Live," possibly the most coveted TV slots for musicians are on "Grey's Anatomy," which has helped make songs like "How to Save a Life" by the Fray into top sellers on iTunes. A finale spot on "Grey's" is considered a particularly plum slot. Last year, the finale allowed Scottish band Snow Patrol to break through to a broad audience and played a role in making its featured song, "Chasing Cars," a hit.

Because Ms. Michaelson doesn't have a record-label contract, she stands to make substantially more from online sales of her music. For each 99-cent sale on iTunes, Ms. Michaelson grosses 63 cents, compared with perhaps 10 or 15 cents that typical major-label artists receives via their label. So far she has sold about 60,000 copies of her songs on iTunes and other digital stores. Ms. Michaelson is pouring most of her profits into pressing her own CDs and T-shirts, hiring a marketing company to produce promotional podcasts and setting up distribution for her CDS.

The fact that much good music today is discovered on the Internet before it ever makes it to the labels demonstrates that the labels need to reconsider their full "supply chain" and continue to review their policies and rules governing the protection and distribution of cultural content they come to license ("for a limited time").

On the same day as the report above, The Wall Street Journal also reported a significant move away from DRM which indicates the labels are recognizing the role of the Internet as a means to build networks of fans for artists through low-cost copy-and-distribution of content:

EMI Group PLC, the world's third-largest recorded-music company by sales (and the fourth-largest in the U.S. market) announced yesterday it would license its catalog to Amazon's DRM-free service. The three other major music companies haven't said publicly whether they expect to play ball with Amazon, but people close to all three companies said they don't expect to license content to Amazon in the near future. That means consumers shopping for downloads on Amazon will be able to buy tracks from EMI artists like Norah Jones and Coldplay, but are unlikely to be able to find music by most other major artists, including, for instance, each of the top-10 selling albums last week. Another complication: Apple's iTunes is moving toward offering music without copy protection, and also plans to release EMI's catalog in that format.

Much of the early use of DRM technologies has focused on limiting the power of digital copy and distribution of content.