The "Big Four" Major Labels

This week brought ominous news for two of the "Big Four" major labels. EMI reported massive losses for the year ending March 2009, with some reports as high as $2.4 billion. Additionally, Warner Music Group reported losses of $17 million for its last quarter alone. Warner also announced that it is considering no longer allowing its music to be streamed for free on sites such as Last.fm.

Now, I am far from an expert, but I think the major labels themselves deserve a good portion of the blame here. Obviously, illegal downloading has had a major impact on the recording industry, but I feel that the industry itself has been very slow to adapt.

First, it seems to me that the major labels have over-extended themselves, becoming almost too big for their own good. Looking through the extensive lists of artists that belong to EMI and WMG, you find a number of highly-successful, talented artists (The Beatles, Johnny Cash, etc.), but you also come across a lot of "filler" and a number of signings that could be considered questionable at best (Kevin Federline? Paris Hilton?). It's nice to be able to reissue the Beatles catalog every so often and make a quick buck, but it couldn't hurt to scale back on the quantity of signings and return the focus to quality.

Second, I feel as though the music industry needs to continue to embrace technology and the internet. iTunes has boomed over the last few years, as has free streaming on sites such as Myspace and Last.fm. Again, I'm no expert, but for Warner to consider pulling its music from such sites doesn't seem like the greatest business model. While they may believe it will force people to start buying their music again, it may also discourage people from checking out new artists that they haven't heard before. Personally, I'm not going to run out and drop $15 on a CD from some band I've never actually heard, so being able to listen to their music ahead of time, even if it is just a song or two, is helpful.

The major labels could also learn from some of the smaller, independent labels. Many of the independents have narrowed their rosters and altered the way they sell their product. It is common for indie labels to run limited presses of their records on CD or vinyl, while also offering the music as a digital download. Vinyl may not appeal to everyone, but limited presses cause the records to become collectible, and also allow for those who must have a physical copy (like me!). It would also eliminated some of the overhead that comes with producing tens of thousands of CDs.

Unfortunately, I don't have any sort of magical cure for the music industry. Maybe labels need to get a bigger hand in concerts / live music. Perhaps an even bigger push is needed toward an all-digital music industry, or some other new form of music distribution. Or maybe labels just need to restructure and refocus on signing one quality artist over 10 mediocre, flavor-of-the-week gambles.

Who knows, it's possible that the collapse of a couple of these "infallible" giants would be good for the industry in the long-run. I've never been a huge proponent of the business side of music to begin with, so I don't think it could hurt to put the industry back in the hands of the artists instead of the greedy, over-bearing corporate executives. Nevertheless, it will be interesting to see what happens over the next few years.