While pursuing an online music business degree, such as the Frost School of Music’s Master of Music in Music Business and Entertainment Industries (MBEI), degree candidates will study the history of the record industry, the long-held prominence of major labels, the decline of industry revenue during the digital revolution and the correlating rise of independent record labels.
A Brief History of Music Labels
During the 20th century, a few giant corporations dominated the music industry — household names such as Sony Music Entertainment Inc., Universal Music Group, and Warner Music Group. These corporations all operated through countless subsidiary labels like Columbia, RCA, Interscope-Geffen-A&M, Capitol, Atlantic, Warner Bros. Records, Virgin Records, etc. On the other hand, independent record labels, known as “indie labels,” work exactly as described: they operate free of any major corporation, which means they do not have to answer to or appease a parent corporation and its stakeholders. It also means, however, that they lack major labels’ budgets for finding, developing, recording and promoting artists into pop-stardom. Indie labels have long been the fringe of the music industry — the rebels, driven by art and musical innovation more than the profit potential of mainstream pop music. Unfortunately, their share of record industry revenue reflects this.
Digital Music Revolution
Enter the digital age of downloading and streaming: at the turn of the century, Napster came into being, allowing users to share music for free via peer-to-peer networks. As an illegal form of piracy, this kind of file sharing had a very negative effect on record industry revenue for both major- and independent record labels. However, in a manner of speaking, it paved the way for the digital revolution.
Following the development of iTunes and other online digital distributors, the bulk of music industry revenue shifted from physical album sales to digital downloads. Listeners could download entire albums or individual singles, a phenomena that also cut deeply into record industry profits, as fans could purchase a hit without investing in the entire album. Digital streaming services like Pandora, Spotify and Apple Music exacerbated this revenue loss by paying out nominal blanket license fees to labels and artists for the entirety of their catalogs.
However, this shift in the record industry did result in an interesting change in revenue distribution. In the age of physical record sales, indie labels struggled to gain wide distribution, radio play and promotion because they lacked funds, and major labels owned most of the distribution channels. With the advent of digital downloading services, indie labels started to have access to the same universal distribution methods as major labels. Blogs became as important as traditional press for promotion. All these factors decreased the viability of the major label model in the music industry, and independent record labels grew to be a large part of the industry as a whole, reflected in both mainstream music and market share.
More Music Industry Jobs
This movement in industry focus also separated the many aspects of major labels into numerous small businesses like publishing companies, management companies, PR companies, booking agencies and a number of new indie labels. The music industry has become a giant network of small businesses forming relationships with other companies to develop their artists holistically. Record deals have also shifted in focus to reflect the new label-artist relationship.
Understanding how to work with and run indie labels has become an important part of working in the music industry. As such, it is an integral area of study for students in an MBEI or other online music business degree program. The many business opportunities created by the decentralization of the industry means many lucrative career paths for the creative, educated music professional.
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