Can the music industry learn to think “small-picture”?

Remember the music industry? Remember right around the introduction of CD’s when the thing was flying high, raking in money hand over fist with no end in sight? You know, the music industry BEFORE the internet….. yeah.

Well now that industry is openly struggling and still doesn’t seem to fully get the paradigm shift that’s happening under their feet. They’re like a family who built a house on the San Andreas fault and in spite of a chasm having opened up in their living room over the past 15 years, they’re choosing to ignore it and just cover it up with their trusty coffee table. Sure, when guests ask about it, they use the appropriate rhetoric so as not to seem ignorant, but if you looked into their windows on a day-to-day basis, you might get the impression they’re in denial.

If I were a true historian I might be able to trace this back further, but for simplicity’s sake, it’s easy to trace this issue back to the year 2000, Napster, Metallica and the internet file sharing revolution. Even at the time, the mainstream media was commenting that the music industry needed to change. It was even harpooned in one of my favourite all-time episodes of South Park, which features a quote that speaks to the climate at the time.

Man must learn to think of these horrible outcomes before he acts selfishly or else… I fear… recording artists will be forever doomed to a life of only semi-luxury.

And now here we are, five years later and the music industry is still trying to figure out how to keep its stranglehold on mass audiences in a time when the mass audience (see: Network vs. Cable TV vs. YouTube) is dying a slow death.

The encouraging news is that the internet, while potentially causing this paradigm shift, is also a strong candidate to be a solution. MySpace and music projects like Pandora and Project Opus have introduced entirely new ways to discover, share and consume music. While these new models and ideas have sprung forth and enabled indie bands to find an international audience like never before, mainstream acts are slowly beginning to abandon their slow-footed labels and striking out on their own to engage their fan bases. A recent example of this was Radiohead pre-releasing their latest album, Rainbows for a public-museum-style pay-what-you can basis. Now the downloadable album was provided at a lower quality than what you’d find in a music store and was taken down and made available at the traditional quality in through traditional channels, but in spite of this criticism, it was a step in the right direction. Commenting on this bold move by a major artist, Bob Lefsetz of the music industry blog and newsletter, The Lefsetz Letter puts it well when he says:

This is the industry’s worst nightmare. Superstar band, THE superstar band, forging ahead by its own wits. Proving that others can too. And they will.

And they have.

Following on the heels of Radiohead’s experiment with Rainbows, the always newsworthy Trent Reznor almost immediately began criticizing their pioneering efforts and took it upon himself (along with band mates at Nine Inch Nails) to again up the ante. NIN’s apparently profitable strategy is offering up their music for free but truly capitalizing on their hardcore fans by offering rare and exclusive upgrades to make their mint. This is coinciding with Live Nation and the consistently indomitable Michael Cole are literally buying up the rights to produce and package music, concerts and merchandise from leading international acts like Madonna and U2.

So clearly there is another model here and there are people who are starting to get it. The continuing problem for the traditional industry is that the people pioneering this new paradigm are doing so by focusing in on channels which allow them to speak directly to an artist’s most rabid fans. They’re capitalizing on that (profitable) niche, rather than resting on the traditional crutches of mass appeal through radio play and album stores. There’s a reason why Live Nation is investing this money in full channel control of artists. There’s a reason why iTunes is eclipsing Walmart as the top music retailer in the US. There’s a reason why more than one major act is looking away from their label to distribute their newest album.

The music industry’s problem is they’re too busy trying to use the coffee table to hide the chasm opening up in the living room floor to get out of the house and try to do something different.