If the sagging music industry really wanted to turn itself around, Radiohead, Lil Wayne and Paul McCartney would be doing more than just performing Sunday at the Grammy Awards in Los Angeles. They also would be dispensing business advice on innovative distribution models.
The National Academy of Recording Arts and Sciences, which represents the 20,000 industry professionals who vote on the Grammys, signed those high-profile artists to boost ratings at the nationally televised awards presentation (8 p.m. EST Feb. 8 on CBS). But the Academy should also study how these artists have continued to remain relevant and commercially successful at a time when the Grammys and the mainstream music industry are struggling.
What Grammy can learn from three music innovators
Like the major labels the awards have represented for the last half-century, the Grammys need a makeover. Ratings are down; last year’s telecast drew 17.5 million viewers, down 12 percent from the previous year, and down 42 percent from the all-time 1993 high of 30 million. The music industry isn’t doing much better; it has lost one-third of its business in CD sales since 2000. The biggest losers have been the Big Four labels: Universal Music Group, Sony BMG, EMI and Warner Music Group, which traditionally back most of the Grammy nominees.
But the music world itself has never been more vibrant. Artists, many without major-label affiliation, are pioneering new avenues for releasing their music and building an audience. Radiohead, McCartney and Lil Wayne speak to different generations of listeners, but they have all expanded their careers in recent months by working around the stodgy music industry and releasing music in a wide variety of platforms.
Radiohead’s “In Rainbows,” nominated for album of the year among several awards, was initially released on the band’s Web site at a price of the consumers’ choice. Since then, the band has solicited and received thousands of fan-generated videos and remixes of the album’s songs. McCartney ended a four-decade partnership with the major labels in 2007 and revived his career by releasing his last two albums, one under the name of the Fireman, through independent outlets, including a coffee retailer.
And Wayne paved the way for his multimillion-selling major-label release, “Tha Carter III,” also nominated for album of the year, with a series of unauthorized mix tapes distributed for free through the Internet.
In years past, independent artists had no place at the Grammys. Though the awards purported to honor “artistic excellence,” they focused primarily on big-budget releases from the handful of major labels that had dominated the business in the last half of the 20th century.
The majors’ grip on music distribution loosened as peer-to-peer file sharing exploded on the Internet at the start of the decade. Illicit downloads now outnumber paid downloads 40-1, which means that more people are listening to more music than ever, but the mainstream industry hasn’t been able to take advantage of this extraordinary marketing opportunity. Radiohead, Wayne and McCartney were among the artists quick to recognize the potential of this new distribution model, and they operate as independent entrepreneurs rather than major-label vassals.
Another innovator the industry should be getting to know better is Nine Inch Nails’ Trent Reznor, who received two relatively minor Grammy nominations but is not scheduled to perform at the awards ceremony. That’s a shame, because few artists had a more successful year. Functioning as a one-man music industry, he released five albums’ worth of new music through his Web site in myriad formats and price levels. After releasing a boxed set of instrumental music last March, he reported first-week revenue of $1.7 million. Because he didn’t have a major-label publicity and marketing machine behind him, Reznor kept most of that take for himself.
Of course, Reznor benefited from years of major-label investment in building his career, as did McCartney, Radiohead and Lil Wayne.
But now these artists, and countless others, are starting to realize that they don’t need a major label to communicate directly with their fans. In the next year, major breadwinners such as Pearl Jam, 50 Cent, Metallica and Beck will become free agents, and they will certainly ponder whether they’d be better off without a label when they release their next albums.
Though the big labels have the resources to expose music in the mainstream media, they have lost the trust of consumers by placing profit and expediency ahead of artistic accomplishment and long-term growth. Listeners no longer deem many CDs worth the $18 list price and have sought out alternative means of sampling music, including file-sharing. Instead of following the consumers’ lead, the industry has tried to stifle them by suing file-sharers.
Radiohead, Lil Wayne, McCartney and Nine Inch Nails have chosen a different path, one in which they deal more directly than ever with their fans, and it has paid off handsomely. The music industry would be wise to learn from their example.