Music industry insiders don’t hesitate to throw around weighty phrases like “paradigm shift” and “irrevocable change” when they discuss the current state of affairs in the American music business.
Industry representatives met Thursday to hash out the latest developments and chart the course for their business as the South by Southwest Music Conference began in Austin.
“People talk about how the record industry isn’t doing that well,” said Walter McDonough, a lawyer with Washington-based Future of Music Coalition.
Still, he said, the music business is working in an entertainment industry that has recently developed three fast growing mediums: DVDs, digital downloads and HDTV.
Digital music and its availability over the Internet has opened the door for entrepreneurs who can make the best use of online resources, panel members said.
“The whole physical aspect of the business is going to cease to exist sometime in the future, and there’s tremendous opportunity there because you can your lower your costs,” McDonough said.
Apple Computer Inc. has led among online music services with its iTunes Music Store, which enables users to download songs for 99 cents. It announced last month that it has sold more than 50 million songs through its online iTunes Music Store.
Mark Cuban, a pioneer of Internet radio who now owns the Dallas Mavericks and HDNet, a high-definition broadcast network, said the music industry has shifted from a corporate to an entrepreneurial business.
“The technologies are in place and have been in place,” he said. “It’s more your imagination and taking the time to get out there and realize what all the alternatives are.”
The Internet remains primarily a distribution channel, and today’s successful record companies still must generate consumer demand for their artists, said Jay Boberg, a founder of IRS Records and former head of MCA Records.
The music industry is in flux in this area as well, Boberg said, as commercial radio stations play a smaller variety of artists, and major retail stores, such as Best Buy and Wal-Mart Stores Inc. market compact discs from only the biggest stars.
That makes it harder for new musicians to break into the mainstream, but it also creates a world of opportunity for independent labels who have the agility to develop fresh acts for niche audiences, he said.
“You still have to create demand, and that demand has to be created on a grass roots level – it starts person to person to person,” Boberg said.
For most artists, developing that kind of popular appeal takes time, a luxury major recording labels don’t always provide.
Don VanCleave, president of the Coalition of Independent Music Stores, argued that homegrown record stores will continue to be relevant despite the proliferation of online music.
The Internet has yet to be the sole catalyst to success for a major recording artist, he said.
“All that content is out there but nobody’s telling people what to listen to, what’s next, what to buy, what to download,” he said. “You can have millions of choices, but without some kind of a filter it’s very tough to get turned onto anything new.”