Key research findings

The digital economy creates opportunities for new value models of distribution and promotion for independents outside of the limited routes of the traditional music industry.  However “the more things change, the more things stay the same,” (Oyewole) as international corporations strictly control the digital marketplace, determining who can rise above the ‘noise’. Like Kusek and Leonhard’s theory that the online economy leads to the rise of the middle-class artist, so too are the middle classes, or those with a technology and marketing education, best placed to succeed when owning a computer and a broadband connection is an entry requirement.

The expectation that online music is a free commodity, and the economic and perceived cultural ‘devalution’ of music, is a worrying trend for independents: their challenge is to create experiential goods – e.g. live products, merchandise or deluxe limited editions – which offer “better than free” (Kevin Kelly) experiences as, in common with the wider music industry, ‘fame’ online does not necessarily correlate to economic success. Strong relationships between artists and audiences are critical, owning the relationship through direct contacts and databases outside corporately controlled networks.

Conclusions

This research sought to capture the experiences and perspectives of independent music entrepreneurs, identifying the effects digital technologies are having on their practices and assessing what skills and strategies they need in the new digital economy.   This research stems from my own experiences as a worker in the commercial music industry and an independent artist.

Independents are leading business model innovation

The music industry, spear-headed by the majors, is the fly in the ointment of digitisation, favouring regulation over adoption – although independents are at the forefront of innovation.  The majors and independents both now feel ill-winds as recorded media sales plummet and file-sharing technologies and ‘freemium’ models have led to a ‘devaluation’ of music products – in economic, and potentially cultural, terms.  Services like Spotify and Nokia’s ‘Comes With Music’ inch the industry closer towards Kusek and Leonhard’s ‘music free like water’ service model – although independents actively resist this cultural shift.

Growing the long tail through social media

Building personalised relationships with fans and promotion through social media favours the self-promoting entrepreneur over the introspective artist, potentially weakening music as a stand-alone art product and re-contextualising it as online media, consumed as part of wider internet, film or games culture.  Practitioners must be  hyper aware of their context – developing Amazon.com-style ‘those who bought this also bought…’ recommendations and selling their goods as part of an online ‘scene’ of like-minded practitioners to benefit from ‘The Long Tail’, recommendation and meta-data trends.

Influencing tastemakers and gatekeepers

Reaching this new army of tastemakers is no mean feat – the previous barrier was money, the future challenge is time and access to this diverse network of influencers.  The majors’ marketing budgets will shorten some, though not all, paths to cut through the ‘noise’ online.  The music industry – large and small – congregates around a limited number of platforms or ‘gatekeepers’, simplifying access routes and increasing standardisation (e.g. MySpace profile as a multi-media ‘flyer’) but potentially recreating the ‘old media’ scenario, favouring elite, corporate relationships.  The artist’s, or scene’s, own website will continue to be an important currency, with access to data – especially older formats like email databases – essential to maintain independence outside of a corporately controlled network.

Cynicism of the online economy

The predictions of evangelists for the new online economy are doubted by some practitioners.  Some believe online marketing detracts from artistic practice and creates a deafening marketplace which benefits corporate gatekeepers and established stars more than individual practitioners; others see the networked economy as an exciting opportunity for new products, relationships and business models.  As a producer myself, I experience this heady mix of excitement, uncertainty and exasperation.

Through the growth in user-generated content, the division between professional and amateur is increasingly blurred; on one hand this increases the market and opportunity, but on the other increases competition creating over-supply, demoting music’s sacred status.

Challenges for the music industry

There are many challenges for the music industry of the future.  The major label is by no means dead – quite the contrary, their historic strengths in publishing, marketing and talent development – with society’s continual need for superstars – means their survival is assured and dominance is likely.  However, there may be further consolidation with labels’ synergy with media and internet corporations, playing to their core competency of seeking and developing talent.  Corporations (both majors and media investors) will continue to be bedfellows with independents, providing the capital, marketing and distribution to maximise their opportunity in the global marketplace. The majors will focus on the ‘star system’, creating ‘hits’ and investing in tried-and-tested artists and genres with an established fan-base; independents will, through choice rather than necessity, proactively choose commercial investment to advance into new markets. Autonomy is closer to a reality for today’s entrepreneurs than the ‘myth’ of independence for previous generations.

Today’s period of creative destruction and re-invention (Schumpeter,1942)  is an exciting time for the independent music industry, likened to the creative outpour of the 1980s ‘indie’ scene, but not dominated by any specific music style.  Established artists – particularly those who found fame through major label mass marketing to establish loyal fan-bases – are able to thrive in the new economy. Those starting out are finding new ways to professionalise their practice earlier in their career, with less reliance on arbitrary connections to find fame and greater opportunities for those working outside of the global centre of London.  We are seeing the rise of a new generation of middle-class musicians, neither ‘grassroots’ artisans nor superstars.  Increasingly, the online and live music economies favour those who are marketing and IT savvy, increasing opportunities for ‘middle-class’ educated artisans and decreasing diversity in underground music scenes.

The music industry of the future will have mitigated online piracy by moving in one of two directions specific to each artist: producing more experiential goods like premium products, compelling live performances or ‘backstage’ access; or using music as a secondary product with income derived from syncs or commissions.   Regulation in some Western territories may moderate the ‘free lunch’ of file-sharing but subscription models that offer greater selection and cross-platform, multi-device delivery will help to legitimise online music consumption.  Closeness between artists and audiences will deepen in tandem with the structured pull of micro-‘scenes’ of geographic or thematic collectives, led by networks of boutique labels and ‘consumartists’ co-existing with corporately promoted superstars.

Production economies will continue to skew downwards but will not, as some predict, drop to zero. DIY will become not a stance but a necessity for survival.  Investment will be personalised, drawn from fans directly, with a greater chasm between superstars and independents.  Independents need to be in for the long haul rather than playing the instant fame game.

Lessons for the digital content industries

In 2002 David Lynch declared “TV is dead” – the internet is the video distribution method of the future. The digital content industries fear whose apple-cart will be next overturned by digital distribution, particularly with the growth in high-speed broadband when a DVD takes just minutes to download.   The music industry provide learning outcomes, business models and foundations to develop the whole digital content market. Peer-to-peer distribution technologies threaten Hollywood, yet the film industry has the benefits of playing catch-up, potentially linking with music to lobby for solutions from centralised regulation.

The digital economy offers, like the ‘celestial jukebox’ (Godstein,1994), limitless possibilities for the invention of new cultural paradigms to benefit the independent music entrepreneur.  However, choosing the right model, acquiring the increasingly diverse and digitally focused skills and competing with established and corporately financed artists for attention is potentially more difficult for independents than in previous generations. Yet with focused application, their potential for success at modest levels to support early professionalization is greater than ever before.

By studying a sample of independent music entrepreneurs, my research suggests there are many opportunities, yet many unresolved concerns and uncertainties as to their future role in the digital economy, still thought to be governed by large corporations.

Independent music online research index