If The Old Music Business Is Dead, What’s Next?

Paramore, Fall Out Boy and experts weigh in on what the next few years may hold.

Letting fans choose how much to pay for your album. … Leaving the label you’ve called home for your entire career to hook up with a concert-promotions giant for a $100 million-plus deal. … Recording iTunes-only one-off singles not slated for inclusion on an album. … Offering “artist subscriptions” to fans, who pay a flat annual fee for more intimate access to their favorite acts. … Serving up the millions of songs in your label’s catalog to MP3 players and cell phones for one all-you-can-listen-to price per month. …

These are just a few of the game-shifting changes the music industry toyed with in 2007 , a year when the old model of signing with a major label and releasing an album every few years finally began to look like a relic of the distant past. As artists stretched their minds to imagine new and innovative ways to get their music into the hands of fans faster, cheaper and on the fly, what some have called the death of the music business is being viewed by others as the opportunity of a lifetime.

“The meteor’s hit, the dinosaurs have all died and now it’s time for whoever’s next to take over,” said Fall Out Boy bassist/lyricist Pete Wentz of the wide open future he sees for the industry. “And I think that it’s a good time for new ideas to be out there.” Wentz is at the vanguard of the new model of music-industry success where record sales are great (if you can get them), but delivering in concert, merchandising your “brand” and branching out into fashion, vanity labels and celebrity endorsements are almost as vital as writing “Umbrella”-like hooks.

This was the year of the so-called “360 deal,” what some are calling the wave of the future in which companies like concert promoter Live Nation cut $100-million plus deals with longtime major-label superstars like Madonna in exchange for a piece of her merchandising, touring and recording monies. According to reports, one of the motivations for Live Nation to partner with Madonna is an expectation that, over the next decade, they might be able to rake in hundreds of millions of dollars in tour revenue from one of the most recognizable, and profitable, live performers on the planet. And while it was a shock that Madonna left her career label home, Warner Bros. Records, to sign with a company that has never released an album before, 360 deals were being cut across the board, even by fresh faces like Paramore, and some think they could be the thing that helps kick start a hit-starved industry.

The Future Of Music

Part 1 :The Year The Music Industry Broke: In 2007, CD sales continued their freefall and superstars began bailing from major labels. And that’s just the beginning …

Part 2 : What Makes A Star These Days? CD sales are just a small part of it. We take a look at other ways artists are getting their names out there and making money …

Part 3 : The Future: What will the music industry be like in a year? Five years? We spoke with experts — they don’t know either but have some fascinating theories …

“I don’t think we really realized how big an opportunity it is, and how big of a change it is for the music industry,” said Paramore singer Hayley Williams of her band’s deal with Fueled by Ramen, in partnership with Atlantic Records. “But it’s cool because I feel like we have a new kind of partnership with our label, and I do think that it’s going to change the music industry completely. And it’s forcing bands … [and] people working in the industry, forcing them to be more creative about how they approach marketing or promotion or picking the single.”

Williams said her band’s deal makes it feel like the staff at their label are more invested in Paramore’s future — and had the group not cut this kind of deal, the label may not have been as patient with their slow-blossoming success.

“A lot of bands on indie labels, they’re working their way up, but it’s slow,” she said. “And so they don’t get the chances we got. We spent two years playing to, like, anywhere from nine to 20 kids, and it grew gradually over those two years, and it got to where it is today because of that. But I don’t feel like a lot of bands get that leniency, that patience, to just wait around for that big single to happen.”

Labels aren’t the only ones searching for new methods. A number of artists are taking matters into their own hands, from Trent Reznor, who is currently working on his next and first non-major label album in more than a decade, and who seems likely to release it in a totally unconventional, perhaps previously untested, method.

Others, such as Beck and Dave Matthews, released one-off singles on iTunes this year as a means of keeping fresh material coming as it’s created, a trend that could become more and more ubiquitous in the future thanks to the cheap, fast ability to record studio-quality songs in home studios using laptop computers. In fact, Beck’s song “Timebomb” was even nominated for a Grammy, making it the first-ever iTunes-only release to snag that honor.

Canadian band Stars experimented with posting their recent album online for download months before it hit store shelves and, just a few albums into their career, the Kaiser Chiefs suggested this year that they might give up putting albums out entirely in favor of releasing only their best songs digitally as they record them.

Some labels are throwing out the playbook entirely, like the online-only RCRD LBL, founded by veteran blogger Pete Rojas (Gizmodo, Engadget) and launched last month. The site gives away free, unprotected downloads from the 40-50 bands it has signed, who get what’s described as a “modest” advance plus a share of the money from ad sales on the site.

“Because we don’t have any fixed ways we have to do things, we actually have a lot of flexibility in the kinds of deals we can offer to artists,” said Rojas of the roster, which includes tunes from a number of relatively obscure, underground bands, in addition to such hipster acts as Prefuse 73, Spank Rock, Chromeo and MGMT. “Some artists are getting paid a flat rate per track, others are getting a [revenue] share. We’re not doing much of this yet, but others might get paid on a per-download basis. We’re trying to avoid that for a variety of reasons. For me, the most important thing is that the artists are getting paid.”

For entrepreneurs like Rojas, giving away unprotected tracks doesn’t devalue music, it actually enhances the experience of discovery, which is a crucial part of another area in which major changes are expected in 2008 and beyond: DRM, or Digital Rights Management, the software that locks up copyrighted tracks so you can’t share or copy them.

While an overwhelming percentage of music is still sold in a format with no copy protection (i.e. CDs), major labels have continued to slowly step toward taking the chains off of digital tracks. The tide appears to be turning and 2008 is slated to bring, among other things, Nokia phones with the “Comes With Music” subscription service, which allows users to get unlimited access for one year to Universal Music’s entire artist catalog on their phone and/or PC (but not MP3 players). It’s just one part of the seeming embrace by Universal — home to 50 Cent, U2 and many other major acts — of DRM-free tracks as part of its “Total Music” service.

According to reports, Total Music will find the three most powerful major labels, Universal, Warner Music Group and Sony BMG Entertainment — which combined control almost 75 percent of the music sold in the U.S. — banding together to compete with Apple’s iTunes by offering “Comes With Music”-style services on a variety of devices, from phones to Microsoft’s Zune MP3 player and the Sony PlayStation.

Next year could also see the rise of another scheme a number of major music moguls have been touting: subscription services. Execs such as new Columbia Records boss and famed producer Rick Rubin have been singing the praises of services like Rhapsody (which has a joint venture with MTV’s parent company, Viacom), which offer the promise of the long sought-after “celestial jukebox,” a device that gives monthly subscribers access to millions of songs anywhere, at any time.

“I think ultimately a lot of these big record companies will become part of Internet conglomerates and the content owned by record companies will be part of the vast advertisement used to [drive people to Web sites],” said Steve Greenberg, founder of S-Curve Records and a lecturer at New York University in the course “The Recorded Music Industry: Past, Present and Future.” “It will be in the interest of Internet companies to build up stars because they will drive more ad revenue,” he said, noting that the fragmentation of the music business, and the Internet, into a million micro-genres has created less opportunity for multimillion-selling albums. “But there may also be a new technology down the pike where the best way to experience it is for everyone to tune in. All it would take is some killer app that was so great and engaging that everyone would tune in the same way they tuned into MTV at the beginning.”

Whether or not any of these new means of delivering music catch on, the one factor that never changes in music is the rush of seeing acts in the flesh. With no new albums to shill, you only had to look at mega-selling tours by reunited 1980s legends the Police and Van Halen to see further proof that in an age when album sales are shrinking, ticket sales hold the promise of re-energizing the business. If some prognosticators are to be believed, live performance might become the business, with DRM-free music as the carrot used to lure people to concerts. But, as the importance of delivering live music and using concerts to sell albums, T-shirts or anything else increases, major labels could find themselves in a bind after years of chasing after bands with a few hit singles in their arsenal but not much else.

“Bands like Van Halen are not a thing of the past, but we do have to look at things differently,” said No Doubt/ Nine Inch Nails manager Jim Guerinot. “Artists will have a greater opportunity to communicate directly with their fans and those who facilitate those communications will have more value.”

For many artists, the concept of direct communication with a fanbase is something very new — but for other artists, it’s business as usual. Take, for example, Fall Out Boy, who have rose to fame thanks in no small part to their very active online presence, which allowed fans the most direct line of communication possible (bassist Pete Wentz even started his own social-networking site, FriendsorEnemies.com). How do they view this brave new world the industry has (rather unwillingly) been ushered into? Surprisingly, with the same amount of excitement and confusion as long-in-the-tooth veterans.

“We’re in an interesting period now. It’s like when dinosaurs became extinct and there’s lots of weird animals running around — like giant sloths or terrorbirds or something,” Wentz laughed. “The terrorbird is like [Radiohead's] In Rainbows. It’s crazy, but you have no idea what to make of it and you know that it’s never gonna exist again.

“So looking at all that, I have no idea what’s going to be next. I mean, people are a slave to interface — that’s the reason the iPod was so big — so there could be kind of one device or one idea that’s going to revolutionize everything,” he continued. “But to do that, it’s going to have to be an industry-wide initiative, which means that it’s going to have to come from the people who have a terrible history of forcing bad decisions on consumers.

“So really, who knows?”

Often guilty, never convicted. Serving 15 years to life at MTV News.