Dolby Says It's Payback Time
by Matt Welch (WIRED NEWS)

LOS ANGELES -- Thomas Dolby Robertson has a message for record company executives: The Internet is punishing them for 20 years of abusing their fans.

"The record industry increasingly over the years has desensitized us to the reason that we originally got into music in the first place," Robertson told a sparse audience at the Digital Distribution and the Music Industry '99 conference Wednesday.

"The music industry is now going to have to own up the fact that the flocking of people to the Web as a venue for music is really an expression of the fact that the Web ... is a much better venue for that activity than a large chain store in a shopping mall."

Computerized radio playlists, the packaging of music in 12-song formats that cost US$20, and a lumbering production schedule "takes away the fans' sense of loyalty and belonging and participation," said Robertson, who is the co-founder and chief of Beatnik, a music technology company.

With this new distribution alternative, and a more direct relationship with the fans, artists will be able to leverage dramatically different contracts with their labels, Robertson predicted.

Instead of the 15 percent on units sold today, songwriter/performers may one day take 70 to 80 percent of the revenue. And instead of getting paid within 12 to 18 months, artists will be paid "instantaneously, or within a few days."

"It's going to mean a shift in the balance of power," he said. "I could see myself five years from now taking bids from a half-dozen different recording companies, see what they could do for me to add value to my music sales."

Record companies should adapt by emphasizing their talent management and promotion skills, and realizing that the manufacturing and retail side "will fade, inevitably," he said.

"What they have to realize really is that this talent business that they're in is something eternally valuable."

"From what I've seen when I worked with them, major labels are so bureaucratic and political it's surprising they ever get anything done," said Dan Mackta, who runs the rock management agency Autotonic.

"R.E.M. or Phish, they don't rely on the label to get them in touch with their fans. They maintain their own databases, their own offices and staffs, and control merchandise and ancillary products," he said. "We're doing as much as we can ourselves, but I just can't afford to print up 50,000 CDs."

Jeff Price, general manager and owner of New York-based spinART records (Frank Black, Apples in Stereo) said the labels' final leveraging point is airplay.

"You can't have a hit record without dealing with one of the five major labels," Price said. "They control all the channels of distribution."

Many at the conference anxiously await the day when the first million-selling artist turns a cold shoulder to the majors entirely.

"Take R.E.M.," Price said. "Why should they sign another contract with a record label? I think what you'll see is even longer-term contracts with artists, so [labels] can make sure to get a return on investment."

Robertson has a more skeptical view of the labels' future.

"The question really is how will the record industry survive?" Robertson said. "In effect, they've had an unfair advantage over everybody else for the last few decades, and that unfair advantage is very clearly threatened and undermined by what is effectively a much more efficient way of getting music from the musician to the fan."