People thought it was pretty cool when I worked at one of the major record labels (EMI America) in the late 80s. And actually I can think of worse jobs to be honest; I did enjoy myself for awhile. But actually, the reason I left was owing to mass label consolidation (at the time there were five big major labels & a tier of labels that were disributed by one of the 'Big Five'). I worked for EMI America which merged with Manhattan Records in '87 -- and at that point I left to start my ten year run at Apple. A few years later, we started to see the major labels consolidate on a grander scale, starting with the merger of Universal and Polygram (aka Unigram as we referred to it), and more recently the Sony BMG merger. Now we have four major label groups -- they are: Sony BMG, Universal Music Group, Warner Music Group, and EMI. Warner and EMI have had several close brushes with uniting (with a lot of noise and fanfare in '06), and EMI has been dancing with suitors throughout much of '06. Many believe we'll see three labels in 2007.
As of this past week, EMI has consolidated its Capitol and Virgin labels in the US under the newly created Capital Music Group umbrella. The labels came together purportedly as a leaner unified entity in an attempt to eliminate redundancies and to streamline efficiencies in promoting and nurturing artists (ahem). Of course in the background of this consolidation, several top EMI execs have departed in the past couple of weeks. Given the labels as a whole are losing money in steadily declining CD sales (with a corresponding spike on the digital side, where rapid growth is projected in the coming years), it's hardly surprising that they need to trim the fat -- and reduce their overhead, especially with regard to the types of salaries label execs have been used to during the past couple of decades.
CD sales are declining as a whole, and sales are shifiting towards increasing digital profits owing to the fact that we're in a different world -- where you no longer need to purchase a whole CD; in the digital age of course it's a singles world. Today's youth like the freedom and flexibility of buying just the songs they want. Which leads to another point. You know there's trouble when the biggest act on EMI is The Beatles, who broke up nearly four decades ago. If the labels really focused on developing artists ('nurturing talent'), we might well wind up with a better cross-section of music that today's audience is looking for.
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Read More Entries by Kelli Richards.
Another potential outcome of the shift to downloads is that the market will turn from albums to singles, giving labels even less interest in artist development. There are artistic reasons for producing an album, of course, but I suspect the primary reason the format existed was because it was more profitable to distribute a package of songs when you're dealing with a physical medium.
And, of course, we now have a whole generation that thinks paying for recorded music is stupid. For those reasons, I believe labels will evolve into licensing services.