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Actually I meant record labels but close enough. I have earlier visited subject briefly but now more focused way. Good stories starts from the beginning.

In music business it is important to understand what is the product and what is the distribution tool. Spotify, CD, even vinyl and radio is a distribution tool, nothing else. The actual music is the product. To create the product, you need an instrument (usually) and very often part of the story is lyrics. So composer and lyrics writer is required which can be the same person. Then someone needs to orchestrate and arrange the product. Now it is ready for production, you need a band and the studio. Then you transfer your product to the distribution media as planned. Product will be delivered to the distribution channel marketing and other commercial stuff will follow. Music labels controls the value chain starting from the studio (more of less). Nice and easy. You think. Music labels did their 1st screw up when C-cassette was introduced. They got a new distribution media which was cheaper than previous one. Did they transfer the price advantage to the value chain, nope to their own pocket. Unluckily for them, the content of their transmission media was easy to copy and the price of new media pushed towards it. In my opinion, the biggest crook in music piracy is the industry itself. And they repeated the same mistake with CD. A double suicide. Currently their focus is in the TV-shows like X-factor, Talent country x etc. Will those shows save day? No way Jose. The fact is that the winner will disappear from the business and someone else will be the big one. Why? Winner goes under heavy control of the record label and the result will show their skills.

Music business is currently moving towards ecosystem based approach. Technology doesn’t limit anymore, everything between the composer and consumer is available for everyone. For what you need record labels? Marketing they say. I say bollocks. Internet solves all of the basic issues like distribution and marketing.

The only floating thing is the money. How the workman (IPR owner) receive a reasonable fee from his/hers work. Spotify’s type of approach stinks from the artist point of view but currently it is almost the only meaningful player in the new economy. This is causing problems to the artists. No/not enough money. Currently ecosystem based music industry is shouting for new solutions how the money flows to the correct pockets. This is a typical internet problem, it is easy to make a nice service available for everyone but how to make money from it. The amount of money going around the music business forces solution to come out, one day.
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