Of course, one part of the equation (the expense of making records) has been changing steadily as technology brought down the costs. First the four-track came along, making the bedroom recording practical, and then inexpensive audio-enabled computers and virtual-studio software have made it possible to achieve sophisticated-sounding results without setting foot in a studio. The major labels, however, still controlled the means of widespread distribution; while independent artists could reach niche audiences through indie record shops, college/community radio and (on a smaller scale) by selling homemade cassettes/CD-Rs by mail order, if you wanted to be stocked by big shops, played on commercial radio and/or MTV, or otherwise to reach people outside the bohemian fringes, you had to deal with the big labels, on their own terms. Occasionally someone brave artist would walk away from the majors and self-release their material to their fan base. These would often either disappear into obscurity or, a few years later, come back and sign a major-label deal.
But then came the internet, mp3.com, MySpace and such, and now, artists and their managers are realising that they don't need the major labels. Not just that, they're realising that others realise it as well, and acting on it. And the majors are realising this, noticing the iceberg looming ominously ahead with no time to change course. Some amongst their ranks have undoubtedly suggested using DRM technologies to retain control over the choke points of music distribution, only to be politely reminded that Apple got there before they did and played them like a cheap fiddle. The economics have turned against the recording industry and the industry is scared.
Now artists and management firms are getting together, underwriting their own costs and offering finished albums to the major labels to distribute, on the artists' terms. Some labels are circling their wagons and refusing to get involved, out of fear that other artists may follow the example and bring their crumbling edifice falling down; others are hedging their bets and investing in the new model, as if accepting its inevitability:
Jeff Kwatinetz, CEO of the Beverly Hills management company known as the Firm, made the rounds to several major record companies with a proposition earlier this year. His client, the rapper-actor Ice Cube, was preparing to record his first album in six years. Did they want to put it out? How could any record company resist?
The OG (original gangsta) just wanted a music company to distribute his record. The rapper would personally write the check for his production and marketing costs. Since he was taking all the risk, Ice Cube felt it only fair that he own the music and reap all the profit from its sale in the U.S. Kwatinetz says Universal nearly did the deal, but backed out at the last minute. "They feared Ice Cube's success would show that superstar artists with big management firms wouldn't need record labels," he says. (A Universal spokesman says the discussions never got that far.)
In the end, Kwatinetz got EMI's (Charts) Virgin label to distribute Ice Cube's "Laugh Now, Cry Later." It was a big financial gamble for the rapper, but it paid off. "Laugh Now, Cry Later" debuted at No. 4 on the Billboard 200 in June, and it has sold nearly 500,000 copies worldwide. No, those aren't Lethal Injection numbers. But Ice Cube keeps all the U.S. profits. (EMI gets distribution fees and overseas licensing rights.)