Why the Major Record Labels just might make a comeback

Last week I made the trip to San Francisco to attend the 50^th Anniversary Convention for NARM. For those of you not familiar with the National Association of Recording Merchandisers, it is a trade organization made up of members from pretty much every major record label and distributor in the business. It also includes many significant indie organizations including labels, distributors, retailers and service suppliers. My company, Rook Interactive, would fall into that last category.

During a conversation with a fellow associate member, an idea struck me, “The Majors are going to make a comeback.”

Imagine you’ve been running your business for 50 years. Suddenly this kid shows up in town and turns the whole world crazy. He openly walks into your store, pulls your entire product line off the shelf and starts giving your stuff away to every Tom, Dick and Harry that crosses his path. Instead of getting thrown in jail as any other thief would, all the kids in town flock to him like the Pied Piper and hoist him up like some sort of hero. As a result, you lose literally billions of dollars of business. Your sense of security is obliterated and you have to tell your closest friends you can no longer employ them. Nobody in town thinks you’re cool anymore.

I don’t know of anyone that could take that degree of change in stride. It’s a wonder we haven’t seen torrents of record execs leaping from windows with notes pinned to their lapels. But these guys are a resilient bunch. They’ve been doing this for a long time and have faced uncertainty before. If we look back over the past decade (yes, it’s been nearly ten years since Napster first hit the scene) I think we’ll see a familiar pattern, Kubler-Ross’ Five Stages of Grief.

It all started with Denial. When peer-to-peer file sharing made its debut, the Majors reacted as they had in any number of unusual situations in the past. The old silver-backs beat their chests, showed their teeth and gave the lawyers their marching orders. Standard procedure.

While there were some victories in this first round of posturing, it quickly became apparent that this new kid wasn’t like the old “down with the Man” soap-boxers from the past. He preached the same message of liberation but he brought something new to the battle; Empowerment. The masses listened and believed. They took up the battle cry and raced down the hill like a screaming herd of blue faced Scotsmen. In the Major camp, Denial quickly gave way to Anger.

As the threat became real, the Majors took up the defensive. They attempted to close off the borders in the form of Digital Rights Management. Lawsuits fell like scud missiles, wild and unpredictable. Not even children or the elderly were spared in the assault. Today, we can still hear this battle raging on, though the flashes of light and low rumbles of thunder now seem more distant.

Most recently we’ve seen evidence of Bargaining. Reluctantly, the Labels have agreed to concessions such as allowing online retailers to sell music DRM free. Today, companies like Amazon and iTunes recognize where the power now lies, with the people.

There are those that claim the Majors no longer have anything to offer, that they have been defeated. But if you look at the situation through Kubler-Ross’ lens, you might see something entirely different. You might see something my shrink used to call progress.

Soon the Majors will work their way through Depression and reach a plateau of Acceptance. When they get there, they’ll stop wasting their energy on the battle. They’ll adapt, as they always have, and will re-devote their talent, experience and resources to capturing the hearts and minds of the masses. This, after all, is what they’ve been so good at for the past 50 years. The difference this time is that they’ll be a little better at listening. Instead of telling us what we want to hear, they’ll ask us what we want to hear. Then they’ll deliver it in such a way that we’ll want to give them our money all over again.

While you might think I’m rooting for the old guard, my position is quite the opposite. I’m an evangelist of democracy and I cheer for the underdog. While billions of dollars have been lost to the new order, there are still many billions left to be had. My hope is to see a re-distribution of this wealth; that the artists with talent and tenacity will rise to the top and get their fair share. As my first order of business, I’m subscribing to Sun Tzu’s philosophy: “Know thy enemy.”