The Record Labels’ Kitchen Sink Strategy

Hillary Clinton’s campaign isn’t the only place where everything but the kitchen sink is being thrown at the opposition.

The big four record labels are doing the same thing – and frankly, they make the Clinton campaign look like amateurs.

Because the labels don’t have enough clout to win the hearts, minds and pocketbooks of the record-buying consumer, they feel they have no choice but to play dirty.

The latest dirty trick is unfolding in Europe. Perhaps you’ve heard. If not, you won’t be surprised to learn that the major labels are looking to extend the copyright limitations in the European Union beyond the 50 year limit. That means they can control whatever minimal profits they might make for what few records are still marketable more than a half century later.

The music industry competes with terrestrial radio for the “Dead Man Walking” award. Everything these misguided record executives seem to do is the wrong thing.

Unlike the Clinton kitchen sink strategy – which worked in helping her win Texas and Ohio recently, the record labels could only wish for such results.

And while Clinton is even throwing the kitchen sink at her “opponent”, the record labels are also throwing the kitchen sink at their friends.

When you look at it in writing, it helps one understand why the record business is finished. Take a look at what the record business is throwing out there in a desperate attempt to prevail:

1. Suing customers. That would have been pretty radical if it had been done over five years ago, but the labels and their lawyers continue to find ways to hunt down college students and terrorize moms whose children may or may not be stealing music. Piracy continues to increase exponentially with no slowdown in sight. Oops.

2. Fighting for the repeal of radio’s performance tax exemption. After all these years of the labels saying what radio stations should play, the desperate majors have even turned on their friends. They make a compelling argument about the artists deserving more money for their performances. Pinch me here -- when did the record labels ever care about artists? Don’t they have a long history of screwing them? Never mind. The exemption won’t be lifted this year, but probably next so they’ll succeed at taxing another dying business, radio, the only one that can still sell their records – albeit not like in the past.

3. Resisting DRM-free legal downloads. They finally gave up the ghost on this one, but for years babbled about how removing digital rights protection from music would kill them. Well, they are no deader than before. But, some majors refuse to let iTunes (the purveyor of 70% of all legal downloads) sell DRM-free music. Just what they need, a pissing match with Apple’s Steve Jobs that they will predictably lose.

4. Forcing subscription models instead of selling music. The majors are goo-goo eyed over a system that would force consumers to pay a monthly fee for access to all the greatest hits of all time, but there is only one problem. Consumers don’t want to rent music. Don’t believe me? Check out Rhapsody. Look what happened with AOL. The marketplace resoundingly has embraced ownership of music instead of monthly rental. The Labels find themselves bucking the inevitable again.

5. Throwing 360 deals at recording artists. The labels may need to be involved in concert touring, merchandising, management and other areas where they can make money, but it’s like they suddenly hung out a shingle and declared “Now Doing 360 Deals”. One problem. They don’t have the skill sets. Ramming 360 deals down the throats of some artists asks more questions than it raises – such as, why do I need a record label?

6. Muscling an unfair music tax on Internet streaming. Internet streamers are one of the few bright spots on the horizon for record labels. So what do they do? Seek passage of a tax that has already crippled the industry. Instead of encouraging the playing of music in a non-traditional space, these labels have put a hurt on anyone trying to broadcast let alone make a living from streaming music on the Internet. Additionally, the music industry intends to keep Internet streamers unsure of what future rate hikes will be thus destabilizing this potentially important new medium.

I wish there were only six things being thrown out at friend and perceived foe alike, but there’s more. The record business goes out of its way to stifle innovation. It does whatever it can to save the status quo when the next generation has already declared change.

It refuses to develop ancillary businesses that could be a replacement for lost revenue from traditional income sources like CD sales and yes, paid downloads. I see legal music downloading with a short shelf life. Free is the new paid and as long as consumers can hack and go around the labels best attempts to stop them, the consumer now owns the delivery system for music. And they’ve set the price low: free.

Just as the voters in presidential politics will ultimately determine whether Hillary’s kitchen sink strategy works against her opponent, the young music lover will determine the fate of the record industry’s strategy.

And they’re voting with dollars.

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