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January 29, 2008
The Robots Control The Music
The other day Last.FM, who was just bought by CBS, announced a revenue system for artists and labels using its service. It will be very interesting to see how this plays out. Could this be the start of a new and sustainable revenue system for the music industry 2.0? It is hard to fathom in concrete terms, but Google, an unknown just a decade ago and now one of the most powerful global brands, draws a vast revenue simply from the placement of contextual ads throughout its network. From what I understand, this is the same kind of thinking that will fund artist revenue in Last.FM.
Starting later this year, four times annually, a portion of Last.FM’s ad revenue will be paid to artists, labels, or whoever owns the rights to the songs uploaded into their site, in a proportional rate to the number of times that said music was streamed through the Last.FM service. Of course the labels, artists, etc. have to opt into the service first, but all four majors are already on board. This is just off the top of my head–so don’t quote me–but I think I read somewhere in the past that the four majors account for publishing of more than 90 percent of the world’s music. Beyond that, this revenue system is open to anyone at all. That means ANY indie band can upload their tracks, videos, etc. and get paid for it proportionally to the plays it gets.
So what we have shaping up here is a system in which almost all of the available recorded music in the world is completely on demand, and at the same time, that system is completely open to any artist to freely add to that system music that is not already included–and make money from it. Thinking ahead, one can dazzle themselves in imagining a plausible future in which a totally unknown artist explodes from inside Last.FM, launching a career and earning a living sans interaction with any traditional label or PR and marketing muscle. Or maybe that’s just a fantasy.
This could be a HUGE deal for the future of music. Or perhaps it will just remain a niche. Either way, interesting times are ahead. I have been a Last.FM member for a couple years, and Tokyo Lab has a presence there as well. I’ll be eagerly watching as this thing unfolds.
Posted by shane at January 29, 2008 12:55 PM