There’s a great article in today’s New York Times Magazine:
Hip-Hop Outlaw (Industry Version)
The big music labels hired DJ Drama to make mixtapes. Then they helped the police arrest him. His crime? Making mixtapes.
Hip-hop has always thrived on mixtapes. They exist in a legal grey area, as mixtape DJs rarely acquire permission or pay royalties on the beats they sample. But at the same time, labels virtually outsource their A&R operations to mixtape shops, which generate street hype for an up-and-coming artist’s album release. According to one major label promoter, “the best D.J.’s have a better brand than the average label does.”
Indeed, despite the less-than-legal method of mixtape distribution, labels take advantage of this method of marketing and cost reduction:
Labels began aiding and abetting mixtape D.J.’s, sending them separate digital tracks of vocals and beats from songs so they could be easily remixed. They also started sending copies of an artist’s mixtape out to journalists and reviewers along with the official label release.
Basically, the mixtape economy is a little model of something vastly different than today’s music industry: content is produced at a very low price, due to the lack of licensing and royalties. CDs and electronic downloads are low-cost, and usually generate high profits. These profits don’t go to a large parent label- they go to independent music stores, and to the people who produced the album. Since there isn’t a huge distribution infrastructure to support, it generates support and exposure for local and emerging artists. And probably best of all, the low overhead allows content to be sold at a low price to the customer. Right now, even the big labels are profiting from this model, since mixtapes generate a lot of publicity for new releases.
Basically, everyone benefits in such an economy: the artists, producers, vendors, and customers. Most of all, this nurtures the music itself, and allows artists to focus on creating quality, original music without worrying about contracts, royalties, and the gigantic companies breathing down their necks.
Overall, this is yet another example of a fear-based reaction from the major labels: their antiquated method of generating profit by allowing artists to take advantage of their distribution network is dying in the face of technology, which has the capacity to completely eliminate the middleman. I’m not talking about illegal piracy; I’m talking about artists being able to sell and distribute their material at much lower cost, while gaining much more freedom than is granted under a major label contract.
In short, big music labels are slowly going the way of the dinosaur. It can be compared to how common people no longer needed to rely on their Latin-speaking priest after the Bible was translated into the vulgate, or to the availablility of free, open source alternatives to expensive proprietary software.