Wednesday, June 11, 2008

If you can't beat them, join them

In an attempt to be the EU of music, Merlin, tries to "to turn indie bands and labels into a loose, decentralized version of the major label." Recently, they are trying to prove their worth in a deal with online sites much like what major labels have. Of course there are two issues at play. The first is the continual instance of the major labels (and multimedia distributers in general) that everyone is out to get them and that they carry no fault. It amazes me how unaware the industry is about the fact that hits have fallen faster than the industry as a whole. The bottom line is that controlling the distribution channels ultimately chokes competition and ruins quality. Call me a skeptic, but I find it hard to believe the deal between MySpace and the major labels is anything but a plot to ration music on the internet. Are we headed for Radio 2.0?

The second issue is whether Merlin actually stays true to its message. As these major labels try ration music on the internet, will Merlin not be pulled by the appeal of control and power? Sure, there is a ton of revenue in The Long Tail, but it also involves a lot of work. What is the revenue generated from investment in a new band? As a band gets bigger, it's costs go up, but the rate of return is higher (and probably, more secure - when will U2 or Coldplay not sell out?). Also, you need fewer bands to make the equivalent revenue. Things are even more appealing if you can control the distribution channels. Will Merlin be able to pass this up and stay not-for-profit? Probably, but more likely, Merlin's Indie bands will jump ship if they start becoming a hit, ensuring Merlin will not eat up "too much" of the market.

So we are left with the status quo. A new distribution channel will open, independent bands will flock to it to get their message out, the record labels will sue, but eventually sign a deal which chokes competition, and repeat.

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