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Kyle Murdock’s MySpace-fueled rise to major label status was the stuff  of dreams.
Murdock’s group, Panacea, made over 10,000 fast fans  including rap luminaries like
Mos Def.   Within months, Panacea signed with legendary hip-hop label
Rawkus Records and  released an album called Ink Is My Drink.
Hip Hop Connection, described by Public Enemy’s Chuck D as “the best magazine in the world”, named Ink Is My Drink album of the year in 2007.

Today, Kyle Murdock is no longer with Rawkus.  But Panacea and Murdock’s other two projects have fans, funding and enduring credibility- everything Rawkus promised them but couldn’t deliver.  So what happened?  How could they do what an established, prestigious major label couldn’t?

Zed’s Dead, Baby.  And So Is Your Label.

The cold hard truth is that major labels, at least as we know them, are dead- and they’re not coming back.  The core pillars of their business model have crumbled in a massive, irreversible way.

• Production:
• Historically, record labels were necessary for artists to create a properly recorded album.  The label would give the artist an advance, the artist would record in the label’s studio and the label would own the rights to distribute the album, giving the artist a cut.  Today’s technology has done away with this paradigm almost entirely.  Artists like Panacea, Imogen Heap, Toro Y Moi and others use software like Pro Tools and Native Sounds to create expansive and full sound that, 20 years ago, was only achievable in high-end studios for big money.
• Distribution:
• Distribution is not glamorous, but it’s where the action is.  Most people in America have not heard Katy Perry’s hits.  This would have been impossible twenty- five years ago, with limited artists and limited places to hear them.  I know every lick of Lisa Lisa and Cult Jam’s “Head To Toe” and Limahl Kajagoogoo’s “Never Ending Story” not because I liked them, but because I had to endure them to get to Human League’s “Fascination” and The Motels “Only The Lonely”.   This was FM radio and there was no other option.  Distribution is king.  It doesn’t matter how good your album is if no one ever hears it.  The major labels were in charge of getting music made and heard.  That monopoly on distribution is gone.  That’s why they’re in trouble, not P2P theft.  The reason major labels survived to the extent they have, other than their trove of copyrights, is their control of distribution on terrestrial radio and television.  You cannot get a record played on a major station or in a major retail outlet unless you were on a major label.  They could get records in stores and the artist could get paid.   But the Internet killed the major label distribution stranglehold.  Anyone can sign up with Tunecore and get their music on iTunes.  The music may not sell, but it’s what this represents that’s important.  Access and the ability to get paid.  The power has shifted.
• Development and Management
  • Acts ranging from Queen to Aerosmith didn’t start out the way you think of them today.   Just go back and listen to their first albums.  Labels used to focus on finding diamonds in the rough and developing them into polished, valuable objects.  Artists would work closely with their management teams, developing their niche, position and sound.  The label would manage tours, merchandising and overall brand development, gradually building the artist into a unique entity with a long career.  This takes time and patience and labels today have neither.  They need the quick hit- the single that they can wring the most money out of the fastest.  Queen didn’t really develop until their fourth album, A Night At The Opera, with “Bohemian Rhapsody”.  Do you think Katy Perry would still be around if she hadn’t Kissed A Girl?  Or even Gaga for that matter if she hadn’t Just Dance-d?  Development and management at today’s labels is primarily focused on moving immediate units- not building enduring value or recurring revenue.  If all you’re focused on is today and right now, it’s hard to know what’s coming tomorrow.

And what came tomorrow was a 10 on the Richter Scale.  The ground under these labels shifted hard and fast.  They were too fat, greedy and slow to keep up.  Napster gave them their opening- imagine if Universal or Warner Bros bought Napster back in the day and built a subscription model.  They’d be the ultimate music finder, filter and profiter.  Instead, they’re a case of pre-recession greed at its best.

So what’s next for artists, labels and the music business at large?  It comes down to two things- understanding the new technology and creating the new model.

The New Technology

The rock stars of the new generation don’t work in music, they work in technology.  Tech companies are the new punk- unafraid to ruffle the establishment.  And just like your favorite bands back in the day, tech startups are sold via word of mouth.  They don’t hire PR companies to prostrate them to the mainstream media. The mainstream media gets on the bandwagon last, when they hear about it from everybody else, when the users have turned the enterprise white-hot.   The tech business has turned the music business upside down.  There’s a ton of tech out there, but if you’re an artist, here are the ones you need to know best.

• Pro Tools
• Pro Tools began life as a program called Sound Designer made in 1984 by two computer and electrical engineering majors at UC Berkley.  In 1991 it boasted a whopping 4 tracks and sold for $6000, but by 1998 it offered such a great set of features that people started using it as a traditional studio replacement for big reel to reel tape recorders.  By 1999, it was being used as a full studio replacement for hits like Ricky Martin’s “Livin’ La Vida Loca”.  New artists should save up, purchase and learn this program.  It’s the fastest way to get work of professional quality up, out and into the world.  And it probably costs less than a full tank of gas for your tour van.
• Kickstarter
• Kickstarter is an online platform used to collect money for help with projects.  Murdock leveraged Kickstarter to fund Panacea’s fourth album, The 12 Step Program.  He also used it to fund a European tour for one of his side projects which was funded by fans in 5 days.  Murdock has run at least three successful projects on Kickstarter, each being built out in a tiered pledge model.  The first tier for $5 gets the donator a link to Murdock’s MP3s.  Higher tiers get more personalized rewards.  An artist named Julia Nunes just raised over $60k on Kickstarter for her new project.  At the $150 tier, she’ll even record personalized voicemail messages for you.  But before thinking it’s some kind of virtual goldmine, it’s important to understand what Kickstarter is and how to use it.  Kickstarter projects overall have a 43 percent success rate, and 85 percent of money that is pledged ends up being collected.   21 percent of projects never receive any pledges at all.   Projects which manage to reach 30 percent of the funding needed, have a 90 percent success rate.  If you’re using Kickstarter to start your career, you’d better have a network of followers that already believe in you.  If you’re using Kickstarter to create something that gives back to the fans who ponied up, fire away.  Everybody wants to get bigger. But that’s got nothing to do with money and everything to do with fans.
• YouTube
• Everyone always talks about the Rebecca Blacks of the world, who seemingly come out of nowhere to be “discovered” on YouTube.  Make no mistake, people watch YouTube, but it’s the equivalent of public access television.  They flip past it and if something catches their eye, they watch it once and are done.  You have as much of a chance breaking on YouTube as Wayne and Garth did on public access television in Aurora, IL.  However, it is a great place to store your video files and start pointing eyes in their direction.  Start your own YouTube channel and post videos, personal messages- even the most sublime view into your life helps.  Fans are built on connections and connections are strengthened by access and intimacy.  YouTube can help with both.
• Spotify
• The same way YouTube is public access television, Spotify is the fan’s DVR. You can find music, save it and take it anywhere with you.  You can even create and share playlists with friends on Facebook.  And what you can learn behind the scenes is incredible.  Back in the day, SoundScan said what was sold and where it was sold, allowing targeted marketing campaigns and tours. Spotify is SoundScan on steroids.  Without Spotify, labels know only when an album is sold.  If a CD is ripped for a friend or borrowed for a party, they know nothing.  Spotify gives them a record, by location, age and gender, of every single time a track is played.  Jay-Z used to think he was big in London, based on U.K. album sales; it turns out he’s big in Manchester.  Encourage people to find your stuff on Spotify- and make sure it’s easy to find.
• iTunes
• iTunes is distribution.  Apple creates and sells no music.  But look at  how powerful Apple has become.  Apple not only killed record stores with iTunes, but the CD with its iPod.  Get your stuff on iTunes ASAP and make it  easy to find.
• Facebook
• Make Facebook a central location where you can answer questions, interact with fans, post new content and more.  Be non-conventional and creative.  The Kaiser Chiefs wanted to give each of their fans their own unique album- both music and artwork.  They recorded 20 tracks and people can pick 10 of them, in any order they like, all done through a website.  The website features graphic objects to represent each song and viewer wires them up to a machine to make their album.   On the backend, an artist was hired to create oil paintings of each of those objects which people can use to piece together their artwork. It’s £7.50 to buy, but that’s not all.  Once you’ve bought your album, the band encourages you to sell it on!  And for every album you sell, Kaiser Chiefs give you a pound (or dollar).  The band and their label, Fiction, are giving people posters, banner adverts, a website and Facebook tools to help them sell these albums. If you sell 8 you make a profit.  Kaiser Chiefs just sold out two gigs exclusively on their Facebook page and are getting fans to use Facebook polls to help pick set-lists.
• Twitter
  • For artists, Twitter can be a double-edged sword.  John Mayer weighed in on this concept on a recent visit to UC Berklee.  Mayer realized that pouring creativity into smaller, less important, promotional outlets like Twitter not only distracted him from focusing on more critical endeavors like his career, it also narrowed his mental capacity for music and writing intelligent songs.  “You’re coming up with 140-character zingers, and the song is still 4 minutes long…I realized about a year ago that I couldn’t have a complete thought anymore.  I had four million twitter followers, and I was always writing on it. And I stopped using twitter as an outlet and I started using twitter as the instrument to riff on, and it started to make my mind smaller and smaller and smaller.  And I couldn’t write a song.”  Mayer deleted his twitter, stopped blogging, and created a strict regime for recording his next album.

Mayer’s issue with Twitter is a fine segue for the other side of the equation- the new model for a successful record label.

The New Label

The distractions and changes in the music business landscape are enough send an artist’s head spinning.  It’s important that the artist is left to develop his art and make sure the concept is fleshed out and evolved.  It’s not about record sales, it’s about a career for both the artist AND the label.  The labels must accept the fact that they are the artist’s teammates.  Accounting and business practices must be transparent and developed together.  The new label should provide value in the following areas.

• Concept Development and Career Building
• Finding and nurturing talent is often a thankless task.   The new label would focus on this, helping the artist on fleshing out the concept of who they are, who they want to be, what their message is and how it’s being sent.  It doesn’t have to happen now- that approach is for the old record labels, the ones with the dead model.  And strap yourself in because it may take a while.  Strong concept development is the difference between The New Radicals and Weezer.   If that means your album is only four or eight tracks, so be it. Only release that which is good and thought through.
• Brand and Content Management
• The only thing I remember from this year’s Oscars is Trent Reznor coming out to accept his award for scoring The Social Network, in a tux, clean cut and smiling ear-to-ear, looking like the smiling industry lackeys he skewered  on “Piggy”.  The new label would make sure artists push the envelope and do interesting new things like score a movie- but they’d also make sure the artist stays true to their core, their fans and what makes them special.   The new label would also coordinate personal appearances, Tweets, Facebook posts and YouTube videos, helping the artist maintain their connection with fans without falling into the same trap as John Mayer.  The new label will be the bridge between player and listener, beholden to both. This is a fine line to walk. Both must be satisfied for the game to work.
• Logistics Management
• Touring and merchandise- keys to every musical act’s success and where the lion’s share of money can be made for the artist and in this case, the label.  The new label would find a way to coordinate this in an equitable way.  Play an appropriately sized building, scale the house accordingly.  Come up with a cool and unique set, both in appearance and sound.  Perform at festivals, public places- even in your fans’ backyards.  News from anywhere can be experienced everywhere if it’s interesting or funny.  Find the right spots for your merch and make it fashionable and relevant.
• Technology
  • The new label would have a team of tech rock stars at the ready, prepared to do things like the Kaiser Chiefs website.  The key here is to use today’s popular technologies as development platforms.  Build your own iPhone/Android app for your fans- they can look at it for special content, videos, tweets, tickets, giveaways and more.  Murdock’s team created a custom USB drive for his Pianorama album.  The new label can build these types of solutions and get a piece of the profits generated.

I have not seen Kyle Murdock or Panacea live.  But I have emailed with him, bought his music, t-shirts and contributed to his Kickstarter campaign to tour Europe.  I’m a fan.

The new label is a different kind of investment.  Profits aren’t going to be like they used to because the distribution channels are controlled by someone else.  There is a hole in the market for a filter- someone who can credibly show people what to listen to- think MTV circa 1986.  Someone trusted by both artists and fans.  This is where the new label can shine.  Be true to building the careers of unique artists with a niche- the Grace Potters of the world.  Set your standards high- find the next David Bowie!  If you build their career the right way, others like them will follow.  And so will their fans.

Rick Oppedisano

Rick is the author.

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