An Open Letter to Independent Artists and Record Labels

In the last decade, we've all watched in awe as the digital world has transformed nearly every facet of our lives, often in unanticipated ways. We take the portability and omnipresence of information for granted in so many ways that its difficult to remember a time when we had to wait days for someone to receive our stamped letter. People just a few years younger than me (I'm 32) have already grown up in a world so radically changed from the world that existed when I was a teen that the great divide between generations that keeps every old one from understanding every new one has gotten shorter. We don't have to wait to have children that we can't understand; our younger siblings are just as likely to to think about the world in ways that seem foreign to us as we did to our parents.

Though the digital revolution has touched everything from cars and clocks to health care, the development of language, and the very basic pillars of our economy, perhaps the area where the change is most visible is in the world of music. Digital technology quickly brought music production to the unwashed masses so that anyone with a computer could record a song, and the internet was right behind that wave, offering each artist a worldwide distribution network for everything he ever created (no matter how good or bad.) For those of us who grew up on Vinyl, Cassettes, and CDs, we probably all remember the thrill of the first time we downloaded an MP3 of a song we just couldn't find any other way. It might have been a new artist we'd never heard of before, or a long out-of-print record by our favorite band, or a demo track from someone screaming out into the vast digital wilderness just begging to be heard. We all have that experience and we may have had different feelings about how that experience would shape the music industry in the years ahead, but I think we all realized that MP3s represented a turning point.

Of course, with that thrill came the realization that something wasn't quite right. One MP3 quickly led to another and eventually we all stumbled upon something that an artist or label wasn't intending to offer to us for free: but there it was anyway. Debating the ethical decisions we were confronted with at that point will result in little useful dialog. We've turned the corner now and there's no looking back. We live in a world where the primary format for music distrbution will soon be non-physical. For those of us who have worked for a significant portion of our lives to make music and see it released on a plastic disc, suddenly our whole approach is being called into question.

We have to look at the reality of this new world and find in it the opportunities that it brings that outweigh the limitations. For a boutique or small indie record label, the Compact Disc is appealing because the media is cheap and until very recently, it was the clear format of choice with nearly all consumers. A small label can invest relatively little in a short run of 300 - 2000 CDs and have a product that looks and feels as professional, presentable, and sellable as anything from a major. These products can be primed for retail with barcodes and shrinkwrap, and they can be everything that their mass-produced counterparts are with one major exception: availability.

The boutique or micro-indie label that is pressing no more than 2000 copies of any single release has to deal with the gross inequity of retail distribution, and often no amount of quality, art direction, or passion for good music can make any difference there. Look at the major retailers of Compact Discs in the United States, and it quickly becomes obvious why small labels don't have a share in the game. Best Buy operates over 1,100 retail stores in the United States, Canada and China; Circuit City has 650 locations; the dreaded Wal-Mart runs more than 6,700 locations; even a small competitor that focuses on counter-cultural product like Hot Topic has 690 retail stores. It's important to understand that these chains deal with distributors of goods on a large scale--they want products that they can merchandize and sell in all of their locations, or at least in entire regions, and small labels clearly aren't even up to the task of creating the volume of product to meet demand if that demand was even created. A label that releases 500 copies of a disc has no chance at all of working with these retailers because stores don't order individually from their distributors.

A network of smaller, independently owned and minded stores exists in the US, but even that network works with a particular set of distributors and with some major label product. All of this leads to a near-hopeless retail situation for small labels. Even in the best of cases, a small label that can get CDs into some of these stores in a limited number of markets still fails to have any real market penetration or recognition. The lack of a national or international retail presence reglegates these small releases to specialty sections in the few stores that will carry their records, or to boutique and often closed-ended retail locations that have no reach outside of an established niche customer base.

Indie bands have long known that touring and selling merchandise is far more lucrative than selling CDs in stores, and yet our historical model for the whole industry has been one where a band released a CD, the CD showed up in the store, the song was played in a club or on the radio, and we then went to a show when the band came to town and bought a ticket and a t-shirt. If the first part of that process (retail) presents an often insurmountable obstacle, how do we expect the remaining steps to work at all? Radio promotion without retail support leads to potential customers who cannot find the record when they go out shopping--these are often customers who are permanently lost because their retail experience offers them myriad alternatives. Touring without radio/club support and press leads to bands showing up in towns where no one has the faintest idea of who they are or why paying $7 to see them would be worthwhile. Online promotion has changed some of this dynamic, but even artists who are able to build a following through Myspace pages and online word-of-mouth have to work within the traditional Retail-Promotion-Performance-Merchandise model if they expect their music to reach potential consumers. Having a popular viral video or Myspace page can augment your success within that traditional model, but it won't replace any of those key components.

Just when the elements of promoting and selling a record (the sole reason that record labels exist,) appear to consipre against the indie record label, the answer begins to emerge from the haze. The move to a non-physical method of distribution is not without its challenges for a small label, but it offers a great chance to remove some of the obstacles that the historical model of record-selling presents. Since small labels have in many cases been reluctant to move towards this solution, let's look at a few of the common reasons that folks site about why dowloads as a release method aren't viable.

Lack of Perceived Quality
The thing that kept me from jumping feet first into the MP3 game was this nagging suspicion that the great ease with which an MP3 could be created, uploaded, traded, and copied meant that MP3 tracks would be less valuable than tracks found on physical media. To a certain extent, this fear is founded as anyone who lived through the era of self-promotion should be well-aware. There's a near infinite supply of MP3 tracks available to potential consumers, and as Barry Schwartz explains in his book The Paradox of Choice: Why More is Less, this creates a new kind of problem where having too many choices leads to people who can't make decisions. At the very least, it leads people towards new systems for weeding out the tracks that are worth investigating from those that are not. Anytime there's an artificial filter like that put on the wide world of choices, its necessarily going to funnel people to similar decisions, but that may not always be a bad thing. There is a long enough tail that the funnelling effect can still help people to make decisions when faced with the prospect of downloading terabytes of MP3s to find the handful of tracks that will be appealing.

But in the last few years with the rise of the iPod, we've seen this concern diminish. We're learning that people are gravitating towards these filters, and that they are surprisingly capable of doing their own filtering and at finding things that they like in the digital domain. The fact that a track is available only as an MP3 no longer has quite the stigma it once did, and in fact in a few more years (if it even takes that long,) most new consumers won't even consider the physical media as anything other than a memento or relic. Any cursory look around will tell the observer that the CD is no longer the center of the music universe. Portable CD players are becoming increasingly rare in public, and most new CD players are now fitted with a feature to play discs of MP3s to help keep the technology from being completely wiped out by progress. The MP3 is quickly becoming the defacto standard for music, so we shouldn't worry that releasing music for download will kill off interest. Small labels should just apply the same standards they would to physical CD production to MP3 releases so that the MP3 does not become an easy way to release substandard records.

Lack of Fidelity
Someone is getting red in the face trying to convince a friend or colleague that vinyl is better than CD right this minute. Someone else is explaining the mechanics of human hearing and dynamic range to justify the CD medium instead. And still someone else is probably chiming in that everyone is wrong--that anyone who listens to music not in Ogg Vorbis format on pig bladder loudspeakers is a fool. To all of this, I say that to the vast majority of consumers, none of this matters. Fidelity and sound quality are not the things that drive purchasing decisions. If they were, all of us who love music would have $6,000 CD players that don't have any more than a 2 digit LED display.

Clearly, the mass market is interested in price, portability, and preference. Price will always be the easiest driver for purchasing decisions. I don't know how many times friends have told me that they can't make it to a movie because they are broke. One of the things that continues to drive CD sales into the ground (losing sales at a rate of something like %10 a year!) is the fact that CDs require a $15 investment for a usually unknown quantity or reward. Will I like every track on the new Dixie Chicks album? Probably not, but with a CD, I will have paid for all of them regardless. While CDs remain portable, they are easily damaged and still nowhere near as portable as an MP3 player that can be no bigger than a single 6-sided die or a couple of credit cards stuck together. People want to take their music with them, and there are now entire industries popping up to support that desire from companies making an endless supply of iPod accessories, to companies that incorporate MP3 players into jackets, stuffed animals, phones, and watches. Yet in the face of all of this, there are still people making and distributing music who have not tapped into that shift in the market. The sad irony is that the company that makes MP3 playing sunglasses will make more money from me than the companies who release the MP3s that I fill those glasses up with in many cases!

Artists and labels must recognize that the average consumer is willing to sacrifice fidelity for portability and price. It's still noble to create truly great sounding records and to make those somehow available to the consumers who demand them, but such an endeavor should not come at the expense of reaching the majority of consumers who would rather have a digital file that they can play on their egg timer.

Loss of Control
It can't be argued that labels and artists won't lose control when their work enters the digital domain: they certainly will. No DRM scheme will survive the hackers and no work of any value will survive the thieves, cheapskates, and lazy enthusiasts who would rather not pay for things that they enjoy. By offering tracks for download, a label or artist may have to grant that they are losing some degree of control over how the work is distributed or used, but let's look at the alternative.

Any CD can be ripped, encoded, tagged, and uploaded to the web in less time than it takes to actually play the disc from start to finish. While it may amaze many of us that people are motivated to do this (and to turn CDs into downloads so quickly,) we all have to understand that this does and will continue to happen. Labels with deep pockets have begun to experiment with value-added components for CDs that can't be easily replicated or distributed online: interactive CD features, bonus artwork, subscriptions and the like. This kind of approach might help to keep a disc from losing some of its sales to MP3, but such features are usually only appealing to invested fans who want to collect those additional artifacts. For the casual listener who is not yet sold on the idea of buying an album he hasn't yet heard, the inclusion of a DVD with live footage of the same songs is not likely to be a great selling point.

Even vinyl-only releases aren't immune to the terror of being ripped and traded, since many DJs now prefer to spin from a laptop rather than a crate of records. The bottom line here is that whether we like it or not, we can't stop the work from being publically traded by refusing to play game with legitimate download services.

Who Will Know What This Is?
Much like the inital concern about quality and choice, the concern that consumers will be funnelled away from indie product towards more common sellers is a legitimate one. However, understanding the online habits of people who purchase music downloads can shed some light on how MP3s might work for indie labels and artists.

The digital store is fast replacing its physical counterpart. With myriad services like music blogs,, review websites and so on, potential customers can have a direct link to a purchase option for songs that they like immediately. The days of reading about a band in a magazine then clipping out that article and taking it to the store are all but over. While we can be fairly sure that small, niche artists are not going to go toe-to-toe with U2 and Jay-Z for download supremacy just because tracks are available on iTunes, we can be absolutely sure that they won't make a sale at all if the songs are not even available. The cost of submitting an album to pay download services is dropping and submitting to multiple services is getting easier. The default question from people I talk to about my own music has shifted since 2002 from "where can I find your CDs" to "do you have anything online?" I expect this to continue, and I think that the answer "yes, you can try out some tracks for $.99 a piece on [service x]" sounds better than "try a Bit Torrent, but realize you are stealing from me."

So where do we go from here?

Artists and labels have a legitimate cause for concern, but it seems clear that the world is leaving those who hesitate behind. We all need the Retail portion of the equation to work in order to make creating this music that we love any sort of viable business model. How then can we overcome some of these obstacles without completely jettisoning the work we've put in up to this point? I have a few ideas.

  1. Release More Vinyl - Vinyl sales are on the rise, and not just among the dance scene. Sure, good old fashioned wax is not available at those big retailers I rattled off before (except Hot Topic,) but it is becoming more of a presence at specialty shops. For consumers who want a physical product, vinyl has great appeal and it flies in the face of the price and portability constraints that usually drive people towards downloads. Meeting those customers demands by offering high quality vinyl releases is one way to keep the physical medium of music releases alive and to preserve that old paradigm to which we all cling.

  2. Pay Attention to Merchandise - Products that can't be downloaded and are ancillary to the music itself still have a place and can in fact be far more profitable than the music itself. While we may never stop many people from downloading tracks for free, we can offer them products that they cannot download to which they may gravitate instead. Remember that artists have always banked on concert ticket and t-shirt sales, and in the face of music that can be had for free, these other products start to look even more attractive. Of course there's no guarantee that an artist will be able to push caps, posters, and hoodies, but knowing that these kinds of objects are a serious additional revenue stream may help labels to make the right decisions about which releases to back in the first place.

  3. Be Everywhere - The limitations of traditional retail don't exist in the digital world, so why not exploit that fact? Instead of using one distributor to handle physical product sales in a region, why not use five or ten reputable download services to handle sales worldwide? Sure, this will require some additional legwork from the label, but in the end, the more available the work is from places that people already frequent (and there are lots of sales numbers to tell us which places those are,) the more likely an artist is to sell units.

  4. Go Granular - With the physical medium, a label is limited to a fixed number of products that it can physically manufacture. This limitation doesn't exist in the digital world, and the increased granularity allows for all kinds of new revenue streams. While a label or artist will likely lose out on some money when a consumer purchases only one track instead of an entire album, those sales can be augmented more easily online. Using the granularity of track-at-a-time vs. album-at-a-time sales, a label should be able to offer a wider array of quality work without having to force music into formats. Does an artist have a great single without enough material you love to make an album? Release the good stuff and send her back to work on the rest! Does one song get played more frequently than others? Convert it to a ringtone and sell that too! Does someone have a handful of remixes or alternate versions lying around that are interesting to die-hard fans but don't warrant a separate CD or vinyl record alone? Release them online at the same places that sell the original tracks!

  5. Work With Artists - It's important for small artists to understand the economics of the music industry. Those artists who aren't at all interested in the money side of things should be easy to negotiate with--pay them nothing but make their music avaialable! With reduced manufacturing costs, label budgets can be diverted into promotional activities and tour support--the things that make Retail successful in the first place! Even an artist who has copies of his album in every store in the nation won't sell many if no one who goes to those stores knows what the album is. Artits and labels should work to find new ways to make releasing records profitable, and this might mean changing the way royalties and advances are handled. Be creative, and don't be afraid to give up a little in the beginning to potentially gain a lot in the long run.

There's an exciting future ahead of us. We can see it. We're already immersed in it. It's already shaping the way we make music, the way we think about commerce, and the way we interact with other fans of the things we like. We all need to learn to leverage that future to make our voices heard and to bring new music and art into the world that is worthwhile. In my mind, the independent labels and artists have been the only things worth following for the last ten or fifteen years. Let's all make sure that the business end of what supports those enterprises can be viable so that we'll all have better, more exciting and inspiring music to look forward to downloading tomorrow.