collateral damage of no-embedding policy

In reaction to my posts on music video embedding, Greg commented:

What about the labels ability to recruit and retain artists? If the effect of preventing embeds is to reduce videos’ viral impact and hence the sales/attention driven by that impact, labels that follow this policy will find themselves less able to develop new artists and less able to stimulate new interest in catalogue artists.

And labels that are inclined to follow this ‘enforcement’ strategy are likely following it across the board rather than just in regards to music videos, i.e. they’re working harder to bust mp3 bloggers, p2p distributors, and all of the other new web-scale promotion channels.

Unless all of us who believe in the efficacy of these channels are totally crazy, in the long run, the artists on these labels should see reduced success: fewer fans, smaller sales numbers, less traction with live audiences.

In a separate but related post on common digital marketing mistakes by record labels Lucy posted on the underlying mental habit:

If we let people embed and distribute our content it will dilute our brand

No, actually, it will make your brand more pervasive and more relevant.

I know of several large corporations who do web 2.0 completely half-assed. They want to be down, so they create, for example, video content and destination sites, but they are so afraid of losing control over their content and brands that they do not allow embedding of their content. In other words they want to work exponentially harder just to get people to go to their site and “interact with their brand”, when they could have thousands of people working for them and spreading their brand to every nook and cranny of the internet by simply enabling users to copy and paste videos into their blogs, profiles and emails.

Here’s a couple of culprits:

Def Jam blocked embedding of their video content

Universal prevented their artists from uploading full length streams of songs to MySpace

Victor commented on damage to the music video business as a whole:

I was working in the video promotion dept. of CBS when they pioneered the 30-day MTV exclusivity deals. Before that, my job involved pushing videos to dozens of video outlets – after the MTV deal, that job didn’t exist anymore. Within months there was only one channel showing music videos.

The MTV exclusivity deal turned out to be a disaster for the labels. MTV stopped showing music for the most part — they mainly do lifestyle programming now — and with the other distribution points for music videos gone there was simply less promotion as a whole. So this is a problem with the majors’ internet strategy. By orienting their embed policy towards negotiations with a few major distribution partners like Myspace and Yahoo, the labels are putting themselves in a precarious situation. The internet changes fast. In five years there will be different providers at the top, and if those providers didn’t come up with music videos it’s unlikely they’ll switch over. Five years ago Myspace and YouTube didn’t exist, and if the majors had been able to cut an effective exclusivity deal with the megasites of the day they wouldn’t now be benefitting from Myspace and YouTube.

The internet does not work by 1-1 deals. There are too many players and the landscape is too fluid. You set a blanket policy that can be negotiated using internet standards and let the best startups take advantage of automation.

Per gurdonark:

The use of the technology in viral media spread evolves so quickly that the traditional record companies have to make very quick decisions on a market which changes so rapidly as to make past experience a dubious guide.

It’s a tough dilemma, which requires solution if the record industry is to avoid complete marginalization, as I do not think that consumer demand for flexible media which can be shared will abate.

And Greg:

Unless all of us who believe in the efficacy of these channels are totally crazy, in the long run, the artists on these labels should see reduced success: fewer fans, smaller sales numbers, less traction with live audiences.

In a world where distribution is free, the only value the labels provide is the power of their promotion engines. Denying themselves access to the promotion outlets with the fastest growing reach seems like a serious long term strategic mistake in these conditions. If all of the artists jump ship in order to take advantage of these new outlets directly (or in favor of new enterprises that will help them do so, as has already happened in a number of high profile cases) what will the labels be left with?