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?

7 thoughts on “collateral damage of no-embedding policy

  1. “The MTV exclusivity deal turned out to be a disaster for the labels MTV stopped showing music for the most part”

    Well, maybe 15 years later, long after those deals expired. Reports at the time was that CBS got $8 mil which they got to pocket because as with everything else, video production costs was coming out of the artists’ back end. I’m not claiming it’s a perfect analog to what’s happening now, my point was that this was the behavior I assumed they would have tried when the Web broke as opposed to the whole suing their customers thing as a top-line strategy.

    Who knows how either Web or music companies would have faired had those deals been in place. I kind of doubt things would have played out exactly as they have with the same winners and losers.

    To play devil’s advocate to a larger point, it might be just as dubious to use the recent past as a guide – do you think the churn of the last 10 years represents what the next 10 years will look like? Doesn’t a winnowing take place after a certain amount of time? (Figure we’re 14 years into an industry that will last a few hundred.)

    fwiw I hope you guys are right and “the only value the labels provide is the power of their promotion engines” because as far a I know no major label have ever, as in never, broken a band. The band breaks itself, proves it has an audience, and then the labels cash in and sucks the artists’ till dry. There is zero expertise there.

  2. the only problem sellaband solves is how to alleviate the last “risk” the labels were taking: fronting the recoding costs. They still swoop in *after* the band has built it’s own audience and then start taking cuts – but that’s a thread hijack.

  3. victor, I suggested it to underline your point, that you may be interested to know of an example (if you didn’t already) of a label adopting a ‘file-sharing immune’ business model whilst still pursuing maximum reward for minimum risk.

    Those in the recording industry have become so mercenary and detached from any risk in facilitating the artist/audience relationship that even when they do adapt to a changing market, they remain as mercenary as ever.

  4. I agree that there is less churn over time, but I think there’s plenty left. I think that Yahoo, Myspace, Facebook, all Microsoft properties, and all music properties are in an unstable position. If Yahoo’s traffic collapses it will leave a gigantic vacuum.

  5. I think there’s another element that increases churn as well. Both musical styles and individual social networks end up having strong ties to particular generations in a manner that can actually alienate younger audiences.

    This is the “not your father’s Oldsmobile” effect: if a social network is dominated by an older crowd (or one that’s been there for a number of years) it becomes less attractive to a rising younger generation looking to carve out their own identity. The same thing goes for musical styles. The genres that were generation-defining when I was in middle school (grunge and classic hip-hop) are now played on retro radio stations and have been completely stripped of the parent-irritating novelty-rewarding qualities that made them appealing to kids in the first place.

    The new web-based cultural communication channels, with their massive throughput, have been speeding up this cycle by shortening the time it takes for youth trends to spread widely and hence become watered down. Simultaneously, they also greatly reduce the switching costs for both media (where discovery is the main cost) and social networks (where efforts like google’s open social and the growing standardization of feed syndication are reducing lock-in). Both of these factors will increasingly penalize the labels for the slow response times they demonstrate because of partnership contracts and a general hostility/ignorance towards the web. In fact, I often wonder if this process has not already achieved escape velocity and permanently broken out of the orbit of the major labels and the other legacy distribution businesses.

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