More on the Future of the Music Industry

Damian Kulash Jr. of OK Go, who rocked Urbana-Champaign's Canopy Club last fall in a double bill with Princeton, has an op-ed in the New York Times where he recounts the band's YouTube breakthrough:

MY band is famous for music videos. We direct them ourselves or with the help of friends, we shoot them on shoestring budgets and, like our songs, albums and concerts, we see them as creative works and not as our record company’s marketing tool.

In 2006 we made a video of us dancing on treadmills for our song “Here It Goes Again.” We shot it at my sister’s house without telling EMI, our record company, and posted it on the fledgling YouTube without EMI’s permission. Technically, this put us afoul of our contract, since we need our record company’s approval to distribute copies of the songs that they finance. It also exposed YouTube to all sorts of liability....

As the age of viral video dawned, “Here It Goes Again” was viewed millions, then tens of millions of times. It brought big crowds to our concerts on five continents, and by the time we returned to the studio, 700 shows, one Grammy and nearly three years later, EMI’s ledger had a black number in our column. ...

...

... EMI disabled the embedding feature. Now we can’t post the YouTube versions of our videos on our own site, nor can our fans post them on theirs. If you want to watch them, you have to do so on YouTube.

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The numbers are shocking: When EMI disabled the embedding feature, views of our treadmill video dropped 90 percent, from about 10,000 per day to just over 1,000. Our last royalty statement from the label, which covered six months of streams, shows a whopping $27.77 credit to our account.

The ultimate point of the piece seems to be that bands need record companies because they need start-up capital in order to take the band to the next level but that record companies need to stop shooting bands in the foot by clamping down on marketing techniques like posting videos on YouTube and making them freely available.

It's easy to understand both sides of the problem here: record companies are seeing so much of their product for which they used to get paid now being distributed for free, so they want to hold on to whatever revenue streams they can; on the other hand, if there's so much free stuff out there, how can a band gain attention if it's not giving stuff away for free?

Ultimately, I think that more and more revenue is going to have to come from live shows -- something that cannot be redistributed for free. But if ticket prices are set by the market, can this happen? Clubs will constantly pressure bands for lower cover charges, and going to see a show at a club competes with other possible entertainment expenditures -- like going to a movie, for instance. So can music venues really raise ticket prices all that much?