[Posted on May 30, 2008 - 5:40 PM]
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The woes of record label EMI Group provoked a lot of discussion this week. With its market share dipping below 10%, EMI's private equity sponsor, Terra Firma, is reportedly contemplating selling its recorded music business in order to focus on publishing and catalog, which Terra Firma chief Guy Hands says have "downside protection" as their revenues trend upward.Ian Rogers, the former chief of Yahoo! Inc.'s music division who recently moved along to startup Topspin, offers his thoughts in a post suggesting that EMI explore the power of catering to niches. Grouping similar or like-minded acts together would help audiences filter their tastes while building brand identity and allowing smaller promotional teams to work more efficiently, he says.
The idea isn't new, and it would simulate a reversal of the longstanding trend of the majors' consolidation. As I've written before, indie consumers are sometimes loyal to labels, but people don't typically differentiate among the big players. Major-owned brands such as jazz specialist Blue Note, however, still have some cachet. (In in its heyday, Blue Note was even similar to a social network for musicians. All the players' names were on the front covers, making it easy to find similar artists!)
But are such brands becoming obsolete, and would a label's brand name be necessary at all for music discovery in the future? Consumers can already use plenty of discovery services, most notably the collaborative filtering of Last.fm Ltd. and its editorially-driven peer (or rival) Pandora. Artists can promote themselves on MySpace and other social networks, going direct to consumers without identifying themselves as anyone else's property or discovery. Even the boy bands, the ultimate music-as-branding opportunities, have apparently figured this out.
Indies that inspire loyalty are turning into a separate niche themselves: They make records for people who love records. Most people are indifferent to labels, aren't "completists" and don't go to music festivals to sample dozens of bands (soon to turn up on their Last.fm pages). Niche branding won't reach that general audience, but it's still effective in capturing people who care about such things. And those loyal customers are more likely to spend money on music, which is one reason why indies' market share has grown over the past few years.
EMI may be in so much trouble that it will be forced to experiment. One VC told me last week that the company has "bled so many people that it can't negotiate deals" with startups. As I've suggested before, struggling majors could benefit from emulating indies, and catering to niches is one way to do that. -- Paul Bonanos
See post from former Yahoo! Music chief Ian Rogers
See April 2 post from Tech Confidential about Rogers' move to startup Topspin
For more see Hypebot, Coolfer and PEHub
