Ballroom Blitz

“P2P: Music's Death Knell or Boon?” appeared on Wired.com.

“Big Music's Last Waltz,” wrote the Washington Post.

“SXSW Dances Around Industry Woes,” said the Hollywood Reporter.

Herein lies the message from this year's music industry schmoozefest that deserves witness: The few, giant corporate conglomerates that control much of America's recording industry still can't figure out how to capitalize on peer-to-peer music downloading, nor are they signing and promoting bands that serve the niche markets, like emo and electronica, that are redefining the music industry.

So is rock music dead? Is corporate radio a dinosaur? Will the Internet revolutionize the music industry and finally give music fans access to the independent artists they want? These were some of the questions bandied about over four days of panel discussions, and while the answers seemed clear when I took to the streets for the live music revelry, inside the convention center these questions still had some industry folks perplexed.

Here's my own blunt assessment of the general attitude coming out of this year's panel discussions: The four major music labels—Sony BMG, Universal Music Group, EMI and Warner Bros.—who own practically all the music you hear on commercial pop/rock radio, invest millions of dollars in marketing relatively few acts. As a result, fewer options are offered on the corporate airwaves, and instead these artists are played ad nauseam in order to create, in theory, the next Pepsi-selling king or queen of pop coming to a Clear Channel stage near you. This so-called business model can be traced back to 1996 when Congress enabled media corporations to consolidate into giant conglomerates like AOL-Time Warner, Clear Channel and Viacom, turning the mainstream airwaves into an artistic wasteland. Why? Because this limited offering had a devastating effect on independent musicians and music fans.

But with the arrival of Internet music distribution, in particular Napster's peer-to-peer file sharing technology, everything changed. Internet music distribution has not only done wonders for musicians of all stripes, it has also exposed the Big Four major labels as the inept, out-of-touch corporate buffoons that they are. (OK, these are my words, but I still think it captures the overall sentiment at SXSW). For proof, just look at the bottom line. Commercial radio ad revenues are sinking, stock values for these companies have stagnated for years, and CD sales for the major labels continue to plummet. Meanwhile, more and more people are consuming music. How could this be?

The answer, it seemed to me, was right there in Austin, a few blocks from the convention center where tens of thousands of music lovers, the nation's music press and industry insiders flocked to the streets to absorb a landslide of fresh music—most modern genres from reggae tone to alt.country—emerging from independent record labels and unknown acts. The showcase represents what one executive from Yahoo Music described as his company's business model: “perceived personalization” (see this week's interview on page 14). Those two words generally describe what SXSW, as well as music on the Internet, is all about. Consumers get to absorb as much music as they want and choose what they like best. It's about personal discovery, expanding music choices and not limiting them. As simple as this sounds, corporate America's recording industry and radio programmers are having a hard time adjusting to the concept.

Elvis Costello offered this insight into the modern, major label mindset: “The creative people inside the companies have become increasingly invisible. They box (them) inside this massive and unwieldy structure, which resembles the last days of the dinosaurs.” Here's what Costello said about the future of music on the Internet: “As soon as broadband is big enough, the record (retailing) business is over. … It’s going to be about five minutes to the end.”

OK, this, I believe, is a bit of an embellishment, and locally run retailers will always have a client base that depends on them for new discoveries, not to mention the CD case that customers love to keep on the shelf. But his point is well taken.

More to the point, when Napster emerged in 2000, its popularity manifested how consumers, given the technology, went looking for more variety. As Michael Bracy of the Future of Music Coalition and founder of Misra Records put it: “The music industry got smacked in the face by consumers going out to find music on their own.” Now, five years later, more than five million people subscribe to satellite radio, while scores of other Internet music services offer subscription or per-song downloadable music. Meanwhile webcasting and Internet radio have become increasingly popular.

Robert McMillian of the Washington Post offered this cynical reduction of the whole affair: “All the posturing and arguing at events like SXSW is well-intentioned but ultimately irrelevant. … Composers will continue to compose, musicians will continue to play. The smart ones among them will find ways to get rich or at least make a living, and smart businesspeople will find new ways to exploit the ones who can read a score but not a balance sheet. That in turn will preserve the centuries-old tradition of singers writing songs about getting screwed because they’re singers.”

Maybe so, but if there was a simple lesson to learn this year, it's this: Any independent artist making music today should be looking to the Internet and not just waiting for some illusory record deal to make them a star. Better yet, find the right independent label and you might at least make a living.

Lastly, here's an ironic twist. Shawn Fanning, who launched Napster without asking and started the whole free file-sharing craze, now owns Snocap—a company that sells software enabling record companies to scan your downloaded media files and see if you pirated any music.