Filesharing: The End of Music or the Beginning of a Revolution?

David Kusek, Vice President of the Berklee College of Music’s Berklee Media says that in 2003, CD sales were down 26% (Kusek 7). Major record labels like Sony, BMG, Universal, EMI, and Warner, and big name acts like Metallica are quick to blame shrinking sales on the prolific amount of free filesharing over the internet. But is online filesharing actually the evil that it is portrayed to be? Has the illegal trading of songs really caused the decline of record sales? Or could it be because independent labels now have a method to circumvent the major label controlled radio as a tool to promote their new releases, and the industry is shifting to smaller, higher quality production?

Steve Albini, who has produced records for Nirvana, the Pixies, and Cheap Trick, says that as a result of filesharing on the internet, users have access to a wider range of material and are buying music that they would never have the opportunity to hear (McLeod 528). In his article “MP3s Are Killing Home Taping,” University of Iowa communications professor Kembrew McLeod states that many smaller independent music labels are more successful recently than they have ever been (529). Though overall record sales have gone down, filesharing has, and will continue to improve the quality of the music industry.

According to Peter Spellman, the Director of Career Development at Berklee College of Music, independent music labels and artists are “…the life-blood of the music industry” (Spellman). Rich Egan, president of Vagrant Records, the home of Dashboard Confessional, was quoted in the New York Times, saying that independent labels are more concerned with developing their artists over time and supplying a high quality product than they are with lining their wallets (Nelson). Egan cites Dashboard Confessional’s album The Places You Have Come to Fear Most, which took more than two years to sell 434,000 copies (Nelson). While Vagrant kept promoting the album over several years, a major label would have been likely to just drop the band when the album didn’t seem to be an immediate hit (Nelson). The founder of Alligator Records, Bruce Iglauer, in likening the major labels to McDonalds, says that independents would rather be the small gourmet restaurant around the corner, noting that “it’s the menu that counts, not how many are served” (Spellman). Kusek explains that while major labels try to disrupt musical trends, independent labels recognize and develop them (Kusek 8). Spellman concurs, commenting that independent labels are “artistically and creatively on the cutting-edge of new music” (Spellman).

Not only do independent labels work to develop new music and take it new places, they are also a better option for the artist. McLeod asserts that “without the major label system, the lifestyle of the vast majority of musicians … might very well go up” (McLeod 530). A Tribe Called Quest, a rap group from the early 90s, sold 1.5 million copies of their album Low End Theory (523). The group received a 14% royalty rate, translating to $1.12 per album (523). After paying off the record label for recording expenses, and paying various other fees and taxes, one member of the group, rapper Q-Tip, “made less that year than he would have working at a convenience store” (524). Dave Marsh, a rock critic for the magazine Creem, states that besides giving artists low royalty rates, major labels exercise “creative accounting,” charging breakage fees against artist royalties, and “charge you extra money to make CDs even though CDs are cheaper to produce than cassettes” (522).

While the majors are trying to use musicians to turn a profit in any way that they can, including ripping off their own artists, independent labels treat artists as partners. Lynne Margolis, a freelance writer who runs an organization dedicated to educating artists in the music industry, published an article in the Christian Science Monitor pointing out that many independent labels have profit sharing models with the artist, splitting profits 50/50 (Margolis). Artists are also usually allowed to keep ownership of the rights to their works on independent labels, while major labels usually take over ownership (Margolis). This allows the artist to use the work any way that they see fit, make it available online, or to take it to another publisher if the title goes out of print. Another advantage to independent labels is that the artist profits sooner. An artist on a major label will probably not see a profit until they sell at least 500,000 albums, while and artist on an independent such as Vagrant see a profit as soon as they have sold 25,000 albums (Nelson). Independent artists also make more per album, perhaps $5 per copy (Margolis), while a major label artist will only get about a dollar per copy (McLeod 523). Though independent artists sell fewer albums, they are able to profit more per album, allowing them to make a living more easily.

It’s not just the artists who benefit from independent labels. Major labels benefit as well. According to the Economist Online, 65% of major label’s sales of albums older than 18 months are of music by artists who were initially on independent labels (Economist). Patrick Burkart, of the Department of Communication at Texas A&M University, reports that major labels account for 86% of total music sales in the US (Burkart). According to Economist, independent labels are responsible for a large percentage of that. It can be concluded that independents push and develop music to new levels (Spellman), are better for the artists in terms of profits and ownership rights (Margolis), and supply major labels with much of their catalogs (Economist).

But what does all of this have to do with the internet and filesharing? Independent labels, as Spellman states, are the “life-blood” of the industry, and thanks to the internet and filesharing, the sales of independents are increasing, sometimes by 50-100% (Margolis).

McLeod points out that the advent of radio “was supposed to ruin the recording industry because, well, if people don’t have to pay for music they hear, why would they go out and purchase records?” (McLeod 524). He then goes on to explain how radio became critical for promotion of an artist, because people would go and buy the records that they heard and became familiar with by hearing them on the radio (524). Today, groups like Metallica and the RIAA claim that filesharing will be the downfall of the record industry, while in reality it will probably become just as important as radio in the promotion and marketing of new acts. The Economist supports the importance of radio, but acknowledges that the major labels control radio as a promotional tool, perhaps as a result of bribery and payola (Economist). Margolis reports that it can cost more than $400,000 to $500,000 per song to get it played on mainstream radio, a sum which independents cannot afford to pay (Margolis). Regardless of the reason, the fact is that the majors control the radio, and the internet finally offers independent labels a way to circumvent it, because filesharing is now being used to launch and promote new artists (Economist).

According to Grammy Award winner Janis Ian, filesharing does nothing but help independent artists. She has found that each time she puts a song online for free, her sales increase significantly (Ian). Ian believes that people use online filesharing services such as Napster to discover some of her older songs, and then make their way to her website where they are able to see her entire catalog. They then purchase the albums, or they find out about and purchase tickets for her shows (Ian).

Rich Egan says that Vagrant Records depends on filesharing for its very existence (Nelson). Other owners of independent labels argue that filesharing helps small labels compete with the large majors (Nelson). Conrad Mewton, a music lawyer in the UK, agrees, stating that “one of the net’s main advantages is that it provides indie labels with an opportunity to compete with the majors on a level playing field” (Mewton 128).

Vagrant is not the only label that is prospering. Other independent record labels are also selling more thanks to filesharing. Rounder Records, the home of George Thorogood and the Destroyers, reported a 50% increase in sales in 2002 over the previous year, making it their best ever (Margolis). New West Records doubled its business every year from 2000 to 2003, and in early 2003, predicted a $10 million income for the year (Margolis).

Tim Quirk, of the band Too Much Joy, argues that he buys more music now because more is available to him (McLeod 524). He also states that “as a musician, you want your music out there, you want it out in as many places as it can possibly be” (525). McLeod explains that if an artist’s music is more accessible to consumers, more people will buy the albums, the merchandise, and pay for tickets to shows (525). This is reinforced by a study conducted in 2000 by the Norman Lear Center at the University of Southern California. The study surveyed college students who trade music online, and found that 73% of them buy the same amount of music or more than they previously did (525). McLeod states that “those who are most likely to trade with friends are the very people who buy the most CDs” (525). Mark Mulligan of Jupiter Research goes further, remarking that “there are very strong music fans within the filesharing community … There is compelling evidence that this group is the bedrock community for those willing to pay for legitimate music services …” (quoted in McLeod 525).

As a non-music example of the potential success of the free online trading of works, consider author Mercedes Lackey. Lackey decided to put a few of her older books in a free online library (Ian). After putting them in the library, Lackey’s royalty checks began increasing, and eventually tripled, as a result of the exposure she got by allowing her books to be available online for free (Ian).

There are also musical online success stories. When Wilco recorded their album Yankee Hotel Foxtrot, their label refused to release it because it was “uncommercial” (McLeod 524). The band put the songs up for free download on their website (524). The album eventually reached the Billboard Top 20, and sold 500,000 copies, impressive for a band without a record label (524). Another success story is that of the Black Crowes. In 2000, the rock band the Black Crowes went on tour with Led Zeppelin guitarist Jimmy Page (Mewton 77). They recorded a live album during the tour, and decided to release it only on the internet, giving fans the option to order the entire CD, pay to download any tracks they wanted, or to order a custom CD with the only the tracks that they wanted (77). The album was a huge hit, and its single “What Is and What Should Never Be,” an internet only release, made it to the Billboard Top 20 (78).

An interview with Roger McGuinn of the Byrds on CNN.com also supports online trading. McGuinn recalls that in the 1960s, “record companies offered him modest advances for his songs and few royalties” (Ferullo). McGuinn goes on to tell of the deal he made with MP3.com in 1998, stating that the filesharing website “offered an unheard-of, non-exclusive contract with a royalty rate of 50% … I was delighted by this youthful and uncommonly fair approach to the recording industry” (quoted in Ferullo).

There is further evidence that filesharing is helping independent music labels. From 1999 to 2002, the beginning of the widespread use of filesharing networks, the US independent music label market share rose from 13% to 16% (Burkart 492). Kusek asserts that “more music has been enjoyed over the past two or three years than ever before … Music fans can thank the inventors and purveyors of new technologies … such as the original Napster and Kazaa” (Kusek 6). Chris Blackwell, founder of Island Records, the original label of Bob Marley and U2, “likens file sharers not to shoplifters, as the major labels do, but to grass-roots promoters whose efforts eventually increase sales” (Nelson).

It should be recalled that illicit trading has been responsible for the success of several bands before there was such a thing as online filesharing, namely the Grateful Dead and Metallica. Griffin Mead Woodworth, in an article published in Popular Music and Society, says that the trading of bootleg tapes “is responsible in no small way for the success of bands as disparate as Metallica and the Grateful Dead” (Woodworth 169). Both groups actually support and encourage the trading of bootlegs of their shows (169). So Metallica, a group of the most ardent critics of online filesharing, directly owes their success to, and encourages a similar illegal practice? It would appear to be so.

It can be seen that independent labels and musicians are very important to the development of new music, and to the supply of material to the industry. Spellman goes so far as to call the independent labels the “life-blood” of the industry (Spellman). These small labels and artists, who are so important to the wellbeing of the music industry, do not have the means to compete with major labels in the standard market of radio promotion (Margolis). Filesharing has helped these labels and artists to launch and promote new records (Nelson). If independent music labels are so important to the music industry, and filesharing helps them survive and get their music out there, how can filesharing be a bad thing? How will it be the demise of an industry when it has helped so many labels and artists? Even major label acts like Metallica and the Grateful Dead owe their success to illegal trading (Woodworth 169). It is clear that online filesharing has, and will continue to improve the quality of the music industry.

Works Cited

Burkart, Patrick. “Loose Integration in the Popular Music Industry.” Popular Music and Society 28.4 (2005): 489-500.

Ferullo, Mike. “Internet Music Debate Plays Out on Capitol Hill.” CNN.com. 11 July 2000. CNN. 29 Nov. 2005 <http://archives.cnn.com/2000/ALLPOLITICS/stories/07/11/napster.hearing/>.

Ian, Janis. “The Internet Debacle – An Alternative View.” Janis Ian Articles. 2002. Janis Ian. 29 Nov. 2005 <http://www.janisian.com/article-internet_debacle.html>.

Kusek, David, and Gerd Leonhard. The Future of Music: Manifesto for the Digital Music Revolution. Boston: Berklee Press, 2005.

Margolis, Lynne. “Independent’s Day.” Csmonitor.com. 11 April 2003. The Christian Science Monitor. 29 Nov. 2005 < http://www.csmonitor.com/2003/0411/p13s02-almp.html>.

McLeod, Kembrew. “MP3s Are Killing Home Taping: The Rise of Internet Distribution and Its Challenge to the Major Label Music Monopoly.” Popular Music and Society 28.4 (2005): 521-531.

Mewton, Conrad. All You Need to Know About Music and the Internet Revolution. London: Sanctuary, 2001.

“Music’s Brighter Future.” Economist.com. 28 Oct. 2004. The Economist. 29 Nov. 2005 <http://www.economist.com/displaystory.cfm?story_id=3329169>.

Nelson, Chris. “Upstart Labels See Filesharing as Ally, Not Foe.” New York Times 22 Sept. 2003. 29 Nov. 2005 <http://www.nytimes.com/2003/09/22/business/media/22INDY.html>.

Spellman, Peter. “Current Opportunities for Indy Label Success.” Rapcointelpro.com. 2000. Rap Coalition Intelligence Program. 29 Nov. 2005 <http://www.rapcointelpro.com/The%20Climate%20for%20Indies.htm>.

Woodworth, Griffin Mead. “Hackers, Users, and Suits: Napster and Representations of Identity.” Popular Music and Society 27.2 (2004): 161-184.