The future of record labels: How tech savvy consumers are transforming the market

Record labels are rooted deep in music history–every classic CD, record and vinyl has journeyed through these businesses to the hands (and ears) of the public. However, the belief of signing with a record label in order to be a successful artist is diminishing as consumer tech trends are shifting away from tangible music and moving towards digital streaming and social media. According to MiDiA Research, in 2000, record music represented 60 percent of the entire music industry. Now, it is less than 30 percent. Why is that? Well, with consumer habits shifting almost completely to digital streaming, record labels are facing competition with other “middleman” companies that can easily get artists’ music to the public for a fraction of the cost.

gearing towards free music

Nowadays, the public can get so much music for free via YouTube, Soundcloud, etc. that there is little incentive to go out and purchase a new record. Vancouver-based label Monstercat started off as a YouTube channel that gave listeners music for free, and now they have sold more than one million records. How do you draw in listeners who are willing to purchase music with free content? There is an amazing boomerang effect on exposure of free music back to its original source. Although YouTube is very user-friendly, people who are seeking music want a more organized way to access it, which is when the music purchasing occurs. This disruption in the record label-model triggered a change for the future record labels; Perhaps in the future, record labels will develop their own platforms that release free content and simply wait for that boomerang effect of purchases.

diversifying the market

Music is a multifaceted industry, and bringing other markets into the industry adds more value and shows big companies music is worth investing in. There is music involved in every aspect of companies, whether it is playing in retail stores, in ads or simply in the office. There is obvious correlation that businesses can leverage into their company. Adidas has proven this by their recent collaboration with Kanye West as the next big record label. This Adidas-Yeezy model as a “new phase for music” has proven that big brands can act almost as sponsors for musicians, while both receive financial gain. In the future, brands can morph themselves into record labels and offer a brand new platform to release music, while adding immense value to the music industry. 

Switching their focus to streaming

Although the shift in tech trends is alarming to companies, they have already began to switch their market strategies. According to Forbes, most record labels currently receive as much as 80 percent of their revenue from streaming. Perhaps within the next five years record labels will completely digitize content for streaming music and traditional media within the music industry will diminish altogether.

Giving artists’ creative control

Record labels are also trying to keep up by giving artists more creative control over their personal brand and musical style. Instead of discovering new artists and molding them into what the record label thinks will make a good musical persona, they are portraying more artist control. In a time of rising independent musicians (especially in Austin’s reputation as a major music city in America), artists are turned off by others trying to morph their personal brand into something else, and appreciate these pro-artist contracts.

The music industry is a constant evolving market, and while no one knows precisely where record labels will stand in the next five years or so, these tech trends are offering some solid predictions.


(Photo courtesy of The Sweet Setup)