Thalasar Ventures

The impending demise of Tower Records – the deep catalog retailer in the record industry has gotten me thinking about what role record labels themselves will play in the iTunes direct to consumer download world. Many people are predicting the death of the record label in the iTunes world. However such predictions (like the predictions of the digital jukebox in the sky with every song made. There’s a reason that thing is in the sky. It’s right next to the pie.)

Assuming record labels are able to adjust (this itself is a prety big assumption) they do indeed have a role to play. It’s a role they used to play in music before the consolidation of the majors and return of manufactured bands. Record labels once were associated with various types of music. The label itself had brand and perceived value. Each label was known for each specific musical experience. While this is still the case, record label branding has suffered terribly in the last decade. Here’s a quick question? What label is Christina Aguilera on? No clue? It’s Sony/BMG (actually RCA but that’s part of the confusion isn’t it?). But wait Brian – shouldn’t the rock star outshine the label? Well yes but in age when the functions that labels previously performed (marketing, air play, distribution, publicity) can be outsourced for a fraction of cost of actually signing a record contract (Face it record contracts are incredibly expensive money – Just ask Prince). It seems to me the only remaining function that labels provide is that of tastemaker/gatekeeper. So the future of the modern labels is to become something akin to HBO. HBO has a strong brand identity as provider of quality serious drama in televison. Does Sony/BMG have a similar position in the marketplace? No even though they are home to some pretty popular artists.
Of course labels haven’t shown any innovative thinking since the invention of the compact disc. As result they attempt to legislate the marketplace in order to control what will happen. For example where are the reality shows covering tours? Why haven’t you launched your video channel (Cause of MTV?) Here’s a hint – youtube.com has replaced it as the arbiter of cool so don’t worry about it.
As the death of Tower Record shows, there’s only one retailer that labels care about and that’s Wal-Mart. If they don’t begin showing some more innovative thinking they may follow Tower.