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Music 2.0

Fred Wilson's blog pointed me to an article in today's NY Times about the band Arcade Fire. Pretty interesting article describing a group of talented musicians who took a non-traditional route to success in the music industry. Their first album was completely financed by themselves. Cost them $10,000 and went on to sell 750,000 copies. In today's world, those are pretty impressive numbers.

So where have I heard this story before? An industry where there is declining costs of production, commoditization of infrastructure and the prevalence of viral marketing over traditional means. Where barriers to entry have fallen to such a degree that young upstarts can go it on there own, rather than selling out to financial or strategic investors? Hmmm....sounds very familiar.

The story of Arcade Fire and many of the original Web 2.0 companies (Flickr, Topix, Gawker, etc.) are very similar. The cost of creating music has always been relatively small. It was the distribution and marketing that was expensive. Sites like MySpace, YouTube, etc. have changed that though. Through a good word of mouth/ viral campaign, artists can now put their songs directly in the hands of their audience without having to do any deals with the traditional labels.

Interestingly though, many in the Web 2.0 crowd figured out that working with the big guys really was the optimal strategy for many reasons. It was their lack of reliance on the established players that gave these new companies the leverage to make deals with them on favorable terms. Will the same happen in music? Music is different in that a band like Arcade Fire can thrive by selling their music, but also performing it as well. Web 2.0 companies never had that second business model, so perhaps not.

But I do see the the future of music be a bunch of bands like Arcade Fire finding moderate success on their own - rather than supergroups dominating the charts. Whether or not they will end up working with majors remains to be seen. If not, the majors will surely become more marginalized than they already are. That is of course unless they can embrace this new world and focus themselves on creating hits in it.


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