'The online revolution has proved as damaging to independent labels as to multinational companies'

HOW FAR DO YOU AGREE WITH THIS STATEMENT?
Independant labels such as Domino are known as being a more traditional label in that they follow the horizontal integration structure. It uses other companies to handle different aspects of the production, marketing, promotion and distribution as it does not own these facilities itself. Recently this is becoming a real struggle as there is so much more need for other aspects of production now that it is hard to manage all these different aspects without doing it with your own facilities. Multinational companies such as UMG are able to do all the sides of revenue themselves. This is a lot easier as less contact is needed etc.

revenue
- record sales including downloads
- broadcast income (payment from radio/TV broadcast)
- licensing to other labels
- secondary licensing-films/TV/adverts
- inter nation sales and licensing
success of groups such as Franz Ferdinand means Domino can invest in other, less popular artists.

The online revenue includes web 2.0, convergence and internet. This means the availability of illegal downloads, downloads, streaming sites, youtube etc. The debate is that the convergence of technology is ruining the music industry in terms of whether the artists that are getting signed are actually talented or not.
Independent labels such as Domino tend to care a lot more about music than money made from music, therefore you tend to see a lot of artists signed to them that you have not heard of before. This means they that do not make as much money as multinational labels such as UMG and therefore may not last much longer. This means that without the money to do so they cannot afford to give music away for free, not that this may even work because the artists they have are not very well known or popular. This is a problem because the amount of CDs being sold are increasing majorly so how else will they be able to see their music? Because the independent labels use the horizontal integrated structure this means that they will have to pay people to distribute and promote the music for them which would cost a huge amount of money.

I agree with this statement strongly. I feel that the independent labels will very much struggle with the technology convergence and online revolutions.

Useful quotes.
"the online revenue is shaking the foundations of the music industry."
"the internet meant that they didn't need a marketing machine."
"this technology is shaking the music industry to its core"
"the new comers often teach the establishment how it should be done."
"young people see downloading as part of their musical education."
"illegal downloading leaves a hole in the music revenue."
"the internet robs the record labels of control."

The 4 major record labels earn 80% of the profits.

An example of a band who became big without a record label.
Artic Monkeys used social network sites (such as myspace). Their friend uploaded their unfinished music for people to download for free. They then signed to a subsidiary label, Domino to realease their first albumn which became no1.

An example of an artists who used a record label to become famous and then decided to go independant.
Mick Hucknall from Simply Red used to be signed to a record label. This record label helped him to be advertised and promoted but then from the influence of new comers he desided to become independent.
Warner made £179 million profit.       <--- It could be that they need that profit to combat
Mick made £20 million proft.                     illegal downloading.


File sharers (pirates)
Sites such as Napster uploaded their CDs in millions for people to be able to download them for free. This progessed to 80million people sharing music.
Peer to peer sites decreased record labels profits from 40 billion to 30 billion.
20 thousand people have been sued for illegal downloading.