CNET – How to beat the record labels on the Web

The answer lies in controlling the rights to recordings. It’s only after start-ups get into the game of signing artists that they will truly be able to control the destiny of downstream distribution. This is no easy task. Record companies have spent decades building up a sourcing system, and have a huge competitive advantage when it comes to expertise in promotion and marketing.

But the majors have huge vulnerabilities when it comes to their cost structures, and the amount of units they need to sell to break even on a title. And, as in all instances where sleeping giants get unseated, it will happen first at the fringes.

There is a long history of small labels making inroads into overlooked genres, and while these independent efforts have historically grown up to be fodder for major acquisitions, it won’t be long before a burgeoning independent makes better strategic use of distribution technology. Often, one loose brick can bring down the whole wall.

So my advice to the plethora of music start-ups focused on distribution? Give it up.

If ya can’t beat ’em… join ’em