This is a common argument among those that have never worked at or with a label.

Matador for instance is distributed by ADA, who, guess what, is owned by Warner Music Group.

The music business is much, much more complicated and convoluted than any glib comments like "who cares?" can summarize.

So what? Exactly what does ADA do that gives them a competitive advantage that will hold over the next 10 or even 5 years? Their expertise at merchandising? Because really, isn't ADA's core value proposition "getting CDs into the racks at Best Buy"? Who gives a shit what's in the racks at Best Buy? We really think people are going to be buying music at Best Buy 5 years from now? No they won't.

No, ADA also ships to indie retail world wide, manages relationships with about 70 DSP's, plus the rights of those relationships (i.e., some get the full record, some have to bundle, some only take AIFF files, etc).

TuneCore or The Orchard or CD Baby sort of do the same thing, but without international reach and without all the DSP relationships.

Stuff doesn't just magically show up on iTunes, Spotify, Rdio, MOG and god knows how many other places (including promos to radio, etc). It also doesn't automagically show up with cutouts and exclusive tracks depending on the retailer.

Also who do you think manages publishing catalogs for bands like Radiohead (Warner) or Arcade Fire (EMI)?

Best Buy will likely eliminate music from their planograms by next year. So will Target and Wallmart at some point. They mostly have. That doesn't mean that an upstart can disrupt the space. There are huge market barriers to entry.

If (stipulate) digital distribution on iTunes, Amazon, Spotify and Rdio is going to account for the majority of all music sales in 5 years: exactly what is the "market barrier to entry" a middleman firm like ADA or a "major label" like Warner can rely on? Can you do me a favor, because you know more about this than me, and be as specific as you have time for?

I'm not bullish on the prospects for small music startups. I wouldn't start one. But that doesn't mean that the middleman roles in distribution and promotion aren't going to be taken by some new entrant.

Compare: Ticketmaster has what seems to be a mortal lock on the business of music performance. But concern promotion is a relationship driven business where firms compete to lock up exclusives with a few venues in each market. None of those venues are particularly interested in vertical integration. So Ticketmaster is likely to hold on to their market position until forced out of it by a huge company or government action.

Why, exactly, is Amazon or iTunes going to abet attempts by firms like Warner to lock up distribution? Amazon has already aggressively positioned themselves up against the major incumbents in publishing. Remember, all they have to do for music is to let more small labels interface with them; unlike the agency debates in publishing, they don't even have to fight the business model.

I just don't see it. However complex you think the music world is, so that we need firms like CD Baby to get artists listed on iTunes, I just don't see why 5 years from now a label like Kill Rock Stars is going to need the relationships it needs now to gets its products into the mainstream market.

It is going to get easier for companies like KRS, and harder and harder for firms like Warner. It just looks like it has to.

You're assuming all the record labels do it distribution.

But they also do management. Without a startup that tackles the management side of things (which is pretty complex relationship wise, this includes relationships with venues and between producers and bands, just so much) attacking distribution is only half of the issue

Labels provide one or more of the following to various degrees of capability:

- Management

- Tour support

- Publicity (photos, PR, etc)

- Radio promotion

- Video promotion

- Tour routing and agent of record

- Marketing

- Distribution and Sales

- Websites, fanclubs and direct-to-fan

- Merchandising (physical and e-commerce), including distribution/sales (Hot Topic, etc)

- Art

- Video production

- Online marketing and community management

- Partner relations

- Licensing management (sync, etc)

Not all labels do all of this, it is case to case. Even labels in the same parent corp (UMG, EMI, Sony or WMG) don't do all of these. Indies vary as well.

What is the subset of these services that are (1) competitively defensible and (2) viable?

To be defensible, a major label should hold a significant competitive advantage in providing the service.

For instance, distribution and sales has been locked up by major labels for a long time because they have the infrastructure and relationships to strike deals with major retailers.

But direct-to-fan isn't defensible and websites aren't defensible.

To be viable, the service should matter 5-10 years from now.

For instance, video promotion is likely to be relevant for many years; it's expensive to produce an excellent music video and channels like Youtube mean they continue to matter.

Terrestrial and satellite radio promotion on the other hand is going to be irrelevant in 5 years.

The labels still have one very vital function - marketing. While it's true there are great musicians out there who are also marketing geniuses, most of them aren't. There is always going to be a number of people involved in helping a musician's career. You can call that group whatever you want. Right now it's called a "label".

I'm not suggesting that Steve Albini is suddenly going to become a merchandising genius, only that Warner Music can't monopolize music marketing talent. Small firms will have a hard time getting a foothold in retail music, but as retail music starts to matter less, more small firms will enter the market to start bidding down the price of "marketing" and "promotion".

Yeah, that I agree with.

I don't think you can expect creatives like musicians to all of a sudden start focusing on the non-music creation aspects of their businesses. I think "business" people will still exist for creative musicians. Record labels dying might mean these business people will no longer exist in that form. It will simply shift from commoditizing the musicians into commoditizing the business people, which is how it should be. After all, who's more important, the artist or the people who manage and market the artist?

I think his point was that new startups and markets will emerge to help artists with the business side of making music. (Promotion of music, concert/tour management, advertising etc...) They're already starting to appear.

So that may not be much of a lock-in for the big music labels.

I think you should take it as an axiom that if the major labels don't have anything viable that they can lock up, there won't be anything that they stay significant in.

So long as terrestrial radio matters, they can parlay their ownership of that channel into many other offerings.

But one by one, the things that major labels maintain structural advantages in are falling into irrelevance.

One day, and it won't be long from now, the last relevant thing that major labels own will fade into irrelevance. And then all the other things that major labels "do" will be "done" by lots of other companies, more agile companies, companies that focus on just those things. And that'll be the end of the major labels.

This isn't exactly insightful stuff, is it? I feel like you can pull case studies about it from the history of 20th century business.