Good Riddance, Major Labels

Will the last band to leave a major label please unplug the amplifier?

Last week, Radiohead announced that it's going solo and releasing its next album digitally, without the helping hand of a major label. Nine Inch Nails followed suit this week. Now Britain's Telegraph.co.uk is reporting that Oasis and Jamiroquai may follow suit.

Can you believe it? Being unsigned is the new signed. That could make the tens of thousands of garage bands and webcam crooners that amass modest yet dedicated followings on sites such as News Corp.'s (NYSE: NWS  ) MySpace and Google's (Nasdaq: GOOG  ) YouTube the new music-industry leaders.

Well, not exactly. Established artists have every incentive to leave a label. The real industry profits lie in touring. Once they have a dedicated fan base, it's more important to nurture that than to have labels bankroll CDs and place songs on the radio.

Besides, have you seen the perpetually falling state of CD sales? Have you heard the thin playlists on terrestrial radio?

Labels are in trouble. Warner Music Group's (NYSE: WMG  ) unsuccessful bid to land EMI earlier this year wasn't so much about synergy as it was about survival.

And in a case of atrocious timing for the industry, this comes on the heels of the record labels' $222,000 legal victory against a Minnesota mother who allegedly made songs available on a peer-to-peer file-sharing network.

No matter where you stand on the issue, you have to agree that the labels may lose more than they gain here, even before you begin to back out legal costs. How many irate music fans, upset over the decision, will make it a point not to buy CDs anymore?

Great! Just what the record companies need: another reason to explain away free-falling sales of prerecorded music. Labels are already struggling with their unfeasible business models. Can they really afford to make themselves even more repulsive to both artists and fans?

The dynamics have changed. Broadcasters such as Disney (NYSE: DIS  ) , java brewers such as Starbucks (Nasdaq: SBUX  ) , and stardom magnets such as CKX's (Nasdaq: CKXE  ) American Idol are the new architects of the music industry.

Cue the major labels funeral mixtape. Make sure it's got NIN's "Head Like a Hole," Radiohead's "Creep," Jamiroquai's "When You Gonna Learn," and Oasis' "Don't Look Back in Anger" on it. If the labels still can't figure out that the songs are about them, why bother mourning.

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