Tuesday, August 01, 2006

The New Stax Label Can Reinvent The Role Of Labels In The Digital Age

The world of pop culture was abuzz last week with Justin Timberlake’s overly candid comments about his drug use. We hope he was stone cold sober when he decided to resurrect the Stax label in Memphis, because with the dizzying changes in the music industry, it will require all of his faculties for success.

As New Yorker wrote a few weeks ago: “Radiohead no longer has a contract with EMI and says that it has no plans to sign with a label…Labels spend a lot of time and money worrying about illegal downloading and file-sharing. What they should be worried about is more bands like Radiohead, which could make major labels a relic of the twentieth century.”

Betting on Stax

It’s these kind of sentiments, which are the conventional wisdom these days, that are on the minds of every one in the music business, but particularly should be on the mind of someone like Timberlake who is expected to announce in September that he’s going to relaunch the mythic Stax label.

Labels were the lords of the pre-digital music world, perching atop a food chain with the artists and customers dependent on them in a business model not too different than the company store and the sharecroppers who never seemed to get out of debt.

The world as the labels knew it has been turned upside down, and these days, they are playing Sears to the Internet’s Wal-Mart. As Wal-Mart founder Sam Walton once observed, it was Sears who should have morphed into the world’s largest retailer, but it couldn’t innovate because it was too invested in its own traditional infrastructure and cumbersome inventory system.

The same can be said of the music industry. It’s so invested in labels and its retail business model that it’s failing to grasp that the world as it knew it is all but gone. Where once music retailers had to spend millions to open a store and set up the distribution system, e-tailers today can connect with customers anywhere in the world.

The Fading Labels

If labels as we have known them do not disappear entirely, their place in the music industry will be significantly reduced in the face of the next wave of the digital revolution. Perhaps, Memphis can be the place where the label is reinvented. It certainly would be a chapter of Memphis entrepreneurship that would rank up there with the FedEx phenomenon, and it would position Memphis at the front of the next wave of change for the music industry.

It’s a high-stakes, high-risk proposition, but it begins with artists moving to the center of the new power structure. That’s why more and more musicians – following the lead of the Beastie Boys, Public Enemy, Widespread Panic, Ani DeFranco, Aimee Mann and Radiohead - will remain independent, connecting directly with their fans and customers and eliminating the labels that once controlled their destinies, but now seem to throttle their artistic vision and limit their profits.

These musicians have dynamited the traditional supply chain, some making their music free to the public and others recording on their own labels, all of which is good news for music consumers. The changes in the industry are driven by the digital revolution, but another factor seems to be a large number of consumers’ fatigue with the lack of creativity and variety that the labels have ushered in as they pursue music that often feels formulaic and derivative.

Changes in the industry are good news for new artists and for the revival of out-of-favor bands. Interestingly, the momentum for change was fueled by a segment of the industry with which Memphis has a love-hate relationship – rap music. With labels steering clear of rap artists and with groups like Three 6 Mafia selling tens of thousands of cd’s out of their car trunks, more than three-fourths of all rap music was sold independently, a reality that triggered innovation and the groups’ quick move into the digital environment.

New Business Models

It seems that in the future, music portals will fill the space once occupied by labels, distributors and retailers, and as it becomes harder and harder to fight and win battles over intellectual property rights, the music business will be transformed. Labels that cling to old business models are unlikely to survive.

This is the world that the new Stax label will enter, and why it must act decisively to survive, much less reinvent, the role of labels in the digital universe. It will require a rethinking of the business model and the supply chain, but most of all, it will require the creation of an artist-centric future.

If Memphis can get there first, it could become a dominant force in music again, understanding that in the future, it’s about creating the experience, the community and the content as much as marketing music. It’s a tall order and will require nothing less than the same kind of imagination and brilliance that characterized Stax music in the first place.


The lessons of myspace.com, youtube.com, garage band.com are powerful, and recording by new local producers like Electric Room, which, using PC’s, the Internet and these new community-creating websites, understands that there is a better way.

Best of all, the real story of the music business today is the story of how the Internet and the individual are democratizing music. Who would have imagined only a few years ago that Apple would become the world’s largest digital music company? Who can imagine today that Stax can become the prototype label for the age of digital music, staking out new territory that puts Memphis again on the musical frontier? Who’s to say it’s not possible? After all, this city revolutionized the music industry before, and here’s hoping that the new Stax label can do it again.

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