Back in my Napster days there were several big name artists interested in working with Napster to sell their music directly to customers. They were tired of giving up the vast majority of their CD sales to the big record labels. Even the most successful music acts only got about $1 from every $20 CD sale.
Those artists who wanted to work with Napster were still under contract to the big labels. As soon as their contract expired they wanted to go direct with Napster and sell their music for $1 per song...a lot better that $1 per CD. Madonna, Green Day, Limp Bizkit, MC Hammer, Courtney Love, and several other artists talked to Napster about doing a distribution deal.
TechCrunch says "And the walls came tumbling down: Madonna dumps the record industry" Madonna announced that she will not renew her contract with Warner Brothers. Last week, Nine Inch Nails announced that they would do the same thing. British music group Radiohead has taken the unusual approach of allowing their fans to buy their music direct and pay whatever they feel it is worth.
Napster was too far ahead of its time. See my earlier post Napster, The Inside Story, for more behind the scenes details. Napster wanted to be what iTunes is today, the online distribution site for all music. We wanted to discover new artists and target them to the users who enjoyed their genre of music. We wanted to work with big name artists who were ready to leave the big record labels. Unfortunately, we got sued out of existence before we could make it happen.
Today the world has changed, partly due to what we did at Napster. Today artists have the opportunity to take their music directly to the public. They don't need the record labels. The opportunity was always there, but the announcements from Madonna, Radiohead, Nine Inch Nails, and others makes the vision a reality.
Will the record labels adapt? Or will they continue to sue their customers and take advantage of their artists? They still have time to adapt, but I think I know how this story will end. If you are an investor...go short on music companies.