Throughout this blog, I’ve been pushing for recognition of the Toronto music scene as an economic cluster – and yet, despite the support of many key economists, this paradigm shift has still not occured. Why is that?

An article last fall in the Toronto Star shed some light on reasons why the music industry, as a whole, is faltering. You can see the article, in it’s entirety, on the Toronto Star’s website.

Some interesting excerpts…

In the mid-1990s, the industry focused on retaining its core business model by emphasizing two strategies:

First, it relied on copy-control technologies, supported by additional legal measures, to curtail unauthorized copying.

Second, it lobbied for the establishment of a private copying levy on blank media to compensate for the copying that technology could not control.

Ten years later, that strategy is in tatters. The use of copy-controls has proven to be an abject failure. Moreover, despite generating more than $200 million in revenue for the industry and artists, CRIA has abandoned support for the private copying levy.

A growing number of international stars are following suit. Last week, Radiohead released its latest CD without copy-controls on its website under a pay-as-you-like system.

The Radiohead announcement has unleashed a stunning series of follow-up moves – reports indicate that Nine Inch Nails, Oasis, Jamiroquai, the Charlatans, and Madonna have either left or are ready to leave their record labels in search of greater commercial success through live performances, merchandise sales and other online innovation that might even include free distribution of their music.

Other artists are exploring new distribution partnerships – the Eagles are selling their latest CD directly to Wal-Mart, Prince distributed millions of copies of his latest CD for free in Britain in a newspaper promotion, and Nettwerk Records, one of Canada’s leading independent labels, combined with a newspaper to offer free downloads of some of its most popular artists.

The music industry (and specifically the CRIA) has shot themselves in the foot. Copy protection levys have justified P2P sharing, and artists are getting sick of seeing executives take all the record profits. And we wonder why independent and local music is suffering? It’s interesting to note that even at the time of writing, not much has changed in this landscape.
Apart from a shift back to vinyl for true aficionados. But that’s another post for another time.