It’s 1992. The labels are signing Seattle bands, left, right and centre while at the same time they are dropping hard rock and heavy metal bands left, right and centre. That is the power the record label had. Not only could they make an artist famous, they could also destroy an artist. You see when you control all the points in the distribution and marketing chain, you more or less control everything.

With the massive power that the major labels had, we always saw artist/s as famous. We always thought that once an artist was signed to a label deal, they had it made. It was a big misconception.

Fame for an artist in most cases meant a large advance that had to be recouped by withholding royalty payments. That is why record label accounting gets messy and it cannot be trusted.

So in 2013, things have changed dramatically. With this change, the power is still with the major record labels. They gathered enough power during the Eighties and Nineties to be a force to be reckoned. Then in the Two Thousands the massive mergers and takeovers happened, further enhancing the power of the record labels. Then in order to allow digital start-ups, the record labels did one of three things; charge high licensing fees or litigate the start-up to bankruptcy or negotiate a large ownership stake in the start-up.

So even though the internet has lowered the barriers of entry, without the money and power of the label behind the artists, there is a pretty good chance, the artist would probably go unnoticed. Remember 4 million songs haven’t even been listened too on Spotify.

So when certain artists are complaining about a low royalty payment, maybe that is the royalty payment that is relevant to the niche the artist is in. Maybe it is a royalty payment that they have earned. You don’t see a current household name complaining. It’s because they worked hard at obtaining a certain thing called leverage.

Digital distribution offers an artist new audiences in places where brick-and-mortar stores would be impossible or unsustainable, like foreign countries or rural areas. The end result is growth across the board, both physical and digital provided that the artist gets noticed.

So is piracy that bad for an artist who is trying to get traction?

The majors and the mainstream journalists attached to news outlets operated by media moguls have done a great job selling the “one pirated item equals one lost sale” statistic and the “illegal downloading (piracy) is theft” argument. It is a statistic that rights holders, lobby groups and misguided artists exaggerate and it is a statistic they use to either kill off innovation or to stifle innovation.

Piracy (better known as copyright infringement) is basically one person (A) copying something of value that another person (B) owns. This leads to a situation that has both people (A and B) having a copy of the same item.

So it is safe to say that one pirated item is not theft. Theft is basically one person (A) taken something of value that another person (B) owns, which means that Person (B) no longer has the item.

So let’s assume that piracy spreads the artists’ material to places that are unknown to the artist and the people who download the music might become a fan and share their thoughts with others. They could even go to a show or they could go and purchase the next album or the artists back catalogue. There are a lot of could’s in the above theory. However the music business is all based on could’s.

For example, in the heyday of the record labels, this is how the above would have panned out.
Let’s assume that a record deal spreads the artists’ material to places that are unknown to the artist and the people who hear the music on radio or MTV might become a fan and share their thoughts with others. They could even go to a show or they could go and purchase the next album or the artists back catalogue. As you can see, the heyday theory also holds a lot of could’s.

Of course the difference is the money. The labels once upon a time threw money at artists and provided tour support. Today, the labels only go for the sure bet and 360 deals.

From a fan perspective, the main thing working against the artist today is time. Why would a music lover want to invest their time in an artist? I recently invested a lot of time in the TV show “Sons of Anarchy” because knowledge of the show was being shared at work and I wanted to be part of the conversation. I invested a lot of time in the show because fans of the show shared their thoughts with me. They convinced me that I needed to watch it.

One thing is certain in 2013. We move on fast. Look at the Top 10 lists of pirated movies that TorrentFreak publish each week. It’s always changing and very rare for the same movie to be at number one for two weeks in a row. Look at the Top 10 of the Charts published by each country. The artists in the list are always changing.