Who is Getting Hurt in this Music Industry Shift?

It's been hard not to notice some of the major Digg articles over the past week. Nine Inch Nails, Jamiroquai, Madonna and an uncountable number of up and coming artists are all dropping their record labels and encouraging people to "steal" their music!

And why shouldn't they? Think about it. A recording artist is a performer. They started out performing live for audiences and created a name for themselves. The money they made originally was from tours, gigs, sponsorships and creating their own accessories like clothing. Then a record label comes along and informs the performer that they want to promote them and help to produce records and all the artist has to do is give the record label a cut of the profits from the sales of the albums.

Simple enough: the record label is the middle man. They take out the stress of promotion and leave the artist to only worry about performing.

In return for all of this, a larger audience is given the opportunity to experience this artist's performance at the mediocre price of $15-20 for an album or $20-60 for tickets to a show. Everyone is happy, right? Not necessarily.

In the whole equation, there is only one group that does not lose money throughout the whole process and you guessed it: the recording label. The audience loses money no matter what. The artist loses money to the recording label because they are only making a few dollars of the $15-20 for each album because the rest goes to the labels.

Now bring in free promotion through file sharing and P2P networks they may or may not require a subscription and all of a sudden, the record label is cut from the mix. The audience still gets the pleasure of hearing the artist perform at a lower cost per album. The artist is still making a fortune from each song download and raising concert ticket prices.

So what do artists need a recording label for? Studios? No way! Most artists have them in their homes or are mobile on the tour bus. Promotion? Nope! The fans are doing the promoting themselves by downloading and telling friends about the artist through any number of ways. Discovery of new talent? Yeah right! In an age where global access is a few milliseconds away, a new artist has a HUGE number of ways to promote themselves without signing contracts!

Now, the question is whether or not other artists follow suit?

I could be wrong here in that this is the beginning of the end for recording labels and this actually could be the movement toward the downfall of the music industry, but I doubt it! Prove me wrong...please!

Have a great day!