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First of all i would like to thank this great community for the very prolific debate we've being doing in the last weeks. Many users with very different thoughts and perceptions are posting, including myself, EFF, chrisso, psalad, neenja and many many others, there are so many threads that is hard to keep track of my posts. Although there is not a consensus, the fact that we are openly talking about the future and present of our business in a very civilized manner is a great example of the strength of Gearslutz (thanks Jules).

Thanks,
Leandro Dias (Subversounds)
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Now to the topic:

The perception i'm having is that music business is now changing its mode of production, not that it is falling apart. As many economists and industry theorist state, every time a field of industry goes through a structural change a fundamental crisis emerge. When Taylor and Ford came with their respective ideas of business organization, it changed a lot the industries, first their respective fields, later all other fields followed their steps. These had it's heyday/apogee from the 50s to late 70s, the Age of Mass Production, and still some fields of industry follows them.

Just to make sure what we are talking, the links above have simplifications of the two methods, but to make things short:

Taylorism is the scientific management of production, in essence its characteristics are the high division of labor; careful study of the role of each job within production chain. Its often related to Fordism.

Fordism is the line assembly approach to production, high standartization of the product and elimination of skilled labor. It complements taylorism because it requires a high division of labor and careful study of each job position (hence it needs a less skilled worker).

So, from the 70s to the 90s, this classic way of organizing industry saw a decline and a new form, much more efficient started to take place. I'm talking about 'toyotism' or the Lean Manufacturing process. The "on demand" way to produce.

To make things short again, Toyotism is based on the TPS (Toyota Production System) which is, oversimplifying, a "on demand" process. Only after a sale/order is made, the car start to be manufactured. And within a few days/weeks, the product is ready to be delivered.

What does it change in practice? It creates a much more economically efficient way to produce things, eliminates the need for stocks (of finished products), eliminates a big part of the risk and it has little to no waste of materials/ final products, mainly because the sale took place before the actual product. This is why many eastern motor companies grew amazingly from 90s to now, a much cheaper and efficient way.

And what does it all has to do with the Music Industry? Well, we can relate the actual way music is produced as a mass production style, highly fordist way approach. Mainly music industry is used to release tons of copies on the market and 'hope' it will sell to pay the costs/get profit. That is why the music industry is usually facing overproduction, excess of supply and when oversupply meets underconsumption, we have crisis.

And if you ask me, where is the music industry going?

I would be categorical: we are heading to toyotism in music industry. We are heading to get the product after we make the sale. Just to reinforce in other words, only after someone clicks BUY, that the machine says PRESS/PRINT. Technology, modern logistics, easy of information and highly automatized production can easily allow this change in a short time period.

In publishing (books) we have two or three of "on-demand" publishers around here (Brasil) and one is starting doing CDs. In US, from the top of my head, i only see CDBaby using the "on-demand" pressing/distributing system but i'm pretty sure that must be others. In Europe i dont know of none. But it is no mistery that these type of on-demand publishers have better deals to musicians and independent labels, they transparently present their "costs of production" and we know how much we will charge to get a reasonable share of the sales.

But what does it change for the factory floor of the Music Industry?

Well it changes everything. As we are talking in many threads, until just recently (particulary in my case, Brasil) Labels always entered with the risk part of the job. They fund albums hoping to sell and get the costs/profit back, a classic fordistic type of business subject to the uncertainties of the market it cant control. During its history the Music Industry, even maintaining its fordistic type of production, tried to eliminate the risks (as any other industries) and started over monopolizing the fields, to assure sales. Hence the studio aquisition/foundation period of 50-60s, the merge with distribution companies 70-80s, the merge with broadcast companies 80-90s, and more recently, advertising companies 90-00s, creating the overpowered big four controlling 80% of all the music market.

The risk part of the business is the main, maybe the only, justification for the high % of shares of copyrights of the final product. And here is where everything changes for the 'fabric floor' (musicians, producers, masterers and so), if the risk part is eliminated, the actual album is produced after its sale, how can their copyright shares be justifiable? This is no rethorical question.

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PS: Sorry for the long text, but i think this is a must read.