12 Music Business Predictions for 2012

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Where were we? Oh yeah, crystal ball and prophesies. You ready for this? OK. What follows is a list of events we expect to befall the music industry in 2012. Yes, these are etched in stone and should be regarded as gospel. Full prophetic titillation ahead.

1. Sales sag on We wish we had good news for you here, but we don't. The future still looks less than rosy. The album isn't entirely dead, though; it's still in ICU and labels are on all fours, praying to every god in existence for a miracle. The bump in digital sales helps. But digital revenue isn't rising fast enough to fill the gulf created by low CD sales. Besides, a good portion of digital growth is in individual units and other formats not named album, e.g. iTunes' build-your-own-album feature.

2. Major cartels downsize We're now down to three major cartels: UMG, Sony, and Warner. If Warner accepts Sony's rumored marriage proposal, we'll be looking at just two. Even sub-labels are gobbling up sub-sub-labels. Take RCA, for instance. Peter Edge assumed the mantle over there and immediately axed the three labels under his banner (Jive, Arista and J Records). Artists from all three rosters--Justin Timberlake, Ke$ha, and Alicia Keys, among them--were bequeathed to RCA Music. Expect EMI to do the same to its own labels. We'll soon be saying "bye bye" to: Virgin, Capitol, and Blue Note. It's strictly an economic move. These guys want to cut costs, explore digital distribution, and expand their operations. Edge won't even call RCA a record label because that's just too...restrictive. His vision, the vision of every music exec in business today, is to expand beyond the business of selling music.

3. Indies boom The allure of a major deal will always be too enticing to resist. But not for long. 2012 will be the year people figure out the difference between indies and majors (mostly leg work vs exposure), and we'll see a gradual migration from majors to indies. Success stories, like Mac Miller's #1 debut, will give new artists fresh impetus to go independent.

4. Adios, DRM Are we still discussing Digital Rights Management? What is this, 2001? Drop the damn thing already, will ya?

5. SOPA Soap Opera flops There's this anti-piracy bill called the Stop Online Piracy Act (SOPA). By the time you get to the end of this article, a U.S. House panel will have taken a vote to determine if you'll get slapped with a felony--instead of a minor charge or a fine--the next time you grab a song off Megaupload. Also, under SOPA: if you upload a YouTube video with copyrighted material (e.g. your kid sister singing Justin Bieber's "Baby"), your ass is toast. If this bill becomes law, the digital music industry is (how do we put this subtly?) fucked.

6. Streaming survives OK, so Spotify got roundly flayed for ripping off artists. That's understandable, because it notoriously yields peanuts* compared to download services and traditional CDs. Then again, Spotify is in its infancy. With time, it'll win over some of its skeptics. Look, the future of streaming is bright. People are spending more time online, especially on Facebook. As people spend more time on the web, it's logical that they're also listening to music on Pandora, Spotify, Rhapsody, etc. So you'll see more streaming services integrate their services with Facebook, Twitter, allathat.

7. No new business model Same song, different dance. If you can somehow invent a new, successful business model for the industry you're going to be a millionaire.

8. New forms of distribution emerge New song, new dance. If Steve Jobs was alive he'd probably be plotting a digital distribution deal and dangling tantalizing offers at frustrated artists. Old forms of distribution are cost-intensive. And with digital sales on the rise, expect non-music companies, like Google or even Microsoft, to jump in and try to revolutionize distribution.

9. A&Rs go back to basics A&Rs are supposed to develop talent. That's what they're paid to do...well, back when they existed. The reason you don't see A&Rs out developing talent these days is because majors no longer have the patience or resources to go under the hood. Most of them don't even offer the position anymore; the A&Rs still left in the business tend to take on perfunctory roles, like picking beats or fetching collaborators. But if there's one thing the industry learned this year it's that the business of artist building is still a profitable one. Let me give you a classic example: J. Cole. Industry vets are scratching up a tumor wondering how a new artist with no hit singles, no big budget videos, and no sex tape could top the Billboard 200, go gold in two months, and score a Grammy nod for the coveted Best New Artist. How, you ask? Two words: artist building.

10. Viral videos tick up Comscore says we viewed over 200 billion videos online in October 2011 alone. It's a new day for online videos; more artists are now relying on the format as a key promo vehicle. One viral video could be the difference between a broke underground artist and a record deal. Just ask Don Trip who scored a major deal off a shitty lunch-budget video.

11. Music and movie trade fates** Riddle us this: how is it that whenever music has a good outing (stop us if you caught a good movie this year) movies end up being shitty across the board, and vice versa? We've concluded that the movie industry and the music industry entered a pact that restricts both from thriving simultaneously. It's been a terrific year for music, so next year, we'll probably see better movies and...OK, we won't jinx it now.

12. Rick Ross is a tree-hugger In an effort to reduce his carbon footprint, Rick Ross will launch a new label called Prius Music.

*Spotify's 1.146 cents per stream is particularly egregious. Digital Audio Insider notes that it would take 244 streams to reach 99 cents. You can make that much off one iTunes download. And if you're lucky enough to convince 244 people to download your stuff at $0.99 a pop, you're banking $241 instead of 99 cents. So if you're an artist, which service are you more likely to align with: Spotify or iTunes? We offer this stat not to contradict an earlier point but to point out why Spotify gets a bad rap. The easy fix? Address this whole royalty issue with a big, smiley raise.

**Can you tell this is where we started running out of predictions?

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