It wasn’t merely Chance… The digital world is changing entertainment industries

Last night Chance the Rapper made history by becoming the first artist to win a Grammy without being signed to a major record label (actually he won three and was nominated for seven, which is amazing even for the most established artists working with an agency for years). In fact, this was the first time Chance was eligible at all after the Recording Academy relaxed their rules to allow the nomination of artists without a recording agency and available only through streaming services. I’m certainly no expert on the entertainment industry but I do think this is one of many signals of permanent changes to this industry thanks to an increasingly digital world.

chance-the-rapper-grammys

Even more interesting is the fact that Chance gives away his music for free and instead relies primarily on concert and merchandise revenues, his independent clothing line, as well as meager payments from streaming services. What began at first as a strategy to gain exposure to a wider audience became a strategic decision to maintain creative freedom.

“After I made my second mixtape and gave it away online, my plan was to sign with a label and figure out my music from there. But after meeting with the three major labels, I realized my strength was being able to offer my best work to people without any limit on it. My first two projects are on places where you can get music for free.” (Vanity Fair)

Now I’m not saying that since Chance did it recording agencies are going to disappear immediately and anyone can be famous thanks to the internet. It’s not accurate to point at one person who managed to become successful and use them as evidence that anyone can be successful if they work hard enough. To say as much would be to severely downplay the talent of the Chance and ignore the odds against any artist trying to make it. One could even argue that access to the internet is only a small step better than handing out mix-tapes on a street corner. While the internet allows an artist to reach more people around the globe, it also means there is more competition (after all, Myspace didn’t eliminate music agencies and at one point it seemed every band had a page). I still have to somehow decide to listen to a particular artist and the internet essentially provides an endless supply of mix-tapes. An artist needs to have (or make) the right connections, find creative ways to market their music, and eventually make money.

However, Chance has entered new territory after his wins last night and may be blazing a trail for others to follow. I think he may even end up changing the entire industry in a similar way as Netflix has changed Hollywood and the way consumers experience movies and television. A few big TV and movie studios used to have exclusive control and this often resulted in similar casting decisions and limited narratives since playing it safe was considered better for appealing to a broader audience. Similarly, cable companies dictated how that content would be delivered to our homes. Netflix is challenging these business models by offering seemingly endless (and even exclusive) content accessible on multiple devices. By using their data and algorithms to inform casting and content decisions, they are able to leverage their broader reach in the market and entirely change the game. Will Spotify, Tidal, or some newcomer create an avenue for artists to reach the masses in a similar way? I think change is coming and regardless of the form, it will function to allow more creativity for artists and a better product for consumers.

7 comments

  1. This a great post and you acknowledge pretty much all of the counterpoints that I would have voiced. I personally think that there will always be record labels. Chance is incredibly talented and I think his music and his very genuine personality has won over the masses. But there will always be up-and-coming pop stars that are willing to sell their soul and sign record deals in the hopes of becoming rich and famous. They’ll put out one song that will be overplayed on the radio, record labels will profit off of it, and the pop star will never be heard from again. While I think this model will continue to exist, I sincerely hope that Chance has paved the way for other talented artists, who may not get as much publicity as radio pop stars, to get some recognition.

  2. Great post! In my strategic management class last semester, we did a case on BMG Entertainment and the recording industry. What surprised me was how the introduction of the internet did not actually seem to disrupt the industry in the sense that the top record labels remained the same. The real disrupter previously occurred with the invention of rock and roll because it introduced a whole new sound and avenue for new labels and artists around the country like Elvis to rise to fame. Could Chance symbolize a new type of rock and roll? Possibly, but I think he is a great example of how the right mix of new music streaming services like Spotify and great talent can change how artists can make it to the top without the help of traditional recording agencies.

  3. I really enjoyed this post! In particular, it was interesting how you compared this event to the way in which Netflix really challenged established business models. Creative freedom is definitely something that record labels tend to impede, so I can see how industry standards could shift away from that restrictive attitude.

  4. Nice post. I didn’t know the “recording artist” requirement for the Grammys. I do think it’s likely a signal for big changes for the industry that we will probably not come back from. Will be interesting to see if this opens the floodgates.

  5. Great post! Given the changing rules of the Grammys and how much Chance had campaigned for them himself, it was awesome to see him win! I really like the analogy between the music industry and the TV/movie industry as it’s been disrupted by Netflix. Though I agree with @ondraceknicole that recording agencies probably aren’t going away any time soon (almost in the same way major TV networks aren’t going away, just adapting), I do think that people like Chance and the rise of streaming services like Spotify and Soundcloud will push agencies to think about “smaller” artists more seriously, and reposition themselves in the online sphere. I also think a huge part of Chance’s success has been social media; Twitter seems to be able to connect more people to artists than Myspace ever could (maybe just because of network effects), and it’s a tool Chance has been leveraging really well to promote his own music, which I think is a trend we’ll see other artists following more seriously in the coming years.

  6. I think it is so interesting how social media truly can change every industry. I also find it interesting how the success of these musicians can be so different regardless of whether they utilize social media the way Chance does by giving away music or they charge people for listening to music. Taylor Swift seems to be one of the musicians who does not allow her fan based to take advantage of free music the way Chance does as she does not allow her music to even be on Spotify.

  7. Thank you for your post Troy, your analysis on the changing music industry gave me a completely new perspective. It seems like social media is turning into a middleman in communicating content between businesses/individuals and consumers. This post even reminds me of the presentation on New York Fashion Week we saw today in class where designers are directly selling their runway looks to customers via online because of their high exposure through social media as well as doing their own promotions through Instagram instead of heavily relying on traditional print ads in magazines like Vogue. I completely agree with you, while Chance has immense talent and very much deserves his win, his strong stance on forgoing partnership with a recording label and relying on concerts and his clothing line for revenue stream has really enhanced his brand and follower loyalty.

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