The phrase "home taping is killing music"--a slogan invented and heavily promoted by major labels to combat the unauthorized duplication of music in the early-1980s--now sounds quaint after the rise of digital distribution. Because the legal arguments surrounding the trading of copyrighted music on file-sharing networks have been extensively debated elsewhere, this article primarily focuses on the way this alternative distribution system poses a very real challenge to major labels. That music monopoly, which has been in place for a century, was able to secure its dominance because it controlled the means of production--something that is no longer the case, because recording, production and distribution costs have radically dropped in price since the 1990s. This article, which operates in a journalistic mode, places into historical context the 1990s compact disc boom and the subsequent rise of digital distribution. The consumer-led file-sharing explosion forced an unwilling music industry into the online marketplace, something that this article argues has been a boon for those working outside of the major label system. This has opened the door for small labels and independent artist-entrepreneurs to use these relatively inexpensive technologies to disseminate their music and circumvent the clogged, payola-drenched playlists of corporate radio.

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This essay sets aside many of the legal discourses and controversies surrounding the emergence of music file sharing to examine one important aspect of it--namely, the way it holds the potential to create an alternative means of music distribution for artists who are often marginalized by the mainstream music industry. Here I will look at the way file sharing and other forms of Internet distribution have mounted a significant challenge to the hegemony of the major label distribution system. In doing so, I will begin by telling a story familiar to anyone intimate with the workings of the music industry. The narrative goes like this: Despite the fact that--in the name of musicians--the Recording Industry Association of America (RIAA) has filed copyright infringement lawsuits against downloading music fans, that same industry has never treated those musicians fairly or equitably.

I move on to demonstrate that, more than merely being a technology that enables copyright infringement, file sharing and other forms of Internet distribution are seen as a threat by the RIAA (and the major labels that it represents) because these new technologies threaten to erode their market hegemony. Later, I explore the emergence of "digital" as a medium that helped fuel the 1990s boom in compact disc sales, but which then ironically opened the back door to the dreaded specter of digital distribution. Although major labels embraced the digital CD format in the late-1980s, the same labels were dragged kicking and screaming fully into the digital age after consumers' adoption of MP3s and other digital music file formats. Lastly, I finish by discussing the ways in which small labels (and independent artist-entrepreneurs) have used these inexpensive new forms of recording and distribution to increase the diversity of music available to music consumers.

The Music Monopoly and Musicians

Dave Marsh, a native of "Detroit Rock City," has been in the music business for many, many years, and he's seen it all. Along with Lester Bangs, the rock critic featured as a pivotal character in Almost Famous, Marsh was an editor at the influential rock magazine Creem. After moving on to Rolling Stone, where he worked as an editor in the 1970s, he started his long-running independent magazine, Rock & Rap Confidential, and authored about a dozen books on music. Marsh also helped found the Rhythm & Blues Foundation, which was dedicated to fairly compensating black musicians who were ripped off in the 1950s and 1960s. True to form, he quit in disgust after it turned into just another hall of fame that had little to do with its original mission.

For years, this working-class rocker has been married to Barbara Carr, one of Bruce Springsteen's managers. They live comfortably in an expensive Connecticut home with their two little dogs; it is a contradiction that Marsh recognizes, and it seems to make him uncomfortable. Surveying his wooded New England neighborhood after I interviewed him for the documentary Money for Nothing: Behind the Business of Pop Music, he unleashed a classic Marsh-ism: "Look at this place. It's like something out of fuckin' Faust." Marsh knows that his comfortable home life is subsidized--indirectly, at least--by the same capital that circulates through the major label system. He is a cranky, cantankerous curmudgeon, rivaling only famed recording engineer Steve Albini (Nirvana, Pixies, Bush, Cheap Trick) in that department--though both also have sweet sides.

Marsh can list off a machine-gun litany of ways major labels use "creative accounting" to withhold royalties from an artist. "They get you on breakage fees, they charge you extra money to make CDs even though CDs are cheaper to produce than cassettes," he tells me, without missing a beat. "I mean, they just got a million scams to take money away from the artist," he says with disgust. "It's the reason TLC filed for bankruptcy, it's the reason P. M. Dawn sold three million records and were still not in the black with the record company." The rock-bottom price to make a video with MTV-level production values is around $100,000, and, depending on the contract, the artist pays at least half of it back to the record company. A more realistic number is a quarter of a million and, after two or three singles, the bills keep adding up. "In terms of the American economy," Marsh tells me, "the recording industry replaced the cotton industry with exactly the same labor relationship. You know, recording artists are mostly treated like sharecroppers." Still, the lure of a major label is strong.

"I know if some big record label had approached me when I was eighteen years old," Albini tells me, "and said we want you to be on our big record label--here's a record contract--I would have signed the first thing that was put in front of me, without any doubt." What made him change his mind? Years of musical horror stories and watching his friends get screwed by major labels. "Mainstream record labels, like any business, are just trying to maximize their profits, so they're trying to minimize their costs. Royalties are a cost; they want to keep that as low as possible. And, wherever possible, if they're going to be paying money to a band and they can instead use that money to pay for something else that they would otherwise have to cover."

Hip hop MC Busta Rhymes rattles off more things: "All those videos, the advertising in the magazines, the sniping that you see when you're walking up the block--all of these things have to be paid for--from the album pictures to the cassette being manufactured, to the actual studio time to record the songs. Everything. Every single red cent has to be made back before the artist can begin seeing money" (Money for Nothing). The vast majority of musicians do not make money from album sales, which end up benefiting only a very, very small minority of artists like Madonna, Metallica, or Aerosmith. "Industry rule number 4080, record company people are shady," rapped Q-tip on "Check the Rhime," from A Tribe Called Quest's 1991 hip-hop classic Low End Theory. Q-tip, another victim of the music industry, tells me, "Yeah, we obviously didn't learn our own lesson when I dropped that rhyme." He was laughing, but it was the sort of bitter laugh that keeps you from flinging yourself out of the nearest window in despair.

Here's what happened. The group sold 1.5 million copies with a 14% royalty rate, which meant they received about $1.12 per album. They spent $375,000 recording the album, which all had to be repaid to the label, and spent $80,000 for each of three music videos (back in the early-1990s when videos were cheaper to make). This and much more had to be paid back to their label before they could earn any royalties. "So we broke even with the company," says Q-tip. "But in our case we had other things we had to continue to pay off," like group taxes, individual taxes, and lawyer, accountant, and manager fees. "You're left with maybe $15,000. It's sad" (Money for Nothing). The year he was a platinum-selling artist with a breakthrough album, Q-tip was sleeping on his mom's couch, having made less that year than he would have working at a convenience store.

File-Sharing: A Challenge to the Music Monopoly