Fear not, budding music moguls — labels aren't likely to disappear anytime soon. For most young bands, record-company promotional and marketing clout is still a crucial part of building and maintaining a fan base. ''Traditional record companies put money and passion into what they believed in, and helped take it out to the forefront,'' says Atlantic Records president Julie Greenwald. ''We continue to do that, to find the best music and put money, muscle, resources, and passion behind it.''
While that may be true, a growing number of young artists, including indie-rock band Clap Your Hands Say Yeah, Maroon 5 tourmate Sara Bareilles, and Grey's Anatomy staple Ingrid Michaelson, have launched solid careers without a label (and with help from MySpace). But that kind of success remains rare. ''I'm very lucky,'' says Michaelson, whose self-released ''The Way I Am'' has become an unexpected Top 40 hit. ''I don't think this is the end of labels. They have a lot of money. If they spend the right amount, get you in the right places, if the songs are the right songs...it's like the right cocktail.''
But Madonna's Live Nation deal is a wrinkle that could flummox some big labels. By breaking down well-defined boundaries between record companies, tour promoters, publishing, and other revenue sources, labels could open themselves up to a lot more competition. ''The Madonna thing is interesting because it's a major corporation that's not a record company saying that they're the whole dog, not just the tail of the dog,'' says Gold Village Entertainment CEO Danny Goldberg, who managed Nirvana and has run three labels. ''There's sort of a paradigm shift in terms of where the real driver of the business is. Now the live career is what's driving it all. But it's encouraging to me that an artist can still command a nine-figure deal, that they can still have that kind of career at this stage. It shows that the music business is still very healthy — even if the record business is going through a tough time.''
L.A. Reid is not happy. The chairman of the Island Def Jam Music Group — the man behind Usher, Kanye West, and Mariah Carey's comeback — thinks Radiohead are making a terrible mistake. ''I'm a huge Radiohead fan, love their music,'' says Reid, puffing on a cigar behind an imposing desk in his midtown New York office. ''But I think it's irresponsible on Radiohead's part to take the position that they don't need a record company. Because it may work for a few artists who are hugely successful, but the large population of recording artists aren't Radiohead.'' What especially irks Reid is the band's implicit devaluation of recorded music. ''To give away music is a huge mistake,'' he says. ''Because the music they make is amazing. They should charge more for their record. Because it's better! I think it's a horrible signal to send out. I'm a huge fan of their music, but I absolutely question their business acumen.'' (It should be noted that Radiohead are also selling a deluxe CD/vinyl set for about $80, and they plan to release a traditionally priced CD in stores next year.)
NEXT PAGE: ''MySpace is only about three years old. YouTube is less than two years old. They've fundamentally changed the relationships between artists and fans, and I couldn't have told you five years ago that I expected those things to happen.''
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