With Sony/BMG merger, 2004 will always be remembered as year 'Big Five' became 'Big Four' and don't be surprised if we're telling you about 'Big Three' at this time next year! Last year will also be remembered for labels aggressively utilizing video games as a marketing vehicle for launching of many of their artists.

It was a year when public finally said "No Thanks" to concert business in a very loud and clear way. The summer touring season, especially, taught some very painful and costly lessons regarding exactly how much public is willing to pay to see an act and what they are no longer willing to pay! As a result, Clear Channel has removed service fees from its ticket prices and drastically reduced parking prices at many of its venues. The industry also learned some valuable and long overdue lessons about number of acts marketplace is able to absorb.

Of course, most profound impact on world of A&R as well as many other areas of business was closure of four major labels: DreamWorks, Arista, Elektra and MCA (although MCA was reborn with far less staff as Geffen). These closures accounted for loss of over 600 jobs (35 in A&R departments).

In looking back over 2004, we're reminded of many conversations we had with various music business professionals on both sides of Atlantic concerning current state of today's music industry. Without exception, there seems to be a very sobering sense that record business we have known for last 25 years is now gone. This is extremely troubling for many, sad for some and terribly exciting for others. I see these times as an incredible opportunity for a total and complete reinvention not just for record label A&R Depts., but for entire spectrum of music industry.

If you as an artist, band, agent, manager or any other music business professional cannot see that old paradigm of artist development (the actual long-term process of building a career from ground up) has been completely re-invented over last few years, then you need to get out of this business. The old methods of doing things no longer apply. This may sound obvious to most of you, but you wouldn't believe how many fairly well known music business professionals within industry still believe that only way an act can have a viable career today is to get that act signed to a major label.

What's so sad is that these people who believe this (and there are many) can't even see that very system they feel can & will accomplish this for their artist no longer even exists! We've said this before, but it bears repeating - though no one will actually come out and say it (truth is, they may not even be consciously aware of it) -- Major labels today, with very rare exception, are no longer willing to be in business they have built over last forty years. The train of thought today is that 'old' process of signing, recording and developing talent takes far too long and is way too costly to achieve results they desire in time they have allotted.

As a consequence, whether intended or not, (and this is part many simply can not see) is major labels are now in Promotion and Marketing business, but of course, only for those experienced artists who have already been developed that they feel can be turned into multi-platinum sellers. Well, that would be nice, but that just isn't world we live in anymore. Of course, there will always be platinum sellers in future, but far fewer of them. Today, there are simply too many choices available.

It's fascinating to observe some of most influential music publications out there today, such as pitchforkmedia.com and Blender to name two, which have hardly any mainstream artists in their Top 50 of 2004. Today, it's all about choices. The future of this business will be thousands of niche artists selling fewer records much like cable television, which has a fraction of audience, but is profitable! And this is most profound difference from past in terms of A&R signings and looking at what can and will work in marketplace.

Under old paradigm, public (the majority of time) only wanted what major labels signed and sold to them (of course, that may have had something to do with what was available). Today, choices of music being vastly wider, a far more diverse artist selection available to us, not to mention various new formats provides an almost infinite selection for today's listeners and consumers. And, as most of us have known for years, market is far, far broader than major labels ever cared to acknowledge (yes, people between ages of 30-50 WILL BUY MUSIC when presented with artists who they can connect with). How else could Ray Charles sell two million copies of a CD via a coffee chain, or James Taylor sell over one million Christmas CDs via Hallmark without his CD without even being available at retail? If either of those artists were at a major label, (James Taylor was with Columbia/SONY for 27 years up until last year) they most likely would not have sold more than 200,000 to 300,000 copies, tops!

These two examples provide an insightful illustration why several of major labels are struggling today for their very survival. They truly can't see what their customers want. But, in much deeper sense, they have no desire to get to know what their customers want.

Don't get me wrong, there are several wonderful executives who work for major labels, it's just that corporate culture at top of most major labels is so profoundly out of touch with times we live in, they cannot see their own part in problems they face. The building of careers is a luxury of time to which they no longer choose to contribute. They really would like to THINK & BELIEVE they do, but reality is just opposite.