I have been in the music business for over 20 years both as a musician and as an engineer. Downloads have their place as a promotional tool. I really believe that. The fucked up sales on CDs has as much to do with Record Companies charging more than what a product is worth as does the download world. That will kill any business. I can record a band in half the time it used to take. Thanks to computers (and auto tune! lol) Manufacturing and artwork costs less than it did 10 years ago too. We can get a project recorded/finished and in the jewel case where it can be sold for 10 bucks and still have a good margin........... Why can't Sony? It can't be videos and promotions because that ends up coming out of the bands pockets like toodamnfli mentioned. There are several small record companies I know of that are doing quite well right now. Fuck I wrote a whole book here. Sorry.
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