Many years ago, the recording industry used very expensive equipment in very expensive buildings. Around this whole process, a whole 'pecking order' was created to only allow the best and brightest artists access to this equipment. If you've listened to pretty much any type of music, I'm sure you've heard stories of artists doing crazy things like selling their car, or all of their worldly possessions in order to get some time in the studio to record a song to submit to the record companies. Another part of this process was to build up interest in this artist by doing things like getting them interviews in key radio markets in the US, as well as airtime on those radio stations. Then, of course, there was the actual manufacture and distribution of the music of the artists, which the record company would also handle.
Times have changed considerably. Over the past 10 years or so, the focus of pretty much everything, including music, has gone from the broad stroke of just marketing one of something, to marketing specifically. For example, take a look at the toy market. There have always been popular toys, and popular genre's of toys. For example, Mr. Potato Head. First there was Mr. Potato Head, then Mrs. Potato Head, then the children, and other characters. However, there were usually only a small handful of additional toys in a certain branding of a toy. This has changed dramatically. Now, within a certain genre, such as 'Spiderman', or 'Blues Clues', there's an amazing amount of toys available. These toys go beyond just the toy itself, there are television shows that go along with it, as well as endless amounts of other items. The recording industry has done the same thing with music and the 'Top 40'. Over the years, music on the Top 40 has always followed whatever the taste in music was at the time. During the 70's, the taste was disco, so the Top 40 had disco music on it. In the 80's it was metal. This music typically appealed to people from their teens to probably their 30-40's. However, starting in the early 90's, the recording industry started to target younger and younger audiences. Starting with bands such as N'Sync and Britney Spears, the total aim of the Top 40 was the 10-18 age group. I've considered that this has always been the case, but somehow, I don't believe this is true. The recording industry is alienating everyone that isn't in that age group, or in that marketing segment.
Currently, for less than $5,000, a fairly professional-level audio setup can be had. This allows for artists to create their own music whenever they see fit. The one thing that the recording industry does provide however, is a talented producer to help the artist record their music. There are countless examples of a talented producer working with a rather 'rough around the edges' band to make an excellent album. A great example, is Def Leppard with their Pyromania CD. Def Leppard had a previous release that didn't do too overly well. John 'Mutt' Lange helped make this album a great album with his experience, and taste for perfection. This was also done in a time with the whole caste system in recording studios, where only a select few would have time to record their music, and have time to mess with the recording systems to see what they can do. Right now, someone can purchase a $2000 Korg device that will provide a multi-channel mixer, and can even dump the music once it's completely mixed to disc. This allows for the individual artists to mix and match as much as they see fit, and play around.
Another thing that has changed, is the possibility of people to directly market their music to people without using the RIAA to distribute content. There are countless mp3's on mp3.com that can be download and listened to by independent artists. There are also other (non-RIAA) organizations out there that distribute CD's for independent artists at lower fees. These mechanisms did not exist even 10 years ago, since they really use the Internet to do their advertising and actually sell their CD's. Surely there were distribution organizations previously, however, I believe that the presence of Internet has made these organizations more successful and is allowing them to reach a wider audience.
This leaves the selling of the artists to the general public. This is something that the recording industry does exceedingly well. They give face time to new artists on major media outlets to gain exposure. There really is nothing that allows new, independent artists to bypass this systems.
I believe that the RIAA isn't really afraid of the 'Illegal File Sharing'. They are really afraid that artists will discover that they aren't needed. They can directly sell their music to the general public. If they were to charge $8 for a downloadable CD, they would make $6 for the CD, since $2 would probably go to maintain the delivery infrastructure. That has to be way more than the $1 they are currently receiving. I also wonder if the 'illegal file sharing' is any different than people copying tapes in the past. I know I used to just make copies of friends tapes instead of buying the tape myself. However, that was something that was impossible to meter. I also believe that 'illegal file sharing' has allowed many artists, such as Aimie Mann, to gain exposure that they would have never gotten, had it not been for that sharing.
Maybe, eventually, the RIAA will realize that people are tired of being mass marketed, and ripped off. For years, we heard that once CD's became more popular, their prices would fall. They haven't. The RIAA has continued to keep the prices high on the CD's, even though you can't even buy a cassette tape at most music stores anymore. Someone needs to buy the RIAA a ticket for the cluebus, because they are certainly missing it.
[editor's note, by matt] Mort was kind enough to reprint his fine article here, and the original can be found on his (very well designed) site.