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What record labels can learn from the app store model

When you look at the current mobile app stores, you can touch and feel a wide range of compelling applications. And the number of apps is growing by the day.

Some are developed by large companies. Some are developed by venture backed startups. Many (most) are developed by 1 or 2 engineers.

My favorite apps are on my iPhone are built by companies with less than 10 employees at the moment. I didn’t fix it that way – it just happened.

The key is that developers can build simple apps and sophisticated apps. It’s entirely up to the developer.

Record labels need to take a page or two out of the current app store model.

In all of the major app stores that exist today (Apple, Google, Blackberry, Palm), the app store owner doesn’t ask for any up front fees, up front licenses, wacky terms like most favored nations (MFN), or complicated rev share fees from the developer. The terms are simple and straight foward. A simple revenue share where the developer gets most of the economics. That’s why it works.

The app store then developers aggregation, reviews, filters and distribution.

If someone wants to create a killer web service or mobile app with music content, well you know the drill.  The complexities are endless. First, you have to do deals with labels and publishers. Then each record label has a complicated process to get a deal across the finished line. I know of some startups that have spent 18months to get a label deal done. Oy.

It has to be simple. I’d love a self service model where the developer agrees to standard terms and a rev share fee structure that allows even the single hacker to build something great (without up front fees, fear of litigation, or pysho-expensive contract negotiations.)

Then we can imagine a viable role for labels and will see an explosive developer creativity and innovation (and venture funding as well). Artists need to get paid more from this new model and the labels will just have to live with it. Because it in this “app store model” the developer is creating a ton of value.

And that will be a good thing for everyone.