In his book Confessions of a Record Producer, music biz insider Moses Avalon—not his real name—wondered if the box of cereal was merely the bait to entice you into buying the toy inside. For many artists—established and otherwise—touring is more and more, from a financial standpoint, about the selling of merch. (Btw, the instances of people not paying, say, $15 for a CD but shelling out that much and even more for a vinyl version of the same is growing every day.) And because touring and its ancillary monies are where the cash is, any artist signing a record deal these days surely has to give up a slice of their merch revenue and maybe even a piece of their touring income. Welcome to the 1950s!
It’s been rumored that Warner Bros will make available online their entire out-of-print catalog. There's a lot of that music people want and would gladly purchase directly from them, and since no printing or advertising costs would be involved, it could also offset a portion of lost revenue from piracy. More importantly, from their current standpoint, they’d have much more control of the product in the marketplace.
Which brings us to what a record store-owning friend told us last year: he theorized that if the majors wise up they will find a way to cut out the middleman—iTunes, eMusic, etc—and sell directly to the consumer in whatever digital format we want. "You want Bob Dylan? Come to sony.com. We got him exclusively."