AUSTIN, Texas (Billboard) - Former Talking Heads frontman

Byrne gave a presentation entitled “Record Companies: Who Needs Them?” at the South by Southwest music conference in Austin, Texas, Thursday. He offered a slide show that predicated digital sales would outstrip CD sales by 2012.

That year will be the “tipping point,” much like the mid-to-late ’80s when CDs overtook cassette sales. Once download sales became the norm, Byrne said, it will allow manufacturing and distribution costs to approach zero. “That is a fact,” he said.

He said at that point, record labels will be faced with a sort of choice — to ramp up marketing services to use music as a loss leader for tours and merchandise revenue, or aim only for international stars of the ilk of Britney Spears.
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But Byrne seemed to imply that labels are not changing as rapidly as they need to be. He pointed to the royalties artists receive on each CD sale, and put the number at about $1.60. He said the royalty rate is essentially the same with an iTunes sale.

“There’s no manufacturing or distribution costs,” Byrne said, “but somehow the artist ended up with the exact same amount.”
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But first, he said, labels will have to remove their digital rights management (DRM) copyright-control technology. He said he buys most of his music online via eMusic, or obtains it illegally, due to the file constraints on files sold on iTunes. Byrne predicated that once DRM is removed, iTunes will no longer “have a monopoly,” and labels will be better prepared to deal with Web sales.

If the likes of the MPAA, RIAA and IFPI are to be believed, file-sharing is causing worldwide havok, costing billions of dollars and creating unemployment. It’s true that some people are feeling the P2P effect; they’re called ‘physical pirates’ and one of them says that file-sharing has ruined his business.
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According to Tony, the first 2 hours of every Saturday and Sunday morning at the local flea market always proved the most exciting. “We’d take 60 cases of CDRs down in the van and as soon as we got there a crowd would swarm around us. We had no competition and it was obvious the punters had no other suppliers. Inside 30 minutes, 90% of the stock would be gone with some customers taking 2 or 3 cases each, presumably to sell on. After 3 hours we were cleared out and on our way home, always with huge amounts of money.”
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Tony is very clear about why his rags to riches story has gone back to rags again. “File-sharing, P2P - call it what you like. When you asked a customer why he wasn’t buying anything, 9 times out of 10 it was ‘BitTorrent this, LimeWire that’. Add that to the fact that huge numbers of PC users have burners and fast broadband and its obvious why I had to get out and earn a living another way. We had it good for a while but I don’t think those days are coming back.”