The Beat Goes On

In fact, Latin music--reggaeton included--could be one of the biggest beneficiaries of the current digital revolution. After all, the demand is already there: in recent years, Latin music has enjoyed unprecedented global popularity thanks to the initial U.S. crossover success of artists like Shakira and Juanes. But while U.S. sales of Latin music are rising--growing at nearly 20 percent so far this year--it's also the most pirated genre. As a result, the supply chain has been cut: several major Mexican record labels have folded in recent years, and in 2004 piracy prompted a Warner Music Group division to dump the hugely popular Mexico City band El Tri. Although El Tri was selling out concerts, the group just couldn't move enough records to generate a profit. Satellite radio could offer these popular-yet-still-struggling artists a direct channel to their listeners.

Even wary major labels could benefit. Most of them now scour satellite radio for new talent: though there is never a guarantee that local success will translate to mainstream profits, it does reduce the risk factor for the labels. New Zealand-based rock band Steriogram, for instance, was discovered by an independent L.A. scout looking around the Web for new talent; a few weeks later he got them a deal with Capitol Records.

And consider reggaeton: although Daddy Yankee will continue distributing his records through his own label, the Internet-aided buzz surrounding the genre has sparked a signing frenzy in the United States. Earlier this year Universal Records launched Machete Music, a label dedicated to the "burgeoning Latin urban music movement--with a specialty in reggaeton." Tego Calderon, a reggaeton veteran previously unable to secure a major U.S. contract despite his popularity, recently signed a worldwide multi-album deal with Atlantic Records. And more big signings are expected following the decision by XM's main Latin channel, Alegria, to focus specifically on reggaeton. "A mutual economic benefit is being exploited," says Kovsky.

Some major labels have even begun to promote their own artists on XM and Sirius. "Smart labels have been looking everywhere," says Sean Ross of Edison Media Research. "And a lot more of the forward-looking record reps have been reaching out to satellite radio." Even though recording-industry bigwigs acknowledge they no longer have full control of the process--which once ranged from signing the artists to distribution to dictating commercial-radio airplay--"they recognize that time marches on, and that the old system just doesn't cut it," adds Sinnreich.

After a period of retrenchment, the future of music should thus be more diverse than ever. File-sharing technology is improving, satellite radio continues to expand and Internet sites deliver more types of music to more parts of the world than ever before. That will likely mean that the majors have to share more and more of the pie with small labels and artists themselves. But listeners eager for new sounds cannot help but benefit.

© 2005