RCRD LBL

As I'd mentioned in my last post, what I'm really focusing on is a label model that can allow talent to grow and musicians to prosper without the influence of the Label 1.0 model.  There's just too much bad blood between artists and labels that I think there needs to be a fresh start.

Enter Rcrd Lbl which, just like Penny Distribution, is a digital music model that is based on a record label, but isn't exactly a label.  The Wall Street Journal mentions some of the keys to this model:

Rcrd Lbl has signed contracts giving it the right to distribute a handful of songs from 40 to 50 bands...Rcrd Lbl’s artist contracts are unusual—chiefly in that they make the company the exclusive distributor of a specific number of songs, not for an act’s entire musical output, as is the case in traditional record deals. “It’s a blog,” says Mr. Deutsch. “We’re not necessarily trying to tie you up for your fifth album.”

Artists with songs on Rcrd Lbl won’t get a cut of advertising associated with their music (as they would on ad-supported service imeem.com); they’ll get advances Mr. Deutsch characterized as modest for each song they give the label. These advances range from $500 a song for the least established artists, according to people who work in the music industry, and escalate for bigger names to around $5,000. Rcrd Lbl will divide with its artists any money that it makes from licensing their music to television shows, movies or TV commercials.

I think giving advances as opposed to a cut of ad revenue is smart move - now anything they make on ad revenue above and beyond the advances they paid artists at the beginning goes straight to their bottom line.  They might eventually make a profit - I said might. 

The $64million question here is whether or not people actually CLICK ON THE ADS. 

Myspace & Spiralfrog haven't shown that that is any way to make a company profitable, but that doesn't mean that ad-supported model doesn't work - it just means that no-one's figured out how to serve the ads in the right way so as to make them a) non-intrusive to the user but b) maximize the amount of people who click on them. 

Here's one guy who thinks that ad-supported music is the answer for the music industry but, unless there's an improvement in how the ads are served and the amount of people clicking, using advertising as the cornerstone of your model is extremely risky. 

Whether Rcrd Lbl is a success or not will be borne out in time, but it represents some key changes in artist/label structure that I think are necessary for a label 2.0., notably:  transparency in accounting with artists, flexibility and accomodation of artist/label needs and re-focusing on normal label revenue streams that can be profitable (e.g. publishing & licensing).  In an interview with Wired, founder Peter Rojas explains:

"...there's no weird, fuzzy, major label math about it, and that's really appealing (to artists)...We're doing entirely new kinds of deals with artists and have these very flexible arrangements....With some artists we do deeper deals, where we rep them in terms of their publishing and licensing, and we split the revenue for that kind of stuff.  Some artists want to take advantage of that, and some artists don't. It varies; it's a spectrum, a continuum – if you want to give us a little bit more, you get a little bit more, and if you don't, that's fine – it works both ways. It's going to evolve over time for sure."

Flexibility, openness, accommodation, evolution.  All essential traits for a market that changes every day, and essential in re-building trust between artists and Label 2.0.