5 posts tagged “music”
Just read this article from the New York Times about the “new model” for record labels, called 360 or multiple rights deals.
“…artists share (with labels) not just revenue from their album sales but concert, merchandise and other earnings in exchange for more comprehensive career support…..In return for that bigger share, labels might give artists more money up front and in many cases touring subsidies that otherwise would not be offered. More important, perhaps, artists might be allowed more time to develop the chops needed to build a long career…”
I know from experience that the 360 deal is very much in fashion in the music industry, and for obvious reasons. A “developing” act would not be signed to a major or major-affiliated indie today without one of these kinds of deals in place because of the death-throes of the CD as the industry’s cash-cow.
There’s a very simple problem with these deals:- there’s almost nothing of value in it for the artist. Let’s look at the items mentioned above that the artist will receive in return for giving up percentages in their until-recently exclusive revenue streams:
- More money up front: Great! Get yourself further into debt with the label and deeper in recoupment and further from making a profit or royalties from your record – and since you’re now giving a chunk of change from your merch sales to the CEO, what are you going to live on? And how is this an answer for already cash-strapped labels?
- Touring subsidies: This is the same as more money up front. Whereas a solid touring act could keep 100% or revenues before, now they’ll get more indebted to labels and have label execs pushing them around on everything from who mans the merch table to who designs the t-shirts.
- Artists might be allowed more time to develop: Excuse me? Isn’t this supposed to be the point of a label? A label should have faith in the artist and not base their success on a poorly-received record, a truth sadly destroyed by the hit-driven behemoths the labels turned into in the 90s. There’s a healthy skepticism among most managers and artists about whether this leopard can so easily change it’s spots - “You can speak to me that you’re going to work a record for 18 months. You’re going to work a record for 18 months when it’s selling 420 copies six months from now? Come on — really?” says one manager in the NYT article.
As always, the devil’s in the details. The article gives us some numbers to work with
“…Atlantic’s document offers a conventional cash advance to sign the artist, who would receive a royalty for sales after expenses were recouped. With the release of the artist’s first album, however, the label has an option to pay an additional $200,000 in exchange for 30 percent of the net income from all touring, merchandise, endorsements and fan-club fees.
Atlantic would also have the right to approve the act’s tour schedule, and the salaries of certain tour and merchandise sales employees hired by the artist. But the label also offers the artist a 30 percent cut of the label’s album profits — if any — which represents an improvement from the typical industry royalty of 15 percent…”
Although there are certain reasonable assertions here, we can’t forget that this is the music industry we’re dealing with.
If you’ve followed this blog at all, or read some of the prominent music industry books available, you’ll know “creative accounting” is an institutionalized norm in this business.
Reducing the monies paid to artists by “deducting” costs of free-goods given as promotional items, breakage of product in transit (even on digital product!) and the infamous controlled composition clause are just some examples of clearly unfair business practices that are “the norm” at many labels. What’s to stop similar practices from surfacing when calculating the labels’ cut of tour monies? Or more stringent deductions reducing the new increased royalty on CD sales to make the increase negligible? This may sound paranoid, but if we don’t learn from history, we’re doomed to repeat it.
The sad fact is that there’ll always be artists who feel that these deals offer them a better opportunity for success than a direct approach – and indeed some bands like Paramore (mentioned in the article) may not exist at all without these kinds of deals – but I can’t see how this will end well for them.
I’ve seen first hand the damage caused by the combination of a label with an exploitative deal and an artist hungry for validation. The 360 deal is not the answer, and I’m hoping with Penny Distribution, and other Label 2.0 models, that there can be less of these kinds of casualties in the future.
Update: Bob Lefsetz has some quality vitriol about this article over at the Lefsetz Letter:
"It’s the artists’ move. Want to make a deal with your computer genius buddy down the hall? Someone who will go to every gig? Be my guest. Throw in with the establishment because they WERE the establishment… You’re fucking ignorant."
and
"The sooner young ‘uns reinvent this business, the better it will be for artists and fans." Couldn't agree more, Bob.
As I’d mentioned, I’m hoping to use the next few posts to “think-out-loud” about what Label 2.0 might look like. As I’ve had first hand experience of Label 1.0 with Real Music, I’m hoping to use that as a jump off point for this discussion. Despite all the hype, I think that most innovations in an industry build on, modify and improve on older models rather than completely replacing them. With that in mind there’s a few things that a Label 2.0 needs to address, and we’ll start with:
1. Improving the reality and overall perception of the Artist/Label Relationship
For a variety of reasons, the perception of a “record label” has been universally distrusted, reviled and rejected as a system of corruption by artists for years, possibly since the very inception of the industry.
The design of a Label 1.0 record contract could be summarized thus: “You get the glory, we get the money”. Through a system of wily accounting, ambiguous clauses and extraordinary use of language, record labels strove to reduce the size of a royalty paid to an artist by any means possible.
Once large corporations began buying & consolidating labels throughout the 70s and 80s, this process only quickened as shareholders began demanding greater and greater profits.
Although
the indie label industry often set their own rules, the “standards” set
by the larger labels formed the blueprint for many independents
business models. And why wouldn’t it? It was certainly making serious
money for the majors.
As recently as 2004, while reading
about industry practices, I was struck by how brazen it all was. The
reasoning behind many parts of record contracts was so obviously skewed
in favor of the label, at the expense of the artist, that I couldn’t
understand how they got away with it. (Check out Everything You Need to Know About the Music Business by Donald Passman for plenty of examples) The reasoning, of course, was “This is how it’s been done for years, so crying about it won’t help”.
Flash forward to 2007 and the game has certainly changed. But the perception of a label, if anything, has gotten worse.
I believe a Label 2.0 needs transparency, first and foremost. As hinted in previous posts, a Labels’ raison d’etre is NOT exploitation of artists for the maximization of profits. The functions of artist development, promotion, publishing, management and licensing are still vital, but artists rightly distrust many of the agreements which allow Labels to take over these functions on their behalf, mainly because of the labyrinthine language that purposely plagued Label 1.0 explanations of various revenue streams.
For many artists, and the general perception of aspiring musicians everywhere, assistance from a label has been seen as a major stepping stone in a career as a musician and has made the move a desirable one for most.
This goodwill has been met with difficult contracts, exploitation of artists and songwriters and a general disregard for the public good in favor of higher profits. The changes that are running through the music industry today are finally bringing a certain balance to the conversation. Artists have many more options available to them now than even 5 years ago in all the arenas that were once the exclusive domain of Label 1.0.
It’s up to Label 2.0 to prove that a record label is an artist’s best option, rather than the only one.
Tune in tomorrow for ways I see a Label 2.0 aiding transparency and making Label structure attractive to artists once more.
"Suddenly, labels are not only struggling against nosediving CD sales.
They are also facing a powerful class of emerging startups, a sector
that is just taking shape.
But where are the billion-dollar, label-replacing ideas, tailored for modern, digitized consumption habits? The digital music space is already bubbling with innumerable startups and fresh ideas, but who will develop, market, distribute, and license artists in the future?"
~ Digital Music News
Sometimes it feels like Silicon Valley circa 1999. Music-based companies with the faintest whiff of an idea are snapping up funding quicker than you can say “lala.com”. Innovation is great, and the spirit of opportunity and entrepreneurship such an atmosphere engenders is great for music in general.
My question is: Do we really need to reinvent the wheel here? According to the hype surrounding Napster, digital music was the death of the music industry. Yet here we are in 2007 and it’s widely accepted that there is, in fact, a more voracious appetite than ever for recorded and live music.
So amongst all of the great ideas (lala.com, last.fm, SnoCap’s MyStore) I think an overarching problem has been missed. Once the traditional record label dies, who and what will take their place?
I watched with interest last week when Nettwerk, Beggars Group, Matador Records, Om Records, XL Recordings, IODA, IRIS, INgrooves, Redeye Distribution, and the Orchard opened up their respective (predominantly Indie, wholly DRM-free) catalogs to Imeem/Snocap’s ad supported music sharing plan.
Not only is the size of this venture impressive (at almost 3 million tracks) but the brain-trust behind these respective labels and distributors is representative of many of the best minds the new music industry has to offer. I’m not one to follow the latest trends, but when all of these companies see value in an idea, there has to be at least some merit in it.
What was most fascinating though, was the fact that at the same time Warner Music Group is suing Imeem for copyright infringement.
I mean, WMG are seriously missing something here, right? It’s these kinds of studies in contrast that seem to point to an upcoming vaccum as larger, protectionist labels begin to lose market share steadily and quickly.
Although the institution of the record label is certainly unfashionable, the basic function of a label is still to develop, market, license and distribute artists. Yes, every artist now has the ability to handle each of these essential functions themselves, but which artists are actually capable of doing so?
A label is primarily a company which assists in the execution of these functions while an artist concentrates on the task at hand: being creative. Among all of the hysteria surrounding Digital Music, music industry bashing and nose-bleed funding rounds, the services a label provides to an artist – 60 years ago and today – remain relevant and essential to the ultimate goal: Creating art and having it experienced.
Over the next few posts I’ll be examining what modifications to the traditional model need to be made to make a Label 2.0. and whether it'll all make any difference in the end...I really hope you’ll join the discussion…
Update: Shortly after I wrote this, Warner dropped their suit and signed up with Imeem.
For more thoughts on Label 2.0, check out Digital Music News' recent article on the subject.
When I was a brisk pup, all bright eyed and bushy tailed in the music industry, I was introduced to the Co-Op promotion by my mentor. Basically, a label pays a whack of cash to a national chain store (somewhere in the region of $3,000 for a 450 store chain) and that chain puts the designated CD on a listening post, prominent endcap or by the register for a set period of time, maybe 1 month.
Your aim as a label was to sell enough CDs this way to justify the cost, and in the bygone days we were aiming for >$1/unit. For example, if you paid $3,000 for 450 stores for a one-month promotion, you’d need to sell 1.5 units per week in each store to make the whole thing worthwhile.
In 2001, no problem. In 2007, not so much.
As I heard one prominent indie-label head comment “They just don’t make sense anymore. I’ll never pay for another Co-Op again”.
Although Digital Music Services aren’t turning into the panacea they were once predicted to be, it’s interesting to watch their approach in replacing the Co-Op.
None of the DMSs accept $ for placement and only give prominent placement to albums editorially. The cynic in me snarls “Finally, the critics get to have what they’ve always wanted…real say in whether a record, and thus a record label, lives or dies”. ;-)
I can only imagine what the good favor of the Indie Rock editor at iTunes is worth today.
In any case, Rhapsody & eMusic are focusing on two things: Free Music & Brand partnering. eMusic has been especially pro-active on this front, with their emusic toolbar. They offer 1 free track every day to people who’ve downloaded this nifty little app, and from personal experience, it has helped people get to know about Real Music artists, increase downloads and I’m sure it’ll work for Penny too.
Brand partnering is something that Real Music has been active in for many years and although there’s the always subtle “Are we selling out?” question, I firmly believe that this kind of connection is one where artists and labels will ultimately become viable entities again in the future.
With the exception of some extremely bad decisions (affirmative action hip hop luminaries The Roots partnering with a brand of cigarettes for their last tour, for example) there’s a lot to be said for using a brand to bring exposure to your new artist or record.
Rhapsody, for example, are offering free downloads via a partnership with Rolling Stone & Hennessy. A full page in the magazine points readers to this page, where one can download 3 tracks from indie rock artists. The magazine & cognac look hip, the record labels get the music heard and Rhapsody is the middleman.
The catch? As with all of these partnering projects the labels have to sign a waiver agreeing to receive no royalties for the term of the promotion (usually one month). Sound familiar? That’s right, it’s just like paying for a Co-Op in the old days.
Now I hear the old guard bristling at these terms. Give the music away for free for the “exposure”? Ridiculous! Exposure never paid for a label’s overhead or manufacturing costs!
But that’s where I disagree.
I firmly believe you can “give away” 1 million copies of an album and still sell 100,000. You can encourage people to listen, to get to know a band, to build positive associations with a label. They might even like the music. And if they do, they’ll buy.
Or you can keep it all to yourself. But more than ever, you get what you give.
You can learn more about DMS’s brand partnering here (eMusic) and here (Rhapsody)
OK, my guess is that if you're anything like me, you're inundated with information. All the time. If you spend even 2 hours in front a computer each day, the amount of information available to you is astounding.
If you've one particular field of interest (in my case, music and the music industry) you may have come across 10, 15 or 20 blogs/websites that really pack a whallop on the information side. It's life lessons, great tips, good people with good writing thinking big and generally getting your juices flowing. Problem is, they're always updating, always adding new analysis. You could just bookmark each page, I suppose, and systematically check each one each time you log on...but wouldn't it be easier if new stories, information and music just came to you? You see where I'm going here...
RSS (Rich Site Summary, or more commonly Really Simple Syndication) does just that...It delivers the webpages you want right to your desktop. Almost every news page or blog has an RSS feed, with most of them making it nice & obvious with a big orange button (like the one I put on this blog post). To receive an RSS feed, you’ll need what’s called an aggregator, or feed reader. Most of these are free and very simple to install. Here are some of my faves:
Google Reader: They’ve taken their time and thought this one through. It offers almost everything you can want in a reader, including the ability to search for content you’d like to add by keyword.
Sage: The best way, IMHO, to get RSS feeds. It’s one of Firefox’s extensions and sits dutifully by while you browse the internet and will even search for feeds on a page you’re visiting.
Bloglines: An interesting take on traditional readers, with a bit of social networking thrown in so you can check out what other users are finding interesting.
After you’ve installed a reader, it’s simply a matter of finding content. I started with just news feeds (BBC, the SF Chronicle) but I’m now sitting on around 50 music blogs which simultaneously helps me find new music, talk about it and find out who’s thinking what about how music will be delivered to the listening public in the future. It’s quite enlightening! Just right click on the RSS feed button on the respective sites, select “Copy Link Location” or equivalent and paste the URL into your reader using the “Subscribe” button. It’s also important to note that when you “Subscribe”, you’re not paying for anything…just standing up and saying “I’d like to hear more of what you’ve got to say”.
These are the obvious advantages from a viewer’s perspective, but as a content provider myself, RSS is even more valuable. It provides a direct link between me and prospective customers, critics and anyone who might want to venture an opinion on Penny Distribution’s coming and goings. As both a reader and provider, aside from email, there’s really been nothing else that’s changed my experience of the internet as completely and as positively as RSS.
Oh, and just in case you were wondering, PD’s RSS feed is coming very soon…
