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| | | Free distribution of music need not signal the apocalypse for record labels. Already recording contracts are being altered to place greater emphasis on alternative revenue streams. The most well-known new model is the “360 contract”, under which labels take a percentage of profit, typically 30%, from all income streams available to the artist. Three sources of revenue are of particular interest: touring, merchandising and licensing. | |
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< | Yet the move to 360 contracts may present a significant risk to artists. Signing a record deal always requires an artist to balance important considerations – an artist must decide whether the advances, financial backing, and marketing support are worth relinquishing control over his or her artistic product. Before 360 contracts, touring, merchandising and licensing were areas left largely in the artist’s control. Not only did this mean a greater share of profits, but also a greater ability to manage an artist’s own brand. Under a 360 contract, however, artists are required to forsake even this limited control. And control over one’s career should be a concern of every artist, a concern heightened by the potential nuptials between Live Nation, which helped spur the move to 360 contracts through its deal with Madonna, and Ticketmaster, the dominant (if not monopolistic) seller of concert tickets. While there is certainly an appeal to being aligned with the king, any artist should be frightened by a single entity that would largely control concert venues, tour promotion, merchandise production, ticket sales, and, through Live Nation’s parent Clear Channel, radio access. | >
> | Yet the move to 360 contracts may present a significant risk to artists. Signing a record deal always requires an artist to balance important considerations – an artist must decide whether the advances, financial backing, and marketing support are worth relinquishing control over his or her artistic product. Before 360 contracts, touring, merchandising and licensing were areas left largely in the artist’s control. Not only did this mean a greater share of profits, but also a greater ability to manage an artist’s own brand. Under a 360 contract, however, artists are required to forsake even this limited control, something that any emerging artist should be loathe to do. And control over one’s career should be a concern of every artist, a concern heightened by the recently approved nuptials between Live Nation, which helped spur the move to 360 contracts through its deal with Madonna, and Ticketmaster, the dominant (if not monopolistic) seller of concert tickets. While such a deal may make sense for established artists with bargaining power, new artists, and fans of diverse music, should be frightened by a single entity that would largely control concert venues, tour promotion, merchandise production, ticket sales, and, through Live Nation’s parent Clear Channel, radio access. It is inevitable that record labels will be unable to maintain any real control over the distribution of music -- live music, however, has limited availability, and it certainly not ideal to have one entity control so much of it. | | |
- Madonna does the deal in order to partially annuitize her business, and get the money out upfront. She is, to say the
| | | about the desperation and business stupidity of musicians; (3)
why no remorse about killing off the companies would be
justified. | |
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> | | | | Artists Without Record Labels | |
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< | Labels may survive free distribution of music, but that does not mean that they are a necessary component of new artist development as Lily Allen contends. The story of Allen’s own success runs counter to her argument -- her initial popularity was due in large part to her posting of demos on her Myspace account. Perhaps more importantly, new business models continue to provide opportunities for new artists to develop without resorting to the support of record labels, and suffering the resultant relinquishment of control. One such label alternative is the venture capital model represented by Polyphonic. Polyphonic treats new artists like a start-up company, providing an initial investment, typically $300,000, in return for a share of profits. Unlike a record deal, however, artists maintain control over their careers, recording their own music and handling decisions about publicity and touring. Additionally, Polyphonic artists retain ownership of their copyrights and master recordings. | >
> | Even if labels manage to survive the digital revolution in some form, that does not mean that they are a necessary component of new artist development as Lily Allen contends. The story of Allen’s own success runs counter to her argument -- her initial popularity was due in large part to her posting of demos on her Myspace account. Perhaps more importantly, new business models continue to provide opportunities for new artists to develop without resorting to the support of record labels, and suffering the resultant relinquishment of control. One such label alternative is the venture capital model represented by Polyphonic. Polyphonic treats new artists like a start-up company, providing an initial investment, typically $300,000, in return for a share of profits. Unlike a record deal, however, artists maintain control over their careers, recording their own music and handling decisions about publicity and touring. Additionally, Polyphonic artists retain ownership of their copyrights and master recordings. | | | Abandoning records labels for alternatives like Polyphonic or self-distribution does represent a risk for artists, particularly the risk associated with forsaking the marketing machine of the major labels or the brand recognition of the more niche labels. This is an area where free distribution of music may actually play an important role in supporting the income of artists that decide against label control. This is especially true as artists recognize the importance of the alternate revenue streams that labels are attempting to envelop through 360 contracts. In 2002, for the top 35 artists as a whole, touring income exceeded income from record sales by a ratio of 7.5 to 1. Licensing is also increasingly significant, as new opportunities, such as licensing music for use in video games, continue to emerge.
When it comes to potentially profitable activities like touring and licensing (as well as related sources of income such as merchandising and endorsement deals), free distribution of music has the potential to actually increase an artist’s income. An essential aspect of convincing people to buy a ticket to a show is making those people familiar with an artist’s music. Promoting the sharing of music amongst friends, or even amongst strangers with similar musical tastes, has the potential of exposing an artist to a much wider population than is possible with restricted distribution. The repeated listenings made possible by transmission of an actual copy of a song rather than just a one-time broadcast may make consumers more likely to develop the familiarity necessary to attend a concert. Additionally, if consumers no longer have to devote resources to the purchase of albums, they may be more likely to spend money to attend a concert.
The Embrace of Free Distribution | |
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< | It is likely that, in the foreseeable future, labels will remain an available option for developing artists. As new alternatives mature, however, artists should become more cautious about forsaking control of their career, and focus on utilizing free distribution to support alternate revenue streams. As artists are able to retain control over their creations, a greater diversity of new artist may be the actual result. | >
> | While yes, labels may be able to continue to function as incubation chambers for new artists, artists need not and should not become contractual slaves to those labels that still exist. even wiartists should become more cautious about forsaking control of their career, and focus on utilizing free distribution to support alternate revenue streams. As artists are able to retain control over their creations, a greater diversity of new artist may be the actual result. | | |
- This is "balanced" advice, appropriate for an interview quote in some venue where you hope to connect with clients in
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