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| | | -- By BradleyMullins - 17 Nov 2009 | |
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< | That the music industry is changing is undeniable. As free distribution of music over the internet becomes a practical, if not legal, reality, the current business models of record labels become increasingly challenged. While people continue to debate whether music should be free, there is no dispute that free distribution will have an inevitable impact on artists themselves. Lily Allen, British singer/songwriter/tabloid fixture, was recently thrust into the spotlight after she blogged her view that filesharing was a disaster for the development of new artists. While Allen’s opinion is not universal amongst artists, she does raise two important questions: Can labels continue to support artists without revenue from album sales? Do new artists need labels at all? | >
> | As free distribution of music over the internet becomes a practical, if not legal, reality, the current business models of record labels become increasingly challenged. While people continue to debate whether music should be free, there is no dispute that free distribution will have an inevitable impact on artists themselves. Lily Allen, British singer/songwriter/tabloid fixture, was recently thrust into the spotlight after she blogged her view that filesharing was a disaster for the development of new artists. While Allen’s opinion is not universal amongst artists, she does raise two important questions: Can labels continue to support artists without revenue from album sales? Or, more importantly, do new artists need labels at all? | | | The Future of Record Labels
The free distribution of music has undisputedly contributed to the deterioration of record labels, which have been largely dependent on album sales. Between 2007 and 2008, physical album sales fell by 60 million, and increased digital sales accounted for only 22 million of this loss. Artists have historically benefited less directly from album sales. The cautionary tale of TLC serves as a reminder that stellar album sales do not guarantee an artist personal wealth. Under the typical label contract, an artist receives only a 9-15% royalty on album sales. These rates seem especially low for digital sales, as they often include include deductions for packaging and distribution costs – an inclusion that is less justifiable for digital sales rather than physical sales, as the costs of packaging, manufacture, and distribution are effectively zero for digital sales. | |
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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. | >
> | Already labels are altering recording contracts 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. | | | 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 loath 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. | | | 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 | | | The Embrace of Free Distribution | |
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< | 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. | >
> | While yes, labels may be able to continue functioning as incubation chambers for new artists, artists need not, and likely should not, become contractual slaves to those labels that still exist. Instead, new artists should focus on maintaining as much control of their careers as possible, so as to be better able to utilize free distribution to support alternate revenue streams. With such increased control, artists will be able to make the music they want to make, without worrying about label approval. Free distribution will allow these artists to focus on other money-making ventures, such as touring and merchandising, knowing that their potential fan base is expanding as people who want to listen to their music do listen to their music. | | |
- This is "balanced" advice, appropriate for an interview quote in some venue where you hope to connect with clients in your role as hip post-sleaze music industry contracts specialist
| | | all music is weightless and goes everywhere
instantaneously. | |
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> | * Professor Moglen, First of all, thank you for your comments. I tend to agree with what I think you are saying, and one point I was trying to make in my piece is that a greater number artists actually seem to have a better chance of at least some independent financial success than they have had before, largely as a result of free distribution of music. Sure, huge pop stars may not be able to make as much money overall, but I'm concerned less with that, and more with the abiliity of new artists to make a living without signing a record contract or even selling their records at all. I've revised various parts of my piece, and particularly the conclusion, in an attempt to better reflect this (I think that I had a lot of earlier phrasing that muddled my message).% | | | |
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