Last Feb. 6, music analyst Bob Lefsetz wrote an entry in his blog that I find very empowering for bands these days. Read on (and Bob, if you Googled this, I hope you won't mind me posting the entire article in my blog. Thanks much in advance.)
We can argue over the mechanical rate, and lament that whatever it is, the major labels will negotiate it downward, but one thing's for sure, in the future acts will own their records.
The traditional deal was we find you, we pay you a bunch of money, and we own everything. Is this fair? Maybe if the record stiffs, but certainly not if it's successful. The act pays for the album yet the label owns it? In what alternative universe does this make sense?
In the world of major label accounting. Which is also undergoing a transformation. Because of transparency. If there's no pressing, no manufacturing, and you just get a statement from your digital distributor, where do you perpetrate the fraud? That's how labels make their money, via fraud. They sell a certain amount of product and pay you..? Which is why powerful lawyers and managers extract such huge advances, because they don't trust the royalty system. But these big advances have brought EMI to its knees. For if the album is a failure, or doesn't meet expectations, the money guaranteed is out of whack. EMI wants a more equitable deal. And part of this deal will involve the act owning its masters.
Oh, that's not the driving factor, the huge advances, but the transparency is key. Today recording contracts are no longer a mystery. Even fans, business experts after Napster, know that the act pays for the record yet doesn't own it. Light has been shed on this heinous practice. And therefore, it won't be able to exist.
You write a book, you own it.
Direct a movie and you don't own it. Because the film is so damn expensive, there's such a risk involved.
Recording is no longer that expensive, it certainly doesn't have to be. Sure, if you're a superstar and want to spend a million dollars, be my guest. Then again, where are you going to sell all this product, in a world where no one goes diamond not because of piracy, but the inability to reach the masses combined with infinite choice?
Recording costs are coming down. In many cases close to zero. Which in this case, is under 50k. Hell, let's just say under 25k. And if you can't lay your hands on 25k, you don't deserve to be a successful artist. Go to your parents, go to your friends, your fan base, work on the road, your day job, if you can't figure out a way to buy the computer equipment required to make a record, and pay for basic tracks in a big room, you don't have the passion or desire to make it.
That's what records are made on now, computers. And I don't want to argue with engineers what is required for ultimate sound (interestingly, to be heard as MP3s via earbuds). It's just that everybody is making records for less money. The label wants you to record vocals in a home studio. So, if costs keep going down, what is the rationale for the label to own the record?
The rationale used to be that you couldn't do it on your own, couldn't make it on your own. You needed the label to be a bank. But now you can record on your own, and the label can't do much for you. Can't get you on television or on the radio. Why should you give up ownership? The business proposition just ain't that good!
Oh, if you're the new Alicia Keys or Whitney Houston, a high concept act requiring money and time to expose and break you, the label is going to extract concessions, you can't do it without them. But if you're a band and your tracks are on MySpace (which Universal won't allow), and you're playing club gigs, why take almost no money and give up everything to an entity that just can't do much for you? Other than take you to lunch and bill you for the privilege?
360 deals? Where is it written that the labels will be all powerful in the future? I just don't see it. They're desperate. They want to recoup income. Who says acts have to give it to them? And each act is an individual entity, negotiating on its own. There's no WGA forcing everybody to agree. You can't keep acts in line.
Which brings us back to mechanicals. If you own your own master, and you're the label and you're gaining all the revenue, who gives a shit what the mechanical rate is? Oh, if you get a cover you care, but do you write the kind of material that's going to be covered? But what about your publisher, and his big advance? Well, do you need that publisher? And, once again, if you own the label...
But publishers advance monies based on airplay, based on hits. Are there going to be hits in the future? Let's put it this way, will it be a hit-driven business? Shit, the Eagles sold triple platinum, and the success of "Long Road Out Of Eden" had almost nothing to do with hits. There was airplay on one song. But, a brand name and visibility and a cheap price. The Eagles didn't need the major label system.
And neither did Radiohead.
The new Radiohead wouldn't break on MTV. Utterly impossible. So what does the new Radiohead need to make a heinous deal with a major label for? Look to the U.K., where majors license product, for a brief period of time, just to feed the pipeline... That's more representative of the future than the all powerful label of the 1980s or 1990s.
I'm not saying songwriters shouldn't fight to get paid more. I'm just saying that the big label is no longer the bogeyman. The big labels are fighting ridiculous battles that don't matter. If you're a developing act you want your complete song on MySpace, and you want file-trading. If you're not on the radio, how in the hell else are people going to discover you? You want to give now to get later. You don't want people to have to pay a lot to get in on your scene, you want to develop.
The desires of the acts and the major labels no longer square, they're at odds. The label wants to pay little for an incredible upside, which it owns lock, stock and barrel. The acts used to have no choice. Now they do.
Will there be labels in the future? Sure. But they won't look like and won't have the same names as the big four companies today. Because the new labels will be about building acts and maximizing revenue in all areas of exploitation. They'll be about transparency. They'll be run by geeks as opposed to mini-mafiosi. There will be a level of trust between performer and businessman. All things today's majors abhor, which will contribute to their marginalization.
Don't give up ownership of your records anymore. You don't have to. Whether you license for a brief term or get the masters back at a certain sales level or both...this is now a negotiable point, just tell the labels you're going to go indie... They'll no longer laugh. They need you. They know indie can now deliver. They'll negotiate.
Source: http://lefsetz.com/wordpress/index.php/archives/2008/02/05/ownership/
Showing posts with label record companies. Show all posts
Showing posts with label record companies. Show all posts
Wednesday, October 8, 2008
Tuesday, October 7, 2008
Who Are The People In Your Neighborhood? (Part 2)
In the last Indieology entry, I described the list of entities that are “closest” and most visible to you, the “consumer”. The artist, media, venues, and then the stores - all these elements are in a very close relationship brought in front of us by record labels in the hope that we would in turn, if we like the music of the artists, buy the CD or download their music at the end of the day.
II. The Middle Men
Before an artist makes that sale, his/her music has to be plugged first somewhere. Media does that via airplay, online streaming, press releases, album reviews, charts, etc. When the song picks up, a tour follows to promote the album and venues take centerstage. People are then expected to buy or download the music from the stores. Easy isn’t it?
But who are the people working behind the scenes? In this chapter, I will attempt to define the roles of the ones responsible for giving that necessary push for the artist in the music business. I classify them as the “middle men”. I’d like to start with the labels and work my way down to the liaison that makes the deals in the business.
1) Record Labels
I did mention that the record companies are usually the most visible entities in the music trading business as they are often seen as “key players” in bringing that artist the success he or she rightfully deserve. In fact, you can find the logos of the record companies printed on the inlays of CDs of your favorite artists.
The truth is, and as I mentioned this in another article, labels are actually just investors on the premise that they believe in an artist’s potential. The trade that they do for artists is somewhat similar to how banks approve loans to qualified applicants. These loans are called advanced royalties in this industry lingo.
Bands use that money to hire and pay fees to producers, sound engineers, recording studio time, management, themselves (of course), and sometimes even lawyers for legal advice on contracts.
After all the recording and mastering is done (usually for professional sessions, it takes about 5 to 9 months), the master harddrive is sent back to the record company for mass production and distribution. Again, the label spends for this.
The advance payment and all other costs must be recoupable. That means it is deductible from the artists initial sales of albums, and in some cases ticket sales, before any actual royalty is made and given back to the artist (assuming that the artist writes or co-writes the songs in the album).
Today, some successful managers of globally established bands think about advanced royalties differently. One manager commented that advanced royalties that are “loaned” to artists look more attractive to newer bands given the fact that record labels also help on the manufacturing, marketing and promotions, distribution, and even accounting which all of these things new bands know practically nothing about.
These managers are now opting to release the albums themselves independently, working directly with music publishers and their entertainment lawyers rather than signing a new five-year contract with a major label. It actually makes sense.
2) Distributors
The distribution department is probably one of the busiest people in all of the record company’s departments. Everyday their staff would make and receive calls, keep track of sales, forward sales reports to other departments such as accounting, etc.
Yet contrary to what most people who are in this business (but not entirely in the business) believe, distributors may not necessarily be run by the record company themselves. There are also companies that specialize on the business of distribution.
In fact, with the growing entrepreneurial spirit of the internet, many websites do a similar distribution service to an online store say iTunes or Amazon.com. Up Dharma Down’s album is, as of last note from their indie label manager, had their CDs distributed under a distribution company – not a record label in Manila outlets.
At this point, the first relationship between the four frontliners of the music scene and the label/distributor is established. I have intended to separate the label from the distributor to simply emphasize this point.
3) Promoters
Of course, just like any product, promotion must be integral in the marketing plans of an artist’s music and career. Who are the promoter’s prospects? Generally it’s media. Although sometimes the promoter’s task may extend up to concert venues and sometimes they would act as the booking agent.
Some labels may have an in-house agent to do the task for them. Lately, they even attempted to merge the tasks of a promoter, artist management, and booking agent. I know a couple of labels in Manila who practices this method.
It’s not necessarily a bad thing. In fact, it works to the label’s advantage. Not only does this save cost on salary, it also gives the company an assurance that everything is kept “within their reach”.
4) Booking Agents
The booking agent’s general scope of work is usually to assist the artist’s management on getting gigs – from interviews to concerts and the in betweens. They coordinate the schedules and get paid for the service.
Booking agents may not be common in the Philippines because the job of the manager and an agent tend to overlap most often. However, these people become significantly important for bands doing worldwide tours.
My observation is that some bands in this country call the person who is taking care of their career as booking agents. There were also instances when a band's extended member does bookings only and they call him/her the "manager". I didn’t care to ask why.
5) The Managers
Many bands in Cebu don’t have managers and that is a fact. If there are, I can only count them with one hand. Perhaps it’s because Cebu is a “big small town” and hiring a manager may not be practical plus it can only reduce the income of the artist (if there is any decent income at all to speak of).
However, a manager’s job can help a lot in an artist’s career because aside from developing an artist, he/she can do most, if not all of the tasks I mentioned above.
I’m not saying that the funding, distribution, marketing and promotion, and booking gigs would come from one person alone. Of course not. That would be suicide. A manager taps and coordinates with people or companies outside of his band zone to get things running for his talent. He/she must also be “well connected”.
It will always be an advantage if the person managing an artist’s career has business skills. But beware, there are also managers who cannot be trusted. Take it from me.
At this point, we have established a link between the front end and the middle men in the music scene. The labels and distributors bring the merchandise out front to the stores (TuneCore.com is a digital distributor that directly deals with artists or its representative). The promoters sell the “image of the artist” to the media. The agents and managers ensure of the artist’s schedules and activities.
In the next Indieology, I will be describing what happens at the back end and who are those involved in getting these middle men motivated to work.
At the moment, I’d like to note that to succeed, start your band small.
Get a “good” manager who knows and understands the music business. Someone who knows someone in the media, the copyright law, music publishing companies, business itself, and most importantly, someone you can really really trust.
The music indusrty is not just about business, it’s also about relationships.
II. The Middle Men
Before an artist makes that sale, his/her music has to be plugged first somewhere. Media does that via airplay, online streaming, press releases, album reviews, charts, etc. When the song picks up, a tour follows to promote the album and venues take centerstage. People are then expected to buy or download the music from the stores. Easy isn’t it?
But who are the people working behind the scenes? In this chapter, I will attempt to define the roles of the ones responsible for giving that necessary push for the artist in the music business. I classify them as the “middle men”. I’d like to start with the labels and work my way down to the liaison that makes the deals in the business.
1) Record Labels
I did mention that the record companies are usually the most visible entities in the music trading business as they are often seen as “key players” in bringing that artist the success he or she rightfully deserve. In fact, you can find the logos of the record companies printed on the inlays of CDs of your favorite artists.
The truth is, and as I mentioned this in another article, labels are actually just investors on the premise that they believe in an artist’s potential. The trade that they do for artists is somewhat similar to how banks approve loans to qualified applicants. These loans are called advanced royalties in this industry lingo.
Bands use that money to hire and pay fees to producers, sound engineers, recording studio time, management, themselves (of course), and sometimes even lawyers for legal advice on contracts.
After all the recording and mastering is done (usually for professional sessions, it takes about 5 to 9 months), the master harddrive is sent back to the record company for mass production and distribution. Again, the label spends for this.
The advance payment and all other costs must be recoupable. That means it is deductible from the artists initial sales of albums, and in some cases ticket sales, before any actual royalty is made and given back to the artist (assuming that the artist writes or co-writes the songs in the album).
Today, some successful managers of globally established bands think about advanced royalties differently. One manager commented that advanced royalties that are “loaned” to artists look more attractive to newer bands given the fact that record labels also help on the manufacturing, marketing and promotions, distribution, and even accounting which all of these things new bands know practically nothing about.
These managers are now opting to release the albums themselves independently, working directly with music publishers and their entertainment lawyers rather than signing a new five-year contract with a major label. It actually makes sense.
2) Distributors
The distribution department is probably one of the busiest people in all of the record company’s departments. Everyday their staff would make and receive calls, keep track of sales, forward sales reports to other departments such as accounting, etc.
Yet contrary to what most people who are in this business (but not entirely in the business) believe, distributors may not necessarily be run by the record company themselves. There are also companies that specialize on the business of distribution.
In fact, with the growing entrepreneurial spirit of the internet, many websites do a similar distribution service to an online store say iTunes or Amazon.com. Up Dharma Down’s album is, as of last note from their indie label manager, had their CDs distributed under a distribution company – not a record label in Manila outlets.
At this point, the first relationship between the four frontliners of the music scene and the label/distributor is established. I have intended to separate the label from the distributor to simply emphasize this point.
3) Promoters
Of course, just like any product, promotion must be integral in the marketing plans of an artist’s music and career. Who are the promoter’s prospects? Generally it’s media. Although sometimes the promoter’s task may extend up to concert venues and sometimes they would act as the booking agent.
Some labels may have an in-house agent to do the task for them. Lately, they even attempted to merge the tasks of a promoter, artist management, and booking agent. I know a couple of labels in Manila who practices this method.
It’s not necessarily a bad thing. In fact, it works to the label’s advantage. Not only does this save cost on salary, it also gives the company an assurance that everything is kept “within their reach”.
4) Booking Agents
The booking agent’s general scope of work is usually to assist the artist’s management on getting gigs – from interviews to concerts and the in betweens. They coordinate the schedules and get paid for the service.
Booking agents may not be common in the Philippines because the job of the manager and an agent tend to overlap most often. However, these people become significantly important for bands doing worldwide tours.
My observation is that some bands in this country call the person who is taking care of their career as booking agents. There were also instances when a band's extended member does bookings only and they call him/her the "manager". I didn’t care to ask why.
5) The Managers
Many bands in Cebu don’t have managers and that is a fact. If there are, I can only count them with one hand. Perhaps it’s because Cebu is a “big small town” and hiring a manager may not be practical plus it can only reduce the income of the artist (if there is any decent income at all to speak of).
However, a manager’s job can help a lot in an artist’s career because aside from developing an artist, he/she can do most, if not all of the tasks I mentioned above.
I’m not saying that the funding, distribution, marketing and promotion, and booking gigs would come from one person alone. Of course not. That would be suicide. A manager taps and coordinates with people or companies outside of his band zone to get things running for his talent. He/she must also be “well connected”.
It will always be an advantage if the person managing an artist’s career has business skills. But beware, there are also managers who cannot be trusted. Take it from me.
At this point, we have established a link between the front end and the middle men in the music scene. The labels and distributors bring the merchandise out front to the stores (TuneCore.com is a digital distributor that directly deals with artists or its representative). The promoters sell the “image of the artist” to the media. The agents and managers ensure of the artist’s schedules and activities.
In the next Indieology, I will be describing what happens at the back end and who are those involved in getting these middle men motivated to work.
At the moment, I’d like to note that to succeed, start your band small.
Get a “good” manager who knows and understands the music business. Someone who knows someone in the media, the copyright law, music publishing companies, business itself, and most importantly, someone you can really really trust.
The music indusrty is not just about business, it’s also about relationships.
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