New routes to market

New routes to the market

*New label strategies / 360°

In the god all days under a traditional record label deal , the record label only did a couple of things

 An A&R to find the talent , they recorded the album and then they distributed and publicized the album they did nothing else they were responsible for nothing else and they got no share of any revenues from any  the other activities  that have been under artist would undertake

Those other areas include : being on tour selling merchandise , being on TV shows , being in movie

Then 360 deal sort of came about over a course of time with legendary deals like from Madonna  for 120millions dollar to join live nation on a 360 basis

360 means that every part of a career or a 360 career is handle by the label

Good news : the label interest and the artist interest are completely aligned with everything that happens in the career of the artist

Perhaps the bad news is that this label this company may not have expertise in all the areas in which the artist is involving him or herself

The jury’s  out is to whether it works but there is many success stories in 360 deal and of course there is failures in 360 deal . but with the caveat that many bands on traditional label deal succeed and many fail .

It’s something to look for and it’s not something to shy away from in aa negotiation if someone come to you and wants to cut a deal with you

*some of the new models that we talking about are: 360 (one I don’t like)

Another one is head revenues sharing

Another one is giving away your product and people will come to your concert

360 is coming along several levels: the company and the artist wills share the all aspect of the artist career means: record sales, concert tour, merchandising, publishing … all potential income

With somebody like Madonna who signed a 120 million deal it’s sounds like a good deal for her , I don’t know her nor the company finances but her future seems to be secure if it wasn’t already .    She gives them all the services and she receive lot of money for that

But what the records companies try to do with new act, is doing the same things but in a much less way.

Back in a days

In a past a records company was signing artist for the records rights, they have a went ahead and they exploited the records marketed it they promoted it they sold the records and they pay artist royalty, they pay the publisher royalty and they took their income and they’ve made their profit from there. Did ten out of ten artists succeed that signed? No. Maybe one out of ten, maybe one out of twenty artist succeeded. But the ones who succeeded have succeeded has such a level , that the records companies were able to makes lot of money out of the ones that succeeded to pay for all of the ones who didn’t succeed . the next question is why they didn’t sign more acts that would succeed , well there is not many geniuses in that business . and even if you have a flair you don’t know ultimately what the public will respond to . And you also don’t know early on if it’s this an artist even though they failed early whether they will succeed later.

So philosophies changed, an example of that is Steely Dan, it took several album to succeed the company believed in it they stayed with it and ultimately they succeed.

Today the philosophy is if they don’t succeed on the first album or the first couple of weeks of the album, they drop it. So they don’t know whether they have a viable artist or not because they not staying with it longer enough, and that’s a bad thing.

(So back to where I was on the 360°)

The record companies made their money from the resale of records. So now they see the sales of records are going down , so their  way of making up for it is instead of thinking through the business model and finding better ways to market and promote and to protect their product , they say will take other pieces of the artist . And it’s not a business model (in my estimation) .

If you take a young artist and say : “ well now we’re going to take your touring , we’re going to take your merchandising , we’re going to take your publishing in addition to your records rights” does that mean that the record company will now succeed because they are grabbing all the other pieces ? (no I don’t think so and I don’t think is a substitute for the record company finding a business model that works) .
in addition to that fact records companies where unprepared for the digital age and were very slow to react .

They also were companies that were completely transformed from sole proprietorship to cooperate monoliths

The result of that was as follows at one time you had Jerry Moss and Herbert Alpert who had A&M records, Ahmet Ertegün with Atlantic records, Johnny mercer who formed Capitol records.

All these were started by young entrepreneurs who had an ear for talent, they discover and they nurture this talent and they ran these companies.

They believe in an artist they sign the artist. If they believe that the artist would succeed ultimately even though the first or second album fail they will stay with it because they believed in it .

Now as the major corporations came in and started to buying up all these entrepreneurs and they vibrant companies (they buy one of these company after the other.

Now in order to pay those companies and pay 500 to 600 million they had borrow money and they had a debt service, a pay off debts to accomplish this. In order to pay off debts they starting to firing the people that they bought (very talented people, very great A&R, discovery people) . Instead of having a positive effect that was having a negative effect, so less great talent was being discovered and signed , the companies were cutting down on the marketing and promotion so they were hurting themselves while they were expanding . When you combine that aspect of cooperate debt that was imposed on these companies with the unpreparedness of the digital age that’s almost the perfect storm for a disaster in this industry and that what happened and that where we find ourselves today and that’s why this is the most major upheaval in this industry ever seen before .

Make the difference

Where there is threat there is also opportunities

Kobalt / raadiohead 

*Weight of contract[Relationship with the artist]        

For anyone working in the music industry it’s been two decades of upheaval the digital revolution has transformed how we all consume music but one things has been slow to change the business model .

If someone makes a records for a major label , label still own the record the only thing that is comparable to is if you take out to mortgage to buy a house you pay back the bank and then the bank own the house .

...