This link has been bookmarked by 184 people and liked by 2 people. It was first bookmarked on 19 Dec 2007, by evad23 Burnett.
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The six possibilities
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360, or equity, deal
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The artist becomes a brand, owned and operated by the label, and in theory this gives the company a long-term perspective and interest in nurturing that artist's career.
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standard distribution deal.
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The license deal
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artist retains the copyrights and ownership of the master recording. The right to exploit that property is granted to a label for a limited period of time — usually seven years.
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4. Then there's the profit-sharing deal
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retained ownership of the master. Thrill Jockey does some marketing and press. I may or may not have sold as many records as I would have with a larger company, but in the end I took home a greater share of each unit sold.
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5. In the manufacturing and distribution deal,
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6. Finally, at the far end of the scale, is the self-distribution model
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If a band has made a record itself and doesn't need creative or financial help, this model is worth looking at.
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"The bands we work with, we never recommend that they make videos. I like videos, but they don't sell a lot of records. What really sells records is touring
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Radiohead adopted this DIY model to sell In Rainbows online — and then went a step further by letting fans name their own price for the download. They weren't the first to do this — Issa (formerly known as Jane Siberry) pioneered the pay-what-you-will model a few years ago — but Radiohead's move was much higher profile. It may be less risky for them, but it's a clear sign of real changes afoot. As one of Radiohead's managers, Bryce Edge, told me, "The industry reacted like the end was nigh. They've devalued music, giving it away for nothing.' Which wasn't true: We asked people to value it, which is very different semantics to me."
At this end of the spectrum, the artist stands to receive the largest percentage of income from sales per unit — sales of anything. A larger percentage of fewer sales, most likely, but not always. Artists doing it for themselves can actually make more money than the massive pop star, even though the sales numbers may seem minuscule by comparison. Of course, not everyone is as smart as those nerdy Radiohead boys. Pete Doherty probably should not be handed the steering wheel.
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16 Apr 12
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19 Feb 12
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I Think Music — an online network of indie bands, fans, and stores — and pessimistic about the future of traditional labels.
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the 360, or equity, deal, where every aspect of the artist's career is handled by producers, promoters, marketing people, and managers.
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The artist becomes a brand, owned and operated by the label, and in theory this gives the company a long-term perspective and interest in nurturing that artist's career.
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the standard distribution deal. This is more or less what I lived with for many years as a member of the Talking Heads. The record company bankrolls the recording and handles the manufacturing, distribution, press, and promotion. The artist gets a royalty percentage after all those other costs are repaid. The label, in this scenario, owns the copyright to the recording. Forever.
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The license deal is similar to the standard deal, except in this case the artist retains the copyrights and ownership of the master recording. The right to exploit that property is granted to a label for a limited period of time — usually seven years. After that, the rights to license to TV shows, commercials, and the like revert to the artist.
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the profit-sharing deal
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the manufacturing and distribution deal, the artist does everything except, well, manufacture and distribute the product. Often the companies that do these kinds of deals also offer other services, like marketing. But given the numbers, they don't stand to make as much, so their incentive here is limited. Big record labels traditionally don't make M&D deals.
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is the self-distribution model, where the music is self-produced, self-written, self-played, and self-marketed. CDs are sold at gigs and through a Web site.
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17 Feb 12
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What is called the music business today, however, is not the business of producing music. At some point it became the business of selling CDs in plastic cases, and that business will soon be over. But that's not bad news for music, and it's certainly not bad news for musicians. Indeed, with all the ways to reach an audience, there have never been more opportunities for artists.
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What is called the music business today, however, is not the business of producing music. At some point it became the business of selling CDs in plastic cases, and that business will soon be over. But that's not bad news for music, and it's certainly not bad news for musicians. Indeed, with all the ways to reach an audience, there have never been more opportunities for artists.
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25 Aug 10
Zan ChandlerDavid Burns thoughts and suggestions for surviving the changes in the music industry
distribution music business media wired technology davidbyrne sfi 2020mf
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19 Aug 10
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The license deal is similar to the standard deal, except in this case the
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Finally, at the far end of the scale, is the self-distribution model
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At one end of the scale is the 360, or equity, deal, where every aspect of the artist's career is handled by producers, promoters, marketing people, and managers
-
the self-distribution model,
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The license deal is similar to the standard deal, except in this case the artist retains the copyrights and ownership of the master recording.
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The license deal is similar to the standard deal, except in this case
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In the manufacturing and distribution deal, the artist does everything except, well, manufacture and distribute the product.
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The license deal is similar to the standard deal, except in this case the artist retains the copyrights and ownership of the master recording.
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Then there's the profit-sharing deal
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Most simply didn't have the $15,000 (minimum) necessary to rent a professional studio and pay an engineer and a producer.
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Now an album can be made on the same laptop you use to check email.
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No more: Digital distribution is pretty much free. It's no cheaper per unit to distribute a million copies than a hundred.
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Performing is a thing in itself, a distinct skill, different from making recordings. And for those who can do it, it's a way to make a living.
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The record company bankrolls the recording and handles the manufacturing, distribution, press, and promotion. The artist gets a royalty percentage after all those other costs are repaid. The label, in this scenario, owns the copyright to the recording.
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So what happens when online sales eliminate many of these expenses? Look at iTunes: $10 for a "CD" download reflects the cost savings of digital distribution, which seems fair — at first. It's certainly better for consumers. But after Apple takes its 30 percent, the royalty percentage is applied and the artist — surprise! — is no better off.
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profit-sharin
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I got a minimal advance from the label, Thrill Jockey, since the recording costs were covered by a movie soundtrack budget, and we shared the profits from day one. I retained ownership of the master. Thrill Jockey does some marketing and press. I may or may not have sold as many records as I would have with a larger company, but in the end I took home a greater share of each unit sold.
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the artist does everything
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the companies
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offer other services, like marketing.
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In this scenario, the artist gets absolute creative control, but it's a bigger gamble
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here the music is self-produced, self-written, self-played, and self-marketed
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. CDs are sold at gigs and through a Web site
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Promotion is a MySpace page
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Within the limits of what they can afford, the artists have complete creative control
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Radiohead's managers, Bryce Edge, told me, "The industry reacted like the end was nigh. They've devalued music, giving it away for nothing.' Which wasn't true: We asked people to value it, which is very different semantics to me."
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to receive the largest percentage of income from sales per unit
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No single model will work for everyone
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19 Apr 10
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29 Mar 10
Daniel CalladineWhat is called the music business today, however, is not the business of producing music. At some point it became the business of selling CDs in plastic cases, and that business will soon be over. But that's not bad news for music, and it's certainly not
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26 Mar 10
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Where are things going? Well, some people's charts look like this:
Some see this picture as a dire trend.
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- Fund recording sessions
- Manufacture product
- Distribute product
- Market product
- Loan and advance money for expenses (tours, videos, hair and makeup)
- Advise and guide artists on their careers and recordings
- Handle the accounting
What do record companies do?
Or, more precisely, what did they do?
This was the system that evolved over the past century to market the product, which is to say the container — vinyl, tape, or disc — that carried the music. (Calling the product music is like selling a shopping cart and calling it groceries.) But many things have changed in the past decade that reduce the value of these services to artists.
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Obviously, the cost of these services, along with the record company's overhead, accounts for a big part of CD prices. You, the buyer, are paying for all those trucks, those CD plants, those warehouses, and all that plastic. Theoretically, as many of these costs go away, they should no longer be charged to the consumer — or the artist.
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No single model will work for everyone. There's room for all of us. Some artists are the Coke and Pepsi of music, while others are the fine wine — or the funky home-brewed moonshine. And that's fine. I like Rihanna's "Umbrella" and Christina Aguilera's "Ain't No Other Man." Sometimes a corporate soft drink is what you want — just not at the expense of the other thing. In the recent past, it often seemed like all or nothing, but maybe now we won't be forced to choose
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03 Mar 10
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I love music. I always will. It saved my life, and I bet I'm not the only one who can say that.
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We'll always want to use music as part of our social fabric: to congregate at concerts and in bars, even if the sound sucks; to pass music from hand to hand (or via the Internet) as a form of social currency; to build temples where only "our kind of people" can hear music (opera houses and symphony halls); to want to know more about our favorite bards — their love lives, their clothes, their political beliefs.
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Recording costs have declined to almost zero.
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Manufacturing and distribution costs are approaching zero.
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Some see this picture as a dire trend. The fact that Radiohead debuted its latest album online and Madonna defected from Warner Bros. to Live Nation, a concert promoter, is held to signal the end of the music business as we know it. Actually, these are just two examples of how musicians are increasingly able to work outside of the traditional label relationship. There is no one single way of doing business these days. There are, in fact, six viable models by my count. That variety is good for artists; it gives them more ways to get paid and make a living. And it's good for audiences, too, who will have more — and more interesting — music to listen to. Let's step back and get some perspective
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Technology changed all that in the 20th century. Music — or its recorded artifact, at least — became a product, a thing that could be bought, sold, traded, and replayed endlessly in any context. This upended the economics of music, but our human instincts remained intact. I spend plenty of time with buds in my ears listening to recorded music, but I still get out to stand in a crowd with an audience. I sing to myself, and, yes, I play an instrument (not always well).
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Recording costs have declined to almost zero. Artists used to need the labels to bankroll their recordings. Most simply didn't have the $15,000 (minimum) necessary to rent a professional studio and pay an engineer and a producer. For many artists — maybe even most — this is no longer the case. Now an album can be made on the same laptop you use to check email.
Manufacturing and distribution costs are approaching zero. There used to be a break-even point below which it was impractical to distribute a recording. With LPs and CDs, there were base manufacturing costs, printing costs, shipping, and so on. It paid — in fact, it was essential — to sell in volume, because that's how many of those costs got amortized. No more: Digital distribution is pretty much free. It's no cheaper per unit to distribute a million copies than a hundred.
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Touring is not just promotion. Live performances used to be seen as essentially a way to publicize a new release — a means to an end, not an end in itself. Bands would go into debt in order to tour, anticipating that they'd recover their losses later through increased record sales. This, to be blunt, is all wrong. It's backward. Performing is a thing in itself, a distinct skill, different from making recordings. And for those who can do it, it's a way to make a living.
So with all these changes, what happens to the labels? Some will survive. Nonesuch, where I've done several albums, has thrived under Warner Music Group ownership by operating with a lean staff of 12 and staying focused on talent. "Artists like Wilco, Philip Glass, k.d. lang, and others have sold more here than when they were at so-called major labels," Bob Hurwitz, president of Nonesuch, told me, "even during a time of decline.
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But some labels will disappear, as the roles they used to play get chopped up and delivered by more thrifty services. In a recent conversation I had with Brian Eno (who is producing the next Coldplay album and writing with U2), he was enthusiastic about I Think Music — an online network of indie bands, fans, and stores — and pessimistic about the future of traditional labels. "Structurally, they're much too large," Eno said. "And they're entirely on the defensive now. The only idea they have is that they can give you a big advance — which is still attractive to a lot of young bands just starting out. But that's all they represent now: capital."
So where do artists fit into this changing landscape? We find new options, new models.
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1. At one end of the scale is the 360, or equity, deal, where every aspect of the artist's career is handled by producers, promoters, marketing people, and managers. The idea is that you can achieve wide saturation and sales, boosted by a hardworking machine that stands to benefit from everything you do. The artist becomes a brand, owned and operated by the label, and in theory this gives the company a long-term perspective and interest in nurturing that artist's career.
Pussycat Dolls, Korn, and Robbie Williams have made arrangements like this, selling equity in everything they touch. The T-shirts, the records, the concerts, the videos, the BBQ sauce. The artist often gets a lot of money up front. But I doubt that creative decisions will be left in the artist's hands. As a general rule, as the cash comes in, creative control goes out. The equity partner simply has too much at stake.
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2. Next is what I'll call the standard distribution deal. This is more or less what I lived with for many years as a member of the Talking Heads. The record company bankrolls the recording and handles the manufacturing, distribution, press, and promotion. The artist gets a royalty percentage after all those other costs are repaid. The label, in this scenario, owns the copyright to the recording. Forever.
There's another catch with this kind of arrangement: The typical pop star often lives in debt to their record company and a host of other entities, and if they hit a dry spell they can go broke. Michael Jackson, MC Hammer, TLC — the danger of debt and overextension is an old story.
Obviously, the cost of these services, along with the record company's overhead, accounts for a big part of CD prices. You, the buyer, are paying for all those trucks, those CD plants, those warehouses, and all that plastic. Theoretically, as many of these costs go away, they should no longer be charged to the consumer — or the artist.
-
3. The license deal is similar to the standard deal, except in this case the artist retains the copyrights and ownership of the master recording. The right to exploit that property is granted to a label for a limited period of time — usually seven years. After that, the rights to license to TV shows, commercials, and the like revert to the artist. If the members of the Talking Heads held the master rights to our catalog today, we'd earn twice as much in licensing as we do now — and that's where artists like me derive much of our income. If a band has made a record itself and doesn't need creative or financial help, this model is worth looking at. It allows for a little more creative freedom, since you get less interference from the guys in the big suits. The flip side is that because the label doesn't own the master, it may invest less in making the release a success.
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4. Then there's the profit-sharing deal. I did something like this with my album Lead Us Not Into Temptation in 2003. I got a minimal advance from the label, Thrill Jockey, since the recording costs were covered by a movie soundtrack budget, and we shared the profits from day one. I retained ownership of the master. Thrill Jockey does some marketing and press. I may or may not have sold as many records as I would have with a larger company, but in the end I took home a greater share of each unit sold.
-
5. In the manufacturing and distribution deal, the artist does everything except, well, manufacture and distribute the product. Often the companies that do these kinds of deals also offer other services, like marketing. But given the numbers, they don't stand to make as much, so their incentive here is limited. Big record labels traditionally don't make M&D deals.
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In this scenario, the artist gets absolute creative control, but it's a bigger gamble. Aimee Mann does this, and it works really well for her. "A lot of artists don't realize how much more money they could make by retaining ownership and licensing directly," Mann's manager, Michael Hausman, told me. "If it's done properly, you get paid quickly, and you get paid again and again. That's a great source of income."
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6. Finally, at the far end of the scale, is the self-distribution model, where the music is self-produced, self-written, self-played, and self-marketed. CDs are sold at gigs and through a Web site. Promotion is a MySpace page. The band buys or leases a server to handle download sales. Within the limits of what they can afford, the artists have complete creative control. In practice, especially for emerging artists, that can mean freedom without resources — a pretty abstract sort of independence. For those who plan to take their material on the road and play it live, the financial constraints cut even deeper. Backup orchestras, massive video screens and sets, and weird high tech lights don't come cheap.
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Radiohead adopted this DIY model to sell In Rainbows online — and then went a step further by letting fans name their own price for the download. They weren't the first to do this — Issa (formerly known as Jane Siberry) pioneered the pay-what-you-will model a few years ago — but Radiohead's move was much higher profile. It may be less risky for them, but it's a clear sign of real changes afoot. As one of Radiohead's managers, Bryce Edge, told me, "The industry reacted like the end was nigh. They've devalued music, giving it away for nothing.' Which wasn't true: We asked people to value it, which is very different semantics to me."
At this end of the spectrum, the artist stands to receive the largest percentage of income from sales per unit — sales of anything. A larger percentage of fewer sales, most likely, but not always. Artists doing it for themselves can actually make more money than the massive pop star, even though the sales numbers may seem minuscule by comparison. Of course, not everyone is as smart as those nerdy Radiohead boys. Pete Doherty probably should not be handed the steering wheel.
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09 Jun 09
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01 Apr 09
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25 Mar 09
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13 Jan 09
Brett MThe CD? It's dead. Good thing the music industry is about more than selling plastic discs. Today's artists have surprising new ways to reach fans and make a living. David Byrne gives Wired readers a guided tour of what's next.
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09 Jan 09
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27 Dec 08
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24 Aug 08
arnie GrossblattHow to survive in the era of free content, pirated content. Written for musicians but contains lessons for publishers as well.
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05 Aug 08
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14 Jul 08
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22 May 08
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26 Apr 08
Tony HirstThe CD? It's dead. Good thing the music industry is about more than selling plastic discs. Today's artists have surprising new ways to reach fans and make a living. David Byrne gives Wired readers a guided tour of what's next.
business free freenomics freeonomics music neweconomy s:l wikinomics
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24 Feb 08
Jorge YunesCon motivo del lanzamiento online del disco de Radiohead, David Byrne escribió un interesante artículo en la revista Wired en el que analiza el estado de la industria de la música y las estrategias para artistas emergentes (y megaestrellas)
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10 Feb 08
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29 Jan 08
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D. CooteyExcellent dope on the type of record deals make the music industry go round.
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25 Jan 08
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21 Jan 08
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What is called the music business today, however, is not the business of producing music. At some point it became the business of selling CDs in plastic cases, and that business will soon be over. But that's not bad news for music, and it's certainly not bad news for musicians. Indeed, with all the ways to reach an audience, there have never been more opportunities for artists.
-
What is music?
First, a definition of terms. What is it we're talking about here? What exactly is being bought and sold? In the past, music was something you heard and experienced — it was as much a social event as a purely musical one. Before recording technology existed, you could not separate music from its social context. Epic songs and ballads, troubadours, courtly entertainments, church music, shamanic chants, pub sing-alongs, ceremonial music, military music, dance music — it was pretty much all tied to specific social functions. It was communal and often utilitarian. You couldn't take it home, copy it, sell it as a commodity (except as sheet music, but that's not music), or even hear it again. Music was an experience, intimately married to your life. You could pay to hear music, but after you did, it was over, gone — a memory. -
Freedom versus pragmatism
These models are not absolute. They can morph and evolve. Hausman and Mann took the total DIY route at first, getting money orders and sending out CDs in Express Mail envelopes; later on they licensed the records to distributors. And things change over time. In the future, we will see more artists take up these various models or mix and match versions of them. For existing and emerging artists — who read about the music business going down the drain — this is actually a great time, full of options and possibilities. The future of music as a career is wide open. -
No single model will work for everyone. There's room for all of us. Some artists are the Coke and Pepsi of music, while others are the fine wine — or the funky home-brewed moonshine. And that's fine. I like Rihanna's "Umbrella" and Christina Aguilera's "Ain't No Other Man." Sometimes a corporate soft drink is what you want — just not at the expense of the other thing. In the recent past, it often seemed like all or nothing, but maybe now we won't be forced to choose.
Ultimately, all these scenarios have to satisfy the same human urges: What do we need music to do? How do we visit the land in our head and the place in our heart that music takes us to? Can I get a round-trip ticket?
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31 Dec 07
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30 Dec 07
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First, a definition of terms. What is it we're talking about here? What exactly is being bought and sold? In the past, music was something you heard and experienced — it was as much a social event as a purely musical one. Before recording technology existed, you could not separate music from its social context. Epic songs and ballads, troubadours, courtly entertainments, church music, shamanic chants, pub sing-alongs, ceremonial music, military music, dance music — it was pretty much all tied to specific social functions. It was communal and often utilitarian. You couldn't take it home, copy it, sell it as a commodity (except as sheet music, but that's not music), or even hear it again. Music was an experience, intimately married to your life. You could pay to hear music, but after you did, it was over, gone — a memory.
-
Technology changed all that in the 20th century. Music — or its recorded artifact, at least — became a product, a thing that could be bought, sold, traded, and replayed endlessly in any context
-
Recording costs have declined to almost zero.
-
Manufacturing and distribution costs are approaching zero.
-
Touring is not just promotion. Live performances used to be seen as essentially a way to publicize a new release — a means to an end, not an end in itself. Bands would go into debt in order to tour, anticipating that they'd recover their losses later through increased record sales. This, to be blunt, is all wrong. It's backward. Performing is a thing in itself, a distinct skill, different from making recordings. And for those who can do it, it's a way to make a living.
-
. At one end of the scale is the 360, or equity, deal, where every aspect of the artist's career is handled by producers, promoters, marketing people, and managers
-
As a general rule, as the cash comes in, creative control goes out
-
2. Next is what I'll call the standard distribution deal. This is more or less what I lived with for many years as a member of the Talking Heads. The record company bankrolls the recording and handles the manufacturing, distribution, press, and promotion. The artist gets a royalty percentage after all those other costs are repaid. The label, in this scenario, owns the copyright to the recording. Forever.
-
So what happens when online sales eliminate many of these expenses? Look at iTunes: $10 for a "CD" download reflects the cost savings of digital distribution, which seems fair — at first. It's certainly better for consumers. But after Apple takes its 30 percent, the royalty percentage is applied and the artist — surprise! — is no better off.
-
3. The license deal is similar to the standard deal, except in this case the artist retains the copyrights and ownership of the master recording. The right to exploit that property is granted to a label for a limited period of time — usually seven years. After that, the rights to license to TV shows, commercials, and the like revert to the artist. If the members of the Talking Heads held the master rights to our catalog today, we'd earn twice as much in licensing as we do now — and that's where artists like me derive much of our income.
-
Merge cofounder Mac McCaughan says. "The bands we work with, we never recommend that they make videos. I like videos, but they don't sell a lot of records. What really sells records is touring — and artists can actually make money on the tour itself if they keep their budgets down.
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4. Then there's the profit-sharing deal. I did something like this with my album Lead Us Not Into Temptation in 2003. I got a minimal advance from the label, Thrill Jockey, since the recording costs were covered by a movie soundtrack budget, and we shared the profits from day one. I retained ownership of the master. Thrill Jockey does some marketing and press. I may or may not have sold as many records as I would have with a larger company, but in the end I took home a greater share of each unit sold.
-
5. In the manufacturing and distribution deal, the artist does everything except, well, manufacture and distribute the product. Often the companies that do these kinds of deals also offer other services, like marketing. But given the numbers, they don't stand to make as much, so their incentive here is limited. Big record labels traditionally don't make M&D deals.
-
In this scenario, the artist gets absolute creative control, but it's a bigger gamble. Aimee Mann does this, and it works really well for her. "A lot of artists don't realize how much more money they could make by retaining ownership and licensing directly," Mann's manager, Michael Hausman, told me. "If it's done properly, you get paid quickly, and you get paid again and again. That's a great source of income."
-
6. Finally, at the far end of the scale, is the self-distribution model, where the music is self-produced, self-written, self-played, and self-marketed. CDs are sold at gigs and through a Web site. Promotion is a MySpace page. The band buys or leases a server to handle download sales. Within the limits of what they can afford, the artists have complete creative control
-
At this end of the spectrum, the artist stands to receive the largest percentage of income from sales per unit — sales of anything. A larger percentage of fewer sales, most likely, but not always. Artists doing it for themselves can actually make more money than the massive pop star, even though the sales numbers may seem minuscule by comparison
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29 Dec 07
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Sean Ddavid byrne of the talking heads on the future of the music industry
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28 Dec 07
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georgiakharperdetails 6 business models for musicians, now that the major labels no longer hold the cards
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Ari RThis seems to be a popular conversation topic this holiday season - people seem to want to talk about the future of the music biz. David Byrne offers some limited advice, but mainly just writes about what’s at stake (and what’s not at stake - ie, people w
media education future music art technology trends strategy brain eno creativity business money radiohead lists davidbyrne luakabop copyright culture
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27 Dec 07
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