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Latosha Cooper's List: 2.4 Appeal for Action

  • Mar 15, 14

    Katy Perry states that record labels aren't making enough money to to stay successful. The record labels only make money from the album sales while most are stuck in a "360" deal where the label gets a percentage of all of the revenue the artist earns.

    • Specifically, they wanted to figure out how much money her label made from such a big success. What comes out is a step-by-step description of the massive inefficiencies of the major label recording system. There are things like paying producers $100,000 per song they produce on the album. Then there's all the payola... er "special promotions" to get the songs played on radio so much.
    • As the full podcast by Planet Money notes, Perry has been able to avoid getting sucked into a "360" deal where the label gets to take some of all the revenue she earns. They just get the record sales. Perry, in the meantime, is estimated to have made $44 million in 2011 -- a large chunk of that coming from her tour, which alone grossed over $50 million.

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  • Mar 15, 14

    This article shows how the record labels are failing to make profit. By sticking to the traditional record retail business practices they are missing out on newer opportunities that indie labels are taking advantage of.

    • Before music video, record companies used to get a lot of free promotion—radio and TV even pay to play their records. Making videos for television in the 1980s was an easy way to exploit that free promotion and the glut of content spawned its own channel: MTV. The deep pockets of the record companies funded a blowout, and as people began replacing vinyl with CDs the labels simply spent more. They got very fat, and it didn’t cost any more to make each record.
    • Big stars earn a lot but big record companies spend more. A few artists earn as much as Major record label bosses, but most earn less than the office staff. The big labels are better paid than most of their content providers.

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  • Mar 15, 14

    This article discusses how profit is split between labels and artist.

  • Mar 16, 14

    Music industries were hit hard during the sift form physical to digital media.
    This article explains how the rise of digital technology affected different media outlets.

    • Independent “indie” Music Record Labels:
    • Record Labels:

    4 more annotations...

    • First of all, in many of these 360 deals the record company will demand that their earnings come out of the gross revenues, meaning that, if the cash that the labels actually receive has been reduced by any parties in the middle of the transaction (even if those parties themselves add value, as, for example, many music publishers do), then the label will add those amounts back in before calculating the percentage of revenue they retain. Think about that for a moment. The manager doesn’t get paid on gross, and the artist certainly doesn’t get paid on gross why then should the record company be paid on gross?
    • Record companies love to cross-collateralize. This thirty-one-point Scrabble word refers to the practice of taking an artist’s positive earnings from one category (e.g. publishing income) and applying it as a record company expense that affects the artist’s unrecouped balance in another category (e.g. the record royalty account). In summary, the labels are postponing, for as long as possible, the day when the artist actually receives a positive cash flow from her end of the pipeline. Yet when it comes to the income which they would like to receive from an artist’s 360 income streams, the labels would like to keep one hundred percent of the money to which they are entitled, without applying (i.e. cross-collateralizing) any of it to reduce the artist’s debt to the record company.

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