What do Record Companies actually do?
One thing’s clear, they’re doing a good job of pissing off their customers. STOP PISSING OFF YOUR CUSTOMERS AND STOP SUING PEOPLE. Joel Tenebaum has reopened the court case that made him pay $675K to Sony BMG for illegal downloads. Give the money back to him if you’ve got a brain, Sony. Don’t you see that if you’re nice to us, we may actually start buying from you again? Just except that you didn’t have a good enough handle on the digital market in the Naughties. Start spending your money innovating with your artists’ content and developing new products, not suing your customers. Live in the present, not the past. The Music Industry is still in turmoil and it’s product innovation amongst other things that will save it, not biting the hand that feeds. That’s from a fan’s perspective, anyway.
But more importantly, this question hits right at the heart of an artist’s livelihood because these Companies take complete control of an artist’s copyrights and only pay them a small fraction of royalties in return. So they should expect a lot. Looking at the big four Record Companies around today, (EMI, Universal, Warner and Sony BMG) some of the things they do for artists are still useful. But many are either unnecessary or out of touch with the public.
At their core, these Record Companies collect an artist’s copyrights, foster and promote the artist’s wares, make money from these wares and give the artist a royalty payment (normally 10-20% of the total money made on their wares but only after recoup).
The Record Companies used to do a lot during this process. They used to have a lot of power and influence over a very complex industry:
In the words of Branson,
“Virgin Records funded recording sessions, manufactured the product, distributed it to shops and then marketed the band and the music. We would give loans and advances for touring, for making promotional videos, for equipment, props and lighting. We would also advise and look after the careers of our musicians and handle the accounts and the sales.”
Their justification for small royalty payouts were also because they used to operate like Music Venture Capitalists. They’d invest a large amount of money in five acts in the hope that one of them would break the big time. They knew that more often than not most of them would go nowhere, that one of them may just about recoup… but they made sure that one of them would be an international super star. Not foolproof, but the one that hit the big time would justify the time, money and effort investing in the four that never really went anywhere.
Their investments may have been £100K+ per artist but that was fine because that one superstar artist would bring in £1m+.
This was great for music, the artists and the fans; big names would break, smaller acts would earn a living, fans had choices and the Record Labels would make enough money to pay its Execs well and move on to the next batch of hopefuls.
Fast-forward to the 21st century and things have changed. Big time. The big four Record Companies are too big. They stopped focusing on the music and focus too hard on their shareholders. The value of the services they used to offer have, in Branson’s words, “mainly disappeared” and the Labels won’t invest much money in an artist until they’ve proved themself. They operate as Indie Labels but charge the artist so much more.
And I’m talking about the big Record Labels here, not small Indie labels.
Does it not seem ridiculous that while the role of a Record Label is diminishing, the percentages paid from the Labels to the artist HAVE LARGELY STAYED THE SAME. If you’re an artist, think about that for a minute.
Record sales are down, the Record Company does less and is less useful but the percentage that you, the artist, are entitled to FOR THE MUSIC YOU CREATE stays the same. In most cases they have actually decreased. If you’re about to sign to a big Label, you’re about to give away your copyright in exchange for a huge chunk of future money and control. In return you should expect to get loans, advances, management, promotion, videos from the outset.
If it’s just management you want, step back. Decent band managers only take around 10%. If you want a bit more, small Indie Labels can be useful but try not to give them your Rights.
If it’s promotion you want, think smart. Use MySpace, Twitter, Facebook. Get on Last FM. If it’s distribution you need, go onto TuneCore and pay them $10 per month to store your music. They’ll pass it on to retailers like iTunes and Rhapsody.
If you write your own music then register with PRS. You should do this anyway, but you can also sign up to an Indie Publishing House.
You can start releasing tracks when you want and how you want, straight to your fans. This is the modern way of doing things. We now live in an age of the real-time web. You shouldn’t get pressured into making an album-worth of music just cos it makes them more money. That’s the old way of doing things.
Make friends with musicians who are further in their career than you and ask if you can tour with them.
If you want a day in a medium size studio it will cost you £1-2K (UK or US). Choose the right one and you’ll get a pro. You’ll get tonnes of advice and hopefully a good sounding couple of tracks to give/sell to fans. That’s more great promotion
I know there isn’t somewhere you can do all this under one roof. Trust me, I’ve researched this… it’s the very premise of Music Balloon. It’s why we think it’s so relevant. So until something like Music Balloon takes off, just get out there and use the resources available to you and HANG ONTO YOUR COPYRIGHTS!
I’m not the only one who thinks this. Branson goes on to say,
“If I was a happening band on the cusp of success today, I wouldn’t go through a conventional Record Company.”
This guy started off his empire with a Record Company!
He goes on to say,
“I’d gather a small team of people around me and release [my own music]. I would consider getting together and sharing distribution, advertising and marketing with like-minded musicians and marketing people. Promotion is as easy as setting up a page on MySpace, Facebook or other social networking sites.”
Amazing that a man who turns 60 this year has such a relevant vision of the future. But he’s a man who’s used to change. In the 20th century, successful artists had it pretty easy. But they gave a lot away to have it easy. And the guys they gave it away to did a lot for them.
As we enter a new decade, it feels like we’re moving away for the overly-marketed, talentless pap that pollutes our radios, mainly because the Record Companies can’t afford to fuel it anymore. Live music and touring are massive again. It’s about being free to create music and promote music in the way you want it to be promoted. You don’t need big Record Labels to do all this for you. Think about the music. You no longer have to sell out to radio stations or do adverts for price-comparison websites, instead you can carve out your own niche. You can talk direct to your fans through stuff like Twitter instead of relying on journalists to tell your story… and if the passion and talent is there, you’ll have a great following in no time.
Until Record Companies stop ripping off their aritsts and suing their fans then the limited value these guys offer is offensive. While we wait for them to innovate with content, copyright management and promotion I suggest artists go ‘Direct to Consumer’. I know as an artist all you want to do is create great music. Musicians back in the 70s and 80s had it much easier because a Label would do so much more. It was worth handing over your royalties. But right now you’ve got to follow up your passion with a bit of nous. Be a bit shrewd. And don’t worry too much, as they the Record Companies continue to falter, a far more relevant, leaner, fairer and more transparent type of service will start to emerge for artists that will make your lives easy again.
Alex and Steve
www.musicballoon.com
(Branson quotes taken from ‘Business Stripped Bare’, 2008)