4 ms·

As someone who was entrenched in the music startup world for a while, I've concluded that the only way to save the music industry is for the major labels to die

by pvnick 14y ago

As someone who was entrenched in the music startup world for a while, I've concluded that the only way to save the music industry is for the major labels to die or become obsolete and for new, innovation-friendly content producers to emerge in their place. We need for music what Netflix is trying to do for movies/tv (see Lillyhammer, new Arrested Development season). It's that broken.

willwhitney 14y ago
I would be very excited for Spotify to start signing artists directly, without the major label middleman. It could let Spotify turn a profit on those artists while simultaneously paying out more to the people making the music. As an insider, pvnick, do you think Spotify could ever pull that off without burning the bridges of its current label deals?
- pvnick 14y ago
  They could, but only for a short while with small artists until the labels start seeing them as a competitor rather than something to be exploited. Once the labels start to feel threatened you can be 100% certain they will take their ball and go home. That and probably litigate against Spotify.
- rm999 14y ago
  Spotify already lets unsigned artists add their music through music aggregators like cdbaby: http://www.spotify.com/us/work-with-us/labels-and-artists/artist-page/ http://www.spotify.com/us/work-with-us/labels-and-artists/ar... I suppose the music aggregators are a modern day take on record labels.
  - k-mcgrady 14y ago
    Not really, a label does much more than get an artists music in a store. Distributing the content is probably the easiest thing for artists to do on their own. Marketing, touring and merchandise are more complication and labels are still the best solution.
    - rm999 14y ago
      Well, that's why I said "take" on it. These companies are actually doing quite a bit that a traditional label would do: they store the media (the digital version of manufacturing it), distribute it, and market it. I don't think a traditional label is always the best solution, especially for groups that will never be big enough to justify the huge upfront costs a label puts in. These aggregators are really for the tail end of the spectrum: the 90% of bands who represent 1% of music listening time and don't have much hope of getting signed.
- ethank 14y ago
  Assuming Spotify signs artists (or Apple for that matter), will they be willing to upfront costs against touring, recording, production? How would they structure recoupment? Apple could structure a better deal because they can cover mechanical royalties through download purchases. Spotify would be streaming only. The economics would be very, very tight. It'd be hard for them to do a 360 deal to get revenue from the money making aspect of music (sponsorships and live), unless they also staffed up artist development (touring) and sponsorships/partnerships/biz dev. Its not as easy as just "signing an artist" If it was, we'd have already been disrupted by the indies.
  - willwhitney 14y ago
    I realize it's a complicated question, and that Spotify (or Apple, or any other company we love) couldn't just jump straight in and be an instant success. And while Apple certainly has the cash to cover upfront costs, staffing up, etc, Spotify probably doesn't, at least at large scale. Are there cases where it would work, though? Bands that stumble upon internet fame are still the exception, but they exist, and it seems like they benefit much less from the visibility and other perks that traditional labels offer. Could a band like OK Go (back in their early days of YouTube success) be better off going directly through a distributor like Spotify, getting less up front, and getting a bigger revenue share? I know a couple of years ago they jumped from EMI (http://okgo.net/2010/03/10/onwards-and-upwards/ http://okgo.net/2010/03/10/onwards-and-upwards/). Maybe they could have done so earlier?
    - ethank 14y ago
      OK Go would still have to register with a publisher and a PRO if they wanted to see any residuals at all. If they just wanted to bypass music and be a "video" band they'd still have to manage the music bed in some fashion, even if through Tunecore or someone like that. These "the labels must die" discussions get tedious because not many know what they do. I quit being at a label, but not because I think it should die, just because it was anyhow.
gabrielbutu 14y ago
It's important to give some credit to the role major labels play in the industry. It might not be the best theoretical system, but practical limitations mean this is something of a second best solution, it is feasible, and a world without a major label oligopoly might not be as rosy as imagined. Majors might appear as obstacles in the latter stages of the distribution chain, sure, but earlier on they play a key role in ensuring the masses - that's not necessarily you or I but fans of popular music - get the very best. That's the best in talent, from song-writing to singing to producing to touring. For that, an institutional arrangement promising immense returns to those at the top is a decent incentive structure for distilling what gets to us. And even if you look further down the spectrum at the indie side of things, you might notice it mimics what the oligopolies do. You hear about Bieber as a product of YouTube and yes, streaming was key to his success. But without Scooter Braun's contacts on the industry side of things, the conversations those facilitated behind the scenes, would Bieber have become the Bieber 'we' have come to know and love? In the end, the music listener's quality of life has improved. For artists, it's tough out there but that's nothing new. The circumstances have changed but fame and money are still on the table for those willing to put skin in the game and lose 99 times out of 100. For those more concerned with the love of it all, they can rest assured their message is getting out to more people than ever (if it's worthwhile). It may not be the best conceivable scenario, but I don't see it doing music much harm longer term. If anything, expect more killer less filler. And for fans of live music, it's never been better. The prices might be higher but so is the standard, the choice, the accessibility. For Spotify, the road ahead is somewhat hazy and needs to be navigated as such. A few years of loss making activity make sense if it keeps growing, keeps hammering out deals, and creates the bulk of its value a number of years down the line.
- quesera 14y ago
  Too subtle, I think. People will miss your pervasive irony.
snowwrestler 14y ago
Unfortunately piracy has the exact opposite effect--it strengthens major music labels by preferentially harming more responsible or smaller labels. Major label A&R looks for young bands that it can sign to 360 deals and promote like crazy to teenagers. (For those not aware, a 360 deal means the label gets a cut of every revenue source: album sales, concert receipts, sync licenses, etc.) Smaller labels do not have the capital to operate that way, or (in many cases) choose not to operate that way out of a greater sense of responsibility to the artist. As a result they are more dependent on their cut of album sales--which have declined tremendously under the pressure of piracy.
- eikenberry 14y ago
  Depending more on album sales for revenue is stupid and will keep you very small. Albums are now merchandise, akin to shirts, posters and stickers. You don't get rich off them. If you cater to the fans you'll make some money as they like to collect things and support their band. But compared to other merchandise, albums are probably one of the least valuable. Labels need to realize they are promotional agencies primarily and take a cut, like acting agencies. You promote them and help them get gigs. You get a cut of the profits in return.
  - bri3d 14y ago
    The problem is that there's already a promotional agency which takes a cut - the tour promoter! [0] That industry is slowly converging to a state of brokenness near that of album-selling record labels, as Live Nation (themselves a Clear Channel spinoff) were allowed to merge with Ticketmaster in 2010 to form a unified ticketing, venue booking, and promotion cabal. 0: http://en.wikipedia.org/wiki/Tour_promoter http://en.wikipedia.org/wiki/Tour_promoter
    - eikenberry 14y ago
      That's not a problem. That is just another player. There are tons of people taking a bite of the pie when it comes to actors. Yet they continue to make a living and so do their agents.
ethank 14y ago
OK, I was waiting for a moment to dig up budget sheets. As of 2010, these are the line items on a budget to release a major label record. The same (minus a few things) applies to indies. PROMOTION: Indie promo (paying someone to promote to radio) Tip sheets (newsletter advertising) Radio promo contests (those win-it-before-you-can-buy-it and fly-aways) Radio marketing (ads) ^ the above breaks down by format. Formats are: Alternative, Active/AOR/Rock, College, AAA, Specialty Format (ie, Urban). -------------- MISC PROMOTION: Radio shows (including artist travel, accommodations, etc) Promotion CD's Tip sheet design and prep -------------- SALES: Advertisement placements (ie, circulars, endcaps) Retail Marketing Outside retail marketing Retail merch admats -------------- ADVERTISING: Print TV Radio Online Outdoor/sniping Circulars Prep and art production -------------- STREET MARKETING Merch Promotions Outside street team Samplers -------------- MISC MARKETING: Advances, DJ advances Remixes General merch (ie, those funky things artists do to promote records) -------------- PUBLICITY Indie publicists (if the artist doesn't use the staff) TV appearances (travel, etc) Photo shoots Press travel Tour logistics (aka Artist Development) Prints, bios, misc (copywriters, etc) -------------- VIDEO: Video production Live footage, EPK cuts VIDEO PROMOTION: Video indies Video promotions Video duplication -------------- TOURING: Tour support Tour marketing Promo tours (including setup, crew, backline, travel) Ticket buys (from the venues, these aren't free!) -------------- ONLINE Marketing Website tech cost Website design Other tech (Facebook, widgets, games, Lee Martin) -------------- PACKAGING Art Production -------------- INTERNATIONAL MARKETING Tour support Promo tour Publicity Production Misc -------------- * Some of these aren't done. Some are much more expensive than others. Anyhow, a lot to be said about this but that's worthy of a blog post. Also this has likely changed a bit recently.
- duaneb 14y ago
  How effective is marketing in these days? I get all my music recommendations from friends.
  - citricsquid 14y ago
    Then you're a rarity. Marketing is important, even more so than before in my opinion. Look at artists like One Direction, a group of talented boys but nothing special... then look at the hysteria that surrounds them, Justin Bieber is another good example. The song "Call Me Maybe" is a perfect example. That song was released almost one year ago, but how many people had heard of it? Maybe a few thousand. Then Carly Rae Jepsen signs to the label ran by Justin Biebers manager earlier this year... now it has over 220,000,000 youtube views and almost everyone that pays attention to popular culture can recite the lyrics. Marketing is everything. Sure it's not always traditional marketing -- billboards, tv spots -- but using existing artists too. Carly Rae Jepsen is famous because of Justin Biebers marketing power.

by pvnick 14y ago

willwhitney 14y ago

I would be very excited for Spotify to start signing artists directly, without the major label middleman. It could let Spotify turn a profit on those artists while simultaneously paying out more to the people making the music. As an insider, pvnick, do you think Spotify could ever pull that off without burning the bridges of its current label deals?

pvnick 14y ago
They could, but only for a short while with small artists until the labels start seeing them as a competitor rather than something to be exploited. Once the labels start to feel threatened you can be 100% certain they will take their ball and go home. That and probably litigate against Spotify.
rm999 14y ago
Spotify already lets unsigned artists add their music through music aggregators like cdbaby: http://www.spotify.com/us/work-with-us/labels-and-artists/artist-page/ http://www.spotify.com/us/work-with-us/labels-and-artists/ar... I suppose the music aggregators are a modern day take on record labels.
- k-mcgrady 14y ago
  Not really, a label does much more than get an artists music in a store. Distributing the content is probably the easiest thing for artists to do on their own. Marketing, touring and merchandise are more complication and labels are still the best solution.
  - rm999 14y ago
    Well, that's why I said "take" on it. These companies are actually doing quite a bit that a traditional label would do: they store the media (the digital version of manufacturing it), distribute it, and market it. I don't think a traditional label is always the best solution, especially for groups that will never be big enough to justify the huge upfront costs a label puts in. These aggregators are really for the tail end of the spectrum: the 90% of bands who represent 1% of music listening time and don't have much hope of getting signed.
ethank 14y ago
Assuming Spotify signs artists (or Apple for that matter), will they be willing to upfront costs against touring, recording, production? How would they structure recoupment? Apple could structure a better deal because they can cover mechanical royalties through download purchases. Spotify would be streaming only. The economics would be very, very tight. It'd be hard for them to do a 360 deal to get revenue from the money making aspect of music (sponsorships and live), unless they also staffed up artist development (touring) and sponsorships/partnerships/biz dev. Its not as easy as just "signing an artist" If it was, we'd have already been disrupted by the indies.
- willwhitney 14y ago
  I realize it's a complicated question, and that Spotify (or Apple, or any other company we love) couldn't just jump straight in and be an instant success. And while Apple certainly has the cash to cover upfront costs, staffing up, etc, Spotify probably doesn't, at least at large scale. Are there cases where it would work, though? Bands that stumble upon internet fame are still the exception, but they exist, and it seems like they benefit much less from the visibility and other perks that traditional labels offer. Could a band like OK Go (back in their early days of YouTube success) be better off going directly through a distributor like Spotify, getting less up front, and getting a bigger revenue share? I know a couple of years ago they jumped from EMI (http://okgo.net/2010/03/10/onwards-and-upwards/ http://okgo.net/2010/03/10/onwards-and-upwards/). Maybe they could have done so earlier?
  - ethank 14y ago
    OK Go would still have to register with a publisher and a PRO if they wanted to see any residuals at all. If they just wanted to bypass music and be a "video" band they'd still have to manage the music bed in some fashion, even if through Tunecore or someone like that. These "the labels must die" discussions get tedious because not many know what they do. I quit being at a label, but not because I think it should die, just because it was anyhow.

gabrielbutu 14y ago

It's important to give some credit to the role major labels play in the industry. It might not be the best theoretical system, but practical limitations mean this is something of a second best solution, it is feasible, and a world without a major label oligopoly might not be as rosy as imagined. Majors might appear as obstacles in the latter stages of the distribution chain, sure, but earlier on they play a key role in ensuring the masses - that's not necessarily you or I but fans of popular music - get the very best. That's the best in talent, from song-writing to singing to producing to touring. For that, an institutional arrangement promising immense returns to those at the top is a decent incentive structure for distilling what gets to us. And even if you look further down the spectrum at the indie side of things, you might notice it mimics what the oligopolies do. You hear about Bieber as a product of YouTube and yes, streaming was key to his success. But without Scooter Braun's contacts on the industry side of things, the conversations those facilitated behind the scenes, would Bieber have become the Bieber 'we' have come to know and love? In the end, the music listener's quality of life has improved. For artists, it's tough out there but that's nothing new. The circumstances have changed but fame and money are still on the table for those willing to put skin in the game and lose 99 times out of 100. For those more concerned with the love of it all, they can rest assured their message is getting out to more people than ever (if it's worthwhile). It may not be the best conceivable scenario, but I don't see it doing music much harm longer term. If anything, expect more killer less filler. And for fans of live music, it's never been better. The prices might be higher but so is the standard, the choice, the accessibility. For Spotify, the road ahead is somewhat hazy and needs to be navigated as such. A few years of loss making activity make sense if it keeps growing, keeps hammering out deals, and creates the bulk of its value a number of years down the line.

quesera 14y ago
Too subtle, I think. People will miss your pervasive irony.

snowwrestler 14y ago

Unfortunately piracy has the exact opposite effect--it strengthens major music labels by preferentially harming more responsible or smaller labels. Major label A&R looks for young bands that it can sign to 360 deals and promote like crazy to teenagers. (For those not aware, a 360 deal means the label gets a cut of every revenue source: album sales, concert receipts, sync licenses, etc.) Smaller labels do not have the capital to operate that way, or (in many cases) choose not to operate that way out of a greater sense of responsibility to the artist. As a result they are more dependent on their cut of album sales--which have declined tremendously under the pressure of piracy.

eikenberry 14y ago
Depending more on album sales for revenue is stupid and will keep you very small. Albums are now merchandise, akin to shirts, posters and stickers. You don't get rich off them. If you cater to the fans you'll make some money as they like to collect things and support their band. But compared to other merchandise, albums are probably one of the least valuable. Labels need to realize they are promotional agencies primarily and take a cut, like acting agencies. You promote them and help them get gigs. You get a cut of the profits in return.
- bri3d 14y ago
  The problem is that there's already a promotional agency which takes a cut - the tour promoter! [0] That industry is slowly converging to a state of brokenness near that of album-selling record labels, as Live Nation (themselves a Clear Channel spinoff) were allowed to merge with Ticketmaster in 2010 to form a unified ticketing, venue booking, and promotion cabal. 0: http://en.wikipedia.org/wiki/Tour_promoter http://en.wikipedia.org/wiki/Tour_promoter
  - eikenberry 14y ago
    That's not a problem. That is just another player. There are tons of people taking a bite of the pie when it comes to actors. Yet they continue to make a living and so do their agents.

ethank 14y ago

OK, I was waiting for a moment to dig up budget sheets. As of 2010, these are the line items on a budget to release a major label record. The same (minus a few things) applies to indies. PROMOTION: Indie promo (paying someone to promote to radio) Tip sheets (newsletter advertising) Radio promo contests (those win-it-before-you-can-buy-it and fly-aways) Radio marketing (ads) ^ the above breaks down by format. Formats are: Alternative, Active/AOR/Rock, College, AAA, Specialty Format (ie, Urban). -------------- MISC PROMOTION: Radio shows (including artist travel, accommodations, etc) Promotion CD's Tip sheet design and prep -------------- SALES: Advertisement placements (ie, circulars, endcaps) Retail Marketing Outside retail marketing Retail merch admats -------------- ADVERTISING: Print TV Radio Online Outdoor/sniping Circulars Prep and art production -------------- STREET MARKETING Merch Promotions Outside street team Samplers -------------- MISC MARKETING: Advances, DJ advances Remixes General merch (ie, those funky things artists do to promote records) -------------- PUBLICITY Indie publicists (if the artist doesn't use the staff) TV appearances (travel, etc) Photo shoots Press travel Tour logistics (aka Artist Development) Prints, bios, misc (copywriters, etc) -------------- VIDEO: Video production Live footage, EPK cuts VIDEO PROMOTION: Video indies Video promotions Video duplication -------------- TOURING: Tour support Tour marketing Promo tours (including setup, crew, backline, travel) Ticket buys (from the venues, these aren't free!) -------------- ONLINE Marketing Website tech cost Website design Other tech (Facebook, widgets, games, Lee Martin) -------------- PACKAGING Art Production -------------- INTERNATIONAL MARKETING Tour support Promo tour Publicity Production Misc -------------- * Some of these aren't done. Some are much more expensive than others. Anyhow, a lot to be said about this but that's worthy of a blog post. Also this has likely changed a bit recently.

duaneb 14y ago
How effective is marketing in these days? I get all my music recommendations from friends.
- citricsquid 14y ago
  Then you're a rarity. Marketing is important, even more so than before in my opinion. Look at artists like One Direction, a group of talented boys but nothing special... then look at the hysteria that surrounds them, Justin Bieber is another good example. The song "Call Me Maybe" is a perfect example. That song was released almost one year ago, but how many people had heard of it? Maybe a few thousand. Then Carly Rae Jepsen signs to the label ran by Justin Biebers manager earlier this year... now it has over 220,000,000 youtube views and almost everyone that pays attention to popular culture can recite the lyrics. Marketing is everything. Sure it's not always traditional marketing -- billboards, tv spots -- but using existing artists too. Carly Rae Jepsen is famous because of Justin Biebers marketing power.