The music industry incorporates many individuals, more than just those that write the music or perform it. It’s an intricate web of producers, record labels, retailers, managers, and a plethora of other careers that can come about just from music. The music industry has really transformed over the years. In the late 19th century, it was sheet music that brought in the most profits. However in the mid-20th century, records (vinyl, 8 track, cassette, cd, digital) overtook sheet music as the main source of income. In recent years, live music has really taken off. Earlier in the blog series we talked about piracy as potentially being detrimental to the entertainment industry. Nowhere does that ring truer than in music. Illegal downloading has really hurt profits, yet on the other hand it has opened up more avenues to find new artists and possibly buy music and merchandise that wouldn’t have been purchased before. While there are a lot of worries in this industry, some countries are seeing a continued growth. However partly because of the piracy issue, partly because of the digital age of the single, record sales just aren’t enough anymore to keep many in the music industry afloat. So what can be done for the industry?
For the record companies, they can sign artists to multiple-rights contracts (also known as the 360 degree contract), which include not only the recorded music, but encompass live music, merchandise and endorsement deals. These are becoming more and more popular in countries which are ridden with music piracy. However, most artists stick to artist-management agencies for the tour side of their career because of the economic benefits. There has been a major distrust in the music crowd of the four so-called major record labels – Universal Music Group, Sony BMG, Warner Music Group and EMI. These firms are said to be only interested in short-term profit, not an artist’s long-term development. However it is not only the big firms who are involved with the 360 model, but many smaller investors who see a great opportunity. The new 360 model is one in which the bands get to keep ownership of their work, but the income is split between the band and backers after the initial investment has been repaid. This may be a way to save music as a whole, by getting away from a copyright trading model to a venture capitalist approach. Then if the artists make it big they can choose to sign with a big label if the financial backing requires a big enough investment. This won’t necessarily be one of the big 4, because since the punk rock era of the 1980’s independent labels have been on the rise. The band would be given ultimate creative freedom with this approach.
This is exactly something that the alternative rock band Radiohead did in 2007. The band and business manager Brian Message had been flirting with the idea for 10 years before that. In Radiohead’s case they already had the resources to go on their own, so they really just wanted to manage their own affairs. As soon as Radiohead got off of the obligations of a long-term contract, they shocked the music world by releasing their 2007 album In Rainbows online as a pay for what you think it’s worth download. Essentially a user could download the album for free, but the message spread like wildfire, most likely bringing in a nice stream of revenue (the band won’t release specific numbers). This allowed Radiohead to connect with fans, connect with tours and give fans a reason to buy other merchandise (such as the vinyl of the album, which is making a comeback). The bands of today can use recorded music to promote concerts and such, so don’t care as much about piracy.
Brian Message himself created his own venture capital firm of sorts for start-up bands looking for the financial backing to make it big. In an interview with the Financial Times, Brian Message said, “Under the new way of doing things, you’re a chief executive of an artist’s business with multiple revenue streams that go across multiple countries,” he says. Brian has an accounting background, which in today’s volatile music industry it’s proving invaluable. The industry is in an investment crisis, but this is where a business manager or even an everyday person can enter the fray as investors.
This can be seen on a website such as Sellaband, where you can financially support an up and coming artist. There may be other possibilities in the internet radio realm, especially with the success of Pandora. In contrast the revenues here are very small, but it’s just a way for music to be heard and appreciated in new and exciting ways. And it may not even take that much money. Aspiring musicians can nowadays make decent quality home recordings on a four-track recorder costing $300, a sum that would barely buy a couple of hours in a professional studio. They can upload their songs to the internet and send them to retailers, social networking sites, song streaming services and so on. It’s a tough model for up and coming bands, but it may be the only way. You have to work for whatever you get in business, and the music industry is no different. I will leave you with the advice Radiohead frontman Thom Yorke gave to aspiring artists about the old music business model, “Don’t tie yourself to the sinking ship, because believe me, it’s sinking.”