New analysis: Did downloads really kill the record labels? (1 Viewer)

[Malcolm R]

label pays to promote album. this is the only cost besides cd replication costs that the label bears itself. and if you're not one of the huge mega sellers like britney or nsync, then it's hard for you to get the label to spend much on promoting you.

One would think that if they are seeking to recoup advances and recording fees from royalties, that it would be in the label's interest to promote every release.

It's amazing to me the number of albums that are released with no promotion/announcement whatsoever. How do the labels expect anyone to know these are even available? What's the point in even putting them out?

 

[RobertW]

because they would probably have to spend far more for promotion than they would get back in royalties.

 

[RobertW]

Of course, it's only zero sum if the band is successful.

do you think the label would just eat those costs? the band would either have to buy their way out of their contract(see: wilco) or those costs would just be added to the costs of their next album. an ever deepening spiral if they don't end up selling.

i can see the labels eating the costs if the band has put out a few albums and is going nowhere, they'll just drop them. but that's probably more of a cost/benefit analysis that it would be cheaper for them to drop them, than to keep subsidizing them. and i'm sure they have ways of writing off those losses. or they probably charge them against nsync or britney, via some kind of accounting trick.

 

[mike_decock]

That Courtney Love article was pretty interesting even though it rambled a little.

My question is: Could you start a record company that provided all the benefits of a major label (distribution in the record stores, clout (money) to get radio play) without screwing the artists?

-Mike...

 

[Brian Perry]

My question is: Could you start a record company that provided all the benefits of a major label (distribution in the record stores, clout (money) to get radio play) without screwing the artists?

My guess is that if you could, it would have been done already. You would probably have to have some luck as far as which artists you signed (and didn't sign).

 

[Lee Scoggins]

My question is: Could you start a record company that provided all the benefits of a major label (distribution in the record stores, clout (money) to get radio play) without screwing the artists?

Yes you can!

David Chesky gave up a Columbia contract to create a new label, Chesky Records, for jazz musicians and new genres. It has been immensely successful.

I think many understandably overestimate the power of the major record labels. Yes, they have a good grip on distribution but David was able to get CDs replicated independently (JVC does not care if you have the green) and attract attention from jazz critics who appreciated the independence and quality of what he was doing.

This is the perfect time for this: Things are so bad now that many people will give special consideration to a new way of doing business if it creates value for everyone in the long run.

See my post on the venture capital model for the music business - I think this may be one way to go.

Now about radio networks - they want to tap into what people are listening to. If an artist is successful on the web or their first CD, then I think they will listen. Perhaps several independent producers/labels can band together to get additional promotion/airtime value for their artists.

 

[mike_decock]

David Chesky gave up a Columbia contract to create a new label, Chesky Records, for jazz musicians and new genres.

While at lunch I thought about the indies a little bit and they're doing the first part, but not following through. You have to grab the entire industry by the balls.

I wouldn't be interested in yet another specialty label. Create more of a consortium of artists, producers, distributors, radio station owners... EVERYTHING music. Do everything the major labels do and do your best to draw big names to join in.

Now, say you have a Chesky-type label that does ANY genre of music. You build a reputation for being fair to your artists. They retain copyrights to their music and get paid fair royalties on sales.

Just like authors who write books. You're more of a publisher who obtains the rights to publish their music for as long as the artist wants and you take a percentage of the profits.

Now, you go after BIG artists who are sick of getting screwed by the major labels. You give them full creative freedom and fair deals.

Since they already have a global fan base, radio stations and record stores will have to deal with you in order to continue carrying the artists consumers are demanding.

You couple this with starting your own radio stations, your own cable TV music station, make deals with movie studios, etc, etc, etc.

If you can't get airtime on the radio, start your own station!


-Mike...

 

[Adam Tyner]

Now, you go after BIG artists who are sick of getting screwed by the major labels. You give them full creative freedom and fair deals.

I'm not sure if you're familiar with what Jimmy Buffet's been doing with his new label, but it's very much along these lines and working very well for all involved, from what I understand. He's working with established artists to minimize promotional costs.

 

[Jeff Kleist]

Personally, I say it time and again. Japan has it right when it comes to music

Almost all artists release MULTIPLE singles between albums, to see what works and what doesn't. Many of these are maxi singles, which include the song, a b track and the karaoke for one of both of the songs. Nowadays we're seeing less karaoke tracks, but we are seeing 4-5 songs.

So when the album comes out, you see the best of those 3-4 singles that came in between the 2 albums. They ALSO have embraced the Internet, with many artists you can go to their webpage and they have 30-60sec samples of most, if not every song in their catalog.

And you know what? When I drop $25-35 on a Japanese CD, I get an album with 80% songs I like 95% of the time

With US albums, I pay $13-20 and count myself lucky if I dig 30%. I get more bang for my buck from Japan

 

[mike_decock]

Just saw this link off the Stereophile home page:
Numbers Don't Lie?
-Mike...

 

[Brian Perry]

Using the RIAA's own reasoning—that access to free music is killing sales—Bricklin trots out another set of numbers suggesting that radio should be a much greater negative factor than online file trading

I don't understand this comparison; after all, radio is temporary, while an MP3 file on your PC is fairly permament. In fact, I'm sure if MP3s obtained via Napster, Kazaa, etc. could be played only once and then were automatically deleted, the record companies would not have a problem with them. They've never lost a sale because someone was content to wait for and listen to a song off the radio.

 

[mike_decock]

They've never lost a sale because someone was content to wait for and listen to a song off the radio.

One of the girls I went to High School with would tape all the songs she liked off the radio. MP3 downloads just make it easier.

I think the music industry is attacking MP3 downloads for two main reasons:

1) It's an easy target on which to lay the blame.

2) They can't control WHAT gets promoted. People can find out for themselves if the rest of the album is crap compared to the single and avoid it for themselves.

It also makes it hard for them to promote specific titles. They would MUCH rather sell 3,000,000 copies of one album to 3,000,000 people than sell 3,000 copies of 1,000 different albums to 60,000 people.


-Mike...

 

[Thomas Newton]

It also makes it hard for them to promote specific titles. They would MUCH rather sell 3,000,000 copies of one album to 3,000,000 people than sell 3,000 copies of 1,000 different albums to 60,000 people.

Here's an idea. If the major labels hate carrying the inventory required to appeal to music enthusiasts so much, why don't they license virtually all of their catalogs on a NON-exclusive basis to anyone who wants to sell the music? Or simply return the sound recording copyrights and the master recordings to Clapton, Dylan, Ian, et. al. so they can do the same?

If the labels want to carry only Brittney Spears, N*Sync, and the like, let them go ahead and follow the "mega-mega-hit or bust" mentality to their own destruction. As long as the good stuff falls into the hands of other businesses who appreciate it, who are eager to sell it, and who are willing to show respect to artists and customers.

 

[mike_decock]

why don't they license virtually all of their catalogs on a NON-exclusive basis to anyone who wants to sell the music?

Because there's a finite demand for music. Whenever I buy a back-catalogue item instead of a Britney album (actually, I own all the Britney albums, too *GHASP*), they lose out on that gravy train. If it takes 1,000,000 record sales to recoup your costs on a "Star" album, the goal is to sell as many as possible to maximize the profits.

If they licensed out all the back-catalogue or non-mega-hit-capability stuff to companies who actually DID something to promote it, their "captive" audience (YOU - The WITLESS consumer) could be distracted from what they REALLY want you to buy.


-Mike...

 

[Lee Scoggins]

If they licensed out all the back-catalogue or non-mega-hit-capability stuff to companies who actually DID something to promote it, their "captive" audience (YOU - The WITLESS consumer) could be distracted from what they REALLY want you to buy.

Mike,

This is a good point. There is a lot languishing in the back rooms as APO (Fantasy Jazz) and Chesky have discovered (RCA classical titles). In fact, once RCA saw how Chesky was selling oodles to audiophiles, they started their own reissues. One wonders why it sometimes takes a smaller innovative player to unlock value like that.

In my venture music model, musicians would be able to offer older works to competing labels. Since they would be in charge of their back catalog, their heart would make sure it was being "monetized" to use a geeky consulting term. That's much better than relying on some big bureaucracy.

 

[mike_decock]

One wonders why it sometimes takes a smaller innovative player to unlock value like that.

I think economies of scale come in to play here. A Chesky-sized operation can be profitable selling 1,000 to 10,000 copies of a single (re)issue. RCA doesn't even break even at that kind of volume.

The other thing specialty labels like Chesky and APO have going for them at this point is a strong following. People buy titles JUST because they are on these labels. Had the exact same titles with the same (re)mastering quality been released under the RCA label, the audiophiles wouldn't have cared nearly as much.

The laws of diminishing returns are strangling the big labels. As they've consolidated and gotten bigger, we've gotten less and less value (quality/variety) for our dollar.


-Mike...

 

[mike_decock]

In my venture music model, musicians would be able to offer older works to competing labels.

Why just older works?

I've often considered the monopolistic nature of the record industry. If I want to buy the new Britney album, I gotta buy it from Jive. Jive has a monopoly on that album! What would pricing be like if every record company was able to print the album as long as they paid royalties to the artist?


-Mike...

 

[Thomas Newton]

What would pricing be like if every record company was able to print the album as long as they paid royalties to the artist?

What happened to long distance pricing and service after the Government broke up the AT&T monopoly? These days, I pay 5 cents a minute for long distance. I'm sure that's a lot less than the rate was when the monopoly was in effect.

When it comes to the need for creators to surrender copyright, albums aren't like movies (cast of thousands) or software (requirement for ongoing bug fixes and upgrades, even after team members leave). There's no obvious reason why a band should give up its copyrights, except for the power-driven one of "do it or you won't get signed."

Compulsory, non-exclusive licensing of sound recording copyrights that stay with the original creators would subject the record companies to a lot more in the way of free market forces than they experience now. I expect that this would be quite beneficial for artists and the public, though there would be some problems to work out. Chief among these are the question of how to ensure preservation of master recordings (if each band keeps its own master recordings), and how to include existing music in the system without stiffing artists (e.g., record company that holds the copyright collects 15% compulsory royalty from another record company, then pays 15% of THAT to the artist, so the artist only gets 2.25%).

 

[mike_decock]

Chief among these are the question of how to ensure preservation of master recordings (if each band keeps its own master recordings), and how to include existing music in the system without stiffing artists

There's a lot of data storage facilities that could support storage of master tapes or disks. This could actually generate a new independent industry for the archival of master recordings.
Perhaps you could have some kind of moratorium on copyrights. After 25/50/75 years the recording falls into the public domain .
-Mike...

 

[Jeff Ulmer]

While many of these proposals aare amusing, they overlook many of the fundamental things that have to do with creative properties. First, music is not long distance service. Not everyone can offer the same music simply by leasing line usage, so the parallel doesn't work. Second, having a free-for-all where anyone who wants to release music simply pays a licencing fee also ignores the business aspects of releasing records: there is a monetary investment which is coupled by an expectation of a return. Why would a company pay $X to release a work by an artist who has 6 other companies releasing the same material in their territory? There is no model for tangible goods that works like this. Bringing an album to market, production costs aside (and that's a big aside) is still an expensive proposition. Who is going to cover advertising? Distribution? Order fulfillment? Soliciting? These are all jobs handled by a label, large or small, when they have control over a product in their territory. How much or little they do affects their return.

People also seem to be forgetting that the Britneys and Michael Jacksons weren't always what they are today. At one point they were unknown nobodies, like the overwhelming majority of artists around today. It took years of development, millions of dollars in promotion and hard work from everyone on their team to get these artists noticed. A demand for the product had to be created, and it doesn't just materialise out of thin air. If product were being released left and right by anyone with a CD burner, who will be paying for the development of these artists? Who is going to stick their neck out for the untried product to see if they can make something out of it, and for those that do, why would they bother when Joe down the street can simply grab the masters and release a competing product without incurring the expense of development?

For good or bad, there is a reason the music industry is the way it is today.