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The New Millennium and Changes In The Music Business |
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Saturday, 12 June 2004 |
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As the new millennium begins there are many changes facing musicians when it come to marketing their music. Even more daunting perhaps is how difficult it can be for musicians to keep on top of all the changes and challenges taking place in today’s music industry.
Introduction
As the new millennium begins there are many changes facing musicians
when it come to marketing their music. Even more daunting perhaps is how
difficult it can be for musicians to keep on top of all the changes and
challenges taking place in today’s music industry. But, for any
musician wishing to grow their career from the start, or gain a wider
acceptance from their existing fanbase, keeping up on new technologies
and changes in music business practices is a necessity for one and all.
Beginning in the latter half of the 1970's a trend began, which has
slowly evolved over the last twenty years, and has proven to be the most
effective way to attract Major Label attention. Releasing your own
record simply is the most realistic method of establishing your music
career, or getting a label deal, as well as the best way to prepare for
any contract negotiations. The more successful an act becomes the more
say they can have a say in any contract negotiations
A surprising number of artists and bands are enjoying the benefits of
owning their own label these days. Ani DeFranco, for example, would not
have it any other way. Once the economics of the Major Label contracts
are studied, a homegrown independent label is more appealing every day
to many musicians.
The artist, who is ‘shopping’ a bunch of songs to a label without
any experience of making and selling their own independent releases, is
an artist waiting to be exploited.
Let's take a look at some examples of artists and bands who developed
their own careers over the last decade, got signed, and if they have
something in common with each other.
Before signing to RCA, The Verve Pipe released 2 independent records
that sold over 40,000 copies, and they spent over four years touring and
securing a strong fanbase who bought those CDs. Mojo Records recording
artists Reel Big Fish, built their solid fanbase on playing only
all-ages venues, and working up to securing better gigs with bigger name
ska bands in Southern California. Ben Folds Five worked the live gig
scene as well as courting the underground press, and then releasing
their first record on Caroline Records, before signing with Sony.
From 1986 to 1995 Country artist Michael Peterson traveled the U.S.
singing 200 nights a year at clubs and schools, playing any kind of
venue that would pay him to perform. He didn't choose to sign with
Reprise Records until he felt his songwriting was strong enough. That
meant he had some work to do if he was going to impress a publishing
company, and impress them he did by making and selling his own CD, and
selling them at all his live gigs. His reputation as a songwriter grew
so that he eventually got an offer for a deal with Warner Chappel
Publishing, which eventually led to the Reprise deal.
After releasing their own Indie record 'Fush You Mang' San Francisco
Bay Area based Smashmouth got lucky when the song "Walking On The
Sun" got to the ears of an L.A. radio station programmer, and the
rest is history; as Interscope Records turned that record into a mega
hit.
The list goes on. Whether or not all these artists remain in the
public eye is beside the point. What matters is that these acts got a
shot at success by taking command of their careers.
Once an artist has the attention of the record labels, there are other
benefits to controlling your own destiny. According to many entertainment
law attorneys the deals once given as 'standard' deals to new artists can
change significantly when a band is being sought-out by a label.
The following recording contract issues are more negotiable than ever, if
an artist has done some development of their own:
Better royalty rates: Artists are paid for the records they
record from a percentage of the sales of that record, based on a
percentage of the list price of their records. A high rate just a few
years ago for a new act was 14-16 points whereas 'Buzz Acts' (the name
given to acts that are in demand by labels,) can get up to several
points higher, if they are in demand.
Ownership of masters: When an artist can buy back the master
recordings they made for a label after their contract has expired, or
after the label drops them, they are more in control of their
destinies than artists who cannot do this. It can be easier to
negotiate a speedier reversion of master ownership if a label wants
the artist.
Creative control issues: Many artists are concerned about
labels deciding key issues regarding selection of material, producer, graphic images etc.
If these issues are important to you, take the time to develop your
career.
Non-recoupable issues: 'Buzz Bands' have more say in what
a label can claim as ‘automatic’ recoupable expenses (promotion costs, videos, % of
touring budgets etc.)
Controlled Composition Clauses: In a nutshell, this is a
clause that labels insert into their contracts with most new artists
that reduces, to 75%, the amount of money due to the songwriter and
publishers for the songs on the record from product sales. The
standard rate, (currently 7.5 cents per song, per record or ‘unit’
sold) is more negotiable with ‘Buzz acts’.
These issues are more than enough reasons for artists to examine their
methods of securing recording contracts. The more time an act takes to
build a modicum of success on their own without a label’s help, the more
they secure a position of power when dealing with recording and publishing
contracts when they present themselves.
Challenges and Changes For Developing Artists
Artists and bands getting into the recording industry today have many
new tools to help them on their way to recognition. At the same time, the
music industry is a state of flux unlike any other time in history. Change
is everywhere, from the choices available to record music, to marketing
and promoting it. Some of those changes are challenges to the old
traditions that help create the music business we know today. Others are
new opportunities that await the enterprising artist/entrepreneur. Check
out some of the most important developments that are going on:
- Like a bullet out of a 38 Special, the era of downloadable music
has exploded on the scene. Compressed audio files in the form of the
MP3 phenomenon arrived on the scene in the late 90’s, and with
file sharing technologies like Napster, Gnutella, Freenet and others
now available, the business of music will never be the same. Any
musician with the goals of making money with their music will have
the new challenge of deciding how to survive in an era when the
value of music in the eyes of the consumer is changing. Why pay for
a CD when you can now download almost anything ever recorded, and
either store it on your computer, or ‘burn’ your own CD in the
privacy of your own home.
- In early 1999, a meeting of the Major Label minds in the form of
the SDMI (Secure Digital Music Initiative) was born. The initiative was concerned with finding
ways to challenge the threats to copyright ownership by using what is
called ‘encryption’ and ‘watermarking’ of downloadable music
(so that musicians and labels can prohibit unauthorized usage of the
music, as well as trace where an illegally distributed song file came
from), and developing realistic policies that protect the record
labels, the artists, and the distributors and sellers/traders of
music.
- However, while the bigshots were huddled in meetings for months on
end, enterprising computer nerds and music fans were ahead of the
game, writing the software that became the file-sharing technology
known as Napster. There are multi-millions of downloads of unprotected
songs being traded and exchanged over the Internet every day now. For
all practical purposes if you do not care about owning a plastic box
with some paper containing artwork on it, and just want to build a
collection of past, present, and future music, there is no reason to
buy a record anymore. All you need is a computer with a good sound
card, speakers, an MP3 player, and a large hard drive...and
preferably, a broadband connection to the internet. Let’s face it,
these days you can have a free collection of music without having paid
a dime for any of it. (I will not be your conscience when it comes to
the morality and/or ethical issues involved in copying copyrighted
material. That dilemma is for each and every one of us to wrestle
with.)
- In addition to MP3 and Napster phenomenon, other downloadable
music technologies have established themselves over the Internet.
Liquid Audio is the most successful of these. Their system, unlike
MP3, includes protective devices for controlling the copying of
copyrighted music. For a while it looked like AT&T’s a2b
system would contend with Liquid Audio, but they seem to have
vanished from the scene rather quickly. Microsoft’s Media Player,
and Real Networks Real Jukebox have also found favor with many
downloadable music lovers.
- For a couple of decades now the major labels, once known as the
Big Six, have had control of about 80% of all the record sold in
America. But we live in the era of corporate buyouts, and the big six became 'The Fat Cat Five', when the Seagrams Co.
purchased Polygram Records land all it's affiliated labels in late
1998, adding to Seagram's existing ownership of Universal Music. The
deal gave them the largest share of the record pie, once dominated
by Time Warner’s WEA. In 2000, Universal/Seagrams was sold to a
European company Vivendi. To complicate matters, Time/Warner
recently made a bid for EMD, the distribution arm of Capitol and
EMI, and the other members of the cartel, BMG, and SONY are
vulnerable to similar consolidation moves.
The ‘Big Four’ are now with us, but for how long?
- Artists wanting to sell or promote their CDs over the Internet
have many choices these days. One of the most innovative and
effective methods is the www.amazon.com/advantage
program mentioned above. Artists can have a strong presence on
this leading e-commerce site by joining up for the free program
and creating their own selling page with graphics and CD
information on it, plus sound samples from the record. In addition
there are over 50 other e-music retailers online who will help
musicians sell their music over the Internet. This does not mean
that an artist should not consider selling their music from their
own websites through a secure service. That is a very valid
alternative. ( For a deeper discussion on e-music distribution,
read my August 2000 Indi 2000 column)
- While it is getting harder for independent artists and bands to
get commercial airplay for the reasons already mentioned, the
Internet has hundreds of new Internet radio stations playing a
wide variety of music. Streaming audio software has made it
possible for anyone and everyone interested in being a DJ to
broadcast their favorite music as a web radio station. This is
great news for developing acts that have a strong niche following
of one kind or another. Stations like www.live365.com
and www.broadcast.com
are just two of the many websites that host Internet stations.
- The disturbing trend of major corporations buying out other
major companies is not relegated only to the record labels. Radio station ownership
continues to narrow, as more and more big media companies continue to buy up more
radio properties. In Seattle, Washington for example, in the mid 90’s, there were
around 25 commercial radio station general managers in town representing 25
different owners. Today there are 6. Companies like Entercom and Infinity own several
stations each in that market and in most radio markets in the U.S. This affects
the aspiring musician, because one company now owns the stations
that once were in competition with each other, and the music and
program directors at these stations work together to decide what
artist or song is right for their stations as a whole. Prior to the
mid 90’s a label could play one competing station off another.
That is no longer true.
-
‘Pay For Play’ is here, and the chances of getting your
music on commercial radio are getting slimmer by the hour. ‘Pay
For Play’ is the ultimate Radio Station General Manager's
dream-come-true. The Sales Department can now play a significant
role in determining what gets played on some commercial stations, because now record labels can
legally buy the airtime to have a song played for a certain number
of times, or pay for announcements right after the airplay of a song. With the revenues available to radio ownership
groups, like Chancellor, they can sign ‘Pay For Play’ contracts
with labels for over $25,000,000 a year. Break into your piggybanks
aspiring musicians!
-
The corporate merger syndrome has also infected the live
performance industry. SFX
Entertainment sold its radio station holdings in the mid 90’s to
get into the concert venue
ownership business. They now have control of over 60% of the largest
regional concert
promotion companies (PACE, Delsner/Slater, Bill Graham Presents etc.)
As one
industry pundit put it: " We are now dealing with the Wal-Mart
of the concert
business". So, want to open up for some touring major act in
your hometown? Sit back>
and take a deep breath. Or, how about getting a tour once you are
signed to a label.
Will your booking agent and manager be walking arm in arm with SFX?
If not, what
could happen to that national tour you were hoping to get?
-
When it comes to music marketing issues, there are a lot of ‘dots’
finally being connected
regarding who buys music and how to reach them. It took the better
part of one
hundred years for the industry to realize that a person who reads a
book might also
enjoy music, and visa versa. When Borders Books and Music connected
that dot several years ago it unleashed a waterfall of creative thinking about
where to sell music. Today you can buy music at sporting good stores,
coffee/espresso shops, grocery stores, clothing stores, airports, hospital gift shops,
alternative health care provider locations, shoe stores, and just about any other retail type
store you can imagine…in fact an artist has to, if they really want to saturate
the marketplace with their music.
Conclusion
Challenges and change are here to stay for the independent musician,
however, any dedicated musician can benefit from the bevy of ideas and
new opportunities being introduced almost every day. No one ever said
being a successful musician would be easy. With every bad news that
comes along regarding the control of the media and the exposure of
music, there is some good news for those curious enough to explore where
few have gone before. So, what unique ideas can you think of to get your
music in front of a potential fan?
Open up your imagination...there are countless ways to expose,
promote, play, and sell independently produced music.
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Last Updated ( Saturday, 12 June 2004 )
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