David Lowery rants against contemporary music business models

“Say Hello to the new boss, same as the old boss”. Digital Music Myths Re-education part 2.

Record labels and artists don’t need to re-invent their business model to match the new reality. THEY ALREADY DID. That’s what we’ve all been doing for the last ten years. AND WE NOW KNOW IT”S ACTUALLY WORSE FOR THE ARTIST.

We know this empirically. The facts and evidence are in. Let’s start with the best case scenario. Let’s just look at the division of gross revenues and expenses. The scenario where the artist puts out the record themselves on their own label. Okay the vast majority of sales take place on iTunes and Amazon. How much does the artist get paid? Well if you are independent you get 61% of gross. cause you need either a distributor or an aggregator to get on iTunes. iTunes itself keeps more than 30% for simply hosting the songs on their servers. They do absolutely nothing else. This is why steve jobs was a genius. He was not afraid to be greedy. So now an old style record deal might have netted the artist 20-35% of gross (most reports of artists deals are wrong and low because they don’t include the mechanical royalties).

The old deals weren’t great on first glance but then if you start digging into it they weren’t as bad as people think. And as i will show you were in most cases a better deal for the artists then the New model. 61% of gross is a lot better than 20-35% of gross until you consider the fact that under the new model the artist is responsible for all aspects of the records production, marketing and distribution.

The Artist pays for the recording, the artist pays for all publicity, promotion and advertising. and here is the key thing. The artist absorbs the costs of touring. You know only a handful of artists make a living touring right? most artists need another job to go back to or they get tour support from the record label. Touring usually only pays enough to pay the crew and expenses. Touring only makes sense if it increases your sales. Artists often go on tour for free in hopes that the tour pays off in increased sales.

In fact under the old model record labels used to pay artists to tour. (actually they still do). Once you factor in the Tour Support labels once paid to artists the the model is actually shittier to the artist. Unless of course you don’t tourt.

Plus the new model makes the artist absorb ALL THE RISK. The risk of making a recording that doesn’t recoup. The risk of going on tours that don’t increase sales enough and become a loss.

Now consider iTunes and Amazon who are now the biggest music companies of all. They put up ZERO CAPITAL and ZERO RISK and they get 30% of the gross in return. At least the old record label system shared some of the risk! Wow the old labels were not so evil compared to the new labels.

So essentially THE NEW BOSS in the new model is iTunes and Amazon (also indirectly Google). And THE NEW BOSS is actually more greedy than the old boss.

Now of course the independent artist can still sell so many albums that the higher percentage of gross 61% overwhelms the higher initial costs. But I bet this is not the case for most of your favorite artists. The increased costs and responsibilities make THE NEW MODEL a worse deal. The artists that do better under the new model are few and far between. That’s why so many artists that seemingly could go independent do not. They still use record labels. Look carefully at your favorite artists latest record. Is it still on a standard record label? A lot of smart well managed bands still on labels. Why? Because the NEW MODEL is actually worse.

But you didn’t even need this whole complex argument to see this right? You’ve already spotted the main problem right?

In the new model you have these parasitic entities (itunes etc) that take 30% of gross and provide no added value. As screwed up as the old business was there was this giant parasitic entity sucking out 30% of gross for nothing. This should suggest to any intelligent person that there is something seriously wrong with the NEW MODEL

Now I’m as surprised as you that we would evolve a worse system than the old record label system. But facts are facts. We have. And I’m not happy about either.

(Also in my argument i haven’t taken into account the way managers and agents are paid. Because of quirks in how managers are compensated it actually makes the new model even worse)

And finally please don’t be an idiot arguing with me if you can’t point to real evidence. or you don’t know the actual percentages or costs. You can’t just drop hearsay, urban myths, fairytales and pretend they are facts. If you do I reserve the right to flame your ass for talking out of your ass.

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