Film – Artist Relationships, Production and Distribution*
The big film studios control most of the production and distribution of their films. Smaller studios, or production companies usually hire specialists to do some of the work on their films since they cannot afford the cost of maintaining their own facilities, paying full-time editors, etc. In the old studio system, the studio would have a contract with a particular actors and directors both, but in the modern industry, artists are free agents and are represented by unions.
When films come to market, they are typically shown in cinemas to audiences who pay to attend the showing. Films might be subject to a limited release to test the market and/or build buzz via festivals. After the films have been released in cinemas, they are sold to individuals for private viewing; sometimes films bypass the cinema release and are released directly for private viewing. The film studio owns the entire production and earns income from anything resulting from that work, including sales of derivative products, branding, and merchandise deals.
How the Music Business Differs
While both the film and music are media industries and have a large number of commonalities, it is important to not conflate the two. The music industry, especially in the independent sector, doesn’t have the same level of control over the release and its production. Record companies generally do not own the infrastructure for the production of recorded music; they pay studios to do that. Many independent record companies will even simply license an album from an artist, who pays for their own recording; even some majors have done similar deals with very popular artists. Historically, recording contracts have been for multiple albums, usually three, with the so called “option” to have a second or third album being the record company’s right to exercise, i.e. if the company does not exercise its option on the second album, the artist is free to go find someone else to release it.
Unlike in film, music artists perform live to audiences and the record companies do not usually get a share of this money. There is no real market for playing albums to paying audiences, and the club and DJ industries really rely on sales of alcohol to support their businesses. Some record companies might even see a live performance only as an opportunity to promote the recorded music they sell, although industry figures show a growing trend of fans purchasing their music directly from bands at gigs. Merchandise is not usually included in record deals, either.
The More Things Change…
This simple structure is changing for all players in the music industry now that it has become more difficult to make money off of selling music recordings. Major labels have had the money and influence to offer lucrative deals to artists for merchandising rights, promotional appearances and so on, and many have included some of these things in their contracts. Lately, deals made with bigger artists have included all of these things. The new model is the so-called “360 deal” (from 360 degrees, indicating an all-encompassing agreement), in which a company gives an artist much more support in exchange for a share of all of the income streams generated by that artist: music sales, live performances, merchandising, promotional appearances and so on.
360 deals touch on many areas that have not really been the domain of record companies, new players have entered the field of music production and marketing from areas like (live music) promotion. For example, in 2007 Madonna signed a long-term deal with Live Nation that covers nearly all activities she might take part in–Jay-Z and Robbie Williams have done similar deals. Remember the “old” movie studio system mentioned above? These deals are a lot like that.
* This blog isn’t called “Film Industry Rules” for a good reason: we know more about the film industry than most people outside of the industry, but we’re not experts. This means we’ve had to research the topic. almost like real journalists. We think this sketch is general enough to avoid cringing from the film crowd.
2012-01-22: Fixed language throughout post.