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  1. Explainer: The Film and Music Industries

    January 17, 2012 by damon

    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.

    Edit Log

    2012-01-22: Fixed language throughout post.


  2. EMI Takeover by Citigroup Means Nothing to Fans, Something to Staff at Major Labels

    February 4, 2011 by damon

    There has been much reporting and discussion of Citigroup buying out EMI and forgiving a few billion dollars of debt and the mysterious circumstances surrounding the original purchase of EMI by Terra Firma in 2007, but what does this actually mean to music fans and to the music business as a whole?

    It means nothing.

    The change in ownership of a major label like EMI from one finance company to another means nothing at all for music fans, musicians or even the music business. The major labels are massive corporations with many shareholders. Now the largest part of EMI is owned by another finance company. No change there. Citigroup used the money owed to it to leverage a takeover of EMI, its Board obviously deciding that they were more likely to recover their investment by taking over the company rather than liquidating it. Now, that is interesting.

    It’s likely that Citigroup will try to sell EMI quickly. If they decide to resell EMI to another major label, the purchaser’s Board of Directors will almost inevitably decide to consolidate their business and fire staff they consider to be redundant. We often humanise corporations by speaking of them as if the CEO / Managing Director were the force behind every decision or claiming they practice Corporate Social Responsibility (CSR), but that simply isn’t true. People will be fired because that is the most cost-efficient thing to do.

    We know what happens, so while music fans need not worry that they will be able to buy Katy Perry or Coldplay CDs, and artists contracts would be sold along with the company, people who work for major labels should be concerned for their jobs.


  3. Music Industry Documentaries

    November 23, 2010 by damon

    I just finished watching Before the Music Dies, directed by Andrew Shapter. This documentary shows how a change in the culture of the major corporations towards short-term profit and away from artist development has led to the major labels abandoning and avoiding any projects that are not immediately profitable. So far, so good. The film also discusses how radio in the US has undergone a similar change through the consolidation of all major radio markets into a single, hyper-homogenised whole focussed on getting people to stay tuned to the station, rather than offering anything with any artistic merit, since new and interesting music does not test well in focus groups. This might be news to some people, and the makers of the film went to pains to point out how they are not insiders. This may explain why so few truly independent voices were heard.

    The alternative proposed by the film is a fixture of the independent music industry: artist-run labels. It is very important for artists to understand the business side of things if they want to succeed. This is nothing new to people familiar with how ethical independent labels work, and the carousel of major artists who have made a lot of money from the majors system were acting as if they’d invented the idea.
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  4. Song by Toad “Owning Information and Terminating Debate”

    February 12, 2010 by damon

    Here’s a comment I posted today on an article by Matthew over on Song by Toad. The article is about much more than the bits I’ve picked out to respond to.

    http://songbytoad.com/2010/02/owning-information-and-terminating-debate/#comment-41555


    I help run an independent label, so I’m writing from that perspective.
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  5. Insight into download blogs from a label’s perspective

    November 11, 2009 by damon

    Earlier today I was reviewing the statistics from the our web shop
    and noticed that quite a few people/sites have been linking to our shop
    release images directly (so-called “hotlinking”). This is an irritant
    because it means that our bandwidth gets used for things that don’t
    really have anything to do with the shop and that costs us some money
    if it happens a lot, and worse yet, at least one of the hotlinks was
    from a blog that is used to distribute illegal downloads.

    It’s hard to get statistics about how much illegal downloading
    actually takes place, but since they linked to our image, our server
    faithfully kept track of how many times someone loaded that image on
    the blog. In the month of October, that image was downloaded 31,000 times and so far in November, it’s at 12,300 hits. That’s a lot of hits for one release on a small independent label.

    As an aside, I’ve since taken steps to make sure that hotlinking on
    our site doesn’t work very well. I’m sure they’ll be surprised to see
    the images have changed.


  6. The Shadow Economy of Illegal Downloads

    March 24, 2009 by damon

    From the point of view of a recording artist or a record label, it appears as though little is being done to address the problem of illegal downloading on the internet. Copyright laws protect the interests of authors and performers, who have the right to choose whether and how their music is sold. The basic case is simple–if an artist chooses to sell their music, then it is an infringement on their copyright and moral rights to take their music without paying for it. Since it is taken without their consent, some people call this “theft”.

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  7. Digital file formats: Why are retailers selling crap?

    March 2, 2009 by damon

    Here’s a question I’d like to open to the world at large. Why are so may retailers selling digital music that has been encoded using lossy formats at inferior bitrates? I have a few theories, and a couple of them may even be true.

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  8. Touch & Go and the future of the music business

    February 18, 2009 by damon

    It is with great sadness that we are reporting some major changes here at Touch and Go Records. Many of you may not be aware, but for nearly 2 decades, Touch and Go has provided manufacturing and distribution services for a select yet diverse group of other important independent record labels. Titles from these other labels populate the shelves of our warehouse alongside the titles on our own two labels, Touch and Go Records, and Quarterstick Records.

    Unfortunately, as much as we love all of these labels, the current state of the economy has reached the point where we can no longer afford to continue this lesser known, yet important part of Touch and Go’s operations. Over the years, these labels have become part of our family, and it pains us to see them go. We wish them all the very best and we will be doing everything we can to help make the transition as easy as possible.

    Touch and Go will be returning to its roots and focusing solely on being an independent record label. We’ll be busy for a few months working closely with the departing labels and scaling our company to an appropriate smaller size after their departure. It is the end of a grand chapter in Touch and Go’s history, but we also know that good things can come from new beginnings.

    (Corey Rusk, quoted in [1])

    If this has happened to Touch & Go, it could happen to almost any independent label. I hope this news isn’t a prelude to a rash of other closures. I really feel that mid-size independents have been hit much harder by the changes in the music market that have led to a large overall drop in sales across the industry. The tiny labels have no overheads and few staff, if any, and the majors can live off the fat of the land. But with the mid-sized independents like T&G, there isn’t any fat to begin with, and it’s incredibly hard to find anywhere to cut. And what does get cut are the vacations, the evenings and weekends at home and any sense of optimism about the future of the music business.


  9. Digital distribution options for small labels

    February 8, 2009 by damon

    One of things that is interesting about alternative digital distributors (i.e. aggregators) like TuneCore, ReverbNation and CD Baby is the retailers they service. Compared to IODA and The Orchard, they distribute to relatively few digital retailers–ten or fewer instead of the hundreds that the largest distributors service.

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  10. Industry Rule Number Four Thousand And Eighty

    February 8, 2009 by allison

    Industry rule number four thousand and eighty
    Record company people are shady
    So kids watch your back
    Because I think they smoke crack
    I don’t doubt it
    Look at how they act.”

    A Tribe Called Quest
    “Check The Rhime” from Low End Theory