The Great Music Industry Myth
There is a great myth out there.. the myth or really more properly termed misconception is that an artist gets signed and their career magically takes off and they are suddenly rich. The majority of the public views the music industry as an illustrious get rich quick method — notice I did not say scheme, and that is because people genuinely believe it to be a legitimate way to magically get rich quick.
I would venture to say that there is not a more difficult way out there to get rich, let alone get rich quick. Getting “rich” or more simply put achieving success in the music industry is rarely an overnight process. It usually takes years of labor behind the scenes before a project is visibly successful to the public. Additionally what may appear to be a commercial success may amount to a project that is effectively a loss of money for investors and an artist or band who is effectively completely broke, living gig to gig.
Lets start our discussion pre paradigm shift that happened in the early 2000’s. The idea was that an artist would play the right showcase who had the big A&R sitting in the audience, or send a demo to the right executive, that would discover the artist, and then sign them to a major deal, with a big advance of course, and the artist would be majorly rich and successful, the dream. Does the music industry work like this today? Absolutely NOT. Did it ever? Well sort of, for the most part, yes. Here is the reality of the “dream” I just described. Did an artist really ever make money from their music itself? NO — absolutely not. (talk through the standard royalty debt model)
The model I just described worked. Why did it work? The labels were making money from selling music. The artists themselves were making money from their brands — touring, merchandising, etc. and It all worked for several reasons. 1. Lack of competition — by this I refer to two things, first, recording equipment, and those who knew how to use it properly were hard to come by — it took a lot of money, and a lot of equipment to get something laid down on track — even the tape the music was recorded on itself was expensive. Bottom line, not everyone who had the talent, or more accurately to today’s standards believed they had the talent, could try it. You had to have the talent, the drive, and the money to get it done, which most of the time took getting noticed by the right person. So the majority of music that existed was made by the major labels, competition was sparse simply because the only people with access were the major labels. What else do I mean by lack of competition — there were few channels for consumers to GET their music. Everything the labels created went directly through a few limited channels that consumers had access to — everyone bought their music from the record stores and there were only a few to choose from, and everyone discovered their music through the same way — radio and television. There were limited outlets to discover and purchase music and because labels made the majority of music — they had the lock on those channels — and by just putting the music in a few places they were able to reach the majority of all consumers. Today there are literally thousands of outlets to discover and purchase new music. Not only that but today it is so cheap and easy to create music literally anyone and everyone can do it (I am not speaking to quality, but only to physically being able to do it). So the completion in every way is fierce. What this adds up to is not having the ability to SELL as much music. And lets not forget about other factors such as the piracy that sprung up in the late 90’s and the new streaming trend there where consumers no longer feel the need to own a library of music, but are instead content, and reasonably so, to stream music from wherever they can on demand. Where does this leave us? It leaves us with the major labels who used to use the BANK they made from their major successes to cover the losses, to have to limit their losses.. what are these losses I speak of? Signing a new artist is and was always a risk for a major. Not every artist that was signed and bank rolled by the label took off and made a return. When sales of a new artist that the labels had spend money on flopped, it was covered by the massive amounts of money they made on the artists that went platinum or diamond — not to mention that in the past full albums sold for nearly $20 not one single at a time for as little as $1.
Lets jump to the 21st century, because of the technological boom that included home recording equipment and thousands of outlets online to discover, purchase, and listen to music. An because of the $1 for a digital single sales model and the boom in single sales resulting in the decline of sales of full albums, today, no one making money from record sales, including the major labels. Labels responded by signing artists to 360 deals and by eliminating risk. What do I mean by this? Labels began taking a percentage of the artists touring and merchandising revenue to make up for the lost revenue in actual record sales. This meant the artists who achieved major success were now not only not making money from actual record sales, but they were loosing the revenue from touring and merchandising as well.
How did labels eliminate risk? They did this by getting rid of their A&R, their artist development departments. Because of the advances in technology there was a greater opportunity for artists and their fledgling teams to in a sense, self develop. On their own they could now write, produce, record, and market their music. Could a self made artist get on mainstream media outlets such as terrestrial radio and television on their own, fat chance, but could they build a fan base and revenue stream on their own, absolutely. Their independent success gives an indicator of their potential success with the label, signing artists who already have initial success, virtually eliminates the risk for the majors. They can then sign them and through marketing via mainstream channels get them greater visibility and multiply the income potential.
So where does this leave today’s aspiring artist? It leaves them in a situation where they need find the time, money, and other resources to create and refine their brand, as well as build a following large enough to be an asset to a major. Once signed they will have a label make the majority of the profits from their efforts in exchange for an outlet to get them on mainstream media and grown their following exponentially.
- revenue from other places — — lifestyle merch ie brand partnerships and publishing/licensing
- how it’s being done via product placement etc — http://money.howstuffworks.com/product-placement8.htm
Keep an eye out for my next article on how to make it work! Lifestyle Marketing for the Musician! You can also follow me on all of my social channels and blogs at www.RidingerGirls.com