by J.P. Kallio
What are we left with? The Major labels have been playing the swan song for a decade and a half by now how they can’t maintain their business model. On the outside they are freaking out over every new change in the business Artist development has become nearly nonexistent. In fact their current “new music” models are either grabbing an existing indie artists after they have built up a large enough audience for them selves that the majors can’t ignore them anymore and exploit them to the best of their abilities, or resorting into completely manufactured model, which is aimed at pleasing the masses for the next three weeks or so and then forgotten about… Quick return on their investment, with minimal artistic value.
But the truth is the majors are playing a clever game. They have backlog of, well… most of the history of modern music. Surely there is value in that? Well they have found a value in that, unfortunately the artists involved are not the ones benefitting from it. What the majors have done is bought, or “invested” into the streaming services. This has been done very much under the hood and the details kept secret.
What this means in simple terms is this: The record label makes a deal with the streaming services, they get an upfront fee for the usage rights to their entire back catalogue. They also either invest into the company, or as a part payment get percentage of the company. This means by the time the streaming service goes on the market, the major labels get return on their investment. What does the artist signed to the label get? The royalties cut from the plays on the streaming services. As you can see, the major labels gain to profit in massive amounts here by making deals with the streaming services, while their artists will get peanuts. Not only that, by having shares in the streaming services they will also benefit from every independent artists success. So now they have direct access to the slice of the pie from the long tail of the music industry as well.
Don’t get me wrong, I don’t think the streaming services are the bad guys here, they in many cases are start-ups still trying to get their business off the ground. It’s the same old story, the greedy major labels find a way to tweak the system to their benefit once again…
So I ask again, what are we home-grown independent artists left with? Well the secret really is in the way it has been in the grass root punk and folk music circuits long before music became an online commodity. The artist exists not above the fans, but amongst them. The more direct routs we can find to offer our music to our fans the better off both the artist and the fan will be.
In fact the new model emerging seems to be the fan funding the artist in advance of the product coming out. Kickstarter and Patreon are the playing a large part here, and these might just be part of the future music business.
The major labels are playing a clever game, and that is just what the independent artists need to do as well. Be innovative, embrace the new technology, but don’t blindly expect your income to come from one source. You need to diversify, break new grounds, take risks and as always at the end of the day, offer quality.