Saturday, August 1, 2009

Question of the Day - 360 RECORD DEALS - August 1, 2009


O'Shea Finn asks:

What's the first step when chasing a record deal? What is a 360 degree deal? When should I sign?

Hartmann responds:

Don't chase the record companies; build an act that gets them chasing you. Maybe, by then, you wont want a deal. In the postmodern record business contracts were structured so successful artists paid for virtually everything from their royalties. The labels collected their share from record one. The artist had no further relationship with the company and was free to pursue a personal appearance career. Now the labels want a piece of all income streams in the big pie.

The monolithic music giants are too big to die. They own far too much recorded and publishing content to dissapear from the game. These are enormous catalogs of music that have ongoing
commercial viability. The big four will stand up in the digital age and revise their business models. They, more than anyone, know the long play CD is dead and downloads are here to stay.

The collapse of the postmodern record business is not totally about piracy. There are other mitigating factors contributing to the implosion. The most significant factor is the role of music itself in the iPod and Mac musical universe. Music is only one facet of the ubiquitous wireless factor. Computing, texting, phoning, instant message and email are all part of the convergence. What was a driving force to their parent's generation is merely a thread on the cyber-highway.

The analog period produced music that was presented, through the label's A&R filtering systems, and promoted on radio. The demand created was used to sell plastic and paper in such tonnage that it made the record business extremely profitable. This enabled the labels to spend lavishly, on vast A&R divisions, in order to find the minuscule number of acts entered into the filtering process. Now, labels can't justify the cost and A&R execs are the last to know what's happening.

The high costs involved in the recording and promotion processes, created a virtual monopoly for record companies. Their ticket to ride was the money they could invest. Trying to launch a baby band used to be a million dollar roll of the dice. In The Music Renaissance it doesn't take a huge capital investment to launch a career. One can find a kid with a Mac and a mic and make a free record. And, he can promote it on the Internet for virtually no charge. The label filtering system has been removed and the talent is now judged by the fans first. The labels have lost control.

Besides their investment capability, the record companies have an economic hold on broadcast radio. They spend large on advertising airtime; and they provide the recorded content at no charge. The radio airplay labels promise artists is attached to their ability to get records into the stores. However, there is a finite amount of airtime and an infinite supply of music. With no place in the filtering, quality control can no longer be dictated from record company board rooms.

The Internet is the new filter. The medium has become the message and the audience gets to choose its own heroes. Its hard to say what this will look like when the digital dust settles, but the big four will discover their golden eggs long after after the fans are already supporting the act. This begs the question, "Do I really need a record company?" The answer is, NO, you don't.

As a music source, radio is a port of last resort; and all the record stores closed. The record business represents only one facet of the music industry. As the relevance of CD ownership surrenders to universal streaming, the fans are turning directly to the artist for their hard goods. This is the most vital key to a band's success. This is where the profit margins that built the infrastructure of the postmodern era, came from. Now they must support the artist's survival.

The big four passed on Napster and put the Recording Industry Association of America on a program of suing the customer base. The vanity of that pursuit became blatantly obvious and now the big four have invented a new kind of participation, the 360 Degree Deal. This is no longer a giant industry squeezing art through its archaic plastic mills. This is full blown partnership.

The collapse of the postmodern record business has imposed a temporary hardship on the new music paradigm. However, publishing is the cornerstone of the music industry, and that commerce never sleeps. Recorded music will become a loss leader in its own universe, downloads will get cheaper and come directly from the artist; and gigs will be personal celebrations with the fan base.

Ten percent of the acts will take home all of the dough. The best song will always win. The best live act will give up its day job first. The records sold should provide high profit income to the artist's own record label; and ownership of the copyrights kept in house. Survival is the first level of success.

No comments: