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When Does a 360 Music Deal Make Sense?

Joe Taylor Jr. — Thu, 13 Nov 2008 20:49:32 +0000

All of my tech friends are pinging me about the article on TechCrunch about Warner Music Group’s demands that any new signed acts must agree to a “360 Deal.”

Traditionally, a record company would sign a deal with an artist that set specific royalty rates for each copy of a record sold. In exchange, the label would front the investment money for the recording while applying their substantial promotion and marketing prowess to the task of getting records sold. Along the way, any expenses incurred in the process would become “recoupable” against those royalties.

In a nutshell, albums would get made, but artists would rarely see a penny outside of their statutory songwriting royalties. That’s because labels would find ways to extract every single cent from artist payments by deducting every cell phone call, every bottle of water, and every regional promoter’s cat litter bills from the artist’s escrow account.

That was fine, though, since artists really make money from movie and TV licensing, from fan club memberships, from merchandise, and from live concerts. Managers and label owners tolerated each other long enough to get a contract signed, and the world kept spinning.

Live Nation’s Best Idea Ever

Along comes Live Nation, a revived company formed from the ashes of Clear Channel, the shell of SFX, and the brain of MusicToday. Clem Chambers called it months ago: by leveraging the footprint of the most desirable concert venues in the country with the prowess of the industry’s most successful marketers, Live Nation actually found a way for itself and for musicians to make money. As a result, it started a new music business precedent: “360 deals,” in which Live Nation acts as label, promoter, presenter, and gift shop. For major touring acts, it’s a no brainer. Ditch the major labels, cash a fat advance check, and head out on the road.

So now, with record sales in free-fall, Edgar Bronfman is telling all comers that he won’t sign an act unless his label gets the same kind of deal. If Warner had the same kind of promotional clout as Live Nation, this might make sense. But I can’t see handing over an extra 10-30% of an act’s income to a company that’s already failing to pay artist royalties in an era where artists still have to do all of their promotion. On top of that, recognizing that the cost of producing high quality records has come way down, where is the benefit of actually signing with a label like Warner?

Song Sharks Using 360 Deals to Lure Unsigned Acts

Here’s what’s even worse, in my opinion. Bronfman’s statements are legitimizing a trend among small labels that are already indistinguishable from song sharks. I’m hearing more and more from independent musicians who are being approached by so-called A&R scouts who promise fame and fortune in exchange for up to 66% of their overall earnings.

When you’re already broke, and dreaming of stardom, 66% of nothing is nothing, so it feels good to actually consider this kind of a deal. Here’s why these folks are ripping you off:

No legitimate music business manager, even in this economic climate, will request more than 15% of an act’s net profit. Managers make money on the back end, just like you do.
If you don’t already have 1,000 fans on your mailing list, a record label isn’t close to being in a position to help you.
Consider any professional offering services the same way you would select a doctor, a dentist, or a real estate agent. What’s their track record? Who have they actually produced? If they’re new at the business, that’s fine — they should be commanding a smaller rate than someone who’s got some gold records on the wall.
Any deal you make early in your career that hands over a chunk of your revenue will make you less attractive to more experienced professionals. If you get big enough to be courted by Live Nation, they’re going to want a piece of the whole pie, not the 75% or 50% that’s left over after the deal you’re thinking about.

As always, I remain convinced that record labels make great pressing & distribution partners. I wouldn’t sign a deal that allowed them to charge my act for promotion, unless I knew exactly who was going to do that work for us and what their strategy was.

And, as always, make sure you run every prospective legal agreement by an experienced entertainment attorney. $300 spent now can save you thousands or even millions of dollars down the road.

When Does a 360 Music Deal Make Sense? originally appeared on spinme.com on November 13, 2008. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.

Music Business Education Reaching High Schools

Joe Taylor Jr. — Fri, 09 May 2008 01:55:53 +0000

After hearing so much great response from our profile of Drexel’s campus-based music business program, I’m noticing more stories about schools that model their student-run record labels and booking agencies along the same principles. This week, the Los Angeles Times profiles a school that’s offering the same kind of real world experience, only at a high school level.

Students attending the Music Academy at Hamilton High School launched A6 Records, a production collective that evolved into a full-fledged and profitable record label. Promoting releases required marketing gigs, so students started booking shows for their signed acts. And the label is starting to have an impact on the neighborhood’s micro-scene: winners of a recent Battle of the Bands won a working trip to Ireland and a record deal.

Technology levels the playing field in so many ways, and it amazes me every time I talk to kids who are fourteen or fifteen years old who don’t know that the gear they got for their birthdays used to cost more than a Maserati when I was their age. Because they know the gear so well, they know that they’ve got to work harder to get their material noticed. Every time I hear an artist complain about how hard it is to get a record made or a show booked, I’m starting to wonder if I need to refer them to a group of these very eager high school kids.

Image courtesy Stock Exchange member duchesssa.

Music Business Education Reaching High Schools originally appeared on spinme.com on May 8, 2008. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.

Drexel’s Student-Run Record Label Reshaping Music Business Education

Joe Taylor Jr. — Sat, 15 Mar 2008 20:58:37 +0000

When I was in school — and I did have to walk uphill in the snow to get to class, so get off my lawn — the campus radio station was where you had to be if you wanted a career in the music business. I chose Ithaca over Syracuse and Temple as soon as I found out that you could get your hands on the mixing board as a freshman.

These days, with online broadcasting, blogs, and podcasts, it seems like college radio is a ghost town at most schools. As an advisor to students at the University of Pennsylvania for a number of years, I watched it get harder and harder to attract talented students to volunteer radio gigs. After all, who wants to slog through a 3a-7a overnight shift — the radio industry’s unique form of hazing — when you can just whip an hour-long podcast together in about ten minutes using GarageBand? (Fortunately, my alma mater’s two radio stations are still going strong.)

If you’re an enterprising university official, and you want to create a greenhouse for future music business professionals, applying the campus media model to a working record label is a daring and effective move. It’s what Drexel University did in 2003, as a logical progression to an informal growth of music business activity on that campus. Throughout the late 90′s, I had watched — from across Market Street — at what the kids over there were doing, even when it didn’t earn them any credit. And I certainly got jealous when I saw Drexel alums get picked for regional music promotion jobs over my own interns.

What’s Drexel doing right? They’re actually giving students a working lab where they can sign acts — some of whom have been dropped by major labels — and launch full length albums. The creative restraints imposed on MAD Dragon Records — staff pressed for time, limited budgets, interns with fractured schedules — aren’t so different from those faced by executives at Warner and Universal. They have a distribution deal through Ryko, which forces them to focus on a blend of online and in-person marketing. Therefore, relationships with independent record stores are still important — just as they should be for

Some closing thoughts on this neat student record label:

I wonder if their University’s public relations manager loves them as much as ours was fond of our radio station. (In 1992, we wound up doing some major spin control over a promotion that went hilariously afoul. The cops were called, and I ended up on an elderly woman’s front porch, apologizing profusely. You can ask Andy, it’s his fault.)
Do they rotate A&R professionals every semester? Because that would jibe with the length of time that most of my A&R buddies spend in a position before being transferred or taking a new gig.
Knowing that a similar project is evolving at the University of Georgia, I wonder if there will be a trade association for college record labels, just ilke we had the National Association of College Broadcasters back in the day. CRIAA?

UPDATE: Their label roster includes Jules Shear. WHA?? But there’s something goofy going on with their all-Flash website, so I can’t click deeper to learn more. You’re an engineering school — please fix that code!

Drexel’s Student-Run Record Label Reshaping Music Business Education originally appeared on spinme.com on March 15, 2008. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.

How Local Record Stores Can Stay in Business

Joe Taylor Jr. — Thu, 10 May 2007 01:40:26 +0000

It’s not the first time we’ve covered the issue here, but amidst the horror story that has become the chart of overall music sales, there’s a quiet confidence among the owners of America’s finest record stores. The Columbia Free Times devotes an exceptional amount of space to the truth that a record store owner who clearly loves his or her niche and understands how to create a real experience for customers can continue to thrive in a music-as-water world.

Technorati Tags: music+business, record+stores

How Local Record Stores Can Stay in Business originally appeared on spinme.com on May 9, 2007. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.

Where can you still make money in the music business?

Joe Taylor Jr. — Sat, 07 Apr 2007 13:43:58 +0000

While our regular readers ask me that question all the time, another group of people is just as curious about the answer — Wall Street.

Clem Chambers from the investment website ADVFN offers a guest commentary in Forbes Magazine about his ideas for the real winners and losers in the entertainment industry shakeout. While he’s not sure how the big players like record labels and movie studios will fare in a world where file sharing runs rampant, he loves the prospects for event production companies like Live Nation and hardware manufacturers like Sony.

After all, audiences still love to see bands perform live, even if they’re swapping files on their new VAIOs.

Technorati Tags: music+business, live+nation

Where can you still make money in the music business? originally appeared on spinme.com on April 7, 2007. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.

Live Recording Patent Busted

Joe Taylor Jr. — Fri, 16 Mar 2007 15:15:22 +0000

With all the internet radio and YouTube stuff happening this week, this news nugget nearly slipped by me:

The EFF managed to get a patent revoked that prevented many artists and clubs from offering quick-turnaround CD recordings of live performances. A Clear Channel subsidiary had patented the idea to make quickly-burned CDs of live performances available for sale in the lobby right after a show. Not only does this process eliminate some artists’ concerns over the safety of live show taping, but it opens up a whole new revenue stream for artists and clubs by offering fans an instant souvenir.

Except, Clear Channel decided to use the patent to prevent competing venues from providing similar services. Ostensibly, the move was designed to encourage bands and managers to appear at Clear Channel venues, while reducing front end payments and shifting revenue to the CD sales. (Basically eliminating the revenue that many bands would have gained from such a service.)

The EFF called them on it, and it’s now safe to offer live recordings to your fans right after a show.

Technorati Tags: music+business, clear+channel, eff, taping

Live Recording Patent Busted originally appeared on spinme.com on March 16, 2007. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.

Is Simon Cowell More Important to American Music than Bruce Springsteen?

Joe Taylor Jr. — Fri, 16 Mar 2007 14:55:48 +0000

Simon Cowell seems to think so.

The American Idol judge reveals in an interview with Anderson Cooper that acts he has signed to Sony BMG have sold more than 100 million records over the past five years. Springsteen, on the other hand, has not had what music industry insiders would call a blockbuster since Tunnel of Love. Still, there’s a reason that Springsteen commands a degree of attention at his record label, and I’ll show you why.

For an industry criticized for selling older music to older people, this influx of new artists from the Idol juggernaut is keeping sales popping, especially for Sony BMG. And, from Cowell’s point of view, Idol is hugely profitable. The costs of artist development and promotion for American Idol contestants are borne almost exclusively by Fox. Even contestants who have been voted off the show can still book promotional appearances far more easily than established musicians. (Who are you more likely to see on your local television morning show this week, Antonella or OK Go?)

It’s amazing to realize that he was signed to Columbia Records thirty-five years ago. And it’s that deep connection to fans that had led to record breaking concert dates, especially the unmatched string of ten sold-out nights at Giants Stadium.

However, it took three years from Springsteen’s signing to Columbia before Born to Run was released. No record label in today’s quarter-to-quarter business environment could hope to sustain a new artist for three years. And it look another nine years for Springsteen to release Born in the U.S.A., another tentpole of his back catalog. Many Idol contestants will be lucky to stay signed to a major label for nine months if their albums perform at the same level as some of the records Springsteen produced during that interim. That’s a testament to Springsteen’s fans, and an indictment of a music business that has no interest in investing in artists’ careers.

Sure, his solo and acoustic tours may not bust a vein at TicketMaster’s data center. But a deep, lasting relationship with his core fans allows Springsteen to focus on creating the kind of work he wants to create. His record label — grudgingly, I’m sure — indulges him by releasing niche records like the Seeger Sessions, they can sleep tight knowing that his next record with the E Street Band (when he gets around to it) will give them the kind of pop on the charts that they need to keep shareholders happy. When you remember that most artists earn the bulk of their income from ticket and merchandise sales, it’s telling that you see far more fans wearing Bruce Springsteen t-shirts than any merchandise related to Idol contestants (that aren’t Clay Aiken).

So, as you’re thinking about your own career, think about how Springsteen’s record deal has played a smaller and smaller role in his success over the last thirty-five years. Think about what you must start to do now to create those legendary, memorable live gigs that your fans will remember fondly thirty-five years from now. And start making an action plan to keep track of those fans today, so you can show a potential label how many sales you can guarantee them in the first week of release.

Technorati Tags: music+business, american+idol, bruce+springsteen, simon+cowell

Is Simon Cowell More Important to American Music than Bruce Springsteen? originally appeared on spinme.com on March 16, 2007. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.

P&D Deals Surging in the UK

Joe Taylor Jr. — Wed, 01 Nov 2006 21:01:58 +0000

In Grow Your Band’s Audience and here on the weblog, I’ve written about pressing & distribution deals as a way to “hire” record labels to do two things that they’re really good at. Few majors will admit to doing a lot of these deals, but they work great for artists that know how to mobilize a fan base. And, according to this Guardian profile, you can expect to see more of these, at least in the U.K. With A&R staffs down to all-time lows, P&D deals are a great way for major labels to scout talent without putting labels or artists in precarious “recoupable advance” positions.

Technorati Tags: music+business, pressing, distribution, record+deals

P&D Deals Surging in the UK originally appeared on spinme.com on November 1, 2006. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.

Compact Discs as Souvenirs

Joe Taylor Jr. — Tue, 24 Oct 2006 13:13:13 +0000

Lefsetz writes that he no longer wants e-mail from folks about the viability of compact discs. Indeed, the compact disc itself is not just a storage medium for music — it’s a reminder of how much you enjoy the work of an artist, and it’s a standalone product that should extend the experience that an audience member has with an artist’s music. Which is why Scott keeps looking at all those great CD packaging catalogs.

Technorati Tags: music+business, compact+discs, CDs

Compact Discs as Souvenirs originally appeared on spinme.com on October 24, 2006. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.

5,000 Records Is All You Need

Joe Taylor Jr. — Thu, 07 Sep 2006 03:03:53 +0000

Lefsetz has a gloriously cynical look at this week’s sales. Pay close attention to what he says about the effects of an $18.98 list price, and the fact that publicity does not equal sales. Also note that a Guns & Roses greatest hits collection is blowing the doors off everything other than the 70-some records ahead of it on the charts.

What I want you to look at is the set of numbers at the bottom of the chart. Government Mule and Marc Anthony sold just over 5,000 records each last week.

Even though it’s hard to sell your first 1,000 records, an independent act that focused enough attenion and energy on growing an audience could conceivably pull a 5,000 unit launch week.

Wouldn’t that be fun?

Technorati Tags: music+business, Billboard

5,000 Records Is All You Need originally appeared on spinme.com on September 6, 2006. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.

Does my pre-order entitle me to bittorrent a CD? Five Tips for Effective Record Releases

Joe Taylor Jr. — Thu, 17 Aug 2006 12:24:31 +0000

Jason Calacanis opens up a great question for debate. If you pre-order a CD, does your support of an artist entitle you to grab it via bittorrent? If you’re a working musician, this question offers an opportunity to serve your audience better, since you should know that they’re already thinking about this. Here’s the new reality for musicians planning a record release:

1. Your “street date” is no longer your release date. You may tell your retail partners that, say, September 12th is your street date. In reality, the moment a single copy leaves the mastering house, you may as well consider it “released.” The incentive for folks is too great to keep your stuff quiet for long, so roll with it. Unhook yourself from the energy and the stress it takes to keep everything secret by building a pre-release marketing period into your plan.

2. Provide complimentary downloads when folks pre-order a disc from you. Save them the trouble and eliminate the debate. You’ll provide extra incentive for your audience to support you directly (where you can make a better margin) and you’ll give your core fans the tools they need to spread the word about you.

3. Communicate to your fans why a strong sales spike can help you. Sadly, this business still cares about “tournament play,” and a strong opening sales week is still important if you’re trying to gain the support of A&R representatives, talent buyers, and retail managers. Let your inner circle of fans know why you want them to buy the disc on a certain day/week and what such numbers will do for you. (Los Lonely Boys and their street team are exceptional at this kind of communication.)

4. Think about your CD Release party as a rolling festival and not a one-time event. If you’re scheduling just one CD release party, you’re leaving a lot of fans out in the cold. Have you noticed, lately, that Hollywood stars fly around to five or six different countries for new film premiere parties? Your events should be the same — roll out to each one of your zones and stage a huge event that’s hyperlocal and inclusive.

5. Make it easy for fans to buy blocks of CDs. Instead of just letting your fans rip copies of your disc to send to their friends, sell blocks of discs wholesale. (1 for $10 or 5 for $25!) Again, removing the reasons that they might have to use Bittorrent in the first place can help your CD sell more copies.

Technorati Tags: music+business

Does my pre-order entitle me to bittorrent a CD? Five Tips for Effective Record Releases originally appeared on spinme.com on August 17, 2006. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.

SellaBand: Fans Pay for Your Recording Sessions

Joe Taylor Jr. — Wed, 16 Aug 2006 12:30:33 +0000

Over the last few years, I’ve been talking to clients and members about how to get a core group of your fans to fund your recording sessions by selling pre-order copies and letting folks purchase “executive producer” credits on discs. We’ve even had folks use neat little PayPal donation meters to track their progress.

Today, I ran across SellaBand. It’s an interesting startup with a really compelling idea. Follow this logic:

Like me, SellaBand believes that your music is your most powerful marketing tool. Giving it away for free can net you the most new audience members (and revenue sources) in the long run.
However, paying for a good recording is very hard.
By offering a free and easy tool for fans to contribute to a recording budget, artists can get to the studio more quickly.
When your budget reaches $50,000, you get teamed with an experienced A&R professional and a producer from SellaBand’s advisory board to help cut the record.
When the record’s done, everyone who supported you gets a copy of the CD and SellaBand distributes free downloads to promote more sales.

Freakin’ genius, y’all. They use a budget of $50,000 as an arbiter — very much like my own — of whether you’ve got enough fans in place to support a full album. (Less than 5,000 folks on your mailing list means you’re better off sticking to releasing inexpensive live and demo recordings as EPs for now.)

And I love the transparency. SellaBand becomes your label and your publisher, but there’s nothing I see in their T&C’s that is any different/worse than what you would get from signing with any other publisher or label. (in fact, the margins are slightly better, at first glance.) And, if you can’t reach your goal, your fans get their money back.

I wish I had thought of this!

[ via Springwise, the bullpen for every excellent idea ]

Technorati Tags: music+business, recording

SellaBand: Fans Pay for Your Recording Sessions originally appeared on spinme.com on August 16, 2006. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.

Pressing & Distribution: My Favorite Kind of Record Deal

Joe Taylor Jr. — Wed, 16 Aug 2006 11:57:57 +0000

In Grow Your Band’s Audience and Music Management for the Rest of Us, I write about how the best kind of record deal you can land is a “P&D.” That stands for pressing and distribution, and it means you, the artist, are basically hiring a major label to manufacture and distribute your disc — the two things that major labels are really, really good at.

When you have enough fans in place to make a P&D deal worthwhile for everyone, it’s a great thing. You pay for your own production and marketing expenses out of pocket, but you own the masters and control your own outreach campaign. You won’t find yourself getting backburnered by your own marketing department. And a label gets to pad out their roster with a surefire money maker.

Sure, labels don’t exactly promote the fact that they do this — it chips away at the mythos of record label as kingmaker. But smart music management agencies like The Firm and its chief, Jeff Kwatinetz, understand that these upfront deals are essential to keep the most money in his clients’ pockets.

[ via The Digital Music Weblog ]

Technorati Tags: music+business, record+deal, The+Firm, Ice+Cube

Pressing & Distribution: My Favorite Kind of Record Deal originally appeared on spinme.com on August 16, 2006. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.

Keeping Independent Record Stores Alive

Joe Taylor Jr. — Thu, 10 Aug 2006 21:06:52 +0000

Putting the gloom and doom of the Tower Records post behind us, there are still opportunities for indie record stores to stay alive and stake a claim for relevance in their customers’ lives. To survive, a good record store should:

Position themselves as an expert in one or more specific niches. When folks think you’re THE destination for emo/jazz/metal/reggae/yourgenrehere, you can go deep and superserve a grateful customer.
Focus on special events. Make the store a destination. Create lots of in-store concerts, signings, listening parties, and anything else that can get folks out at lunch time, after work, or around shows (if the store’s near a venue).
Make it easy to do business. Offer online presales with in-store pickup. Blog about upcoming releases and special events.
Create a space that’s fun to shop in. Ditch the flourescent lights and use warm gallery bulbs. Make it easy to browse and listen to songs. CLEAN THE STORE, so folks won’t mind spending time there.

Here’s a profile of a store that’s working hard to stay open — and it sounds like it’s working…

[ via Matthew Kappenman ]

Technorati Tags: music+business, record+stores

Keeping Independent Record Stores Alive originally appeared on spinme.com on August 10, 2006. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.

Three Vital Things to Know Before You Can Succeed in the Music Business

Joe Taylor Jr. — Mon, 07 Aug 2006 18:46:19 +0000

We have a lot of new readers rolling through the site this week, so I thought I’d sum up my philosophy on how to make money making music. I just typed out a quick note to one of the members of our music business mentoring program that frames things up nicely…

The challenge with being a musician and trying to run a business is that you’ve got three masters to serve: 1) The music you want to make. 2) The fans you want to play to. 3) The ability to connect #1 and #2 profitably. And when you’re still trying to figure out #1 or #2, #3′s really hard to come by.

Technorati Tags: music+business

Three Vital Things to Know Before You Can Succeed in the Music Business originally appeared on spinme.com on August 7, 2006. If you are reading this in a feed reader, you rule. If you are seeing this post included on another website, it is in violation of our terms of use.