The pre-internet version of this is Steve Albini's "The problem with music" which shows how major labels can end up costing bands quite a bit of money. Originally printed in Maximum Rock 'N Roll in 1993, but reproduced here on Negativland's site: http://www.negativland.com/news/?page_id=17
It's worth the read if only for the amazing end line: "Some of your friends are probably already this fucked."
Sorry, I don't make it a habit to plug stuff I submit to HN, but in case anyone is interested, I submitted Albini's article here: http://news.ycombinator.com/item?id=4901063
I used to do music and a lot of my friends and I discussed the economics of music a lot.
The funny thing is...some of my friends really ARE this fucked. As in, literally. I have friends who are signed and tour a little over 50% of the year all over the world. They get depressed and always ask us to email them to keep them from getting too depressed or from going out of their minds.
This is off topic, but Salon.com is a mess. The page loads, and I get halfway through reading the first paragraph, the scroll point jumps around four times, a big overlay advert opens up, the page jumps down to where I was reading, now hidden behind the adverts background. Scroll up to the top, close the advert, a popup window opens for netflix. Close that, scroll back down, start reading the article but realize I've lost my attention.
I'm not against advertisements, just wish these big sites would devote some front end development to having them load smoothly.
This is the reality anywhere you have gatekeepers. I also have to point out that for all its talk about leveling the playing field and connecting artists to fans, the digital world has for the most part been simply replacing the old gatekeepers with new ones... and often at a lower margin for the artist. Look at what artists get from Spotify for instance, and Apple is trying to Wal-Mart the margins even lower.
(Wal-Mart. v. To use access to a massive sales channel as a tool to squeeze margins away from suppliers, often brutally.)
You have to wonder why that is, though. Maybe the gatekeepers provide more value than they're given credit for in forums like this.
Maybe the artists' roles in producing value is overrated.
Maybe consumers just lack any real sense of discrimination so can't be bothered to find the good independent artists when the music industry is throwing a ton of crappy acts their way.
In a world where an over-produced non-talent like Justin Bieber is a huge sensation, I really wonder how much we can't just blame consumers for not expecting better.
The Internet has provided plenty of models for "artists" to form closer connections with their fans and eliminate the gatekeepers. Why hasn't it worked?
Maybe the gatekeepers provide more value than they're given credit for in forums like this.
Don't confuse contributed value with value extraction. Completelty different things. Extraction requires legal/social leverage, which is independent from anything else. eg. Legal Authority == right to tax. There is no correlation that gov't "adds value", except insofar as there is/not (over the long-run) an political revolution.
The point I'm making is that extraction is obviously not much of the cost when there are so many opportunities for artists to connect directly with fans in this digital/internet age.
The so called gatekeepers seem to be providing some other value proposition since they don't appear to have much of a monopoly any significant portion of the system.
Well the majors used to own distribution. Also manufacturing where they could apply economies of scale, and sales channels where they would operate deals. They also brought an effective monopoly on promotion to the party (street posters, radio, in-store etc). One of the biggest value adds was that they would act as a kind of banker, giving an interest free and unsecured loan to artists to create their first record. (And then there's stuff like putting the whole piece together with producers, designers etc.)
The role they played was more like a movie studio (where the artist might be something like a leading actor, as the face of a production). And like movies, the economic model is a classical publishing one where most productions lose a ton of money and the whole enterprise is supported by the runaway successes.
The percentages you hear about (e.g. 10-20) are calculated on dealer price and might equate to closer to 30-40% of profit - and are meant to be easier to count this way (per unit sold). There were some shocking deals in the 60's and 70's, many of which were exposed in court, but since then most of the real evil has lain in the complexity of the system and therefore how easy it is to squirrel money away and make highly questionable deductions e.g. record clubs, or more recently spotify (often legitimately, within the bounds of a poorly negotiated contract).
I've read Albini and know he worked in the industry. I think it's good that he put this out there to make bands think twice but at the same time I think he gives an extremely one-sided and misleading impression, largely telling people what they want to hear.
No, this is a sign of competition. Music has a problem, any given person can only consume so much of it. When music was hard to make and distribute it was easy to fix the price. Now that(at least bad) music can be made by anyone there is an oversupply of music.
As a supplier to Wal-Mart you don't have to agree to lower prices. You just get replaced by another company willing to make 5 million units for .003 cents less.
That being said, I remember some post here about an indie artist (Zoe Keating) looking at revenues from Spotify, Apple, Amazon, etc.
With Apple she made decent living wage ($80k for the year) while the revenue from all the other services, esp the subscription ones, was barely a blip on the radar.
Kind of old problem. The world has changed. Newer math now, like how much does Spotify actually pay people. Apparently Lady Gaga got $167 from one million plays of 'Poker Face'.
A million plays sounds like a lot when the payment is only $167, but compared to the old method of listening (radio at its peak) the rate is not massively far off the mark, assuming you can adjust per listener. The article below attempts to compare the UK radio PRS royalty splits with Spotify payments and if I'm reading the numbers correctly the middle estimate comes to around $300 per spin per million listeners (I'm using the estimate of £0.0001870 per spin per listener).
Super interesting. We could stretch the technical arguments though. The play/stream is broadcast exclusively for me, sure. But then again, see my point below about Spotify being peer to peer application. It is, from an interface perspective, provisioned for me. But really songs are broadcast by individuals to other individuals. In the long run, this line of thinking is fun, but not much else. What matters is what it feels like, not how it's accomplished. And you know what, it's a pretty cool optimization from a technical perspective - gets my respect.
The source of the $167 number seems to be a Guardian article linked below. Assuming it's talking about the UK system, then the artist almost certain does get paid for radio plays (which might not be the case in the American system, I'm not sure). My understanding is that most UK stations play a flat annual fee which is magically divided up among artists based on a formula, but for big stations like BBC Radio 1, the exact number of plays will be monitored and royalties will be paid out accordingly.
The artists are a commodity until they are stars, the scarcity at the early stage is the set of people that can make the system work (promotion, marketing, producers)... thus they reap all the profits. Artists are not forced to work with major record labels. Once artists prove themselves not to be a commodity (i.e be stars) they reap great profits and have much more negotiating leverage over labels. I don't understand this rant.
> Artists are not forced to work with major record labels.
And what were/are their alternatives? Things are theoretically different with the internet now, though I'm not sure how well well-paying outlets for artists have advanced as of yet.
> the scarcity at the early stage is the set of people that can make the system work (promotion, marketing, producers)...
I doubt there's a scarcity of these people. Nor do I imagine they reap a huge profit from their work anyway. And surely the whole point is the quality of the artists' work, not how well crap can be pushed to preadolescent girls a la Justin Bieber?
> Once artists prove themselves not to be a commodity (i.e be stars) they reap great profits and have much more negotiating leverage over labels. I don't understand this rant.
If you read TFA you'll find that this is often not the case, even the stars get screwed out of vast sums of money.
The alternative, for artists, is not to sign with a major label. A lot of bands go it alone these days, although odds are they aren't the ones you hear on the radio (see "independent radio promotion"). They can still find an audience thanks to the internet. Yes, their music gets pirated heavily but, as Neil Young so aptly put it, "piracy is the new radio". The more their albums are pirated, the more likely at least some people will check out their live shows, buy T-shirts or, heck, even albums from their website or at concerts.
As a fan of good music, I try to maximize the impact of every last dollar I can afford to spend on music. My goal in doing this is to pay as little as possible to Apple, amazon, or major record labels and as much as possible directly to artists. That means almost every album I buy is through band websites or at concerts. I make use of the "new radio" and don't feel the least bit bad about it because I make a point of supporting the bands I like in a way that sees far more of my money reach artists than comes from any "honest" iTunes user. In my view, this is the most ethical route.
The record labels' "war on piracy" is really just a war on competition, and is a great example of how the letter of the law can be subverted by a greedy few to defeat the spirit of the law. Even the term "piracy" is very deliberately chosen to squash this valid new promotion channel. I really wish people would take a cue from Neil Young and call it the "new radio" because that's a far more accurate term.
This is a naive viewpoint. It still costs money to live while you're building an audience, which was why there was some merit to a record label's advance, even if the recoupment terms were unfair. Also, you assume (as do many) that there is a living to made playing live. Not all artists want to play live; not all can attract large live audiences (eg experimental musicans or people who make ambient soundscapes, for which there may be a large enough global market to sustain a living from record sales, but not enough in any single place to make bookings reliable); not all artists work in a medium conducive to live performance (composers and film actors spring to mind).
12 years since the article was written and what's changed?
Seems like business as usual for the music industry.
All those "We're going to change the world" artists have just stood in line those 12 years waiting for their turn to get screwed by the recording industry.
Very astute observation. Different companies, different "models" with spotify and rdio and other radio, but the underlying dynamics for the artists really haven't changed
Some great insight, but I do wonder if it was ghost-written. Courtney certainly didn't give up her Prada pants, nor has she fully quit the machine: in 2004, she released a solo LP on Virgin records, and in 2010 she released another as part of reformed Hole on Mercury, a Universal Music subsidiary.
EDIT: On the other hand, Kevin Shields of the My Bloody Valentine whom Courtney mentions has made some great choices by waiting for digital distribution to mature and self-releasing his long-awaited album. Good work.
See above comment by @pashields. These are Steve Albini’s conclusions that Courtney is merely riding on—and continuing to get credit for it seems. I think Albini’s original-original was actually printed in The Baffler before it was printed in Maximum Rock 'N Roll.
I think that's a little unfair, can't 2 people talk about the same subject from different angles? Also Steve Albani, while a respected producer, is not a highly popular musician like Love, it's nice to see an opinion from somebody in a different position.
What you’re saying is fair enough, but in this specific case if you compare what the two are saying it is obvious these are not “separate angles” but one is the original composition and the other is a watered-down version of the exact same angle. And the result is perhaps not Courtney’s fault—when my peers say something interesting I love to quote them on it. Just here it seems to have been done without the credit.
I am surprised to see you make such a suggestion. Quite apart from the freedom of contract issues, think of the transaction costs on a large collaborative venture such as a motion picture.
There is no freedom of contract issue--getting rid of "work for hire" doesn't mean employees can't contract to transfer their IP to their employers. It just means that these transfers must be specific and explicit.
Having done a lot of work-for-hire in film and TV, my experience is that it usually does involve specific and explicit contracts, and disputes are most likely to arise on amateur productions where business is one on a handshake or informal basis with no paperwork involved.
I'm no fan of 'submarine contracts' but more often disputes like this tend to involve someone (such as a camera person) holding the IP hostage as leverage in a payment dispute. Whether a project will be financially successful is often a matter of pot luck, so many people just sign whatever comes their way and don't review the terms unless a dispute arises and the stakes make it worth winning. For one thing, you can't make people read contract terms carefully and a lot of creative people don't like reading turgid legalese in the first place; for another, the ratio of paying producers to wannabe creatives is low enough that many employment offers may as well be contracts of adhesion, and until people achieve enough success to get an agent the attitude is often that it's better to sign a bad contract than to be passed over for someone more accommodating.
Maybe I misunderstood what sort of work for hire situations you had in mind?
Elimination of the "work for hire" doctrine wouldn't mean that you couldn't contractually transfer your IP. It would just mean that such transfers would have to be in explicit contractual language, instead of the vague "your employer lays claim to everything you create" situation we have under work for hire.
I think we're almost done with this, finally: with a laptop, an Apogee Quartet and some $1000 ribbon mics (all easily resellable) you can make recordings as good as any studio, magic mixing board or no. And with Spotify, Rdio etc catching fire distribution will soon be no problem for the little guys. No need for big labels and dummy contracts.
But we have to make sure Spotify, Rdio etc are transparent about their payouts. The big labels are probably making deals to ensure they live on as gatekeepers to these services and right now they have the leverage. We have to demand openness so we don't see a situation where Warner gets 5 cents and smaller labels get 1 cent per play.
Spotify is horrible for artists. In some senses it's even worse than piracy because listeners think it's far, far better for artists than it really is. At least with piracy people know the artist isn't getting paid. http://www.digitalmusicnews.com/research/augustconcerts2.jpg
What makes it even worse is that Spotify itself doesn't make money! They are losing tens of millions of dollars per year, it's crushing all other distribution models, and artists aren't getting paid. It's basically the worst outcome for everybody all at the same time.
When it catches on with Mom and Dad and the country western Walmart crowd hopefully people will start making money.
And all we know is some artists are getting screwed. Warner, Universal, EMI might have made a deal where they get a decent percentage and smaller labels get peanuts, we have no way of knowing.
Doesn't take long at all to find out that the deals struck with majors included not a decent percentage, but actually ownership. Ownership means access to a revenue stream — good for labels, bad for artists who don't receive royalties on investment revenue.
Go beyond that one Google search, you can quickly learn that indie labels — the folks who win more than half the Grammys — don't get the same arrangement. So the music one their labels actually subsidizes the competition. They're not all that happy about that.
And lastly: artists. You can listen to them. Plenty are outspoken. For every Metallica getting onstage with Spotify there are many others essentially saying that they receive nothing — and that makes sense because the payouts are designed to work at scale, not at the level most working musicians operate.
Saying all this without judgement. I think the streaming market could be a good one for artists if it were more geared to driving direct purchases — but thinking about it as the answer is a problem. It's the start of exposure, like radio used to be, not the end goal.
See I think it is the end goal and it's going to replace CDs and iTunes really soon. I personally don't like Spotify but Rdio and Mog are incredible. And to have the major labels pulling the strings, which sounds like is happening, is probably a really bad thing.
You are forgetting a lot of stuff inbetween, not in the least the fact that even successful bands have a hard time making ends meet, major label or not.
Grizzly Bear, a very successful indie band recently had an interview where they spilled out everything. The band that opens for Radiohead and Paul Simon, is featured in ads for Volkswagen and Peugeot and sells out Radio City Music Hall.
They can't afford health insurance. After a tour they just about break even, and they make most of their sales from touring. Here are a couple of quotes from Twitter: "Mog and Spotify do not help bands or labels or indie stores. Not shaming you, just stating the facts since someone asked" and "Buying an album helps a band ten fold over buying a t-shirt, no matter what format. Again, answering questions".
The vocalist, Edward Droste, says that he doesn't even make a middle class living.
Here's the money quote from the interview: "“There’s a ceiling that independent artists hit,” he recently told NPR, “and the only way past it is radio.” And radio “still feels very much controlled by major labels’ ability to use leverage—you still have to have the muscle. Very few indie acts actually have breakthrough radio hits.”"
It's worth the read if only for the amazing end line: "Some of your friends are probably already this fucked."
Apparently, he'll be updating it for the digital age soon based this article from January: http://www.mhpbooks.com/steve-albini-to-update-the-problem-w...