Revel Lever®

An absolutely outstanding article/series of audio interviews at WIRED.com from the January 2008 (16.01) issue regarding David Byrne’s survival strategies for recording artists. Spend some time reading the full article and make sure to listen to the audio clips, simply great material there.

For existing and emerging artists — who read about the music business going down the drain — this is actually a great time, full of options and possibilities. The future of music as a career is wide open.

Some pain points brought forward include the fact that major labels don’t treat downloads as a new music format in their recording contracts. The trend is that less music is purchased and more purchases are in digital download format.

Major labels have basically fired all the middle level management and the people who actually know how to do stuff, the top level executives are being overpaid, and the lower level employees doesn’t know how to do anything…generally speaking.

Touring sells records better than anything else and the best survival strategy according to Byrne is finding opportunities to license music to third parties such as movies, television and commercials.

An artist and their manager is always looking for the best result in all areas/revenue streams vs. a record label is only looking for the best result in one area: music sales. So the motivations of the two parties are never really aligned.

The highlight quote goes to producer Brian Eno. In regards to major labels he points out, “Structurally, they’re much too large, and they’re entirely on the defensive now. The only idea they have is that they can give you a big advance — which is still attractive to a lot of young bands just starting out. But that’s all they represent now: capital.”

Many who take the cash up front will never know that long-range thinking might have been wiser. Mega pop artists will still need that mighty push and marketing effort for a new release that only traditional record companies can provide. For others, what we now call a record label could be replaced by a small company that funnels income and invoices from the various entities and keeps the accounts in order. A consortium of mid-level artists could make this model work. United Musicians, the company that Aimee Mann’s manager Michael Hausman founded, is one such example.

Byrne advises artists to hold on to their publishing rights (well, as much of them as they can). Publishing royalties are how you get paid if someone covers, samples, or licenses your song for a movie or commercial. This, for a songwriter, is your pension plan.

However, no single model will work for everyone. There’s room for all of us. Some artists are the Coke and Pepsi of music, while others are the fine wine — or the funky home-brewed moonshine.

Here is a summary/breakdown of the six distribution options examined:

1) At one end of the scale is the 360, or equity, deal, where every aspect of the artist’s career is handled by producers, promoters, marketing people, and managers. The idea is that you can achieve wide saturation and sales, boosted by a hardworking machine that stands to benefit from everything you do. The artist becomes a brand, owned and operated by the label, and in theory this gives the company a long-term perspective and interest in nurturing that artist’s career.

2) Next is what is commonly called the standard distribution deal. The record company bankrolls the recording and handles the manufacturing, distribution, press, and promotion. The artist gets a royalty percentage after all those other costs are repaid. The label, in this scenario, owns the copyright to the recording. Forever.

3) The license deal is similar to the standard distribution deal, except in this case the artist retains the copyrights and ownership of the master recording. The right to exploit that property is granted to a label for a limited period of time — usually seven years. After that, the rights to license to TV shows, commercials, and the like revert to the artist. If a band has made a record itself and doesn’t need creative or financial help, this model is worth looking at. It allows for a little more creative freedom, since you get less interference from the guys in the big suits. The flip side is that because the label doesn’t own the master, it may invest less in making the release a success.

But with the right label, the license deal can be a great way to go. This is the relationship Arcade Fire has with Merge Records, an indie label that’s done great for its band by avoiding the big-spending, big-label approach. “Part of it is just being realistic and not putting yourself in the hole,” Merge cofounder Mac McCaughan says. “The bands we work with, we never recommend that they make videos. I like videos, but they don’t sell a lot of records. What really sells records is touring — and artists can actually make money on the tour itself if they keep their budgets down.”

4) Then there’s the profit-sharing deal. It involves a minimal advance from the label and the profits are shared from day one. The artist retains ownership of the master. The label does some marketing and press. An artist may not sell as many records as they might with a larger company, but in the end they will take home a greater share of each unit sold.

5) In the manufacturing and distribution deal, the artist does everything except manufacture and distribute the product. Often the companies that do these kinds of deals also offer other services, like marketing. But given the numbers, they don’t stand to make as much, so their incentive here is limited. Big record labels traditionally don’t make M&D deals.

In this scenario, the artist gets absolute creative control, but it’s a bigger gamble. Aimee Mann does this, and it works really well for her. According to Michael Hausman, “A lot of artists don’t realize how much more money they could make by retaining ownership and licensing directly. If it’s done properly, you get paid quickly, and you get paid again and again. That’s a great source of income.”

6) Finally, at the far end of the scale, is the self-distribution model, where the music is self-produced, self-written, self-played, and self-marketed. CDs are sold at gigs and through a Web site. Promotion is a MySpace page. The band buys or leases a server to handle download sales. Within the limits of what they can afford, the artists have complete creative control. In practice, especially for emerging artists, that can mean freedom without resources — a pretty abstract sort of independence. For those who plan to take their material on the road and play it live, the financial constraints cut even deeper. Backup orchestras, massive video screens and sets, and weird high tech lights don’t come cheap.

Radiohead adopted this DIY model to sell In Rainbows online — and then went a step further by letting fans name their own price for the download. They weren’t the first to do this — Issa (formerly known as Jane Siberry) pioneered the pay-what-you-will model a few years ago — but Radiohead’s move was much higher profile. It may be less risky for them, but it’s a clear sign of real changes afoot. As one of Radiohead’s managers, Bryce Edge, explained “The industry reacted like the end was nigh. They’ve devalued music, giving it away for nothing. Which wasn’t true: We asked people to value it, which is very different semantics to me.”

At this end of the spectrum, the artist stands to receive the largest percentage of income from sales per unit — sales of anything. A larger percentage of fewer sales, most likely, but not always. Artists doing it for themselves can actually make more money than the massive pop star, even though the sales numbers may seem minuscule by comparison.

David Byrne’s Survival Strategies for Emerging Artists — and Megastars