10 years ago I was a small time hip hop DJ who did some clubs and radio. Before I became a programmer, my dream was to become the next Puffy. I studied the industry big time (reading books, talking to people inside, doing interviews) and still do. I also worked security for years for the main purpose of being able to interact with the people behind the scenes (managers, promoters, etc). So even though I am not an expert, I know a decent amount about the music industry.
First of all I see some talk about how you can predict a hit. No, you can't. You have basic formulas that you know can do okay but a hit is usually a surprise. No one could predict Adele would be as big as she is now. Her first album was very good but it did not pick up steam in the US market. Lady Gaga was bounced around as well. She was almost dropped from her record label until Akon picked up the slack and was able to do something with her. Basically what I'm saying is that after something is made you may be able to tell that it is going to be big but you have to craft it first. While crafting it, you are not going by formula but what feels right. You don't know that it is going to be a hit while you are making it.
Second, you have to understand the record label model to be able to disrupt it. The point systems, mechanical royalties, publishing, different rules for selling overseas, etc. This is what the labels are good at. This is the moat to their castle. In the past, (before around 2002 or so) record labels would put out a bunch of artist and see which one stuck. They would lose money on 80 - 90% of their artist because all they needed was one or two to make it big to make their money back. Minor artist would also be able to make the label profits through the use of singles. But the record labels gave up the singles model for the larger profit margins of albums. Now it is different.
Now they have to be real careful who they put out. The profit margins are a lot thinner now than what they used to be. Piracy is one reason but a bigger reason is the more places for people to be able to spend their disposable income. The record labels did not make a pivot to change the way they did business when the economic problems hit. Instead the industry shrunk down and now we have less labels. But they are still doing business in the same fundamentally screwed up way that they did in the past. In their mind, why change something that has worked for over 50 years. Think Kodak and the reason for their recent bankruptcy.
The one thing they did change is how to make artist pay more for the squeeze that the record labels are feeling. New artist these days have to bring to the table a built in fan base. The label then will try to expand that base. For the most part, if you want to be signed to a record label these days then they have to know that you have a track record with fans. Take an artist like Whiz Khalifa. He already had a big buzz when the record labels signed him. He could have made a lot of money staying independent. But most artist want the international fame that accompanies the major record labels. So he signed with them so they could push him internationally. In the past having a buzz would help you get signed but it was not the only factor. Now in most cases, you HAVE to have a big buzz.
The labels are also making the artist pay more in a new type of deal structure. This signing is called a 360 deal. In the past, the deal basically was that an artist would receive a (relatively) low amount of points on a record put out. This is especially true if you were a new artist. But it didn't matter because if the record did well they could tour off of it. The tour and merchandise money was basically the artist only. This is how they would get rich. Now record labels have made sure they get a part of that money as well. A 360 deal makes an artist have to cut the record label in when it comes to merchandising and tour money. AND they still get low points on the album. You either accept this new industry practice or you do not get signed.
The record labels are ripe for disruption. New artist are available all of the time. But you not only have to study what the labels got wrong, you also have to study what they got right. First, musical talent is only part of the equation when it comes to selling music. People have to be personally invested in the artist. They have to like them and think that they know them. Record labels are experts at this. An artist either has to relate to the consumer or the artist has to be someone they idolize. Think of it like the Fanboy trap that we see when it comes to tech. Go to any gossip blog site. People argue about the artist as if they know them. Some people love them for no reason and others hate them for no reason. But the key factor is that they love talking about them. So if you build software to disrupt the industry, this has to be in the equation. Your service has to allow people to have a personal connection with the artist. None of the music services now do this. They let you listen to the artist but the connection is already built in from somewhere else. I would say the best right now at doing this is Youtube. But even Youtube could do a lot better job of it. MySpace was kinda on the right path but bad design decisions killed that.
Second, a new service to disrupt the industry would also have to think about the people who make the artist what they are. The stylist, the make up people, the manager, the promoters, the background singers, and etc. An artist is a package. And you would have to allow for that package to be dealt with in a new disruption model. The record labels feed a lot of people and a lot of those people are vital for a record and an artist to be pushed.
I have a lot more that I have to say about this subject but I have already built up a wall of text so I'll cut it here. I'm a little bit passionate about this topic because I have seen for years how the label system screws both artist, DJ's and fans. They need to be brought down and brought down hard but it will not be easy. The one thing that you will find is that most artist have no business sense. They want to be able to create and that's it. We see this line of thinking with some software programmers as well. But programmers usually keep a steady job. Most artist have a short shelf life. It's not until they are broke that they realize how they have been screwed. Before that happens though, they love the industry.
In the past, (before around 2002 or so) record labels would put out a bunch of artist and see which one stuck. They would lose money on 80 - 90% of their artist because all they needed was one or two to make it big to make their money back.
When I read this, I thought of VCs and how they'll back many promising startups in the hopes that some percentage of them will generate significant returns for them.
To distill down what you said, would it be accurate to characterize record labels as sort of a marketing agency for musicians, where marketing means branding, positioning, promoting, distribution, public relations, community building, etc?
And that instead of a musician hiring such a marketing agency, these agencies offer their services for a (massive) cut of the musician's earnings?
I ask because it feels like some music startups are in a good position to do this, such as Topspin and Bandcamp. At least, they have the start of a distribution system and some primary promotional features. The whole brand image thing doesn't quite feel like their forte, but they could certainly try adding that too.
To top it off, these startups could build a marketplace of service professionals that help musicians with stylists, managers, promoters, background singers, etc.
The difference between these startups and record labels is how their technologies to allow them to scale without constantly increasing their cuts from musicians' earnings.
Yeah, they are basically a full service marketing firm but they don't think of themselves that way. I've never worked in a label but I have talked to several people who have and they think of themselves more as a grooming service. In other words they prepare the artist on how to be famous as well as make them famous. Every label thinks they are in the mold of Motown. And if you have ever read up on Motown then you know that they had very tight control of their artist. From image, to song selection and everything else in between.
I think that any model that handles the X Factors easily for artist would be the one to beat the record labels. I have a bunch of different ideas in my head competing with each other on what would be the best way to do this. I'm still lost on what is the correct one. I just know that it can be done.
I also used to voraciously consume endless books about the business side of the music industry, specifically the legal and marketing side of things. I imagine there is still a box full of those books in extant at my parents' home. I too had aspirations of becoming a mogul in the mould of Combs, so I wonder how many there are of us whom had these aspirations and are now hackers?
BTW is your name a hat tip to the rapper Fabolous? I ask because you joined HN around the time of Loso's Way.
I used to be a label executive and you pretty much nailed it. And nailed why I left.
I worked with a group of really great people who strove for innovation. However the tendency is still to mine the past for as much as its worth until there is nothing left to mine.
Try this thought experiment: take the earnings from any of the labels and see how much is from catalog vs new signings, and how much was spent to market catalog vs new signings.
Basically wmg would be in a better place to just shut everything down except Rhino and Chappell and ride out their mechanical and publishing contracts to end.
From what you said the labels are already killing themselves by raising their own commissions and by demanding an artist already has a big fanbase. If a lot of artists have to get to that point, some of them might realize they don't even need a big label to make them more popular, and will just look for tools and services for self-publishing like Youtube and the Google Artist Hub.
Even though I use Google Music and have developed Android apps, this is the first time I'm hearing about this service from Google. It looks good but I am going to have to explore it some more to get an educated opinion. But so far it looks like a good start.
Whatever service tries to bring in independent artists, it has to be easy to use. A lot of artist loved Myspace because it was easy to upload music & videos. It was also easy to engage your fans. To them it was ugly but it got the job done.
Though it may not seem like it, the music industry is way behind when it comes to tech trends. At least in Urban music. While I'm not as well versed, people in EDM seem to be pretty tech savvy. In the Urban block, Blackberry's were still the most popular phones until about the end of 2010. Many in the industry considered both the IPhone & Android a toy. So any tech aimed at them has to be simple. For every artist who has mastered using Ableton or Cubase there are ten more who think using Fruity Loops is like launching the space shuttle.
I've been saying for a long time that MySpace could still be successful in the right hands. While it is laughed at as a social network, people still remember it as a great place for music.
I don't think anyone has come close to replicating this since. I'd love to see someone take MySpace, wipe the slate 95% clean and make it deeply artist-centric. Hell, integrate it with Facebook. But make it the central hub for a musician to post news, videos, music, etc.
I thought that this would happen when the group including Justin Timberlake took it over, but so far no dice...
Soundcloud has the artist-centric part down really nicely, but it doesn't have much room for other music-related stuff like gigs, videos etc. I'm still undecided on whether that's a good thing or not, because what they do do, they do extremely well.
great wall of text! you have a weblog or so? interested in the intersection of technology and cultural stuff as well... i'm based in toronto, btw. quite often in nyc. cheers.
I'm sorry, but all I read here is the suggestion to accommodate greed instead of music or art.
Which may be perfectly sound (no pun intended) advice for anyone trying to do a startup related to the music industry, but it has nothing to do with disrupting it.
Disrupting the music industry would be taking all of that unsustainable crap that turns the artist into "a package" out of the equation, not perpetuating it.
What might be the best way to disrupt an industry? I believe it is to provide competitors which beat out the other competition because they are so much better. He isn't talking about greed, he's talking about business sense... Or do you want to go attack their websites or something silly like that?
Also why is calling artists a 'package' disrupting? I agree they are people. But when I want to listen to Led Zeppelin, I don't think about how I want to listen to the musical contributions of Robert Plant, Jimmy Page, John Bonham, and John Paul Jones during their career together. No, I experience them as the musical whole. I think that's all he means.
He's talking about supporting all the hangers-on, the stylist, make-up artist, managers etcetera. That is purely perpetuating the parasitic industry that has latched itself onto popular music.
Disrupting the industry in my view means separating that stuff from the production and distribution of the actual music, so that those of use that wish to make and/or consume music are not forced to sustain and entire industry we neither want nor need, and has fuck all to do with music.
That BTW doesn't mean I don't recognize an act like Lady Gaga as a legitimate artistic and commercial product, I just think that it belongs in an entirely different industry where music is secondary. One most musicians wouldn't want a part of if there were other options, and most music lovers don't want to pay for (because most of the money you pay for "legal" music goes to that industry, not the musicians who's music you actually want). Making that happen is the disruption consumers and musicians are waiting for.
First of all I see some talk about how you can predict a hit. No, you can't. You have basic formulas that you know can do okay but a hit is usually a surprise. No one could predict Adele would be as big as she is now. Her first album was very good but it did not pick up steam in the US market. Lady Gaga was bounced around as well. She was almost dropped from her record label until Akon picked up the slack and was able to do something with her. Basically what I'm saying is that after something is made you may be able to tell that it is going to be big but you have to craft it first. While crafting it, you are not going by formula but what feels right. You don't know that it is going to be a hit while you are making it.
Second, you have to understand the record label model to be able to disrupt it. The point systems, mechanical royalties, publishing, different rules for selling overseas, etc. This is what the labels are good at. This is the moat to their castle. In the past, (before around 2002 or so) record labels would put out a bunch of artist and see which one stuck. They would lose money on 80 - 90% of their artist because all they needed was one or two to make it big to make their money back. Minor artist would also be able to make the label profits through the use of singles. But the record labels gave up the singles model for the larger profit margins of albums. Now it is different.
Now they have to be real careful who they put out. The profit margins are a lot thinner now than what they used to be. Piracy is one reason but a bigger reason is the more places for people to be able to spend their disposable income. The record labels did not make a pivot to change the way they did business when the economic problems hit. Instead the industry shrunk down and now we have less labels. But they are still doing business in the same fundamentally screwed up way that they did in the past. In their mind, why change something that has worked for over 50 years. Think Kodak and the reason for their recent bankruptcy.
The one thing they did change is how to make artist pay more for the squeeze that the record labels are feeling. New artist these days have to bring to the table a built in fan base. The label then will try to expand that base. For the most part, if you want to be signed to a record label these days then they have to know that you have a track record with fans. Take an artist like Whiz Khalifa. He already had a big buzz when the record labels signed him. He could have made a lot of money staying independent. But most artist want the international fame that accompanies the major record labels. So he signed with them so they could push him internationally. In the past having a buzz would help you get signed but it was not the only factor. Now in most cases, you HAVE to have a big buzz.
The labels are also making the artist pay more in a new type of deal structure. This signing is called a 360 deal. In the past, the deal basically was that an artist would receive a (relatively) low amount of points on a record put out. This is especially true if you were a new artist. But it didn't matter because if the record did well they could tour off of it. The tour and merchandise money was basically the artist only. This is how they would get rich. Now record labels have made sure they get a part of that money as well. A 360 deal makes an artist have to cut the record label in when it comes to merchandising and tour money. AND they still get low points on the album. You either accept this new industry practice or you do not get signed.
The record labels are ripe for disruption. New artist are available all of the time. But you not only have to study what the labels got wrong, you also have to study what they got right. First, musical talent is only part of the equation when it comes to selling music. People have to be personally invested in the artist. They have to like them and think that they know them. Record labels are experts at this. An artist either has to relate to the consumer or the artist has to be someone they idolize. Think of it like the Fanboy trap that we see when it comes to tech. Go to any gossip blog site. People argue about the artist as if they know them. Some people love them for no reason and others hate them for no reason. But the key factor is that they love talking about them. So if you build software to disrupt the industry, this has to be in the equation. Your service has to allow people to have a personal connection with the artist. None of the music services now do this. They let you listen to the artist but the connection is already built in from somewhere else. I would say the best right now at doing this is Youtube. But even Youtube could do a lot better job of it. MySpace was kinda on the right path but bad design decisions killed that.
Second, a new service to disrupt the industry would also have to think about the people who make the artist what they are. The stylist, the make up people, the manager, the promoters, the background singers, and etc. An artist is a package. And you would have to allow for that package to be dealt with in a new disruption model. The record labels feed a lot of people and a lot of those people are vital for a record and an artist to be pushed.
I have a lot more that I have to say about this subject but I have already built up a wall of text so I'll cut it here. I'm a little bit passionate about this topic because I have seen for years how the label system screws both artist, DJ's and fans. They need to be brought down and brought down hard but it will not be easy. The one thing that you will find is that most artist have no business sense. They want to be able to create and that's it. We see this line of thinking with some software programmers as well. But programmers usually keep a steady job. Most artist have a short shelf life. It's not until they are broke that they realize how they have been screwed. Before that happens though, they love the industry.