In a recent interview with the Financial Times, Radiohead’s manager talked about a change in the way ‘the music industry’ managed its business model. As quoted in the piece:
“We’re trying to get away from a copyright trading model more towards a venture capitalist approach with artists,†says Message. Think of it as Dragons’ Den with guitars – with Message as the thoughtful-looking entrepreneur sitting with fingers interlocked while some young beat combo pitch their wares (“So, we’re kind of like The Smiths meet Funkadelic…â€).
(thanks to @lykle for the link)
So here’s the problem with that as I see it – Venture Capital, exactly like the old record company model, is a speculative business. You ‘bet’ that the thing you’re investing in will make money. You can set benchmarks that need to be met to release the next level of funding (the amounts of money often mentioned in rounds of VC funding for start-ups are often never handed over – they are promises of continued funding if targets are met), but you’re still getting into massive debt on the guess that you’re going to make it back.
- Same old control
- Same old spread bet proposition for the funder
- Same old shitcan for the artists who fail to recoup.
But here’s the rub – musicians no longer need that kind of backing. It’s not that they can’t use it, it’s that it’s no longer a given. The economics – and power balance – of the big industry is all about what was necessary in the world of physical product and shop distribution, radio and magazines. You just couldn’t do it efficiently on your own.
Here’s the key thing to understand – the relationship between musician and audience is now entirely disintermediated. That is, it no longer needs, or thrives on, the intervention of 3rd party mediators (record labels, pluggers, radio, TV, magazines, advertising agents) in making it happen. Those mediators are still there – inefficiently plugging away, selling ever more elaborate and absurd mythology to the artists in order to get them to sign up to shitty deals – but it’s not needed, it’s not efficient and it WILL damage your relationship with your audience.
If you’re Coldplay, or U2, the damage is imperceptible – they’ll just spend more money, carpet-bomb the media, and carve out a smaller percentage of a bigger level of exposure. All recoupable from band earnings. Again, not a problem if you’re already a millionaire.
So if we – the little people who make up the vast majority of music makers – don’t speculate, what do we do?
- We tell stories, and we invite other people to tell stories with us and about us.
- We talk about things that are awesome and resource those people who think we’re awesome to do the same.
- We become part of a culture where talking about awesome things and finding awesome things via the recommendation of our friends and peers is the normal way to discover awesomeness.
It’s a slow process, but it’s sustainable. And the music industry has never been a sustainable proposition for musicians.
Last week, I was at a breathtakingly great indie music conference in Berlin, called All2GetherNow. Some panelist in one of the discussions, after telling us that only 270-something albums had justified their investment last year *worldwide* (based on oh-so-trustworthy Soundscan data), then said that getting out of record company debt was easy – you just leave the band and start another one. What an horrific way to talk about someone’s musical home. Someone’s art, someone’s team, family, gang, friends… It’s OK, just shitcan the whole thing and move on.
Not. Sustainable.
I’ve been at two big business events in the last week where the focus has been on sustainable business practice. I’ve heard LOADS from big businesses like IBM, M&S, Kingfisher and Waitrose about their desires, intentions and stragegies for making every area of their business sustainable, environmentally and socially.
I’ve never heard a big record label talk like that. I’ve not heard any of the radical, progressive thinking that I heard from mainstream industrialists and technology multinationals, from the agencies who are supposed to be delivering art and entertainment to the world.
So, forget speculative, nonsense, destructive, wasteful, unaccounted-for business deals that shit on musicians and see quitting your band as the best way to avoid debt, and instead become an awesomeness node. Want a benchmark? You can aim to generate 10/2o/50/100 new artist/listener relationships over the next week/month/year for other people.
Go on, set a goal. You’ll be part of making the world extraordinary.
I’ve said before that I’m responsible for selling more of other people’s music that I am of selling my own. I sell a fair amount of music online, but the amount of other people’s music that is sold because of my recommendation is bigger than that by a significant amount. I know, because of the thanks I get from artists who’ve seen a sales spike.
Do it, it feels great. Here’s some awesome for you, courtesy of Danny Barnes:
Great points as usual Steve.
One thing I’ve found recently through talking to people recently is different business models work for different acts. If you have a 17 piece funk band band with ambitions of playing internationally some venture capitol may be required. Its a lot harder to build things for an act like that, although the model as described has been brilliant for many artists(myself included). What was it Fripp said in the 70’s – a “small mobile intelligent unit”, that’s where I nicked the idea from anyway 🙂
Matt,
if you’re a 17 piece funk band, you have a staff of 17 – even if they all do 5 hours a week on band stuff, that’s two full time staff covered :). ‘Ambitions of Playing Internationally’ – playing internationally happens because people want to hear you, not just because you want to play. You might as well get VC money f0r a holiday, in the hope that you’ll win on the casinos while there and be able to pay it back… 🙂
If for whatever reason you do see the ‘international market’ as key, you can build it online – your audience, and my audience, have no geographical barrier. By talking to the people who listen to us, we can build up a picture of where the epicentres of interest are, and go there. If there are 17 of you, then you need to be REALLY well organised, but you need to be really well organised just to be able to rehearse and play the damn choonz, so that’s nothing new :).
You’ve also got WAY more chance of getting proper financial support from an arts organisation if you’re on your own than with a label. If you’re a 17 piece funk band (or similar), your best bet would be The British Council, or festival commissions, which are actual payment for playing, not recoupable loans…
We just need to rethink everything. It’s not about the end of infrastructure, it’s all about seeing sustainability and creative independence as paramount to music meaning anything to people. The same kind of radical thinking that’s happening in business…
Aargghhh this is infuriating! Even in the software world, VC is simply not needed. In my mind, you need the VC approach when you have something very expensive you need to start a business and you can’t get a loan (and you need one). Neither software nor music fit these. For software, you can just start coding in your evenings using open-source tools and while having a day job that pays the bills until your other venture does. In music, you can teach and/or do session work while recording your project yourself on a cheap Mac and distributing it online.
The problem here is that some people want the fame and riches and the music is just a mechanism to get there. The sad fact is that you can get a lot more control and a greater share of your “profits” in either software or music by taking the slow build. It’s also a lot less likely to all come crashing down and destroy your dreams in the progress.
Silly people!
Thanks Mike, software is the perfect analogue to this, given the kind of tools required and the way that roll-out works. Sure, it costs a lot to box up the CDs of your program and ship them to PC World, but who the hell needs to do that, especially as their ‘strategy’ before even building a demand for whatever it is they make…
The fame-is-the-aim side of this is almost easier to deal with than the people who do care about their music but have just bought into the mythology… It was pretty all-pervasive until very recently. I’m not sure when I first started to challenge that version of how things should be, but was clearly well past it by the time I started playing solo, solo bass not being the most effective route to fame and riches I can think of 😉
Yesterday I had an email from a young (17-18) band I met at a festival, asking if I could give them any names and addresses of A&R or agents to send their CD promo kit Jiffy bags to.
These guys have only just left school, but they are very internet-savvy. Their Myspace page looks more professional than most major label ones I’ve seen and links to the Twitter accounts of each band member. The Facebook page is working well. They are confident and not afraid to hit up contacts like me for advice and help. They have a few festivals and a Barfly gig coming up. They are heading for a potentially sustainable situation (especially if they’re going to be students for the next three years).
But what’s their plan? Send out CDs to industry people. As Generation Y-ers they do all the social web stuff without thinking, but they see it all as preparing a great pitch for the Music Industry Dragons: “In the next financial year, we predict Likes of 2500, climbing to 4000 in 2012. We have also successfully trialled performance agreements with the Barfly and several high street festival brands.”
Needless to say, I emailed back with a list of reading material (Steve, Dubber, Barnes etc.) and told them to ask me again once they had read it.
They are smart kids, and I’m sure they will learn from this and do great things. But what worries me most is that their music is part of the pitch. They have carefully crafted a boy band power pop image that only really has mass market appeal. The ambition to be famous is built into the music…
Interesting to hear. Is there any reason you haven’t named/linked to them?
Who is still perpetuating the Big Label myth?? That outmoded model died so long ago I can’t believe anyone even still knows about it, let alone sees that as an option.
In a business of supposedly creative people it amazes me how uncreative folks can be about enhancing their musical lives. Sustainability hasn’t been a cornerstone or hallmark of the music biz in a while; which is strange, because bands who were born when labels actually took bands in for the long haul are still out there playing to giant crowds today. Talk about sustainability!
Now it’s up to musicians to find their own way to sustainable careers, and I think what people find difficult is there is no longer a road map. It was a lot easier when you had the guideline: make demo > pass to A&R > get signed > be rich and famous. Thing is, that only worked for probably .01% of bands. The opportunities we have as musicians now are so mind-bogglingly amazing that I can’t wrap my head around the naysayers’ arguments.
I’ve found many musicians still need help. They may need some money upfront to get a vehicle to tour in. They may need money upfront to get a portable sound system. They have often needed money upfront to put out a CD, although now preselling CDs is becoming more the norm. The upfront money doesn’t need to come from a label or investors. It can come from family and/or friends in the form of loans. It can come from credit cards (though my experience has been that musicians have such bad credit they can’t charge anything). But trying to do it without any sort of upfront money may mean a much slower progression. It would be the equivalent of not buying a house until you have saved up enough cash to pay for it outright.
If you need money up-front, you save for it. By the stage that musicians are renting sound systems and vehicles they should have been able to save a reasonable amount of money already. You can put out a CD for free now with a computer and free software.
I don’t want to get off the topic onto fiscal irresponsibility but unless you are set up as a limited business, taking out any sort of loans is pretty silly when it’s just of doing it now rather than later.
The difference with the house is that a mortgage is a loan backed by property. If the property devalues, you can back out of the loan. If you want your money back, you can sell the house. Taking out a loan for something that is purely a cost and not guaranteed to make you money doesn’t strike me as the most sensible way of managing your finances.
The bands I know tend to own vehicles and sound systems rather than renting them. So if they qualify, they take out loans (car payments for the vehicles and credit cards for the equipment).
These days I think it is possible to record for very little, so that isn’t really a problem anymore, but anyone who is paying for something over time (like a band vehicle) isn’t doing a music career on a cash basis.
Young band members often turn to their parents if the parents have the money and are supportive. Older band members sometimes depend on spouses/significant others to cover shared living expenses.
Kickstarter is an interesting place to check out because it shows you how people without the necessary funds hope to raise enough money for their next projects.
Suzanne,
I think there are definitely ways that bands can be helped – this isn’t the death of services and companies that connect artists and their listeners – far from it. It’s the rebirth of services that support and facilitate those relationships, without getting in the way. And tradition record deal relationships just aren’t fit for purpose. It’s like riding into town on the back of a cow and expect all the cars to use different roads in order to protect your (sacred) cow.
So there will be myriad schemes that spring up that help musicians to build the equipment and resources they need to match their (realistically) projected levels of success/reach, and some way even involve loans, but they won’t be loans that hold the existence of the band ransom against the repayment, neither with they be loans where the banker gets to spend the money with impunity and still recoup it from the person whose career and assets are securing the loan.
I’m going to write more soon about ideal services for musician’s support… 🙂
I’ve been one of those lenders. My terms: an interest-free loan, repayable when they generated the money from CD sales. No strings in terms of rights. I couldn’t afford just to give them the money, but I could afford to advance them the money on the assumption that when they started selling CDs, or merch, or playing gigs, they could afford to repay me.
Here are the ways to raise money in advance (in ascending order of obligations on the part of the artist/band):
1. Sponsorship/gifts.
2. Presales.
3. Loans.
4. Investors.
Getting gifts with no strings is the best. Getting investors who, in turn, want a piece of your project or your business is the worst unless they contribute significantly to growing that business/project.
Feels to me like there are places for a lot of the things mentioned in other comments and your original post.
Though I can’t describe what it would look like, I think some form of hybrid support/funding is required. More like a co-operative.
Co-Operatives are definitely a model that does/will work. I know of a few situations that have worked like that – collectives that pooled resources, co-branded (so you knew the kind of thing you were getting going to a – for example – F-IRE Collective gig).
And with growth comes the opportunity to innovate new services around that growth – I’m sure bands will still get way too big to do this stuff on their own, particularly touring, and companies that provide useful services for touring artists are going to do really well, as they always have.
And of course, as bands have more to spend, they’ll be able to experiment with different recording environments that may be more conducive to certain types of playing – there are some AMAZING studios around, and I hope they find ways to still make enough to stay in business.
Here’s one model. It covers all arts rather than just music.
http://creative-capital.org/aboutus