Slashdot Mirror
Record Labels Looking for a Cut of Tour Revenues
Anonymous Coward writes "As many a Slashdotter has pointed out, musicians make their money not from selling records but from going on tour. Now record labels are trying to get a piece of the action. 'Now the music labels, hungry for revenue from any source, are mulling over whether to make a grab for a piece of the tour biz. One company already has: In October EMI Recorded Music signed a deal with Brit singer Robbie Williams that gives the label a cut of the pop star's merchandise, publishing, touring revenue and sponsorship.'"
This is what many slashdot users have been suggesting they do, so I don't understand the negative attitude all of the sudden. Remember the "they're going to have to change their business model" speech everyone was giving a couple of years ago? This is that change. Mind you, in typical record label fashion, they aren't going to mark down CDs any or ease off of the filetrading litigation, because that would still cost them *something*. That is the part everyone should criticize, that there is no quid pro quoa (spl?). Sure, they don't have to give their customers something in exchange no the markup on ticket prices we will no doubt see, but it might hurt them in the long run if they don't...
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Crudely Drawn Games
I found this interesting from the article:
... just have to be seen on a big screen.
> While music sales have dropped for three years in a row, from $13 billion to $11.5 billion in
>2002, hurt by Napster-style digital piracy and a lackluster flow of hot new acts, the tour
>business has climbed for four years straight, from $1.3 billion in 1998 to $2.1 billion last year
So in total, money spent on music has gone down from 14.3 to 13.6 billion. A small change in a time of economic uncertainty. I imagine people will always spend a similar amount of money for entertainment, just the patterns of expenditure change. Ripping an MP3 off the net will never compare to a live performance.
Similarly, movie studios don't have to worry. Seeing a decent movie on DivX makes me want to go to the cinema for the proper experience. LOTR, Matrix,
Anyway, the studios should make money where the consumer wants to spend it, and stop whinging when their lack of innovation stops them from earning.
Ponxx
Ten years ago, Metallica's original contract with Elektra (signed in 1984), expired and there was a lot of competition from every label in the business to sign them to a new contract (after all, their untitled 1991 album was well on its way to being one of the bestselling albums of all time, and its predecessors were storming off store shelves). Metallica and Elektra reached an agreement that basically made Metallica completely independent of the RIAA. The arrangement that was reached was the creation of a corporation E/M Ventures, with the four members of the band, their management (Q Prime), Elektra being the sole shareholders (IIRC, the breakdown was something like 22% Lars Ulrich, 22% James Hetfield, 16% Kirk Hammett, 10% Jason Newsted, 15% Q Prime, and 15% Elektra). Elektra transferred the copyrights on all the catalog recordings (1983-1991) to E/M as their investment, along with a record deal that would pay E/M Ventures royalties equal to 50% of the wholesale price (in other words about $4 to %5 per album, or $7 to $8 per double album), with no deductions for anything (all record production and promotion expenses would be handled by E/M). This deal only expires when a simple majority of the voting shares decides to terminate it and buy back Elektra's share.
Elektra basically makes little to no money (apart from their share of E/M's profits) on the sale of a Metallica CD... all costs related to manufacturing and distribution are eaten by them. However, they're making this money with little risk; Metallica can put out basically anything and it will go platinum, simply on the strength of a rabid fan-base (much like Rush's, but probably at least twice the size).
E/M owns all aspects of Metallica's business interests. The tours are done by E/M (or subsidiaries thereof). The merchandising revenues are to E/M. Thus, Elektra gets a cut of all those revenue streams, which are actually even bigger than the recording streams. Elektra also gets a cut of international record sales by Vivendi and Sony. Metallica gets out of this what effectively amounts to total independence from the system. Even if Elektra doesn't want to release something, they're obligated to manufacture and distribute it, otherwise they forfeit their share (for no compensation, through breach of contract).