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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.'"
I'm surprised it took them this long. I mean come on, there's a way for them to bilk the artist out of more of their earnings, and they didn't do it? That's not the recording industry I know!
I thought a big part of the RIAA's argument is that the labels have to underwrite the promotion and some of the costs for the tours... If this is true, then shouldn't they have already been taking a cut from the tour profits? Maybe I'm wrong here. I'd check out the RIAA's site, but it appears to be down...
Ok, to the animals who don't get the "theft" thing, a concert has real scarcity. If I copy your ticket, both our asses can't sit down in that seat. A recording has only artificial scarcity. Copying your cd has no effect on you. So this is a good thing. Let them act as promoters.
-Libertarian secular transhumanist
If you're willing to sign away your profits in the future for that fat advance now, the only one to blame is you. On the other hand, maybe the only way to get anyone to listen to your crappy music is to get a major label to spend millions promoting it, in which case giving a percentage of the tour revenues you wouldn't be making without selling your soul to the record company is a good deal anyway.
Remember, we don't have Britteny Spears because she is a musician. We have Brittany Spears because a record company invested millions of dollars in creating her. It's only fair that they get a cut of the tour revenues she never would have had at all without their promotion.
In modern society, there is no reason to make a deal with the devil for fame and fortune - just call up EMI.
paintball
I believe you'll find that this is the norm for all of the "manufactured bands" and "pop idols" that the industry created from scratch. Only the real artists get their own touring revenues, and the writing has been on the wall for them since the labels discovered that they could manufacture bands in just about any popular genre, not just bubblegum.
Personally, I think it's a good thing.
One of the reasons that artists are skeptical of online distribution of their music is the fact that it has the precise effect of making record lables think of those songs as valueless (which they are) and instead focus on tangible things that people will pay for (e.g. a concert with merchandise).
Once artists and labels get used to this arrangement, though, there's no reason that the indy labels can't do the same, and then distributing the music cheap (or even for free) and making their money on the concerts too.
A "label" in the Internet age should be... what? My feeling is that it should be a clearinghouse... a packager if you will that records/collects the band's or artist's music, sees to its quality of recording, adds lots of indexable info and then gets it to all of the online distributors (iStore, mp3.com, etc) that will "retail it". Heck, they could just run a Gnutella farm with a web-site full of reviews and other "value added" indexing, and a client-side plugin for downloading. Boom, instant high-bandwidth music distribution, and as long as the client has some basic incremental checksum system so that it can verify it's getting the exact file that you selected, you can be sure you're downloading what you wanted. That adds ad revenue to the label's list of sources.
The margins on all of that are small to negative, but if they have an alternate source of income, then they can afford to do it, and there's really no reason that foobar label can't compete with EMI on equal footing.
And you wondered why the RIAA was deathly afraid of file sharing... it's not because they thought their members would lose money, but because they KNEW that it had to lead to a decision about the value of music that they didn't want to have to make, and ultimately killing this goose once and for all!
There was just now a segment on ABC World News about The [Grateful] Dead's new model for making money off music. They record their shows every night, take orders from fans at the show, have their audio man master it, ship it off for duplication on CDs, and have it in the mail to the fan within about three days.
Instead of the $1/album typically made by signed bands they make $8-$10 on the three-CD set that sells for $22. They've turned a quarter of a million dollars on the CDs from their performances at Red Rocks over the past couple of weeks.
Not mentioned at the link, but Peter Jennings added that the music companies don't like being cut out of the loop like that.
Sheesh, evil *and* a jerk. -- Jade
As much as I'd love to belive that I don;t think that will happen.
Stan Lee made this mistake for Spider man, most ppl know to ask for a percentage of the revenue flow not profits.
But it would be soooo nice to see record companies blunder
My understanding is that what the labels often tend to do is sign a 'quick' pre-contract agreement that pretty much locks up the musicians, then starve them into signing.
Quick, nasty and effective. The trick for the musician is to actually pay attention before signing such 'quick and harmless' agreement in principles -- but the young and eager are often blinded by apparent opportunity.
Free Software: Like love, it grows best when given away.
Don't the labels get a fee whenever a song is performed? (Some of which might be back to the writer, if the label feels like it...) Wouldn't that include the artist performing their own song?
Royalties are supposed to be paid when a song is performed. That royalty goes to whoever owns the copyright, which would be the artist if they were smart, or someone else if they voluntarily sold the rights to the song. It wouldn't include the artist performing their own song if they own the copyright.
I guess the new part is wanting a percentage of merchansing? Oh, and the article says sponsorship, too. Ouch. You mean you can't even sell out to Pepsi without losing a cut, now?
This comment makes it sound as if the labels are taking a cut without doing any work, like perhaps mafia protection money. Deals such as these are not extortion, but the record companies branching out into other areas of the entertainment business that have existed for years - merchandising; someone must make, market and sell the stuff - sponsorship; someone must produce the numbers and charts, seek out potential sponsors and sell the artist to them as a good marketing investment. This takes time, people and money.
Right now these things are going on (whoever got Led Zepp their $500,000 fee from Cadillac took a cut), record labels just want to enter that part of the biz. If the artist thought someone else could do these things better, they are free to work with them. I could see big labels being in a good position to excel in these areas as they have lotsa cash to work with and plenty of contacts.
Please notice that this article only discusses mega-huge acts. It could be a sound business move for a major artist and label to enter into all-encompassing contracts which cover recording, merchandising and touring, instead of bouncing back and forth between several companies. This type of deal probably wouldn't be effective with or for smaller acts.
RTFM; please, I beg you.
The artists already give a cut to someone, and it's called the promoter. Currently, the big boy in the business is Clear Channel. http://cc.com/
Currently, the way it works is that you have to schedule tours through Clear Channel for the most part. There are some local organizations who will properly get promotion and venue arrangements in place, but even then they have to usually give a cut to Clear Channel for the rights to promote someone. Anyone who's worked in a campus concert promtion board knows that you mostly have to pay off Clear Channel before an artist will schedule a date on their tour in your city. For big artists Clear Channel may get $100k up front, smaller ones maybe as little as a few thousand, but they get paid before a single ticket is sold. The venue then takes their cut of the gate, extracts the costs from the leftover and then gives the rest to the artist, and in some cases a cut of that goes to Clear Channel again, depending on how it was negotiated. Merchandise is usually only split with the venue, but it wouldn't surprise me to see some of it go to Clear Channel also.
There used to be a rate card published for clear channel's upfront fees for an artist, but I can't find it anymore and it may not have been a public site. It is very interesting to see how much it would cost a venue promoter to book an artist, as some of them make quite a lot of money just for showing up.
If anything, I'd see Clear Channel getting pissed before the artists, because at the very least this would give artists an option of who to let them promote their tour in the future. Clear Channel or their record label directly, either way the artist is going to drop at least %20 of whatever the gate is, so you can deal with the devil you know, or....
...and all I got was this lousy t-shirt!
No seriously, I did help create a contract management system for EMI in the early 90's. Biggest piece of shit I ever worked on. No access to the subject matter experts (people who know what it should do), but plenty of "interpretation" from middle management types.
It was made clear to us that the only purpose of record label contracts was to fuck the talent and maximize label profits. Advances on publicity costs for tours to promote the album, holdbacks on royalties until the label had turned a profit, "equalization" so that profits from one album were siphoned off to pay "expenses" incurred for others.
On the other hand, there were stories about how the artists would occasionally score a victory. I think it was Dean Martin, beholden to his label for seven more albums, who showed up, dropped seven albums worth of shit tracks on the desk, and said "Ciao!"
And Christ, don't get me started about the VP who would grab us at the end of the workday and shanghai us to Flash Dancers (Manhattan tittie bar) to force us to charge hundreds on our credit cards which we billed as meal expenses.
Yuck, it's not just the talent who feel like we swam a river of shit for the music industry.
No one tell the RIAA but the real money is in scalping tickets for insane prices on Ebay. There are people making a good amount of money by buying tickets as early as possible on web and turning around to get a premium after tickets are sold out.
I should know I just bought 2 tickets to see a Radiohead concert for $200 bucks on Ebay.
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