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The Real Reason Behind iTMS Tiered Pricing
Raindance writes "Joel on Software has an interesting piece on why Big Content is making loud noises about moving from 'flat fee' to 'tiered' pricing models on the iTMS. According to Joel, it's not about pricing songs commensurate with their economic value; rather, it's about allowing the labels to manipulate public perception of value through pricing." From the article: "And now when a musician gets uppity, all the recording industry has to do is threaten to release their next single straight into the $0.99 category, which will kill it dead no matter how good it is. And suddenly the music industry has a lot more leverage over their artists in negotiations: the kind of leverage they are used to having. Their favorite kind of leverage. The "we won't promote your music if you don't let us put rootkits on your CDs" kind of leverage."
In spite of all the catterwalling you've heard, the truth is that the majority of artists who fail to go platinum once or twice don't really make much money for either themselves or the label.
Once an artist on a three or five album deal starts enjoying a bit of mainstream success, that's when there's real money involved, and therefore it's also when there's something worth arguing over. Battles between hit artists and their labels are sometimes legendary.
Here's the usual path:
New artist establishes a scene in some local market as a live act, or is the cousin of a hot-shit producer, or the favorite new project of Madonna or Prince or Jimmy Jam & Terry Lewis, or whoever. Anyway, they get a deal to make a record.
The record, usually made up of their best ideas from years of being a struggling performer, becomes a hit, but not enough of a hit for the artist to pay back all the money the label fronted them. The artist is living well on their advances, but also badly in debt and constantly on tour to promote sales.
It is, however, enough of a hit for the label to sign the artist for a few more albums.
In order for the artist to keep their head above water (and in order for the label to cash in on the "new artist" hype) a second album is rushed out. If the artist is out of material and can't write new songs fast enough, half-thought-out songs are slapped togther, other writers are hired, or licenses are bought for a cover-song or two to pad out the album. Whatever it takes to get 35-40 minutes of music on a disk and get it out to the shopping malls.
More often than not, the album sucks and hardly anybody wants to buy it. This is often called "the sophomore jynx" among music critics. Artists who manage to work well enough under pressure to dodge this particular bullet often become the ones which the labels will latch on to and try to turn in to "the next Beatles."
Since there's a contract for a third album, and (for the bands who bombed on the second) no real rush to get another one out, the artist is able to take their time and make something which is guided more by their creative vision (or the creative vision of their producer, in the case of disposable pop acts), and generally a slightly better album is put out. If the critics like it, the artist just might get a chance to re-emerge as a hit machine.
At this point, the artists who had a hit on either their second or third album are likely to be in the black (unless they were ripped off by their management or ran out and bought their own soccer teams or something). This is when it gets interesting.
A label has a contract with that artist, one which is very profitable at this point. They want to keep that artist in their "stable", but doing so is likely to get a whole lot more expensive when the time comes to negotiate the next deal. There's two ways they can respond.
1. They can promote the shit out of the artist, make as much money as they can off the next album or two, and let the future take care of itself. Even if the artist bolts for another label, you can always exploit the material of theirs you own with yet another "greatest hits" collection or "retrospective" or "complete box set" every few years.
2. They can let the artist's popularity dwindle to next to nothing, making it cheaper to re-sign them, and then ramp the machine up again when you have a mutual committment for a few more years... or not. You can also make money off them as a "niche" act (as Crysalis did for years with Jethro Tull), by spending almost nothing to promote them while loyal fans buy their albums based on the artist's name alone.
Either choice is a risk. A lot of labels go with option #2, and that's when you get the really, truly entertaining hair-pulling, eye-poking, bitch-fests of rage from the likes of Prince or Metallica. The artist became a multi-millionaire by working with the label, but now they see vast sums of potential money their label seems to be ignoring, all while keep
Information wants to be anthropomorphized.