Music Labels Becoming More Like Venture Capital with 360 Deals?

Nashville Cream caught this story, “The New Deal: Band as Brand” in the Sunday edition of the New York Times featuring Franklin’s TN own Paramore. I think the Cream gets the 360 concept wrong. I believe the future of Music Labels is to be more like venture capital than record Label. They didn’t like the Label taking smaller slices of the whole pie in exchange for larger percentage, development time and longevity.

Money

The major artists in Nashville make more money off merchandise, touring and licensing than they make off the music itself. Why would the Label spend the money to break an artist only for the artist to make 10 times as much a year? Labels used find artists to build in hopes of a hit single that sells
the album where the label makes the money back. That model of making money is no longer viable but you still need a pile of money in order to break an artist. Labels don't develop artists anymore either which is one of the problems.

Longevity and Development

“Let’s face it, if you’ve sold 1.5 million albums off one single, and here comes your clothing line, and here comes your personalized phone, you haven’t really built a fan base,” Mr. Flohr of ATO said. “You’ve built fans of songs.”

I have known artists that had an album in the can ready for release and the first and second singles tanks then the album is shelved. Finally the artist is quietly dropped in spring as the Labels introduce the new crop of hopefuls at CRS. Most likely they won’t even be able to release their completed album as an independent artist. The 360 approach the artist is treated like a long term investment, at least in theory.

An interesting fact from the story which seems obvious is artists that slowly build their way up the Billboard charts end up selling more albums in the long run than artists who are instantly number one.

Josh Farro, Paramore’s guitarist, sounded wary. Until now “we didn’t want to get lumped into that whole machine, MTV and all that stuff,” he said. “We felt like it was just too soon. And we’d rather build a solid fan base.”

Outcome?

The industry is changing as we all know. The article gives an example of a standard Atlantic Records 360 deal which I’m not all that thrilled with. I still think they want too much ownership and say in the direction of the artist. I also think there needs to be as full disclosure of finances along with an exit strategy if things don’t work out. Then maybe there will be less feelings of the getting screwed by the artist and in turn the perceptions of the Labels might improve.

I am encouraged that the music industry is trying different models. While I think there’s a lot more opportunity for independent artists there is still a need for Music Labels with the marketing power and capital to propel an artist to a mass audience.

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