(this article can also be listened)
In the world of uber successful artists and bands, a ‘new’ phenomenon has started to arise, in the form of buying up all of their back catalogues. In this article we explain how and why is this a ‘thing’, and what the advantages are for both parties, and how this reflects on us lesser mortals, playing in the game of the music industry. Is there any effect that trickles down? Is this the real world version of NFTs with hard currency? Is this something we should be concerned about, being indie artists making our way up the ladder? Is there a goal that we, with good smarts and hard work can ever hope to attain?
In this short article, Music Authentic attempts to explain where this fits on our music business landscape, and highlight the mindset of these seemingly out of reach uber deals. Grab a tea or coffee, and lets get into it.
The latest deal, as you may of heard, was the buy-up of Justin Timberlakes back catalogues, by the relatively new merger of Hipgnosis (that bought the label Death Row Records) and Blackstone. What’s going on here? Why would they spend big money on songs and music that WAS popular, that has now been and gone? It’s not only this latest artist, but a long list of other big names in this crazy, inherently unstable industry.
The key word here is music IP (intellectual property). This means that whoever owns the masters to these songs, controls all aspects of licensing, in a nutshell. So, lets say MA bought the masters to an artists songs. We could then sell a licence to use their music in films, (exclusive-with a defined term, or non exclusive) for adverts and to publishing companies that would use the music, for a (huge) fee in their film projects. So, an initial investment would pay itself back– in time (yes, you know the film).
The main idea is that the long term payout would easily cover the cost of the investment, and in fact continue to do so way into the future, given that there is a legacy agreement, where the rights would hold at least 80years after the death of the artist. See the Elvis catalogue for that.
Basically its a deal where the artist (label) forfeits long term future revenue, for a big bundle of hard cash, right here and now. Its a trade off.
Yes, the artist could hold onto to the masters and license them, and earn a steady, but proportionally low income over time, or sign over their masters for a lump sum. Timberlakes deal was reportedly worth over 100 million. Would his label make that money if they held onto the masters rights? Yes, they would. But they struggle to find the massive profit they were once were privileged to. In todays increasingly unstable music business, where the old model has been forced to make way for a new, digitally (and increasingly artist biased..not label biased) model, the profit margins from physical media (CDs, vinyl) has all but been lost for good, and the streaming era has forced labels to re-invent themselves. The market landscape has changed dramatically, and now 360 deals are commonly offered to recoup investment. (the label advance).
This is a desperate attempt by labels to keep their previous status quo, and its not beneficial to the artist. In times gone by, labels made their money from mechanical royalties from sales of CDs, and touring was expensive (it still is) but good money for both, and sales of merch was the bands sole profit..and good too. Now, the 360 deal has invaded any and all sources of an artists income. How else are they to recoup their investment? It gets worse. Once the artist has paid back the advance, the label then continues to reap the rewards of all income, and presents a small percentage back to the artist, often inciting over inflated charges for everything from travel costs of their employees, to fictitious services, to horrendous charges for personnel that barely have anything to do directly with the daily operations of the artist.
Often, sadly, the label takes massive advantage, leading to the artist OWING the label money, to the tune of many, many, thousands. As you can see, this method of operation is hurting the label and the artist and the industry, in an already dire situation. But there is a way out, and us mere mortal artists can do something about it.
We could reach out to sync licensing libraries ourselves. There can be good money to be made, and its where publishing can work for us, with exclusive or non exclusive deals. There is a catch though. A whole subset of music writers write especially for sync. Which tends to be a generic, vanilla, one song to please as many people as possible type of gig. You’ve heard that very forgettable, almost annoying advert music, the film trailer music that all sound the same, etc etc. But the growing trend is to get placements for indie artists with original music. Which is good news! This actually pays out well! But..is often harder to get the coveted sync deal. Its also common to be in the sync biz for 5 years before anything happens at all. So its no bed of roses.
And so here we are, full circle – from the elite, the top few percentile, that can command the best deals, with certified music (hits) that future film studios will pay very good money to place said music in support of the theme of the scene. We’re talking big budget, multi million deals.
We can take the biz model that these huge companies employ, and apply that to our own career, albeit in a much smaller ecosystem.
Lets break it down some more. Your songs are classed as assets, (intellectual property) where you have spent the time (and money) to develop, write, and release, progressing the cultural genre you belong to. The demand for new music is still there, and its as strong as it ever was. Its also true that there are innumerable songs released daily, due to the access to technology that has achieved a near post scarcity status. This creates a huge imbalance in supply/demand. There’s now a very low barrier to entry to release music, and this is where the problem exists. This model works very well financially for subscription streaming services, but does nothing for those with very strong, well crafted songs. These are lost in a sea of music. Or are they? Its true that all levels of artists can now get a blue check-mark on their preferred streaming platform, but this does not differentiate the all-in, do or die artists, from the hobbyists, the weekend warriors, or the ‘I have an album bursting to get out’ once in a lifetime artist.
All of these surely have their place, but the all-in bands and artists struggle to get heard. This is where the game (or biz) of online presence can make or break a situation. Where the music biz is vast, is does provide more opportunity than ever. We essentially have to have a few pieces in place to open these. The best music you can make, with a strong identity. An engaged and active online presence. And consistency. Thinking (and doing) outside the box helps too. Its not a dire situation, but the game has changed. The low down is that the demand for new music is as strong as ever, (imagine being stuck with Elvis, or worse, ABBA for the rest of our lives) 🙂 Only a few are motivated enough to make it. Even less are prepared to fight through the noise to secure their place in this vast ecosystem. So, you can see that in the rarefied air of those that align their skills with practicality, vision and unwavering attention to their career will, actually rise to the top. Yes, its one step at time, and its hard for good reason. Our best work and ideal life situation and success will not be handed to any of us on a plate. And it has nothing to do with chasing fame. After all, if people like the Timberlakes in our world can do it..so can we.
They have already mapped out a path!
director of Music Authentic’s Holistic Artist Agency