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More On Managers Becoming Record Labels

Posted by: Jon Fine on October 26, 2007

Glenn over at worthwhile music-biz blog Coolfer—a guy from whom I’ve pilfered many a notion—jumps off from a column I wrote about managers being the next record labels and takes a deeper dive, finding worthwhile examples of bands and managers who’ve actually gone down that road. He concludes:

The manager-as-label model, though, is another model that should be kept in perspective. It works very well for very successful artists who have the kind of fan base that broad exposure through major labels can offer. It works less well for undeveloped artists. Why? Moving to a manager-run-label requires far less risk for any one artist, which means the more successful artists will get access to that capital. The rich get richer.

Can’t disagree! (Ask the Eagles or their manager Irving Azoff; gazillioniares, all.)

Glenn also writes “the media has gone overboard” on the significance of the Radiohead ruckus. Which I agree with in terms of hype, but not as much when you view their move through a business lens. Other venues have made guesstimates as to how much Radiohead netted from their ploy, but let’s play reallllllly conservative here: If the much-reported figure of 1.2 million downloads went for an average price of $2.50—a pound and twenty five pence, approximately—well, that meant that Radiohead made $3 million in the first few days after In Rainbows’ release. Which is all theirs, too. No advance to pay back to a label; no one to share those funds with at all, really.

It’s hard to see how they would have made as much in the context of being a “signed” band.

And that’s not a small deal. Even if, as I said elsewhere, Radiohead is a rare band that would be able to pull this off in such a resounding way-—big fan base, unusually fanatical fan base, and big media play surrounding everything they do.

Elsewhere, in the Department Of Should Have Seen This One Coming: Radiohead on brink of hooking up with the ATO label to release theur physical CDs. ATO is run by Coran Capshaw, head of Red Light Management and who (as I wrote in the column), and who’s definitely a manager-to-watch in this arena.

Reader Comments

Ike Williams

October 30, 2007 5:52 PM

Just as CD replaced the cassette tape, the CD will be replaced by digital music (once devices like the Ipod and Zune become excepted and accessible by mainstream America). Digital music (and other media), unlike the CD before it, can be purchased via the Internet from anywhere instantaneously. The need for consumers to go in store to purchase music will not exist because digital music can be downloaded from various websites; from to The record companies would be replaced by the artist and their management team. These would be the only pieces needed to negotiate record distribution and revenue deals with each of the online entities they chose to distribute their music through. Digital online record sales would allow artist to target their fans on sites that they frequent, like how behavioral ads are served currently.

The artist in the world of digital music would not need record labels promotional dollars either, this money could come from a variety of different sources. Artist could choose to pitch their services to investors of their choosing to provide financial backing for their projects, just as startup companies do. Promotional funds can also come from partnerships the artist form with advertisers and brands. We have already learned this is a possible and successful option from Jay-Z and his Kingdom Come album. That album had a big marketing push behind it, in which he partnered with everyone from Budweiser to NASCAR. The marketing plan for this album totaled over $30 million dollars, in which Jay-Z was paid for his services.

This new digital model for selling music does not have to wait until the mass public accepts digital music. Artist can actually make the transition from being owned by a record label to independence right now. Popular artist such as Jay-Z and 50 cent who already have the financial means to sustain themselves and a built in fan base (and coming up to the end of their contract) really have no need for a record label. The power and benefits of signing to one of the big record labels start to dwindle considerably as music becomes more and more digital.

Record Label Contracts

March 31, 2009 7:10 AM

Beautiful article with lot of new things.
Thanks for sharing.

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