Posted on 11/11/2008 10:49:19 AM PST by weegee
With many major labels posting significant losses every quarter, Warner Music have decided that enough is enough and as such have decided to require all of their artists to sign the new '360 deal' before working with them.
Whereas previously, labels only got a cut of album sales and related airplay, under the '360 deal' they will entitle themselves to a slice of the merchandise and touring pie. In effect, the band will become a subsidiary company to the record label and be required to declare its earning in every field which the label will then take a cut of. The name likely comes from the fact that no matter where a band turns in degrees, there's someone there with a hand out demanding money.
The reveal came at the Web 2.0 Summit in San Francisco where Warner Music Group CEO Edgar Bronfman Jr. took to the stage for a keynote address.
"Every new artist we sign, we sign now with rights in all their revenue streams: ticketing, touring, merchandising, sponsorship," Bronfman said. “We're only signing artists that way and we now have over a third of our current roster signed to 360 rights.”
It is unclear if bands with existing contracts will be required to sign the new deal. Earlier this year, Creation Records founder Alan McGee, the man responsible for breaking Jesus and Mary Chain, Teenage Fanclub, My Bloody Valentine and Oasis spoke out against the new deals. He has since retired from his management and label positions in the industry. He said:
"Why am I reading about record industry honchos defending 360-degree deals? I find it incredible, this passion to rationalise one's industry's demise.
"The record industry's demand for bands to sign over a portion of their merchandise and tour revenues as part of a recording contract is an admission that selling music is not a sustainable business model.
"I understand survival. I understand business. I understand it is not always win/win as it should be. I understand some lose and some win. But I don't understand raping and pillaging in business.
"Artists have been getting ripped off since the beginning of the marriage of commerce and art. Musicians have been getting the sharp end of the stick since the start of recorded music. You don't have to look far to find a bankrupt or poverty-stricken musician.
"It was trailblazers such as Peter Grant here in the UK and Shep Gordon in the States who fought for artists, winning them a percentage of the door at gigs. They pulled artists out of the slavery of 1970s deals.
"Didn't we all applaud that? Wasn't it great when the Beatles started their own label?
"In a 360-degree deal, this is what the records company is doing: ripping off the door at the gig. Let's call it like it is. Where is the morality in that? The cops would bust someone for stealing at the door. And everyone would applaud.
"So what's going on here?
"It raises the question of legality. If you want a record deal you have to give up money you earn from other endeavours. Isn't this a form of extortion? I hope some attorney gives counsel on this for us all.
"Because music is free and the traditional record industry model obsolete it doesn't give the industry the right to move into the business of promoters and merchandisers.
“What next? Will oil companies own our cars?”
Rock and roll PING.
Is Warner the only game in town?
I doubt this will affect the smaller independents.
The music industry is so filthy. The labels and agents are just pimps. Been there, done that.
They have an enormous back catalogue of classic albums which they do not bother to remaster or rerelease.
Sony Legacy does a great job of getting people to buy deluxe editions of albums they already own - by adding unreleased live albums, hard-to-find b-sides and other goodies to the old albums. Collectors and fans love them and buy them at premium prices.
The Warner back catalogue is so poorly managed that people will pay up to a hundred bucks in the aftermarket for an unremastered, muddy-sounding 1990 CD release from the Warners catalogue.
Does anyone at Warner's stop and think: "Hey, if there are hundreds of people bidding top dollar on an auction site that pays me nothing for a poorly mastered 18 year old CD of an album I control, why don't I just pay a few grand to remaster it and release a deluxe edition at 19.99 a pop?"
Sony is cleaning up - Warners couldn't be bothered.
Recording labels are quickly breaking down as a business model.
Look at the software industy. Pre-internet you had to find a company to distribute your software. Today, there are millions of software companies that create their product in a basement and distribute it via the internet. Now, the number of people becomming zillionaires by selling software has gone down, but the number of people making a decent living selling software is in the zillions.
Bands no longer need record labels to produce music, and they don’t need them to distribute it. The number of mega-bands in the future will probably go down, but the number of bands able to make a decent living will go up.
In the 1990s WEA (Warner Entertainment) bought shares in the majority of small labels. They wanted to be sure to have a piece of whatever the next big thing was.
I've said it before and I'll say it again: why is the music business controlled and staffed by individuals who nothing about either music or business?
Part of the filthiness is due to the stupidity of the musicians, however. A roofer would laugh at the terms of the typical contract that a musician will willingly sign.
Pretty much every contract requires the artist to pay for all of the overhead out of their own pocket with the music company putting nothing at risk.
And the geniuses who run this system of contracts still lose money.
**The music industry is so filthy. The labels and agents are just pimps. Been there, done that.**
Label owes me $$$$$ from the 70’s. will end up costing me double that in legal fees to fight.
I’m seeing bands doing the whole shot themselves. Advertising on NET selling thru Itunes, etc.
Warner can go bankrupt and THEN ROT IN HELL!!
Warner in milking that trend for big dollars. $30-40 for a single CD on Rhino Handmade:
Mailorder only, no stores or distributors to worry about. They get all of the money and be aware they may charge you sales tax even if you are not in california.
The major labels in days gone by were deep pockets, and loud megaphones.
They advanced struggling artists money to get their records made and then they made sure that the records were in stores and got radio play. Maybe they fronted the costs for touring as well.
Assuming an artist can borrow the money elsewhere, it seems to me that they could promote, distribute and tour all by themselves.
If they can’t get the money elsewhere then they’re stuck and they’ll have to sign their life away.
At some point, however, I’m betting the musicians tell the major labels to stick their 360 contracts.
Record companies should be prosecuted for the payola scam they have going with corporate radio.
From the dawn of time to about 1915 there were no mass-produced, readily available music recordings.
So musicians, to live off their music, had two options: selling their compositions for money or playing their compositions or other people's compositions for money.
That was how musicians made money: publishing or performance.
Then, from 1915 to 1975 there was an era in which enormously expensive recording equipment was able to profitably sell affordable recordings.
This technological innovation turned the music business on its head - promoting recordings on radio and selling recordings became the main cash generator for musicians. The way to become a popular musician was to make recordings that were played on the radio and sold in stores. You didn't have to publish and you didn't even have to perform that much - or even at all.
Then, from 1975 until now, the technology required to make an appealing recording got dramatically cheaper thanks to advances in electronics and miniaturization. In 1995, distributed networks became commonplace as well.
So, beginning in roughly 1995 almost anyone could afford to record music and distribute it - the era of unapproachably expensive recording equipment and distribution, which enabled well-capitalized record companies to cartelize the music market - ended.
The future of music is now its past: publishing and performing.
When anyone can record and distribute music using a laptop and a few peripherals, the record industry of 1915-1995 makes no sense.
HA HA! Silly Rabbit, you touch that door money and we’re beating that ass!
Now, go get me a coffee and shut up.
Creation Records founder Alan McGee [said] "The record industry's demand for bands to sign over a portion of their merchandise and tour revenues as part of a recording contract is an admission that selling music is not a sustainable business model.
McGee is right. Warner Music has just signed their own epitaph.
Television was exempted from the payola hearings of the 1960s.
And now Viacom’s MTV owns the Vice label and they are plugging their artists with no disclosure to the home audience.
Then again ABC’s “Good Morning America” pimps parent company’s Disney films with no complaints either.
The industry gave up on music in the 1990s. It’s been all about “celebrity” over talent. Become famous and you can host the MTV movie awards, music awards, remember the 80s, get your face onstage at a presidential rally, etc.
Now the industry wants a cut of the celebrity dollars too. And they can blacklist you from media exposure if you don’t sign over a share of “earnings”.
Payola 2.0.
How many people have ever even heard of Eric Quincy Tate?
You're only ever going to be able to sell 4 or 5 thousand copies of a record like that, and if you pay a good studio to remaster them that's going to cost you ten to fifteen grand spread out over only a few discs.
Clearly they are making a healthy margin - if they have gauged the demand for the recording right (a tricky proposition with stuff this rare).
But why would they only sell a budget unremastered version of Moondance by Van Morrison for $6.99 at outlets when thousands and thousands of American and European fans are paying $30 or more at Amazon Japan for the Japan-only remaster of the album? It's nowhere near as rare and obscure an album as most of the stuff on Handmade.
Sony has shown that they can sell both the budget and the premium remastered version of the same albums in the US and Europe - why hasn't Warners realized this?
I have helped hawk the merchandise for a brother-in-law at some venuses. Big stadium / race track shows pull down some serious bucks. I have worked shows that gross in the $1,000,000 neighborhood. A 15,000 seat venue that I worked would gross between $250,000-$400,000 for a top act.
Those dollars don’t include the tickets for the show. Low overhead and highly over priced items snapped up by a worshiping fan base results in a healthy profit.
Looks like Warner in getting into the game right as this market is drying up too:
Concert souvenir sales vulnerable in recession
http://news.yahoo.com/s/nm/20081111/media_nm/us_merchandise
Billboard Nov 11, 2008
Even if recession-stung music fans continue to pay big bucks to see top touring acts, their free-spending ways won’t necessarily continue once they get to the concert.
That could pose problems for concessions and merchandise sales, a key element of the touring business.
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