Why sign a record contract?

I remember with little affection the years pre-Napster et al, growing up in a naïve age of music superstars, inspirational icons made for kids to imitate and wannabe musicians to emulate. Such face-value celebrity has arguably ended, and will never return. To many, this was a golden age, late 80’s onwards- where Michael Jackson could hawk Pepsi Cola and have his integrity undiminished, a formative time between industries that would see the record industry, advertisers, filmmakers and musicians collaborating or syndicating their content out on cross-platform endeavours. From this, the celebrity endorsement reached an apex, and the Hollywood blockbuster emerged- star names, released to hype every Summer to get bums on seats, with a sure-to-be-Number-One soundtrack launched simultaneously. To those who worked in the recording industry, you’d never had it so good.

In the business of marketing super-stardom, record labels enjoyed a near-monopoly. I remember the fervent clamour with which young bands chased recording contracts, and the romanticised retellings of this narrative through such Generation X films as Wayne’s World or Bill & Ted. If the process was hard, it was also inevitably rewarding- this was the message the industry gave off- that really, it was a case of filtration, and once you’d signed your first contract- the number one’s, obliging lady friends, suitcases full of cash- would come rolling in.

This, of course, is a bygone era- and you would perhaps forgive those more closely involved with record production and promotion if they regarded it with rose-tinted spectacles, staying awake late at night wistfully remembering how it used to be. As compared, of course, to how it is. For whilst they attempt to claw back some of their relevance, to re-establish themselves as crucial, essential players in the process dividing band and audience- it’s becoming increasingly difficult to articulate how ‘what they do’ could possibly be in anyone’s interest, besides their own.

In 2000, the highest selling album shifted 9.9 million units (N’Sync) and in 2006, a mere 3.9 million (High School Musical). With these statistics indicating a continuing trend, the likelihood that a band will get burdened with a major label’s expenses is more realistic than ever. Why? A record label's main concern is the monetary return on their initial investment (or ‘advance’), but an artist's main passion throughout any negotiations is the quality of the music being produced, and their ability to keep making it- regardless of financial minutae. That is, of course, if you even get signed- with such low returns on investments, record labels are much less inclined to take risks on emerging talent, instead pumping their funds into either established artists (with a proven track record of selling records, playing theatres) or more malleable artists, whom they can fast-track to the spotlight through a process of characterisation and branding.

In this environment, competition for places is paramount; a sense of limited resources being fought over by bands desperate for what spotlight is available. Artists are already forced to compete for the interest of fans; they shouldn't have to compete for that attention within their own record label. As such, unprofitable artists may get dropped at a whim after failing to live up to the record label’s short-term expectations, or have their releases pushed back to accommodate marketing a label’s other, more prioritised releases. How is the record industry responding to these trends, their diminishing necessity? By changing the way they write record contracts.
A 2010 survey found that those who download music illegally spend an average of £77/year on music (including concerts and merchandise) - £33/year more than those who claim they never download music dishonestly. This indicates quite clearly that the emotional value of music remains there for listeners, even if the economic value of the recorded product (album, singles etc) has diminished- and arguably remains a good model for bands to operate under. If you can generate a strong fan base through the quality of your music, then there’s every likelihood that by playing out and connecting with your audience directly, a band can see generate a decent amount of income. On the basis that you can print a t-shirt for less than £2, if you sell 500 of them over the course of a tour at £10 each, that’s a return of £4000 on your outlay.

In traditional agreements- labels recouped their investment through record sales, leaving band’s earnings to be made from touring, merchandise and sponsorship. Now, 360-degree deals are the norm. Warner won’t sign anyone now unless it’s a 360 deal- a package which is more akin to a management deal, whereby the label will take a cut from any future sponsorship, seeding, use of material, touring and merchandise. And while this may remove the need for an ‘immediate hit’, in real terms it means that bands will earn even less, and have less control over their image, presentation and rights. Labels traditionally made money from the process in which they were involved – ie/ recording and distributing records. Is it coincidence that now that recorded music sales are significantly declining, they change their business model? What gives them the right to impede on touring, merchandise, sponsorship or the use of music in films or adverts? How does this benefit either the artist or the audience?

This isn’t the 1980s anymore though, and record labels shouldn’t presume they can operate with such impunity. Similarly, it is the responsibility of artists to challenge this, and exist on a self-sustainable model that is more edifying to both audience and their own career. The benefits of doing so speak for themselves.

1. Maintaining ownership of rights over any/all your produced material and image- In an age of 360 licensing deals, you may have little control over how your material is used, and see little return on that use. Maintaining ownership here can be both artistically intelligent (as you define your public identity) and prudent (as you will own all funds generated by use).

2. Control of cash flow- Rather than being the last to be imbursed (after retailers, distributors, promoters and rights-owners), the band can enjoy a direct relationship with their paying audience and cut out all these middlemen.

3. Success or failure on your own terms - There are lots of ways you can clash creatively with a label, and depending on what kind of deal you have, sometimes the label will win. When you're the one putting out the music, you release the music you want, and only the music you want, when you want to release it. The marketing, the touring - all of the decision will be made by you, so there will be none of the typical conflicts.

These things in mind- we must turn our attention to the third and perhaps most vital part of media reception process, that is to say audience. What motivates an audience to part with their hard-earned cash in respect of recorded music? What generates the notion of fandom, or devotion to a particular cause/band/independent label?
In many respects, the record industry today is like the bottled water industry. You have a product that is widely available for free, and yet remains a market for people who want to pay for it. The question is: what motivates them to pay for something they can easily get for free?

1. Quality- Just as bottled water may come from volcanic riverbeds, or mountain glaciers- so too does a successful album release come at a higher quality that a peer-to-peer downloaded MP3 can allow (ie/ vinyl or a digital download in a lossless format, like FLAC) or it comes in a beautifully crafted box with stunning artwork, as opposed to the overtly mass produced plastic jewel cases. Vinyl sales have reliably shot up nearly 20% year on year for the past 5 years- and this trend shows no signs of abating. Special, limited editions are becoming an increasing norm as well- packaged with exclusive art, remix CDs, full size posters or other exclusive content- engaging the audience with a feeling of privilege, and removing the ‘album’ from this notion of being a mass-produced, faceless product- reeled off with the sole purpose of being sold.

2. Convenience- 2010 is the year that digital record sales equalled with physical formats, after years of increase and decline in either sector. Of these digital sales, over 70% of that will come from iTunes. The iTunes model has proved a success, unlike p2p networks, or the failed digital models set up by labels directly, because it is convenient- providing liner notes, digital artwork, website information, links to tour info and the digital file is trustworthy and easy to transfer between media devices.

3. Ethics- Using conventional, historically prevalent music publishing models- one could argue that there is little in the way of a moral obligation involved in the purchase of music. Labels, having bought up the artists, promoted and distributed the records- were then rewarded for having brought the artist to your attention, rather than for the content of the record. In fact, it’s something of a backhand step: That most people presume a record purchase will further the career of the artist, whereas in truth this is something of a convoluted argument. Whilst notes will be made in that artists’ sales, therefore will encouraging the label to invest further resources in them- the artist receives little or nothing directly as a result of this. As mentioned previously, old arrangements (pre-360) afforded musicians their bread and butter through touring and merchandise. Now, it’s even worse- artists enrolling in what nearly amounts to slavery in exchange for little more than the privilege to record and publish. In this model- can there be any ethical obligation to buying the recordings?

And yet, our notion of moral responsibility prevails. If we are to ascribe emotional value to recordings, do we not also feel obliged to offer financial reward in exchange? The imperative is direction: that the correct source finds themselves rewarded, in this case the artist(s). When musicians can demonstrate a direct causality between this artist creativity and audience response, audiences are much more inclined to part with their cash, and feel justified in doing so.

Production, publication and distribution are no longer elitist industries that record companies have monopolies on. Simply put, they need the bands more than the bands need them: the rise and democratisation of home recording suites, use of communications and social-media technologies allowing for bands to operate on an entirely self-sustainable promotions model, without need for the recording industry conglomerate’s “expertise” or input.