Apple Seeking Lower Rates With Record Labels as Initial Deals Start Expiring

[macs4nw]

I'd rather see these record labels hammered into the ground and artists sign directly with distribution services like Apple Music where the artist receives 70% cut and Apple receives 30%, similar to the App Store. Right now artists make squat from their own music sales and have to do the exhaustive tour circuit to actually make money. At least in most cases.

The big labels have been greedy money grabbers pretty much since the beginning of recorded music, in the beginning often taking advantage of up-and-coming, young and naive artists by locking them in with long-term, undervalued contracts, not to mention the illegal payola tactics so prominent in the Fifties.

That original music distribution business model has obviously changed drastically with the advent of downloading and streaming, but the labels' greed doesn't seem to have abated. Eliminating the labels, if that was even possible, and going with your 70-30 artist/distributor split scenario would be a radically positive shift for artists.

Heck, even a 50-50 split would be a monumental improvement for them.

 

[jaymie1983]

Someday people will see that the sun doesn't shine out of Apples backside & that the world will. It stop turning without them. Greed will leave them with a boycott on their hands

 

[ginkobiloba]

I'd rather see these record labels hammered into the ground and artists sign directly with distribution services like Apple Music where the artist receives 70% cut and Apple receives 30%, similar to the App Store. Right now artists make squat from their own music sales and have to do the exhaustive tour circuit to actually make money. At least in most cases.

Actually, It's been possible for an artist to sign directly with Apple/iTunes almost since it's exstence. No need to hammer record ompanies to the ground. As a musician i have several albums on iTunes ( also on Amazon, Tidal, and various other digital outlets) without being signed to a record company. And i still pretty much make squat, especially since streaming has started dominating. Now Appe wants to lower it even more...

The reason many artists still sign with record companies is that , despite a certain loss of creative control and much lower revenue shares, some record companies are far better at marketing than what a lone indie artist can do by him/her self. And the signed artist can end up making "more" money than if he distributed direcly with iTunes.
By "more" i mean slightly superior to squat....
[doublepost=1498135613][/doublepost]

The big labels have been greedy money grabbers pretty much since the beginning of recorded music, in the beginning often taking advantage of up-and-coming, young and naive artists by locking them in with long-term, undervalued contracts, not to mention the illegal payola tactics so prominent in the Fifties.

That original music distribution business model has obviously changed drastically with the advent of downloading and streaming, but the labels' greed doesn't seem to have abated. Eliminating the labels, if that was even possible, and going with your 70-30 artist/distributor split scenario would be a radically positive shift for artists.

Heck, even a 50-50 split would be a monumental improvement for them.

It's aleady been possible for more than decade, see my earlier post.

The thing is, going direct with iTunes ( and Amazon, etc) didn't change anything really, except for more creative control i guess. 90% of music is pirated, that's still the core issue. So going direct with 70% of revenue ( as i do), i'm still getting 70% of squat, especially with streaming.

 

[huperniketes]

Label execs need to make less money and labels need to spend less on promotion and give more money to the artists. They also need to find a way to create a business where each artist is profitable. Everyone recording should be profitable even if it's not a big hit.

I don't think this model where a tiny few of the artists feed the whole music industry.

It really is an inefficient model. It's the same one VCs use to fund startups. Magical unicorn blood makes up for all the money lost on funding artists and startups which never make it to hit-makers, let alone one-hit wonders.

 

[macs4nw]

.....The thing is, going direct with iTunes ( and Amazon, etc) didn't change anything really, except for more creative control i guess. 90% of music is pirated, that's still the core issue. So going direct with 70% of revenue ( as i do), i'm still getting 70% of squat, especially with streaming.

Thanks for your insight, so in spite of the better ability of labels to market and promote an artist's music, the more pressing problems preventing the artists from making a decent living without extensive and exhaustive touring, are piracy and streaming?

I hadn't thought of it that way, but that certainly makes sense and also explains why the digital distributors (Apple, Amazon, etc.) are so keen to have us stream rather than purchase our music-- a never ending revenue stream instead of a one time cut-- where they collectively can also keep continuous downward pressure on negotiated streaming contract prices to increase their own earnings at the expense of the artist's well-deserved earnings.

Is it fair to say that ditching labels for direct distribution, from an artist's perspective, is somewhat akin to discovering that the light at the end of the tunnel is the headlight of an oncoming train?

 

[happyprozak]

The whole "record labels are evil" phrase gets repeated a lot but I read that record labels consistently lose money on record deals they cut. They only make money on the artists that make it big.

And that money is what allows new music the chance to be promoted.

If record labels are so evil why do artists try so hard to be signed?

Corporations aren't good guys, they are there to make money and artists do sometimes cut really bad deals but they aren't that much worse than Apple, Microsoft, Google, etc.

Let's also not forget that historically, artists in general did not become rich from their works. That is very much a 20th and 21st century creation.

Don't get me wrong, I do not condone pirating. I have purchased all of my movies, music, and books new unless they were out of print but times have changed.

People do not value music the same way they did a few decades ago. People rarely buy an album and sit there and listen to it critically. Usually people are doing something else, cleaning, driving, cooking, browsing the web, etc.

If we go back hundreds of years, people use to sit around with friends and play live music with each other. There were less forms of entertainment and going to listen to your favorite artist wasn't a thing the way it is now.

 

[petsounds]

Label execs need to make less money and labels need to spend less on promotion and give more money to the artists. They also need to find a way to create a business where each artist is profitable. Everyone recording should be profitable even if it's not a big hit.

I don't think this model where a tiny few of the artists feed the whole music industry.

This sounds like a terrible way to run a creative business. If every artist was required to be profitable, we wouldn't have albums from The Velvet Underground or Nick Drake. There are many bands that never made what was owed in recording costs (both on major labels and on indies), but for those albums to not exist would be a huge cultural loss.

 

[KidAKidB]

If they could negotiate that more of that record company share actually went to the artists, THAT would be a victory.
As it stands. Artists receive 0.000000something%
Unless the revenue distribution is radically challenged, there won't be any new music in the future...

That's not Apple or Spotify's problem though. You act as if a record label doesn't do anything for the artist. Do you realize that record labels LOSE money on the vast majority of the artists they sign and release? They rely on that one huge hit to cover the losses of all there other 80% who lose them money. A record label is an expensive business.
[doublepost=1498941112][/doublepost]

Label execs need to make less money and labels need to spend less on promotion and give more money to the artists. They also need to find a way to create a business where each artist is profitable. Everyone recording should be profitable even if it's not a big hit.

I don't think this model where a tiny few of the artists feed the whole music industry.

Without promotion they don't sell as many albums. Where in the world would they find this magical money to give to the artists if they aren't selling as much?

You speak of utopian ideas, where everyone should be profitable, but that's just not how business works. Record labels lose money on 80% of their releases, they rely on that one big hit to make up the losses for the other 80% they lost money on.
[doublepost=1498941191][/doublepost]

The whole "record labels are evil" phrase gets repeated a lot but I read that record labels consistently lose money on record deals they cut. They only make money on the artists that make it big.

And that money is what allows new music the chance to be promoted.

If record labels are so evil why do artists try so hard to be signed?

Corporations aren't good guys, they are there to make money and artists do sometimes cut really bad deals but they aren't that much worse than Apple, Microsoft, Google, etc.

Let's also not forget that historically, artists in general did not become rich from their works. That is very much a 20th and 21st century creation.

Don't get me wrong, I do not condone pirating. I have purchased all of my movies, music, and books new unless they were out of print but times have changed.

People do not value music the same way they did a few decades ago. People rarely buy an album and sit there and listen to it critically. Usually people are doing something else, cleaning, driving, cooking, browsing the web, etc.

If we go back hundreds of years, people use to sit around with friends and play live music with each other. There were less forms of entertainment and going to listen to your favorite artist wasn't a thing the way it is now.

Record labels are absolutely NO worse than Apple, Google, etc. They're a business and need to make money. People around here like to act as if Apple was some benevolent corporation, as if it doesn't only look out for it's own good...

 

[AdonisSMU]

That's not Apple or Spotify's problem though. You act as if a record label doesn't do anything for the artist. Do you realize that record labels LOSE money on the vast majority of the artists they sign and release? They rely on that one huge hit to cover the losses of all there other 80% who lose them money. A record label is an expensive business.
[doublepost=1498941112][/doublepost]

Without promotion they don't sell as many albums. Where in the world would they find this magical money to give to the artists if they aren't selling as much?

You speak of utopian ideas, where everyone should be profitable, but that's just not how business works. Record labels lose money on 80% of their releases, they rely on that one big hit to make up the losses for the other 80% they lost money on.
[doublepost=1498941191][/doublepost]
Record labels are absolutely NO worse than Apple, Google, etc. They're a business and need to make money. People around here like to act as if Apple was some benevolent corporation, as if it doesn't only look out for it's own good...

They need to find a way to make records profitable and that means everyone making less and promoting less. Songs that are hits arent necessarily profitable. You are assuming that because a song is a hit its profitable and that because a song isnt a hit its not profitable. This may or may not be true. Maybe the song was used in an advertisement or something that more than makes up for the cost to creat the record. The only way labels will become profitable by default is to charge enough to maintain the payouts or scale back the payouts to everyone.

 

[KidAKidB]

They need to find a way to make records profitable and that means everyone making less and promoting less. Songs that are hits arent necessarily profitable. You are assuming that because a song is a hit its profitable and that because a song isnt a hit its not profitable. This may or may not be true. Maybe the song was used in an advertisement or something that more than makes up for the cost to creat the record. The only way labels will become profitable by default is to charge enough to maintain the payouts or scale back the payouts to everyone.

We'll see I know exactly how record labels work considering I spent most of my career working for a major. They lose money on the majority of their releases and they want to charge more but Spotify and Apple, etc all want to pay less. You have to meet in the middle. The issue here isn't record labels not wanting to pay artists more it's that the modern music distribution is favourable to Spotify and streaming services rather than the labels and artists.

 

[happyprozak]

We'll see I know exactly how record labels work considering I spent most of my career working for a major. They lose money on the majority of their releases and they want to charge more but Spotify and Apple, etc all want to pay less. You have to meet in the middle. The issue here isn't record labels not wanting to pay artists more it's that the modern music distribution is favourable to Spotify and streaming services rather than the labels and artists.

From what I've read online, iTunes purchases have a 30/70 revenue split between Apple and the Label/Artist but Apple Music and Spotify have something closer to a 50/50 split and Spotify is losing money.

Do you have any insight on why the revenue is skewed so much more towards streaming services but the largest streaming platform, Spotify, can't generate a positive revenue flow?

I don't recall reading that digital purchases had trouble making money, so what's going on?

 

[AdonisSMU]

We'll see I know exactly how record labels work considering I spent most of my career working for a major. They lose money on the majority of their releases and they want to charge more but Spotify and Apple, etc all want to pay less. You have to meet in the middle. The issue here isn't record labels not wanting to pay artists more it's that the modern music distribution is favourable to Spotify and streaming services rather than the labels and artists.

Artists don't make any money from Spotify and everyone knows that the majority of releases don't break even and even then the record label gets most if not all of that money. The labels need to start pricing records at levels they can turn a profit with or they need to be willing to make artists stick to smaller budgets when creating records. The quality may suffer initially but once they get everyone profitable for the long term everyone will be all the better for it.

Maybe there needs to be a different payout model. Maybe a flat fee goes to the labels on a yearly basis adjusted for inflation. Then Apple/Spotify pay the artists based on the amount of streams garnered. People are only willing to pay $10/month for a streaming service. TBQH Spotify made the grave mistake of pricing its service too low and then having an unlimited free tier. The free tier really should be the $10/month tier with the $20/month tier coming with no ads interspersed throughout.
[doublepost=1499148112][/doublepost]

This sounds like a terrible way to run a creative business. If every artist was required to be profitable, we wouldn't have albums from The Velvet Underground or Nick Drake. There are many bands that never made what was owed in recording costs (both on major labels and on indies), but for those albums to not exist would be a huge cultural loss.

Right now you have a situation where artists are pumping out more material than people are willing to consume. Therefore people are less likely to listen and they simply don't have the time to devote to everything being thrown at them. Music isn't just competing with other music. it is competing with other forms of entertainment. We have to live in the reality of the business. If you can't make any money off of the business you have to stop doing business or in this case maybe not do business at the major label level unless you can sustain it. The artists team needs to run a tight ship and run it as if it were a business on some level. Artists can't continue to operate as if they can keep losing money year over year over year.

 

[happyprozak]

Maybe there needs to be a different payout model. Maybe a flat fee goes to the labels on a yearly basis adjusted for inflation. Then Apple/Spotify pay the artists based on the amount of streams garnered. People are only willing to pay $10/month for a streaming service. TBQH Spotify made the grave mistake of pricing its service too low and then having an unlimited free tier. The free tier really should be the $10/month tier with the $20/month tier coming with no ads interspersed throughout.

You can argue that there shouldn't be an unlimited free tier with ads but $20 per month is completely out of the question. There is only a small minority of people who would be willing to pay that price, a minority who would not be able to support such a business.

Also, people have very low tolerances towards ads when they are paying money. The belief is that if you are paying money that you should not be subjected to ads.

The problem with the current model is that it's too expensive for most people. I read somewhere that the average person spends $5 per month on music and what you need to make subscription services successful is to have more mass appeal.

At $10 these subscription services are too expensive for most people and too cheap for the minority who love music and really get a lot from the services.

I understand one price tier simplies things but the person listening to 120 hours of music a month should not pay the same as the person listening to 15 hours of music a month.

At $10 per month I will continue to buy CD's instead of renting music.