Posted on - December 9, 2003 [at] 9:57 pm by Brad
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Interesting interview with Apple CEO Steve Jobs about iTunes, Apple and the record industry.
I particularly liked his assessment of the current issues in the record industry and conclusion that record contract advances should be done away with:
The remedy is to stop paying advances. The remedy is to go to a gross-revenues deal and tell an artist, “We’ll give you twenty cents on every dollar we get, but we’re not gonna give you an advance. The accounting will be simple: We’re gonna pay you not on profits — we’re gonna pay you off revenues. It’s very simple: The more successful you are, the more you’ll earn. But if you’re not successful, you will not earn a dime. We’ll go ahead and risk some marketing money on you. But if you’re not successful, you’ll make no money. If you are, you’ll make a lot more money.” That’s the way out. That’s the way the rest of the world works.
This has been my pet theory for a while, that this whole system of advancing and recouping seems really dumb given how stupid cheap it’s getting to make a record. Marketing still costs plenty though (and is a pain in the ass) so I think there must still be a role for record labels in there somewhere.
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8 Comments on this post
JB on Steve Jobs Interview in Rolling Stone
December 10, 2003 at 12:02 am
Record labels just seem like big banks to me. Like, when you get a deal with them, you’re getting this huge loan. With that loan you make pay for all the stuff it takes to be a recording/touring musician.
It just so happens that the record company gives you the loan, and then you’re paying the record company for the services they render– they have the marketing staff, they have the record distribution system, they have the people who know how to get you on TV, they have people who know how to get you on tour.
It’s all just numbers on paper. And from what I hear, if you never make back all the money they spent on you, the record labels don’t come after you for it.
I dunno. Seems like making the album is the least part of the expenses involved in getting the songs out to a lot of people, if you do it the old fashioned way.
It also seems like Steve Jobs’ angle is that Apple should get a lot of credit for sticking songs in a database and charging people for them. Some programming work up front, a helluva lot of bandwidth, six people to encode songs, and start counting the money. It’s still up to the artists/labels to make sure people know about your music in order to want to download it for a buck.
Ok I’m rambling.
ken on Steve Jobs Interview in Rolling Stone
December 10, 2003 at 1:54 am
So, let’s see, no advance. So the artist has to pay for the making of the album and keep a day job to pay the rent/mortgage/child support at the same time? Even if all recording costs are paid by the label, the artist still has to eat, and how can they devote all of their time to making a great album if they have to spend 40 hours a week flipping burgers or working at Paine-Webber?
I admit, it is possible. I’m working on a CD and financing my own project and working a full time job. But it certainly slows me down. I would probably be able to put out two albums a year if I didn’t have to worry about anything else. OK, maybe that’s an overstatement, but still. Advances are a necessary part of the equation. Ridiculous advances are another thing.
JB on Steve Jobs Interview in Rolling Stone
December 10, 2003 at 11:35 am
A few months ago I had a silly idea about changing the business model for the recording industry. I wrote it down:
http://www.whyohwhy.net/archives/2003_02.html#000685
victor on Steve Jobs Interview in Rolling Stone
December 10, 2003 at 4:13 pm
> Marketing still costs plenty …a role for record labels in there somewhere.
Marketing at the level you’re talking about (getting a new band off the ground) is always done by the band themselves, usually by heavy touring.
Once the artist “breaks through” they quickly hire their own publicists and the record company contracts out to “independent promoters” for radio bullying.
If there’s a role for record companies I don’t see it here.
blindmime on Steve Jobs Interview in Rolling Stone
December 11, 2003 at 12:36 pm
While it’s true that the initial groundwork for a true indie band is what they make for themselves, it’s rare to find a band that stays indie once they break into the next level (whatever that might be). Almost always they sign on with a major because the relationships they have with all kinds of media are fairly essential and can’t be readily had just by hiring your own publicists and promoters. I’m talking major exposure at this level, but is that really necessary for most bands? I mean, can’t a band make a decent living without selling out to a major? (And I don’t mean that’s necessarily bad ‘cos I do think some artists want the major label trip). Obviously you can, because it’s being done, and there are many former major label stars existing now at a diminished level that are doing quite well without suckling on the proverbial teat.
There are lots of bands who exist quite successfully at some mid-level who do hire out their own marketing work and keep it indie, but they’re not selling millions. And it’s a lot of work. And they’re almost always playing live at least to some extent. I remember interviewing Lee Rocker and he was touring on the weekends and coming home during the week while working his first solo album. He was hiring out a promo group for his promotions which I understand runs several thousand dollars a week even at that mid-level. I think that level is most interesting to me ‘cos it can be done, while making enough money to live comfortably on your music. It seems to be hard getting there without some chance break of some kind, which I guess is what keeps the hope alive for many of us.
JBB on Steve Jobs Interview in Rolling Stone
December 11, 2003 at 1:24 pm
Yeah. Uncertainty is addictive. Check this out: http://www.showaltergroup.com/newsletter/2002_q3/science_behind_rewards_p2.htm
jack on Steve Jobs Interview in Rolling Stone
December 11, 2003 at 7:03 pm
i just want to say this is a really interesting and well thought out discussion. i think JB and blind mime make very valid and true points. i think the more the artist relinquishes artistic control over their music to the label, and this will inevitably happen when the label doesn’t like what the artist is doing and wants to recoup their advance, the more frustrating it will be for the artist in the long run. i’d rather be a frustrated, struggling artist with control over my art/music than just another flave of the month to some A&R hack who has no real interest in seeing me succeed other than as a dollar sign
Brad on Steve Jobs Interview in Rolling Stone
December 11, 2003 at 7:53 pm
Interesting stuff, guys. I definitely agree with Blind Mime re: mid-level fame. There are lots of artists who hardly ever make it onto mainstream radio that manage to scrape out a living and that’s even before factoring in the distribution power of the net. That’s the area that’s most interesting to me personally.
Record labels come in all shapes and sizes. I think there’s a role for record labels just in the fact that doing business and marketing related things is so awful for space cadet art fags like me (and I’m even more interested in that stuff than most artists I know).
I have friends who own or work for small indie record labels and it all seems okay to me. In a perfect situation the artist and the record label are working together to make money, the record label helps organize and finance junk, the artist brings the art to the table and tries not to OD and everyone gets paid for their hard work. If you take the advances out of the picture it seems like it simplifies the symbiotic relationship nicely.