by Charlie Doom
Making it in the music business was simple.
You form a band. You write good songs. You get signed by a label to develop and release your songs. The label pays you an advance to record an album they can sell. Album gets distributed. You pay back the advance from your percentage of the proceeds. If you’re lucky, your album sells really well and you go home with a little money. If you’re like most bands, your album sells fairly well and you just go home.
That’s about how the record industry worked for the past 50 years and it don’t work like that no more. Actually, it don’t work at all no more.
The question is whether or not it’ll ever work again. After all, rigor mortis doesn’t go away. By all accounts the industry is desperate for brains, hungrily staggering towards anything that resembles a fresh idea, but it can’t get the soil out of its eyes.
We stumbled across this interesting article from Wired magazine, “What’s Wrong With Music Biz, Per Ultimate Insider.” It features an interview with Tom Silverman, founder of Tommy Boy Records and board member of just about every prominent record label organization. Ol’ Tommyboy seems to have an idea he thinks will bring the industry back from the dead. He also explains why anyone would want to do such a thing.
We don’t know about you, Tommy, but zombie stories don’t usually have happy endings. Best wishes and safe travels.
An excerpt from the interview:
Wired.com: What are your ideas on how to enable risk taking in the music business again?
Silverman: There are two ways to do it, and you have to do both. You have to reduce the risk and increase the reward. The model that looks most promising is to set up an LLC, just like a movie company — they set up an LLC for each movie. Every artist is a business, and has its own corporation under this model, and all of that artist’s creative equity goes into that — not just music, but everything they do. Whether it’s live, or merch, or whatever, their brand goes in there. And the investors who are investing and trying to promote on the other side — they own half. So it’s more like a business. An equity partnership.
The good thing about it is, the artist and label-slash-investor are on the same side of the table. As long as they want to maximize profitability, nobody makes money unless everybody makes money. In that respect, you can’t fuck an artist, because you fuck yourself.
Wired.com: Well, that’s a very different music industry.
Silverman: One of the biggest problems with the old model, which has been going for 50 years, is thinking, “We’re the labels, they’re the artists, and we make money even if they don’t make money. We reduce our risk, they put their blood, sweat and tears into it, and we only give them money when we sign them and when they deliver a new album.”
In between, the only place where they get money is from their booking agent, because they’re touring. They all love their booking agent, because their booking agent gives them a check every month, or every week, and we only give them a check every year and a half when they deliver a new record — and most of that money goes to their lawyer, manager, the taxman, and making the record. Not much of it ever goes in their pocket, and that’s been true for 20 years. Unless they have a five million seller, most of that money goes into that project. Of course they don’t like the labels, because they’re not getting that reinforcement of regular cash flow. They see the labels making money, and them not making money on records.
It’s a silo mentality. If you have your portfolio managed by four different companies — one for your stocks, a different one for your bonds, another one for your real estate investments — there would be no kind of concept about “let’s take money out of bonds right now because of what’s going on and put it into stocks because things are getting ready to explode over there,” or “let’s start to sell real estate because the banks are about to fail” or whatever, and moving things around to maximize profitability. Instead, you’ve got the publisher deal, the label deal, the manager, and maybe there’s a merch deal. They’re not thinking like one entity — they can’t manage the creative portfolio and output to maximize returns. It makes much more sense, if you have a good team, to have it all under one roof. You may decide you want to purposefully lose money on the album so that you can make money in some other area.