Record Labels Looking for a Cut of Tour Revenues 332
Anonymous Coward writes "As many a Slashdotter has pointed out, musicians make their money not from selling records but from going on tour. Now record labels are trying to get a piece of the action. 'Now the music labels, hungry for revenue from any source, are mulling over whether to make a grab for a piece of the tour biz. One company already has: In October EMI Recorded Music signed a deal with Brit singer Robbie Williams that gives the label a cut of the pop star's merchandise, publishing, touring revenue and sponsorship.'"
This is what we've been suggesting they do. (Score:4, Informative)
Total music revenue almost unchanged... (Score:5, Informative)
> While music sales have dropped for three years in a row, from $13 billion to $11.5 billion in
>2002, hurt by Napster-style digital piracy and a lackluster flow of hot new acts, the tour
>business has climbed for four years straight, from $1.3 billion in 1998 to $2.1 billion last year
So in total, money spent on music has gone down from 14.3 to 13.6 billion. A small change in a time of economic uncertainty. I imagine people will always spend a similar amount of money for entertainment, just the patterns of expenditure change. Ripping an MP3 off the net will never compare to a live performance.
Similarly, movie studios don't have to worry. Seeing a decent movie on DivX makes me want to go to the cinema for the proper experience. LOTR, Matrix,
Anyway, the studios should make money where the consumer wants to spend it, and stop whinging when their lack of innovation stops them from earning.
Ponxx
Re:Not surprising (Score:2, Informative)
Labels been getting cuts for a long time... (Score:2, Informative)
Correction (Score:3, Informative)
Correction: As many a misinformed, incorrect Slashdotter etc., etc...
Writing royalties are where artists make the big bucks.
The idea that concerts and touring are the big money-makers is quoted fairly frequently, although it is the fantasy/excuse created and embraced by those who want, want WANT to believe that downloading free music has no ill effect on artists or performers.
Yes, this is a bit of a digression, but let's keep the facts straight.
Another Nail in their coffin (Score:3, Informative)
They will also piss off all the musicians who will no longer join the *AA in the first place.
This is just one more step towards that 'apparent' goal.
Re:Greedheads (Score:2, Informative)
(emphasis added)
Mariah Carey was paid $21 million when she signed with EMI... and another $28 million to walk away. I think that qualifies as "rich." I don't think she has to worry too much about money.
Source: http://www.foxnews.com/story/0,2933,43736,00.html
Once again, Metallica are the trailblazers (Score:5, Informative)
Ten years ago, Metallica's original contract with Elektra (signed in 1984), expired and there was a lot of competition from every label in the business to sign them to a new contract (after all, their untitled 1991 album was well on its way to being one of the bestselling albums of all time, and its predecessors were storming off store shelves). Metallica and Elektra reached an agreement that basically made Metallica completely independent of the RIAA. The arrangement that was reached was the creation of a corporation E/M Ventures, with the four members of the band, their management (Q Prime), Elektra being the sole shareholders (IIRC, the breakdown was something like 22% Lars Ulrich, 22% James Hetfield, 16% Kirk Hammett, 10% Jason Newsted, 15% Q Prime, and 15% Elektra). Elektra transferred the copyrights on all the catalog recordings (1983-1991) to E/M as their investment, along with a record deal that would pay E/M Ventures royalties equal to 50% of the wholesale price (in other words about $4 to %5 per album, or $7 to $8 per double album), with no deductions for anything (all record production and promotion expenses would be handled by E/M). This deal only expires when a simple majority of the voting shares decides to terminate it and buy back Elektra's share.
Elektra basically makes little to no money (apart from their share of E/M's profits) on the sale of a Metallica CD... all costs related to manufacturing and distribution are eaten by them. However, they're making this money with little risk; Metallica can put out basically anything and it will go platinum, simply on the strength of a rabid fan-base (much like Rush's, but probably at least twice the size).
E/M owns all aspects of Metallica's business interests. The tours are done by E/M (or subsidiaries thereof). The merchandising revenues are to E/M. Thus, Elektra gets a cut of all those revenue streams, which are actually even bigger than the recording streams. Elektra also gets a cut of international record sales by Vivendi and Sony. Metallica gets out of this what effectively amounts to total independence from the system. Even if Elektra doesn't want to release something, they're obligated to manufacture and distribute it, otherwise they forfeit their share (for no compensation, through breach of contract).
Re:I Wrote a Contract Tracking System for EMI... (Score:2, Informative)
You only get away with crap like that once.
I hear the standard boilerplate has now evolved to the point where it's the label that gets to decide what counts as a "marketable album" and they base your contract on a certain number of "marketable album".
Hence the whole Prince thing. He wanted to go more experimental, but the record companies weren't having it, and his contract prevented him from putting out anything for anybody else until they got what they wanted.
So much for the "creativity" that the RIAA purports to protect.
Re:Not surprising (Score:3, Informative)
Both sides win because the needs of each side are different. One side needs/wants cash quickly while the other side prefers more cash but is willing to wait for it.
Instead of insurance you might want to think of it like an IPO. You're giving away some of your potential profits in exchange for instant cash; something not easily come by.
TW
Re:Not surprising (Score:3, Informative)
Re:Ask any Slashdotter... (Score:1, Informative)
Or, to put it differently "People who think they know everything really annoy those of us who do know everything".
"Most musicians make more from CDs that sell enough to get past the break-even point (i.e., after the label has recouped its expenses) than they do from touring."
What do you base that on? Certainly not RIAA sales statistics. I would dispute that assertion, just from the experience of myself and my colleagues, many of whom have profitable recordings but still have day jobs to pay the bills. A very few have made a lot from recording; most, however do view a recording as promotional material for their live shows. And most musicians never have a profitable CD. So the "most" you refer to is really a tiny minority of musicians making a living out of playing music.
"Touring expenses are enormous. Living in hotels 200 days out of the year?...Touring for the large majority of acts is a break-even proposition at best."
Only acts selling a lot of CDs have the profile to tour that much (and if they are touring that much without a profitable CD then touring itself must be profitable for them, otherwise they couldn't afford to keep doing it. QED). 200 days a year? Not likely. Most acts will tour perhaps 3 months of a year in total. Besides, touring is only expensive if you decide you want to travel by gold palanquin and stay in caviar-lined hotels. In 15 years of touring (and handling most of the arrangements myself) I have only been on one tour that failed to make a profit (lesson here kids: don't be tempted to do a national tour as a support for a larger act; it probably won't help your profile, and it will cost you big). Most hotel chains will do deals for regulars; any manager who isn't aware of this isn't worth their fee. And, most obviously, keep the horns away from the mini-bar...
"For the rest of the acts on tour, live shows are a means of promoting an album, thus a modest loss is an acceptable cost of doing business. No CD, no tour, unless they can take advantage of the economy of scale afforded by a multi-act tour (like Lollapalooza)."
No, promoting an album is done by media appearances, interviews, music videos and high rotation airplay, which we all know are bought and paid for (that's what the judge said, anyway). If your act is not in that league, you will most likely be selling a handful of CDs at the venue and relying on the performance fee. As has been pointed out (see:http://www.arancidamoeba.com/mrr/problemwithm usic.html which is an article written by Steve Albini, who produced Nirvana), most bands make next to nothing from CD sales, (quote: "1/3 what they would make working at a 7-11" from 250,000 units), so live performances are their primary revenue stream. Personally, after 2 albums and 6 EPs, I left BMG with a debt of nearly $40,000; the band was clearing up to $10,000 a year from touring (after expenses, and paying the musicians and crew a fee per show + per diem. Not a vast amount, but it was a profit. Not many bands can say that). I never saw a cent from CD sales (except royalties, more later); most musicians are in the same situation as me. Large tours like Lollapalooza do not represent any kind of economy of scale for the lesser bands, and can actually blow out tour costs by making them pay for bulk-booked accommodation that is way beyond their budget (I know this from experience:$280/person/night to stay in the same hotel as the Beastie Boys & Helmet, vs $65 at a Best Western? No contest). BTW, a band isn't likely to be booked for Lolapalooza or the like unless they have a CD, or they are a local act added for colour who won't be on the full tour anyway. Don't assume that because little band x are playing in their home town they are on the whole run of shows.
"Touring is an extremely inefficient way of reaching listeners. Four to six weeks in the studio can produce a recording that millions will buy"
I