Record Labels Looking for a Cut of Tour Revenues

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.'"

Who cares?

[SamBeckett]

No one is forcing the artists to sign a contract with record label X-- if they dont like the terms, find another record label who has terms you agree with. If none exist, well you are up the river without a paddle, but Juicy cranberries grandma!

wtf

[Anonymous Coward]

How are the artists expected to make any money at all? This is outrageous. So now when we "do the right thing" by boycotting the RIAA and their overpriced CDs and really support our favourite bands by going to their concerts, even that might not be enough? How is the typical artist supposed to make a living? I have a feeling all of this will come back to haunt the labels eventually. Hopefully sooner rather than later.

Makes sense...

[Sheetrock]

A lot of times, the label is putting a fair chunk of change into promoting the tour, booking the appropriate venues, and getting things done in general. I could see a decent tour costing the same as producing a CD, if not more when they go multinational.

I don't think it's wholly inappropriate. I know we're paying more for CDs than we probably should, but the one has nothing to do with the other.

who needs record labels?

[Pompatus]

At this rate musicians won't even worry about getting signed to a label. A couple friends of mine do quite well playing local gigs. Of course, here in New Orleans, live music is plentiful.

Don't get me wrong, this wont happen anytime soon. I wonder, though, what the threshold is before it pays to stay home and play in your local club.

Was Robbie forced to sign the contract?

[mikeophile]

He was paid $20 million up front for the stake in his non-music revenues.

Record companies are not the nicest people, but the spin on this submission is that they are somehow robbing the artists.

There are enough things to berate the music industry over without having to fabricate injustice that isn't there.

What terms?

[samjam]

If the artists have accountants as good as the record labels they can surely manage to make a "loss" on all the tours after charging "consultancy" and "music services" etc, and having their own highly paid company of roadies, etc.

Give the record labels a taste of their own accounting!

What a crock

[FreeUser]

A lot of times, the label is putting a fair chunk of change into promoting the tour, booking the appropriate venues, and getting things done in general. I could see a decent tour costing the same as producing a CD, if not more when they go multinational.

Um, no.

The record label is putting a great deal of the Band's future earnings into promoting the band, mostly in promoting their CD sales, of which the band will receive $0.25-$0.50 per copy. Any promotion of the band, be it their CDs (the bulk of the promotion) or their tour is all charged to the band. In the end the recording companies, while taking the Lion's share of the CD profits (and now, soon, the touring profits as well), pays absolutely squat for promotion.

Hopefully this new development will encourage more bands to avoid the clutches of the recording industry and market direct, or use non-traditional channels such as mp3.com once was to reach their audiences. With luck this final act of hubris will be enough to kill those parisites dead, something that would be very good for artists and fans alike.

Re:This is all the .mp3 pirates' fault.

[mjmalone]

True... Partly... the problem is the record companies see that they are no longer needed. Their main function was to act as a source of loans and to distribute music. Recording music is no longer expensive, and distribution can be done over the internet. Who needs record companies anymore?

Re:Oh, great.

[whig]

This is not such a bad idea.

More artists should put up a website with a button that lets people contribute to them by the method of their choice, using PayPal (ugh) or whatever.

Even if it's just a buck or two, think of it like a tip jar. You want your favorite artists to be supported, so support them.

as if artists made money on record sales anyway

[son_of_asdf]

This is more foolishness from an industry already rife with fools. 99% of the marjor label artists out there already make nothing off of thier record sales to begin with-even artists that have sold half a million albums generally haven't seen a penny's woth of royalties, via a process called recoupment. Recoupment means that the artist has to make back the money out of thier own royalites that the record label puts up for startup costs, which is everything from the recording sessions, new instruments, new clothes, makeovers, tour support (which is often very little), and various other costs of production. When you consider that a very fortunate artist who has a good lawyer might make 8 cents on the dollar when a CD is sold, you can see that it takes a LOT of record sales for a band to recoup. Meanwhile, the record company is getting the other 92 cents for every dollar, and is still sticking the band with the tab for EVERYTHING, which has to be paid out of that measly 8% or less. Labels rarely provide more than nominal tour support, particularly to thier 2nd tier artists (read as anyone who hasn't gone platinum.) The artist is expected to cover most tour costs via ticket sales and mechandising. To come to the point, for the labels to go dipping thier fingers into the only viable revenue stream that most artists have is only taking the highway robbery that they are committing already and taking it to the next level. Not that we should expect any better, since the majors have behaved like scum for decades, and are not likely to change anytime soon. Just my .02 dollars worth

Re:Was Robbie forced to sign the contract?

[ryanr]

Robbie isn't the problem. The problem is struggling artists, and mking it "normal" for the record companies to take one more source of revenue from them.

No, no one is forcing the artists to sign a contract, but they really have little choice if they want to be professional musicians at this point.

Why sign to a label?

[nerdup]

The most revealing part of the article to me was this:

EMI officials say they are pursuing similar deals with other musicians, both superstars and new acts.

Maybe Celine Dion can afford to have part of her touring revnue taken away, but what about smaller acts who likely walk onto the stage already owing the record company hundreds of thousands of dollars? So now the record companies want to start shaving money off the only place the musicians earn a living? Seriously, how will anyone be able to afford to be a musician?

Re:Who cares?

[barc0001]

Wow. That's good.

Did it ever occur to you that most bands starting out have less ability to dictate terms to a record label than people who are getting their first mortgage have with the bank? It works like this:

(label rep) : Here's our terms. Sign right there and we'll bring you onboard.
(band) : Hang on, we are a little unsure about this point here. Can we alter it?
(label rep) : Truth be told, I came to town to cut a deal with a band. If you don't like these terms, there are 3 other bands I'm talking to that I'd be just as pleased to go with.

At this point, the band either signs a draconian contract agreeing to give away God knows what, or the A&R rep walks and does business with someone else and the first band continues to play at dingy nightclubs ad nauseum. Fair? No. Life? Yes.

More here [arancidamoeba.com] on exactly how that works and how bad the band is screwed.

Re:Not surprising

[digitalunity]

Note:

Robbie Williams is not unknown in the US. He has had several singles released, several music videos made, and many albums sold. We 'mericans just aren't fanatic about him like them european folk.

No it isn't

[daveo0331]

The goal of a corporation is to make as much money as possible for the shareholders. If the record labels think they can make more money by going after the touring revenues, they'll do it, regardless of what is happening on the CD side of the business.

This would be like saying Major League Baseball is charging more for TV rights because ticket sales are down. Believe me, if MLB thinks they can milk more money out of the TV networks, they'll do it no matter how many people go to the games.

Re:Not surprising

[Rosco P. Coltrane]

Is this as bad a deal as it appears? Notice that the guy voluntarily signed - in order for him todo that, they had to offer something that he felt was worth signing

How about "they offer the artist a chance to not have his career shot by reducing his radio air time, making sure they promote other artists better, or making him sign insane contracts ?" Is that worth signing for ? I doubt very much the record industry has genuinely something to offer that artists want to sign for. I'm even quite sure they don't even even have to say "or else" after saying "sign this" to an artist for the artist to comply.

In the '30s, there was a guy in Chicago who offered such "services" to local businesses.

Ipso Facto

[Speare]

A lot of times, the artist is putting a fair chunk of creativity into producing the disc, selecting the appropriate instrumentation, and getting things done in general. I could see a decent disc requiring the same creative effort as performing on stage, if not more when they go multinational.

I don't think it's wholly inappropriate. I know we're paying more for concerts than we probably should, but the one has nothing to do with the other.

(Artists work their ass off to create new music, and get left only a few scraps on the initial sales. They don't retain copyrights, they don't get paid a substantial royalty, they don't see direct income from other artists who sample, they don't see direct income when Muzak destroys their rockin' ballad. The artist says goodbye to the wife for a few months of hauling their equipment from Fuckbum Indiana to Bumfuck Illinois to do a gig at Beerapalooza, which is a promotion in and of itself to entice the fans into donating to BorgUniversalSonyWarnerBMI. I think the artist and crew should get all the cash the ticket sales raise.)

Just the beginning...

[Alizarin Erythrosin]

Soon labels won't sign an artist until they are guarenteed a cut of the tour proceeds, merchandice, etc... stuff that the artists usually took home all the profits on. I guess they figured out that they can't make all that much money by suing college students.

Re:What terms?

[Aadain2001]

But then the RIAA will just blame the complete lack on music sales as overwhelming proof that the online piracy threat is real and that they should be allowed to hack into peoples' computers and blow them up if they feel like it. This would be a bad thing!

Ask any Slashdotter...

[ktakki]

As many a Slashdotter has pointed out, musicians make their money not from selling records but from going on tour.

Just because "many a Slashdotter" has pointed something out doesn't make that statement true.

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. (Note: I said "most" so put your Phish back in your trousers please.)

Touring expenses are enormous. Living in hotels 200 days out of the year? Not cheap, and you still have morgage/rent payments to make on your primary residence. The venue owners take a massive cut of the gate, and a large part of that goes to their expenses (insurance, union labor, security, etc.).

Touring for the large majority of acts is a break-even proposition at best. The exceptions are the Grateful Dead-like acts that can count on people who are willing to see a dozen of their shows every year and those "top-tier" arena acts (U2, Springsteen, Stones, et. al.) who can charge between $75 and $300 for a single seat. And those dinosaurs still make more from a CD (since they have name recognition and the label's not afraid of spending $1M to promote a low-risk release).

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).

Touring is an extremely inefficient way of reaching listeners. Four to six weeks in the studio can produce a recording that millions will buy (and millions more will hear on the radio). To reach a million concert-goers, a band would have to play 50 nights of sold-out hockey rinks (20,000 seats), which with travel time and days off approaches three months on the road.

As for revenue streams, retail sales aren't the only source of income from a recording. There are royalties from airplay (heard any live cuts on the radio lately?), and from soundtrack and commercial uses. I wonder if you asked "any Slashdotter" what a transcription royalty was or the origin of mechanical royalties whether you'd get a correct (or even coherent) answer.

Finally, here's a quite from Robbie Robertson, late of the band The Band about touring:

The road has taken a lot of the great ones...it's a goddamned impossible way of life.

Of course, I don't see what goes on here making a damn bit of difference with respect to the Byzantine construct known as the music industry. Any Slashdotter could tell you that much.

k.

Re:What terms?

[letxa2000]

If the artists have accountants as good as the record labels they can surely manage to make a "loss" on all the tours after charging "consultancy" and "music services" etc, and having their own highly paid company of roadies, etc.

Agreed. And if they can't manage that, well, at that point I hardly feel sorry for the artists. The artists currently get shafted by the RIAA and yet they put up with it, but it's mostly tradition. If I were an artist and the RIAA bow told me, "Hey, not only aren't you going to make any real money off of CDs, we want a piece of your tour money" I'd well and truly tell them to take a flying leap.

I keep wondering when the artists themselves are going to leave the RIAA en masse. It's becoming completely clear that these heavy rockers that preach rebellion are too much sheep to actually follow their own advice.

Re:WRONG

[letxa2000]

Record sales have declined as file sharing has increased. This is certainly a correlation, if not evidence. You will respond by saying "thats because the music sucks"

It might be because the music sucks. It might be because the economy sucks. Many companies would love to have the slightly reduced profits that the RIAA is "suffering" right now.

Or it could be that the product/service that the RIAA has been performing for the last 50 or 60 years is now completely obsolete.

I tend to believe it's the latter. And I believe they realize that and that's why they're looking for this revenue stream. They'll essentially want some percentage of the tour so that the artists get radio play. This will work for the RIAA until the radio industry gets into the same business and cuts RIAA out as an intermediary.

Any way you cut it, the RIAA is obsolete and will be history within 5-10 years, easily. But don't expect it go down without a fight.

Re:I Wrote a Contract Tracking System for EMI...

[Detritus]

You just don't have a devious type of mind.

What if the bar is owned by the VP's brother-in-law? The VP organizes periodic trips of "volunteers" to go to the bar and spend large sums of money, which are reimbursed by the corporation as meal expenses. It's a neat way of sucking money out of the corporation. Better yet, have the corporation charge the expenses against some recording artist's contract. Hey, it was a business meeting to discuss who should be in the artist's next music video.

Re:artificial scarcity versus real scarcity

[bucky0]

Well, unfer your analogy, would it be fair to do this?

The ultra-cool band X is releasing it's highly anticipated album, "Album X". Hundreds of thousands of people wait out in front of the record store at midnight to get the new album. Just before midnight, however a man says that he will sell people burned copies of CD's for $3 a piece. Of the 100,000 people who were sitting outside the store waiting to purchase the CD, 99,000 people chose the burned CD because it's cheaper.

Instead of grossing 100k x
They receive 1k x
Is that fair to the artist or the record store?

Please reply because i'm wanting to understand the logic that went on in your post

Allow me to illuminate

[clambake]

Is this as bad a deal as it appears? Notice that the guy voluntarily signed - in order for him todo that, they had to offer something that he felt was worth signing. Maybe promotional things, perhaps transportation costs, etc.

Hi there, Bob, it's me, Chuck, you know, your RIAA rep? Well, Bob, We at the RIAA would like to offere you a draconian contract to suck a little more blood from the wound, if you know what I mean... How's that sound?

No?

Oh, Bob, I'm sorry to hear that, we'll, I guess we'll just have to go without. Oh yeah, before I forget, there is just one little thing...

Remember that whole "five album deal" we made with you when you signed. Yeah, that one. Yeah, remember how in the fine print, it says you can't work with any other recording company until those deals are done? And remember that clause about how an album can't be released without our approval?

Well, you see Bob, it seems that you've only released three albums so far, so you still owe us two more. Now, the way I see it buddy, You're going to need our approval to get those last two out. Now, I can't speak for the rest of the group, but I like you a lot. However, there are a few of us who are saying.. well, saying that they don't think you've got what it takes to get your last two albums approved.

Yeah? Yeah, that's true, you COULD practice more, but Bob, the thing is, they think you just aren't a team player... I don't think they'd feel you deserve approval even if you were really good. Unless you could show us some of that RIAA team spirit...

Yes, Bob? Oh, no, Bob, without those last two albums, you can't work for ANY label, even your for youself. Nope, can't sing another lyric, legally at least. Ah, we'll I wouldn't advise singing Happy Birthday to your grandmother, see that would be a public performance, and all....

Oh, what's that you say? That draconian contract sounds fine to you after all? Oh, excellent! Oh wait a second, I think the RIAA percentages I quoted you before were off by, say, 20% (darn blurry faxes), but I'll have the revised copy sent to your trailer. Oh, I'm sorry, Bob, the line must be going bad, I could have sworn I heard cursing on the other line... It would be a shame if we had to.. oh, you didn't hear anything you say? Ah, so you agree? Right. 25%. Oh you heard 20%? Ah, that pesky line noise must have interfered... Or did I say 30%? That's a good boy, Bob. Yes you can come over later this afternoon and lick my car clean for me, that would be super.

ciao!

Re:What terms?

[Melantha_Bacchae]

Music is a part of our culture. We shouldn't let the RIAA take that from us.

Instead, we should take music away from the RIAA. The technology for production and promotion is here, today. Make music outside the RIAA, heck, outside any label if you want to. Buy music from indie artists and honest indie labels. Create a new music industry apart from the RIAA and its members, and watch them shrivel and blow away.

It is the artists and the people that must be free.

And the RIAA sharks with their decades of enslaving artists and gouging their customers is evil.

Bells are ringing: Mothra, Mothra! Every heart is calling: Mothra, Mothra!
Come on, Tok Wira, these sharks have gotta pay! New Kirk calling Mothra, we need you today!