The success in the music business today relies entirely on the performer. The progress of the profession relies on the enthusiasm of the artist for music, his or her expertise in the negotiation of company contracts, advertising, distribution history, media relationships, etc. It’s still fine for any artist to work with his or her own business side of the music industry, so as a singer, you want to spend your time writing new music or improving your knowledge and rehearsing with your band instead of worrying about business contracts or advertising.
Ok, so, what should you do? Ok, for one, in the music industry people have a good knowledge of the business end of the world of music, contacts with big label labels, and will market your music as well as maintain your public relations. These individuals are regarded as Artist Management and have played an important part in the launching of the careers of many prominent musical artists. These administrators give a certain amount of the artist’s profits to their services. An individual or band’s legal arrangement is referred to as an artist management deal or band management agreement. A standard deal is for 7 years, although the period can differ based on how the management and the performer perceive each other.
Like in every commercial arrangement, this contract largely covers the percentage received by the manager in exchange for the services rendered. The boss and the performer must be mindful of one crucial condition, dubbed the ‘sunset clause,’ which is normally used in the arrangement with the management of artists. This essentially covers both the boss and the artist’s interests. If the artist chooses not to utilize the Manager’s business and wishes to separate him from the Manager, the Sunset Provision allows the Manager to collect a certain portion of the commission for two years following the separation. The Manager respects the artist’s ability and strives for his artist’s performance. Depending on the performer and manager, the percentage can differ. From the artist’s perspective, this provision encourages the artist to break from the present boss and go on to a stronger management team until his career hits a whole new horizon, without paying the same percentage over 7 years as indicated in the initial deal for the artist management.
What should the music industry learn from the real estate sector?
As I watched the television the other day, the overwhelming amount of forfeitures around the country came up. An interview was made with a few who blamed their plight on their hungry commission agent who offered them an unqualified home, their unscrupulous broker who “creatively” arranged a loan that they were unable to manage to reimburse and their uninformed mates were given bad advice. Basically, they all blamed – including themselves.
It made me think of what the music business might benefit from the immobilizing industry and its comparisons.
Rocket Science music industry, like the real estate industry, is a percentage-based business. Both have their own esoteric vocabulary and focus on a set of rotating characters playing a number of roles. All are motivated by relationships. Both are geared towards the operation of nature. The deductions and hidden expenses that affect prices and earnings are both thriving. And all have ups and downs, of course.
But there is one big difference: nothing occurs in real estate without funding
In the real estate market, the first move when you are thinking about purchasing a house is to locate a creditor who secures the loan to allow a purchase for you. At a moment when recording stars used to covet contract dealings, they did so because a recording agreement was associated with funding.
The main objective of this funding was to meet manufacturing and marketing expenses. Since the rise of the Internet and the subsequent independent campaign (falsely marketed as a response to perceived unjust record labels’ market practice), many musicians would never be given the sort of attention that their contemporaries had received only because they did not have the financial resources to do so.
In brief, a clear and readily accessible means of support for music artists is no longer available. Traditionally Record labels have fulfilled this function, but this changes as musicians search to pursue new sources of finance beyond the recording business (eg, Madonna and her lucrative $120 million contracts with Live Nation). That’s superstar artists.
Besides the financial difficulties, value, understanding, and importance are the key problems of music and the music business.
The mantra is in real estate: build it and it will come with funding to buy it, so it’s not a real transaction at the end; it’s a sound investment that will give potential dividends (in most cases). The same cannot be said about CDs which have just two decent songs out of 10 or 15, by general agreement. That’s considered a poor bet, and iTunes is a decent business opportunity. We also realize that iTunes is not only about the legal purchase of music at present, but about the sale of iPods and the perception for people 15 – 25 (always the goal demographic for the music industry) is that music is accessible. With or without an iPod.