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Tuesday, January 08, 2013

2012 My Year In Music

   I did a 2011: My Year In Music post in December of 2011.  In that post I mostly discussed the experience of Dirty Beaches Badlands coming out in March of 2011.  I think the essence of this post is contained in this paragraph:

    After Dirty Beaches, Sweet 17 was named Best New Track, the attention was overwhelming, especially from labels that didn't know that Zoo Music existed. Solicitations included those directed to the label itself regarding who was "putting out" the Badlands LP. Clearly something any "bedroom indie" Label needs to consider immediately on the occasion of any kind of market success is the need to react to the needs of the Artist. If you don't react in some positive way to the increased attention that results from success, you will lose your artist nine times out of ten. Or, as another, wiser person i was talking to put it, "99 times out of a hundred."

   For me, 2012 in music was all about restraint and not doing something that would erase the success of 2011.  It's normal for ambitious people in all walks of life to tie success to being very active, but in my experience, people who are actually successful often spend most of their time not doing stuff that would ruin or compromise the existing sources of their success.

   2012 was also instructive for me in terms of understanding the relationship between a bedroom indie label and a successful artist.   The 50/50 split of profit minus costs "standard" indie business model should mean that an Artist with a selling records gets money in relatively short order.  The dilemma for every indie label is what happens when you have one hit record and then 20 records that are break even or lose money.  In that situation it's very easy for the indie label to "rob Peter to pay Paul."  Avoiding this situation requires restraint on the part of the label by not releasing a ton of break-even records following the release of a successful record.

  This business problem is not a matter of a record label "screwing" an Artist out of royalties on purpose necessarily  it just results from a  business model where only 10 percent of the product line generates revenue.  So let's say Record Label releases 10 records and spends 5-10k per record on physical production- that is going to cost 75,000.  

     Now let's say that 9 of those records break even-  that is revenue of 67,500.  For the tenth record, the revenue is ten times the cost of the record-   75,000.  So for this time period- the outlay is 75,000 and the receipts are 142,000.

      However, the label owes the successful Artist half of all the money above what the record cost- so 75,000 - 7500 /2 = 33,000.  So really, under this very realistic scenario the record label makes 109,000 and spends 75,000 in this initial time period.

  So now move to the next time period- the label is starting with 34,000- less then half of what they need to produce the same amount of music.  In the first time period, successful artist got 33,000- or roughly the amount that Record Label needs to finance their records for time period two.  Now,  Record Labels often figure this out BEFORE they've actually paid the successful Artist their royalties from time period one, and that realization is at the root of all of the very many examples of record labels screwing Artists out of royalties through history

  The only way to avoid this mistake is by reducing your number of releases so that you don't have as many break even records and can afford to pay the successful artist without compromising your ability to continue releasing new records.  I mean, that's what I did . So paradoxically I basically spent 2012 not making new records, or making as few as possible so I wouldn't be caught in the trap that I described above.

 The result of 2011 success was doing less in 2012, but hopefully that restraint will set the table for more activity in 2013- that's my hope anyway.


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