Record Labels Put Out Report Insisting That Record Labels Do, In Fact, Invest In Musicians

from the it-ain't-the-investment... dept

Mon, Mar 15th 2010 5:43am — Mike Masnick

With the debates ongoing over where the music industry is heading, it's been amusing to watch the major record labels try to remain relevant. One talking point they've hit on lately is this idea that record labels are the only ones who invest in artists. So, for example, when we point out that multiple studies have shown that more money is being spent on music today -- just that it's going to other providers, rather than the record labels -- we've heard people come back by saying "but only the record labels invest in artists." Perhaps sensing a valuable talking point (and getting sick of claims from many in the industry that the labels have seriously cut back on investing in new artists), the IFPI has put out a report that basically is the major record labels screaming "hey, look, we do invest in new music!"

But, of course, no one really doubted that the major labels still invested in music, but lots of people are questioning how that money is being spent and what sorts of results they're getting from it. But where it gets funny is that the IFPI tries to use this to prove that labels still have a place, because, apparently, no one else could possibly fund musicians:

"Investing in music is the core mission of record companies," says [IFPI] boss John Kennedy. "No other party can lay claim to a comparable role in the music sector. No other party comes close to the levels of investment committed by record companies to developing, nurturing and promoting talent."

To which we would just add a rather important: yet. The labels still seem to think they have some divine right (or, perhaps it's just a gov't granted monopoly -- the two are so easy to confuse) to be at the center of the music industry.

And, of course, the amount invested, by itself, is not nearly as important as the return on investment. It's easy to throw lots of money away (and having been to more than a few big record label events, I can attest to their ability to throw away vast quantities of money in no time flat). But what most folks are focused on is the actual ROI.

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Filed Under: investment, musicians, record labels

21 Comments

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Josh, 15 Mar 2010 @ 6:37am

Fans
Sp according to the IFPI the money fans spend on music, tickets and merchandise in no way counts as investing in artists? What about the time fans spend promoting the artists and introducing new people who will then go out and spend money? They don't count either?

What a load of crap.
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B Bonn, 15 Mar 2010 @ 6:49am

Government Granted Monopoly
Funny you should use that phrase, "gov't granted monopoly", because up here in Canada, there IS another viable investor into the music industry. Specifically Government grants. Yes, up here in America's hat there are federal and provincial government agencies that offer forgivable loans and outright grants to emerging and established independent artists to fund album production, touring, video production, marketing. If a group has a good business plan of their own, and works hard, all they need to do is apply. Look up FACTOR (the Foundation to Assist Canadian Talent on Recordings) or Canada Council for the Arts, or, in my province, MANITOBA FILM & MUSIC. And there are many more funding bodies country wide. Ah, it's great to live in a socialist state. ;)
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CStrube (profile), 15 Mar 2010 @ 6:49am

Patrons
So basically the IFPI is saying that only they are qualified to be a patron of musicians. This is like the really old model of artisianship, but with the labels as being the only ones who can finance art.
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Anonymous Coward, 15 Mar 2010 @ 7:00am

and it ignores self-funding
recording your own albums, hiring your own practise rooms/garage, buying your own equipment, organising your own gigs. Something that we have always done except now the recording process is free.
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SteveHedberg, 15 Mar 2010 @ 7:14am

I was listening to NPR this weekend and they had an interesting story on Indy musicians, where a musician explained how when he acts as his own label, he is not only a musician, but also a promoter, marketer, distributor, ect, which can take a little bit of the fun out of making music.

I think this kind of touches on what a record label can do and how they do serve a place. Of course, with that said, most major record labels seem more interested in capitalism than music, so there is still a big divide...
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Danny, 15 Mar 2010 @ 7:19am

You know....
"Investing in music is the core mission of record companies," says [IFPI] boss John Kennedy. "No other party can lay claim to a comparable role in the music sector. No other party comes close to the levels of investment committed by record companies to developing, nurturing and promoting talent."
This lines up perfectly with the fact that many of today's top music acts are manufactured by the record industry themselves ratheer than acts that work their way from playing in the garage to the sold out stadiums. They are afraid that if they are not the ones telling music fans what if popular that they will fade into nothingness. Which would not be the case if they could just come to terms with the fact that they are not the center of music universe like they think they are. If they would actually scout decent talent and promote it in a way that actually helps someone other than themselves they would be alright.
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Rob.Etler (profile), 15 Mar 2010 @ 7:32am

Re: You know....
"If they would actually scout decent talent and promote it in a way that actually helps someone other than themselves they would be alright."

But that would be an admission that their way of doing things NOW is the reason why music sucks, which is something the record labels would never, ever do.
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Richard (profile), 15 Mar 2010 @ 7:49am

Re:
Just watched a programme on telly last night about Blur.

Some points from the programme

1. Their initial recording contract was a real bad deal - and they're STILL stuck with it! (The usual - "we just didn't understand at the time what was going on" type stuff)

2. The label exercised total control over their first album - which they really didn't like.

The record labels invest in musicians in the same way that cotton planters used to invest in Africans. No-one else was investring in Africans at the time - but that doesn't mean it was good for the Africans.
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deadzone (profile), 15 Mar 2010 @ 8:04am

!!
Basically, WE ARE STILL RELEVANT! Right?! Not so much recording industry, sorry.
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NAMELESS.ONE, 15 Mar 2010 @ 8:07am

CRIA = RIAA
ya like hte billions they stole form over 300,000 artists in canada, AND WHO is in charge of the levy thats not being paid?
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Steve R. (profile), 15 Mar 2010 @ 8:31am

Investing is a Market Risk
The argument is often made that creating content requires significant investment. The argument is made that without this investment, the content would simply not exist, therefore a degree of "protection" is necessary to foster content creation.

Missing from this is the fact that we live in a free-market(capitalistic) economy. What this means is that when an artistic endeavor pencils out as uneconomic (no matter how great it could be) then it simply should NOT be produced!

Like the newspaper industry, if technology is making an old business model increasingly uneconomic, that is the free-market at work. If you can't adjust to compete, too bad, you are out-of-business.
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Anonymous Coward, 15 Mar 2010 @ 8:36am

"Yet" is appropriate, and over time alternate methods will be developed that will to varying degree serve the administrative functions served today and historically by the record labels. It does, however, seem to me correct that the labels to date remain the predominant provider of administrative functions...no small task given all that needs to be done to take a musical work to market.
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Dan, 15 Mar 2010 @ 8:37am

One hit wonders
Actually, I saw a lot more of this 30 years ago then today.

A band's first album would suck but the label allowed them to perfect their craft and the albums would get better.

Today, the emphasis is on going platinum first time out or you're gone.

That is the reason for so many 'unrecouped' bands. The labels don't want to 'grow' megastars anymore.
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topspeed (profile), 15 Mar 2010 @ 9:10am

But of course they INVEST in new artists
For me, an investment is a gamble of time and/or money in a belief associated with an expectation of future returns, monetary or otherwise. So technically speaking, by signing a new artist, they invest in new music.
The question should be: how much of this investment contributes to the new artist's success and is the administrative overhead actually preventing more investments in talented but not as "mass market" palatable artists?
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Overcast (profile), 15 Mar 2010 @ 9:19am

Didn't Pirate Bay recently put out a reporting insisting that they do, in fact, promote record sales?

I might be mistaken... ;)
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topspeed (profile), 15 Mar 2010 @ 9:22am

Re: Government Granted Monopoly
Interesting you should mention this. Coeur de Pirate (Béatrice Martin) will be in concert at the Olympia in Paris tonight. She has received help from the Canadian government and is now a celebrity in Europe and in French Canada. She is also well known in English Canada, having been on CBC Q3. Disclaimer: I am not a big fan, just a proud Canadian.
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topspeed (profile), 15 Mar 2010 @ 9:58am

Re: CRIA = RIAA
As far as I know, the levy was introduced in 1997 for:
the private copying right (the right to make private copies subject to a levy on blank audio recording media intended to compensate performers, owners of sound recordings and the authors and owners of musical works embodied in those sound recordings for royalties for the resulting loss).
If there is no loss demonstrated, how can they give them any money?
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greg.fenton (profile), 15 Mar 2010 @ 12:12pm

Re: Fans
Or how about the initial investors in the majority of acts: their parents!
Who's garage or basement was used in rehearsal? Who's minivan was the tour bus? Who's $$$ put those instruments in the artists hands?
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corey, 15 Mar 2010 @ 11:23pm

labels wasting money on big parties?
You had me til you said "and i've been to label parties" - and the name of your publication is "tech dirt" -

I have never seen companies waste money more than the majority of tech companies. It's far worse than record labels, except tech companies are spending VC money as opposed to artist money. talk about unnecessary lavish parties...nobody treats money as poorly as the tech industry. At least the majors are trying to remain relevant. Tech companies don't care, they spend millions and millions of investor dollars on ice sculptures at parties, but in the long run, there's no ROI. At least the new music industry is rooted in ROI even with "return" equated to "attention"
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corey, 15 Mar 2010 @ 11:27pm

Re: Re: You know....
music sucks? what? i'm sorry you don't like music today. I do believe however, that you are in the minority.

record labels wouldn't admit error? i disagree, but also have to ask you: why does this even matter? Do you want Beggars Group to apologize to you or to give you more of what you want? as for a real big major, warner bros builds communities for their artists using the drupal platform. Do you care if they admit "error" or if they embrace progress. as a 12 year vet in the music industry, i can tell you with confidence that forcing anyone in this industry to admit error is a grand old waste of time, especially when given the option of embracing progress.
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corey, 15 Mar 2010 @ 11:29pm

Re:
well said. many of the indie labels and strategists are working with artists in the way you describe. if the majors don't want to, more power to the rest of us!
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