The New Mafia: (Music And Film Independent Artists)

This is part 1 of a 2 part series on music and film and the new indie artists that have taken both by storm, for the good and bad of both industries.

THE NEW MAFIA: MUSIC

In 25 years, the music industry has moved from LPs to CDs to MP3s. But that doesn't begin to describe the utter turmoil the music industry finds itself in. As CD sales plummet and the big labels fret about the Internet, bands are seizing control of the means of distribution, releasing their music as free downloads or throwing it up on social networking sites. This has led to an explosion of indie bands and live performance.

But who's really making any money in music today?

Digital revenue will NEVER make up for the losses in physical revenue, at least not in the career lifetime of any of the executives running these companies, and it’s not just because of the mathematical difference between a $.99 download and an $18.99 CD.

- If a band moves to a major label, it does not necessarily guarantee the band's success. Only about 1 in 10 CDs released by major labels make any profit for the label. It is possible for an artist to make more money producing and promoting their own CDs than signing with a major label. However, an independent label that is creatively productive is not necessarily financially lucrative. Independent labels are often one-or two-person operations with almost no outside assistance and run out of tiny offices. This lack of resources can make it extremely difficult for a band to make revenue from sales. A testament to this could be the fact that since 1991, only twelve independent records have been able to reach the top spot on the Billboard 200 chart; although a few have been able to reach Platinum status in the U.S.

The difference among various independent labels lies with distribution, probably the most important aspect of running a label. A major-label distributed independent label allows the independent label to find, sign, and record their own artists. The independent label has a contract with a major label for promotion and distribution. In some cases, the major label also manufactures and releases the album. Independent labels that are owned by a major label distribute their records through independent distributors but are not purely independent. A purely independent label is not affiliated with a major label in any way. Their records are distributed through independent distributors. - (wikipedia)

Most major label artists earn a 10-15% royalty rate. However, before a band is able to receive any of their royalties, they must clear their label for all of their debts, known as recoupable expenses. These expenses arise from the cost of such things as album packaging and artwork, tour support, and video production. An additional part of the recoupable expenses are the artist's advance. An advance is like a loan. It allows the artist to have money to live and record with until their record is released. However, before they can gain any royalties, the advance must be paid back in full to the record label. Since only the most successful artists recoup production and marketing costs, an unsuccessful artist's debt carries over to their next album, meaning that they see little to no royalties. So the majority of artists signed to a major deal today, never collect one single royalty, because they find themselves stuck in a non-recoupable status.


PAYOLA IN RADIO STILL EXISTS

Although the business model of the radio business has changed as direct result of the change in the music industry, payola, however has not changed. Radio Broadcasting companies now control large blocks of what were formerly independently owned stations. These stations are in turn controlled by corporate boards who send out radio consultants to direct what is programmed on that Broadcasting companies stations.

Payola is still adrift in the business as well, evidenced by record company documents obtained in the investigation of Sony BMG and Warner, both of which have settled with the attorney general, revealed payments for songs that became major hits, including Jennifer Lopez's "I'm Real" and John Mayer's "Daughters."

Other artists whose songs are named in the documents obtained include Jessica Simpson, Celine Dion, Maroon 5, Good Charlotte, Franz Ferdinand, Switchfoot, Michelle Branch and R.E.M.

Last night Simpson's father and manager told ABC News, "All I know is we worked really hard to get the record on and it was as honest as I could be. So whatever happened above us, you know I have no answer for."

Much of the money went directly to corporate bottom lines, unlike payola scandals of previous decades when individual disc jockeys and program directors received the money. People in suits are coming in with documents rather than cash payments under the table to a DJ.

The nine radio conglomerates that have received subpoenas from the attorney general are Clear Channel, Infinity (now CBS Radio), Entercom, Emmis, Citadel, Cumulus, Cox, Pamal and ABC.

The nine companies together control several thousand radio stations across the country. In statements to ABC News, five of the companies said they are cooperating with the attorney general's investigation and take the matter seriously. The other companies did not respond to requests for comment.

So how are indie artists from the new MAFIA going to compete with these broadcasting companies that now dominate radio?

SOLUTIONS

The major labels' fate were in their own hands, and they could have set the learning curve for others to follow, yet their greed and insatiable appetite for profit margins led to them singlehandedly cause the change in the business model of the industry. Their MAPS agreement did more damage than any other single thing that caused the industry to lose revenue over the past decade. The digital revolution was inevitable, however, the file sharing and piracy that has been a direct result of their greed, was due to the MAPS agreement.

Another result of this has been a downward spiral in the quality of music that is now available to the consumer. Now anyone with the means to record, can in just a few short hours, be up and running on the internet, be their own distributor, label, booking agent, manager, publicist, etc., but definitely at the expense of having the ability to know what is good music or what is really bad music.

There really is no one way to determine what solution may work in changing the current business model, and if it will be a good thing or further ruin the industry. There have been numerous ideas from savvy entrepreneurs, but none have been enough to completely turn things around. Most have been after profits just like the major companies were, at the expense of the unknowing artists, who think that by uploading their music to one of these online distributors, that it will bring instant fame and wealth. The truth is that these entrepreneurs are usually the only parties to these agreements that will see any profit, from collecting submission fees and uploading fees from these artists that will probably never break even and will operate at a loss their entire careers.

Consumers really have the ability to demand change, but with all the file sharing that is going on around the world, I think they truly would prefer things to remain as they are. Although artists now control their own destiny and the way their music is shared, distributed and promoted to the public, they ultimately will continue to suffer.

-DJ Giovanni Nsane-

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