03 Jun 2011
- Written by Carlee McCullough
Highly complex, the music industry consists of different organizations, businesses and individuals, all now being impacted by ongoing change.
Next week, we feature a table discussion on “The State of the Music Industry.” This week, we set the table with a look a few of the components that many believe contribute to success in the industry.
In Memphis, incredible talent is in almost every church choir and in every neighborhood. However, the industry often refers to the total package as unique talent, looks and swagger. When the total package meets opportunity it literally becomes true music to everyone’s ears. Then the work begins to translate the music into profit.
From blues to rock and from gospel to hip hop, Memphis has been known for a distinctive sound. Gifted and blessed, many of the new producers have been influenced by the greats. Yet they are making their own sounds and marrying them with talent worldwide. This was the path of Nate Walker with Jamie Foxx, Keelyn Ellis with Diddy, and Jazze Pha with Ciara and Ludacris, just to name a few.
Talent and sound are only part of the formula. Appearance is a crucial component to stardom. You never know when talent will meet opportunity. Sometimes it is the appearance that catches the eye before the sound reaches the ear of the rainmaker. So giving time and effort into “the look” is critical.
The artist manager, entertainment lawyer and business manager serve as the core team for the talent. The artist manager oversees all aspects of the talent’s career for a percentage of the talent’s income. The entertainment lawyer creates and reviews all contracts pertaining to the talent’s career, including management, record and merchandising deals. The business manager or accountant provides oversight of financial transactions, taxes and bookkeeping.
Record labels are experiencing some significant effects of changes in the music business. Through mergers, the industry now consists of four major record labels: Sony, EMI, Universal and Warner. Smaller labels and distribution companies feed into the majors.
Agents, promoters & publicists
The agent schedules tours and performances in addition to solidifying deals. The promoter books the talent in certain venues. A publicist generates and manages publicity for the talent. It is important for the public to know the talent exists with music ready, willing and able to perform and sell.
Money is generated from many different sources in the music business. By understanding the source and frequency of revenues, the talent has taken one major step towards protecting its future. Here is a list of some of the various sources of revenue in the industry.
Mechanical royalties from record sales are a significant portion of revenues generated by talent. With the closings of most record stores over the past few years, Wal-Mart and Best Buy sell more music than any other retailer.
Online sales revenue
As sales of physical CDs and records have decreased, online sales have increased. Amazon, iTunes, Rhapsody, and Tune Core are some platforms to place music for digital sales. Ringtones also present an opportunity for revenues.
The sound created in the studio must translate to an interesting stage performance. As record sales suffer, revenues generated from live performances and merchandise has become increasingly important to talent. In these fiscally challenging times, consumers must believe the entertainment will be great for them to part with money. Depending on the potential exposure, larger companies may sponsor a tour as well.
ASCAP, BMI and SESAC are performing rights organizations (PRO), which pays the holders of the copyrights royalties for the public performance of the music.
SoundExchange pays royalties to the sound recording copyright owners and featured artists for non-interactive digital transmissions, which includes satellite and internet radio.
When music is placed in television, film, videogames and commercials, the copyright holders receive fees from synchronization licenses. Although difficult to get placement, synchronization licenses can provide some extra, unexpected income.
Merchandise such as books, T-shirts, hats and cups are popular items that can be branded with the talent’s name and likeness for purchase by fans. Companies such as Cafe Press and Zazzle can provide items without having to maintain inventory on hand.