Artists Find Backers as Labels Wane
Published: July 21, 2009
There was a time when most aspiring musicians had the same dream: to sign a deal with a major record label.
Emily Haines of Metric at the Coachella Valley festival in Indio, Calif., last year. Metric, which declined a recording contract, made its own album and offered it in the iTunes store.
From top, the principals of Polyphonic, formed to help rising bands, include the founders Brian Message and Adam Driscoll, and Terry McBride of the management firm Nettwerk.
Now, with the structure of the music business shifting radically, some industry iconoclasts are sidestepping the music giants and inventing new ways for artists to make and market their music — without ever signing a traditional recording contract.
The latest effort comes from Brian Message, manager of the alternative band
Radiohead, which gave away its last album, “In Rainbows,” on the Internet.
His venture, called Polyphonic, which was announced this month, will look to invest a few hundred thousand dollars in new and rising artists who are not signed to record deals and then help them create their own direct links to audiences over the Internet.
“Artists are at the point where they realize going back to the old model doesn’t make any sense,” Mr. Message said.
“There is a hunger for a new way of doing things.”
Polyphonic and similar new ventures are symptomatic of deep shifts in the music business.
The major labels — Sony Music, Warner Music, EMI and Universal Music — no longer have such a firm grip on creating and selling professional music and minting hits with prime placement on the radio.
Much of that has to do with the rise of the Internet as a means of promoting and distributing music.
Physical album sales fell 20 percent, to 362.6 million last year, according to Nielsen, while sales of individual digital tracks rose 27 percent, to 1.07 billion, failing to compensate for the drop.
Mindful of these changes, in the last few years marquee musicians like
Trent Reznor, the
Beastie Boys and Barenaked Ladies have created their own artist-run labels and reaped significant rewards by keeping a larger share of their revenue.
Under the Polyphonic model, bands that receive investments from the firm will operate like start-up companies, recording their own music and choosing outside contractors to handle their publicity, merchandise and touring.
Instead of receiving an advance and then possibly reaping royalties later if they have a hit, musicians will share in all the profits from their music and touring.
In another departure from tradition in the music business, they will also maintain ownership of their own copyrights and master recordings — meaning they and their heirs can keep earning money from their music.
“We are all witnessing major labels starting to shed artists that are hitting only 80,000 or 100,000 unit sales,” said Adam Driscoll, another Polyphonic founder and chief executive of the British media company MAMA Group.
“Do a quick calculation on those sales, with an artist who can tour in multiple cities, and that is a good business.
You can take that as a foundation and build on it.”
The third Polyphonic principal is Terry McBride, founder of the Vancouver-based management firm Nettwerk Music Group and manager of Barenaked Ladies.
The Polyphonic founders, who have provided the company with $20 million in seed financing, say they plan to invest around $300,000 in each band.
The company will then guide musicians and their business managers — who will function a little like the band’s chief executive —
to services like Topspin, which helps manage a band’s online presence, and TuneCore, a company that distributes music to online services like iTunes,
Amazon and Napster.
The partners say they have been thinking about such a venture for several years.
They recently tried to raise money for the company from venture capitalists in Silicon Valley, but met with initial skepticism.
“Returns on entertainment products when portfolios are small are typically very erratic,” said David Pakman, a partner at venture capital firm Venrock,
which passed on the deal. Mr. Pakman doubted that Polyphonic and similar firms could produce the kind of returns on investment that venture firms typically look for.
Polyphonic, which will be based in London and in Nettwerk’s offices in New York and Los Angeles, says it plans to approach private investors again after it has proved its model works.
The new company will have plenty of company in exploring new ways for artists to maintain control over their creations.
Marc Geiger, an agent at William Morris Endeavor, who tried a similar venture in the late 1990s called ArtistDirect, is now developing a program for musicians at his agency that will be called Self Serve.
Mr. Geiger said he was not ready to divulge the details yet, but said that Self Serve would provide tools and financing for artists to create businesses independent of major recording labels.
Even the major labels themselves are demonstrating new flexibility for musicians who do not want to sign the immersive partnerships known as 360 deals, in which the label manages and profits from every part of the artist’s business.
In late November, for example, EMI took the unusual step of creating a music services division to provide an array of services —
like touring and merchandise support — to musicians who were not signed to the label.
“We all know the role that the record label has traditionally played needs to change,” said Ronn Werre, president of EMI’s new division.
“There are artists that want to have more creative control and long-term ownership of their masters, and they may want to take on more of the financial risk.
To be successful we need to have a great deal of flexibility in how we work with artists.”
Artists who have produced their own music and contracted with EMI to run parts of their business include the R&B singer Bobby Valentino and Raekwon, a member of the
Wu-Tang Clan.
Mr. Message said that “there are many artists who still want to go with labels, which do still have abilities to really ram home hit singles.”
Bands who take the Polyphonic route, he said, will need to have considerable entrepreneurial energy.
For example, they might stay after concerts to “go to the merchandise store and sign their shirts and talk to fans, because they know they are right at the heart of their own business,” he said.
Bands that have taken this approach say it can be arduous.
In 2007, after releasing three records with independent labels, Metric, an alternative band from Toronto, finally got several offers from the big record companies.
But the band declined to sign after concluding that the labels were asking for too many rights and not offering enough in return.
With help from a grant from the Canadian government, the band cut its own album in April, “Fantasies,” and started selling it directly to fans on services like iTunes, where it has scaled the popularity charts.
“It certainly has not been easy,” said Matt Drouin, Metric’s manager.
“When I get up at 6 a.m. the British are e-mailing me.
When I go to bed at 2 in the morning the Australians are e-mailing me.
It’s an extremely empowering position, but one hell of an undertaking.”
LBN-THE "INSIDE" STORY-MALAYSIA PART 2:
An Islamic court in Malaysia has sentenced a Muslim woman to be flogged with a rattan cane (example above) for having a beer in a nightclub, a court official said yesterday.
Part-time model Kartika Sari Dewi Shukarno was sentenced to 6 lashes and a fine of about 850 for consuming alcohol, said a Sharia High Court official.
Miss Shukarno pleaded guilty in the court in eastern Pahang state to a charge of drinking beer when Islamic authorities raided a hotel nightclub in August 2008.
Consuming alcohol is a religious offence in Malaysia for Muslims.
Offenders are prosecuted in Sharia courts, which handle cases mainly related to family and moral issues for Muslims.
LBN-MUSIC INSIDER:
***Whitney Houston's new CD, I Look to You, got the star treatment tonight.
Music mogul Clive Davis played nine tracks from the album, due Sept. 1, for an A-list audience at Jazz at Lincoln Center.
When he was done, Houston walked out and got a standing ovation and cheers.
***Due to a combination of factors, including a problematic location, steep rents and mushrooming competition, the Knitting Factory in Hollywood has chosen not to renew its lease and will be going dark by the end of October, confirmed Morgan Margolis, president and CEO of Knitting Factory Entertainment.
LBN-NOTICED: ***Anderson Cooper at the Santa Maria Della Victoire Church in Rome with a muscled, older gentleman, checking out the Bernini sculptures.
***Matt Damon and his wife, Luciana, dining at Da Silvano in NYC.
***Missy Elliott sharing bottles of Cristal with friends over brunch at the Gansevoort Hotel in NYC.
***Gloria Vanderbilt telling model Kiera Chaplin, granddaughter of Charlie and Oona Chaplin,
"You look just like your grandmother. Oona and I were often mistaken for being sisters," at a party for her novel, "Obsession: An Erotic Tale," at Diane von Furstenberg's store in NYC.
***Veteran manager and producer Hilly Elkins having lunch yesterday at McCormick & Schmick in Beverly Hills.
*** Kristen Stewart rocked out at the Joan Jett and the Blackhearts show at the Santa Barbara County Fair in Santa Maria, Calif.
*** The Dancing with the Stars runner-up Gilles Marini was all over his wife Carole at the L*Space by Monica 2010 fashion show in the Cabana Grande at South Beach's Raleigh Hotel.
***
Paris Hilton held court with sister
Nicky Hilton at a VIP table at new club Playhouse Hollywood, while Vanessa Minnillo danced on stage next to DJ Vice.
LBN-HISTORICAL COMMENTARY By MARTIN LUTHER KING: Men often hate each other because they fear each other;
they fear each other because they don't know each other;
they don't know each other because they can not communicate; they can not communicate because they are separated.
(1958)
FEDS RAID DR. CONRAD MURRAY'S OFFICE:We've learned the Houston office of Dr. Conrad Murray is currently being raided by federal authorities ...
and we've learned they are looking specifically for all medical records relating to
Michael Jackson.
We're told 8 Drug Enforcement Agency vehicles arrived at his offices about 30 minutes ago.
Two LAPD detectives also arrived on scene along with uniformed members of the Houston Police Department and 10 members of the DEA's Tactical Diversion Team.
There are another dozen or so DEA agents on hand.
The law enforcement agents, armed with a search warrant, entered the property and began going through the property.
