The slides from the CMU:DIY x UD Industry Takeover Seminar called 'Record Labels & Deals' looking at the role record labels play and the deals they do with artists.

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RE:CAP

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HOW DO YOU MAKE MONEY FROM MUSIC?
INTELLECTUAL PROPERTY
LIVE PERFORMANCE
FAN RELATIONSHIP

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MEET THE MUSIC INDUSTRY
THE MUSIC INDUSTRY
MUSIC RIGHTS
Record Label
Merchandiser
Music Publisher
LIVE INDUSTRY
Booking Agent
Promoter
Ticket Agent
FAN BUSINESS
Direct To Fan
Brand Agency

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WHAT DO WE MEAN BY DIY?
 Artist community has talked a lot about ‘DIY’ in the last decade.
 Because digital channels make it easier to distribute and engage.
 And labels sign new artists later – so you have to DIY at the start.
 But we don’t really mean ‘do it yourself’.
 There isn’t time – and you’ll need other talents on your team.

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WHAT’S THE END GAME?
 Some artists see DIY as the end game – they want full control.
 But most DIY artists still ultimately want to get signed.
YOUR CAREER
MANAGEMENT
AGENT
LABEL DISTRIBUTOR
PUBLISHER

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MANAGEMENT
THE MUSIC INDUSTRY
MUSIC RIGHTS
Record Label
Merchandiser
Music Publisher
LIVE INDUSTRY
Booking Agent
Promoter
Ticket Agent
FAN BUSINESS
Direct To Fan
Brand Agency
MANAGEMENT (+ lawyer and accountant)

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RECORD:DEALS

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THE BIG COPYRIGHT DEALS
THE MUSIC INDUSTRY
MANAGEMENT (+ lawyer and accountant)
LIVE INDUSTRY
Booking Agent
Promoter
Ticket Agent
MUSIC RIGHTS
Record Label
Merchandiser
Music Publisher
FAN BUSINESS
Direct To Fan
Brand Agency

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THE BIG COPYRIGHT DEALS: WHY?
£

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NEW TALENT INVESTMENT
 Traditionally look to one or two business partners to provide
upfront investment – especially for new talent.
 Label and publisher traditionally provides this investment.
 Label deals remain key for most new acts.

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LABEL PROVIDES
 Advance.
 Production costs for debut album.
 Marketing costs for debut album.
 Distribution of physical and digital content.
 Rights management.
 Contacts, influence, negotiating power.
 Artist development and support.

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LABEL WANTS
 Investment launches artist, but label makes demands.
 Exclusivity for set period (number of albums).
 Ownership of sound recordings – normally outright.
 Pays royalty – BUT only after recoupment.
 So initially no income from recordings – except 50% of PPL.
 Royalty depends on deal – usually a minority split.
 Label allowed to make future deductions for ongoing costs.

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LABELS GET BAD REP – WHY?
 Investment does not guarantee success.
 Label may interfere artistically to safeguard investment.
 Label may screw up marketing and/or overspend.
 Label and artist may just fall out over time.
 Artist gets no recordings revenue until recouped.
 Artist may have given up best recordings.
 Most record labels ultimately profit drive.

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BUT BASICALLY A GOOD INVESTMENT MODEL...
THE CURRENT BIG THING
NEW
BAND1
NEW
BAND7
NEW
BAND3
NEW
BAND4
NEW
BAND5
NEW
BAND6
NEW
BAND2
NEW
BAND8
NEW
BAND9
NEW
BAND10
FAILS:
MAKES
LOSS
FAILS:
MAKES
LOSS
FAILS:
MAKES
LOSS
FAILS:
MAKES
LOSS
FAILS:
MAKES
LOSS
FAILS:
MAKES
LOSS
BAND
BREAKS
EVEN
BAND
BREAKS
EVEN
BAND
BREAKS
EVEN
THIS
ONE
WORKS!
THE NEXT BIG THING

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NEW TALENT INVESTMENT
 While the artist may not earn hugely from their first recordings -
initially or ever - a label would argue that initial investment helps
launch an artist opening up all the other revenue streams…

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LIVE INDUSTRY
Tickets
Food & Drink
Corporate Gigs
FAN BUSINESS
D2F Sales
Brand Partnerships
MAKING MONEY FROM MUSIC
MUSIC RIGHTS
Recordings
Merchandise
Songs
YOU + YOUR MUSIC

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21ST
CENTURY BLUES – RECORDINGS MAKE LESS MONEY
£

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THE RESULT…
LESS PROFIT
LESS TO INVEST
Labels sign less bands and become more risk averse.
Will look for artists to do more ground-work before investing.
May ask for control and/or cut of other revenues…

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WHAT ELSE?
LIVE INDUSTRY
Tickets
Food & Drink
Corporate Gigs
MUSIC RIGHTS
Recordings
Merchandise
Songs
FAN BUSINESS
D2F Sales
Brand Partnerships
YOU + YOUR MUSIC

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WHAT DOES THIS MEAN?
 Record deals are changing.
 Multi-revenue stream or ‘360 degree’ deals increasingly common.
 What does that mean? What do the deals look like?
 Can deals evolve to benefit artists too?

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BEHIND THE LABEL…
A&R CREATIVE MARKETING
PRESS &
PROMOTIONS
SALES &
DISTRIBUTION
LICENSING
& COMMERCIAL
LEGAL &
BUSINESS
AFFAIRS
BRANDS?
MERCH?
WHAT ELSE?

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