downloading = disintermediation?

October 19th, 2002

I just watched The New Music on City TV in Toronto. Today’s show was largely about downloading and its effects on the industry. All through the piece it was all about the artists, how downloading affects *their* livelihoods.

I’d be interested to see/hear artists describing their revenue breakdown. How much do they as artists make from the records and royalties? How much do they make from concerts, appearances, merchandise?

My impression from articles and letters from Janis Ian, Courtney Love, and the recent court statements from one of the Backstreet Boys about never receiving royalties is that the artists themselves make very little if anything from the recording industry. The assumption I’d like investigated is that they view the recording industry as a necessary evil that allows them to graduate into revenue streams that actually make it as far as their own pockets – concerts, merchandise.

Assuming that these observations hold true, with professional recording and wide distribution having become reasonably affordable via computers, might it not be true that artists could be far better off in the future producing and distributing their own material for free consumption in order to jumpstart their personal payback of concert and merchandising streams, thus cutting out the RIAA middlemen who seem from many accounts to be taking close to all of the money and exerting all of the control?

This is fairly closely tied to the CARP issue that has effectively shut down internet radio stations, who were also encroaching on the recording industry’s ability to control what is played on increasingly centrally-owned broadcast radio. Both downloading and internet radio are threats to the RIAA et al in that they realize that if enough artists wake up to it, they will realize that completely disintermediating the process will give them direct control over their art, their profits, and their marketing.

It sounds almost too simple. Am I wrong?

2 comments to “downloading = disintermediation?”

  1. I can’t point to any hard numbers, but here’s a primer: Steve Albini’s infamous “The Problem With Music”


    Be sure to scroll down and read the part about the fictitious band. It’s a given that many, many signed artists see little to no royalties from record sales. All of that money advanced to the artist has to be repaid before the artist sees another dime.

    The catch is that record labels hold the keys to mass marketing and distribution, while radio holds the key to even wider exposure. That’s why it’s so much more appealing to a label to “create” an artist, like Christina Aguilera, which can move not only album units but a ton of merchandise: posters, dolls, lunch boxes, etc. Labels are no longer interested in developing a promising act. I don’t know what it’s like in Canada, but in the US, radio consolidation has made it nigh impossible for even major labels to get an artist on the air. The markets are that tightly defined and controlled.

    So the complete disintermediating you mention is indeed too simple and obvious. If it weren’t for the blockages imposed on the channels of distribution by the labels and radio, everyone would have a fair shot at making money, and could do it themselves. But as it stands, the independent artist has to work extra hard to be noticed by a populace that is largely caught in the headlights of the latest “sensation” brought to you courtesy of market saturation.

    Before I get too off-topic, let me bring it back to revenue: yes, the majority of cash is to be made in merchandising. T-shirts and hats and whatnot. If an artist is smart enough to negotiate this with the label, they can make some bank. Maybe. Most artists aren’t that smart. They’re too in awe of the star-making machinery to read the contract. Smart artists own as much as they can: publishing rights, mechanical rights, merchandising, etc. Royalties are a drop in the bucket.

    I too would like to see more numbers on revenue breakdown. I’m sure it would be eye-opening, and help pinpoint exactly how much “damage” illegal file trading is doing to profits. My guess: too small to be of any consequence to the artist that is pulling out all the stops to promote their music.

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