BOSTON – Exactly what the record companies of the future might look like was the topic of conversation at the “Next Generation Record Label” panel at the Rethink Music conference here, and the panelists found themselves grappling with the issue just as much as the audience. It goes without saying that the technological advances of the past decade have created enormous challenges for labels already coping with drastic revenue drops.
“We have to show value to artists who say, ‘I can do that myself,'” said Phil Hawken, the COO of ESL Music.
Hawken and Interscope Senior Vice President of A&R Neil Jacobsen said that artists need labels in new ways, now that the old cycle of record/tour/take a year off no longer applies in a world of 24-7 connections with fans.
“We have things we do to build a platform they can launch from,” said Jacobsen.
Jacobsen said labels’ infrastructure is also essential for artists to succeed in the complicated international market, offering Lady Gaga as an example of an artist who broke overseas first.
At the same time, most artists will have to start out on the DIY path: “Labels don’t want to start from scratch with an artist for the most part, they want artists who have a following already,” said Tommy Boy Recorders founder Tom Silverman.
Labels are going to have to lower the barrier to entry, though, if they want to survive in the new media economy, Silverman said. “There’s too many artists that aren’t getting shots now,” he said. “We need to start thinking about ways to take more shots.”
Rich Bengloff, president of A2IM, said that there’s another new model of artist-label relations in the indie world: the true joint venture, 50/50 deals often via standalone corporate structures, where they co-own the masters, “have board meetings together and make decisions together.”
New revenue streams are important even to major labels, Jacobsen said, noting that Beats by Dr. Dre headphones have become a significant business for Universal.
How about a new model for CDs in a world that’s ever more digital? Silverman said that even bands that supposedly go digital-only need CDs to sell at gigs and hand out as promotional items.
“That changes the CD from a revenue generator to a marketing expense,” said Hawken.
A major big topic for the 500 industry insiders who turned out for the conference at the Hynes Convention Center was copyright and compensation. Finding new ways to collect revenue in the digital world is one problem; finding rights owners in an ever-more-decentralized digital world is another. But new models for moving the money face opposition.
“The frustrating thing is, recognizing this is not a battle of ideas but a battle between people who make money under the old system and people who might make money under the new system,” said Harvard Law School Professor Lawrence Lessig.
Participants on the “Alternative Compensation Schemes” panel touted changes underway in Brazil, where major enforcement efforts against piracy have had little effect. A copyright reform effort now playing out there finds artists and others supporting a “sharing license” to be collected by ISPs, essentially a small monthly fee on Internet users that would buy peace in the war on file sharing.
Transparency is key, so consumers paying the fee know what it is and where it’s going, said media researcher Volker Grassmuck, who has studied the issue in Brazil and in Germany. “A new social contract between artists and audiences needs to be negotiated,” he said.
Of course, money collected also has to be paid out to artists and other rights holders, and that’s where collection organizations come in. They have to know whom to pay, though, which is especially difficult in a place like Brazil, where many of the most popular artists rise outside traditional corporate structures. But it’s a problem everywhere, panelists said.
Several panelists called for a new-model registry of rights ownership, whether organized by the World Intellectual Property Organization or a mooted consortium of entities such as Berklee, Harvard, SoundExchange and the National Music Publishers Association.
“Rights unenumerated are rights unrespected,” said Jim Griffin, managing director of OneHouse LLC.