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Originally Posted by Young
I think you're the one who has no clue what you're talking about. The ARTISTS COVER ALL OF THOSE CHARGES. NOT THE RECORD COMPANIES. They just front the money.
Now back to the topic at hand.
The model needs to change. The model WILL change.
20 years ago artists had no other means to distribute their music. So record companies would take chances and put money into distribution and promotion (concerts, videos, etc). IN THE END THE ARTISTS ALWAYS END UP COVERING THOSE CHARGES and usually lose. It's very rare that someone becomes a millionaire off of music. Just take a look at the amount of music that is out there and now create a list of the 100 or so millionaire popstars in the last 10-20 years. VH1's Where Are They Now was a depressing fucking show. As soon as the labels stopped believing in your money making ability you were no longer allowed to make a living off of music. They cut off your distribution.
Today. Artists can distribute music themselves. Making a living off of music (not necessarily a millionaire) can now become a reality. Becoming a millionaire is of course less likely this way. But earning a living off of music is possible.
All it's going to take is the right music discovery platform/service/application/model. There's millions of dollars being poured into this right now for good reason.
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I worked for a record label for about 3 years. Yes, the artists do end up paying the record label back for all the costs of making and promoting the album. The paybacks come from record royalties and most artists never sell enough albums to pay the label back. This is why big name artists demand large advances. They know that once they spend a ton recording the album and then making videos, promoting it, buying ad space, getting it on the radio etc they are going to have to sell millions of copies before they ever pay that back and they likely won't. This way they get the big advance and then they cash in when they go on the road and play concerts and sell merchandise. If they write their own songs they can also earn money from royalties and licensing. It is possible, and often likely, for a big, well-known band to put out an album, hit the road and play to sold out arenas all over the world. They could bring in $50 million dollars from the tour, have a double platinum record with a few huge hits and still be in debt to the record label. However, the publicity that the label was able to generate for them allowed them to make all that money touring and selling merchandise and so on. That is why bands still work with major labels. It is still impossible these days to become a huge star without them.
The internet is leveling the playing field, but there is a problem with it. The reason it doesn't work for most bands/artists is because they are just that - artists. Artists aren't marketers. Most bands have trouble getting dressed in the morning and feeding themselves much less coming up with a marketing plan and putting in the work to carry it out so they don't succeed on their own. There are some that can and do and since you get a bigger slice of the pie you can sell fewer albums and still make some money, but I think what the future holds is something akin to a crowd-sourcing for the music business. If you are in a band you end up recording the album yourself and maybe even hiring a producer. You then end up hiring people who help you establish an online presence and maybe still other people who help promote you. The benefit will be that these will likely be individuals or small firms without a ton of overhead so you can keep costs down instead of having to cover the cost of a huge marketing department from a major corporation. Of course the artists will either need to come up with this money out of pocket or get investors and they will be more likely to do things on the cheap. That could hurt the overall quality of the music they produce. I have always said that the reason you never hear about most bands is because most bands suck. The good bands are going to have to find a way to make themselves stand out and that won't be easy.
All that said, the level of success of internet artists will be capped until they figure out a way to break into mainstream radio or radio finally fades away and is replaced by something else.