Multiple Rights Deals Changing How Record Labels Make Money

Evolving '360' model allows companies to gain more revenue

For labels, signing an artist to this comprehensive deal is not about the instant hit anymore, says Stiffelman, who also teaches music law at the University of California Los Angeles. “Now a manager can say, if we put out an extra single I think I can get my artist on the Black Eyed Peas opening act. Now they’re not limited to how much they can sell, labels are looking at the broader picture.”

But he warns against companies assuming greater control of an artist’s image and brand. Adding that with labels holding a share in much of an act’s deals artists can find their image exploited.

Though Branch is a proponent of the deal (arguing, “If a label invests millions of dollars in an artists and [the label] brings the artist to the world, why can’t [the label benefit from that?”) he says that if a company does not have the proper team in place to develop an artist, than the deal is counterproductive.

Many labels, because of downsizing, are left with less staff, and with one person responsible for several jobs, some are going above and beyond their skill level, he says.  Thus, the onus of marketing and branding can fall heavily on the shoulders of the artist and its personal management team while the label still shares in the profits.

So, where will this new business model taking the industry? In the next five years, Branch sees labels transitioning from music companies to full-service entertainment companies.

“I think we’re going to see companies establish recording divisions, touring divisions and so on, to run these talented people,” he says. “Labels are going to see artists as brands and not just people who can sing or rap really well. The time is right.”

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  • I think this new practice continues a long held tradition of record companies economically exploiting artists.

    You always hear the suits say,”We have to recoup our investments,” and the like. But, record companies thoroughly exploit artists.

    First, the record industry gives you an advance. Second, they give you about 15%-25% of the album. Artists must repay all the expenses before they receive a dime. Think songwriters, studio time, graphic arts, producers, video production,etc. After the artist pays for everything, and after the company has received a more than generous profit, the company retains ownership of the masters. Where is the equity? They use the master to generate future income. Think movie features, new albums and TV commercials. For GOD sakes they still sell Ray Charles’, Elvis’ and Tupac’s music and they’re dead.

    Then, after an artist realizes that they are being exploited and force the company to release them, the real exploitation begins. First, the company demands a huge payout from the new company. So the artist starts in their new situation in massive debt. Then, after the artist gets a buzz going, new marketing and a new album. The old record label then markets and releases a greatest hits album with unreleased music on the same date as the new album. Taking advantage of the resources the new company financed. How can they do this? Because they own the masters that artists finance.

    The only way for artists to make more money is by diversifying i.e (touring,acting, new media, reality shows, sponsorships etc.) Now the companies want a piece of that pie. The music industry is a legal mafia that’s not in the business of enriching artists. Just ask Little Richard, New Edition and many old school acts.

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