In 2015, is there a future for the entrepreneurial artist manager? – 23/03/2015

Introduction

The battle between creativity and commerce is one that every artist will encounter when they start to attract interest from the public. The resulting commodification of that artists work then has to be dealt with professionally and securely. This is the role of the Artist Manager, to plan strategically in order to best exploit and generate interest in their client/s whilst keeping every single aspect of their careers closely monitored (Harrison, 2014, pp.31-61).

The variety of different business deals and problems encountered by managers has changed vastly over time in an ever shifting industry driven by technological change. Artists are now able to create music themselves without the need for label backing, on modest costs, using readily available yet highly sophisticated equipment. Social Media then allows artists to build a fan base for little or no cost and earn a sustainable wage through online distribution (Evans, 2014).

This situation has led to questions being asked of the value of the artist manager in today’s market, and if business savvy artists need someone behind the scenes pulling the strings. This essay hopes to find the way forward for artist managers in the 21st century in an attempt to find their relevance in today’s industry.

A brief history of Artist Management

Throughout the 20th century, artist managers have been centre stage with people like Malcolm McClaren, and Peter Grant grabbing almost as many headlines as the artists they represented. One of the key figures in this period was manager of The Rolling Stones, Andrew Loog Oldham, who details a shift in management style from the mid-sixties; “In the ’70s, a different kind of manager was required — a hard-nosed money collector. Acts had their own vision. In the ’60s, we provided them with that vision.” (Loog Oldham, 2014)

This could certainly be said of the heavy handed approach by Led Zeppelin’s manager Peter Grant. He became famous for his intimidation tactics towards bootleggers, and his fierce negotiations with promoters leading to a 90/10 split in Led Zeppelin’s favour on tours (Allen, 2014 pp. 31-46).

However, the situationism applied by Malcolm McClaren in the making of The Sex Pistols, that impacted on the whole UK punk scene, was closer in approach to that of the vision led managers of the 60s (Simpson, 2010). The “Svengali” managers of the 1960s were exemplified by London star-maker, Larry Parnes. Parnes took working class youths, dressed them up in flamboyant clothing and had them sing interpretations of American rock’n’roll music under exciting pseudonyms such as “Billy Fury” and “Vince Eager”. The “Svengali” approach to management can still be seen today with the successes of Simon Fuller, which could point toward this management style being a way forward in the contemporary market (stratobuddy, 2010).

The Decline of traditional Record Labels in the 21st century

The decline in revenue from recorded music sales has led to a shift in management priorities as managers feel that their influence extends far beyond their now industry standard 20% commission on the contractually stated areas of Recording, Publishing and Live income (Riches, 2012 pp. 24-28). As the industry moves forward, managers are looking at different ways to earn a living from artist’s successes, especially as manager’s work for the artists and could potentially be fired at any time so need to protect their own interests. One of these ways is to enter joint ventures with prospective artists and start businesses together, instead of just signing a traditional management contract. This would involve co-ownership of any available rights with the artist in question. This may work in some circumstances, but artists should be wary of any such deal, especially when major labels also look to take a share of all available income with 360 degree recording deals (Riches, 2012 pp. 15-17).

In the 21st century, the lines between the services offered by labels and managers will potentially become more blurred. The merger between Cooking Vinyl and Music Manager John Black to create Black Gold management is just one example of how labels and managers are forming partnerships. This particular deal will allow the management company to benefit from the A&R (artist & repertoire) and marketing departments of the label at an early stage but leaves the company free to partner artists with other labels/publishers should they see fit (Music Business Worldwide, 2015).

Simon Napier-Bell sees the role of the manager now as a developer and part A&R man. In an interview with music week, Napier-Bell argues that major labels are still the power players in the music industry holding most of the places in the top 20 in both the USA and UK. He also goes on to say that the way the internet has allowed artists to grow and develop without major label backing is a positive thing for the industry as in his opinion “Artistic development was always better in independent hands, rather than corporate, so it’s actually a big step forwards” (Napier-Bell, 2015). If this is to be the way forward, perhaps the re-evaluation of the management role is fair, as they are becoming more crucial in marketing an artist’s output at the earliest stages of their career. If this relationship is to become the norm however, it is of vital importance that the legal principles are correctly observed. Potential production and/or recording contracts offered by management companies must protect artist’s creative work. They cannot allow managers to “double-dip” by taking a percentage of revenue from a single source twice, once as a manager’s cut and then again as the label/publisher (Riches, 2012 pp. 15-17).

Established artists do now have the ability to bypass the major labels/publishers structures completely, and retain the rights in their compositions and recordings by utilising label services groups such as Kobalt, who have financial backing from tech companies the size of Google [Ingham, 2015]. Jazz Summers proves the importance of the alternatives Kobalt offers as he was able to reduce the percentage taken by a record label on one of his artists live income from 20% to 12.5% through the threat of using Kobalt over a traditional label deal [Summers, 2014]. The transparency offered by Kobalt through the use of data that can track royalty payments over 700,000 revenue streams is a tantalising prospect for the 21st century manager and one that could put him centre stage in his artists career, accounting to them like no record label has previously been able to (Collins, 2015). 

The importance of Brand Creation

In the modern music industry, Patrick Wikstrom proposes the idea that the importance of how people interact with the online world lies in the context and not the content of its services. He states that Spotify’s success is down to “the service’s features and structure are superior to those of its competitors” (Wikstrom, 2013 pp. 177) While this may be the case in the online world, the same arguably cannot be said for one of the music industry’s most entrepreneurial projects of recent years. Tyll Hertsen (2011, quoted by Martin, 2011) declared “Beats” headphones by Dr. Dre as “among the worst you can buy” yet the company’s sale to Apple in 2014 was worth a reported $3 billion (Moore, 2014). This is a perfect example of how a fresh idea by an artist that is branded correctly can make waves in the modern music industry. The product identified a gap in the market for fashionable and high quality headphones to be worn as a statement that people latched onto (Martin, 2011). This same model can be seen when looking at Simon Fuller’s success with The Spice Girls and S Club 7 who was quoted in a 2003 guardian article stating “I reflect what’s out there, and if there’s a demand for something I recognise it.” (Fuller, 2003) Fuller’s success went on and spread into the realm of television with the huge brands of Pop Idol and American Idol and all of these point towards the importance of brand power in today’s industry.

Josh Brandon from Insanity Management believes that when it comes to his artists “the music is secondary, it’s the lifestyle or brand that the artist represents is what people buy into” (Brandon, 2015). Perhaps this is one of the key areas for development and could lead to the widespread adoption of artist-specific subscription services. The mass amount of content and slick “context” of an on-line streaming service like Spotify allows consumers to listen to an incredible amount of music at the touch of a button. The potential for this type of service has been identified by Bandcamp, a platform that allows artists to sell their music direct to fans with no middle man. Their next step of development is to provide acts with a self-managed subscription service, where the artists themselves dictate the price-point and availability of content direct to their fans (Williamson, 2014).

One successful brand that has already capitalised on such a service would be Jack White’s subscription service run through his record label, Third Man Records. Platinum membership to the service entitles the consumer to a quarterly package of vinyl records and bonus items, as well as an exclusive on-line members area where video interviews are held with Jack White and other exclusive content can be downloaded (Third Man Records, 2015). This approach, along with marketing stunts such as recording the world’s fastest vinyl record, liquid filled vinyl records and the release of the 2014 album “Lazaretto” on the gimmick filled “Ultra LP” format resulted in Lazaretto being the fastest selling vinyl LP since records began (Caulfield, 2014)

By taking the wisdom of Simon Fuller and identifying what brand value an artist has and developing that, music managers could still retain their worth in the industry today. This would allow artists to concentrate on their musical output, whilst the managers seek to identify ways for fans to buy into artists as lifestyle choices, not just by purchasing their latest record.

21st Century Technological advancements and opportunities

Technology has always been a force that has dictated change in the music industry and led to new ways of generating revenue. One incredibly innovative way that established artists can generate revenue through streaming is through the placement of retroactive advertisements in the YouTube videos. This new technology means that brands can now place ads in music videos that weren’t there in the first place and is a way that they can ensure their message is seen that will benefit the brand visibility and the artist financially (Newman, 2014). 

The app world is another area of potential development in the 21st century for innovative ways of thinking that could open up a whole new world of possibilities for artists and managers. Bjork’s Biophillia application provided an immersive experience that allowed listeners to actively participate in a visual and aural world they could interact with, rather than just listening passively (Beaumont-Thomas 2014). Although this may not be the right approach for more mainstream pop acts, an application that focused on a specific artist rather than album could be developed for this audience. Managers could look into partnering with tech companies to create artist specific apps that are purchased and subscribed to. In return, exclusive premium content would be unlocked and back catalogue works readily available to stream/download, as well as press, video interviews and regularly updated social media channels.

Because of the changing nature of the industry, what is required for an artist’s success is highly based on social media metrics and online “buzz” in order to entice people to get involved with their creative output (Peckham, 2015). It is through applications like Soundcloud and Bandcamp that music can be shared immediately and for free which is becoming key in establishing an artist’s career early on. Music managers need to look further than just the music-focused apps already available though and encourage their artists to adopt and experiment with other platforms. Video streaming service “Meerkat” could provide a key insight for fans into an artist’s life on the road for example. Partnerships could be struck with this service to stream live shows or live chat/interview sessions could be held with competition winners. The services selling point is the here and now and immediate interaction, as the video is not saved after it is streamed, once it’s over, it’s over (Peckham, 2015). It is through the creative use of new platforms like these to showcase artist’s talents, and the insight provided by management teams that will see acts thrive going forward.

The Live music industry and its importance today

The potential revenue from the live music industry is one of the most immediate ways an emerging artist can make their career sustainable through performance fees, live performance publishing income and intuitive merchandise ideas (Allen, pp. 85-98). It is for this reason that the management team of an artist must identify this quickly and capitalise on it appropriately, whilst being careful not to over expose their act. This means they have to act in the best interest of their client and not of themselves, known as their “Fiduciary Duty”. The stresses of earning a living as an artist can be seen when looking at the Martin-Smith VS Williams case when Robbie Williams decided to leave Take That. Martin-Smith sued Robbie Williams for unpaid commission and Williams argued that he did not have to pay because Martin-smith had failed in his Fiduciary duty to him personally. Williams stated that Martin-Smith advised the rest of the band to sack him, but the rest of Take That and Martin-Smith said Williams left of his own accord. The court found that, Martin-Smith had advised Take That’s members individually to the best of his abilities, the interests of the group as a whole were protected and he therefore did not sack Robbie Williams. Martin-Smith was therefore not in breach of his Fiduciary duties and was paid the unpaid commission from Williams (Harrison, 2014, pp.31-61). Disputes like these still arise today and constant media exposure and touring commitments have led to One Direction star Zayn Malik to be signed off with stress from the bands activity. It would be interesting to see if he takes action against Modest Management (Modest Management, 2015), because he feels they failed in their Fiduciary duty to him (Guardian Music 2015).

One example of an entrepreneurial yet controversial approach to the live music industry can be seen when looking at the secondary ticketing market. The demand for entrance to a live show by a highly successful pop/rock act, who’s audience quantity outnumbers the tickets available, opens up a new potential revenue stream on the free market. Some people are able and prepared to pay a significantly higher price than face value to guarantee entry to a live show and this is what the secondary market provides. Promoters have been able to allocate tickets to secondary resellers and take a cut on the profits. Channel 4’s dispatches documentary stated that 1865 tickets allocated for SJM promotions for a Coldplay show sold for £229,230.51 which is around £123 per ticket and almost double the £65 face value and earned 90% of that mark-up (JustMe STKK 2012). Although this is a way to maximise revenue on live shows in a market where the price is dictated by demand, it is seen as unethical and has been met with calls for transparency by managers. Jon Webster, chief executive of the Music Managers Forum, told the BBC: “It reflects badly, at the end of the day, on the artists – probably more so than anyone.” (BBC, 2012).

This has led to legislation put through in the UK to require the face value, seat number and any applicable restrictions to be stated when put on sale though anonymity of the seller has been upheld (Hanley, 2015). The legislation will still allow promoters and artists to reap the benefit of the secondary market if they choose to do so, but the possibility of bad press could result in managers failing their fiduciary duty to their clients by damaging careers in an attempt to maximise revenue.

For artists that already have a following, the secondary market can be avoided through direct to fan sales platforms like Music Glue (Music Glue, 2015). Through a service like this, the artist and manager can set their own price point for their shows and sell direct to their most passionate fans without booking agencies or promoters getting in the way and taking percentages from the earnings. This empowers artists and managers to have their own live schedule and tour when and where they want through using data collection services and is exemplified by acts the size of Mumford & Sons using these new platforms (Reynolds 2012, pp. 312).

Another successful artist in the live area is Skrillex and Jazz Summers puts him forward as an artist that the industry could learn from; “[he] makes these tracks, puts them out, doesn’t worry about whether they’re on a label or not on a label. Then he does 300 gigs a year for £50,000 a night or whatever it is.” (Summers, 2014) Although this is clearly part exaggeration, it gives an example of a key industry figure identifying a trend that is leading to recorded music becoming a marketing tool for artists to earn money through the live sector. This sentiment is echoed by Adele’s Manager, Jonathan Dickins, as far back as 2008 when he said; “when you’re looking at people who are willing to pay more to see an artist live than they are to buy a CD or download an album then that tells you a lot” (Dickins, 2008).

Conclusion

Recorded music is now readily available for free and some industry figures like Jim Griffin, founder of Choruss music believes that “Sound recording’s economy is now a tip jar.” (Griffin, 2009) Griffin’s failed company believed a way forward could be to bundle in the cost of accessing recorded music at ISP (Internet Service Provider) level but the scheme stalled as it could not get licenses for enough content. (Rosenblatt, 2011) The ‘free’ access to music this would have facilitated, along with the significant stature of legal streaming services like Spotify and YouTube, further ads to the belief that the way forward for artists and managers is shifting. It is no longer through selling significant amounts of recorded music, but through finding innovative ways to license it through alternative media platforms that are not specifically music based, like Facebook and even on-line messaging services like Snapchat (Peckham, 2015)

The role of the contemporary music manager is to work with their artists, identify their target audience, and partner up with the relevant brands, tech companies and marketing teams at the time that is right for them. “The music is secondary, it’s the lifestyle or brand that the artist represents is what people buy into” (Brandon, 2015). If music managers can understand this and create worlds that fans want to engage with all year round, not just in the lead up to another album release, then artists can truly flourish. Technology that allows direct to fan engagement could open up a world of possibilities that would allow fans to be immersed in an artist’s activities like never before. The managers that service their acts fan base innovatively, and deliver content that has enriching cross format appeal, have the potential to provide an immersive and interactive experience that would benefit the entire music industry.

Reference List:

Allen, P. (2014) Artist management for the music business. 2nd edn. Amsterdam: Taylor & Francis.

BBC (2012) Viagogo defends sale of promoter’s tickets. Available at:http://www.bbc.co.uk/news/entertainment-arts-17151727 (Accessed: 23/03/15).

Beaumont-Thomas, B (2014) Bjork’s Biophillia becomes first app in New York’s museum of modern art. Available at: http://www.theguardian.com/music/2014/jun/12/bjork-biophilia-first-app-museum-of-modern-art-new-york (Accessed: 22/03/2015).

Brandon J. (2015) ‘UEL Guest Lecturer.’ Interview with Josh Brandon. Interview by Dave Wibberly for UEL, March, 2015, unpublished

Caulfield, K. (2014) Jack White’s Lazarreto Debut’s at No. 1, sets vinyl sales record. Available at: http://www.billboard.com/articles/news/6121606/jack-white-lazaretto-debuts-billboard-200-sets-vinyl-sales-record(Accessed: 23/03/2015).

Collins, K (2015) Google Ventures bets on music publisher Kobalt in $60 million round. Available at: http://www.wired.co.uk/news/archive/2015-02/27/google-ventures-invests-in-kobalt (Accessed: 23/03/2015).

Dickins, J. (2008) ‘Untitled’. Interview with Jonathon Dickins. Interview by Kimbel Bouwman for Hitquarters.com, 14th July published

Evans, R. (2014) 7 things a Record Deal Teaches you about the Music Industry. Available at:http://www.cracked.com/personal-experiences-1288-7-things-record-deal-teaches-you-about-music-industry.html (Accessed: 22/03/2015).

Fuller, S. (2003) ‘I’m one of the best in the world.’ Interview with Simon Fuller. Interview by Caroline Sullivan for The Guardian, June, 2003, Available at:http://www.theguardian.com/culture/2003/jun/13/artsfeatures(Accessed: 23/03/2015).

Griffin, J. (2009) ‘Keynote at Digital Music Forum East.’ Interview with Jim Griffin. Interview by Bruce Houghton for Hypebot.com, 14th March published Available At:http://www.hypebot.com/hypebot/2009/03/transcript-jim-griffin-of-choruss-keynote-at-digital-music-forum-east.html (Accessed: 23/03/15)

Guardian Music (2015) Zayne Malik ‘signed off’ One Direction world tour to recover from stress. Available at: http://www.theguardian.com/music/2015/mar/19/one-direction-zayn-malik-signed-off-world-tour-stress (Accessed: 23/03/15).

Hanley, J (2015) Revised secondary ticketing laws passed by MPs. Available at:http://www.musicweek.com/news/read/revised-secondary-ticketing-regulations-passed-by-mps/061113 (Accessed: 22/03/2015).

Harrison, A. (2014) Music: the Business: Fully Revised and Updated, Including the Latest Changes to Copyright Law. United Kingdom: Virgin Books.

Ingham, T. (2015) Google Ventures pumps funds into Kobalt, leads $60 million investment round. Available at: http://www.musicbusinessworldwide.com/google-ventures-pumps-investment-into-kobalt/(Accessed: 22/03/2015).

JustMe STKK (2012) Viagogo – the Great ticket Scandal Available at:https://www.youtube.com/watch?v=G0PQIVQVVSI (Accessed: 23/03/15).

Loog Oldham, A. (2014) ‘Andrew Loog Oldham dishes on rock’s biggest movers and shakers’. Interview with Andrew Loog Oldham. Interview by Ken Sharp for Goldmine Magazine, September 2014, Available at: http://www.goldminemag.com/article/andrew-loog-oldham-dishes-musics-biggest-movers-shakers?4qL0410 (Accessed: 22/03/2015).

Martin, A. J. (2011) Beats Headphones with swagger (and lots of bass). Available at:http://www.nytimes.com/2011/11/20/business/beats-headphones-expand-dr-dres-business-world.html?ref=technologyhttp:/&_r=1 (Accessed: 23/03/2015).

Modest Management (2015) Available at: http://www.modestmanagement.com/one-direction(Accessed: 23/03/2015).

Moore, H. (2014) Apple buys Dr. Dre’s Beats for $3bn as company returns to music industry. Available at: http://www.theguardian.com/technology/2014/may/28/apple-buys-beats-dr-dre-music-streaming (Accessed: 22/03/2015).

Music Business Worldwide (2015) Cooking Vinyl Back New UK Artist Management Venture. Available at: http://www.musicbusinessworldwide.com/cooking-vinyl-backs-new-uk-artist-management-venture/ (Accessed: 23/03/15).

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Napier-Bell, S. (2014) ‘The Big Interview Simon Napier-Bell’. Interview with Simon Napier-Bell. Interview by Tom Pakinkis for Musicweek, September 2014, Available at:http://www.simonnapierbell.com/mweekFB.htm (Accessed: 23/03/2015).

Newman, J. (2014) Old Videos, New Ads: Advertising shocking next frontier. Available at:http://www.rollingstone.com/music/features/old-videos-new-ads-advertisings-shocking-next-frontier-20141104 (Accessed: 22/03/2015).

Peckham, E (2015) Envisioning Snapchat’s impact on music. Available at:https://medium.com/@epeckham/envisioning-snapchat-for-music-3a9e9069b41f (Accessed: 23/03/2015).

Peckham, E (2015) The New ‘Meerkat’ App is a win for music. Available at:https://medium.com/cuepoint/the-new-meerkat-app-is-a-win-for-music-a7452a1de2fc (Accessed: 22/03/2015).

Peckham, E (2015) Why Artist’s Managers are taking centre stage. Available at:https://medium.com/cuepoint/why-artist-managers-are-taking-center-stage-4c54f93b1e44 (Accessed: 23/03/2015).

Reynolds, A. (2012) The tour book: how to get your music on the road. 2nd edn. Boston, MA: Delmar Cengage Learning.

Riches, N (2012) The Music Management Bible: 2012. London: Music Sales

Rosenblatt, B (2011) The future of music, from blanket licenses to registries. Available at:http://copyrightandtechnology.com/2011/10/10/the-future-of-music-from-blanket-licensing-to-registries/ (Accessed: 22/03/2015).

Simpson, D. (2010) Malcolm McClaren Obituary. Available at:http://www.theguardian.com/music/2010/apr/09/malcolm-mclaren-obituary (Accessed: 23/03/2015).

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Summers, J. (2014) ‘All That Jazz’. Interview with Jazz Summers. Interview by Tim Ingham for Music Week, 31st January published, Page numbers 15-17.

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Should rights holders be financially compensated under section 28 of the 2014 amendments to the 1988 copyright designs and patents act?

Introduction

As of October 1st 2014, amendments to the 1988 Copyright Designs and Patents Act came into place. The changes were implemented in order to bring the act in-line with technological advancements and therefore, avoid stifling creative innovation in the 21stcentury [Newton, J. and Smith. H 2014]. One of the main changes to the act has allowed for the private and/or temporary copying of copyrighted works without infringement, which is a progression that the UK music industry as a whole has mostly welcomed. However, UK music industry bodies such as The Musicians’ Union (MU), The British Academy of Songwriters, Composers and Authors (BASCA) and UK Music have launched a judicial review challenging this alteration. They believe that this change is in violation of European Law, which states that copyright holders should be financially compensated if private copying is legalised [UK Music, 2015].

This essay will look at whether the amendment further devalues intellectual property in today’s world, or if it is simply updating old laws to keep pace with modern societal norms. Both sides of the argument will be analysed in an attempt to decide whether rights holders have a claim to compensation from legalised private copying, and what the outcome would mean for the wider music industry.

Format Shifting & Cloud Locker Services

Up until the change in copyright law in October 2014, the process of ‘Format Shifting’, taking music from a legally purchased CD and putting it on a computer or portable music player, was illegal. Because of this being general practice and widely used by the public yet against the law, the music industry was in support of rectifying this situation. As a side note, this seems like a far cry from the 1980’s where ‘Format Shifting’ from Vinyl to Cassette was ‘killing the music industry’, and that was without the internet and file sharing sites [Rogers, J. 2013]. However, in order to ‘format shift’ it is necessary to create another copy of the copyrighted material in question, something which only the copyright owner is allowed to do. Therefore a license needs to be granted and where a license has to be granted, financial compensation is due. This can be seen when mechanical royalties are paid in the manufacture of CDs [PRS for Music, 2015]. Allowing ‘Format Shifting’ to take place without any money going to rights holders could potentially have very negative implications on the wider music industry. This is proven when looking at 22 out of 27 EU member states who all do pay a financial levy through to rights holders through various methods from country to country, either on blank media, MP3 players, printers or personal computers [Kretschmer, M. 2011]. Without this levy, the French composers’ society overall revenue would be down 7 per cent, a significant amount at a time where songwriters revenue streams are being spread ever thinner [Orlowski, A. 2012]

Another sizeable problem about a lack of financial levy would be apparent when looking at cloud locker services. These services allow consumers to have access to their own music collection in a private locker stored on the internet, as well as being able to stream thousands of other recordings from that same location [Macmanus, R. 2011]. The changes to the act allow only individuals to make private and/or temporary copies, and says nothing about service providers or institutions. Therefore, an unlicensed service provider creating copies of music files on their servers would be an infringement of the act, even though the change in law is meant to aid the use and development of these services [Ballard, T. 2011]. This is problematic due to rights holders already having licensing deals in place to provide cloud locker services. If it is deemed that service providers are also exempt because of the fair use policy, it would not only jeopardise already existing deals, but could potentially negate the need for any future licensing to take place, thus resulting in a loss in revenue for the rights holders [Ingham, T. 2012]. 

The Ian Hargreaves Report

The report that signalled the first signs of these amendments being made was produced by Ian Hargreaves in May 2011 and recommended that an allowance for private copying be implemented to bring UK law into line with EU law. It stated that most EU member states had a levy scheme in place to compensate for this free use but also went on to say that due to the lack of consistency throughout the countries enforcing a levy payment, there was no economic argument for a similar system. The report enforced this stance by quoting the lack of evidence of harm done to rights holders through private copying as this was the normal use of most personal media devices [Hargreaves. I 2011].

Further on in the report, a point is made about a CD player with a built in storage device that enabled people to carry their entire collection with them. Because of UK law at the time, the advertisement had to carry the notice that by using the product, that user would be infringing copyright. This could be seen as a needless barrier to technological progress, and so the review proposed law that would reflect what consumers were already doing in this respect. However, it could be argued that the same principles could be applied to ‘Peer to Peer’ (P2P) file sharing websites, such as the recently taken down ‘Pirate Bay’ [Gibbs, S.(2014]. By using the aforementioned CD player as the example, P2P websites are only providing a consumer with a service or product, and it is up to the consumer to use that service or product within the confines of the law [Hargreaves. I 2011].

The report went on to further highlight that because the music industry was aware of ‘Format Shifting’, it would have already anticipated it. Therefore, it would be expected that the resulting revenue alteration would be factored into its pricing strategies already, negating the need for a levy system [Hargreaves. I 2011] On the other hand, Ann Harrison argues that technological advancements have forced the music industry into accepting price points dictated to them by large technological companies. This means that artists and labels are being backed into a corner, both by tech companies pricing strategies and government legislation providing no support from a levy legislation [Harrison. A 2014]

The Padawan v SGAE & Copydan Båndkopi (C-463/12) cases and what their outcomes could mean for UK law

One relevant case that dealt with the levy system was between a Spanish distributor of copying devices ‘Padawan’ and the Spanish levy collection society SGAE. Padawan refused to pay the levy charge on what they felt was a discriminatory system because the levy did not differentiate between private and company purchases [Guibault, L. 2013] It was therefore decided that when the charge is applied to anything capable of digital reproduction, even in cases where it is clear the equipment is being used to perform tasks completely unrelated to private copying, the law is unenforceable and payment should not be made. This decision lead to distinctions having to be made between devices sold to individuals and those sold to organisations and that a levy should not be placed upon devices purchased by companies. More importantly, it was also decided that it could be assumed that through an individual purchasing a device, they were going to use that device in order to make personal copies of files, hence the need for a levy at individual consumer level [Bonadio, E. 2010].

This outcome is particularly interesting when looking at the decisions Danish courts made in the Copydan Båndkopi (C-463/12) case that considered the use of the ‘de minimis harm’ (minimal importance) principle [Wolfe, L. 2015]. This case focused on mobile phones and memory cards as storage devices, and whether or not it could be assumed (like in the Padawan ruling) that private copying was taking place on the devices. The court decided that the compensation paid to rights holders must reflect the harm done to them, and that a legally obtained work being privately copied does not necessarily require fair compensation due to the small amount of harm done. This is because EU member states have significant power to apply or exclude compensation in situations of minimal harm to rights holders [Edwards, S. and Swimmer, N. 2014].

This shows that the amendments made to the act are within the confines of European law and so it is highly unlikely that a levy scheme will be put in place in order to compensate rights holders [Kostovo. N 2014]. The UK’s further reasoning for this decision is “on the basis that it is likely to have adverse impacts on growth and inconsistent with its wider policy on tax” [IP Federation 2012].

Conclusion, should fair compensation be given to rights holders?

Due to 22 out of 27 EU member states offering a levy system (albeit arguably flawed) it could be argued that not offering a similar compensation scheme is against the norm. Although due to the findings in both the Padawn and Copydan Båndkopi cases, perhaps it’s only a matter of time until EU countries withdraw the levy system in their territories. However, is there really only minimal harm done to rights holders in ‘Format Shifting’? Research has shown that the ability to copy a CD to a portable music device is worth 44% of the value of a basic MP3 player, that’s almost half the reason they are purchased [Oliver & Ohlbaum Associates, 2012]. If the general public value this process so highly and it is a societal norm, it is hard to see how it is not harming rights holders and that relative compensation should be paid. In a time where sales figures of recorded music are falling, the industry as a whole needs to adapt to the shift in revenue streams. Without the private copying revenue stream that is clearly valued so highly by consumers, creators stand to lose out on funds that could be integral to their continued creative expression. This could potentially be very harmful to the whole UK music industry, and the acts it prides itself in producing [Musicians Union, 2014].

Reference List

Ballard, T. (2011) Cloud Services and the private copying exception Available at:http://www.harbottle.com/cloud-services-private-copying-exception (Accessed: 06/01/15).

Bonadio, E. (2010) Fair Compensation and Private Copying Levy: ECJ stance in Padawan VS SGAE Available at: http://www.medialaws.eu/fair-compensation-and-private-copying-levy-the-ecj-takes-its-stance-in-padawan-v-sgae/ (Accessed: 06/01/15).

Edwards, S. and Swimmer, N. (2014) The New Private Copying Exception: The UK Music Industry Wants to Be Paid for It Available at: http://www.reedsmith.com/The-New-Private-Copying-Exception-The-UK-Music-Industry-Wants-to-be-Paid-for-It-12-15-2014/(Accessed: 06/01/15).

Gibbs, S. (2014) Swedish Police Raid Sinks the Pirate Bay Available at:http://www.theguardian.com/technology/2014/dec/10/swedish-police-raid-pirate-bay (Accessed: 06/01/15).

Guibault, L. (2013) Private Copying Levy: The Aftershocks of Padawan Available at:http://kluwercopyrightblog.com/2013/09/17/private-copying-levy-the-aftershocks-of-padawan/ (Accessed: 06/01/15)

Hargreaves. I (2011) Digital Opportunity A Review of Intellectual Property and Growth. Place of publication: Available at:http://webarchive.nationalarchives.gov.uk/20140603093549/http://www.ipo.gov.uk/ipreview-finalreport.pdf (Accessed: 06/01/15).

Harrison, A., 2014. Music – the business: the essential guide to the law and the deals 6thedition London: Ebury Publishing

Ingham, T. (2012) PRS Licenses Google Play In Europe Available at:http://www.musicweek.com/news/read/prs-licences-google-play-in-europe/052535 (Accessed: 06/01/15).

IP Federation (2012) Court Of Justice Case C-463/12 (Copydan Bandkopi) Available at:www.ipfederation.com/document_download.php?id=1364 (Accessed: 06/01/15)

Kostovo. N (2014) The Private Copying Exemption is here… To Stay? Available at:http://blogs.sps.ed.ac.uk/copyrightandcreators/2014/11/27/the-private-copying-exception-fit-for-purpose/ (Accessed: 06/01/15).

Kretschmer, M. (2011) Private Copying and Fair Compensation: A Comparative Study of Copyright Levys in Europe Available at:http://www.epip.eu/conferences/epip06/papers/Parallel%20Session%20Papers/KRETSCHMER%20Martin.pdf(Accessed: 06/01/15).

Macmanus, R. (2011) Heavenly Music in the Clouds: iTunes Match, Amazon Cloud Drive & Google Music Available at:http://readwrite.com/2011/11/14/heavenly_music_in_the_clouds(Accessed: 06/01/15).

Musicians Union (2014) MU, BASCA and UK Music Launch Judicial Review. Available at:http://www.musiciansunion.org.uk/news/2014/11/26/mu-basca-and-uk-music-launch-judicial-review/ (Accessed: 06/01/2015).

Newton, J. and Smith, H (2014) new and amended exceptions to copyright infringement. Available at: http://www.lexology.com/library/detail.aspx?g=560df4da-86c2-4a16-894f-ff44c89914c1 (Accessed: 06/01/15).

Oliver & Ohlbaum Associates (2012) the UK Music Consumer A Presentation for UK Music. OR Available at:http://www.impalamusic.org/grup/sites/default/files/pictures/attachedfiles/UK%20Music%20-%20OO%20Copyright%20Research%20Presentation%20Copy.pdf (Accessed: 13/01/15).

Orlowski, A. (2012) What’s Copying Your Music Really Worth to You? Available at:http://www.theregister.co.uk/2012/05/21/format_shifting_conjoint_research/ (Accessed: 06/01/15).

PRS for Music (2015) Retail Audio Products: AP1 and AP2 Licenses. Available at:http://www.prsformusic.com/users/recordedmedia/cdsandvinyl/Pages/AP1AP2.aspx(Accessed: 06/01/2015).

Rogers, J. (2013) Total Rewind: 10 Key Moments in the life of the cassette. Available at:http://www.theguardian.com/music/2013/aug/30/cassette-store-day-music-tapes (Accessed: 06/01/15).

UK Music (2015) Government Facing Judicial Review Challenge over Failure to Compensate in Private Copying Exemption. Available at:http://www.ukmusic.org/news/privatecopyingexception(Accessed: 06/01/2015).

Wolfe, L. (2015) Copyright Laws – What Is The Diminis Principle and Copyrights? Available at:http://womeninbusiness.about.com/od/copyrightlaws/f/FAQlaw-deminims.htm (Accessed: 06/01/15).

Record Label Profile – Third Man Records

Introduction

At 10am On Saturday 19th April 2014, Jack White, owner and founder of Third Man Records, took on the challenge of creating the worlds fastest released record. Three Hours, fifty-five minutes and twenty-one seconds later, the task was complete [Moss, M. 2014]. This was all to celebrate independent record store day 2014 because, as Third Man Records slogan says “Your Turntable’s Not Dead” [Third Man Records 2014]. However, is Jack White really the saviour of analogue recording and vinyl records? Or is this just an elaborate way of upping back catalogue sales, enabling him to produce more vanity projects in the future?

This report will look at answering that question by looking at Third Man Records as a label, it’s history and releases, and how it carries out its business in an ever-changing music economy. This economy will also be analyzed to see if there are any practices that could benefit Third Man’s already interesting, innovative, yet niche market approach.

Report

Third Man Records began life in 2001 when The White Stripes signed their first significant label deal with V2. In order to keep control over his master recordings, White set up the label to lease them to V2 in the USA and XL in the UK and Europe. A move that shows a solid level of industry awareness early in his career, turned out to pay dividends when V2 records collapsed in 2007. A loyal fan base created through these 6 years allowed him to rerelease material he regained control of in his own way, with no record label executives to worry about, but it was only in 2009 that a physical premises was built [Modell, J. 2011].

Incorporating label headquarters, record shop, performance space (capable of recording live gigs/sessions) and a novelty outlet selling souvenir like trinkets, White has swallowed up most of the vertical supply chain needed to release a record [Wikström, 2013: 51].

This is a smart vertical integration move, and with the United Record Pressing plant (the only missing link) situated a mere 1.3 miles from Third Man Headquarters, White enjoys a personal relationship with the plant, enabling him to release his strange and unique records [Gold, A. 2011].

Each one of these unique releases is accompanied by a YouTube video featuring Jack and Third Man employees explaining the unique features. That is then shared with their 95,401 Facebook fans and 97,512 Twitter followers [OfficialTMR, 2010]. Although a simple approach to social media, it is effective and relevant to its products and audience.

In terms of then further marketing Third Man’s releases, the 6 year period of success between The White Stripes third album “White Blood Cells” and their last album “Icky Thump” in 2007, helped turn Jack White into one of the 21st Century’s great guitar pioneers. In 2003, White was named the 17th greatest guitar player of all time by Rolling Stone magazine, cementing his status as a guitar hero [White Stripes Biography 2014].

Because of this iconic status, White has become tastemaker, with fans interested in every release on Third Man, simply because it has been released by Jack [Gold, A. 2011]. New garage-rock projects like The Dead Weather & The Racontuers featuring White, plus his own solo material, have greatly improved the labels stature.

The label also reissues blues and rockabilly records by the likes Blind Willie Mitchell, Charley Patton, Roy Orbison and Johnny Cash. White also reissues White Stripes releases and has collaborated with acts like Beck, Tom Jones and Wanda Jackson for label exclusive vinyl releases [Third Man Records 2014].

Third Man also signs artists for development projects, including; The Black Belles, Whirlwind Heat, The Greenhornes and Kelley Stoltz, who all have a similar garage rock sound to White’s material. Karen Elson, Pokey LaFarge and The Haden Triplets have a more country feel to their music, a style which is clearly very close to Jack’s heart, and can also be heard throughout White’s own tracks [Third Man Records 2014]. Solo blues artist Seasick Steve is also signed to Third Man Records, who’s most recent album, ‘Hubcap Music’ reached the top 20 in the UK when it was leased to Fiction records [Fiction Records 2014], suggesting that Third Man may be a little more than just Jack White’s plaything. [Official Charts Company 2014].

The most interesting of Third Man’s releases though are their “Vault Packages”, a quarterly subscription service offering online bonus material [Michaels, S. 2011]. They contain a brand new exclusive 12” LP, an exclusive 7” Single and a Bonus Item in one package 4 times a year. This costs $60 a quarter plus $20 shipping for international subscribers. This works out as $360 per year (£215) for UK customers, almost double that of an annual Spotify Premium service. There is also no guarantee of what the next package will be. It could be a new solo album from White, (Package 20) or a bunch of live recordings from an older Wanda Jackson, arguably past her prime (Package 9) [Third Man Records 2014]. This is an intriguing business model at a time where online internet subscription services such as Deezer, Netflix and Spotify are changing the way the public consume different forms of copyright. Perhaps offering something physical at a slightly higher premium, combined with online content, could be a way of enticing more of the general public into subscription streaming services. Though it could be debated that this could not work on a mass-market level, and would only work effectively in niche markets, such as the one that Third Man operates in.

Jack White clearly believes in that niche market; “We need to re-educate ourselves about human interaction and the difference between downloading a track on a computer, and talking to other people in person and getting turned on to music that you can hold in your hands and share with others” [Michaels, S. 2011]. So its obvious that Third Man Records has set up in opposition to the culture of digital downloading. However, this is could be seen more as a marketing exercise because a quick search of the iTunes Store will find most of Third Man records releases available for download [iTunes, 2014]. This backs up the idea of White using gimmicky releases to thrive of the press generated. Only an incredibly limited number of people in Nashville were able to purchase the world’s first liquid filled record on record store day in 2012, but the mass of attention gained through releasing such a product had the potential to increase his digital and regular physical sales significantly [Peoples. G. 2012].

Among these physical sales are CDs, however, they are limited to only to the artists that are signed to Third Man. Presumably because White still sees their importance in the growth and development of an artist, and the size of the global CD market. All of Third Man’s vinyl and CDs are distributed in the UK by Forte Distribution [Forte, 2014] and White himself also has a record deal with XL records. One of the UK’s largest independent labels XL is home to Adele, The Horrors and Radiohead. XL records stock and release White’s solo projects and White Stripes albums in the UK (including UK digital releases on iTunes) but XL does not have much input in the releases themselves as they are leased from Third Man [XL, 2012]

From vinyl to CD to MP3 to streaming, the change in music formats has always gone hand in hand with technological advancements that have continued to present fresh challenges to both major and independent labels. As the Internet has developed, the recording industry has had less control over the flow of its copyrighted material. Increased connectivity led to peer-to-peer file sharing sites presenting a massive piracy problem for the whole industry, which may have lead to irreversible damage to the value of intellectual property [Wikström, 2013: 6].

One way Third Man Records has reacted to these changes is by encouraging increased connectivity between fans and the label itself, with its aforementioned vault subscription service. Releasing what Jack White calls an “Ultra LP”, a reverse playing record with holograms and locked grooves, also shows a desire to give value to the physical product, not just using it as a vehicle for different copyrights [Beaumont-Thomas, B. 2014]. Not only does it generate great press and further his stance on being anti digital music, but it could also be an example to the rest of the industry. Perhaps more thought could be put into the design and release of its physical products as the mainstream CD buying public still count for 69.8% of the album sales market [Jones. R, 2014]

If Third Man started catering to this market, the label could expand greatly. Improving the quality of its CD releases (limited editions, box sets etc.) has the potential to tap into a whole new mass-market audience.

Being an independent label allows releases and projects to not be purely profit driven and can be created for more artistic reasons, especially when they are owned by an artist themselves. Major record labels are business, and so have shareholders to account to at the end of every financial year. This leads to major labels searching for the next big hit in order to generate maximum revenue. Although this is clearly a very successful approach, it is argued that major labels are unable to allow the creative freedom offered by smaller independents [Harrison, 2011: 63].

From the nature of Third Man’s special releases, it can be assumed that creative freedom and innovation are championed above the need for profit. The label itself is still a business though, regardless of the money that can be ploughed into it from White’s royalty cheques [Gold, A. 2011]. Artist run labels are an interesting business model, and what they can potentially offer their rosters is a contentious issue. On one hand their career could be propelled to heights previously unattainable to them, whilst being inspired by the creative owner to make better records. A good example of this would be The Smoke Fairies, who garnered so much attention from being the first UK band to release a single on Third Man records (that Jack White produced and played on), that their debut album skipped a release on White’s label and came straight out on V2 [Independent, 2010].

This is not always the case however, with artist owned labels sometimes being highly idiosyncratic and therefore, releasing only material that is either self-indulgent or sounds like cut rate versions of the owners hits. Though this argument could be levelled at some of Third Mans artists, there have arguably been worse. The Beatles, after the release of some of the greatest albums in history, started Apple records. Apple released experimental solo projects by John Lennon and George Harrison that are very challenging, and now only focuses on a steady flow of Beatles reissues. Paul Weller’s failed Respond records, and Noel Gallagher’s defunct Big Brother Records lacked success. [Petridis. A, 2010]. This is surprising, given their owners musical pedigree, but are further examples of the negative impact artists can have when they try their hand at being the A&R guy.

White’s pedigree allows him to collaborate with high profile acts, most recently Neil Young, who released a covers album recorded live in a 1947 recording booth. Young’s most recent innovation, the Pono music player, has seen him become the most credible face in digital music, promising digital audio at 24-bit sample rate to “bring music back to life” [Barry, R. 2014]. Although there are many sceptics, Jack White has come out in support of the device [Pono 2014]. This could be a way for Third Man Records to grow, by venturing further into the world of digital music; partnering with Pono, providing high quality digital music, whilst still opposing the MP3 format.

Conclusion

Through a combination of placing more value on physical releases and realising the internet has the potential to allow niche markets to flourish, Third Man records seems to be a stable, secure, yet idiosyncratic label. White’s bank balance allows him to indulge in weird and wonderful marketing campaigns fuelled by his genuine love for vinyl records, resulting in far reaching press that increases the labels profile [Beaumont-Thomas, B. 2014]. The artists the label signs and develops are either in the same garage-rock style as White himself, or are playing music akin to his influences, that can be sold to a specific audience. Third Man has identified that this audience places authenticity above all else when purchasing its music, and there is a high degree of authenticity in analogue recordings contained on vinyl LPs. The resurgence of Vinyl has primarily been in this small market that Third Man operates in [Dredge. S 2013]. If this format, almost consigned to the history books, becomes something for more than just the niche market enthusiasts, White’s innovative releases will be a huge part of reminding the general public that “Your Turntable Is Not Dead” [Third Man Records, 2014]

Reference List:

Barry, R. (2014) Oh No Pono: The Trouble With Neil Youngs New Player. Available at:http://thequietus.com/articles/14724-neil-young-pono-player-review (13/05/14).

Beaumont-Thomas, B. (2014) Jack White Creates Ultra vinyl containing hidden tracks and holograms  Available at:  

http://www.theguardian.com/music/2014/may/07/jack-white-ultra-lp-lazaretto(Accessed: 29/04/14).

Dredge S. (2013) Daft Punk & David Bowie Helped UK Vinyl Sales Double in 2013

Available at:  

http://www.theguardian.com/music/2014/may/12/courtney-love-review-shepherds-bush-empire(Accessed: 29/04/14).

Fiction Records Seasick Steve (2014) Available at: http://store.universal-music.co.uk/restofworld/fiction-records/seasick-steve/icat/seasicksteve-fiction/ (Accessed: 13/05/14).

Forte Third Man Records (2014) Available at:http://www.fortedistribution.co.uk/releaseFeatureLabel.php?contentID=25 (Accessed: 29/04/14).

Gold, A. (2011) Jack White’s Third Man Records Tells The World: Your Music City Is Not Dead. Available at: http://www.nashvillescene.com/nashville/jack-whites-third-man-records-tells-the-world-your-music-city-is-not-dead/Content?oid=2171963 (Accessed: 29/04/14).

Harrison, A. (2011). Music: The Business – The Essential Guide to the Law and the Deals. London: Virgin Books.

Independent So Who Runs The Record Labels Now (2010) Available at:http://www.independent.co.uk/arts-entertainment/music/features/so-who-runs-the-record-labels-now-1946160.html (Accessed: 29/04/14).

iTunes Preview The Black Belles (2014) Available at: https://itunes.apple.com/gb/artist/the-black-belles/id349501936 (Accessed: 29/04/14).

Jones, R. (2014) ‘Let’s Get Physical’, Music Week, Issue 14.03.14, Page 1 

Michaels, S. (2013) Jack White’s named Record Store Day Ambassador. Available at:
http://www.theguardian.com/music/2013/feb/20/jack-white-record-store-day-ambassador (Accessed: 29/04/14).

Michaels, S. (2011) Jack White’s label launches subscription service. Available at: 

http://www.theguardian.com/music/2009/jul/06/jack-white-label-subscription-service (Accessed: 29/04/14).

Modell, J. (2011) Pop Pilgrims: We Visit Jack White’s Magic Factory, Third Man Records In Nashville. Available at: http://www.avclub.com/video/we-visit-jack-whites-magic-factory-third-man-recor-99478dead/Content?oid=2171963 (Accessed: 29/04/14).

Moss, M. (2014)  Inside Jack White’s World’s Fastest Record

. Available at: http://www.rollingstone.com/music/news/inside-jack-whites-worlds-fastest-record-20140421 (Accessed: 29/04/14).

Official Charts Company Seasick Steve (2014) Available at:http://www.officialcharts.com/artist/_/seasick%20steve/(Accessed: 29/04/14).

Official TMR (2010) Triple Decker Record. Available at: https://www.youtube.com/watch?v=xQ3c3WZ-3UU (Accessed: 13/05/14).

Peoples, G. (2012) Record Store Day Nashville: Liquid Filled Jack White Records at Third Man; JEFF The Brotherhood Rock Grimey’s. Available at:
http://www.billboard.com/biz/articles/news/retail/1097680/record-store-day-nashville-liquid-filled-jack-white-records-at (Accessed: 29/04/14).

Petridis. A (2010) Why Artist Run Labels Dissapoint

Available at: http://www.gq-magazine.co.uk/comment/articles/2010-05/14/gq-comment-alexis-petridis-on-why-artists-must-never-start-a-label (Accessed: 29/04/14).

Pono Testimonials (2014) Available at: http://www.ponomusic.com/#testimonials (Accessed: 13/05/14).

Third Man Records About (2014) Available at: http://www.thirdmanrecords.com/about/(Accessed: 29/04/14).

Third Man Records Artists (2014) Available at: http://www.thirdmanrecords.com/artists/(Accessed: 29/04/14).

White Stripes Biography (2014) Available at: http://www.rollingstone.com/music/artists/white-stripes/biography (Accessed: 29/04/14).

Wikström, P. (2013). The Music Industry: Music in the Cloud. 2nd ed. United Kingdom: Polity Press.

XL Records The White Stripes (2012) Available at:http://www.xlrecordings.com/thewhitestripes(Accessed: 29/04/14).