Record labels were dependent upon record sales and when the profit margins from recorded sales shifted from high margin returns to low margin returns, they screamed piracy. To them the only way they could remain in business was to have laws passed that protected their gatekeeper based business models.

However technology and innovation is always moving forward, so while the record labels are lobbying hard for new laws, at the same time they were being pulled into the future, kicking and screaming all the way.

Spotify to me is just a legal version of Napster, that has arrived in most markets. However before Spotify was even allowed to operate in certain markets, they needed to make licensing deals with the relevant record labels and publishing groups.

Spotify came into the market with the idea that they need to compete with free. And compete they did. The service even started to break artists to the masses, something that the record labels are clueless to do in current times.

Look at Lorde.
Her song “Royals” was added to Spotify on March 19th. It did nothing.

On April 2nd the song was added to the popular Hipster International Playlist by Napster founder Sean Parker. Isn’t it amazing what a little help can do and this was achieved without any dollars going into marketing. This was purely a stakeholder of Spotify, liking a song and sharing that song with the masses.

What’s that word again? Sharing.

On April 8th “Royals” appeared on the Spotify Viral Chart. What does this mean? It means that people have started to share it.

In relation to metal, I have posted previously how Dream Theater is doing it all wrong with their album release, putting money into marketing and believing that the old school scorched earth policy would bring results. It doesn’t. Sharing is what brings results. Fans sharing your music. Hey didn’t Napster do just this. Didn’t Napster allow fans to share music.

On June 10th “Royals” started to appear on radio. Remember when radio was cutting edge and used to be hip. This is proof that radio is a format that is dead and buried. This is proof that radio is always late to the party. This is proof that radio is clueless. This is proof that radio only plays what the record labels pay them to play.

So if you are an artist and your idea is to get your song onto radio, forget it. It is pointless. It does nothing for your career today.

Go on Dream Theater’s Facebook page and they are telling fans to contact their radio stations, so that “The Enemy Within” can be added to the playlist.

To use a quote from Flying High;
“Surely you can’t be serious.”
“I am and don’t call me Shirley.”

On July 9th “Royals” debuted on the Billboard Hot 100 – three months after debuting on the Spotify Viral Chart.
See how important sales are. By July 9th, Lorde was already a super mega star. It didn’t matter if she finally made enough physical sales to enter the Billboard Hot 100. She was already a success.

This is another lesson that the metal and rock world fail to learn. They still focus on the sales in the first week and the chart position. This is so old school and not a great measuring tool of reach or success, especially for new acts starting out.

But the metal world is still clueless. This is what we get from the bands, their PR companies and the various news outlets that report on metal and rock. Here are a few examples.

Loudwire: Dream Theater’s new DVD ‘Live At Luna Park’ recently entered at No 1 on the Soundscan music DVD chart.

Loudwire: Volume 2 of Five Finger Death Punch’s ‘Wrong Side Of Heaven; lands at No. 2 on Billboard 200.

Blabbermouth: “Wretched and Divine: The Story of the Wild Ones” sold 42,000 copies in the United States in its first week of release to debut at position No. 7 on The Billboard 200 chart.

See what I mean. They are still reporting on the old system. What those websites are saying is that the first week of sales is a measure of success, which I totally disagree with. If that was the case, then the first Five Finger Death Punch album was a dud, after first week sales.

August 6 – Lorde plays her first US gig in NYC.

Slow and steady wins the race. You play where there is demand. Humanity wins out in the end. Those that can play, perform live and write their own songs will win. It’s a return to the song writer. Expect a back lash against the over processed songs written by a committee.

Forget about acts that focus on big screens and pyro technics. The people are looking for human performances. It is an escape from our increasingly digital world.

“Royals” is the most shared track in the US by a new artist this year. This is what matters. The track is SHARED. It means the fans are spreading the word, getting more people to invest time and money into you.

Spotify has finally released some information as to how they pay and it sure makes an interesting read. I have posted previously about the greed of the record labels and how that greed will ultimately kill the streaming star.

So let’s get down to the nitty-gritty. Spotify pays 70% of their revenues to rights holders. The rights holders in 90% of the cases are the record labels and publishers. The same people who lobbied hard to extend copyright terms and are lobbying hard again for longer copyright terms.

So in 2013 so far, Spotify has paid out $500 million dollars to rights holders in royalties. That’s right $500 million. When Spotify pays royalties to a rights holder they provide all the information needed to attribute royalties to each of their artists. Check out the post, it sure makes interesting reading.

http://www.spotifyartists.com/spotify-explained/

So it got me thinking about business models. It looks like to me that the new record label business model of today is to ensure that they have the talent. The one with the most talent wins.

The Record Labels are the only ones putting money out there and the rule of thumb is that if you want to dominate in the music business in the future, you have got to spend. So if record labels are spending, the talent ends up on a label.

That talent brings to the record label the following;

Any songs that BAND A writes will end up with the record label for the life of the artist plus 70 years after their death (the U.K has 90 years). So if the artist is say 30 years of age when they write HIT A, then the copyright of that song will be owned by the record label for 120 years (assuming the artist lives to 80 years of age). Talk about securing their future. Now multiply BAND A or ARTIST A by all the millions of artists who are getting into deals where they sign away their copyrights.

SECURE the most talent and be a winner in the long run.

Has anyone noticed the large push from Frontiers Records in signing up talent past and present? Has anyone noticed how they are getting the Eighties legends to re-record their classics by creating modern forgeries and in the process handing over the copyrights to Frontiers? Has anyone noticed how they are getting all of these artists together for special one-off projects like Michael Sweet from Stryper and George Lynch?

Since managers and other entities are afraid to spend on artist, the ones that do so will win. If a label is not spending money, then they are not in the game. If they are not in the game, then they do not control any talent.