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360 Deals

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Understanding the Music Business: What is Music Worth?

Vanderbilt University

4.6 (110 ratings) | 18K Students Enrolled

This course will examine the music industry in the United States, with the unique perspective gained by Vanderbilt University’s location in Nashville, TN. Nashville is a major center of music in the United States, and the music created here has a global reach, particularly in the country, rock, pop, singer-songwriter, and Americana genres. However, students will learn that the basic principles of recording, marketing, copyright, licensing, and live performance are the same, regardless of musical style or genre. The music business is one of the most rapidly changing industries in the US today. It is also an industry filled with contradiction, and media headlines and anecdotal stories often add to the confusion. Here are just a few statements paraphrased from recent news stories: * The music business has collapsed * Demand for music is expanding at the greatest rate in history * Historic recording studios are closing at an alarming rate * More people are making recordings than ever before * Musicians usually lose money touring * Musicians usually make money touring * Major artist pulls songs off streaming services because they don’t pay fairly * Major artist makes a fortune from streaming services * People won’t buy records anymore * Vinyl record sales are soaring This course will attempt to make sense of these seemingly contradictory trends and data, outline the basic structure and mechanisms of today’s music industry, and encourage students to think critically and entrepreneurially about the future of music. Leaders from various areas of the music business will lend their perspectives through in-depth interviews, and footage from a recording session will give learners a behind the scenes look at how a song goes from the spark of an idea hummed into a cell phone to a finished recording. Participants will grapple with questions about art and commerce which are both timeless and crucially important today, and will emerge from this course with tools allowing them to make more informed decisions as creators, promoters, and consumers of music. Course launches February 19, 2016.

Reviews

4.6 (110 ratings)

5 stars
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4 stars
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GG

Mar 01, 2016

Loved it.\n\nIt gave me insight to how thing work in this business.\n\nGreat Job.

XM

Dec 13, 2016

it's great, all vivid content and clear explanations.

From the lesson

New Models, Trends & Strategies

Upheaval in many sectors of the music industry – much of it brought by the digital revolution – has led innovative people on both the business and artistic sides of the industry to do business in new ways. You will learn about opportunities for entrepreneurialism that come with technological advances; you will think critically about the controversies that arise when traditional businesses must redefine their relationships with artists; and you will hear from a business owner who has succeeded by questioning old boundaries and focusing on artist services. You will wrap up your engagement with the course by considering some larger ethical questions and asking yourself what you can do to support a healthy music ecosystem.

Introduction1:42

The Entrepreneurial Musician3:45

Fan-Funded Recording2:58

Criticism of the DIY Approach1:46

New Business Models1:38

Interview: David Macias43:34

Sync Licensing2:04

Music & Big Data5:33

Interview: David Pomeroy68:11

Ethics & Controversies3:09

Taught By

Jen Gunderman
Assistant Professor of Musicology

Transcript

[MUSIC] Wanted to tell you a little bit about something called a 360 deal. This is a new model used by record labels and refers to a new kind of arrangement between artists and a record label. In which the record label takes a percentage of everything the artist does in exchange for the label actively looking for opportunities for the artist across many different kinds of platforms. In order to understand why 360 deals are a hotly contested issue, it is important to understand a little bit about the history of the relationship between musicians and record labels. A traditional record label deal works in the following way. The record label will front the money for recording, distributing and marketing the artist. And then when the record sales come in, the label takes all the money up until the point that the artist recoups expenses. And at that point when the money is paid back, the artist begins to see record royalties. By the way, signing bonuses are also a recoupable expense, and everything that they give you in tour support, the cost of producing videos, and packaging and distribution are also recoupable expenses. So in this old system, a lot of artists never recouped at all. At least not right away. It was sort of a long term game for a lot of labels and artists. But musicians could make a little bit of a living while building their fan base in other kinds of ways. Musicians could keep the money that they earned playing shows. The merchandise that they sold at those shows was theirs to keep. The earnings from the merchandise was there's to keep. And song writing royalties in general were kept with the people who wrote the songs and the band. These income streams were not required to be shared with the record label as part of repaying them for expenses incurred. As long as record sales were healthy, record labels could afford to sign artists knowing that a lot of them would not recoup costs. Because the ones who hit, hit big, and they paid for all of the other projects that lost money. Now, of course, record labels never like to lose money. Nobody ever likes to lose money. But no talent scout in the history of the music industry has ever had 100% accuracy in predicting the next big thing. Also, a lot of great artists took some time to build and so labels could afford a more long-term approach when sales were healthy. One of the great examples in rock music history of this kind of approach approach is Bruce Springsteen who built, and built, and built over many years until he was Bruce Springsteen. Today record sales have spiraled downward, so artists are even less likely to recoup costs under the old model style record deals. Because of that, record labels had to look for other ways of generating income from their artists and the 360 deal was born. 360 deal contracts allow the record label to take a percentage of every part of an artist's income stream. That includes a percentage of corporate sponsorships, merchandise sold at shows, song writing rights in some cases, live performances, endorsements, everything. Now as with everything in the record business, all of these terms are negotiable depending on who you are and who you're dealing with. But in general they're going to take a piece of everything. In exchange for this, the record label takes an active hand in finding opportunities on these fronts since they have something to gain. If you If you get, for example, a big Pepsi ad or something like that. Some of the biggest stars today have signed 360 deals that turned out to be extremely lucrative and it is the primary way that superstars are made. It's the way that you get your film and corporate and live music packages and everything sort of working on the same page. Because you know your label has skin in the game as they say. The concept however remains controversial. Working class musicians, not the pop superstars, but regular guys and girls who are on the road get down right angry that a record label should have a piece of the grueling work of touring. Or personal work of songwriting. For example, if you're stuck in a van outside of Knoxville trying to get to your gig. And you're all exhausted and you haven't had a vegetable in a couple of days. It's very difficult to understand why a business person in New York City should be getting a piece of the door that you're going to be getting at that gig in Knoxville that evening. The thing to remember too, is that record labels can afford to sign 360 deals with a lot of different artists knowing that some of them won't pan out. But a musician only has one career, and throwing all of your eggs into one basket can seem really scary. Having a good lawyer is key when it comes to being presented with a good 360 deal. As I say, a lot of these terms are negotiable and you're going to really have to keep your eyes open and think about where you want to be before you sign anything like this. I want to say a word about the record label's perspective when it comes to 360 deals. because it's really easy I think, especially for musicians, to sort of bash the idea of them taking a piece of everything. From a label perspective, they've spent a bunch of money recording and promoting artists. And I'm sure that they're thinking the least that artists can do is get out there and work and earn money back any way possible. Everybody knows that artists are less likely to recoup through record sales alone. And that a 360 deal can be mutually beneficial if you can find a lot of different ways to exploit your work. Understanding the tension here I think is central to sort of getting what's going on in the record business in a lot of ways right now between musicians who are used to keeping some things for themselves and record labels that are searching for new kinds of income. [MUSIC] [APPLAUSE] [SOUND] [APPLAUSE]

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