Label Collective business model

Since there have been a number of threads covering intelligent discussions about what indie artists should do to be successful. Here is some food for thought.

The traditional Label model – Artists are signed to a business where they are ‘groomed’ by ‘experts’. The song selection, style, image, etc, are largely dictated by the label to maximize the potential ‘marketability’ of the act.

Pros:

Label has the financial capital, resources, and expertise to:

· Produce a sellable product

· Effectively leverage marketing of the product

· Manage and leverage distribution of product to the point of sale

Cons:

· Artist’s ‘success’ measured by shareholder demand for profitability.

· Artist’s output controlled by individuals w/out a vested interest in creativity.

· Artist’s output tied to perception of potential financial return.

· Due to corruption and conflicts of interest, artist is most often last in line to be paid.

Bottom line: The most critical component of the value chain (the artist) is marginalized creatively and financially.

The independent artist model – Advancements in technology coupled with a shift in the consumer’s perception has enabled artists to manage development, marketing, and distribution of their creative output.

Pros:

· Artist has total creative and business control.

· Artist can potentially realize a higher return on investment.

Cons:

· Artist has total responsibility to finance and successfully guide both the creative and business processes.

Bottom line: No man (or woman) is an island. Few artists are equipped with the resources and business acumen to benefit from an independent position.

The independent artist COLLECTIVE model – Shared expertise and resources have a better potential to manage development, marketing, and distribution of collective creative output.

Pros:

· Artist’s retain creative and business control within a collective environment.

· Artist can potentially realize a higher return on investment.

Cons:

· Artist has total creative control.

· Shared responsibility to finance and successfully guide the business processes. This could be a pro or a con depending on the situation.

Bottom line: The best of both worlds. The artist is 'on the roster' as well as a co-owner of the label. The artist can control their creative output and rely on the support of other artists’ business and technical expertise to manage their output. the KEY dependencies in this model is that the artists involved must have the business intelligence, ability to cooperate, and willingness to accept that the 'greater good of all' is the priority above their own self interests alone.

That is a cool idea, and I am really interested in exploring such partnerships -- though I'd think that this type of venture is best done with other acts in similar genres.

On MySpace, I am keeping tabs on bands I come across that seem to be compatible with my music. But it's hard to find acts who impress me with both their music AND their business executions.

ari

Gtrbass, I really like how you outlined this. Who would be the key players in the indie artist collective model? Also, don't you think it's more advantageous to just use the indie artist model and then graduate to the traditional label model? Build up a fan base, accumulate some minor funds, and then show labels you're ready to play in the major leagues.

If you can eliminate human nature, it just might work!

Some big-name songwriters are doing this, which validates the idea.

http://nu.musiccitynetworks.com/index.htm?id=3041

I think its very ambitious of them to create an artist collective run label, but does their label match the resources and revenue produced by a major Big 4 label? Probably not. I think before breaking down these individual models and talking about their characteristics, one has to look at their personal objectives and priorities as an artist. If you don't care strongly about what your music sounds like and just want to make money than the traditional label format might work for you. But if you want complete artistic control, knowledge of everything going on, and no middle men then the indie route is appealing. Either way I think you have to first determine what success is for yourself and proceed from there. Maybe an artist collective model works for some people, but might not work for you.

A key requirement for a collective run label is experience. The artists involved must have a significant amount of real world experience in production and marketing.

I am working on such a venture right now:

Artist 1 has experience in business governance (legal affairs, accounting, etc) and is a qualified musican/engineer producer.

Artist 2 has significant experience in web design, IT administration and is a qualified musician/engineer.

Artist 3 is the head of marketing for one of the largest MI mfg companies in the industry, and is a tremedous singer/songwriter with deep catalog.

Artist 4 is a solid business manager and singer songwriter.

There is also a non-artist equity partner with past experience in marketing and promotion (former staffer at Capitol and Warners).

Sounds like you are on the right track. I was actually thinking about doing something vaguely similar but I am really no where near the people you have to draw from. Let us know how it goes!

I like your attitude, as well- I mean, I think the indie route needs to be modified, and I really don't like the way major record labels operate. I believe there *is* a middle ground and that it *can* be achieveable, and I am heartened by the idea that someone else (with more resources, it seems ) also feels that way.

Rock on!

That sounds great. But based on what you have just said, the collective run label still has certain prerequisites that have not been outlined. The partners involved in the label all need to have industry experience and moreover the drive and will to set goals and then successfully accomplish them. You and your partners have to be on the same page in terms of business skills, objectives, and mentality. Nevertheless it seems to me that the indie model is not too different from the artist collective model. I would bargain to say they're the same thing. An independent artist can assemble a strong team that will handle marketing, promotion, web design, and business governance. All of the things you mentioned above. Personally I think this is the best option to take until one has the means to acquire a label contract that caters to their goals and objectives as an artist.

Actually, there is a model for this which was done in the movie business many years ago. Anyone ever heard of United Artists? Several major stars of the day (Mary Pickford, Charles Chaplin, Douglas Fairbanks, and D. W. Griffith...this was in 1919!)) banded together and created their own production arm, leasing studio space and making movies...ultimately, it turned into just another big business...and eventually was bought out by MGM.

United Artists is a very good example of what I'm talking about. I have recruited a group of other artists who are similar to me. We all have experience in the industry. We all have acquired business skills. What differentiates us from UA model would be celebrity status. We've all been 'contenders', been in signed acts that didn't break, etc, but nobody is a known artist (unless you had your ear to the ground in Hollywood 15 or so years ago).

Key objectives:

1) Complete business plan and agree on buy in for all partners.

2) Draft contractual agreements for assignment of rights to the LLC as well as the profit distribution, exit clauses, etc, in the LLC partnership.

3) Establish an LLC for asset protection and taxation pass-through.

4) Develope and roll out the web presence.

5) Devise and execute marketing plan. Obviously fine tuned along the way.

The big 'IF' is whether or not their will be any serious revenue stream to continue funding the collective. There are six titles awaiting a release schedule, so marketable product is not the problem.

If anything, this seems like a reasonable attempt, by reasonable people, with reasonable expectations of ROI to take a shot.

I think it sounds like a great idea. You guys appear to know what you're doing and have set goals and understand how to protect your assets.

let me know if you need a consultant....