Blog Post

FMC: New Economics in the Music Creation and Distribution Chain

[by Derek Slater] Today’s second panel focused on two relationships: artist with label, and artist or label with online distributor. Two key points of interest:

David Pakman of eMusic discussed the differences in how subscription and a la carte services pay out to rights holders. A la carte is a typical wholesale-retail relationship – the label sets a fixed cut that they get from every download. eMusic’s subscription pays out a percentage of their revenue; when eMusic does better, so do labels. Pakman suggests that this structure enables more experimentation by the distributor.

— Panelists discussed the 50-50 artist-label net revenue split in the independent music context, and it’s continuing relevance today. This relationship has required artists to play a role in their own promotion and marketing, and that’s potentially more imperative in the online environment. Pakman pointed out that labels have even more choices to consider for promotions online, including exclusive song or cover art deals. Real’s Tim Quirk added that he hates playing the exclusive songs game with the labels. They have to play it because Apple’s playing it, but Quirk would rather do it with new or novel types of material (e.g., live shows released immediately after its recorded).