ARTISTS ARE MEDIA COMPANIES
The Convergence of Music and Media
The word “media” has its origins in a 16th century word which means "a middle ground, quality, or degree; that which holds a middle place or position,". This word evolved to also mean a "person who conveys spiritual messages,". This informs us to understand that “media” is a vessel through which messages are transmitted from one primary source to end recipients. Often times, the vessel itself can be symbolic of the intended message; or as Roger Ailes, former President of Fox News, once reiterated – “the medium is the message”.
This is a powerful concept if we can truly understand it because it leads us to the understanding that when we consider the 8+ billion people on the planet, and the internet technology that can connect us all, the ability to connect, inform, educate, entertain, inspire, and even enable global citizens to see themselves in “media personalities” is arguably the most powerful phenomenon on the face of the planet. Political and Community Leader, Malcolm X, once said, “the media's the most powerful entity on earth. They have the power to make the innocent guilty and to make the guilty innocent.” In terms of economic power, the global media and entertainment industry has been projected to reach $2.9 trillion by 2026.
The CNN of the Ghetto
While there are a variety of segments within the classification of the “media industry”, this article focuses on the music industry. As an attorney who managed an entertainment law practice for several years, it’s interesting to me that most artists don’t actually see themselves as being part of “the media”. Sure, you have enlightened artists such as Chuck D, front man of ‘Public Enemy’ who declared “rap music is the CNN of the ghetto”; but in actuality, many artists see themselves as entertainers and performers – while viewing institutions such as CNN, Fox News, NBC; etc. as “the media”. The truth, however, is that recording artists are just as much “the media” as is a program like ‘60 Minutes”.
In the music industry, recording artists are transmitting messages to an audience - and often times, their very brand is the message; just as the form of newscasters seen on Fox News are often symbolic of the demographic targeted by the network. Ever seen a politician don a cowboy hat for a campaign commercial? He most likely does not wear a cowboy hat on a daily basis; but his target audience might - or that may be an image that they admire. It’s the same for recording and performing artists. This isn’t a socio-political article per se – it’s an economic one. By not viewing themselves as a part of the media; and, in essence, media companies, many (most?) recording artists are forfeiting the opportunity they have to capitalize on their brands, audiences, and influence.
There has been a fundamental problem in the music industry which is that the art of artists, and artists themselves, have been historically devalued. Artists have often been viewed as disposable commodities meant to feed the machine. Marc Andreesen once spoke about “the original sin of the internet”; namely the fact that the internet, and access to online content, was built on an advertising model - rather than content subscription or direct commercial interaction. The debates around content licensing, the current creator economy phenomenon (to be discussed later), and the aims of Web3 companies and entrepreneurs all offspring from this issue.
The music industry, and its participants, were unfortunately caught in the wave of this “original sin”; and a generation of recording artists grew up viewing themselves, and their music, as promotional tools instead of media enterprises. Recording artists often see themselves simply as vessels of amusement, rather than serious executives and entrepreneurs; and those artists, such as Jay Z (who once stated “I’m not a businessman, I’m a business…. maan”), who are able to effectively manage the artistic and economic side of their music career are seen as anomalies. But even Jay Z said, “the greatest trick the music industry ever played on artists was it convinced artists that they couldn’t be artists and make money”.
To be balanced, recording artists are analogous to actors, directors, and even screenwriters in that their primary function, in the industry, is to create content that is then distributed, marketed, and hosted either in public performance theaters or on subscription and/or advertising based digital platforms. This all requires high levels of technical expertise and financing - and if another entity is footing the bill and taking the bulk of the risk, then these artists will often not own the work, or perhaps not to the extent that they would like. The average burgeoning recording artist has neither the technical expertise nor the financing to handle all of these areas themselves; especially when you consider that the barrier of entry to claiming to be a recording artist has been virtually shattered due to online music distribution platforms - and digital service providers such as Spotify, Apple Music, and Tidal. This leads to a crowded market where recording artists have to fight for attention.
Depending on who you ask, somewhere between 20,000’ish and 40,000 + songs are uploaded to Spotify every day. Additionally, taking into consideration the seriousness, commitment level, and talent of everyone who uploads music to Spotify, just 0.2% of artists on Spotify are generating $50k per year. Regardless of the exact figures and definitions, we can all agree that it is hard to break through as an artist; but life is hard, the point of this article is to shed light on the importance of understanding that recording artists are media companies, and the need to capitalize on their position when / if they break through. Are most artists prepared to maximize on the opportunity? My real world experience tells me no.
“…and every way they movin’ is promotional. Everybody’s actin’ irreplaceable, it’s like they ain’t disposable”
Drake, ‘Churchill Downs’
Charlie Munger, Vice Chairman of ‘Berkshire Hathaway’ and partner of Warren Buffett, once said, “show me the incentives and I’ll show you the outcome”. The music industry, as presently and generally constructed doesn’t really reward talent - it rewards economic activity (viable fan bases, consumption of music through streams, views, and downloads, social media activity via likes and comments, and other metrics that provide revenue and drive market share). Most artists won’t get attention from “the powers that be” until they have those things. Truth be told, artists shouldn’t be principally worried about “the powers that be”. Artists should be more concerned about generating consistent economic activity through the cultivation of a consumer (fan) base, and then making strategic decisions based on their current situation and future business aims in a way that increases the probability of long term business and personal success.
That’s precisely the problem though. Many artists have been indoctrinated by marketing propaganda about what the music business is, who they are as artists, and how to maximize their position. They often resort to activities such as signing questionable contracts, purchasing fake streams and social media followers, and devaluing themselves and their music - in order to pursue what they think will make them “successful”. It’s not until much later on in their career, if they have one, that they see the mistakes and hopefully adjust.
“I ain’t got a billion streams, but got a billion dollars. Inflating numbers like we ‘posed to be happy about this. We was praising Billboard, but we were young”
Jay Z, ‘What’s Free’
Correcting Mistakes
Often times, in order for you to know where you’re going, you have to know where you’ve been; and those who do not learn from past mistakes, are doomed to repeat them. So what are the past mistakes of the music industry? My immediate answer would be that the music industry (see: the major recording labels) did not view and empower recording artists to be media companies from the beginning; but the truth is that the major record labels are not really in that business - and, to be frank, they really shouldn’t be - it’s not their job.
There’s much I could say about the history and evolution of the major record labels, and record labels in general, but I’ll save it for another article. The main thing is that the major labels are currently in the business of servicing (namely marketing, distribution, A&R, and publishing) recording artists - who are media companies; and have the opportunity to grow and maximize the economic realities of that definition, while working (equitably) with business and service providers who help to provide scale to artist content and influence.
To answer the question though, I believe that the most applicable mistake the music industry, namely the major record labels, made is that they, generally speaking, did not see themselves as media companies - at the very least, they didn’t fully capitalize on it. For example, in the sports industry, professional sports leagues generally execute exclusive distribution and broadcast agreements with other media companies to broadcast games, interviews, and other league-related content. This is because professional leagues recognize the premium that their content carries. Basically, if you want to watch the best athletes in the world, there are only a handful of leagues where you can watch them.
For example, Apple recently agreed to pay Major League Soccer $2.5 billion over the next ten years for the right to exclusively broadcast MLS games. Similarly, Major League Baseball agreed to a seven-year deal, with ESPN, to exclusively broadcast its baseball games beginning in 2022 - a deal that will total $3.85 billion, or $550 million annually. Other major sports leagues have executed (and will continue to execute) similar deals - primarily due to the premium that professional sports carries due to its ability to command large live audiences despite the waning of live TV audiences.
The music industry, however, has not always operated with this same “premium mindset”. For example, the major record labels infamously provided music videos to Viacom’s MTV (and other networks) for free as a way to promote their artists. Major labels were more concerned with the outsized revenue -generated from $20 CDs - rather than capitalizing on the visual content (music videos) that they produced. Media platforms such as MTV, as a result, were able to build a media empire on the back of this content in exchange for “promoting” major record label artists and videos. Unlike, professional sports leagues, major record labels didn’t maximize their position as media providers of content which could not (at that time) be sourced from anywhere else beside the major labels themselves.
The major labels (UMG, Sony, EMI) later sought to rectify this mistake by creating a joint venture, in 2009, with investor Abu Dhabi, called VEVO. VEVO, with a backend built by YouTube, was to exclusively provide major record label audio-visual content (i.e., music videos and other video content). VEVO was the major record label’s attempt at controlling and monetizing their content as a media company.
Another mistake the major labels made was in their infamous dealings with Napster and other P2P services. Napster, notoriously known (or blamed) for disrupting the music industry was a peer-to-peer music file sharing software which allowed any individual to download songs for free. At it’s height, Napster allowed for tens of millions of users to access their favorite songs. The attraction of Napster was that, before the rise of P2P services, music listeners were essentially “forced” to purchase CDs for $20 when they often only cared about a few songs on the albums.
As a listener, you may not have wanted to listen to everything an artist released on a particular album - but there was, at the time, no other option. The major record labels were not incentivized to create or even compete with P2P file sharing services like Napster or Limewire, simply because their margins on CDs were so great - they would essentially be cannibalizing themselves - but this is principally the dilemma that traditional media companies such as ESPN, FX, HBO, NBC, and others, have faced due to the declining viewership of linear TV; but they have all bitten the bullet and created on-demand streaming services to counteract the decline and provide an alternative product to “cord cutters”.
In their response to the challenge that Napster exposed, the major labels infamously fought against Napster, even suing fans themselves. Now, to be clear, I believe in copyright law and don’t believe that one should be able to download, stream, or view content (intellectual property) for free - without the consent of the creator. But the main mistake here is not simply that the major record labels shut down P2P services like Napster and Limewire; but that they did not adequately recognize and respond to the underlying reason why those services were so popular to begin with. My belief is that IT services are not the value themselves; but rather, they are the mechanism through which value and consumer desire is communicated and enabled. The major record labels missed this, and recorded music industry revenues were decimated as a result - at least until modern-day music streaming services came into the picture.
“Napster came at the end of a decade of expansion and healthy profits in the global music industry. The CD had become an enormously popular format; almost one billion were sold in the US in 2000, and at around $16 an album, they weren’t exactly cheap. The 1990s gave birth to many classic albums, but not every LP was deep-pile quality from start to finish. People were paying a premium price for a CD which might contain only two or three songs they wanted.”
High Flying Bird
Now to be sure, the major labels learned from these mistakes - whether in terms of leveraging their position in order to acquire stakes in digital service providers such as Spotify, ancillary media platforms, or competing artist services companies; but for those who have worked within the trenches of the music industry, and have seen or been a part of how deals often get done - particularly with respect to writers, producers, engineers, and independent artists, we can attest that the “promotional”, and short sighted, aspect of the music industry is still alive as ever - and much of this thinking trickles down and informs the psyche of modern-day recording artists.
There’s a scene in the movie “High Flying Bird” where a recently drafted rookie is having a conversation with his agent. At one point, the newly drafted player says “I was made for the league!” To which the agent very coldly responds, “the league is a business”. This exchange encapsulates the ever present disconnect between artists and corporate institutions. As someone who emigrated to the states as a child, grew up enthralled by hip hop culture, and later became a music lawyer – I can tell you that this disconnect is very real - and that the images of success and luxury promoted by music videos and recording artists often belie the cold reality of the industry - all to the disillusion of aspiring recording artists who often grow up believing they were “born to sign to a record label”.
Let me just say here.. I don’t believe that record labels are inherently bad, they provide a very necessary service. I don’t believe that record label agreements are inherently bad, and there are varying types - but I do believe that a pollyannish view of the industry, and a misunderstanding of how the business works often leads aspiring recording artists to conform to a model that limits them.
For example, and let’s discard the fact that most artists will make the majority of their money on the road (which can be exhausting and is unscalable), an artist who generates 10 million streams will make somewhere around $50,000 directly from those streams. This isn’t taking into account the percentage that they would be required to pay an applicable label, producer, co–writer, manager, lawyer, accountant; and/or tax authority. Meanwhile, an artist who is able to persuade 5,000 of their most hardcore fans to pay them $5 a month for premium content will make $300,000 directly from that content.
This is true whether we’re speaking of recording artists or labels owning that content - and this is a very real possibility with the creator economy platforms that are present (to be discussed later). So why don’t more recording artists seek to take advantage of the newly available tools? Well, outside of what I’ve already discussed, many recording artists don’t realize that they’re not Spotify, Apple Music, and Tidal’s (and the other DSP’s) primary customer - the average music listener is the principal customer. The music created by recording artists is the product, the DSP platform is the delivery service, and the streaming royalty rate which varies (depending on the service) from $0.0033 and $0.013 per stream is compensation for the artists goods and labor.
Additionally, my personal belief is that many recording artists have a very fixed mental model of what a “successful” recording artist path and career looks like. Even though there are many creators making six and seven figures from creator economy platforms, why don’t we see more artists (particular those with viable fan bases) taking advantage of these resources? I would argue that some of it is perception, artists may view platforms such as “Only Fans” as being cash grabs or for those creators who couldn’t cut it in the “big leagues”. But I would argue that while these new creator economy platforms are not for everyone - for recording artists and their teams - it should be more about viewing these platforms as ancillary divisions of an artists media company; similar to how Disney produces theatrical movies, and television programming (via ESPN), but also has on-demand streaming platforms (i.e., Disney+ and ESPN+) - in addition to theme parks and live event productions.
Unfortunately, many artists (even without viable fan bases) still see a record deal as their golden ticket and are not always aware of their options, and the current macro and micro economic trends affecting the industry around them. For example, while Kanye West is one of my favorite artists - much of what he said in his rants against the music industry was common knowledge, and it’s a bit concerning that so many (within the music industry) took it to be revolutionary. This either speaks to people not knowing, or not speaking out, enough about what needs to change.
Big ups to Kanye, regardless.
Lastly, and another reason why many recording artists do not take advantage of the newly emerging creator economy platforms is that they often sign agreements in which the applicable record label controls the distribution and public performance of the artist’s music. This can prevent an artist from exclusively providing audiovisual content and placing said content behind a paywall - which could potentially provide a less than desirable experience for fans.
CASHIN’ OUT
In hip-hop culture, it’s often said that “rappers want to be ball players, and ball players want to be rappers”. Well, we’re seeing a growing similarity between how major labels operate and how professional sports leagues operate. My hope is that recording artists begin to emulate the leagues just as much as they emulate the players - if not more.
Professional sports leagues such as the National Basketball League and the National Football League are, at their core, multi-media companies which have their own unique business operations; namely, the exhibition and distribution of sporting games featuring high profile athletes. These leagues then contract with companies such as ESPN to exclusively broadcast league content. Over the course of decades, these leagues and platforms like ESPN have developed highly curated brands which have become known for featuring the “best” athletes in the world; and have consistently influenced generations of athletes who have grown up believing that they were “born for the league”. This phenomenon creates ecosystems to which viewers must subscribe in order to access games, highlights, and interviews of their favorite professional sports and players.
This inevitably creates a wide moat (aka competitive advantage) positioning these leagues and media platforms to increasingly leverage themselves as the exclusive providers of this premium media content; and although, we have seen media upstarts such as the Lebron James founded, ‘Uninterrupted’, Ice Cube’s Big 3, and the star-backed Overtime Elite league position themselves outside of the traditional system, the professional leagues and platforms still continue to dominate by fiercely defending and advancing the exclusivity of their content. In other words, these professional leagues maintain a very high price for access to their content; and will continue to seek out avenues to reinforce and grow their position.
In the music industry, we’re also seeing the majors learn from history and the sports industry, by capitalizing on their position - for example, by entering into licensing agreements akin to those negotiated by professional sports leagues. We’re also seeing the majors fiercely defend their position by preventing licensing partners, such as Spotify, from directly competing with them by preventing DSPs from enabling recording artists to directly upload music.
As I may discuss in a separate article, record labels have also been aggressive in strategically snapping up media platforms and “artist-direct” music service companies in order to shore up their position. “Artist-direct” refers to the fastest growing segment of the music industry, and constitutes those artists who are not signed to a traditional record label, but instead rely on digital music distribution platforms to directly distribute their music. Some of the acquisitions made by the major labels, in this space, include Sony’s acquisition of ‘Human Re Sources’ and music distribution company ‘The Orchard’; as well as Warner Music’s acquisition of hip-hop media site ‘HipHopDx’. The major record labels, and the stalwarts of the music industry, will continue to extend their moat by increasingly operating as leagues in an effort to gatekeep their media content.
I WANT IT THAT WAY
So where does this leave recording artists? In my opinion, perfectly positioned. One of the key differences between professional sports leagues and the major record labels is that athletes like Lebron James are contractually prohibited by the NBA’s collective bargaining agreement from playing for competing leagues - or in a televised “one-on-one” game against a college or overseas athlete. In their attempt to create ancillary media companies, professional athletes, generally, cannot unilaterally use league-related content; but must instead simply depend on commentating on their performance and/or general lifestyle(s). Artists like Drake, on the other hand, are not prohibited from similar actions (well, it’s at least negotiable).
For example, Drake (presumably) is not contractually prohibited from featuring on an independent artist’s album, creating his own label and publishing company; or even performing with the Backstreet Boys in concert. If he wanted, he could organize a tour with the Backstreet Boys and NSYNC. This is the kind of flexibility that recording artists have which differentiates them from professional athletes - with respect to their specific craft and industries.
While professional athletes, in terms of their professional athletic exhibitions, are prevented from taking advantage of certain opportunities - recording artists, depending on their profile, have more immediate and clear opportunities to extend their platforms via the direct use of their exclusive and original creative content. While, in professional sports, the league is the brand - in professional music, the artist is the brand. Record labels may be media companies in their own right; but whereas sports fans generally watch games because of the respective league or team - music fans generally don’t listen to artists because of who they’re signed to. Music fans listen to an artist because of the artist! The artist is the brand, and the artist is the shield.
Artists are media companies.
For those who can learn from the mistakes of the past, understand current trends, and shrewdly leverage their fanbase(s) and influence - there has never been a better time to be a recording artist.
FOR US, BY US
We’re currently seeing the rise of what many call the ‘Creator Economy’ which has been said to be valued at anywhere between $20 billion and $100 billion in market size. The creator economy refers to the segment of the internet enabling online and digital creators to monetize their intellectual property through a variety of mediums and platforms. We’re seeing the rise of platforms such as ‘Substack’, ‘Patreon’, ‘Stir’, ‘Mandolin’, and ‘Only Fans’ (among many others), which are enabling individuals to earn up to 7 figures through the subscription and direct access, by audiences, to creator exclusive content. We’re also seeing creators like Kevin Hart, Jay Z, Lebron James, Naomi Osaka, Kendrick Lamar, and Chance the rapper , who purchased ‘Chicagoist’, a website that covers news, food and culture, build out and acquire legitimate and wide-spanning media entities which capitalize on their influence, leverage their access, and distribute and market content.
The opportunity is clear. Artists have the ability and tools necessary to maximize their potential as media companies. To be clear, this is beyond the traditional creation of subsidiary record labels or music publishing companies that are often little more than vanity imprints.
Imagine a world where fans are paying an HBO-like subscription to access exclusive content which potentially includes unreleased / first-listen music, BTS visuals, tour film, mini-documentaries, live recording sessions, and artist Q&A meetings; etc. Imagine the subscription also allows for early access to tour tickets and merchandise drops; or even windowed artist movies and documentaries. Imagine artists coming together to create movie production companies leveraging their collective star-power in order to create culture and music-themed shows similar to the Complex-powered ‘Everyday Struggle’, the content produced by Diddy’s, Revolt TV, or Eminem’s ‘SiriusXM’ hip-hop radio channel -‘Shade 45’, which produces the popular ‘Sway in the Morning’ radio show.
This is the reality that we’re already seeing artists and creatives take advantage of, and I believe that as technology continues to advance and media / entertainment continues to remain the crown jewel of today’s “attention era”, we will see an increasing number of artists, particularly those who have been able to excel at their craft, step up as media executives and leaders of industry in their own right.
Something I would have loved to see would have been for rapper, Meek Mill, to capitalize on his love and notoriety for biking by partnering with a professional competitive biking or motorcross company - or perhaps creating a motorcross athlete management or marketing agency. Imagine the synergy and the potential of leveraging his passion and his platform - and transferring that to such a company.
This is very similar to what Lebron James did with his media company by tapping into his star power by creating multimedia content - based not solely on him, but actually being ancillary to him and his position while expanding and covering his interest areas. This would be similar to what Jay Z did in leveraging his position by diversifying into record label services, artist management, athlete representation, corporate marketing, sponsorship, and event production. Not to mention Jay Z’s acquisition of music streaming service, Tidal, which he launched and branded as an artist-owned streaming platform. Eventually, Tidal was acquired by Square, a technology company. The acquisition of Tidal, by Square, shows not just the power of the convergence of music and media; but also the convergence of culture, music, and technology. As technology continues to democratize industries across the board, it’s my hope that we will continue to see more artists take advantage of the opportunity to become major players in the media industry.
That’s what this article is about. It’s not about ignoring the things that we have seen; but it’s about encouraging the empowerment of those who have not seen and have not done - as well as asking the question: “what’s next?”
“…but there’s no need to dress up the numbers”
Drake, ‘What’s Next’
The obvious point here is that, just as 95% + of amateur athletes will never play in the “pros”, most musicians and recording artists will not attain Drake or Jay Z levels of commercial success; and the things I have covered in this article may seem unreachable for the 19 year old artist living at home in his mother’s basement - and it’s probably better for them to first focus on finding 100 people who want to listen to their music - but there is a proverb which says, “without a vision, the people perish”. Another translation of that proverb says that “without a vision, the people run wild”. You can immediately see the applicability of this proverb if you’ve spent any serious amount of time working within the music industry.
But even though, not every artist may become a multi-platinum, global superstar, there are still multiple ways of earning a good living as a musician and recording artist, outside of the traditional path - especially in the new creator economy; but many burgeoning careers are cut short simply due to a lack of vision, focus, discipline, and emotional intelligence; and so my point remains the same - artists must understand the playing field and strategically position themselves as media companies, step by step, taking advantage of opportunities - especially at the highest peaks of their career, which often comes and goes faster than they can blink.
The key for recording artists will be to find and work with specialists who are focused on truly helping them build out their enterprises. These specialists may be found in cross-functional fields such as law, finance, business management and information technology; but assembling a capable team who can facilitate the specialization and financing necessary for recording artists to actualize their business aims is how recording artists take the leap from simply being recording or touring artists to flourishing as media companies.
Most importantly - I believe that recording artists need to truly educate and understand themselves as human beings, first, in order to truly thrive and maximize their God-given potential(s).
As Carter G. Woodson once said, “those who have not learned to do for themselves and have to depend solely on others never obtain any more rights or privileges in the end than they had in the beginning”.
