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Is the music industry reallyfull of bollocks?

How has the simple process of writing and performing music turned into a complex web of rights, power, rules, regulations, bureaucracy, middlemen, charlatans and hustlers? AIR general manager NICK O’BYRNE thinks he knows the answer.

Last week we all watched as the charismatic, opinionated and handsome lead singer of a prolific and iconic Australian band got angry, then frustrated, possibly a little confused, and then angry all over again.

Steve Kilbey of The Church got pissed off about a royalty cheque. His US Record label Second Motion had apparently sent him just $400 for what Steve believed was all his digital sales in the US. That’s a pittance. A day later he recanted the statement saying that he was actually angry at his own band for not managing themselves properly. He thought that if The Church had their shit together, they wouldn’t be in this position in the first place.

Meanwhile, Second Motion released a statement saying the cheque was actually six month’s worth of mechanical royalties for The Church’s last studio album, Untitled #23. Mechanical royalties are just one type of royalty generated when you sell music. Steve would’ve also been paid sales royalties, sync royalties and public performance royalties separately. According to Second Motion, they’d paid him a hell of a lot more than $400 over the past year. Apparently they’d paid him every cent that they owe him.

They also said that it was a little uncouth for Steve to bring this whole thing to the public’s attention without checking his facts before people made an internet mess out of the whole thing. After that, Steve got riled up and responded by saying that actually he was pissed off at his label after all. What’s more, he said he’d found some “interesting new friends” who would enforce his need to be paid more. Money. Accusations. Drama. Threats.

I’m not going to make a judgment call on Kilbey versus Second Motion. Both parties make reasonable points and I’m a little nervous about what Steve’s “interesting friends” are capable of doing. However, amid claim and counter-claim, there’s one thing Steve said to _The Sydney Morning Herald_’s Bernard Zuel that resonates with almost every artist, manager and small label that I’ve dealt with in the last couple of years: “I just feel incredibly frustrated that I am the geezer at the centre of a little industry and I have absolutely no control.”

In one simple sentence Steve encapsulated the reason why “The Music Industry” has a reputation for being full of bullocks. He wants to know how on earth the simple process of writing and performing music has turned over the years into a complex web of rights, power, rules, regulations, bureaucracy, middlemen, charlatans and hustlers.

Well, I think I know the answer: Distribution.

I’d be surprised if any working musician in Australia knows exactly what happens to their music after they hand it over to their final masters to a label or distributor. They have no idea about the faceless but necessary companies that convert the track and its accompanying metadata into dozens of formats and squeeze it down the internet to aggregators, who in turn disseminate it among digital service providers, MP3 stores, streaming services, mobile phone companies and background music providers. And once a fan pays for the music, how much money can these faceless companies take before the artist even sees a cent?

“It’s now virtually impossible to sell your music to a large audience without the major labels taking a clip of your earnings”

When it comes to record labels, we know that marketing, publicity and A&R all play a role in the success of an artist but it’s the distribution of music into stores (physical and digital) where the largest players in the music industry exert their power. In the digital realm, distribution requires the processing of literally millions of lines of metadata, negotiating royalty rates with hundreds of digital stores and then accounting back to artists, publishers, labels and collection societies. The process is so elongated and complex that there are now only three record labels in the world that can deliver music to every store without help of a middleman. That’s Sony, Universal and Warner. The majors. This is why those companies are so powerful.

Throughout the 2000s, as a way of heading off a major label distribution monopoly, dozens of independent distributors started up worldwide. Indie labels and artists adopted these services on masse to the point where the most successful of these did so well that they then became an attractive target for take-overs. They were duly purchased. By major labels. Square one.

It’s now virtually impossible to sell your music to a large audience without the major labels taking a clip of your earnings. They may not own your music but they control where your music goes and how it gets there.
The increasing reliability on large scale digital distributors to get music to consumers has an inverse relationship with the amount of control artists and small labels have on the price their music is sold for, who it is sold to and the way in which it is sold.

If you read Steve Kilbey’s statement next to Second Motion’s, you’ll see they are in furious agreement. They’re stung by costs that they have no control over and feel like they’re seeing diminishing returns. It’s hard to foresee any huge changes to these distribution chains in the near future, so as an artist, manager or label, what can you do to avoid Kilbey-like levels of frustration at the music industry of the 21st-century?

Sell your music yourself

Kilbey threatened to put the entire catalogue of The Church on Bandcamp so you could buy direct from the band. It’d be a pretty damned good idea if it wasn’t likely to breach his contractual relationships with at least 15 labels. When you hand over an album directly to a fan, no one is standing in the middle taking money. Indie labels have been selling “direct to fan” for a long time and it’s a method that suits niche artists. You’ll see the trend grow over the next couple of years. It makes common sense. You got a mailing list? You playing gigs? Then sell direct. You won’t get on the ARIA charts but you will see the lion’s share of your earnings.

Demand transparency

If you want to reach a wider audience through streaming services, iTunes and everything else, if you want to sell tens of thousands of albums to make a living from your music then you’ll need distribution. Suck it up and enter deals with your eyes wide open. Question every line in your royalty statement and question each clause in your contract. Much of Kilbey’s frustration was directed internally at himself and his own band, they’re no good at managing themselves and they never asked the right questions at the right time.

Understand the industry

Understand that iTunes will take 30 percent of your sales. Understand that good distributors will probably take 20 percent after that. Understand that streaming services pay diddly-squat but will expose you to unprecedented audiences. Understand that there are plenty of circumstances where these companies are helping your career and that they actually deserve to get paid for the role they pay.

Music businesses are still businesses. They’d like to make money. Ask yourself if they adding value to your career as a musician and if the answer is yes, then paying them a percentage of your sales royalties is fair deal. If all of the above sounds too hard, get a manager to do it for you. If it sounds too hard and you can’t get a manager, then perhaps a career selling your music just isn’t for you? Play gigs, write rad tunes and play music for love. It won’t pay the rent but your inner-Steve Kilbey might stay more sane.

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Nick O’Byrne is the general manager of the Australian Independent Record Labels Association. Their annual Independent Music Awards are being held this Tuesday (October 16) at Revolt Art Space in Melbourne. Nominees here.

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