Leverage plays a key role in why you should own your own masters. Historically Record Labels had bags of it and artists had none.
Recording music was expensive, pressing records or CDs was expensive, distributing music was expensive, plugging and marketing music was expensive and exclusive. Having a large amount of capital and the infrastructure to do all of this meant the record labels had the leverage to offer any kind of deal they wanted and most artists were happy to accept (and perhaps rightly so).
Fast forward and many of the capital intensive parts of the supply chain have been commoditised by technological advances (I’ve written more on that here). Historic record deals are starting to be unpicked and publicised by artists.
“I don’t make my money from streaming. I can’t make money from streaming because I’ve got a pre-2001 record contract. “ - Tom Gray - Broken Record Campaign via MusicAlly
I’m not going to discuss the merits of those contracts or what should be done about them in this article but instead, try to build on that widely offered, overly simplistic piece of advice; “own your masters!”.
Every time I hear someone talk about owning their masters and how important it is, my next question is always, “then what?”. Of course, owning your own masters is hugely important as a driver of future revenue but they’re only one piece of the puzzle and one that won’t be a particularly lucrative piece unless you can put them to work.
The reason why I use the analogy of a puzzle is that any single income stream for an artist is unlikely to be something that will provide a lifetime of income unless they’re in the 0.1%. Although this could be perceived as a huge challenge, what now exists is the opportunity to build a new business model for artists. This business model is already being demonstrated in other parts of the internet by creators as well as musicians and artists.
The Synergy Business Model
Before showing the business model, it’s important to recognise the origins. The inspiration for this piece came originally from historic infographic of the 1957 Disney Eco System (below) created by Walt Disney and known as the ‘synergy map’. What this shows is how each individual business unit or revenue stream in the Disney ecosystem can contribute not only individually support Disney but also to provide value to the other elements. At the centre of the map is the studio where the IP is created but from there each part of the wider ecosystem uses that original IP to drive value for itself and onwards into new business units. The creation of a film in the studio creates merchandise opportunities and Disneyland theme park experiences, as well as a soundtrack and music opportunities coming from the TV channels and films.
Looking more widely and more recently, Matthew Ball has written an incredible article on how this concept applies to Fortnite’s creator Epic Games.
Swapping the Disney studio IP for the Unreal games engine produces similar results, with an ecosystem that provides value for each different business unit.
Equally, this model could easily be applied to internet creators such as Mr Beast or David Dobrik who have used their audience and IP to driven many other complementary products and business units (merch, games, social networks, restaurants).
So how does this apply to musicians? One clear observation from the synergy maps is that the most important parts don’t always directly drive the most direct revenue and thinking of the music business in this way requires a new approach. In Disney’s case, the centre of their map is their IP, for Epic Games it’s the game creation engine, for David Dobrik and Mr Beast it’s their videos. Some are fully monetised, some are partially monetised and some aren’t monetised at all.
What this means for the music business is perhaps the music itself will no longer drive the most revenue, even when an artist owns their own masters.
On the Music Synergy Map there are some traditional revenue sources such as live, merch, royalties and radio and TV and “newer” elements such as streaming, product partnerships, social media and digital events.
However, I would argue the big shift is in how to think about the elements, not the elements themselves. With the historic revenues in the music industry mostly coming from recorded music and more recently shifting to live (for the majority), one element has always been dominant. What this business model encourages is a more evenly spread distribution of revenue streams and thinking more indirectly about how to monetise music. For some artists music distributed via platforms like YouTube or Soundcloud could potentially earn almost no money directly but by building an audience they can find new ways to monetise across merch, brand partnerships, sponsorship and direct platform revenue.
Looking at artists like Kanye and Rihanna, they have already figured this out with substantial product brand partnerships with Adidas and Fenty. Kayne’s previous merch drops also showed a more shrewd approach by attaching them to an event, not an album (Wyoming), giving a wider appeal and longer shelf life.
Beyond the most obvious names, artists like Ryan Leslie and Nipsey Hussle have been pushing a version of this for some time. Their business models focused mostly on how to be more direct-to-consumer, however, they still leveraged a range of revenue streams such as live, merch, sales and brand product partnerships.
For the upcoming independent artist, this road isn’t easy and building an online audience doesn’t happen overnight, however, persistence pays off and taking this approach to build a loyal, engaged audience that leverages Kevin Kelly’s 1000 fans theory to create a sustainable income for the long term will be the model that allows musicians to thrive.