[Dixielandjazz] is the "Music Industry" losing its power over artists.

[Stephen G Barbone]

For years many people have bitched about the "music Industry" control  
over artists, musical content, promnotion etc., etc. That seems to be  
changing if the following article is right.
Cheers,
Steve Barbone 												www.myspace.com/barbonestreetjazzband

July 22, 2009 - NY TIMES - by Brad Stoner
Artists Find Backers as Labels Wane

There was a time when most aspiring musicians had the same dream: to  
sign a deal with a major record label.

Now, with the structure of the music business shifting radically, some  
industry iconoclasts are sidestepping the music giants and inventing  
new ways for artists to make and market their music — without ever  
signing a traditional recording contract.

The latest effort comes from Brian Message, manager of the alternative  
band Radiohead, which gave away its last album, “In Rainbows,” on the  
Internet. His venture, called Polyphonic, which was announced this  
month, will look to invest a few hundred thousand dollars in new and  
rising artists who are not signed to record deals and then help them  
create their own direct links to audiences over the Internet.

“Artists are at the point where they realize going back to the old  
model doesn’t make any sense,” Mr. Message said. “There is a hunger  
for a new way of doing things.”

Polyphonic and similar new ventures are symptomatic of deep shifts in  
the music business. The major labels — Sony Music, Warner Music, EMI  
and Universal Music — no longer have such a firm grip on creating and  
selling professional music and minting hits with prime placement on  
the radio.

Much of that has to do with the rise of the Internet as a means of  
promoting and distributing music. Physical album sales fell 20  
percent, to 362.6 million last year, according to Nielsen, while sales  
of individual digital tracks rose 27 percent, to 1.07 billion, failing  
to compensate for the drop. Mindful of these changes, in the last few  
years marquee musicians like Trent Reznor, the Beastie Boys and  
Barenaked Ladies have created their own artist-run labels and reaped  
significant rewards by keeping a larger share of their revenue.

Under the Polyphonic model, bands that receive investments from the  
firm will operate like start-up companies, recording their own music  
and choosing outside contractors to handle their publicity,  
merchandise and touring.

Instead of receiving an advance and then possibly reaping royalties  
later if they have a hit, musicians will share in all the profits from  
their music and touring. In another departure from tradition in the  
music business, they will also maintain ownership of their own  
copyrights and master recordings — meaning they and their heirs can  
keep earning money from their music.

“We are all witnessing major labels starting to shed artists that are  
hitting only 80,000 or 100,000 unit sales,” said Adam Driscoll,  
another Polyphonic founder and chief executive of the British media  
company MAMA Group. “Do a quick calculation on those sales, with an  
artist who can tour in multiple cities, and that is a good business.  
You can take that as a foundation and build on it.”

The third Polyphonic principal is Terry McBride, founder of the  
Vancouver-based management firm Nettwerk Music Group and manager of  
Barenaked Ladies.

The Polyphonic founders, who have provided the company with $20  
million in seed financing, say they plan to invest around $300,000 in  
each band. The company will then guide musicians and their business  
managers — who will function a little like the band’s chief executive  
— to services like Topspin, which helps manage a band’s online  
presence, and TuneCore, a company that distributes music to online  
services like iTunes, Amazon and Napster.

The partners say they have been thinking about such a venture for  
several years. They recently tried to raise money for the company from  
venture capitalists in Silicon Valley, but met with initial skepticism.

“Returns on entertainment products when portfolios are small are  
typically very erratic,” said David Pakman, a partner at venture  
capital firm Venrock, which passed on the deal. Mr. Pakman doubted  
that Polyphonic and similar firms could produce the kind of returns on  
investment that venture firms typically look for.

Polyphonic, which will be based in London and in Nettwerk’s offices in  
New York and Los Angeles, says it plans to approach private investors  
again after it has proved its model works.

The new company will have plenty of company in exploring new ways for  
artists to maintain control over their creations.

Marc Geiger, an agent at William Morris Endeavor, who tried a similar  
venture in the late 1990s called ArtistDirect, is now developing a  
program for musicians at his agency that will be called Self Serve.  
Mr. Geiger said he was not ready to divulge the details yet, but said  
that Self Serve would provide tools and financing for artists to  
create businesses independent of major recording labels.

Even the major labels themselves are demonstrating new flexibility for  
musicians who do not want to sign the immersive partnerships known as  
360 deals, in which the label manages and profits from every part of  
the artist’s business.

In late November, for example, EMI took the unusual step of creating a  
music services division to provide an array of services — like touring  
and merchandise support — to musicians who were not signed to the label.

“We all know the role that the record label has traditionally played  
needs to change,” said Ronn Werre, president of EMI’s new division.  
“There are artists that want to have more creative control and long- 
term ownership of their masters, and they may want to take on more of  
the financial risk. To be successful we need to have a great deal of  
flexibility in how we work with artists.”

Artists who have produced their own music and contracted with EMI to  
run parts of their business include the R&B singer Bobby Valentino and  
Raekwon, a member of the Wu-Tang Clan.

Mr. Message said that “there are many artists who still want to go  
with labels, which do still have abilities to really ram home hit  
singles.”

Bands who take the Polyphonic route, he said, will need to have  
considerable entrepreneurial energy. For example, they might stay  
after concerts to “go to the merchandise store and sign their shirts  
and talk to fans, because they know they are right at the heart of  
their own business,” he said.

Bands that have taken this approach say it can be arduous. In 2007,  
after releasing three records with independent labels, Metric, an  
alternative band from Toronto, finally got several offers from the big  
record companies. But the band declined to sign after concluding that  
the labels were asking for too many rights and not offering enough in  
return.

With help from a grant from the Canadian government, the band cut its  
own album in April, “Fantasies,” and started selling it directly to  
fans on services like iTunes, where it has scaled the popularity charts.

“It certainly has not been easy,” said Matt Drouin, Metric’s manager.  
“When I get up at 6 a.m. the British are e-mailing me. When I go to  
bed at 2 in the morning the Australians are e-mailing me. It’s an  
extremely empowering position, but one hell of an undertaking.”