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Author Topic: Swallow The Leader  (Read 1526 times)

hargerst

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Swallow The Leader
« on: June 09, 2004, 08:55:41 PM »

From October 2003:

The music industry is playing a new game, and we're all the poorer for it.  In the past, record companies were judged on yearly growth and final bottom line profits.  If a company didn't have a roster that could produce big numbers at first, they spent some time developing the artists they believed in, and most of the time, it worked.  The artist may not have hit big with the first or even the second album, but they'd find their niche, and suddenly take off.  And eventually, make a lot of money for the record company.  

But then, big conglomerates got interested in the big numbers these record companies were generating, and they decided they wanted a piece of that pie.  So, they simply went out and bought a successful record company.  Well, the first thing they did was call in the accountants, and they were shocked by what they found.  Some of these record companies spent a lot of money that they didn't get back on the first few albums by an artist.  

Oh sure, they eventually got it all back (and a lot more) when the artist hit it big, but accountants don't like to "lose money", even if it's gonna make more later - way too unsafe.  And accountants don't like yearly projections, they want quarterly earnings, showing a steady increase every quarter.  This music business was way too unstable for the accounting department.  Some changes needed to be made - big changes.  Enter the number crunchers.

First of all, no more development deals; either the artist makes it big right out of the shoot, or you drop em.  Yeah, maybe they'll go on with a smaller label and make it big later, but then, we can buy up the artist, or the label, at that point, and not waste development money.  Either way, we win.

Accountants to newly purchased labels:

"You wanna develop 10 new artists this year?  No way - too much money, and too risky.  You can develop 3 new artists.  How we gonna make money that way?  Simple, the label has a ton of back catalog stuff that's all paid for - we'll release those tracks again as boxed sets and greatest hits albums, for enormous profits, since all the costs were paid for long ago.  And when we run out of those boxed sets and "best of" albums, we'll buy out another label and start the process all over again."

"That way, we can show great quarterly profits, each and every quarter, and not take any risks at all."

But then, I asked, where are the new artists gonna come from?    Their answer?

"Don't ask us, we're just accountants - that's your job."
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Harvey "Is that the right note?" Gerst
Indian Trail Recording Studio
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