Money Talks, Artists Walk: Principle or Profit?

Music Makers Singers and Songwriters
#1

The Spotify controversy may go deeper than the typical media coverage. Most media covers the “principle” aspect of the story, but doesn’t seem to delve into the money motivations. Who are the actors behind the scene? Are some artists ‘compromised’ by their financial ties?

As long as there has been professionally recorded music, there has been a “music business” for artists to contend with, but when does the money serve the artistic process, and when does the art serve the money process?

I’m particularly curious what @Jonathan thinks about this, given his knowledge of commercially traded music catalogs.
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#2

That depends on the specific ‘equity giant’. There is no good way to take control of the music back. Once their catalogs gain value, the artists typically lack the finances to re-gain control of them. (See Elton John losing Rocketman Records in the 90’s, and the feud between Scooter Braun and Taylor Swift for example). Even as wealthy as Elton and Taylor were, they STILL did not have the funds to acquire their own catalogs. Garth Brooks was the exception. The record label took his all his stuff, the record label’s assets went into distress, he bought the record label in a hostile takeover. First and only time in history I’m aware of an artist pulling this off.

At the time the artist signs their catalogs over to the investors, it’s impossible to anticipate who will control them later on down the road. That would be just like building a house but trying to control which family buys it down the road. The more an artist tries to retain control of it, the less appealing it is for an investor. How would you like to buy a house to where you’ll never truly own it, and will have to share control of it with the architect who designed it?

Ok… so… I’m in the process of buying a piano. The piano dealer doesn’t need to love the piano. He needs to understand the piano. His job is to acquire a piano cheap enough, to where someone who would need to love the piano (like myself) would end up loving it enough to pay for it. Yes, I could buy a piano myself, order an inspection on it, and delivery and pay closing costs myself, but there are several reasons that for me personally, it’s worth paying a premium for going through a dealer.

Your question above is could be equated to the question ‘when does the art of engineering and building a piano serve the piano and the art of piano building, and when does the piano serve the money process?’

Here’s what I think is super critical to understand here:

Intellectual property is a product. Is is scalable, monetizable, tradable, traceable, liquiditable, and has a shelf life, just like a design patent on a pizza box. It has development costs and peak pricing costs just like a stock. Most importantly, it has a manufacturing process. That process begins with the creator, but goes through a production line (in the record facilities), and then ships to market (just like a piece of software). It’s promoted, advertised and distributed through a supply chain just like pills in a pharmacy.

They key to your question is understanding that control of the financial handling of the song is supposed to change hands and leave the artists control. This is a good thing, and critical to the health of the industry. It may feel like a punch in the gut to the artist, but it is absolutely necessary in order for there to exist a global mass market for recorded and streamed music at all.

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#3

If you want to and have time, I would say the best source for understanding the infrastructure and anatomy of a publishing giant is deeply study their investor statements. Look for form 10K’s in an S corps SEC filings.

This gives a high-level overview of how the business is built, which subsidiaries it owns, and what its plans and strategies for future growth are. I learned this stuff by printing shareholder statements and taking them to financial info to a commercial investment banker. I did this with spotify too, 3 yrs ago when they acquired Soundbetter, the freelance production and mixing job placement site. I was considering buying Spotify’s stock but passed. Any questions I had about the syntax and cash flow, he was able to answer.

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#4

And also, Stan, and anyone else in the US or Canada who’s interested, if you want more info on the music streaming business, in addition to pulling investor shareholder forms (do quarterly AND annual), find a stock broker or banker with a series 7 license who can access the IBIS databases, and pull the reports for national (US and Canada) and global.

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#5

Any time it gives the artist the opportunity to work on art instead of plowing a field or digging for roots.

Any time the artist gets any kickback beyond general appreciation of their art.

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#6

Thanks for all the information! I knew you would enjoy pontificating on all this stuff. :slightly_smiling_face: The intellectual property and supply chain analogies make a lot of sense. Kind of like patents, where an inventor starts it, but the process goes much farther than that. The artist is kind of like a designer/illustrator that gets an idea moving, then the executive suite and factory floor take over to move it forward.

Those things I understand. But it seems that now there are these mega-corporations that own just about everything … and perhaps, everyone. Blackstone, Blackrock (both mentioned in the OP video), and Vanguard literally own just about every company as a subsidiary through their investments - from processed foods and even farmland, to real estate, and just about anything you can think of that you buy. And if Neil Young sold half his catalog to Hipgnosis, which merged with Blackstone, who around the same time appointed a former Pfizer executive as a senior advisor … doesn’t that then create some conflicts of interest? Is Neil Young truly speaking for himself in regard to the Spotify/Rogan controversy, or is he ultimately speaking for Pfizer? I guess that begs the question of how much influence do the original artist and the owner of the artist’s intellectual property have on each other. How reciprocal is it? Does the owner still need the artist’s public presence and persona, and compliance, to keep the investment viable?

#7

That’s a good point. It’s pretty open for interpretation though. At least in terms of “general appreciation”. While some classical composers were endowed with sponsorships from kings, others may have been busking for pfennings and gelders. For the past several centuries at least, probably much longer than that, the success of musicians and artists has relied on sponsorships and benefactors. But how long does the art remain ‘pure’ when the sponsors and benefactors start suggesting song titles and themes? How often does the artist get to go direct to the people for their general appreciation? Our modern day concerts may approach that, as may the minstrels of the past, but yet there are always the middlemen of the venues and ticket sellers that can turn the performance into a three-ring circus.

Kickbacks may often be disguised as perks, or dangled as unspoken or implied benefits. Many an early Rocker was enticed by the promise of “chicks and drugs”, which were par for the course, but not something outlined in a contract nor documented on an income statement. They probably served the money process nonetheless.

#8

Once you sell it it’s gone. I mean… how much influence does the seller have over their house once someone else buys it?

Depends on what’s in the catalog. Music licensing IP pipelines can go either way. Sometimes the writer is the publishers main bartering leverage for licensing, sometimes the writer is completely irrelevant. There should be a metric in the risk analysis when they appraise the catalog before purchase. Its due diligence on the buyers part to figure that out before they make the offer or underwrite the investment.

If an architect designs a house, and oversees the constructions of it, if he’s really THAT concerned about what the buyer does with it, he oughta to NOT SELL IT. Same with musicians. Just publish it yourself. You’re still credited as the architect/songwriter either way. No one ever takes that from you.

Corporations don’t have a love a product or its creator in order to monetize it. If someone can’t accept that, don’t you think it’s better for them to simply choose not to participate in the system? They will not reform the system by complaining about it or speaking out against it. No one’s committing crimes against humanity here. Thus, money will almost always supersede ideology and principle in real life.

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#9

I think I see what you’re saying in terms of having an asset, and being able to leverage that asset for sales or investment purposes. The analogy still bugs me though, in terms of comparing a house to a collection of songs/music. Both may have artistic/aesthetic elements, but a house is mostly a ‘thing’ and (typically) immovable, and there is only one of it that exists. Music is replicate-able, and as you mentioned can be marketed worldwide to millions/billions of people who may all feel they share that musical experience of “the universal language”. It’s so much more of a cultural phenomenon and communication vehicle IMO.

So that’s where I feel the artist’s persona and image must have some significant impact on anything that happens with it. I know great architects are celebrated and published in magazines with pictures of their designer homes, so there is that similarity perhaps, but I think music can touch your soul in a way that a house can’t quite compare to - including on a global scale, with numbers of people impacted and influenced.

I agree that sometimes it’s better to not participate in the system, and while you may not be able to reform it per se in a clear capacity, you may be able to influence it or even debilitate it through boycott/buycott methods. If enough people tell the marketplace they don’t want something, it usually brings about change. Just look at what people think of Justin Turdeau. :wink: He doesn’t look like a good investment at this point.

You’re probably right, but it’s a sad testament to what our societies’ have turned into … hollowed-out shells based on materialism, devoid of intrinsic values and meaning.

#10

…And also often lacking the critical thinking and reaonsing skills to even realize it. Yes. I agree. Neitzsche spent portion of his life and career perplexed by how this can be, and why humanity often lacks the desire transcend beyond this and become more.

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#11

Yep, we forgot all about striving for the Übermensch, and just called an Uber driver to take us where we want to go. :joy:

I think it goes back to the Rockefeller designed education system - i.e. “social engineering”. They may say that they teach critical thinking skills, but if they do it’s only in the context of the “box” they condition you to stay in.

From the Lord Bertrand Russell book, “The Impact of Science on Society”:

“The populace will not be allowed to know how its convictions were generated. When the technique has been perfected, every government that has been in charge of education for a generation will be able to control its subjects securely without the need of armies or policemen.”

“In like manner, the scientific rulers will provide one kind of education for ordinary men and women, and another for those who are to become holders of scientific power. Ordinary men and women will be expected to be docile, industrious, punctual, thoughtless, and contented. Of these qualities, probably contentment will be considered the most important. In order to produce it, all the researches of psycho-analysis, behaviourism, and biochemistry will be brought into play… All the boys and girls will learn from an early age to be what is called ‘co-operative,’ i.e., to do exactly what everybody is doing. Initiative will be discouraged in these children, and insubordination, without being punished, will be scientifically trained out of them.”

“Fichte laid it down that education should aim at destroying free will, so that, after pupils have left school, they shall be incapable, throughout the rest of their lives, of thinking or acting otherwise than as their schoolmasters would have wished.”

“The completeness of the resulting control over opinion depends in various ways upon scientific technique. Where all children go to school, and all schools are controlled by the government, the authorities can close the minds of the young to everything contrary to official orthodoxy.”

“Diet, injections, and injunctions will combine, from a very early age, to produce the sort of character and the sort of beliefs that the authorities consider desirable, and any serious criticism of the powers that be will become psychologically impossible. Even if all are miserable, all will believe themselves happy, because the government will tell them that they are so.”

#12

Thanks.