Today the NY Times published a Brad Stone penned article called ‘Artists Find Backers as Labels Wane’, which explores a new business model applied to music by ‘Artist Investment Business’ Polyphonic.
“…Polyphonic [...] 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.”
In this model an artist is viewed as a self-contained start-up company to be invested in, much like VC firms invest in new technology start-ups in Silicon Valley. They will be injected with capital and are then guided in the process of recording their albums, hiring outside contractors that provide PR, merchandise, and other services.
“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.”
The old way of doing business where a band loses rights to their work, ownership of their masters, and decision-making power, in return for a small fee if their record is a hit, is a far cry from this model which leaves bands with all the ownership and control they can handle. That may sound like a dream, but lets also beware of the fact that most bands simply won’t have the entrepreneurial savvy and energy to operate in this model. A vital part of making this model work would be having a great manager on the team, and having a clear creative and business vision.
A great example of an artist that seems to thrive in a similar model is Francis and the Lights who received an investment of $100,000 from The Normative Music Company. President Jake Lodgwick states:
“Francis Starlite is an uncompromising musician and a strong leader. [...] As a fan of his music, I see no alternative. The traditional role of a ‘manager’ who makes strategic decisions is incompatible with a man whose vision requires absolute control of all artistic and business decisions. When we hear the term ‘independent music’, we should recall its actual, forgotten promise of unmolested artistic integrity. In 2008, such music cannot exist with submission to the whims of a brittle industry, nor with automatic rejection of anything ‘corporate’. Artistic freedom requires an awakening, from the artist, that business is good — because music requires it, because life requires music, and because life is good.”
Normative’s take on this business model may seem a lot more idealistic than Polyphonic’s practical approach, but they’re essentially exactly the same. There is inherent risk involved with any investment by a VC into a project, and it takes a lot of trust and faith to make it work. It’s interesting to see some have enough of it to apply the VC model to an industry so fickle and unpredictable as the music business. I’m very curious to know what kind of profit sharing percentages are part of these deals and am interested to see how this model will develop in terms of rights involved and proliferation across the industry in the near future.