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|Bobby Borg has graciously provided a series of articles to run in Outsight. Here is the latest in that series. Bobby Borg is the author of The Musician's Handbook: A Practical Guide To Understanding The Music Business , which is available NOW by Billboard Books at Amazon.com or in a store near you. If you don't see it, just ask for it1|
There’s been a lot of talk lately that the Internet and digital downloading is likely to transform the music industry into a singles business. After all, the World Wide Web is about freedom of choice and convenience. A consumer will be able to more readily log onto a site, find an album from their favorite artist and download a track or two. What affect will this have on the creators of music—the musicians—from both the financial and creative aspects?
The Financial Implications For Musicians
From a financial perspective, a singles market will reduce both the mechanical royalty and record royalty payable to the artist.
Mechanical Royalties. Mechanical royalties are licensing fees the record company pays to you for using your songs on a record. After deductions are taken by the record company per a clause in your recording agreement called the controlled composition clause, author/owners earn a mechanical royalty of usually 6 cents per song and typically 60 cents per album. When a consumer buys a full-length CD because they like one of the songs, there are still nine or more songs on the recording that will earn a mechanical royalty. However, if singles can be downloaded at the buyer's discretion, this will decrease the amount payable to the copyright owner because the buyer would only purchase his/her song of choice. The consumer will be able to skim the cream off the market so to speak, and in the process, take a few pennies right out of the artist’s pockets. It’s important to note that at the time of this writing, though a digital download is classified as a mechanical royalty, no one quite knows how these fees will be paid, or how they’ll be collected. This is, however, a completely different and complex issue that is likely to take quite some time before it’s resolved.
[What’s going to happen is that there is going to be a greater responsibility on the artists and the record labels to release better albums. Records have traditionally been sold on the strength of one or two good songs. Now every song will have to be special in order to encourage album sales.]
Record Royalties. Record royalties will also take a plunge in the advent of a singles market. Don’t confuse record royalties with mechanical royalties. Record royalties are percentages that are almost always based on the suggested retail price of a record. For the sale of a full-length CD, new artists signed to a major label may receive approximately $1.00 for a CD. The royalty for single tracks may be approximately 10 cents. Again, when a consumer decides to download one or two of their favorite tracks instead of buying a full length CD, the royalty will obviously be lower. And taking this one step further, does it even make sense to use the same royalty computation for digital downloads as you would for physical product sold in stores? Think about, does a system with deductions for “packaging costs,” “free goods,” and “breakage” even make sense in a digital world? The answer is NO! But again, this is a separate issue and one that will likely take a long time before a new system for computing royalties is in place. There’s a lot of speculation as to what it may be, but no one really knows the answers for sure.
The Creative Implications for Musicians
From a creative perspective, a singles market may have a number of affects on artists. For one, many artists view an album as a complete experience that should be listened to from beginning to end. Artists songs may begin to sound more disjointed if they were to concentrate on a writing single tracks. To draw a parallel, the effects may be similar to the creation of a novel if the author knew that consumers would only purchase the 4th or 7th chapter? Moreover, concept albums such as Tommy by the Who, The Wall by Pink Floyd, Operation Mind Crime by Queensrchye, Joe’s Garage by Frank Zappa, and Metropolis Pt.II: Scenes From A Memory by Dream Theater, would have never existed if the primary business model at the time was a singles market. Will creativity be stifled? The outcome is yet to be seen.
[“I look at singles as only trailers to great movies.” —Music mogul Clive Davis, one of the last great record men.” ]
On the other hand, many artists embrace the creative benefits that a singles market may bring. Rather than waiting years to release an album, single tracks can be made available for download as soon as they're created. Todd Rundgren announced as early as 1997 that he would start a subscription service where fans could actually participate in the recording process of an album. Rundgren's 20 year-old contract was up with Warner Bros. Records and he was ready to experiment with the idea. For $20 to $30 a month, fans would be able to download new tracks and offer feedback. "For the artist, that's fantastic,” said Rundgren. "I don't have to write songs and package them into 12 slots. If I write a couple tonight, I can have them online and get feedback by morning. If you're wrong, you can do a U-turn. That's an instant form of gratification."
The Big Picture
In closing, will a singles market be good or bad for the recording industry as a whole? Currently, the recording industry is a 40 billion dollar a year industry. Can a singles market cut this in half? Or will a singles market “grow the business” by doubling the audience? The record companies are concerned and only the future will tell. Nonetheless, it seems as though a singles market in the world of digital downloads may be inevitable. Stay tuned!
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