The Idea Behind the Music Business


When we are approaching the music industry as a business, we are dealing with quite an ingenious revenue generation model and logic. The strong role of copyright or the meaning of ’footwork’ plays a significant part in it. To an unacquainted viewer, this can be a challenge. The idea behind the music business is present beneath the surface. Instead of monitoring by eye, the focus should put more into tactics and strategies behind them – and even more to the core intentions that each operator truly is aiming for. The idea of everything is to get produced material along with immaterial elements into the profitable form for consumers to listen and watch.

People consume products of music for many purposes and reasons. More there are possibilities to enjoy music – more roaring each prospect may turn to. Music industry is known of its ability and willingness to drive new technology in to its own systems. Every new invention enables a new way to listen music.

The production of the master tape is a two times expense. The process should entitle the licensee to produce music into different formats or products for sale or to be streamed. Booking a studio, hiring the personnel or a pre-production is the physical part –  a ’courier service’ to record a specific amount of performances to be released in future. However, the production cannot be exploited without the relevant grants for its immaterial content – the composition and its recording.

The twist comes along with copyrights and other immaterial property rights. It is good to make a distinction between one-time expenses (cost-items of physical recordings) and recurring expenses (authorization of exploitation) while building a business around it. Compensation for these rights-transferring agreements is the cost-item which entitles the exploitation in a granted territory to the extent that is specified in the licensing agreement. All commercial use of music requires a notification of copyrights in order to be exploited and used.  It is usually considered as royalties and other copyright compensations to the relevant rights-holders. It is natural that copyrights reduce the profit of every manufacturer and operator who wants to exploit the music in itself or as a part of their own commercial operations. For the industry this share is an important cash-flow-channel, a reason to produce music.

Footwork in turn, that non-profitable activity, is something to be addressed. Footwork is something that starts all. It is the way in. Everyone has heard about connecting and its meaning for career. This is one of the most misunderstood issues. It is – as usually associated – not ’connecting’ at all. Connections are the consequence. They happen while working together for the joint destination. It all starts from the little circle and the bubble grows bigger – at the same time the operative environment gets larger. There are no short cuts in building your network. Meeting people at the parties and in other similar events is not so meaningful as people often tend to think. The initial meaning of networking is to get know each other via actual work, activity or common business, not only in Person. While working in that stage, it is easier to develop and learn. This is what the word footwork basically means. The same applies to business. True connections are always earned. Usually the release is the moment that fulfills the said requirement.

If every accomplished session is taken as an acquired connection, each release is then counted as a resource. Discography or back-catalog is comparable to money. The same happens with every accomplished and notified business. It is all about the release and results. From that moment it is not possible take that achievement away. After the release, also the vital copyrights will be activated and all the potential input can be channeled to its makers in a way the rights are originally, or as a derivative, established.

The idea of the music business is to get that immaterial substance into the physical, profitable form. It is important to make a distinction between direct and indirect goals. Direct goals occur when money change hands. If you sell your album to your fan, you will receive the payment. If your recording gets streamed online, you will get royalty. All this happens due course. Direct goals are something you can more easily affect. You may convince your fans to buy your record. Or you can get people stream your music on Spotify. The end user has made a decision to listen to your music.

Indirect intentions are the other side of the matter. You now need to convince the gatekeepers first. If they like what they hear, they probably place your music available. For example, if some radio station decides to play your music, you will receive performance royalties.

It is the copyrights and related rights which have an elementary role in pricing. The physical production of the recording isn’t necessarily an expensive operation. The use of its commercial exploitation can be. If you get an offer to place your music with the next Marvel movie, you will probably receive a substantive compensation for it.

An artist’s total income or turnover is a combination collected from the different sources. Availability is dependent on how largely the artist and their production have been distributed and made available for the public. This is always a choice and affected by many things. Not all the artists want to be present everywhere, when with some artists, this is exactly their goal.

At its most authentic form music industry introduces itself when the artist is having a show in front of the audience.

Popular music is a phenomenon that breaks customary barriers whenever it is possible. The origin of a song and its performer have no longer same role it used to have. Nowadays, there are no requirements to born or move to the United States to become a world-known artist, manager or producer. At the same time the technology reduces the margins, distribution have become easier and cheaper. That progress is a double-edged sword. Some artists benefit of this and others don’t. The fact is that none of this changes the essence of the music business. Supply and demand goes the same way it has done for last 50 years. There has just came new ways and technologies to consume music. It is all about how the fans and listeners want to hear it. This is the request for which the industry have to answer – everyday.

The songwriters are the production units of this branch. They either by themselves or jointly bring forth the substance for the performers to record. Technically this production is provided by composers, lyricists, arrangers, producers and sound engineers. They create the facilities for the performing artist.

When the artists then make themselves known with the footwork and make their music available to the public, we are reaching the level of artistry in which the enjoyment of passive income is enabled. The turnover and its magnitude are not relevant here. The main goal is to get something released. What it ultimately generates, depends on the reception of the audience.

to be continued..

The idea of music business management can be read from this The Art of Music Business Management - For Artists & Managers book