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 the copyright and meaning of a ’footwork’ reach a whole different level than in many other branches. This fact easily fades out the true essence of it all what comes to an unacquainted viewer. The idea behind the music business is found beneath the surface. Instead of monitoring by eye, the focus should put more into tactics and strategies behind them – and even more into the core intentions that each operator truly is aiming for. The idea of everything is to get produced material along with immaterial elements into a profitable form for consumers to listen and watch.

People consume products of music for many purposes and reasons. More there is possibilities to enjoy the music – more roaring each prospective action 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 on the technical side is a one-time expense. This makes it possible for a licensee to produce music into different formats or products for sale. Booking studio, hire of personnel during the session and pre-production is a ’courier service’ with an intention to record a specific amount of performances for the album to be released in future. However, the production cannot be exploited without the relevant copyright assignments.

So the twist comes along with the copyrights and other immaterial property rights. At that point 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 agreement. All commercial use of music requires a notification of copyrights in order to be exploited and used.  This claim is usually regarded in royalties and other copyright compensations to the relevant rights-holders against which the right-holders grant all the respective rights and licenses. It is all natural that the existence of copyrights indirectly reduces the income of every manufacturer and operator who wants to exploit the music in itself or the music as in part of their own commercial operations. For the industry that share is an important cash-flow-channel, a reason to produce music.

Footwork, in turn, that non-profitable activity, is something that should not be neglected. Footwork is something that starts all. It is a way to get in. Everyone has heard about connecting and its meaning for career. This is one of the most misunderstood issues in the whole branch. It is – as usually associated – not ’connecting’ at all. Connections are the consequence. They happen as a result while working together for the joint destination. It all starts from the little circle and bubble grows bigger at the same time the operative environment gets larger. There are no short cuts on building your network. Meeting people at the parties and in other similar events is not so meaningful as people often tend to think. Initial meaning for networking is to get know each other via actual work, activity or common business, not only in Person. The ultimate goal for beginners is to be able to demonstrate their abilities in places where decisions are made and where the potential of one’s own talent can be more widely noticed. While working in that stage, it is easier to develop and learn. This is what the word footwork basically means – making itself, the matter and production public. Same applies to business. True connections are always earned in a way that everyone can see that. Usually the release is the moment that fulfills said requirement. Impartial feedback and approval of the audience and industry is what this is all about.

If every accomplished session is taken as an acquired connection, each release is then accounted as an existing resource. Discography or back-catalog is often comparable to money. 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 how the rights are originally granted, transferred or assigned. It is difficult to engage in sales without the production to the public.

The idea of the music business is to get the immaterial substance into a physical, profitable form. It is important to make a distinction between direct sales and indirect intention. Direct sales occur while money transfers from hand to hand and sales online with the physical downloadable package or streaming. Indirect intentions are the other source of income. It is more of a result of the public play and presentation for commercial purposes. It doesn’t matter if the sales or use happen directly or indirectly. This distinction is made to make it easier to understand the matter. It is the copyrights and its related rights which have an elementary role in pricing. The physical production of the record with the relevant prints is not necessarily a very expensive operation. As the technology is already at the high level, making music available to the public is also cheaper and easier than ever before.

Artist’s total income or turnover is a combination that is collected from the different sources. Availability, the other side of the coin, is dependent on how largely an artist and its production has been distributed all over and made available for the public. The artist receive incomes in royalties from the album and online sales, payments from their live performances and merchandising in their every available forms but also strict money from the advertisers and sponsors who wants to use their name, picture, music, physical presence, likelihood and success identified to the products and brands they represent. The artist can also generate revenue from the new media such as ringtones or synchronizing their music with the movies

Some artists, as we already know, also write the songs they perform as in whole or partly. Because of this they are entitled to receive payments while that material is played public. They are also entitled to obtain copyrighted mechanical fees – if someone wants to record the performances from those songs.

At its most authentic form music industry introduces itself when artist is having a show in front of the audience. Decreasing selling rates are not an indicator of a dying industry. Actually development and reality is heading to a whole other direction, the result is made from a growing number of sources with a less effort than before. Music as a phenomenon breaks customary barriers where ever it is possible. Origin of the 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 when then technology reduces the margins, distribution becomes more easy and cheaper. That progress is a double-edged sword. Some of the artists benefit of this progress and others don’t. The fact is, however, 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 become 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 industry have to answer.

Singular songwriters are the production units of this branch. These operators by themselves or jointly bring forth the substance for the performers to record or to present it live. Technically production is provided by the composers, lyricists, arrangers, producers and the engineers. They create the facilities for the performing artists. Their asset gives the form to the substance in which it is possible to enjoy. At its most reduced form that outcome is provided by the performing artist while they are giving live sessions in front of the audience.

When the artists have made themselves known with the footwork in the contexts they have sought and organized their music to the world so that the most of the distribution channels make their music available to the public, we are dealing with the most significant level of artistry – the enjoyment of passive income. Turnover and its magnitude are not relevant here. It is important for the new material to be constantly released without any major effort. What it ultimately generates, depends on the reception of the audience.

to be continued..

idea behind essence of music business
2nd Edition – Cover