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PART ONE

Prince, Kanye West, and the Fight Against the Music Industry

PART TWO

The History of Record Labels

PART THREE

The Safety Net

PART FOUR

Connecting to Your Audience

PART FIVE

Practical Steps Towards Patronage

PART SIX

Using Your Patronage to Make Art

PART SEVEN

Advantage: Artists (Finally)

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PART ONE

Prince, Kanye West, and the Fight Against the Music Industry

The music industry needs to change.

Every musician believes this — including the ones who’ve found the most success and favor. Artists struggle to control their art, the percentages that record labels take is far too high, and at the end of the day the musicians simply aren’t the ones in control.

One of the artists most emblematic of this reality is also one of my favorites: Prince, who in the 1990s changed his name to an unpronounceable symbol. Though to this day most people assume he did this because he was weird, that’s not the case at all. Prince changed his name because he had grown so frustrated with the creative limitations and predatory tactics of his label, Warner Bros, that he rejected his name entirely in an attempt to break his contract.

Prince, who found fame early, signed a deal with Warner Bros at the age of 19. Twenty years later, he re-signed with that same label for a six-album contract worth $100 million dollars. Though that sounds like a lot, the majority of that money was actually a series of advances which required each of his albums to sell 5 million copies.

Prince, being a prolific artist that moved from project to project with quickness, seemed to have no interest in turning every album into a #1 hit — and many of his releases prior to this deal were selling way under the 5-million mark.

In actuality, the terms of the contract were a tactic by Warner Bros to get Prince to slow down and release music at a more gradual pace in order to not over-saturate the market. They wanted him to spend more time promoting each album with tours, singles, and music videos. Prince, accustomed to releasing music yearly and the owner of a literal vault full of music, wanted to move faster.

So, what does this have to do with a symbol? Well, changing his name wasn’t some random act. Instead, it was Prince’s attempt to extract himself from a deal with a record label who had trademarked his name.

Prince gave up his own name completely in an attempt to extract himself from his contract.

Sadly, it didn’t work. Prince was stuck releasing music through Warner Bros, and many of the albums he submitted to the label wouldn’t see the light of day for years. In a rare moment of public vulnerability, Prince wrote about it directly, saying that the process was painful and that “record labels had no right to enslave the creators.” Prince would reclaim his name upon the expiration of his contract, but he continued to be a vocal critic of the music industry for the rest of his life. Prince took plenty of opportunities to tell the world about the brokenness of the artist-label relationship, even on the music industry’s own stages. During his acceptance speech for an ‘Artist of the Decade’ award he use his time to encourage artists to understand that they were “playing someone else’s game” and subtly encouraged the entire room to get out of their contracts.

25 years later, the music industry is more in need of disruption than ever and artists are still deserving (to use a word Prince would enjoy) emancipation — and now the major artist who’s publicly moving the conversation forward is Kanye West.

Much like Prince’s battle, Kanye West’s fight revolves around the desire to see artists own their own masters. Thirty years later, the story hasn’t changed much since the 1990s. When an artist signs a deal with a record label, they often unwittingly sign away their rights to the creative works they’ve made. In Prince’s words, “if you don’t own your masters, your master owns you.”

Kanye wants to see the artist-label relationship change starting at the contract level. Almost every record contract is based around the idea of royalties and advances. What most artists don’t understand is that there are numerous hidden costs like “distribution fees” which make it so that you often can’t fully recoup and you definitely can’t make a stable income.

Kanye has a new ideal model in mind, with a set of rules that looks something like this:

- Artists must own the copyright of their recordings and songs in full, and lease them to record labels for a limited time period, typically 1 year.

- Record labels should be seen as service providers that receive a share of the income that represents their role, with the default split being 80/20 in the artist’s favor.

- Artists must be able to manage their catalog on their own if they so choose, and record labels must create and provide artists with an online portal that clearly shows the artists their income in forms such as a royalty breakdown.

- Finally, contracts should be written in plain english and based on equity, not advances.

Kanye believes that the only way to see change happen is for artists to unite, demand better terms, and work exclusively with players who uphold these new standards. Unfortunately, in all likelihood, this will only truly impact the artists with the biggest names. The benefits that Kanye West are pushing for will not trickle down to smaller artists for years, if ever, and even if contracts are changed in the artist’s favor, in this scenario record labels in still the ones in the position of power.

The truth is that artists no longer need labels or publishers at all. The future of music is in artists independently controlling their own art, using a savvy team of experts to make things happen, and creating a direct relationship with their audience.

Let’s explore why record labels are a thing of the past and why patronage is the future of the music industry.

PART TWO // The History of Record Labels >>>

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PART TWO

The History of Record Labels

Have you ever wondered why record labels are called record labels? The answer is a simple one that gives you some insight into how old these corporations truly are: It’s because they’re named after the ‘label’ that would go in the center of a vinyl record.

We know what record labels look like today, especially in the form of The Big Three: Sony Music Entertainment, Universal Music Group, and Warner Music Group. But what were they like back when the vinyl record was still at the height of its power? Let’s look at one example that went by the name of A&M Records.

In the early 1960s, Herb Alpert and Jerry Moss founded a small record label called ‘A&M’ out of Moss’s garage. Signing a series of popular artists like Herb Alpert’s own band the Tijuana Brass, the Sandpipers, Burt Bacharach, Captain & Tennille, Liza Minnelli, and more, they quickly gained steam and by 1966 were the fourth largest record label in the United States. In that year alone they grossed $30 million dollars in sales which, adjusting for inflation, would be around a quarter of a billion dollars today. In an interview a few years after the labels creation, the co-founders insisted that they wanted to stay a ‘boutique label’ and pointed out that they had only released 7 albums that year and had a crew smaller than 40 people.

As A&M grew, they continued signing successful artists. They went international and signed artists from the U.K. like Cat Stevens, and in the 1980s were more successful than ever with stars like Janet Jackson, Oingo Boingo, and The Police. In an interview, Sting said that the reason he chose A&M is because they felt like “a family”.

Smash cut to January 1999, and A&M’s entire 170-person staff (much larger than the 40 people they employed at the height of their success) showed up to work only to be told that they were all let go, effective immediately. The LA Times reported on the day, saying that “artists and executives hugged in the parking lot as weeping employees carried boxes of personal belongings to their cars. Above them, the A&M sign was draped with a black band and the flag flew at half staff, to commemorate, fired workers said, the death of the historic Hollywood record label.”

Just like that, A&M Records was no more. Which begs the question: What in the world happened between the happy days of the the label?

Well, we can look to ‘The Big Three’ that still exist today to find out.

Sony, Universal, and Warner are all merely the newest forms of labels that have existed since the 1920s, 1930s, and 1950s respectively. Sony started existence as the American Record Corporation, morphed into Columbia / CBS Records in the 1930s, and was taken over by Sony in the late 80s who then also acquired BMG, one of it’s largest competitors. Universal began life as Decca Records, which turned into MCA Records in the 1970s, and then acquired two of the largest labels, EMI and PolyGram, the latter of which had before acquired and killed A&M. Warner slowly acquired more and more smaller labels over time (and on occasion was itself bought before being restored to its original name), turning into the behemoth it is today.

If this all sounds complicated, it’s because it absolutely is. I’m reminded of a scene in 30 Rock where Alec Baldwin’s character Jack Donaghy, Vice President of GE, explains the company org chart and reveals that NBC is not actually owned by GE directly but instead, through a series of mergers and acquisitions, is owned ‘in full’ by a subsidiary of a subsidiary called ‘The Sheinheardt Wig Company’.

This punchline is deeply rooted in reality, and I find the messy history of record labels insightful. These are not cleanly formed organizations, instead the result of tangled dynamic after tangled dynamic. If we were to rethink the record label concept today with a blank slate approach, it would certainly look nothing like what it currently does.

When the one-time President of A&M was interviewed after the label’s closure, he said that “the record business is changing fundamentally” and cautioned musicians to not “think that there are calm seas on the other side of this threshold.” He continued by saying, “If the quake that devoured A&M is a 6.0 on the Richter scale, there is a 7.0 coming in this industry. It’s a Wall Street world now. Get ready.”

It seems like the music industry has always been quick to blame a ‘changing world’ for the failings of the industry, but looking at the way that record labels cannibalized each other paints a different picture altogether. It’s simple economics: When labels merge, the label gets bigger. When the label gets bigger, the payroll gets bigger. When the payroll gets bigger, the percentages they need from contracts gets bigger. When the percentages they need from contracts gets bigger, the artist is squeezed out.

It’s easy to see how removing competition and growing labels into behemoths has led the music industry into the unfortunate position its in today, and the lack of choice means that artists only have a few options, none of whom are incentivized to give a good deal.

During an interview in 1967 at the height of its success, A&M co-founder Jerry Moss was asked why he started the label. He said this: “What the label is now is a labor of love that money makes possible. That’s the nicest thing about money; you can afford labors of love.”

Unfortunately, record labels have gone from being “labors of love” to cogs within a gigantic industry. The love is gone, but the labor is more real than ever.

So why do they still have so much power?

PART THREE // The Safety Net >>>

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PART THREE

The Safety Net

One of the primary reasons that the record label model has been able to persist for so long is because they represent legitimacy.

Especially today, artists are signing deals not because record labels are the only option, but because this is ‘the way things are done’.

Record labels represent a ‘safety net’ which many musicians find alluring. It makes sense! In many artist’s minds, a record label represents not just money but exposure and (most importantly) a sense that you’ve made it.

Signing with a big name like Universal or Warner or Sony (even if its through a subsidiary) feels like a safe bet — after all, these are the entities that have launched the careers of so many massive artists in the past.

Unfortunately, that isn’t quite how it goes. The reality is that many, many artists find themselves tied up in contracts that do not further their career but instead grind them to a halt.

Artists like Prince who sign multi-album deals might find themselves unable to release the work that the label doesn’t find marketable or forced to make creative decisions they disagree with.

Artists who take large advances might find themselves in debt after the cash is spent quicker than they realized, which was the case for the three artists behind TLC.

TLC released their second album, a total commercial and critical success, at the end of 1994. In 1995, the album netted the artists two Grammys for Best R&B Album and Best R&B Performance. Yet, between the album’s release and that Grammy win a year later, all three of the the artists would file for bankruptcy. "Everybody treats us like stars now, except our own record company,” said Tionne Watkins (known as T-Boz). “When we signed our contract, we were under the impression that if we sold a bunch of records they would give us a better deal. No matter how many records we sell or awards we win, they just treat us like dirt.”

Unfortunately, TLC had signed a contract agreeing to take away a meager 7% of album sales. After the other 93% is removed alongside additional ‘fees’ like marketing, production, and packaging(!), the three would each get only 20 cents a sale and the artists wouldn’t be paid anything until the record label fully recouped its costs. Because of this, the trio said that the very act of performing at the Grammy’s put them even deeper into debt.

"One of the great lies in the music business is when an executive tells an artist during negotiations not to worry about contract details and promises to renegotiate later,” said TLC’s lawyer, Eric Greenspan. “This is not just a problem for TLC, it's a problem for every unknown artist in the industry. Once you sign on the dotted line, you are at the company's mercy."

So let’s say that an artist manages to sign a deal that doesn’t lock them in and gives them a decent percentage of royalties. Even still, artists will be surprised at how little they receive in royalties while the record label takes the lion’s share. This is even more frustrating when you realize that those labels have ownership of the streaming platforms which the songs live on, meaning they’re double dipping while the artist is left with table scraps.

I’ve used examples from past generations because its easy to look back on these historical artists and see the fullness of the issues they had to deal with, but of course plenty of current-day artists are still dealing with these same issues. 

Even though it may feel great to have a deal with a record label, that record label has many, many more deals than the one they signed with you. Even though you bet your career on their support, they did notbet their business on you. As Kanye West said, “Artists have one career. Majors have millions.”

That lack of commitment is now playing out with terrible consequences. Artists have historically had to turn to the things that they can fully control such as touring and merchandise in order to make an income. Touring has been a win / win for both the artist and the label, as the label knows that tours will lead to more sales for current and future albums while the artist gets to keep the majority of the profits, on both tickets sales and merchandise sold.

Sadly, in a world changed by a pandemic, even this dynamic has changed.

COVID has drastically impacted artists income as touring has gone off the table. During this global crisis, record labels (surprise surprise!) did not come up with new and innovative ways to support musicians. Instead, artists had to continue signing the same deals and doing even more work, while the labels workload (and percentage shares) remained the same.

For many musicians, the ‘safety net’ that record labels have represented is seriously beginning to tear.

So, what can artists do about it, today?

They can take control and begin moving to the patronage model.

PART FOUR // Connecting to Your Audience >>>

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PART FOUR

Connecting to Your Audience

To talk about the patronage model, we need to talk about its major misconception.

When we think about an artist asking their audience for support directly, our minds turn to services like Kickstarter where the pitch revolves around fans supporting a potential future project like an album.

Unfortunately this doesn’t actually work, because in today’s digital age we have so much content freely flowing into our lives that it’s essentially ubiquitous. This has directly devalued the concept of paying directly for a project.

By the way, the fact that we call it ‘content’ and not ‘art’ speaks to this truth! We’re not collectively referring to the material artists are creating as ‘music’ or ‘essays’ or ‘films’.

We’re calling it ‘content’ that is being put in our ‘feeds’.

When an artist kickstarts a new album or puts their latest essay behind a paywall, we as an audience aren’t particularly compelled. After all, every album comes to Spotify eventually and every essay can be converted into a Twitter thread. No one is so desperate to listen to a new song or read an article that they want to pay for it. They can just open Spotify or Twitter or TikTok or Instagram, find ‘content’ that fills all of their free time, and feel satisfied.

So, doesn’t that make patronage a non-starter? It does if you attempt to build it around paywalling your ‘content’, but the reality is that healthy patronage models aren’t about building paywalls at all! Instead, patronage is a way to cultivate a community of what we’ll call ‘True Fans’.

At the beginning of the social media era, Kevin Kelly wrote an essay called 1,000 True Fans. If you haven’t heard of Kelly, he was the founding editor-in-chief of Wired magazine and has been an elder statesman in the world of technology for a long while. What I love about him is that he isn’t very intrigued by the passing fads of tech, instead much more interested in the way that the world will evolve because of what he calls ‘inevitable’ changes that are brought forth by our increasingly digital world.

Something that Kevin Kelly feels confident about in regards to the music industry is that the bond between the artist and their audience will grow stronger over time. Because our world is growing increasingly interconnected, artists can use the internet (and their social media platforms) to find their fans.

This may sound simple, but it has not always been the case!

If you were someone who loved fountain pens in the 1960s, the only chance you had of being paid for that passion was working in a fountain pen shop or writing for something like ‘Fountain Pen Monthly’. The world simply couldn’t sustain a ton of hobbyists all profiting off the same hobby, so it was either find the singular profitable instance or find another line of work.

Today, if that’s your passion, you can create a fountain pen podcast! You can run a fountain pen blog! You can create an Instagram where you do nothing but review the latest and greatest fountain pens! If you can find 1,000 people who absolutely love your work, they can provide you with a stable income — and because the world is so large, there’s no limiting factor on how many fountain pen podcasts can exist! Hundreds of people can create hundreds of fountain pen podcasts, all with their own subcultures and audiences, and as long as they reach a sustainable number of fans, they can become a sustainable form of income. You just need to find your “true fans”.

Kevin Kelly defines a ‘true fan’ as “a fan that will buy anything you produce,” the ones that “will drive 200 miles to see you sing” or “buy the hardback and paperback and audible versions of your book.” He continues to say this: “As far as I can tell there is nothing — no product, no idea, no desire — without a fan base on the internet. Every thing made, or thought of, can interest at least one person in a million — it’s a low bar. Yet if even only one out of million people were interested, that’s potentially 7,000 people on the planet. That means that any 1-in-a-million appeal can find 1,000 true fans. The trick is to practically find those fans, or more accurately, to have them find you.”

Patronage isn’t intended to capture your entire audience base. It’s intended to capture the most dedicated members who your work has resonated so deeply with that they are looking for a method of supporting you directly. Think about how many fans you have, and then think about the small fraction of ‘_true_’ fans. It’s a much smaller number — 10% or 5%. That’s your patronage base.

Kelly used the number 1,000 because he estimates that most artists with a committed audience could find a way to get 1,000 people to contribute $100 a year, or ~$8 a month. That would be $100,000 a year, which for many artists would be a healthy living. But that number isn’t set in stone. Many artists happily use the patronage model to bring in a small amount of income from a much smaller base. Others make more! That $8 a month isn’t a set number either, which we’ll get into later. The great news is that as technology continues to develop, an artist’s ability to connect with fans will only grow deeper. In fact, the essay was recently updated to be ‘_100_ True Fans’!

The digital age has made patronage more viable than ever, which is why I call this the ‘_new_’ patron age. Kelly writes about this truth succinctly, saying that fans and patrons have been together forever, but that “the benefits of modern retailing meant that most creators in the last century did not have direct contact with consumers,” and that the internet “…permits creators to maintain relationships, so that the customer can become a fan, and so that the creator keeps the total amount of payment, which reduces the number of fans needed.”

This level of connection built on knowing your audience is another reason why patronage is a wonderful and worthwhile pursuit. As of right now, you as as artist don’t have any way to directly interact with fans. The closest you have to that is your social media accounts, which explicitly do everything they can to keep you from owning the relationship with your audience. This is because they don’t want you to leave their platform, and so they try and create a level of ‘lock-in’ which keeps you from being able to escape. Of course, you as an artist are once again put at a disadvantage because of this. If you build your entire audience on Instagram and Instagram shuts down, how can you reconnect with your audience?

The rising stars of TikTok almost found this out the hard way recently during the standoff between the app and the United States government. With TikTok being threatened with closure, the in-app celebrities began trying to diversify their audience, telling their followers to find them on other platforms like Twitter or TikTok-clones such as Triller. Fortunately for them, TikTok remains standing (as of now), but the celebrities of dead platforms like Vine weren’t so lucky, many of whom lost their entire audience overnight.

Many artists have grown wise to this, recognizing that it’s important to find a way to ‘own’ the connection to their audience. Nipsey Hussle said that “When you say ‘follow me on Twitter’, and you get 10 million people to follow you — you just leveraged your influence to add value to an app that you have no ownership in.” So to subvert this and ensure ownership, he formed a clothing brand called Marathon in order to directly gain access to his audience’s contact information and create 1-to-1 relationships.

Patronage can be the vehicle to owning your audience — and the great news is that you don’t have to leave behind all your other models of revenue (or social platforms like Instagram) in order to pursue it. To reference Kevin Kelly once more, he said that “The mathematics of 1,000 true fans is not a binary choice. You don’t have to go this route to the exclusion of another. Many creators, including myself, will use direct relations with super fans in addition to mainstream intermediaries. I have been published by several big-time New York publishers. I have self-published. And I have used Kickstarter to publish to my true fans. I chose each format depending on the content and my aim. But in every case, cultivating my true fans enriches the route I choose.“

So, patronage isn’t about paywalling content.

It isn’t about blocking yourself off from other revenue models.

It’s about creating meaningful connections with the people who your art has already resonated with.

PART FIVE // Practical Steps Towards Patronage >>>

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