Artists Sock it to the Major Labels – How “Re-performance” is Changing the Game
The New York Times recently reported on how artists are really beginning to make money from their hard work – despite the major record labels. When an artist signs with a major record label, the contract will typically include a provision granting the label with the rights to the performance. The label also gains the right to consent to similar performances (on television and radio) and will retain rights for a number of years after the termination of the contract. Some artists find the term for the contract contingent on the completion of a certain number of recordings (e.g. 12 months following the delivery of the final recording master) – a rather onerous term. It would be preferable for a fixed term be placed in the contract, but large companies thrill in taking advantage of the little guy.
In any event, once the covenant not to compete has elapsed, the artist is free to re-record past performances. If the artist is careful and has not resigned with the label, he or she can re-record a past hit and then enjoy the reward – which is the entire license fee for use of the re-recorded performance. When under contract, most of the license fees go to the label. When the artist gains control of his work – then the license fee goes into his accounts.
This is just another example of how the back catalogs of the major labels are quickly losing their value. After years of being unreasonably enriched on the work of others, once the artist is free to control his product – he does not hesitate. The major labels are beginning to reap what they have sown.
The major labels thrived when the market for music was inefficient – they made money on the fact the consumer lacked information to make a rational economic decision. That is gone with the internet. Now, since professional recording has become easier with computers, soon we will see more and more artists re-recording their past hits. Good Grief, in 2003 Anton Fig recorded Figments – a very professional musical expression – in his apartment on a Mac! See these articles here and here. We will also see many more artists distribute their own music. Such competition will drive down prices. The days of the 99ยข download are numbered.
In any event, another revenue stream for major labels will soon begin to dwindle as artists license their own work.
Here is the NY Time article on how some artists have taken to re-recording.
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