The music industry is literally a scam

Summary

The video script delves into the dark side of the music industry, where record deals have evolved from a path to fame and fortune to exploitative contracts that strip artists of their earnings. It discusses how the advent of the internet and streaming platforms like Spotify and YouTube have drastically changed the landscape, leading to record labels implementing new deals that take ownership of artists' work and profits. The script also introduces Tune.fm, a decentralized streaming platform aiming to revolutionize the industry by paying artists more fairly and allowing listeners to earn from their engagement with music.

Takeaways

• 🎵 Record deals once symbolized success for musicians, offering fame and fortune, but over time, they've become exploitative, with contracts designed to siphon money from artists.
• 💰 Record labels often prey on artists who are inexperienced in business, offering them contracts that leave them with little financial control and earnings.
• 📉 With the rise of the internet and streaming platforms, the traditional revenue model for music shifted, severely impacting record labels' profits from album sales.
• 🎶 Modern record deals often grant labels ownership of both the masters and publishing rights, allowing them to control and profit from nearly every aspect of an artist's music.
• 💸 Advances offered to artists are often loans that must be repaid, trapping many in debt as their earnings from music are too low to cover the advance.
• 🔄 The 360 deal is a newer, more comprehensive contract that allows record labels to take a cut from all revenue streams an artist generates, including merchandise, endorsements, and live performances.
• 💼 Even major artists like Taylor Swift and Kanye West have publicly fought against the exploitative nature of these contracts, highlighting the unfair practices in the industry.
• 🎧 The rise of platforms like Tune.fm, which uses blockchain technology, aims to disrupt this exploitative system by paying artists directly and fairly for their work.
• 💻 The current music industry structure makes it difficult for artists to independently distribute their music and receive fair compensation, but new technologies are beginning to challenge this.
• 🚀 Platforms like Tune.fm offer a new model for music distribution, enabling microtransactions that pay artists instantly, and providing listeners the opportunity to earn by engaging with the platform.

Q & A

What was traditionally seen as a sign of success for musicians?

Traditionally, signing a record deal was seen as a sign of success for musicians, as it was the key to fame and fortune.

How have record deals changed over the decades?

Over the decades, record deals have become increasingly exploitative, with contracts designed to take advantage of artists by giving the labels ownership of their music and a significant portion of the revenue.

Why are artists often easy targets for exploitative contracts?

Artists are often easy targets because they tend to be focused on their craft, may lack business acumen, and are often in financially vulnerable positions, making them more likely to accept unfavorable terms.

What impact did the internet have on the music industry?

The internet disrupted the traditional music industry by enabling easy access to pirated music and streaming services, which significantly reduced revenue from physical album sales and shifted the industry towards streaming platforms.

How did record labels adapt to the rise of streaming platforms?

Record labels adapted by creating new types of contracts that allowed them to take a cut from streaming revenue and by retaining ownership of artists' masters and publishing rights, ensuring they earned from all aspects of the artist's work.

What are 'album advances,' and how do they work?

Album advances are upfront payments given to artists when they sign a record deal. However, these advances are essentially loans that must be repaid from the revenue generated by the artist's music, often leaving artists in debt.

What are 360 deals, and why are they controversial?

360 deals are contracts where record labels take a percentage of all revenue streams an artist generates, including tours, merchandise, and endorsements. They are controversial because they give labels control over nearly every aspect of an artist's career.

Why might artists continue to sign with record labels despite the negative aspects of modern contracts?

Artists may continue to sign with record labels because labels are still seen as gatekeepers to mainstream success, offering the resources and connections necessary to achieve widespread fame and financial stability.

What role does Tune FM play in addressing the issues with traditional record deals?

Tune FM is a decentralized music streaming platform that aims to cut out middlemen and pay artists more directly and fairly, using blockchain technology to enable fast, cheap microtransactions and ensure artists are compensated more equitably.

What are some of the long-term impacts of the current music industry model on artists?

The long-term impacts include financial instability, a lack of creative freedom, and a cycle of debt for many artists. Even successful artists often feel exploited, leading to dissatisfaction and conflicts with record labels.

Outlines

00:00

🎵 The Reality Behind Record Deals

The paragraph discusses how record deals, once seen as the ultimate achievement for musicians, have evolved into exploitative agreements. It explains how the music industry uses complex contracts to take advantage of artists, particularly targeting those who are less knowledgeable about business. The allure of fame and fortune drives artists to work harder, but the industry's sophisticated methods ensure that the profits go to the record labels, leaving artists with little in return.

05:01

💰 Streaming's Impact on Record Labels and Artists

This section delves into the challenges record labels faced with the rise of the internet and streaming platforms. Initially, the internet led to widespread piracy, but eventually, streaming services like Spotify became the primary revenue source. However, record labels found a way to reclaim profits by crafting new record deals that allowed them to take a significant portion of artists' earnings from streaming and other music-related activities. These modern deals left artists with little creative freedom and even less financial reward.

10:02

💸 The Trap of the Album Advance

The paragraph explains the concept of the 'album advance,' a loan given to artists by record labels that must be repaid through their music earnings. It describes how this advance, often seen by artists as a windfall, quickly becomes a burden as they realize they must pay it back with a significant portion of their music's revenue. The explanation highlights the difficulty of paying off such advances, especially for new artists, leading them into a cycle of debt and exploitation by the labels.

15:02

🔄 360 Deals: Total Control Over Artists' Lives

This section introduces the concept of 360 deals, where record labels take a cut from every aspect of an artist's revenue streams, not just their music. The paragraph discusses how these deals further exploit artists by taking over their entire careers, from fashion lines to cooking shows, and how even major artists like Kanye West and Taylor Swift have pushed back against such contracts. It also touches on how the COVID-19 pandemic exacerbated the financial struggles of artists, leading to even more exploitative practices by record labels.

Keywords

💡Record Deal

A record deal is a contract between an artist and a record label, where the label agrees to promote, distribute, and manage the artist's music in exchange for a share of the profits. In the video, record deals are portrayed as both a milestone for musicians and a mechanism for exploitation, where artists often sign away significant control over their music and earnings.

💡Masters and Publishing Rights

Masters and publishing rights refer to the ownership of the original recordings (masters) and the rights to distribute, perform, and license those recordings (publishing rights). The video explains that modern record deals often transfer these rights to the label, leaving artists with little control over their own work and reducing their potential earnings.

💡Album Advance

An album advance is an upfront payment made by a record label to an artist upon signing a contract. This advance is essentially a loan that the artist must repay through their music sales and other revenue streams. The video highlights how these advances can trap artists in debt, as they often underestimate the costs associated with producing and promoting their music.

💡Streaming Revenue

Streaming revenue refers to the income generated from platforms like Spotify, where users pay a subscription fee to access a vast library of music. The video criticizes how record labels have secured a significant share of this revenue, often at the expense of the artists, who receive only a small fraction of the earnings despite their work being the primary content.

💡360 Deal

A 360 deal is a type of contract where the record label takes a percentage of all the artist's revenue streams, not just music sales, but also concerts, merchandise, endorsements, and more. The video portrays 360 deals as a way for labels to exert even more control over artists' careers and financial lives, especially in a post-pandemic world where traditional revenue sources like concerts have dried up.

💡Indebted Servitude

Indebted servitude in the context of the video refers to the situation where artists become financially and contractually bound to their record labels, owing more money than they can ever realistically earn. This concept underscores the exploitative nature of modern record deals, where artists' creativity and labor are leveraged by labels for profit, leaving them trapped in debt.

💡Music Industry Exploitation

Music industry exploitation describes the ways in which artists are taken advantage of by record labels and other industry players. The video suggests that this exploitation has become more sophisticated over time, with complex contracts designed to siphon as much money as possible from artists, often leaving them with very little financial reward for their work.

💡Streaming Services

Streaming services like Spotify and Apple Music allow users to listen to music online for a subscription fee or for free with ads. The video discusses how the rise of these platforms has transformed the music industry, shifting revenue away from physical album sales and towards streaming, where artists often earn significantly less per stream compared to traditional album sales.

💡Napster

Napster was a pioneering peer-to-peer file sharing service that allowed users to download music for free, leading to widespread piracy and a major disruption in the music industry. The video mentions Napster as a key moment in the industry's history, where the traditional business model based on physical sales began to collapse, leading to the rise of streaming services and new forms of artist exploitation.

💡Web3 and NFTs

Web3 refers to the decentralized internet powered by blockchain technology, and NFTs (non-fungible tokens) are unique digital assets verified using this technology. The video introduces Tune.fm as a Web3 music platform that aims to disrupt the traditional music industry by allowing artists to sell their music directly to fans as NFTs, potentially giving them more control and higher earnings.

Highlights

Record label deals were once the holy grail for musicians, key to their fame and fortune, but have turned sinister over the decades.

Sophisticated contracts are designed to exploit artists, leaving them as 'debt slaves' to the labels.

Record labels target naive, unsophisticated artists who are often poor and uneducated, making them easy to exploit.

The internet and streaming platforms have drastically changed the music industry, shifting the revenue model from CD sales to streaming.

Modern record deals give labels ownership of both the masters and publishing rights, leaving artists with minimal creative control.

Labels now profit from every aspect of an artist's work, from performances to merchandise, undercutting the artist's earnings.

The 'album advance' is a loan, not a bonus, that artists must repay from their earnings, often leaving them in debt.

New artists often sign without understanding the full implications of their contracts, drawn in by the promise of fame and immediate money.

A 500K album advance may seem generous, but artists must use it to fund their careers, leaving them with little to live on.

The shift to 360 deals allows labels to take a cut from every revenue stream an artist generates, including non-music ventures.

The pandemic worsened the situation for artists, as live performances, a major revenue source, dried up.

Artists like Kanye West and Taylor Swift have spoken out against these exploitative contracts, despite their fame.

Tune.fm aims to disrupt the industry by offering a decentralized streaming platform that pays artists directly and immediately.

Tune.fm uses blockchain technology to facilitate fast and cheap microtransactions, benefiting both artists and listeners.

Listeners on Tune.fm can also earn money by discovering and promoting new music, creating a more equitable ecosystem.

Transcripts

as a musician nothing says you made it

quite like a record deal what do you say

fellas

you want to go make a record record

label deals were the holy grail for

musicians it was the key to their fame

and fortune but over the decades record

deals have turned into something

sinister on the surface all the public

sees is the money the fame the cars the

jewelry but on the inside the industry

is something completely different

sophisticated contracts are designed to

suck all the money out of an artist

while they slave away as dead slaves to

the label and for good reason if you

want to screw people over you're going

to want to pick the most naive

unsophisticated victims that can't fight

back and let's face it most artists

dedicate their lives to the pursuit of

music which means they're probably poor

you got a 6-4 i don't have a car and

probably not very educated and on top of

that they have that idealistic drive to

spread their art impact their fans get

rich and famous to prove all their

haters wrong which means while you're

screwing them over they're gonna work

harder than ever for you and the best

part thanks to the celebrity culture in

america there is an endless supply of

them

but no more if you let me inside your

world so let's learn the art of

enslaving artists

damn me

who work for

absolutely so the status quo here is

artists have been getting screwed since

the beginning of time where's the value

going it's going into the pockets of the

rights holders and they write these

contracts

that are so convoluted that they

essentially strip away every last piece

of value and everybody's getting paid

except the artist artist gets paid last

and they get paid the least

the music industry

is a joke they got into ownership equity

deals with the streaming services in an

in an arrangement for them to have an

equity position they agreed to very low

rates for the artists music one band

that we're in is going to make us all

this money and be our sole source i

think that that's gone every band needs

to really pay attention to what their

record contract still don't get

paid for anything we do and we travel

around town to town

hoping for scraps of food the music

business plays this jedi mind trick on

you

where the whole thing's set up to be

rapacious and take advantage of your

weakness

[Music]

it's the 1980s and you're a record label

looking for artists to sign the 80s are

seen as the glory days of music for a

lot of reasons there are all these new

genres taking off people were listening

to everything from folk music to pop to

hard rock and for artists life was good

back then a record deal was a pretty

huge achievement you would approach an

up-and-coming artist offer them a record

deal and once they signed 85 of the

profits from their music releases and

albums would go to you and 15 would go

to them sure it may seem a little unfair

at first but this was before the

internet you couldn't really reach a

wide audience on your own it was hard to

tour on a global level on your own not

signing with a label and keeping a

hundred percent of nothing is still

nothing on top of that 15

artists could keep all the money they

made from concerts and merchandise so it

was a pretty good deal you see musicians

usually don't have good business acumen

they are craftsmen not business people

so signing with a record label left them

free to focus on the creative side while

you the label did all the business stuff

to blow them up so back then record

labels and artists had a somewhat

symbiotic relationship there was still

plenty of bad stuff going on but record

labels served as a legitimate engine to

getting music out to the masses but then

came the internet and it changed

everything

[Music]

napster says it's willing to pay to play

but will consumers stay loyal the latest

software makes it a bit too easy for

students to access their favorite legal

troubles over copyright infringements

aren't slowing down napster the song

swapping company is now in the top 50

list of most visited sites on the web

according to mediametric popular

internet sites for downloading music a

federal court ruled monday napster must

stop allowing music fans to swap

copyrighted material it's time for

napster to stand down and build their

business the old-fashioned way

they must seek permission first at first

it looked like the internet was going to

make life hell for record labels not

artists suddenly people could download

pirated versions of songs off the

internet or watch music videos online

cds vinyls radio stations and tv

channels like mtv became obsolete no one

was going to wait hours for a tv show to

play their favorite song if they could

just stream it online and no one was

going to buy a cd for 10 to 15

if they could just pirate the songs for

free everyone was losing money but at

least artists could still make money

from things like touring and merch

record labels were in serious danger and

it wasn't about to get any better after

the nightmare that is the internet came

youtube and online streaming apps like

soundcloud and spotify it made it a

million times easier for people to

access music for free or as little as

five to ten dollars a month versus 10 to

15 for a single album it's hard to

describe just how much damage the

internet cost the record labels they

have been hemorrhaging money but at

least now people weren't straight up

pirating music as much back in the 80s

95 of the revenue in the music industry

came from cd sales so cd sales were

propping up the entire industry now 75

came from streaming so the question

became how do we the record labels get a

cut of that streaming revenue so it

doesn't just go to streaming platforms

and artists and finally you hatched an

idea a way to get back to the good old

days when you were making millions but

this time it was at the complete expense

of artists

[Music]

as a record label you had a lot going

against you in the early 2000s your

solution create a new kind of record

deal that would make up for the loss in

cd sales so you found a way to legally

take as much control of their lives as

you wanted enter the modern day record

deal no longer was it a symbiotic

relationship according to these new

record deals once an artist signed

record labels got ownership of both the

masters and publishing rights this means

you own the rights of the actual music

they created plus the rights for them to

perform this music at concerts online

pretty much everywhere this would be

kind of like the equivalent if i sign

with some youtube agency and they own

this actual video instead of me now you

weren't just making money from album

sales which was now non-existent you

were making money from every single

aspect of their music if they sang at a

concert you cashed in performed at a

private party you cashed in had their

song played on the radio you cashed in

artists didn't have creative freedom

anymore with so much money at stake you

got everyone involved to make sure that

every song they put out would be a

global hits that's why today it seems

like the majority of the biggest songs

sound very similar it was a race to make

money not art and the best part of it

all all that money being made from

having international hit songs and

albums millions of streams online and

dozens of concert appearances every year

well most of that money wasn't flowing

into the artist's pockets anymore it was

flowing into yours

yeah so if you sign a deal with a label

uh they basically own your rights so

it's really up to them what they pay you

and in most cases they take 90 of the

money so everyone takes their cut

and then at the end of the day artists

are left with less than a tenth of less

than a half a penny per play this is

andrew antar a lifelong musician and the

co-founder of a music streaming startup

called tune fm that's looking to change

all of this when online streaming

platforms like spotify came around

things got even worse so you can't just

sign up and start uploading your masters

to spotify they don't really have that

the whole spotify for artist thing is

just for the social engagement and like

posting pictures and text not the actual

music so the rights holder is really

still in control there and once they do

you take pretty much all their money so

what they do is they use distributors so

digital distributors they push out the

song to every platform like spotify

apple music dieser yadda yadda

and so they do these blanket license

deals where 70 percent of the revenue

from the streaming service goes directly

to the rights holder the labels and the

publishers

and then they decide to pay out the

artists and other producers and the

songwriters

based on the deal terms that they sign

and generally these are the sketchiest

deal terms you could possibly find in

many cases a lot of these songs are

written by one guy produced by another

guy

and then performed and sent by another

person so

everybody has to get their cut

at the end of the day

now for you this whole setup seems great

and all but what's gonna make an artist

fall for it what's gonna make them eager

to sign away all their money well part

of it is that record labels are still

the gatekeepers like we just talked

about but another reason is something

called the album advance

the way that i believe in this because

you have a unique talent eric very

special don't [ __ ] around

first off you promise them the world you

play up their ego you tell them they're

gonna be the next beyonce the next

justin bieber the next drake you make

them think that you're the only label in

the world that can get them there so

like what's the uh what's like the pitch

they give artists like like how do they

sell the dream yeah just like the vc

says we're gonna make you a millionaire

a billionaire or ten times over

the the labels say the same thing we're

going to make you huge you'll be on the

top 10 spinning on the radio you're

going to be doing all the headlines of

all the festivals and this and that

we're going to make you rich we're going

to make you famous

and it's a very hard thing to turn down

and then you see oh wow this is a big

company their public company

you know they have all these other

artists you sort of trust all the social

proof behind it but at the end of the

day it's a lot of people who are not

making music who are taking all the

money

remember most artists are broke so you

just gotta offer them something they

crave just as much as fame immediate

money most of these artists have heard

rumors of signing bonuses in the

millions so when you offer them five

hundred thousand dollars as what's

called an album advance it makes them

feel like they finally made it but

unbeknownst to them the album advance is

actually just a loan a loan they have to

repay what money their music generates

but to an artist that's broken doesn't

know anything about business or finances

the album advance that half a million

dollars might as well be as good as cash

here's how it works a new artist comes

along and you offer them five hundred

thousand dollars to sign with your

record label most of these artists will

sign right away without reading anything

because again they're broke desperate

with half a million dollars staring them

in the face you promise them they're

gonna be millionaires that they're gonna

be an a-list celebrity while you

conveniently skip over the clauses and

the contracts about how they sign the

rights of their music and performances

over to you they'll only be getting 20

of all the money their music makes and

you justify it by telling them that all

these other famous artists got the same

deal you showed them the math that once

they're famous even that 20 is gonna be

worth millions upon millions so they

sign a deal get the 500k and eventually

they realize the truth you see the 500k

you offer them isn't a bonus or reward

it's literally like a check you would

get if you raise money for your startup

they have to use that money to make

music videos hire and pay their managers

lawyers producers create merch promote

their music and on top of all of that

they need to budget to live their daily

lives 500 000 seems like a lot until you

realize that one good music video can

set you back almost three hundred

thousand dollars and even if they manage

not to buy a new car i style jewelry or

designer clothes that five hundred

thousand dollars could take years to pay

back that's because of all the money

they generate only their 20 cut goes

towards paying off the loan that means

their music has to make 2.5 million

dollars just to pay off a 500 000 loan

and until that loan is paid off they're

not gonna see another sense for the

artist and performer at least six months

to a year or more before they see

basically a pittance of what the money

that came in that they generated on

these these streaming platforms you

could be making millions of streams

generating millions of dollars for all

these platforms and rights holders and

be getting paid you know less than 100k

less than 50k less than minimum wage uh

for the value that you're driving and

that 2.5 million well that's gonna take

a little over half a billion streams on

spotify to make that is the number of

streams global superstars get not new

artists so the cycle just continues you

offer an advance they have no choice but

to take it to survive and they end up

owing you even more money the life of a

signed artist is a life of indentured

servitude except for the few that blow

up at least before kovan artists had

concerts to pay the record label back

faster labels were confident that

artists could pay them back but then all

that dried up with covid and the

pandemic now all the shows got cancelled

for like years on end and now they're

actually making no money so the notion

of the starving artist is a truly real

thing post pandemic however it's looking

a lot more grim which gave way to the

next innovation by record labels 360

deals

[Music]

what do you do when concerts aren't an

option anymore you take over every other

aspect of the artist's lives enter the

360 deal a record deal where you can

take money from every single revenue

stream of an artist start a fashion line

you get a cut create a perfume you get a

cut start a cooking show you get a cut

every single scent the artist is making

directly or indirectly from their music

or influence becomes yours to exploits

now artists aren't just signing the

rights of their music away they're

assigning their literal lives over to

the record label and for you life

couldn't be better

and at the end of the day

the founder or the artist in this

scenario becomes an employee

of the funder so they might give you

1500k

to put into a new album and all that

goes to the recording studio and the

producers you don't actually get any of

that in your pocket and artists have to

take it because they don't have any

other money otherwise so they're taking

advantage of they're in a position of

weakness and sure if you're an a-list

celebrity you can make money even if the

deal is lazy but even major artists like

kanye west and taylor swift have had

enough of being owned

[Music]

a-list we're talking about literally

hundreds of millions of streams

then these guys can be making like what

could be seen as decent money

um but then they even get pissed off and

then they start to break their contracts

with their labels so you look at taylor

swift and kanye and every and radiohead

they're all saying you know what like

we should be making tens of millions of

dollars if not hundreds of millions not

a few million here and there

and but we're talking about point zero

zero zero one percent of all the artists

that are even licensed and then even

less than all the artists around the

world and by now you might be wondering

if record labels are so scummy and

artists end up with so much depth from

signing why don't they just do it

themselves

because one the current music industrial

complex makes it very hard two music

still takes a lot of money to produce

but on top of that the current financial

system also makes it very hard to pay

artists directly we would need micro

payments like paying a fraction of a

penny per stream and being that fiat

charges giant transaction fees it's not

possible to make micro payments in fiat

that's where something caltoon fm comes

in which is basically the web3 version

of spotify that's actually live and

working

tune fm is essentially web3 spotifier

decentralized streaming platform and

very soon we're launching the number one

music nft marketplace in the world aka

openc for music and we're the only ones

with the technology that's necessary so

lossless streaming masters we have no

dmca violations for people just

uploading an mp3 of jc or something

and we have where you actually buy the

nft is where you can enjoy it and play

it so vertically integrated streaming

platform all the social networking and

tooling and everything that you would

need from the payment layer with the

hedera tokens that are native so we're

trying to change that by going direct

cutting out all the middlemen there's

more than one there's many of them pay

artists 10 to 20 times and sometimes up

to 100 times more if they're independent

tune fm already has artists like beyonce

on there and it's run on their native

jam token which is based on something

called hedera hashgraph an enterprise

level distributed ledger technology

owned by google ibm boeing and much more

this tech is already working for these

giant companies and it actually allows

for fast and cheap microtransactions

unlike fiat or bitcoin or ethereum that

means whenever you play a song on tune

fm the artist gets paid immediately it

even allows you to make money by

listening to songs on tune fm

so you could actually make money as a

curator and also as a listener

basically get paid to play

other songs that are being promoted by

artists

so as a curator if you're helping

surface new music or as a discoverer if

you're helping listen to new promoted

music you can actually get paid and be a

net

creditor or hypothetically even break

even but then of course you can always

buy jam but then you have to worry about

it's not a sunk cost because then you

can go ahead and sell jam for

potentially even more money or whatever

the market price will bear so you're

never losing so if you want to

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video

[Music]

[Applause]

[Music]

you