The music industry is literally a scam
Summary
TLDRThe 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
🎵 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.
💰 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.
💸 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.
🔄 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.
Mindmap
Keywords
💡Record Deal
💡Masters and Publishing Rights
💡Album Advance
💡Streaming Revenue
💡360 Deal
💡Indebted Servitude
💡Music Industry Exploitation
💡Streaming Services
💡Napster
💡Web3 and NFTs
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
participate in this music revolution
tune fm is giving you guys 100 jam coins
for free to give it a listen right now
when you go to tune.fm with the link
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everybody just sign up at tune.fm go
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you have nothing to lose by giving it a
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now thanks to tunefm for sponsoring this
video
[Music]
[Applause]
[Music]
you
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