‘Artist as Retailer’ is the development of an idea that originally came from the FAC, and is the first proposal to be put forward by the new coalition of the MU, FAC and MMF. It addresses the need for a change in the way artists receive royalties in the digital world.
Background
A typical artist royalty on a 79 pence digital download is 5-6 pence. Regardless of any arguments as to whether the economics of digital versus physical deliver reduced costs to the record company, the fact that this is small beer is beyond dispute. An artist who has recouped would need to sell over 700,000 downloads to earn £40,000 a year. In the case of an artist with an unrecouped balance of £150k, the artist would need to shift over 2.5 million downloads to recoup. The three organisations behind this proposal believe that a solution has to be found that would deliver a more equitable share to artists from digital sales. This proposal affords the artist the opportunity to retail his or her own product and enjoy a greater share of the profit at zero cost to the record company.
The proposal
Under this proposal, the record company would agree to licence the artist’s recordings to the artist, in much the same way as the record company would licence catalogue to iTunes, Amazon or Napster and at much the same price. The artist would then be able to sell their recordings through their own band/artist web presence.
The mechanics
The record company would account the artist’s royalty from the sum received through the licence, again in much the same way as the record company would do in respect of existing licensing arrangements. Therefore, if the artist was unrecouped, the royalty would be credited to the artist’s account and the unrecouped balance would reduce. If the artist was recouped, then the record company would account and pay royalties to the artist from the amount received for the licence in the time honoured fashion. The artist would pay for and obtain a mechanical licence from MCPS in respect of download sales and keep any profit remaining from the sale of the download.
The money
We propose that the record company licence to the artist for the same price that the artist is accounted to by the label for a download sale (the wholesale price). If there are variations in the wholesale price then the artist should pay at the lowest price. For the sake of this example let’s call it 50 pence a download. The artist would have an additional cost of approximately 5 pence per download for the mechanical licence making a total cost to the artist of 55 pence. From a 79 pence download price the artist would make a profit of 24 pence, plus of course the artist royalty payable by the record company, making a net profit to the artist of almost 30 pence per download.
Conclusion
The artist as retailer is not a new concept, we are all familiar with the practice of buying boxes of records/cd’s from the label to sell at gigs and keep the profit; this is the same thing in a digital age. It will not impact on the record companies’ profits as it is simply one more licensing arrangement on terms that the labels are accustomed to and are mirrored in their existing licensing agreements. Neither will it affect the delicate ecology of advances and recoupment; in fact, it should be a good news story all round resulting in happier artists at zero cost to the record company.
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TweetTags: amazon | fac | featured artists coalition | itunes | licensing | mcsp | mmf | new music platforms
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