Unmasking the Illusion of Independence in the Music Industry

The Illusion of Independence

We've all witnessed the shift in the music industry in recent years. To me, what's most perplexing and problematic is not just the illusion of independence, but also how this concept is sold to artists. Independence is amazing, and ever since we started Unity Group | Music Company , 12 years ago, we've strived to maintain our complete independence and ensure that our artists retain as much ownership of their masters as possible. But something has changed; with the rise of DIY artists and distribution companies, deal structures and the culture around them have evolved and make almost non sense in today’s landscape.

In the midst of this evolution, I've noticed a new trend: many managers are now building ''labels'' in an effort to have an additional source of income. Managing is a tough job, and I respect those who take on the mantle. But with this role comes responsibility, and part of that is to act accordingly. If a manager has aspirations to build a label, they should do so—as we did—with integrity and transparency, creating an entity that truly fosters artists' development instead of establishing it as merely a mechanism to supplement their own income. The rise of such pseudo-labels is becoming a part of today's problem.

The Problem with Overpriced Deals

Naturally, as a manager or artist, you want the best deal possible, which for most people means shorter terms with a larger sum of money. On paper, this makes sense, but years of experience have taught me that deals need to be fair for everyone. 

In the past, we used to secure substantial deals, but over time, I've come to believe that those deals were too big. These are the types of deals that everybody is talking about, and there's almost a sense of pride in landing such a deal. However, 8 times out of 10, these deals fail because they're overpriced. People are still engaging in these types of deals today, and many artists and managers continue to be excited about them, but this approach is short-sighted. We need to find the right balance and assign the appropriate value to your art for everyone involved. 

Fun fact: of all the big deals we made, all the executives found ways to hide them under the carpet to maintain a positive P&L. That's why such deals continue to happen—because there are ways to hide the fallout.

The Value of Art/ Music

Speaking of appropriate value, you've probably seen this quote from Warner Music Group CEO Robert Kyncl arguing that "an Ed Sheeran stream is not worth the same as a stream of rain falling on a roof." On paper, I agree. However, while art value is somewhat subjective (the value of an artist is also based on various criteria, as in music), the dynamics in the music industry are different. For instance, when a painter works with a gallery, the gallery takes a 50% commission, and the buyer ends up owning the piece. The music industry operates differently.

Independence and Its Hidden Truths

Numerous industry players and 'gurus' loudly assert that you should own your master, control your career, and build your label. But the critical question artists should ask is, "Am I capable of doing this? Do I want to do it? Am I willing to invest the time, money and energy required?" An example that comes to mind involves one of our artist who received an appealing offer from a distributor—a classic 25/75 deal in the artist's favor, a generous advance, and short terms. Initially, you, like many others, might think this is a good deal. However, I believe it's not, and here's why:

• Artists often don't know how to utilize the advance. Most artists I know use the advance to sustain their lifestyle, not to invest in their careers.
• While distribution implies independence, there's a hidden truth: your assets will be tied up with the distributor until they recoup.
• Distributors have tools to calculate deals that ensure they won't lose money. They might not earn a lot, but they will never incur losses.
• Distributors won't do the job for you. This is not their business model.
• How can people be expected to work for a 25% share with no ownership?

This last question is crucial. Without any sense of ownership, can you truly care?

The crucial impact of Time and Cost

Frequently, people end up disappointed by the work and choose to find another deal (distribution or label). Over the years, I have seen numerous artists move from label to label because they were ‘unhappy’ and it’s getting more and more frequent. I personally think this is due to the deal structure and the lack of transparency between all the partners involved.

(Don't get me wrong, there are brilliant distribution, record companies or management team with the right approach, but there are also deals that aren't worth the paper they're written on.)

I want to draw attention to the notion of time, which is often overlooked in the music industry. Do you know the cost of building a commercial record? If you know the amount, can you imagine the expense required to develop an artist or create a superstar? In reality, nurturing independent artists as labels or fostering superstars as major companies comes with a cost: time and/or money.

If an artist or manager don't give enough terms to a label or don't use the money wisely, the change of success are really low. And their schema of finding new deals over and over again will repeat.

The Changing Roles of Majors, Indies, and Distributors

With deals getting shorter and major labels no longer owning the masters, their business plan becomes simpler. This is the current trend—focusing on catalog rather than investing millions in projects and assets that may leave after a few years (have you seen the results of Ed Sheeran latest album?). Operating with existing catalogues and developing new artists are fundamentally different tasks that require separate skillsets and team. The need to adapt to these new deal structures has had tangible impacts on the majors, as evidenced by recent layoffs. This structural shake-up is forcing them to seek new growth strategies. Indie labels, on the other hand, can excel at developing artists due to their lighter cost structure, they can take the time. 

Majors should focus on acquiring and marketing catalogs, while independent labels should channel their time and effort into nurturing artist development and distribution companies, in turn, should take the lead in supporting DIY creators or labels and experts who will allocate their funds wisely.

My View on What Independence Should Mean

Nonetheless, being independent does not mean owning everything and maximizing 'short-term' profits. In my view, true independence involves having the freedom to experiment without being tied down, building a supportive team, and finding paths to success where everyone involved benefits and gains ownership, at least for a certain period. Longer licensing terms should offer more time to test ideas and take calculated risks when there is trust in a project, ensuring that the efforts, time, and risks eventually lead to a return on investment. After all, we are engaged in a business endeavor, not charity. At Unity, we strive to create a fair and transparent business model. Unfortunately, some people are driven solely by greed, seeking extended terms to generate more money without putting in the necessary work. This is one reason why artists have opted for the independent path—due to a lack of commitment from partners. Over time, the meaning behind independence has become blurred. Ironically, our industry is like the cat biting its own tail, we often create our own problems, with distribution being a solution to issues caused by those who were excessively greedy and unfair.

Rethinking the Future

In conclusion, we must reassess the notion of independence, redefine deal structures, and be transparent about our expectations in terms of work, time, money, and career development. If you, as an artist, feel capable of owning and managing every aspect, go ahead and do so. But if you feel unable or uninterested in building a music business on your own, collaborate with the right people (bearing in mind that good people come at a cost). If you're a distributor and believe that giving advances to artists will automatically lead to their career or album success, you're mistaken. If you're an indie label and your terms aren't long enough to allow for proper development, you won't achieve success. And if majors adopt the deal-making strategies of indies or distributors, they will no longer possess assets or build superstars.

I am excited to witness how the industry navigates and regulates these challenges. It's possible that AI will become both the solution and the problem in the coming years (I would even bet on it). If you have any ideas, theories, or experiences regarding these changes, please share—I'm eager to learn and discuss more.