Labels subsidize success in bid to break big acts

Coolfer reported last week about comments made by Edgar Bronfman Jr. at the Deutsche Bank Securities Media and Telecommunications Conference, and I found one of his statements interesting. I agree with him, but he doesn't take things far enough, and his shortsightedness is part of the reason why the music business is failing.

Asked about artists releasing music directly to consumers as opposed to going through major record labels, Coolfer reports that Bronfman "firmly defended the value of the record label model and the company's role as financier and risk-taker. "This question is a decade old," he said while recalling his days with Polygram in the '90s. After ten years, Bronfman said, the answer is that it is still very complex, complicated and expensive to launch an artist. Record companies are only entities putting up the capital against the launch, and record labels will continue to be the only ones in a position to do that. He finished with a bang: 'The artist going direct is a false notion, has been a false notion and I think continues to be a false notion.'"

He's right, up to a point. Yes, it is extremely expensive and time consuming to launch an artist these days. There are examples of bands and artists that have gone it alone and made a fairly successful career for themselves (Ani DiFranco, for example), but they are few and far between.

The problem, of course, is that labels are fickle, and after putting hundreds of thousands -- if not millions -- of dollars into breaking an act, they'll cut their losses if it doesn't work. That, perhaps strangely enough, works very much to the advantage of artists.

No one can break an act like a major label. They offer top-flight production, graphic arts, tour support, ad buys and more. A band can go from a regional phenomenon to a nationally known entity in short order. Even if they do nothing more than flop, their name is out there, and their fan base will have expanded significantly. Once they are dropped, that name recognition doesn't go away. Many artists have taken that path, knowing they would make next to nothing during the major-label stint, but consider it an investment. I remember interviewing the Posies' Ken Stringfellow years ago after the band had been dropped by DGC. He said he'll always have the people that discovered him thanks to DGC's promotion as an audience who will likely pay attention to what he does in the future.

So, Bronfman is right: Major labels are still the best way to break bands. But any band with an ounce of sense would bolt at the end of that first contract, guaranteed, unless they're one of the tiny fraction of acts that blow up big, to make more money on their own. Meanwhile, the labels lose money because they spend so much trying to break big acts but don't have the patience to let an artist's audience grow over time.