The boss of EMI says iTunes prices will have to go up, because the labels aren’t making enough money. According to the article:
Artists, represented by music publishers, take home only around 6 cents from every 99 cents sale, with recording rights holders earning around 65 cents.
By charging more, the labels will pay the artists more. But perhaps they should be trying to cut their costs to get the same end result.
Here’s an unlikely hero: ginger whinger Mick Hucknall of Simply Red. Where most acts get $0.06, Word magazine reports that Hucknall gets around ten times that amount. The difference? He’s no longer with a record label. SimplyRed.com is completely independent, so not only does Hucknall get the artist royalty, but he gets the record company slice too. That’s a lot of money.
What that means is: you can keep iTunes prices the same but make ten times the cash, simply by not re-signing your record deal when it expires.
Now, let’s say you’re Radiohead. You’re reaching the end of contract with your record label (I think, but I’m not sure, that Radiohead are currently between deals). Why bother re-signing for a paltry royalty rate when you can deal direct with iTunes and get all of the money, not just the little chunk left over after the label and distributors have taken their cut? You can jump off the album/tour/album bandwagon, do whatever the hell you like without interference, and make more money.
Record labels are important – without them, many bands wouldn’t break – but as Arctic Monkeys and the various MySpace bands are demonstrating, you can carve out a reasonable career without being on a label. At the other end of the scale, yer U2s, yer Radioheads, yer Robbie Williamses… do they really need record labels at all? The labels need them – the money from their sales pays for the next tier of bands, and a delayed Coldplay album is enough to make a label’s share price plummet – but do the big bands need the labels any more?
If I were the head of a major record label, I’d be absolutely crapping myself.