In the News
August 31, 2005
The Music Industry is Changing, and the Labels are Adapting - Artists Be Warned
By Mathew B. Rabin
Recently The Wall Street Journal reported on what may well be a turning point in the music industry. The new "manufactured" pop group, The Pussycat Dolls, a recently reformed band-cum-LA burlesque show, have yet to release their first album. Nevertheless, they have a Billboard Magazine number 1 song, a Las Vegas nightclub and a cosmetics line. "Ancillary business" is the new well from which the music labels hope to drink.
Since the late '90s, record labels have seen their bottom lines dwindle due to piracy and general malaise of would-be commercial music consumers. Historically, record companies rarely made money on anything other than album sales. Now, with The Pussycat Doll model, A&M-Interscope, the Dolls' label, will share equally in all ventures of the band-from the lounge homage act at Caesars in Las Vegas, to TV appearances to their line of makeup with Estée Lauder. As Jeff Haddad, The Pussycat Dolls manager was quoted as saying in The Wall Street Journal, "It's no longer strictly music."
Such an aggressive, 'vertically-integrated' strategy is a shrewd move, regardless of its success with The Pussycat Dolls. The article highlights some of the plan's potential problems, one glaring example being lack of success in the past-such as when the 2001 band called Eden's Crush, assembled by contestants from the reality show "Pop Stars", failed to translate show viewership into album sales. Another potential problem from the story: the readiness of known, established music stars to share the rewards of ancillary market success with their labels.
Both issues are right on target. However, both issues may be irrelevant. The labels are keen to take back some of the revenue they've lost over the past five to 10 years. Although it may be a future issue, the labels will almost certainly want to develop such a business portfolio with performers, and, of course, want at least their share of the cash. Artists, whether seasoned vets or up-and-comers, have to be prepared to identify and negotiate all potential revenue streams stemming from their music. Our practice can help the artist build a sound strategy before their signed with a label, then negotiate the best terms possible-not only for the album deal, but for all potential ancillary markets. Yes, even makeup.
Article, "Pussycat Dolls, Music Label Share All Profits in Novel Deal", by Ethan Smith, The Wall Street Journal © 2005.
This article, Copyright 2005 Mathew B. Rabin, A Professional Law Corporation.