Background: How the cooperation between Martin Garrix and Spinnin’ Records should work

Last days news sites and blogs are full of news about the split between Martin Garrix and his record label Spinnin’ Records Management and Music All Stars. Tension in the relationship between parties arose. If parties decided to continue their collaboration how should the collaboration between Martin Garrix, Spinnin ‘Records and Music All Stars work?

Not too long ago, record companies and music publishers dominated the world of music and dictated its practice. Musicians were reliant of them for financing, marketing and distribution. Those days are over. Self-published content is more powerful than many realize. It can be the launching pad for a career in music (or writing, or cinema et cetera). The key issue is to create a fan base, which is more important than making money from the self-published content. In the music industry of today it is still not clear who is responsible for, or has to invest time and money in the internet strategy of the artist. All parties involved – record companies, music publishers, booking agencies – point at their neighbor, so nothing really happens. So what is the artist’s or deejay’s new business model?

House of rights

Start a ‘house of rights’. A house of rights is a legal entity (private limited company or foundation) that owns, administers and exploits the artist’s intellectual properties. It makes it easier to negotiate deals with organizations in the music business, such as record companies, music publishers, booking agents and the like. It simplifies the application and management of the artist’s internet ecosystem.

One of the house of right’s objectives is the exploitation of the artist’s rights. At the close of the financial year, the organization will take stock of the results – what the rights have yielded – and pay out the share in profits according to agreements with parties involved, for example manager, record company or music publisher.

A house of rights is a veritable ‘360-degrees cooperation’; after all, it represents a common interest. Moreover, and this is contrary to the situation of old, it is not a defensive collaboration. Before, the standard contract implied that the record company owned the rights. It limited its risk and protected its investment.

This new 360-degrees cooperation is currently the juridical solution for the changes internet has pressed upon the music business. Decreasing revenues from record sales and pay-per-downloads oblige the artist or deejay to look for new income models within the business model. Furthermore, the value proposition must be the focus, not the income model. Artists are aware that internet gives them endless opportunities to connect with their fans. They want to adopt to the new dynamic of the music business.

This dynamic sees borderlines dissolve and music companies entering territory that used to be the professional area of complementary businesses. In other words, the record company no longer is in pole position. The booking agency is on the rise, since the bulk of the artist’s revenues come from live performing. However, the 360-degrees contract frequently fails to deliver on its promise, Record labels, as well as many booking agencies, are simply not able to fully exploit the copy rights or work in tandem with outside parties. Releasing and marketing music – which is an income model, not a value proposition – is the record label’s core business and top priority.

Fan relation

Fans want to be close to an artist or deejay. They want to decide whether, and how much, for music, a live performance or merchandise. Who ‘owns’ the artist’s or deejay’s fans? Not the record company nor the booking agency; not the management nor Facebook, actually. Obviously, it’s the artist or deejay. The fan connection is his only tangible asset.

Although the deejay or artist has more data on his (potential) fans and followers than ever before, the vast majority of these data is not stored or valued. As a result, the artist or deejay misses out on opportunities to extent his fan scope. And let’s not forget, the direct contact with the fan. Thus, the artist overlooks what could very well be the crux of the matter, which is the monetary value his fans represent. After all, the fan base represents financial value, which can be added to the balance sheet. This is the new paradigm.

The artist or deejay should collect only data that really produce relevant knowledge or result into transactions. Only then can the data be added to the balance sheet as monetary value. Often, these data are at the artist’s or deejay’s disposal, yet he or his management has not figured out how to exploit the information. Indeed, the present day artist or vent producer collects, without realizing it, an extensive volume of fan-related data, produced by his email data base, Facebook friends, and friends and followers on various channels like Twitter.

The artist or deejay can start a direct relation with friends and followers, who, in turn, can be recruited to raise new friends and followers. This helps to expand the scope of news items on upcoming performances, merchandise and music. Moreover, the connections provide endorsement and sponsor options, due to the links that will emerge from cross-referencing the data base: the data base is a map of the artist’s audience. Information of this kind will help to negotiate a favorable contract with record labels, music publishers, booking agencies, event producers, brands, organizations and companies.

Cement

For fans, the cement that holds the artist-fan relation together is the music, the story and the personality of the artist or deejay. In fact, the artist or deejay himself is the intellectual property via his music. He (she) makes the connection with the fans, which subsequently results in the data that artist or deejay can capitalize on. In the right 360-degrees collaboration, the manager is the artist’s business partner who operates in a ‘full rights management’ business model that supposes the artist or deejay as a brand.

All the artist’s or deejay’s rights, like personality rights, trademark rights, related rights, copy rights and other rights, are the aces in the manager’s arsenal in negotiating  a favorable contract for his client or business partner. These rights are part of the house of rights that is administered by the artist’s or deejay’s management. From this house of rights-construction, you can license the rights per area to an operator who is best at his chosen field. In this way, records labels, music publishers, booking agencies, event producers, commercial sponsor raisers and merchandisers have become service providers.

Experience learns that in the entertainment industry and the music business in particular, innovations take a long time to land. One of the reasons is that challengers of the status quo are ever dependent of the establishment. This state of affairs is illustrated by the lack of urgency to re-evaluate content or asses the vitality of current business practices.

* These are some paragraphs of the new upcoming publication ‘EDM and the Digital Domain – Why dj’s, events and festivals should change’. Release date 1st of October 2015.