There's an article on the NY Times site today about a new approach to the music business by the band Korn. Regardless of what you think of Korn as artists the article is an interesting read.
http://www.nytimes.com/2006/01/11/arts/ ... html?8hpib
My understanding is that they have negotiated a deal with EMI (their record company) and Live Nation (their concert promoter) where all band revenue -- cds, merchandise, concert tickets, videos, etc -- gets put into one big pot. The various parties then get a cut of the total revenue. The idea is that the record label will have more interest in promoting the band's concerts and such, and the concert promoter has more interest in promoting the band's other merchandise sales.
Anyway, read the article if you're interested. I'm curious what people think of this approach.
Korn's new music business model
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- KVRer
- 17 posts since 28 Feb, 2005 from Michigan
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TotcProductions TotcProductions https://www.kvraudio.com/forum/memberlist.php?mode=viewprofile&u=6202 - KVRAF
- 5157 posts since 5 Mar, 2003 from Franklin, NH
That's very nice. Hopefully, it will teach all these record companies a small lesson and the bands will benefit more in the end.bipolarbear wrote:There's an article on the NY Times site today about a new approach to the music business by the band Korn. Regardless of what you think of Korn as artists the article is an interesting read.
http://www.nytimes.com/2006/01/11/arts/ ... html?8hpib
My understanding is that they have negotiated a deal with EMI (their record company) and Live Nation (their concert promoter) where all band revenue -- cds, merchandise, concert tickets, videos, etc -- gets put into one big pot. The various parties then get a cut of the total revenue. The idea is that the record label will have more interest in promoting the band's concerts and such, and the concert promoter has more interest in promoting the band's other merchandise sales.
Anyway, read the article if you're interested. I'm curious what people think of this approach.
peace
frank.
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- Rad Grandad
- 38041 posts since 6 Sep, 2003 from Downeast Maine
tbh new york times plus the RIAA (likely a big part of it) doesn't really give me much faith...
The highest form of knowledge is empathy, for it requires us to suspend our egos and live in another's world. It requires profound, purpose‐larger‐than‐the‐self kind of understanding.
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- KVRist
- 346 posts since 7 Sep, 2004
could you cut and paste the article?bipolarbear wrote:There's an article on the NY Times site today about a new approach to the music business by the band Korn. Regardless of what you think of Korn as artists the article is an interesting read.
http://www.nytimes.com/2006/01/11/arts/ ... html?8hpib
My understanding is that they have negotiated a deal with EMI (their record company) and Live Nation (their concert promoter) where all band revenue -- cds, merchandise, concert tickets, videos, etc -- gets put into one big pot. The various parties then get a cut of the total revenue. The idea is that the record label will have more interest in promoting the band's concerts and such, and the concert promoter has more interest in promoting the band's other merchandise sales.
Anyway, read the article if you're interested. I'm curious what people think of this approach.
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- KVRer
- Topic Starter
- 17 posts since 28 Feb, 2005 from Michigan
Here's the article, as requested...
LOS ANGELES, Jan. 10 - When the hard-rock band Korn hits the road in the coming weeks to promote its new album, it will be performing not simply a string of gigs but a running experiment in music-industry finance.
Today Korn is expected to announce an unorthodox deal with the nation's biggest concert promoter that advances the band's strategy of turning itself into an investment vehicle and redefining how the revenue pie is split in the music business.
Under the terms of the arrangement, Live Nation Inc. will share far more than is typical for a promoter, which normally receives a cut of the band's box-office sales but little else. Instead, the company is paying roughly $3 million for an estimated 6 percent stake in the band's box office, licensing, publishing, merchandise and CD revenue for its recently released album, "See You on the Other Side," and its next album, music industry executives involved in the deal say. Live Nation will also be the exclusive promoter of Korn's concerts in the United States.
"We really are stepping 50 feet back and looking over the next four to six years at the profitability of the overall Korn business," said Michael Rapino, chief executive of Live Nation. "It's new ground for all of us."
The deal reflects a new twist on relationships that generally involve only two players. Music acts sign contracts with record labels to distribute their CD's; the acts strike separate deals with concert promoters to market their live performances. The labels and promoters historically have not shared in each other's earnings, but under Korn's arrangement with Live Nation - and an earlier all-encompassing pact that the band struck with the music giant EMI Group - the money will flow into one shared pot. The three-way partnership is the latest example of how the various players in the music business are scrambling to keep pace with a shifting market.
Amid a sharp decline in album sales, record labels are hunting for new sources of revenue. Similarly, as the concert industry faces a drop in attendance, promoters like Live Nation - formerly the live-event division of Clear Channel Communications and recently spun off - are also looking outside their traditional field for extra cash.
For their part, recording artists are trying to find better ways to compete for fans in a marketplace crowded with other acts and competing forms of entertainment like video games. Korn's gamble is that its business partners will be more inclined to spend money promoting the band and will allow the artists more flexibility if their fortunes are tied together.
"For the promoter, this is about them having the comfort of knowing that any sacrifices or investments they make, even in touring, let alone in everything else, will come back to them," said Jeff Kwatinetz, a founder of the Firm, the management company that brokered the deal with Live Nation. "Instead of thinking about 'How do we get back $200,000 on the Fresno show?' they're thinking, 'How do we maximize the Korn brand?' They're more likely to invest dollars, ideas, thinking time."
Fans can expect to see more elaborate marketing tie-ins that involve multiple products, like free Korn song downloads with the purchase of a concert ticket.
But some industry figures expressed skepticism.
Jerry Mickelson, an owner of the Chicago-based concert promoter Jam Productions, who recently fought a legal battle with Clear Channel, said, "Any promoter already has plenty of incentive to work hard to sell tickets because of the guarantee" - the upfront fee that a promoter typically pays a band to appear. Live Nation's investment, he added, "is just a way for the promoter to attempt to monopolize the live entertainment industry and cut out competitors."
Mr. Rapino strongly disputed that, saying the corporation's investment was aimed at exploring new business models, not squeezing out rivals. In the standard concert deal, a promoter agrees to pay the performer an upfront fee or a split of future ticket sales, usually 80 percent to 90 percent of the night's box-office sales. In the Korn arrangement, Live Nation will pay for the band's production expenses - but instead of offering a predetermined appearance fee, it will put all of the ticket revenue into the partnership to be split. The corporation will also throw in a portion of the money it makes from ancillary sources, like beer and refreshment sales, in certain instances. (Such revenue is rarely shared with performers.)
There is little indication so far that the business structure devised by Korn will become the industry standard, but there are a few other examples of such arrangements. Many artists' representatives shake their heads at the prospect of sharing revenue from, say, concert tickets with a record label, because they assert that executives who sell CD's lack any expertise in marketing concert seats.
David Munns, chief executive of EMI Recorded Music's North American unit, dismisses such claims.
"I'm not going to manage their tour," he said. "I'm not telling you I want to be in the promotion business. You're not going to hear of me suddenly buying a merchandise company. I just want a piece of that income."
Mr. Munns declined to give details of the company's arrangement with Korn, but executives involved in the transaction said EMI last year agreed to make upfront payments to Korn of $25 million (partly an advance against future earnings). In exchange, EMI received a 30 percent stake in the band's licensing, ticket sales and other revenue sources. The deal was struck after Korn left its previous label, Sony Music.
Before that, EMI committed to a deal with an Irish vocal group, Celtic Woman, in which it receives a share of revenue from various sources, including ticket and merchandise sales, in addition to CD's. Three years earlier, it reached a revenue-sharing deal with the pop singer Robbie Williams.
In a similar vein, Interscope Records, an arm of the music conglomerate Universal Music Group, developed a deal with a newly created pop act, the Pussycat Dolls, in which the label shares in the artists' cosmetic line and earnings from a new themed Las Vegas nightclub bearing their name.
While EMI and now Live Nation are rolling the dice on an established American act, it is one whose commercial clout has appeared to be on the wane. Korn's best-selling album, 1998's "Follow the Leader," sold an estimated 3.8 million copies in America, according to Nielsen SoundScan data. Its last new studio album, "Take a Look in the Mirror," released in 2003, has sold roughly 1.1 million copies.
Its touring prospects in recent years have appeared uncertain, too. Korn generated more than $15 million in annual ticket sales in its heyday a few years ago, playing more than four dozen dates a year, according to Billboard. A shorter stint in 2004 generated less than $4 million.
Live Nation executives say the band will play 30 to 40 concert dates in America this year, kicking off the tour in six to eight weeks.
Its first CD under the new structure, "See You On the Other Side," has enjoyed a strong start, selling an estimated 530,000 copies in the United States since its Dec. 6 release through EMI's Virgin Records label.
Mr. Munns said the investment by Live Nation validates the concept of such revenue-sharing bets and added that the arrangement had already shifted the music company's approach to selling Korn's music. In the Britain, for example, where the band's CD sales have been softer, EMI has devoted extra money to marketing on the notion that its efforts will pay dividends when the band tours there. "The more you focus on it now, on the front end, the more the touring is going to work," he said. "We certainly are more conscious today about the value in the brand, rather than just looking at record sales."
That is the hope of the band's management.
"We've taken the biggest promoter and one of the biggest record labels and incentivized them to think long term and to think career about our band," Mr. Kwatinetz said. "We believe long-term career planning is what's been lacking in the business. We believe that's part of the solution to the woes the music business is experiencing."
LOS ANGELES, Jan. 10 - When the hard-rock band Korn hits the road in the coming weeks to promote its new album, it will be performing not simply a string of gigs but a running experiment in music-industry finance.
Today Korn is expected to announce an unorthodox deal with the nation's biggest concert promoter that advances the band's strategy of turning itself into an investment vehicle and redefining how the revenue pie is split in the music business.
Under the terms of the arrangement, Live Nation Inc. will share far more than is typical for a promoter, which normally receives a cut of the band's box-office sales but little else. Instead, the company is paying roughly $3 million for an estimated 6 percent stake in the band's box office, licensing, publishing, merchandise and CD revenue for its recently released album, "See You on the Other Side," and its next album, music industry executives involved in the deal say. Live Nation will also be the exclusive promoter of Korn's concerts in the United States.
"We really are stepping 50 feet back and looking over the next four to six years at the profitability of the overall Korn business," said Michael Rapino, chief executive of Live Nation. "It's new ground for all of us."
The deal reflects a new twist on relationships that generally involve only two players. Music acts sign contracts with record labels to distribute their CD's; the acts strike separate deals with concert promoters to market their live performances. The labels and promoters historically have not shared in each other's earnings, but under Korn's arrangement with Live Nation - and an earlier all-encompassing pact that the band struck with the music giant EMI Group - the money will flow into one shared pot. The three-way partnership is the latest example of how the various players in the music business are scrambling to keep pace with a shifting market.
Amid a sharp decline in album sales, record labels are hunting for new sources of revenue. Similarly, as the concert industry faces a drop in attendance, promoters like Live Nation - formerly the live-event division of Clear Channel Communications and recently spun off - are also looking outside their traditional field for extra cash.
For their part, recording artists are trying to find better ways to compete for fans in a marketplace crowded with other acts and competing forms of entertainment like video games. Korn's gamble is that its business partners will be more inclined to spend money promoting the band and will allow the artists more flexibility if their fortunes are tied together.
"For the promoter, this is about them having the comfort of knowing that any sacrifices or investments they make, even in touring, let alone in everything else, will come back to them," said Jeff Kwatinetz, a founder of the Firm, the management company that brokered the deal with Live Nation. "Instead of thinking about 'How do we get back $200,000 on the Fresno show?' they're thinking, 'How do we maximize the Korn brand?' They're more likely to invest dollars, ideas, thinking time."
Fans can expect to see more elaborate marketing tie-ins that involve multiple products, like free Korn song downloads with the purchase of a concert ticket.
But some industry figures expressed skepticism.
Jerry Mickelson, an owner of the Chicago-based concert promoter Jam Productions, who recently fought a legal battle with Clear Channel, said, "Any promoter already has plenty of incentive to work hard to sell tickets because of the guarantee" - the upfront fee that a promoter typically pays a band to appear. Live Nation's investment, he added, "is just a way for the promoter to attempt to monopolize the live entertainment industry and cut out competitors."
Mr. Rapino strongly disputed that, saying the corporation's investment was aimed at exploring new business models, not squeezing out rivals. In the standard concert deal, a promoter agrees to pay the performer an upfront fee or a split of future ticket sales, usually 80 percent to 90 percent of the night's box-office sales. In the Korn arrangement, Live Nation will pay for the band's production expenses - but instead of offering a predetermined appearance fee, it will put all of the ticket revenue into the partnership to be split. The corporation will also throw in a portion of the money it makes from ancillary sources, like beer and refreshment sales, in certain instances. (Such revenue is rarely shared with performers.)
There is little indication so far that the business structure devised by Korn will become the industry standard, but there are a few other examples of such arrangements. Many artists' representatives shake their heads at the prospect of sharing revenue from, say, concert tickets with a record label, because they assert that executives who sell CD's lack any expertise in marketing concert seats.
David Munns, chief executive of EMI Recorded Music's North American unit, dismisses such claims.
"I'm not going to manage their tour," he said. "I'm not telling you I want to be in the promotion business. You're not going to hear of me suddenly buying a merchandise company. I just want a piece of that income."
Mr. Munns declined to give details of the company's arrangement with Korn, but executives involved in the transaction said EMI last year agreed to make upfront payments to Korn of $25 million (partly an advance against future earnings). In exchange, EMI received a 30 percent stake in the band's licensing, ticket sales and other revenue sources. The deal was struck after Korn left its previous label, Sony Music.
Before that, EMI committed to a deal with an Irish vocal group, Celtic Woman, in which it receives a share of revenue from various sources, including ticket and merchandise sales, in addition to CD's. Three years earlier, it reached a revenue-sharing deal with the pop singer Robbie Williams.
In a similar vein, Interscope Records, an arm of the music conglomerate Universal Music Group, developed a deal with a newly created pop act, the Pussycat Dolls, in which the label shares in the artists' cosmetic line and earnings from a new themed Las Vegas nightclub bearing their name.
While EMI and now Live Nation are rolling the dice on an established American act, it is one whose commercial clout has appeared to be on the wane. Korn's best-selling album, 1998's "Follow the Leader," sold an estimated 3.8 million copies in America, according to Nielsen SoundScan data. Its last new studio album, "Take a Look in the Mirror," released in 2003, has sold roughly 1.1 million copies.
Its touring prospects in recent years have appeared uncertain, too. Korn generated more than $15 million in annual ticket sales in its heyday a few years ago, playing more than four dozen dates a year, according to Billboard. A shorter stint in 2004 generated less than $4 million.
Live Nation executives say the band will play 30 to 40 concert dates in America this year, kicking off the tour in six to eight weeks.
Its first CD under the new structure, "See You On the Other Side," has enjoyed a strong start, selling an estimated 530,000 copies in the United States since its Dec. 6 release through EMI's Virgin Records label.
Mr. Munns said the investment by Live Nation validates the concept of such revenue-sharing bets and added that the arrangement had already shifted the music company's approach to selling Korn's music. In the Britain, for example, where the band's CD sales have been softer, EMI has devoted extra money to marketing on the notion that its efforts will pay dividends when the band tours there. "The more you focus on it now, on the front end, the more the touring is going to work," he said. "We certainly are more conscious today about the value in the brand, rather than just looking at record sales."
That is the hope of the band's management.
"We've taken the biggest promoter and one of the biggest record labels and incentivized them to think long term and to think career about our band," Mr. Kwatinetz said. "We believe long-term career planning is what's been lacking in the business. We believe that's part of the solution to the woes the music business is experiencing."
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deleted deleted https://www.kvraudio.com/forum/memberlist.php?mode=viewprofile&u=1
DELETED
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- KVRAF
- 1530 posts since 20 Apr, 2005 from southsubchicago
you're thinking about it all wrong...Jonny X wrote:sounds like a very good idea for the big boys. Doesn't affect us self-promoted acts tho....
that's what the bigs boys are thinking, you gotta think about the "Jonny X Brand"....bipolarbear wrote:
"Instead of thinking about 'How do we get back $200,000 on the Fresno show?' they're thinking, 'How do we maximize the Korn brand?' They're more likely to invest dollars, ideas, thinking time."
"4 out of 5 doctors prescibe Jonny X Brand Benzos over other, shittier brands"... "Choosey mothers choose Jonny X Brand Bran for their constipated children"..."Jonny X Brand is the Official Brand Suppository Endorsed by the Multi-National Capitalist Machine....ask for it by name (and don't forget: thumbs-up!)"
you gotta sell sell sell, pimp pimp pimp, whore whore whore....but look like you don't give a shit all the while....
second place prize is a set of steak knives, third place prize YOU'RE FIRED!!!
Last edited by ross g on Thu Jan 12, 2006 5:46 am, edited 1 time in total.
KVR: come for the music, stay for the polemics and grammar lessons...
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TotcProductions TotcProductions https://www.kvraudio.com/forum/memberlist.php?mode=viewprofile&u=6202
- KVRAF
- 5157 posts since 5 Mar, 2003 from Franklin, NH
ross g wrote:you're thinking about it all wrong...Jonny X wrote:sounds like a very good idea for the big boys. Doesn't affect us self-promoted acts tho....
that's what the bigs boys are thinking, you gotta think about the "Jonny X Brand"....bipolarbear wrote:
"Instead of thinking about 'How do we get back $200,000 on the Fresno show?' they're thinking, 'How do we maximize the Korn brand?' They're more likely to invest dollars, ideas, thinking time."
"4 out of 5 doctors prescibe Jonny X Brand Benzos than other, shittier brands"... "Choosey mothers choose Jonny X Brand Bran for their constipated children"..."Jonny X Brand is the Official Brand Suppository Endorsed by the Multi-National Capitalist Machine....ask for it by name (and don't forget: thumbs-up!)"
you gotta sell sell sell, pimp pimp pimp, whore whore whore....but look like you don't give a shit all the while....
second place prize is a set of steak knives, third place prize YOU'RE FIRED!!!
Just wanted to lay down some respect for those comments. very funny.
We should meet up for a drink some day. I'll buy. Peace
frank.
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Voidoid Surrealist Voidoid Surrealist https://www.kvraudio.com/forum/memberlist.php?mode=viewprofile&u=41079
- KVRAF
- 4048 posts since 18 Sep, 2004 from Places far less tedious than this blue trainwreck...
ross g wrote: "4 out of 5 doctors prescibe Jonny X Brand Benzos than other, shittier brands"... "Choosey mothers choose Jonny X Brand Bran for their constipated children"..."Jonny X Brand is the Official Brand Suppository Endorsed by the Multi-National Capitalist Machine....ask for it by name (and don't forget: thumbs-up!)"
