I've sheepishly defended record companies in the past trying to make the point that they have been known to nurture artists, but I can't make this argument with a straight face. Damian Kulash Jr. writes in his NY Times Op Ed:
...record companies [have earned] a reputation for being greedy and short-sighted. And by and large they deserve it. But before we cheer for the demise of the big bad machine, it’s important to remember that record companies provide the music industry with a vital service: they’re risk aggregators.
See, I like this. 'Nurturing artists' sounded way too charitable. 'Risk aggregator' frames the involvement in purely financial terms which feels more appropriate and accurate.
To go from playing at a local club once a month to actually supporting yourself with music requires big investments in touring, recording and promotion — investments young musicians can’t afford. My band didn’t sign a contract with EMI because we believed labels magically created stars. We signed because no banker in his right mind would give a band the startup capital it needs.
Exactly! Breaking a band takes cash, and record companies are basically banks that specialize in high-risk loans. Maybe the record industry needs a bailout?
OK, now check this out. It is really fun to play 'bash the record industry' (usually in the context of justifying piracy) and point out how completely unfair music industry record contracts are - contracts the artists willingly signed and, in most cases, understood with the help of a capable attorney.
Record companies, on the other hand, didn’t expect that all their advances would be repaid. They spread the risk by betting on hundreds of artists at once, and they recouped their investments by taking the lion’s share of the profits on the few acts that succeeded.
This is how the music industry operates. If anyone wants to argue about this, they're perfectly welcome to go get a more favorable contact with some other company, or do everything on their own/raise capital themselves.
Today, as the record industry’s revenue model has collapsed with the digitization of its biggest commodities, companies are cutting back spending on all but their biggest stars, and not signing nearly as many new acts. If record companies can’t adapt to this new world, they will die out; and without advances, so will the futures of many talented bands.
...aaaand we're back to the death of the recording industry as we know it. He's right that record companies are the only entities around willing to make these sort of high-risk investments. As the industry adjusts itself, it will shrink and focus its efforts on low risk, vanilla, higher-return products.
So, where does that leave acts who deserve a national stage, but exist beyond the fringe of a safe investment? Most will die on the vine. I'd like to see major corporations sponsor smaller music acts. Not record labels, but, like national brands like Doritos, Budweiser, etc... Kind of like how your favorite athlete makes the majority of his money. Personally, I want to be sponsored by Advil. ARE YOU LISTENING, PFIZER? I WANT TO BE THE FIRST MUSIC ACT SPONSORED BY A PAIN RELIEVER. These companies have huge marketing budgets. They can sponsor the arts and raise their brand awareness at the same time.
