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Have 10 conversations about the recording industry and at least one will contain the phrase “artist development is dead”. This is an exaggeration, although many musicians and their managers have painfully learned that this is also true. A better term, however, might be the more mundane, “artist development is expensive”.
Record labels pay huge sums to find, record, promote and market artists. A 2020 report from IFPI puts global A&R and marketing spend at $5.8 billion, or about 34% of annual revenue. Admittedly, only a portion of this money is spent on developing new artists from scratch, while some is spent on more established artists. But the nature of the business means record labels have to deal with sunk costs – meaning they have been incurred and cannot be recovered – before decide how much to spend to promote and market a young artist. Holding your wallet is not an option.
Record labels like to minimize risk in an inherently risky business. This means that signing an artist with existing momentum may be preferable to developing a complete unknown. TikTok is the current A&R tool of choice because a song that enjoys viral success is already popular and takes the guesswork out of signing an artist. Likewise, a broad social media presence reduces the doubt that an artist will succeed and secures an existing following. And labels are only too happy to let someone else spend the money: competitions such as american idol, The voice and American song contest bear the cost of introducing an artist to the public, giving the winner – and anyone else who gets a label deal – invaluable visibility and recognition before they step into the recording studio.
In the context of risk reduction, it’s no surprise that entertainment companies are now creating content with virtual characters based on well-known non-fungible symbolic artwork. iHeartRadio announcement On Tuesday, he will create a series of podcasts based on NFT artwork from the Bored Ape Yacht Club and CryptoPunks collections. The goal is to make the Non-Fund-Squad a “media franchise and shared multimedia universe” using iHeartMedia-owned characters built around CryptoPunk #2821, Mutant Ape #10144, and NFTs from other collections, according to the Press release.
In a strictly financial sense, the NFT artwork is like an artist or DJ with an existing audience. The owner of a Bored Ape or CryptoPunk NFT can tap into pre-existing communities and benefit from the promotional work of NFT developers, Yuga Labs and Larva Labs. (Yuga Labs bought Larva Labs in March.) Now, iHeartMedia didn’t buy a turnkey operation like a McDonald’s franchise — they still face the hard work of giving NFT personalities and creating compelling programming. But, on the other hand, they don’t start from scratch either.
We have also seen it in music. In November, Universal Music Group announced the formation of a music group, Kingship, consisting of four characters from Bored Ape Yacht Club. And because every four-piece band needs its own Brian Epstein, in March, 10:22 p.m. — the UMG imprint behind Kingship — paid around $360,000 for a fifth Bored Ape NFT who will be the band’s manager, called Manager Noet All. If that sounds unusual to you, consider UMG spent €588 million and €364 million (net) in 2020 and 2021, respectively, on advances it hopes – but will not fully recover – from artists and songwriters. If developing an artist is expensive, why not invest in a trending NFT?
The fact that giant entertainment companies create characters on NFTs isn’t the main point here. It’s about strengthening intellectual property and reducing risk. A virtual band is built on artwork, not a piece of code. An NFT is a digital token, its existence proven on a blockchain, which represents ownership of Something — digital artwork, a share of music royalties or even a house in Florida sold at auction by a company called Propy for $653,163 worth of ether. But the nature of some NFTs actually encourages owners to create characters, music, podcasts, and other content. Not only can the owners of a Bored Ape or CryptoPunk NFT capitalize on the brand recognition of these collections, they also own the rights to monetize the intellectual property of the work. This is not always the case with NFTs: you can spend hundreds of thousands of dollars on a piece of digital art without owning the copyright. But if you own a Bored Ape NFT, a Hollywood casting director might cast your character for “The Degan Trilogy,” a series of Bored Ape Yacht Club animated shorts. produced by CoinBasethe $39 billion publicly traded crypto exchange.
Some people may roll their eyes at the thought of NFT-based music and podcasts or predict doom for projects. But iHeartMedia and 22:22 have proof they can pull it off.
One of Japan’s biggest pop stars, Hatsune Miku, is a hologram. Miku has 2.1 million YouTube subscribers and 1.3 million monthly listeners on Spotify. During live concerts, Miku is projected onto a glass screen – something American and European audiences have seen with deceased legends such as rapper Tupac Shakur and heavy metal singer Ronnie James Dio. In 2020, South Korea’s SM Entertainment launched Aespa, an eight-member group made up of four singers and their digital counterparts that now has 4.4 million monthly listeners on Spotify. Avatars have enough mainstream potential that baby boomers can get on board as well. Next month, Swedish pop legends ABBA will launch a virtual concert, ABBA Voyage, in which the four members’ young avatars will be supported by a 10-piece live band in a custom-built London arena.
Then there’s Gorillaz, the animation group formed in 1998 by Blur frontman Damon Albarn and artist Jamie Hewlett. Tracks such as “Clint Eastwood” and “Feels Good, Inc.” helped make Gorillaz international stars, tour the world, sell millions of albums and win a 2006 Grammy for Best Pop Collaboration with Vocals – a perfect category for a real band represented by characters from cartoons. Gorillaz didn’t have to start from scratch: Albarn had already achieved rock star status when the group’s first recording was released in 2000, and Hewlett was known to be the comic’s co-creator. tank girl. Still, the band’s success and longevity is surprising as no other artist has done it yet.
The saying in the music world is “it all starts with a song”. Before an artist walks into a recording studio, a songwriter creates lyrics, chord changes, and melodies in hopes of capturing listeners’ attention. A great song has a chance of finding an audience eventually. The saying deserves a reverse that says “everything ends with a bad song”. This will be the difference factor here. No NFT-based star, celebrity, or virtual artist – no matter how well known – is immune to failure when the music isn’t right. This is the real risk.
Until April 15, the % change over the last week and the change since the beginning of the year
Spotify (NYSE: SPOT): $136.27, -3.5%, -41.8% YTD
Universal Music Group (AS: UMG): 24.89 euros, +4.5%, +0.4% since the start of the year
Warner Music Group (Nasdaq: WMG): $35.65, -4.4%, -17.4% YTD
HYBE (KS 352820): 294,000 KRW, +3.7%, -15.8% YTD
nation live (NYSE: LYV): $111.31, +3.2%, -7.0% YTD
MSG Entertainment (NYSE: MSG): $80.71, +2.8%, +13.8% YTD
Cumulus (Nasdaq: CMLS): $14.21, +40.7%, +26.3% YTD
Composite NYSE: 16,511.51, -1.1%, -3.8% since the beginning of the year
Nasdaq: 13,351.08, -2.6%, -14.7% since the beginning of the year