The Death of the Middle-Class Musician

The lede of this article, about Rollie Pemberton, is about a "360" deal where the label gets a cut of all revenue related to the act (Pemberton's "Cadence Weapon"). Unusually, in Pemberton's case, it appears that most of his revenue came in from prizes and grants, not from recording sales or touring. The structure of his deal thus made Upper Class Records an outsized return. The deal seems pretty exploitative.

The problem with this as a framing device is that it doesn't describe very many working musical acts. 360 deals are probably generally gross? But Pemberton's situation is weird. In most cases, labels are in fact going to lose money from midlist acts.

The more you look at these kinds of businesses the more striking the pattern is. It's true of most media, it's true of startups, it's true for pharmaceuticals. The winners pay for the losers; in fact, the winners are usually the only thing that matter, the high-order bit of returns.

What's challenging about this is that you can't squeeze blood from a stone. The package offered to a midlist act might in fact be a loss leader; incentive to improve dealflow and optionality for the label, to get a better shot at the tiny number of acts whose returns will keep the label afloat. There may not be much more to offer to acts that aren't going to generate revenue.

David Lowery (a mathematician and the founder/lead vocalist of Camper Van Beethoven and Cracker) had an article about this years ago:

https://news.ycombinator.com/item?id=3850935

It's worth a read (though things have probably changed in a number of ways since then). It's an interesting counterpoint to the automatic cite to Albini's piece that comes up in these discussions. Not that you should have sympathy for labels, just it's useful to have a clearer idea of what the deal was. The classic label deal with a mid-sized advance that never recouped (and which the labels never came back looking for when it didn't) was basically the driver for "middle-class" rock lifestyles; it's dead now.

> In most cases, labels are in fact going to lose money from midlist acts.

This is almost certainly the case. The music business is the economics of superstars. see: Rosen, Sherwin. “The Economics of Superstars.” The American Economic Review 71, no. 5 (1981): 845–58.

Small personal difference translate into enormous differences in earnings. The income curve has only small area for middle incomes. Either you are below middle, or you quickly get into upper middle class or higher incomes. It's not a market failure but a predictable dynamics of this particular field.

Artists low pay is driven by two things:

First, an oversupply of talent willing to work below a living wage keeps incomes low.

Second, promotion and marketing are the primary drivers of an artist's financial outome, leading to uneven deals where labels handle the heavy lifting and deserve larger piece of the cake. Once an artist's career reaches a certain scale, their earnings can grow to outweigh their direct creative input.

This is a very sensible analysis of the problems. On the one hand, people tend to ignore how many bands fail, and how much money and effort is spent on the process. On the other hand, labels have a deathgrip on the industry, using payola and other practices that they can afford thanks to their financial (and accounting) abilities.

One thing that could help is transparency, but in a way the lack of transparency is a good part of what keeps the system going. Most people would not agree if they knew how little they would keep if they were successful; "what do you mean I have to pay for the losers?". They would just want to pay for what was necessary for their success, ignoring every expense that didn't work as a "stupid label decision". The thing is that nobody has a true recipe for success, you can just get reasonable estimates on your bets, but each bet will always be a biased coin flip.