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Samsung and Jay-Z recently created what many believe to be the new blueprint for the music industry.  Jay turned profits on Magna Carta Holy Grail before the album hit traditional retail, by partnering with Samsung.  The first 1 million customers to download Jay-Z’s app via their Galaxy S III, Galaxy S 4 and Galaxy Note II device received a free album download prior to the formal retail release.

This created a host of questions.

Do labels ultimately matter? Did Jay-Z create #newrules for the Billboard charts? Which brands will step up next to create release strategies? Who’s the next artist to pre-release outside of their label?

Make not mistake, turning a profit on an album prior to the formal release deserves some media whoring, but did it really create #newrules? Hardly.  Extending a step further, Jay-Z’s #newrules campaign actually deteriorates the marketplace not only for major label acts, but more so for indie bands attempting to generate international niche exposure.

With all the questions swirling around Jay-Z’s release, one stands out. What is the release? Meaning: Is it an endorsements deal? Branding deal? Album release platform?  More so, how will it be duplicated? During Midem 2012, I spoke on the topic of international strategies for emerging artists. In its simplest form, the lecture explored “options.” If you’re an artist located in Norway, how do you generate exposure in Los Angeles?  If your band is based in Sydney, how can you sell merch in London?

The answer isn’t just social media, rather a combination of non-traditional factors, ironically monopolised by the international indie music community.  In 2013 I extended the Midem lecture to discuss the newly emerging trend of Anti-360 Deals.  These deals are commonly delivered by non-traditional labels – a topic in itself.  However, at their core, both lectures operate under the principle that ALL artists have assets.  These “assets” don’t necessary refer to recorded music, rather social media, creative structure, fan base, content and numerous other elements which dictate an Artist’s success. In a sense, all Artists are businesses.  Jay-Z himself is a business and what he accomplished with Samsung shouldn’t necessarily be glorified.  Mr. Z has simply implemented a business strategy by using his assets, it just so happens he has more assets than the normal indie artist. Nonetheless, rules haven’t changed, labels are still relevant and nothing unique really happened. Jay-Z simply implemented on a grand scale what indie artists and indie labels have done for years as a way of survival within the international music market.  The lingering question for me is can indies continue to have global success in the wake of Jay-Z and Samsung?

Samsung paid Jay-Z a mountain of money for a product (i.e. himself). Samsung created a unique branding opportunity, more so than they created a release platform.  Make no mistake, Samsung is not a label, nor did they create a new generation of endorsements. They are not an anti-360 label – they simply created a massive partnership deal. This creates problems in the marketplace.  At the major label level, executing successful branding deals coupled around a release strategy is damn near a magic show. A host of unseen variables dictate whether the possibility of carrying on discussions is even possible given the conflicting party interests.

Let’s have a look behind the curtain. Managers may field offers from brands about partnership releases, but they’ll need to check with the artist’s attorney to see if their client even has the flexibility to engage in alternative release strategies, given the terms of recording agreement with the label. For argument, let’s assume all parties are interested. Now the economic filter comes into play. Is the artist in a 360 deal?  How will the branding be classified? Endorsement, sales, partnership, appearance, publicity – all of these have different economic factors concerning payouts for artists, labels, managers, agents, etc.

If the deal becomes an album release, the artist gets minimal royalties based upon the album sales, not the partnership. If it’s an endorsement, the labels receive backend entitlement via the Collateral Entertainment Activities Agreement (i.e. CEA or Multiple Rights Deal) which sometimes excludes management payout. These filters continue through all components of the artist’s business team — meaning numerous stages of approval/disapproval on several endless levels.

Again, for argument, let’s assume everyone works out these issues, and then it comes down to execution, which is the equivalent of a three ring circus set on fire. Doable? Yes.  Easy? No. Execution on a grand scale requires clearly defined collective goals and collaborative efforts, unfortunately neither of which are characteristics exercised within an industry known for personal gain. Just because we see the beautiful end result of the Jay-Z partnership with Samsung doesn’t mean others haven’t attempted similar deals (i.e. Lady Gaga, Madonna). Likely thousands have attempted and failed. At the major level, branding is difficult, at the indie level it is not. The team dynamic in Jay-Z’s case demands applause. The deal itself doesn’t.

With the execution of Jay-Z’s Samsung deal, expectations have already shifted within the industry. Who’s next? Are labels relevant? How big will the next deal be? These are all comments that will oversaturate the partnership market and dilute what indies have been doing for years.

 

They’re all comments rooted in a broken system. How much? Major label partnership deals operate under the model:

Visibility = Money

If we (the artist) give you (the brand) X, you must pay us Y.  This forces major label artists’ fate to rest in the hands of their labels and brands, therefore diluting their voice. It’s driven by big dollars. Emily Gonneau’s most recent midemblog post confirms this structure.

 

To the contrary, indie artists operate under a different model:

Visibility = Social Currency

A monetary exchange does not necessarily need to take place, as indie artists can quickly partner with a company in Sweden to generate Scandinavian demand, generate release strategies with a mobile service in Australia to promote a tour, or market their product to an audience in Greece in exchange for creative visibility and advertising from a Greek company.  The model is based upon creativity and visibility, not money.  Now majors will want more – bigger deals, more money, and more visibility… all to the indie’s detriment. Deal expectations are too blotted even before primary considering the relationship dynamics involved. The market will be flooded with others attempting to duplicate Jay-Z’s deal; and too much money will be demanded – all factors leading to the creation of a new industry problem- the partnership bubble.

My parting suggestion: keep things small. Branded release strategies are best controlled by the indie music market. Branding deals and endorsements are best suited for major label artist.  When lines are blurred between these two markets, the partnership bubble pops.

 

Martin F. Frascogna is an entertainment lawyer who represents clients both indie and major in 31 countries spanning 6 continents. Frascogna’s practice, Frascogna Entertainment Law, notably specialises in advising DIY artists. Follow him on Twitter for daily tips.

 


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