Friday, January 21, 2011

360 Deals ARE Today's "Record Deals"

By, Wendy Day from Rap Coalition (www.WendyDay.com)

I gotta state right upfront that I am biased against 360 Deals. I understand WHY they exist, I just find them unfairly oppressive in the label’s favor in an industry with a draconic history of jerking artists out of money. I stopped negotiating deals for artists in 2005 because I refuse to do a 360 Deal for any artist! How strongly do you have to hate something to stop your own income over it?

In the early 2000s, the music industry went through a severe change. Music sales plummeted, the importance of the internet reigned supreme, and there was an influx of artists into the industry causing an over saturation never seen before. It’s gotten worse, not better, for the major record labels.

Once used to a healthy profit margin that afforded grand lifestyles for those at the top of the food chain, the major labels became disgruntled as sales dropped while they missed the boat on less profitable digital sales. Taking on the role of dinosaurs fighting for survival, they tried everything from stopping the new digital revolution, to fighting it, to suing it, to band wagon jumping too late. Nothing worked for them. And they still haven’t learned from their mistakes—they still continue to fight the ways the consumers want to receive their music.

So to justify their continuing existence, they decided to take an even larger share of the pie from the ONLY aspect of the equation that they controlled—the artist (or the “content” provided for digital download). Back in the day, labels took roughly 87% of the pie while giving the artists 12% of the money AFTER the artist paid back everything spent on them from that 12% share. This means that if the artist sold $500,000 worth of CDs, and it cost $50,000 to market and promote that CD (a very low example), the artist share of $60,000 (12% of $500k) would be divided between paying the label back that $50,000 and a check for the remaining $10,000. The label would receive $490,000 for its investment and belief in that artist while the artist made $10,000. In exchange for giving up the lion’s share of the sales, the labels always told the artists that they’d make 100% of the touring. Any show money, was the artist’s to keep!

When the shit hit the fan financially for the labels, they decided to tap into the show money, and all other streams of income for the artists, as well. After all, if your profit margin is made smaller, you need to eat more of everyone’s income to keep the fat cats at the top, and the stock holders, happy. Most 360 Deals share in endorsement income (15% to 30% depending on the artist), performance income (10% to 30% depending on the artist), merchandising income (20% to 50%) and Film/TV money (15% to 40%). Before I go any further, I have to thank the good folks at Warner Bros Records for leaking me a major label contract for an artist’s 360 Deal. This enabled me to write about REAL contracts instead of just what I’d heard from lawyers, artists, and label folks.

How do labels justify taking an even BIGGER share of the pie from artists? They complain that they are doing all of the developing, investing, marketing, and promoting. Their argument is that they believe in the artist when the artist has nothing, and they feel that assuming the lion’s share of the risk should result in sharing in a lion’s share of the profit. If the label is developing and building the artist to a level of super stardom, they feel they have the right to share in a percentage of everything that super stardom affords the artist. So if they drive the artist platinum, they feel they should get a piece of the tour that came from the fame the label helped the artist build, and a piece of the endorsement deal or film income that came from the fame that the label helped build. I guess I could see this argument better, if I actually agreed that the labels did their jobs well of building artists.

I have a different vantage point of record labels. I see major labels based in tall glass buildings in NY and L.A. that have little interaction with the streets, fans, or the artists. I see them sign artists that have already started to build a buzz or sell music themselves, and then I see them sit back and let the artists’ teams continue to do much of the work themselves. I don’t see major labels taking much risk with their artists, but do continue to put them through a system that is almost an outdated cookie cutter version of how to sell CDs. The labels rarely interact with the fans and are quite out of touch about what the fans want or are willing to buy. They seem to create this assembly line of artists who all sound similar and fit a certain format at radio. They seem to throw a lot of music into the marketplace and work whatever catches on quickly and easily. Most labels do what’s best and easiest for the label, not what’s in the best interest of the artist. Now, in a way, it’s very unfair of me to make this sweeping generalization, because there are some amazing people who work inside of major labels and really go all out for the artists. But I find these people to be the exception, not the norm, and I also find them to be frustrated most of the time because they constantly have to fight with their bosses and the status quo to succeed on a project.

I also find that competitor labels usually hire the best people away from the labels who are experiencing some success, thereby breaking up the synergy within a team once they all learn to work well together. This is why a label like Def Jam or Universal could be so strong in the late 90s and yet be struggling to succeed today. I find that artists rarely look at the teams working at labels and just fiend for a record deal no matter the success of the label or who’s at the label (staff or other artists).

So labels got further away from the fans, the staffs got lazier or more frustrated (perhaps more work for less pay?), the artists took less risk because there were more of them and they were just happy to have a record deal, and the fans started expecting music for free because they could just download it if they didn’t feel like paying for it. Major labels continued reducing spending, slashing budgets, cutting pay, and signing “sure things” (whatever that means). And to justify the spending they were still doing, they decided to offer deals that cut into more of the artists’ income. The argument was that out of 50 artists signed to their label, only one was successful and funding the 49 losses. No other business on earth has such a backwards business model. Imagine if Ford built cars and accepted the fact that every model but the Taurus was meant to be a loss leader, and that the Taurus sales had to make up the loss of every other brand under their umbrella. Huh?

Or imagine if banks lent money for mortgages expecting 99% of the mortgages to default, and 1% of the mortgages were expected to make up the bank’s profits that year. Further imagine if each homeowner paying back their mortgage didn’t actually get to keep ownership of the house after their mortgage was paid back! The bank’s argument would be that they took all the risk on the house, so they should get to retain ownership. The people that lived in the house would still have to pay for all the repairs and upkeep, but the bank would own the house. That’s how the music industry is built. And the folks at the top with the most to lose are the ones fighting to keep this backwards system alive.

People ask me all the time what I think is wrong with the music business. I would like to blame our troubles on the greed of major labels, the proliferation of bad music that the fans don’t seem to want, or the free downloading of (stolen) music. But the truth is that if the artists didn’t agree to these incredibly bad deals, there would not be incredibly bad deals. If a bank existed that kept ownership of your house after you paid back your mortgage, you would never do business with that bank. Yet all day, every day, there is a long line of artists willing to sign their lives away to record labels because they don’t understand, or possibly don’t know about, the consequences. Or maybe they just don’t care. Maybe the need for fame overpowers the need for money…until they realize they aren’t making money but someone else is. I find that it takes artists 3 to 5 years to realize they are getting jerked. In that time, a lot of money is lost and one or two things happens: either the artist is replaced with a new artist willing to make less money, or the artist has enough value to renegotiate their deal and share a larger piece of the pie. Sometimes, they even start their own labels and repeat this onerous process with their own new, unknowing artist! They got jerked, so they turn around and jerk someone else.

But back to 360 Deals. This new model will exist until artists are willing to say “no!” and I don’t see any signs of that happening. What I do see happening are artists becoming more entrepreneurial, and instead of signing to major labels, I see them finding their own investors and building their own teams who can help them succeed. There are enough laid off employees of record labels who’ve experienced some success out here to hire to run and work at indie labels. There’s a huge void in the marketplace to deliver the kinds of music fans want…and that’s not just one kind of music.

What I learned from both the buzzes of Drake (lyrical mainstream artist who’ll succeed at radio) and Gucci Mane (not-so-lyrical street artist with gutter stories and experiences to share) is that fans still want music. Major labels are still slow to respond to the needs of the streets and the internet is only speeding up and splintering demand further. There’s still a market for good music that the fans want. Our job is to give it to them. And if we do so with a fair and equitable split of the profits, the artists can build lifetime careers and we can all make money!

I hear the artists who sign 360 Deals say that they feel they have to sign these deals because the label won’t work their projects if they don’t give up a bigger split. I hear the artists say they want the labels to help them land endorsement deals, major tours, and TV Shows and film roles—but I’ve yet to see a major label do this. Let’s be realistic, these major opportunities go to the biggest stars and the ones who apply themselves directly in those alternate areas. If you hire a film agent, and take acting lessons, you may get increased roles in film and TV. If you increase your fame through music sales, your endorsement opportunities increase. Beyonce landed a Revlon contract because she was a star, Revlon did not make her a star. How many new artists are the major labels building to be stars? In 2009, it was Taylor Swift and Susan Boyle out of all of the releases that came and went. And neither of them were developed by the major label system—one was a product of an indie label and the other a product of a TV show. The majors had access because they did deals with middlemen and then applied their systems behind those movements that were already happening. Maybe that really is the job of a major label in today’s environment.

In my opinion, a 360 Deal is an excuse for a major label to take a bigger piece of the pie without doing any additional work. It’s insurance on their part. If the artist does blow up by chance, it gives them more opportunity to make a bigger cut. And that’s just smart business. I guess if they called it what it really is, I’d be less annoyed by it: the price of doing business with a major label. If they played a bigger role in building overall success, I’d be happy to see them share in a bigger piece of the pie at the end of the day.

Example of a “360 Deal” Artist (this is not an actual artist example):

Male rapper based in Atlanta with a strong following. He has his own team of inexperienced friends and family around him and a very strong street following. The DJs, fans, other artists and industry are supporting him and propelling him forward. With no real single or CD in the marketplace, demand is high—he’s getting $30,000 a show and performing three or four times a week for the past few months. This will last about 6 months, approximately. He’s put out a series of mixed CDs, for free, over the past year. The label signed him a year ago to a 360 Deal but hadn’t begun to promote him yet because their roster was full. The artist got tired of waiting and began putting out a new mixed CD every month to build his buzz.

Advance: $75,000
Album Budget once popularity increased: $350,000
Recoupable Marketing and Promotions: $750,000
Monthly Show Income: $420,000
Endorsement Deal: $50,000

Album comes out and sells a total of 350,000 copies (it was a very commercial album but the artist had been very street, almost gutter, up to the point of his album release so fans didn’t really embrace the album as expected).

Album income for label: $3.5 million
Artists’ Share after Recouping: negative balance of $405,000
$750,000 + $75,000 = $825,000
12% of $3.5 mill = $420,000
$825,000 - $420,000 = $405,000
Artist’s endorsement Deal Share: $37,500
75% of $50,000
Artists Share of Touring Income: $1,764,000
70% of $420,000 x 6 months
Artists Share of Publishing Income (50%): $100,000 (estimate of mechanicals and ASCAP/BMI royalties)


Income for Label: $4,773,500 gross income on an investment of $825,000
$3,500,000 sales
$405,000 recoupment
$12,500 endorsement income
$756,000 tour/show income
+ $100,000 publishing income
$4,773,500 gross income
Less Staff costs
Less Day to Day operating expenses
Less Taxes


Income For Artist: $1,122,375 income
$37,500 endorsement income
$1,764,000 tour income
+$100,000 publishing income
$1,901,500 sub total
-$405,000 recoupment
$1,496,500 gross income
Less 20% management fee
Less 5% Business Manager fee (Accountant)
Less Tour costs/legal costs/tour manager/DJ/Operating expenses/taxes

Let’s compare gross incomes…
Artist made 1.5 million while label made 4.7 million
Artist share: 24%
Label share: 76%

Let’s compare Net incomes before taxes…
Artist made approximately $1 million while the label made approximately $4.5 million
Artist share: 18%
Label share: 82%


If the label is taking all of the risk (they are not), putting up all of the money in all of the right places (they are not), devoting all of their attention to this one artist (they are not), and doing most of the work (they are not), then this business model makes sense for everyone involved. But if the artist is doing the bulk of the work, risking their career in the hands of the label, and coming out of their own pocket for many expenses, then this business model is hugely skewed in favor of the major label.

Perception Is Reality

By, Wendy Day (www.WendyDay.com)

One of the most difficult parts of being in this industry, is accepting that perception is reality. What people THINK is true, IS true to them. Let me explain. If you think an artist is wack, he is wack. Even if 2 million screaming fans buy his music, you still think he’s wack. It would be difficult for anyone to convince you otherwise.

To millions of Americans, Michael Jackson was a pedophile, OJ Simpson was guilty and his all-star legal team beat the system, Obama is a Muslim socialist born in a foreign land (that’s just too funny), and Tupac is still alive. Proof or no proof, the belief is there. Their perception is their reality.

This mindset travels into business as well. If a record label thinks an artist is a good risk, has a strong buzz, and is talented, they will sign that act. But if the label thinks otherwise, that artist doesn’t have a chance in hell of getting a deal unless he or she does something to change the perception. So whether an artist has real talent or not, has never been of much relevance in the music industry—it’s the perception of talent that matters. Labels chase perceptions, because that is what’s accurate and real to them. If Waka Flocka is the hottest rapper on the streets of the south right now, then labels will scramble to sign him, work with him, and look for other artists like him. Perception is reality.

Once you understand this simple concept, it makes it far easier for you to move forward in the music industry.

If you are looking to get a good record deal, one that could actually lead to some longevity and success in the music industry, you will need to change (or control) the perception that labels (or those with money) have about you. If the perception is that you are a star, then you are a star. If the perception is that you are surrounded by a team that doesn’t understand the music business, then you don’t understand the music business.

When I have shopped deals in the past for artists, I always focused on changing the perception to be what we needed it to be to get the deal done. And for the most part, I did so with artists who were talented and could back up their 15 minutes of fame with some real artistic value. I learned this lesson very early in my career when I was shopping Eminem.

In 1996, I went to speak on a panel at an event in Detroit at the Athenium Hotel (I think it was called Music Mecca). I had driven there from Chicago with a rapper called Rhymefest, and there was a whiteboy rapping outside in a cipher that ‘Fest immediately recognized as hugely talented. Eminem was one of the best lyricists I had ever heard, but he was white and I knew the stigma of white rappers. Back then, the industry was just recovering from Vanilla Ice, a pop sensation that had a lot of money and promotion sunk into him, but he was later found out to be “pre-fabricated” (therefore not real), accounting for a huge loss to the label and industry as his career plummeted into obscurity.

So my perception of Eminem was that he was an incredible talent, but it would be hard to get a label to sign him. Enjoying a good challenge and being a little crazy, I offered to shop him a deal. For nine months, I took his package around to the labels trying to get anyone to see the value in his lyrics and ignore his skin color. Slowly some progress was made, and The Source Magazine covered him in the Unsigned Hype column (the holy grail for any unsigned rapper at the time, yet a small percentage of rappers covered in that column actually went on to have successful rap careers so the perception at the labels didn’t change much) and the Lyricist Lounge monthly showcase in NY embraced him. At that time in the industry, labels were less excited about an artist’s lyrical prowess, and more excited about the hype and buzz surrounding them. I knew that if we were going to get Em a deal, we’d have to change the perception of white rappers and change the perception of lyricists in the industry. I also knew we’d have to get some CDs out on the streets to try and build/expand the buzz.

I wasn’t alone in recognizing Em’s talent. He had Paul Rosenberg (he was a brand new lawyer at the time trying to be a brand new manager) shopping him a deal, a production company I never met or spoke with called the Bass Brothers, and a guy who owned a magazine named Mark who is outspokenly bitter about being cut out of the equation early on by Paul, Em’s manager. I have no idea whether he was or wasn’t, as he was gone by the time I started shopping Em’s deal. Truth is, I dealt as little as possible with Em’s team, just reporting back to Em or Paul regarding my progress, or lack thereof.

To shift perception, I put together an event called RapOlympics. My plan was to showcase lyricists in a competitive atmosphere and get M-TV and BET to cover it. If it became a hugely talked about event, it would showcase lyrics in a positive light while bringing attention to the best of the best—the winners. With RapSheet Magazine, a handful of volunteers, and the best lyricists in the country, I pulled it off in Los Angeles in 1997. I took a wicked financial loss (sadly, not my biggest one--Twista was the biggest financial loss I ever had in this industry), but my plan worked. Lyricists were brought into the spotlight (it wouldn’t last, unfortunately), Dr Dre signed Eminem to what I thought was an above average deal for a new artist, and fans of lyricists were encouraged that talent mattered once again.

I recall this story for you only because a few days ago, the manager of an unsigned group with a strong buzz called me to ask for advice getting his group signed. They had offers on the table, but the offers were low and were 360 Deal offers. He felt they weren’t in line with what the buzz and hype of the group warranted. He was 100% correct. As I called around to label presidents on another project, I struck up conversations about this hot group to see what the perception was, and every label had similar comments. The perception was that the team behind the group made bad business decisions, and once signed, the label feared this team would negatively impact their ability to make money. Their distaste ran so deep that most referred to the lawyer and manager by name, something labels rarely do. So the offers were low enough to counter this risk. It’s very hard to reposition disbelief in a team. It was especially frustrating to hear because I found their manager sharp and intelligent—the opposite of what the labels’ perception was.

Although I never voiced my opinion, I felt the only real way to counter this perception was to change the team (or the illusion of who the team was with a new manager and a new lawyer that the labels would respect, while keeping the old team involved behind the scenes). Or, create a new outside offer from an investor that would be higher than all of the low offers from the major labels. This would either drive the price up at the Majors, or give the group a deal within the price range they felt was worthy of their situation with an investor. I see many deals lost or lowballed because the labels don’t respect the manager, the lawyer, or the negotiator. In 2005, I did a deal at Motown for an artist whose lawyer received an offer for $350,000 and 15 points in August. It was the only label interested in the artist, so raising the stakes would be nearly impossible. The artist found out the lawyer wasn’t well respected at that label, fired him, and hired me. Within 30 days, the artist was signing a deal for a $650,000 advance with a 50/50 split on the backend—a far better deal. Perception is reality, so make certain it’s always to your advantage.

Behind The Scenes

By, Wendy Day

To those outside of the music industry, the business of music appears easy and available to all. It’s not. Part of what has led to this mistaken impression, is the amount of idiots that work in the music business (or pretend to work in the industry but really just keep busy all day accomplishing nothing real or of value). As people outside of the industry watch the spate of reality shows based around the music industry, or meet these idiots who appear to be employed (but are working for free or slave wages), the mindset becomes “hey, if he can do this, then so can I.”

People enter this industry each year by the thousands thinking they understand it and have access, but they really don’t. To me, it’s not damaging until folks try to enter with funding, because more often than not, they end up wasting it, trusting the wrong folks, and losing hundreds of thousands of dollars in a matter of a few short months. Very few of you actually read articles like this or meet people with legitimate strong track records of success, in order to build a successful career.

Fortunately, all of the excess bodies come and go very quickly. Very few people have the dedication to take the beating of the music industry (financially, emotionally, and mentally), nor do they have the staying power to work for the few pennies tossed to them by those in power. The reality of the music business, is that those at the top make millions and those at the bottom work for free (and rarely, if ever, make it to the top) and every one in between is scratching, clawing and stepping on each other to become the ones at the top. Most never do. [If you are a history buff, see “share cropping” for a historical reference you can apply to the music business psychology.]

For every one person that succeeds, hundreds fail.

The major labels depend upon artists and their teams not knowing or understanding how the music industry works. They encourage ignorance so they can take advantage financially, after all, if an artist has a knowledgeable team, the label makes a smaller share of the pie. I’ve even seen members of the artists’ own teams keep the artists ignorant and away from legitimate established people just so they can protect what they see as their cut. Just this week, I watched an Atlanta lawyer who is not well-respected tell a group he represents not to hire an outside person to shop or negotiate their deal, when he had tried and failed twice himself. The major labels have no respect for the group because their team appears stupid. He seemingly was protecting his own fee over doing what was best for his group that could potentially be superstars if they had better advisors. Someone will sign them for cheap and squeeze out the manager and lawyer within a few months, and steer their own choices in place. For the record, no label should ever have input as to an artist’s manager or lawyer, as those positions are naturally adversarial to the label. In a perfect world, you want someone the label respects, but isn’t employed by the label or too close to the label.

I’ve put together a list of some of the things you can do, and avoid, to properly prepare for your foray into the music business, or to strengthen what you’ve already built during your stint in this snake-filled industry.

1. DO THE RESEARCH – Watching BET every day (or American Idol) does not qualify you to work in this industry. Read all the books, and study the websites and blogs every day to learn who’s who and what’s going on behind the scenes in the music industry. Follow the behind the scenes folks on Twitter, not just the famous artists. See who they talk with frequently, what they say to each other, and what issues are important to them. Ask questions (specific ones like “how do 360 Deals adversely and positively affect artists in today’s economy?,” not general or selfish ones like “how do I get started in the music business?”, or “how come you never return my calls?” or my personal least favorite one: “Follow me back!”).
2. DO VOLUNTEER OR INTERN – Very few people enter the music industry without doing some free labor of some sort, unless they start their own businesses. Working under a legitimate, well connected person in this industry can be more valuable than any money you could have ever been paid. Even if you decide to start your own management company, record label, or be a publicist, it’s important to gain some knowledge, connections, and experience in this business prior to going out on your own. Hey, P Diddy started as an intern.
3. DO BUILD RELATIONSHIPS – This is a “who you know” business. You need to build real and lasting relationships with people. The bulk of paid work and opportunities that you get will be referred by someone else. I can’t even begin to tell you the number of paying jobs I’ve helped people get in this industry—not because they asked me to do so, but because someone mentioned they needed a road manager, or marketing person, or good publicist, or radio promoter, and I’ve plugged in folks I know and respect. I don’t hook up friends, I hook up people who are right for the job. They tend to go further in positions and make me look good for recommending them.
4. DO NOT BURN BRIDGES – I have burnt a lot of bridges in this industry, but they have all been well thought out, planned, and as a last resort. This is an ego driven business and there’s nothing worse than insulting someone and then finding yourself in a meeting with that person years later needing something from them.
5. DO NOT ASSUME – There’s so much that goes on in this industry behind the scenes that you can’t possibly assume you know what’s going on. When you are at the Barbershop talking about why an artist got shelved or signed, you look stupid for speculating. If you’re at a party talking about the latest rapper getting arrested based on what you read on the internet, you’re an idiot.
6. DO NOT ALWAYS BE “ALL ABOUT THE MONEY” – being fiscally smart is a good thing. Always attaching a price to everything you do will get you left behind. Even the top folks at the most successful companies have their pro-bono and spec projects that they work on strictly for the love. If you are seen as being all about the money, you will gain a reputation of being a “culture vulture,” and those who are willing to pitch in and work free on special projects or special events will surpass you in their careers.
7. DO SURROUND YOURSELF WITH LEGITIMATE PEOPLE – This industry is really just a minute big. We all know who the fuck boys (and fuck girls) are. If you are so desperate to get into this business by working for or coming up under a scumbag (artist or company), expect to always be seen as a scumbag. And if you end up working for a snake because you didn’t know any better, too bad! See #1 above.
8. DO BE LOYAL, BUT NOT LOYAL TO A FAULT -- Loyalty is one of the most important traits in this industry (or in life). Misplaced loyalty is not. You can do the right thing, but if you do the right thing in loyalty but for the wrong person, you can really get burned. I’ve seen people take bullets and razor cuts for their team, but then watched the team not make a call, pay a hospital bill, pay for funerals, fund the bid, or even visit the family. Be loyal to those who will be loyal to you in return.
9. DO NOT BE BLINDED BY FAME – Fame is attractive and intoxicating. Do not trade your money or dignity for fame. It is fleeting, short lived, and those who have it will try to fight to keep it (but never succeed)—even at your expense. Just being “down” with an artist doesn’t make you famous or rich. It makes you just another groupie. And when you leave that camp, even though you’ve moved on, the stigma of you selling out to be a groupie stays forever. See any famous sidekick for proof of this fact.
These are just a few thoughts to help you move forward in your career in the music business, behind the scenes. Truth is, maybe ten people reading this out of all of the tens of thousands will still be in this industry next year, and maybe one or two will really succeed.

Changing Times

By Wendy Day

OK, so writing this article is the first productive thing I’ve done since I got my iPad. It’s crack to me. I’m so addicted to my iPad apps. I can’t get any work done. And I’m gonna have to take out a loan to pay for all of these expensive ass apps I am downloading onto my toy! The apps on my iPhone were 99 cents to $3.99. The iPad? The business apps are $9.99 and up. Games and books and shit? $4.99 and up… crazy. But I’m officially addicted. I have to pay to play.

Which brings me to the internet and technology... The playing field has been leveled. The price of recording equipment came down so anyone could record songs at home without having to spend a lot of money to record in a 64-track studio. Then, with the social networking sites, artists could go direct to fans and promote. With companies like TuneCore.com, artists can upload from home, and digitally distribute their music while collecting the bulk of the income from the sales. Could it get any better than this?

But here’s the downside: the internet with its relatively free access has led artists to believe that this is all they need. And that message was welcome news to most ears because—well, let’s face it, artists are almost always broke. So when led to believe that all they need is to upload their shit to the web and promote for free from home, they ate that up!! And still do. Unfortunately, it has made any internet millionaire artists in the music industry.

This thinking of “oh, that’s easy, I can do that,” spawned an entire new generation of people who jumped head first into the industry. This not only included artists and producers, but anyone who was able to invent a job within the music industry and look important. People able to copy news and information from the major hip hop web sites became bloggers and started blabbing their personal opinions and called themselves “sources.” Anyone able to collect email addresses and press send on a mass email became email blasters (for a fee). People with the ability to email bloggers and websites started calling themselves publicists and charging for it even though they lacked the relationships, skills, and experience to get successful placements for their clients. The more enterprising scammers toured the country doing seminars and showcases for a fee, as if they were the New Music Seminar meets American Idol. Except they taught next to nothing useful in the real world, and gave artists little more than experience performing in front of other artists, for a fee.

On the social networking sites, like Twitter, people with no experience and no access gained instant access to the inner circle of the music industry. You can “friend” or “follow” Julia Beverly, Puffy, Steve Rifkind, and every star and convince yourself you have a relationship with them. You can retweet what they say, or repeat it in an e-blast and lead others to think you have access and inner knowledge (reminder: you don’t).

Industrious folks quickly learned they could sit at home and surf the web in between computer games and would call it “grinding.” They could print up business cards and charge other unknowing folks who jumped into the industry to publicize them, promote their music, buy beats or hooks, subscribe to their eblasts, and pay good money for a variety of useless and ineffective services. Up sprang a cottage industry of conference calls, record pools, DJ coalitions, award shows, and seminars.

So an industry already rife with bullshitters and scam artists went into hyperspeed. Intent on making money off of artists’ dreams, these less than experienced “fuck boys” (including women) started promoting themselves and their services as if that’s what it took to succeed in this business. Only, they were wrong.

Even Souljah Boy, who is credited with being the first rap artist to use the internet effectively to promote, didn’t build his career solely by promoting on the internet. He got out on the streets and promoted to actual living people, as well as utilizing the internet to its fullest extent.

The internet has almost single handedly wiped out the need for retail stores and CDs. So what all of this created was an industry that was over crowded, inexperienced, and full of shit. It made it next to impossible for anyone to make a living doing music. It became overcrowded and saturated. The ancillary services were reduced to a few very talented people and a sea of bungling idiots. Many, many people lost large sums of money banking on the wrong people to help them.

But the Internet and technology aren’t the only things that negatively impacted the music industry. In the mid-2000s, the labels caught on to 360 Deals, and instituted them like they were fresh air. Not only wasn’t anyone getting a deal or being promoted at the label level unless they agreed to and signed a 360 Deal, but they became the new industry standard.

360 Deals impacted the industry quickly and heavily. Because the labels were now partners in every revenue stream possible for artists, the focus switched from building a career to making the artist a pop icon as quickly as possible. For example, where it took TI four albums to go from street rapper to pop radio superstar, and Young Jeezy three albums, Gucci Mane tried to do it in his first major label release. Labels became keen to drive their artists to urban radio and into the domain of pop radio so they could quickly impact tours and endorsement money. A rapper with a hit pop record could transcend into film, tv, endorsement, bigger touring opportunities, etc. It became about the financial split instead of about building a sound career with a foundation. Artists have become disposable. When the fans grow tired of Eminem (or he ages out of the target demographic), there’s Fergie and Black Eyed Peas to pick up the dollars. If and when Black Eyed Peas sales start to lag, the label can impact with Lady Gaga. It’s a constant cycle of filling the label’s coiffures. VERY smart business. Very damaging to the art form of music.

And since I’ve mentioned touring, let’s talk about how that has changed for the worse. When new artists were coming up (like Yo Gotti, Plies, Jeezy, Lil Wayne, etc) there was a market for artists to make $5,000 to $10,000 a show. Up and coming artists who had developed a street buzz could make a living doing shows. When I first met Yo Gotti, he was doing very well for himself performing for $3,000 to $5,000 a show, three or four nights a week. He could eat, his manager and his team could eat, and it helped to build his reputation and buzz with fans and with the industry. He built a solid foundation.

In today’s economy, artists seem to raise their prices quickly, so they become more expensive than they can attract fans. Here’s what I mean: Nicky Minaj had a wonderful buzz. Before she had a single or an album to promote, the word was she was charging $16,000 a show. That is a wonderful thing, but here is the reality of that. In a smaller market, which is what makes up the bulk of America, to make a profit on a $16,000 show, the promoter has to have a venue that holds at least 3000 people willing to spend $15 or $20 a ticket. In a smaller market, there are very few clubs that hold 3,000 people and very few people who can afford a $20 ticket a couple of times a week. So newer artists go from being a regular feature in a small town to a once in a while event.

There was a point this past Spring where the show prices of artists either fell into the $1,000 to $5,000 range (Travis Porter, Roscoe Dash, etc) or the $15,000 to $25,000 range (Yo Gotti, Waka Flocks, etc). While I absolutely LOVE seeing artists get money, I can’t help but wonder what the promoters did who needed shows in the $5,000 to $12,500 range. Sadly, I know the answer--they stopped doing rap shows. They couldn’t make money. The artists who commanded the higher price point ended up doing spot dates in bigger markets, and couldn’t tour properly because the economics didn’t make sense. I worried about Gotti and Waka when their planned tour ended after just a handful of dates. Touring not only brings in income for the artists (and now the labels) but it also promotes the artist amongst the fans all over the US. Not being able to perform in Albany, GA or Columbia, SC, or Nashville, TN hurts the artists, the fans, and the industry as a whole.

So when I pulled up SoundScan last week, I noticed that very few rappers have gone Gold. The artists who’ve sold the most are the mainstream pop acts, the artists like Black Eyed Peas, Lil Wayne, Kanye, Rick Ross—the ones who’ve already built their careers on a solid foundation. The ones who no longer need the smaller markets or the smaller clubs to make a living.

Here’s the light at the end of the tunnel: bullshit comes to light very quickly and the folks that will remain after all of the dust settles, are the ones who were passionate enough to ride out the turbulence and stick it out. The artists savvy enough to think longterm and who realize that it’s better to work for 7 nights at $2,000 a night, instead of once a week for $10,000, are the ones who will have the staying power and the solid careers. The rest will fizzle out and go by the wayside. Natural selection at its best!