how much to invest in a new artist's career?

The major label system gave up trying to make money on artists who sell 50,000 to 100,000 copies per album years ago, and most independent labels are too cash-strapped in the wake of the collapse of the CD to substantially invest in brand new careers. Aspiring musicians, almost no matter how talented, have few options besides the DIY, MySpace, book-yourself life. Every party in the music business is looking at the others (labels at managers, managers at publishers, etc.) to become the new bank for artists who don’t have an instantly recognizable appeal to mainstream radio. Many are hoping that new model music companies, managing all parts of a burgeoning career and collecting a part of all possible revenue streams, will shepherd new and emerging artists into the marketplace. But where will they get the money and more interesting, how much is enough to give a serious new artist a serious chance?

A story last week in the New York Times about the launch of a musical venture fund called Polyphonic offers one possible answer. Three new era music moguls including Radiohead’s manager and Terry McBride the guru behind Nettwerk are raising $20 million to invest in new careers. Their baseline investment in a new artist, the story seems to say, would be $300,000. The Times says:

Under the Polyphonic model, bands that receive investments from the firm will operate like start-up companies, recording their own music and choosing outside contractors to handle their publicity, merchandise and touring.

Billboard’s always astute Glenn Peoples writes that the vision here is exclusively for semi-established or legacy artists with an existing fan base and revenue streams, but I don’t see why. My thought experiment here is about nurturing local acts into national acts, undeniable young talents into household names. All I have to work on here is my gut feeling and a little bit of knowledge about how much things cost in the music business, but $300K feels really good to me. It’s robust but not crazy. Spent smartly, that would seem to me to give a new artist a fair chance at living, touring and building an audience. A company spreading those $300K investments around would seem in a good, diversified position to absorb some failures but profit big time from the successes.

But what constitutes smart? First, I’m thinking don’t spend it all at once. Stretch it out over a four or five year time horizon. Plan on making and releasing several albums and supplemental recordings. Or bail on the album concept and release a variety of recorded projects that best capture the artist in question. Live lean on whatever revenue you can drive in the door and husband your investment dollars for unplanned opportunities.

Second, don’t spend like a drunken sailor, er,  major label. Twenty thousand dollars for a photo shoot and $90,000 for a music video will use up your pool pretty quickly. Remember that one reason major labels spend (or spent) exorbitant sums on all the parts of a new artist’s career was to impress the rest of the industry and keep a large pool of egotistical people on board and in line. There are a lot of great photographers, designers and recording engineers out there working for reasonable rates. Find the young and talented and be their breakthrough client. And it should go without saying that promoting to FM commercial radio is off the table, at least at first. Thems the rocks on which most nascent careers get impaled with useless spending.

Third, and yes this is self serving, invest a few thousand in video. Not a music video, though they’re not all bad, but video about the music and about the artist. Instead of moaning that the media aren’t covering you or covering you with any nuance or awareness, hire a good documentarian to capture key events in the artist’s life and release a controlled flow of fan-driven content that’s exactly the story you want to tell. It could be serious or goofy, conceptual or verite, but make it reflect the artist’s sensibility. Use your video as a hook to drive free media coverage. As with your recordings, give some of it away and monetize the really juicy stuff.

The rest of making this work comes down to having a really cohesive team and an all-in revenue model that doesn’t divide publishing from recording sales or anything else. The artist shouldn't be the business, but the artist better have a business, run by a manager, with either in-house or easily outsourced web marketing, booking, tour press support, etc. 

Could you make it work with $100,000? Seems scary to me. $200,000? Plausible. What doesn’t work (and which seems to be the default model in today’s chaotic music space) is where the artist scrapes together $10,000 to make a record, presses it up, gets a MySpace page and runs out of money before they can book their first tour. Sure, the occasional DIY act with a gimmick will become a viral sensation and they’ll feel for a few minutes like their ship has come in. But that’s today’s version of the one-hit-wonder, without the fringe benefit of a VH1 special twenty years hence to catch up with you and interview you at your dog grooming business. The goal is the slow, steady build, a truly distinctive sound and vision, and a dedicated fan base that will keep coming to  your shows through the many decades you should be planning on working before collecting your lifetime achievement awards.

Please comment. I’d love to hear some opinions about the minimum plausible investment for launching a new artist.

Comments

[Scott Rouse]

I think you've nailed it. Comparatively it is easier to be a 1 hit wonder than a real, long term, serious artist at this point. A large portion of the music we're experiencing today proves that.
Teaming up with an entity providing the financial support a true artist may need might prove to be the selling point for signing with a larger label. In essence they will become the publicity machines and marketing teams that will make the merchandising and touring aspects profitable enough to give the music away. At this point the major labels have the relationships and know how to establish this, however, they are finding it unappealing to change from the "old school" to the "new, new, new school" of the modern music business and are SLOWLY creeping toward the inevitable licking and screaming. Its a very exciting time in music as well as business.

Scott Rouse

[Ben Ward]

It's interesting, if you read http://www.lefsetz.com and http://www.mediafuturist.com they seem to take a very long term approach for the new artist. Get a day job, build your audience by giving away most of your content, and then slowly start charging and hope that your audience is big enough/committed enough to help you quit said day job. This is sort of the Dave Ramsey approach to building a career. Don't borrow and just plug away until something breaks. Your article brings up a middle ground that's intriguing. There needs to be some level of investment to get off the ground, but don't go crazy. The question then becomes: Where do you find investors (besides McBride and Co.) that will take artist investment seriously?

[aiosmith11]

I think you've nailed it. Comparatively it is easier to be a 1 hit wonder than a real, long term, serious artist at this point. A large portion of the music we're experiencing today proves that.
Teaming up with an entity providing the financial support a true artist may need might prove to be the selling point for signing with a larger label. In essence they will become the publicity machines and marketing teams that will make the merchandising and touring aspects profitable enough to give the music away. At this point the major labels have the relationships and know how to establish this, however, they are finding it unappealing to change from the "old school" to the "new, new, new school" of the modern music business and are SLOWLY creeping toward the inevitable licking and screaming. Its a very exciting time in music as well as business.