New Artist Odds Need Improving

Traditionally, record labels prospered using the 80/20 or 90/10 rule. If one or two, out of every ten new artist signings succeeded, a label would be profitable. In fact, up until a few years ago, the payoffs were so great that no one stopped to consider why a company would endure a business model with such poor odds of success. Unfortunately, as proved by continued downsizing and layoffs, today’s marketplace demands better odds of success.
Do labels really belong in the baby act development business? Are they still the logical choice to perform that function? Following a page from the evolution of movie studios, talent could be developed by “talent providers.” These-publishers, producers and others-would invest frugally and provide labels with finished products to consider, even test market. If A&R odds improved under this kind of system-which has worked for the movie industry-both talent providers and labels could profitably share in the rewards.
The idea of a 360 deal would then have greater value for all parties.Consumer test marketing has also been largely ignored.Online is the perfect arena to solicit response. Talent providers might agree to allow several tracks to be streamed and/or purchased on a temporary basis, for testing purposes, assuming they shared in the revenues. We’ve seen consumers embrace the idea of voting for talent via American Idol and other shows. Given a gentle push via contests and value-added carrots, it might be possible to create a massive online testing network…or maybe it already exists at myspace.com. Maybe there is already a mammoth new artist engine already built, all we need is to find the keys and turn it on.