Should record labels move to an advances system?

A few nights ago, my wife was doing an online course on Zoom. It was all about books. Writing books, getting books out, marketing books, publishing books and so on. Books, books, books basically.

One particular section caught my ear – it was about advances and royalties. The royalty rate for the author of a paperback book is between 7 and 10% typically. It ranges from 10 to 15% for hardbacks.

These, on the face of it, sound terrible. But then I decided to do some reading – and I discovered that the book industry works differently. They compete with one another on the basis of the advance, not the royalties.

The more I think about this, the more I think it might be time for the music business to move to a similar model. Typically in underground music, the royalty rate is 50% for the label and 50% for the artist. Stakes might change if there is a remix involved, but that’s how most do it.

This results in a situation where artists are forever having to chase up record labels for royalties in order to get paid. It also means record labels inserting clauses like they won’t pay out royalties until your release has made at least £50 or whatever.

It’s a pretty poor system really, isn’t it? It results in endless admin for labels and endless chasing for artists. No one has much love for this system, so why can’t it be changed?

A record label could offer a one-off fee for the track at the start. This would be for the artist to keep and put the risk on the label. But this would then provide an incentive for record labels to push and promote their releases better, and to arguably release less material.

This might persuade record labels to drop the current strategy which many of them have – namely if they throw enough shit at a wall, some of it will eventually stick. It would encourage labels to think more carefully about what they sign because the element of risk would return once more to the business.

After all, people are always complaining there are too many releases of inferior quality around these days. This would reduce the problem massively.

The artist gets paid something under this system. The label is incentivised to make sure they sign better material that they are confident they can get money back on. And the consumer has better quality music to enjoy at the end.

What do you all say, label heads?

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