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Comment by OldManAndTheCpp | Hacker News Reader

Why are record companies still attractive to musicians today?

In the past, selling music meant having access to capital equipment (the vinyl presses), access to marketing budgets, and access to the record shop inventories.

Now, music can "pressed" for free by Spotify, Apple Music et all, shelf space is not limited (computer storage is cheap!), and the marketing can be done online more cheaply (I assume).

With all these stories of successful artists in the past (like Erroll Garner) and in the present (like Taylor Swift) being chained by their record companies, why do present day artists sign with a record label?

I'm sure I'm missing some key facet of the business, what is it?

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Marketing. Superstars aren't (possibly never were) natural, they're the product of a lot of time and effort getting their look, their feel, their etc all just right. This takes time and effort, but when it works, the results are huge.

Think of Record Companies as the VC Funds of the rock and roll world. Yeah, it's possible to bootstrap, but why bootstrap when you can get a cash and publicity injection?

There are tons of great artists that you've never heard of. There are tons of mediocre artists who people can't avoid listening to.

The key difference between these artists is marketing.

Most of the money in music isn't from record sales. It's from touring and merchandise.It takes a lot of planning, marketing and resources. Which means a large upfront capital investment. Record labels provide that.

I wonder how advances on royalties might fit in here.

I would think if the advances are large they could explain why new artists seem so prosperous, where if they were steadily getting royalty checks it would seem like they would have to live modestly at first.

One last step in my query-posed-as-speculation: New artists using the posited advance money would explain why they "brand" themselves using pink vinyl wraps on their Lamborghinis and maybe that sort of branding is important to promotion.

It's been a long time since a complete unknown got enough of an advance to buy a Lamborghini.

Advances used to be seed funding, but now they're more like later series funding. Artists don't get them until they're up and running as a business, and they're treated more like investor input in exchange for management equity - politically and financially - than free cash.

In a very real sense, the music business pioneered the VC model. If you strip away the glamour from music, there are some very familiar relationships and strategies (and scams) on the business side.

From what I've heard, most of the money for artists comes from doing concerts and selling merchandise, streaming revenue is a drop in the bucket. Unless you can create a brand around yourself, you probably won't be hugely succesful. It's kind of like a startup that needs to hire outside management help once they want to grow beyond their inhouse management abilities.

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