Three Hundred and Sixty Degrees of Marketing

Major record labels are expanding their agreements with their artists. Instead of just making money on CD sales, labels want in on the touring and merchandising revenue as well. Nick Martens looks at the artistic impact of these deals in an attempt to divine their overall effect on the industry.

Jeff Leeds’s recent New York Times article, “The New Deal: Band as Brand,” is terrifying for a couple of reasons. In it, Leeds describes a new kind of recording contract called a “360″ agreement. A 360 deal basically allows a record label to take a percentage of a band’s touring and merchandising revenue in exchange for giving the band a single large payment and an increased cut of their own record sales.

Historically, a record label’s only financial stake in a band was in its album revenue, but, as CD sales slump and concerts become more popular, the labels want a piece of the touring action. Leeds’s article covers the business angle of these arrangements thoroughly, but, in a nutshell, a 360 deal creates a relationship of cultivation between the label and the band. The label gives the band room to grow musically and to establish a fanbase rather than crash-marketing the band into a grey pulp. This fanbase, in the label’s estimation, will feel great loyalty towards the band, and, as such, will buy more concert tickets and merchandise, areas in which the label now holds a fiscal interest. It’s a more patient approach to marketing a band, an approach that seems to be catching on throughout the industry.

The first scary thing about these deals is how shamelessly they expose the cold hand of marketing, pushing buttons behind the scenes. Just look at this quote from Atlantic Records chairman Craig Kallman:

If we weren’t so mono-focused on the selling of recorded music, we could actually take a really holistic approach to the development of an artist brand.

The content of this sentence is actually innocuous: If labels stop focusing only on CD sales, they could help the band develop as a more complete musical entity. But he’s not talking about music, here, nor about musicians. He’s talking about “artist brands.”

The implication here is obvious. Kallman doesn’t care about the quality of the music nor about the artistic concerns of the band. He cares about developing a successful brand, and, if that means that the brand must produce good music, well, all the better. But if bad music sells a ton of branded shoes, he’s sure as hell not going to tell the brand to step up its game (unless doing so requires new sneakers).

Now, anyone who actually gets paid to produce content rather than rambling for no money on the internet will probably think that I’m being naive here. You’ll think that Kallman is probably onto something, and that these deals will be largely successful. Instead of appearing as soulless corporate hacks, 360 bands will be perceived as artistically valid and their celebrity will be seen as genuine and hard-won. Their fans will be many and devoted, willing to cough up some dough for any artist brand-related product.

This brings me around to the other terrifying aspect of 360 deals: They will almost definitely work. Just a week ago, I wrote that “for the internet generation… people are more willing to spend money on concerts than on albums.” If the major record labels are in step with radical, indie-rock hipster bloggers in terms of business strategy, then the times truly are a-changin’.

As much as I want to despise these deals for their callous manipulation of consumer affection, I can’t help but admire their cleverness. Young people, by and large, are fairly stupid and extremely predictable. Their only shield against large corporations is that large corporations tend to be unbelievably stupid and farcically predictable when it comes to youth-oriented marketing. If the major labels can get their act together, as they seem to be doing, this new strategy could slow, stop, or reverse their current free fall towards oblivion.

Consider a close sibling to the 360 deal: the Xbox 360. The names are not only similar, but similarly devoid of meaning–i.e. they’ve got that marketing gloss layered on thick. They are both produced by giant, eminently hateable corporate entities. I mean, is there really such a thing as a Microsoft fan? Like, in the same way we consider people to be fans of Apple? If they exist, I’ve never met one.

Despite its maker’s ominous reputation, the Xbox 360 is not only a successful product, but also a brand the evokes strong fan loyalty. Message boards and even entire websites are devoted to supporting the Xbox in the console wars. How did the loathsome Microsoft create a product that so many people love?

First, to be fair, it is a mostly excellent product. Aside from the high hardware failure rate, the Xbox is well-designed. It has a host of top-quality exclusive games, and its internet functionality is currently best-in-show. But the Xbox is also marketed extremely well. Was there a person in America that didn’t know about the Halo 3 launch? The marketing there was not only relentless, but also focused. It raised awareness of the Xbox while depicting the brand as modern and cool.

So, how does this videogame talk relate to artists signed to 360 deals? Well, the most surprising thing about the Xbox is how little it feels like a Microsoft product. Helmed by a single man with a cohesive vision–-J. Allard-–the Xbox is usable and consistent in the same ways that Microsoft products tend not to be. I fully expect 360 bands to similarly diverge from the super-slick, focus-grouped music traditionally associated with major labels. And, since almost nobody identifies a band with its label the same way they do a consumer electronics product with its manufacturer, a lot of the new major label stuff could be mostly indistinguishable from genuine indie rock.

So, where’s the downside here? If we start getting better music from major labels, isn’t everybody happier in the long run? Sure, indie kids like me are biased against major label output, but the general public couldn’t care less about that kind of inside baseball nonsense. All of these things are true, and, if you don’t really care or notice if your musical preferences are being subtly manipulated by marketing, I expect these 360 deals to be a largely positive change for you. I will remind you, however, that the major labels comprise the RIAA. Sure, these forward-looking deals may be a sign that the majors are getting with the times, but I think it’s a bridge too far to suggest that they will understand the online music landscape anytime soon. I hope I’m wrong, but I don’t see a future any freer of dubious lawsuits, chilling take-down notices, and general consumer antipathy.

Nick Martens is a founding editor of The Bygone Bureau. You can email him, if you like.