New Business Models

As the music industry continues to evolve in an age were technology is creating shifting revenue streams the emergence of new business models is required. As I am focused on how to create a Mondragon style co-operative record label, my research has led me to several interesting approaches to running a business in the industry today. While both of these businesses are recent startups the idea behind each have a common thread: Let the artist maintain intellectual property (IP) and control of their work and splitting the revenue from the joint venture. This concept is what drives me to develop a co-operative label, the difference only in approach and the fact that these two examples are businesses run by current industry managers/professionals and not a collective of artists with business aptitude.

Last month I ran across an article posted on Hypebot’s Music Think Tank blog titled “OurLabel Launches 100% Fan Funded Record Label” by Clyde Smith. This article covers a start up which is based on a new business model centering on fan or crowd funding for artists. The label’s industry professionals handle the business side of music production once an artist reaches the financial target set for the project. Revenue is then split between the label, artist and the supporting fans. OurLabel founders are Asaf Elani and Brandon Robin.

Today Clyde Smith covered another startup 3/4 Records, which is pushing another new business model. The article is titled “Three Quarter Offers Musicians New Model: 'We Run The Business, You Run The Art'”. 3/4 Records is the brainchild of David Airaudi a industry professional and former executive with Interscope Records. This model creates partnerships between the artist and 3/4 Records who acts as the business management or operations of the partnership while the artist focuses on the creative aspect guiding the enterprise. What is interesting about this model is the ambition and scale in which Airaudi would like to take the company. Smith points out that while venture capital and IP retention is common with successful artists, it is rare if not unheard of in the small independent artist.

Both of these companies are worth watching for any independent artist serious about success and a career in the industry. The current trends of developing new business models to compete and stay profitable are worth researching to discover what works and does not work today and those that will thrive in the future of technological evolutions.