Last week, in the two 12% posts, I started with…

Artists should make as much of the pie as possible in a way which maximizes their long-term earning potential.

I sought to explain how the definition of long-term earning potential is not black and white. It depends on the deal, its surrounding context, and who you ask.

Then, I sought to answer, or at least raise more questions, to the following

Does the knee jerk reaction that every artist should increase their profit margin actually lead to more money in their pockets?

If you pay less to a promoter or manager, will you get the same attention to detail and opportunities from them in the future? If you do a joint venture with a label instead of standard contract, will they prioritize the artist on a royalty deal over yours? If you spend less on a music video or making an album, will it be as “good”?

Business is a moving train so there are too many variables, which make it impossible to answer the above question… That is before even layering the fact that art is subjective over the top of the equation.

Furthermore, what works for one artist won’t necessarily work for another.

Artists are the creators. And since they typically dedicate their lives to their craft,¬†shouldn’t they be entitled to more of the pie?

Today, let’s answer that question… What are artists entitled to?

Technically, artists are entitled to 100% of the pie.

They can release songs however they please (assuming they haven’t already signed away this right) and perform wherever they like.

However, most artists want to have their music on streaming services – These companies have built robust platforms to expose their music to the world and in some cases, have never made a profit, but do collect a portion of each monthly subscription.

Artists want to have reputable agents, managers, and lawyers behind them navigating their career with them. The best in the business are only available on a percentage basis so these executives share in the earnings.

In most situations, artists also want operators, whether it be Live Nation or Universal Music, to push their touring and recording businesses forward.

I am all for doing things independently, but even then, as referenced in previous posts, there are certain unavoidable costs of doing business.

Notwithstanding, except for the various rights controlled by the government (such as what radio pays for each spin), no artist is required to obey any of these standards in order to be successful, unless they have already signed a contract.

The facts are most artists do follow the industry standard because the industry supports the artist in valuable ways, such as exposing their career and creating revenue streams for their art. But any artist can choose to build their career themselves (or with limited team members).

In turn, they will receive a larger percentage of what their business generates. It just might not generate as much.

Lastly, I’ve seen a lot of industry “slam” the Citigroup report.

It’s easy to “gang up” on a person or entity in the music business, especially ones that seek to provide clarity in an industry clouded by complexity.

In fact, a reference to my AoaM post, was even included in this great Billboard article by Cherie Hu, which sums up some of the industry’s gripe with the report.

My intention was to set straight a couple areas of the report I thought deserved further explanation.

The report is not perfect, but it does have a lot of extremely valuable information for the community, which is why I believe it is capable of “providing more clarity to both the artist community and their advisors so they can be fully aware of their rights, how revenue is generated, and how it is shared with various stakeholders” as I wrote in my original post.

I commend any individual or group of people who takes the time to create such a substantial body of work worthy of such questioning and follow-up, which is why I have the utmost respect for Citigroup in their research process and appreciate their continued hard work for the industry.

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