Evolution of the Artist Manager in the Digital Age - Technology, Part 1 of 3

Technological advances have undeniably transformed the music industry. Many artists now turn to the Internet to kick-start their careers instead of depending on a manager to put them on the map. In this “D.I.Y” era, artists have access to more resources than ever before with the simple click of a mouse. From MySpace music to YouTube sensations, they can promote their music, gain exposure, and ultimately accumulate a fan base. Similarly, increases in Peer 2 Peer networking sites have music lovers in pursuit of new material to add to their ever-increasing storage space. While the music industry has been plagued by rumors of piracy, exploitation, and profit loss, technology has opened up huge new doors for innovative managers willing to think outside the box. Although the new digital era has given artists more opportunity to control their own careers, the necessity of a manager, as well as their increasing roles are more prevalent than ever.

            Traditional artist managers launched the career of an artist based upon a tried and true business model. Whether the artist manager owned the record label or secured the deal, they followed a stable business plan that promised a hefty profit for themselves and the utmost exposure for the artist. Labels owned the music and ultimately ensured their profit by maintaining that exclusivity and raking in royalties. “A record company’s value used to be measured by the acquisition, protection, and exploitation of copyrights”. Record labels dominated the supply chain fostering artists and distributing their music to record stores and then consumers. Record sales were the main source of revenue and copyright was used as a tool to enforce that.

            In 1999, at the onset of the digital era, new site MP3.com allowed independent artists to upload their music and generate an income based upon consumer downloads. Free downloads linked artists to consumers, while cutting costs and giving them direct access to their revenue. Record companies immediately deemed digital distribution an illegal entity that threatened the integrity of the music industry as a whole. Traditional managers and stakeholders allocated more time and resources into combating piracy and digital distribution than they did taking advantage of new lucrative endeavors. The digital era interrupted the traditional supply chain by empowering artists and leaving executives fearing the demise of their beloved record labels.

            Initially, the economic promise of the Digital Era was clouded by fear from traditional labels and managers. From ringtones, to movies, to commercials, music is everywhere and technology is to thank for that. Music can be transferred across networks at unimaginable speeds, leading to fast business and therefore faster profit. International markets are easily accessible allowing artists to tap into previously unreachable territory. Technology continually decreases the cost of production, as it is cheaper to record and create music. Portability has increased the market for multifunctional electronic devices with premium price tags, such as smartphones and iPads. For example, Motorola resulted from car radios and Sony from FM radios. Ringtones are a multibillion-dollar industry and subscription based services, such as Spotify, promise great long-term profit. Storage is increasing at unprecedented rates allowing consumers to carry more music with them, as well as maximize their library. The omnipresence of music only proliferates consumer demand and dependence on music in their everyday life, proving that the industry is far from lost.
            In the midst of this evolving business, music managers have less defined and more multifaceted roles. The modern manager is no longer solely responsible for getting their artist signed, but rather developing their artist as an individual business with multiple revenue sources. Digital distribution has allowed more artists than ever to break into the music industry, which in return has made it harder for an artist to stand apart and establish a long-term presence. New music managers need to have a deep understanding of online marketing, promotion, and distribution, along with the ability to recognize and execute strategic partnerships and alternative financing options. They need to identify their own shortcomings to construct a creative team that will make the best decisions regarding the artist as a business, not just a talent. LA based entertainment attorney Glenn Litwak adds that modern managers also have to know about social networking, online music subscription services, licensing, sponsorships, endorsements, and transitions from film and TV. Such skills leave traditional managers unequipped to handle the multiplicity of today’s industry.

            New artist managers need to be able to understand and evaluate each business opportunity and anticipate its consequences on the artist as a brand. Successful managers know how to strategically place their artist to gain maximum exposure, staying power, and brand equity. The digital era continually opens up new paths untraveled, whether it be reality TV or charitable campaigns, and the role of modern managers is to decide which to stay and which to stray. Traditional music managers acted based upon proven methods and a standard course of action. The role of new managers is less conclusive. Their role is to make educated decisions without knowing the ultimate outcomes, as well as using innovation to distinguish their artist from the rest. While talent is obviously a key factor in success, digital distribution has saturated the business with new artists increasing competition to an all time high. Talent alone is not enough to create a business that allows an artist to pursue their passion as a long-term career.  
         
            Despite conflicting ideologies, some traditional record labels have embraced the new digital era proving the two worlds can coexist. Specifically, Universal has profited off of technological advances and new means of distribution. For example, originally MTV gave their programming to record labels in exchange for promotional gain, which helped offset the cost of the music video. Up until 2006, Yahoo, which then boasted about 750 million video views a month, did not pay for the videos they displayed. They did not share their advertising revenues with the suppliers under the premise that it was “free publicity.” Universal argued that they deserved a royalty for their videos despite initially paying MTV to do a similar job. Yahoo agreed to pay the royalty and both companies profited from the new digital distribution. Universal embraced the changing industry and achieved success within this partnership. Similarly, they profited from an avenue that initially cost them money in the traditional business model.

            In 2011, Universal formed another successful partnership with Live Nation Entertainment, the “world’s biggest ticketing, concerts promotion, and artist management company”. In this partnership, Universal gave co-ownership to Live Nation, while taking advantage of their expertise in artist management, ticketing, and promotions. Lucian Grainge, the CEO of Universal, explains,” We are creating a series of platforms and global direct- to- consumer initiatives that will further expand the presence of our artists in the evolving marketplace while providing music fans with even more flexibility in how they consume music”. In collaboration with Live Nation, Universal is gaining greater exposure and expansion than ever imaginable. Technologically, they are embracing new listening platforms to meet consumer demand while increasing their profit and decreasing their liability. Live Nation in return is getting co-ownership of an already successful label, as well as the artists from Universals four management companies to promote and profit from. Much like the traditional and modern industry, Universal and Live Nation generate greater revenue when they collaborate, than when in competition. This example demonstrates how management companies have diversified their roles, while profiting from the new digital era. Through creativity and new partnerships, Live Nation and Universal set new standards for the music industry.

            The once simplified music industry has been turned upside down by advancements in technology. The traditional supply chain is no longer suited for the diverse and evolving industry. Although record sales have decreased significantly and free music dominates the Internet, the lost revenue from records does not reflect the flourishing music business. Music is now a part of everything that we do and there is a clear need for managers with a passion for artist development and an educated, entrepreneurial mindset. Where managers and record labels controlled the industry before, artists and consumers now hold more power. With intense competition, a manager is necessary to create an artist with staying power that generates multiple sources of income. In understanding this new Digital Era and the potential of the music business, it’s important to recognize that while the industry sells music, music sells so much more. From capitalizing on iPhones that play music, to using a song in a commercial, the power of music is at an all time high and the successful manager gets that.