14. Artist Roster

  1. Sony BMG has significantly decreased the number of artists on its roster, declining from [.] in 2002 to [.] in 2006. However, all majors decreased their number of artists during that period in the same magnitude, and this decrease followed the drastic decline in demand for physical recorded music.
  2. When an artist leaves or joins a record company, this may be due to a number of factors, for example creative partnerships, strategic artist roster rationalization, genre expertise or specialization. The artist’s success with a new record company may similarly be affected by numerous factors (in particular the creative partnership formed), and the level of success of an artist who joined Sony BMG does not necessarily reflects the level of success whilst signed to a previous record company, or vice-versa.
  3. Given the market conditions, and in particular the declining demand for recorded music, competition among record companies in order to find and sign new artists and the search to attract growing and established artists whose contract are up for renewal remains intense.
  4. Major record companies often try to sign artists originally signed with independent companies as soon as they become successful, as the majors are generally able to offer them better financial conditions. In this content-based industry, competition between record companies is intense for securing successful artists in their roster, and artists are attracted by the possibility to gain higher visibility and better financial conditions.
  5. This fierce competition in discovering and signing artists can also be explained because of the rapid evolution of computer technologies in the recent years which has made it much easier and cheaper for artists to develop their ’home studios’ and record music to a quasi-professional level without the help of recording companies.
  6. At the same time, the increase in importance of the internet as a means for artists to showcase their music to a large audience by putting their music for free or even selling it directly through internet vehicles such as for example Myspace or Youtube, has made it possible for several artists to become very successful without the initial support of record companies and without initial presence in retailer’s outlets.
  7. Competition for artists is also illustrated through information showing that artists signed with independents move to majors and vice-versa, and also rotate among majors. In 2006, Sony BMG signed [X] new artists in affected market95, representing [20-30]% of the total number of artists signed. In the same year, [X] artists left Sony BMG, representing [20-30]% of all artists on its roster. This reveals a high rotation rate, characteristic of a fluid market.
  8. Of the 10 most important artists who joined Sony BMG between 2002 and 2006, [X] came from other majors; and out of the 10 most important who left, [X] joined other majors.
  9. In terms of artists’ remunerations, Sony BMG is engaged in two main types of contractual relationships with artists: contracts where the recorded music master rights are owned by the record company (most common in the United Kingdom) and contracts where the recorded music master rights are owned by the artist or a third party production company and licensed to the record company (most common in continental Europe). For both contracts, artists are generally paid a percentage of the “Royalty base price” -the list price less discounts and a packaging allowance- on all un-returned units.
  10. The royalty rate applied will vary between formats (albums or singles), price categories (full or mid or budget) and sales volumes. It is negotiated according to the stature and success of an artist and may significantly vary from one artist to the other.
  11. Artists’ remunerations are negotiated on a case by case basis and rely on forecast sales and expected potential of each artist. There is no coordination between majors in terms of capping artist remuneration.
  12. The competition for securing the best artists remains intense among all record companies -majors and independents. Artists can, and do, move from majors to / from/ and between other majors and independents.
  13. The share of local artists has also significantly increased in the past few years in the majority of countries.
  14. Finally, the cost of recording and reaching end customers through the use of new technologies has never been so low for artists of all genres, especially the ones with lesser sales potential. The recent growth of internet as a forum for known and unknown artists to display and sell their music directly to end-customers without the use of traditional retail channels, as well as the growing success of digital services such as e.g iTunes which offers some 6 million songs in Europe, the large majority of which come from artists that have signed with independents, also points towards the direction that no reduction or limitation of product variety of customers has taken place.

This item is part of the series of posts based on the European Antitrust Agency 2007 Music Industry Analysis for the Sony BMG Case. It’s home page is here.

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