“Perhaps the [record company] who makes a risky bet on a raw [artist], and who take the time and effort to train her, should be entitled to a small portion of her lifetime earnings as she moves on to more lucrative employment. That would create a powerful incentive for [record companies] to devote real resources to building the skills of their [artists].”
How’d that work out?
1. It worked out better for the record companies when they had a monopoly on the means of distribution. The Internet tends to undermine that monopoly.
2. Regardless of technology, the supply of people who want to be in the entertainment business seems to be highly elastic. And the nature of demand for entertainment (people want to like stuff in part because other people like it) tends to produce winners-take-most outcomes. So a lot of artists will make low incomes, and a few will get lucky.
3. I think that artists cultivate an image of being unusual and self-made. So they will not shout it from the rooftops that their skills reflect real resources invested by major corporations. But my guess is that if the Beatles had been so determined to think of themselves as original that they had never taken any suggestions from their producer, they would have been just been the WannaBeatles.
The current state of the book (especially the novel) business is interesting in this regard.
There has been a great deal of talk about how most of what’s been hollowed out there by the rise of digital and the Internet is investment by publishers in mid-level authors who aren’t really paying for themselves but credibly might have a hit one day.
Now the Internet is acting more like a farm system for publishers. Writers fight tooth and claw for some kind of attention. In rare cases, they make it really big—see Amanda Hocking: http://www.novelr.com/2011/02/27/rich-indie-writer
But once they are recognized as such they get snatched up by publishers—as Hocking indeed was. Her arguments for doing so was that by taking less per book but allowing the publishers to run all non-writing parts of making a book—editing, cover design, marketing, negotiating with retailers—she had more time to actually write additional books.
Much more common than Hocking-level success are writers who are making enough on the Internet to make a living or at least to substantially subsidize their income. These writers are still a risk for publishers but substantially less so than any random writer; these guys already had an audience. The question just became, were they not big hits because they’d already found as big an audience as they were going to get, or was their present audience a signal of potential for what they could get if they had more resources put behind them?
Those whose upper bound on audience size is relatively niche are unlikely to ever be the purview of big publishers, but the Internet does provide them with a substantially greater probability (than pre-Internet times, it’s still not a large probability in absolute terms) of making a living via what Kevin Kelly calls the 1,000 true fan effect: http://kk.org/thetechnium/2008/03/1000-true-fans/
How’d that work out? It didn’t really happen, because “more lucrative employment” was limited to records assigned to the label becoming popular. The far more common case of “more lucrative employment” was and is probably anything other than making records, but the record company’s stake in its particular recordings of the artist gives the record company zero interest in the common case.
I’ve no idea how it’d work out in practice, but the general idea (and why limit to low wage?) would be for employers to have a stake in all employee future earnings. I don’t know what to make of it, but seems like a symmetry with employee gaining small stake in employer, common at least in case of startups. This could be done with no contract if “stake” were a tax credit based on current taxes paid by past employees.
The short answer is it works fine. Maybe it could be improved, but it took a disruptive technology to change it to something a lot of people call “destroyed.”
But it is also a very special case. When an artist changes labels, the old label doesn’t really get to collect on their future work which is why Salam’s proposal is not fully thought out.
#3. Producers and the record label are distinct, and I think if you completely got rid of them the artists would be relatively unaffected. We are running the no record company experiment right now. Producers are important, but they are almost part of the artist.
Why? This doesn’t happen in any other profession I can think of. No company under which I have received training (formal or “On The Job”) has considered itself entitled to any portion of my future earnings, nor would I agree to any such arrangement. I’m perfectly fine with the idea of committing to work for a company for a certain (reasonable) length of time in exchange for formal training, but I in no way consider any current or past employer “entitled” to my current earnings.