The Potential of Employee Ownership in the Music Industry
The Potential of Employee Ownership in the Music Industry
How employee ownership can address longstanding issues in the entertainment business
Last week I attended the Pixies & Modest Mouse concert, an electrifying experience that got me thinking about the dynamics of the music industry from beyond the stage. Dr. Hand’s recent article covering George Straight’s concert further sparked my curiosity about the inner workings of the industry. I began to think how employee ownership could potentially address some of the longstanding challenges faced by musicians and labels alike.
Of course, the music industry, while glamorous to us on the surface, grapples with issues that affect artists and employees behind the scenes. The issues we’ll focus on:
Artist Exploitation
Revenue Transparency
Many artists, especially emerging ones, often face exploitation because of unfair contracts, opaque calculations, and a lack of bargaining power. In traditional music labels, artists can find themselves in unequal power dynamics where the decisions that will impact their careers and life trajectory are being made by the executives and shareholders with little input from the artists themselves. On top of this, labels and management typically prioritize short term profits over the long term welfare of their artists. There is also an opacity surrounding revenue streams in the music industry, which is a major concern. Artists frequently struggle to track and verify their earnings from digital platforms, live performances, and merchandise sales, often leading to mistrust and disputes.
The Promise of Employee Ownership
Employee ownership can drastically shift the dynamic by giving artists and other staff a direct stake in the labels success and decision making processes. Research shows that when employees have a financial stake in the company they work for, they tend to be more motivated, engaged, and overall committed to its success (Blasi et al., 2018). This principle can be applied to the music industry as well, where artists and employees have the potential to become co-owners invested in promoting the labels long term success.
Employee ownership can mediate the risks of exploitation by aligning incentives between artists, employees, and management. Moreover, this structure also encourages a space where decisions are made to prioritize the collective interests of all rather than short term financial gains. With an employee ownership structure, artists and employees can participate in governance structures such as board meetings where they can voice their opinions, concerns, and oversee the label’s operations. Employee ownership can also help with revenue transparency by setting up clear financial reporting practices. Artists and employees could have access to these reports, enabling them to track how much income their music is generating as well as the financial assets of the label.
While employee ownership remains relatively nonexistent in the music industry, this awareness is important to advocate for greater autonomy and fairness for artists. By having these conversations, the momentum for change could be built.
Some examples of employee ownership in the music industry down below:
Kudos Records - A UK music distribution company
Taylor Guitars - An American guitar manufacturer
Moog - An American company that specializes in electronic musical instruments