The winners in the music business has almost always been record companies, not the artists. There are notable exceptions of course, but in the grand scheme, when a record company foots the bill for the production of an album, they also own most of the profit.
Jeff Kwatinetz, the CEO of a talent management company called The Firm, is looking to change that. He wants his musicians to cut out the middleman (record companies) as much as possible. Some established musicians (brands) can afford to write their own check for production costs, but still need distributors to get their music to the people.
The companies were the gatekeepers between the artists and the audience. If you wanted your video played on MTV, you needed a major label. If you wanted your CD displayed at Tower Records, you had to have a big record company. Sure, the company paid you a big advance. Then it would bill you for production, distribution, and marketing costs using accounting methods that would give people in Hollywood pause… The record companies are no longer so powerful, because artists have more ways to get their music to fans.
Yet, the record companies, specifically Capitol Records, is supporting Kwatinetz’s moves, according to Fortune Magainze. It will take some time to determine if there’s a shift of power in relationships within the music industry.