Startups & Funding

Three Quarter Offers Musicians New Model: ‘We Run The Business, You Run The Art’

Three-quarterThree Quarter is a new music startup with a hybrid business model. They describe it as "part record label, part venture capital firm, part management firm, part marketing/pr firm." A catchier take, also provided by Three Quarter, goes, "3/4 runs the business, the artist runs the art." Founded by David Airaudi, former Strategy and Business Development Executive at Interscope, Three Quarter is an important step forward out of the quagmire of current music industry practices.

David Airaudi, with whom I spoke this week, has a relatively low profile on the web. Most often mentioned as a partner with Christian Clancy co-managing Odd Future, Airaudi is now focused on working with a growing roster of emerging acts at Three Quarter (aka 3/4 aka 3qtr aka naming issue).

He told me that he's never going to be the guy that gets his picture taken at industry functions. His focus is on taking care of business for 3/4 artists and that's quite a job, given 3/4's unique business model.

3/4's Approach to Building Businesses In Partnership With Artists

Though 3/4 is associated with Odd Future via his co-management relationship with Clancy, he is developing 3/4's approach with such artists as Bass Drum of Death, Phlo Finister and Crass Mammoth. Airaudi says he has been focused on finding young artists who want to be in control of their careers and intellectual property without having to take care of the details of running a business.

Interestingly enough, this business model has also led to an unintended A&R model. He says the acts who are drawn to this approach are constantly putting out new music and improving in the process.

Such artists are not interested in signing with a traditional label, major or indie, because they give up too much IP and control in the process. But they also don't want to go totally DIY and have to be constantly dealing with the wide range of issues that come with that approach.

Developing a Third Path Beyond Label Deals and DIY

3/4 offers a third path with the artist functioning as CEO and Airaudi as COO in the creation of a new business designed to further each artist's career based on the kind of career they envision. 3/4 is not designed to chase hits or build superstars though that may be the outcome of the work artists do.

The basic concept is that 3/4 exists to help artists develop their career as they see fit whether that means simply making a decent living while pursuing their art or pushing to get to the top of the charts.

If artists have other interests, whether that's fashion or some other business or creative interest not typically associated with music, 3/4 provides the support to make that happen.

Envisioning New Business Models While Working With Jimmy Iovine

Airaudi developed this model over a 7 year post-MBA major label career, first doing business development at UMG (North America) for a year followed by 6 years with Jimmy Iovine at Interscope. He says he treated this 7 year period as the "world's greatest internship," learning as much as he could along the way.

At UMG he got a look at every business deal that came through the door.  With Interscope he had visibility and/or involvement in a wide range of deals and business relationships at a time when they were expanding far beyond music and also exploring new approaches with artists such as partnerships and 360 deals.

During this period he began to pursue the concept of "Life Post-CD", discussing new business models that he hoped Interscope would consider. Over time he recognized how unlikely such changes would be and, when he found Odd Future, he realized that they were already pursuing similar ideas.

Odd Future represented a whole crew of young people who handled all the aspects of their business in collective fashion. These combined factors inspired him to leave Interscope a year ago to found 3/4, though he says he loved the job and loved working with Iovine who he described as the "most progressive exec out there."

Developing the 3/4 Co-Ownership Business Model

Initially he thought of 3/4 in terms of an incubator but eventually developed the current model in which he establishes an individual business for each artist, co-owned by the artist and 3/4. The artist functions as a creative entrepreneur and has control of the direction of their career.

Airaudi says 3/4 is, in part, the answer to the dilemma facing artists who are supposed to build careers as they sell little bits and pieces of their assets and parts of their careers to disparate third parties who often have conflicting self-interests.

Typically, artists have to go through an extensive period of building before they can reestablish control of their careers and intellectual property as musicians such as Radiohead, U2 and Madonna have done. He feels artists should have that control from the beginning.

Though Airaudi knows of others exploring related models, they are all focused around single acts and are either at the height of their career, like Radiohead, or pursuing a team building approach to establishing themselves. Though we did not discuss The Parlotones, based on my interview with manager Raphael Domalik, I think they are pursuing similar territory for an emerging act.

Airaudi's goal is to scale 3/4 to be able to work with a much larger number of acts. However, he doesn't speak in terms of owning the game. He feels he is pursuing one viable direction but that the real answers lie ahead and will require lots of different bands and businesses exploring the possibilities. In fact, he regular reaches out to business people pursuing related models not in order to make deals but to share knowledge and help develop new approaches.

Keeping Music at the Center of the Music Industry

Airaudi also insists that, at the end of the day, music should be at the certain of the music business. Since he doesn't make music, he feels blessed to have a way to work with musicians and help further their careers.

Airaudi says he looks at each artist as a riddle, one that requires individual attention to create a unique path based on their artistic desires and the realities of doing business.

If you're interested in keeping up with 3/4's development, check back in a month or so when their website will relaunch with a full Topspin integration. You can also keep up with 3/4 on Tumblr and check out the music on SoundCloud.


Hypebot Features Writer Clyde Smith maintains his business writing hub at Flux Research and blogs about dance at All World Dance. To suggest topics for Hypebot, contact: clyde(at)fluxresearch(dot)com.

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  1. Not really seeing anything new here, other than coining the phrase “Third Path.” My team of network affiliates have been preaching a similar method for years, as I’m sure other have too. More along the lines of scrapping DIY for “BYT” (Build Your Team) \m/

  2. I think the scaling is a big difference. Nobody’s doing this with a large number of acts involved.
    The other thing is the co-ownership with the artist still keeping their various rights intact.
    So my understanding, though I need to clarify this, is that the legal entity doesn’t take over ownership of various music rights but does benefit from exploiting them.
    Also, it’s not a team working for an artist, it’s co-ownership. So it’s also not a boutique firm providing services.
    Does that seem different or not?

  3. Building a team implies that they either are paid a fee upfront or get a percentage.
    3/4 actually provides needed funding as part of the deal.

  4. This is very similar to Independent Distribution Collective. Seems that 3/4 may have some strong financial backing however.
    Great to see bigger players part of the disruption on the business side of music.

  5. No, one party owning something is not co-ownership. Co-ownership is both parties sharing ownership.
    I actually think the artist retains masters in this model but I have to double check on that.

  6. So, a label and artist agreement wouldn’t be considered co ownership??
    Some deals are better than others, however rarely are they work for hire, though now those lines are becoming blurred in certain situations.
    To me this is a huge semantic argument. If a label owns my masters and I own my publishing, we’re both co owners of the music or product no?
    How do you define ownership?
    At the end of the day both parties are appropriating some aspect of each other whether it be talent, content or resources.
    What I’m seeing in this explanation of 3/4 is a management/consulting situation, a seemingly well intentioned one, but how do they get paid? So the artist gets to keep their rights, but they just take their cut off of a different piece of the pie.
    If this is just a matter of of management doing the various job of a label through todays technology and infrastructure opportunities, we can just call it that, management.

  7. Indeed, very much like IDC with a VC element… good to see the disruption! Let’s keep these great new models coming!

  8. Clyde, IDC actually consults and develops up and coming clients, offers artists and labels physical and digital distribution, music licensing for TV and film and marketing and promotion, without owning anyone’s master or getting anything more than a flat fee for services, and a cut of sales for what is sold. This coupled with helping with project management and consultation that includes Business Plan writing, Marketing plan development, and so much more.

  9. i highly doubt he has a low profile on line by choice. who would want that if they are launching a company.. that said even if he did why do all the artists also have a low profile online? who does the branding and marketing for them? this just feels suspicious to me. I wonder how much money they take as a partner and what the artist actually gets in return… cool idea but only as good as the people involved.

  10. after doing a little bit of research I kinda agree with Rob.. theres 100 companies like this and they are all only as good as the people and their relationships. Artists can outgrow or get stuck in these deals ala a production company. Feels intelligent but disconnected. Looking online It seems like they simply invest and handle paperwork, business etc but not branding. Maybe they aren’t a management or marketing company tho and they let the artist deal with that. But thats not working. Its confusing. I think Christian handles Odd Future and Im not positive but I don’t think he or them are involved with this company

  11. cool idea but seems spread to thin. even in the description. part this, part that, part this, part that.. are they complete in any of those areas? ha i just realized their name makes sense. Seems like 3/4 of a good idea. Needs some tweaks. I wish them luck tho. Someone needs to mix it up.

  12. Hi. It is a pleasure to meet you all. My power company sent me an email concerning 3/4 Business Plan & Model. After reading it, I know why he sent this to me. 😉
    The model is great. It’s being done by everyone now. It’s nice to know that you have funding as well. That helps.
    Everyone here is making very valid points. \m/._.\m/
    Most of these, I have already addressed as I am a walking Record Label.
    I won’t get into detail on here as this is America and the way the times are changing, people like to take other people’s creative ideas and run with them taking all the credit.
    However, I would love to sit down with the CEO’s of 3/4’s with an NDA in place and play a bit of creative tennis with you. In order to be the best, you have to learn from the best….and then you do better! Perhaps the two of us can come up with a solution that will become the next convergence plan for artists & musicians and ease everyone into the next age of Digital Multi Media.
    Thank you for your time and the wonderful ideas you have for independent artists like myself! I hope to hear back from you.
    Scott Price
    CEO of UNIR1
    Things Just Get Better When You and I are One!

  13. and that’s different from a traditional label or management deal how exactly? and what are those rates and fees?

  14. sounds like semantics to me… lets talk math, what does an actual deal look like, what are the numbers, who gets to keep what, for how long and who has the rights to exploitation?

  15. I’d love to know, it just sounds like some goofy ghetto 360 deal… ya know what would really be “disruptive?” Transparency, that’s what… want a game changer, how about honest representation of terms. If the deals good and the team is great, you’ve got nothing to worry about.

  16. As someone studying music law this idea comes with a host of issues that could affect an artists career substantially. It truly does depend on the people much more than the idea. Let’s assume they take a third of all income as a business partner (although many of these companies shoot for 50%) in exchange for funding and business infrastructure. You now have an artist who is already involved in a 360 deal with a company that most likely preaches against them. What happens when said artist wants to change course? The above comments ring very true as well. What are they delivering as far as management and/or brand guidance etc. It doesn’t appear that they do much of that, at least based on what is available to review online. If they do, it seems like they need help which leaves the artist in a very tough positon. Sure they have the freedom to “handle the art” but artists need more than that to navigate an extremely tough environment, especially taking the independent route.

  17. Got Distribution? While this is an interesting model, as other pointed out not the only one, the bottom line for any artist today is to have a Clicks to Bricks distribution strategy; And I am not seeing this being offered……
    As well what we believe is the next real model and part of our offering now is a pathway to ownership for successful supplier/content creators of the distribution element and a charitable connection with each and every thing we do.
    BTW I have no problems being out in public and talking about our model. In fact we’ll be at the convention ready and willing to talk to anyone that wants too including the press who I would love to talk about the state of
    Nelson coCEO

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