MusicTank

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Overdosing artists, inscrutable label-bosses, tour bus breakdowns and the latest booze-fuelled PR disaster...it seems a manager’s work is never done!  Stressed, frequently under-appreciated and working longer hours than your average hedge fund manager, it’s hardly the easiest of jobs.  And, given the scale of the current industry shake-up, it could be about to get even more complicated.  This think tank will investigate the emerging trends of fragmentation and diversification of label services, and the resulting changes in configuration of management and label teams.

Declining CD sales have altered the business landscape.  According to The Economist, in 2000, artists derived roughly two thirds of their income, via labels, from recorded music, with the rest coming from ancillary streams such as touring, merchandising and sponsorship.  We’ve since seen a shake up of the above, and as a consequence bigger labels are looking to recoup their investments through diversification into other areas (live, merchandising, sponsorship), while heavyweights from other sectors are increasingly seeking to play them at their own game (eg. Live Nation & Madonna, AEG).

At the opposite end of the spectrum, some managers and industry veterans are increasingly looking to restructure the release team, separating out the investment stage from rollout and adopting a 'pick ‘n’ mix' approach to marketing and distribution. 

On the face of it, increased options can only be a good thing - more scope to shop around, better business efficiency and a more bespoke operation.   But which of the two extremes of single partner vs. a la carte services (and what in between) will prove the most successful, or is it just a case of horses for courses as the traditional release structure mutates and fragments?

On the one hand, channelling all income via a single relationship with a 360 label, or even a player from an adjacent sector, seems most straightforward (especially if the label is willing to move on digital royalties or copyright reversion).

But the a la carte approach to label services is also attractive - after all, who wouldn’t want Hi-Fi separates over an all-in-one?  But would it prove practical for most artist managers to manage the large number of relationships necessitated by this strategy?  And is this not a case of reinventing the wheel - naively ignoring the existing skills that labels have developed, often over many years, in nurturing, marketing and promoting talent? 

As recently pointed out by the BPI’s Geoff Taylor "...in addition to their traditional expertise in international physical distribution, labels have networks of relationships to collect licensing income around the world, to account to artists, music publishers and other rightsholders, to generate new income from brand partnerships and synchronisation, as well as the skill and resources to promote an act across a multiplicity of online channels. These capabilities are essential for artists trying to build a long-term career."

And that’s before you take in to account the seal of quality and committed fanbase that many labels bring and have brought - think Atlantic, Island, Rough Trade, Parlophone, Ninja Tune, Warp and SO many more.

Even if we dismiss the 'pick 'n' mix' approach to label services, is there still an argument for heeding Tim Clark’s call for separation between the investor and the service providers?   So how about raising the money, actually PAYING the label, and thus negotiating superior service deals and a much better return to the artist?

Yet accountability to an investor might bring its own raft of problems. Will the venture capitalist’s requirement to maximise return on investment within a reasonably short time frame conflict with the artist’s long-term interests?

How about just financing part of the project yourself (say the production and initial marketing) and partnering with another company to provide the rest of the label services?  Well isn’t that exactly the sort of thing smaller labels do when they license to bigger ones? From Kaiser Chiefs and B-Unique / Universal, Mylo and Breastfed / Sony BMG or even Transgressive’s relationship with Warners?

Label development company Integral takes this approach a step further, enabling indies with successful acts, and in some cases (Enter Shikari, Underworld) the band’s own label / management team, to retain their copyrights and play the bigger league themselves, using Integral’s marketing know-how.

Given the emergence of so many competing configurations in these turbulent times, MusicTank asks: Is there a best model for the 21st Century and if so what is it?