What fate for existing acts and future for new acts?
WITH TRADITIONAL record labels in a state of disarray, there’s no shortage of new business models jostling to take up the slack. Propositions include bands like Groove Armada signing to a drinks company to release their music to 360 deals, where one entity oversees all aspect of a band’s output, from music publishing and sales to live tours and merchandise.
But all of these new business models are predicated on the act already having an audience. Brands such as Bacardi (Groove Armada’s new partner) and companies like Live Nation (which has done 360 deals with Madonna and Jay-Z, and a touring and merchandise-only deal with U2) are not in the business of investing in a brand new garage band.
The future for new acts remains unclear. Despite notions about bands utilising MySpace and other internet tools to build an audience, remarkably few bands have made a sizable mark using such 21st-century DIY methods.
And history has shown it is record labels which have always taken a chance on investing huge sums in raw talent in the hope of finding the next big thing. Finding someone else to replicate the largesse, patience and seed capital of a major label to allow a new band grow their audience will be difficult.
NEW LABELS
STEVE KNOPPER talks about sustainable record labels that are small, nimble and artist-facing. Major labels may be in trouble, but it is a different story at labels like Domino, Beggars Banquet, Warp and Merge, who are robustly coping with changes in the music sales market.
These labels have ensured their survival through largely common-sense measures. They don’t have huge overheads in the shape of big staffs, huge executive salaries or swanky offices. Their acts are signed to sensible contracts and, as has been seen by the decision by Radiohead to sign with XL, these labels are widely viewed as more artist-friendly than their major label peers.
Unlike the rampant short-termism of the majors, indies are viewed as more patient and prepared to take a medium- to long-term view on when the act breaks even or turns a profit. Most of all, they owe the continued good health to their A&R policies. Artist and repertoire is the music industry’s research and development and, like every other industry, it is vital in future-proofing the business.
In recent years, a label like Laurence Bell’s well-regarded Domino has seen its revenues rise through the signing and subsequent multi-million-selling releases of Franz Ferdinand and Arctic Monkeys.
But the increased profile from such successes is every bit as important as increased profits. Such media exposure and positive coverage of the label means the next hot band to come along may prefer to sign with Domino because they believe the label will do more for them. And that’s the kind of reputation – and recommendation – that money can’t buy.
STREAMING VERSUS DOWNLOADING
THERE HAS been a growing industry and consumer buzz of late about ad-supported streaming services like Spotify (pictured) and Lala, currently available in the US. Spotify users can listen to eight million tracks at any time free of charge, or sign up for the premium ad-free monthly subscription service.
The labels have given their blessing to these services and are happy for a couple of reasons. For a start, they get paid every time a track is streamed.
Also, easy-to-use, accessible services like Spotify will entice people away from illegal filesharing services like Pirate Bay and their peers. Some executives are also happy because these services cock a snook at Apple’s quasi-monopoly on MP3 sales.
However, if customers are happy to stream their music from the cloud rather than own the CD or MP3, will the streaming revenue be enough to offset those losses? And given the current advertising pinch, is there enough ad revenue to support the streamers? The jury remains out, for now.
