Business News Labels & Publishers

Labels continue to invest the most into new music, say the labels

By | Published on Thursday 1 December 2016


Record companies continue to invest loads into new music, so you can shut up with all your moaning, you ungrateful moaning moaners. I’m paraphrasing slightly, but that’s usually the implied conclusion of the International Federation Of The Phonographic Industry’s annual ‘Investing In Music’ report, and this year’s edition, published yesterday, is no different.

Overall, record companies invest 27% of their revenues back into A&R and marketing, says the report, which equated to $4.5 billion in 2015. This spend is all about “discovering, nurturing and promoting artists” adds the IFPI, and, please note everybody, “record companies sustained this level of annual investment even as the industry weathered two decades of revenue decline”.

If you’re sitting there all smug and self-righteous thinking, “well, yes, OK, revenues tanked in the 2000s, but digital is way more profitable for labels, so it’s not quite so grim out there as it sometimes looks”, well, please remember the cost of maintaining the digital music infrastructure. Don’t forget that, whatever you do. “Music companies also invest, along with distributors, in developing the infrastructure of the digital market, servicing more than 360 digital music sites globally with more than 40 million tracks”, says the IFPI.

Actual A&R spend constitutes 16.9% of revenues which – if you’re willing to classify that slightly nebulous budget line as ‘research and development’ – and it’s certainly true that label spend on brand new artists is a highly risky investment – means the record industry invests more in R&D, as a proportion of income, than “all the leading sectors included in EU Industrial R&D Investment Scoreboard 2015”.

So there you go. The IFPI worked with indie-label-repping WIN on this particular report, and the bosses of the two organisations – Frances Moore and Alison Wenham – spoke in perfect unison yesterday, remarking: “‘Investing In Music’ highlights not just record companies’ financial investment in artists, but also the enduring value they bring to artists’ careers”.

The went on: “In the digital world, the nature of their work has evolved, but [labels’] core mission remains the same: discovering and breaking new artists, building their careers and bringing the best new music to fans. These are the defining qualities of record companies’ investment in music”.