CMU Trends Labels & Publishers The Great Escape 2015

Trends: What’s the point of a record label anyway?

By | Published on Friday 29 May 2015

What's the point?

The team from CMU Insights began the proceedings of each conference strand at The Great Escape this year by reviewing the part of the business under the spotlight. Taking those insights beyond the room, here we present a bullet point summary of the deals intro.

• Ever since the rise of the first direct-to-fan and fan-funding platforms, many journalists have predicted the demise of the record label. Yet artists continue to sign to labels all the time. Why?

• The record company is just one of an artist’s business partners. Traditionally artists would do a separate deal for each of their revenue streams, having separate business relationships for their recordings (label or distributor), songs (publisher), live activity (agent and promoters), merchandise (merchandiser) and so on.

• Generally artists – especially new artists – would expect business partners to work on their behalf for free at the outset, based on the promise of future fees, revenue share and/or copyright ownership.

• But artists – especially new artists – also need someone to cover their costs, and to fund and lead on a big marketing campaign to fully launch the artist and their debut album.

• Artists usually looked to the label to provide all of this. So the label is important for providing money, but that’s not the only thing.

• What the label provides: Money, artist development, content production expertise, distribution (routes to market), marketing (expertise, resource, contacts), rights management and deal-making power, a sounding board, a friend, the occasionally necessary bad guy in the room.

• Most – if not all – of these services can now be secured elsewhere – from direct-to-fan and pre-order platforms, from digital distribution and label services companies, and from other business partners within the industry.

• But label deals are still attractive. So why do they sometimes get a bad reputation?

• Various reasons – investment doesn’t guarantee success, the label may interfere artistically to safeguard its investment, it may just screw up the marketing, the artist and label may just fall out over time, the artist often sees very little recording revenue until the label has made back its initial investment, and artists sometimes resent having signed over the copyright in their early (and possibly best) works to a label.

• But labels will point out that, while they may take control of the sound recording revenue stream, and continue to take the majority of sound recording income even once their investment has been recouped, their investment and the risk they take can launch the artist, unlocking all the other revenue streams, which only have real value as fanbase grows.

• Though, of course, as record sales decline, many labels now want a share of some of those other revenue streams as well.

• But that means that record deals are changing. Is that an opportunity for artists and managers to evolve the partnership, so to have more of the good and less of the bad?

• Time will tell, though the artist/label relationship is definitely in flux and plenty of opportunities are definitely there.