Sunday, November 6, 2011

The 10 commandments to successfully run a label [part 2]: Tips from key indie players

By Emmanuel Legrand

In part two of this two-part series on indie labels originally written for the Midem blog in January 2011, we asked several veterans from the indie sector to share their experience about how to run a label:
Bob Frank, Merlin (USA)
Martin Goldschmidt, Cooking Vinyl (UK)
Richard Gottehrer, The Orchard (USA)
Michel Lambot, PIAS (Belgium)
Korda Marshall, Infectious Records (UK)
Martin Mills, Beggars Group (UK)
Simon Raymonde, Bella Union (UK)
Tim Renner, Motor FM (Germany)
Dan Storper, Putumayo (USA)

1 - Bob Frank, Merlin: “Start small and grow organically at first

Merlin's Bob Frank
Bob Frank is chairman of Merlin, the global licensing body set up by indies. He is currently president and co-founder of Qello, a digital syndication company ( He was formerly president of USA’s biggest indie group Koch/E1 Records from 1999 to 2009. He also served as an exec at PolyGram from 1989 – 1997.

Q: Based on your experience, what are the advices you’d give to people willing to launch a label today?
Bob Frank: Firstly be passionate about music and even better a specific genre. Don't be in a rush to be the next Interscope. Start small and grow organically at first. Study all the new consumption and marketing models and get your labels music directly out to those most likely to enjoy what you are releasing. In other words be a part of the new music business and do not focus on the traditional physical goods model and all the added costs that go along with it. Although still important it will soon be ancillary. And maybe I am getting softer as I am getting older but never work with people who don't bring the same joy, love and passion to the label that you do. Make it a great place to work, put out good music that people want to hear and market/promote them according to the 2010 rules of engagement. Follow this and you've got a good chance of getting royalty checks from Merlin some day.

Q: And what are the mistakes you’d try to avoid if you were to launch a label today?
Bob Frank: If I were launching a label today I would not try and be all things to all people. The business is difficult enough. I would study the market and pick a genre I love and one that indies can compete in. Also I would try and avoid the operating mistakes that we all seem to make over and over like over paying for an artist because another label offered a little more and many others. My favourite is probably working a second single on an album that doesn't really have a second single on a wish and a prayer. Hope is not a good strategy. Hope tempered by experience-based decision-making is of paramount importance. Without that real experience you run the risk of missing opportunities as well. I've seen Dr. No's at bigger labels kill great projects as well as the culture of the company. Saying no is not skill in itself if not combined with battle scars. You can train a monkey to say no.

2 - Martin Goldschmidt, Cooking Vinyl: “If you ignore the money and the business side you won't survive

Martin Goldschmidt is managing director of UK indie group Cooking Vinyl.

Cooking Vinyl's
Martin Goldschmidt
A: What would you say to someone wanting to set up a label and asking you for advice?
Martin Goldschmidt: Why are you doing it? If you want to get rich, forget it; get a job in a bank. If you want to hang out with stars, wrong answer. If you want to turn people on to music you love and work with musicians you are passionate about then welcome to the club.

Q: How should one approach the business side?
Martin Goldschmidt: It's a tough gig. It's the music business. You have to get the balance right between music and business. The music bit is easy. If your music is great it will get noticed, if not you will waste your time. The business side takes a lot of learning and you need to get it right. I've been doing it over the last 25 years and seen many great labels go bust or get bought. They didn't get it right. If you ignore the money and the business side you won't survive.

Q: Any tips you can offer of what to do and not to do?
Martin Goldschmidt: 1. Plan thoroughly.
2. Budget each project and look at a worst-case budget. Check what similar projects have sold. (Your distributor can be a great source of help here).
3. Work out the time lines and build in for stuff being delivered late. If you don't give yourself enough set up time, you won't set it up properly, and you are not doing your job.
4. Put together the right team. (Your distributor can be a great source of help here). You normally can't afford the dream team. Enthusiasm always means more then gold discs on someone's wall.

3 - Richard Gottehrer, The Orchard: “You have to have passion for the business and for talent

The Orchard's Richard Gottehrer
Richard Gottehrer is founder & chief creative officer of US-based digital aggregator The Orchard. But he was also co-founder of Sire Records with Seymour Stein in the 1966 and built a reputation as a music producer, working with such acts as Blondie, The Fleshstones, The Go-Go’s, Robert Gordon, and more recently the Dum Dum Girls' debut album.

Q: How would you set up a label today?
Richard Gottehrer: You have to choose wisely how you set up your label. The world today is much different than when we started Sire. In those days, we were in a singles market where radio played a big part. Today, in the US, radio is still influential, but you can’t count on it. With Seymour, we relaunched Blue Horizon at Midem last year. It is an indie label but it is structured differently. If you launch a label today, you have to do it for the love of it because it is quite likely that you will never be able to make much money. You have to remember that in the old days only a handful of people made a living out of it. It never was a business for a large group. All these talks of demise of the business, they are childish talks. It’s the demise of the business as we knew it. But for artists and indie labels, it is a great time to be in this business.

Q: How would you approach A&R?
Richard Gottehrer: You have to choose artists that you love and give them the best of you. Artists today have more of a place and can determine their future. There are now more avenues for independent artists and artists and labels can distribute their music in so many different ways. But you have to be aware that the sales potential is so much smaller than a few years ago. Sales of millions of albums are no longer a reality. So you have to set your goals differently. But like Seymour and I used to do, you have to have talent to recognise talent and help artist with a direction. In my case I learned the business from the bottom up.

Q: How important is digital?
Richard Gottehrer: It should be a tremendous focal point. At the Orchard we have a lot of experience in that field, simply because we started very early on, and we did focus on indie labels. We may not provide the same service as a major label but for artists, we offer a possibility to make their music available on 700 accounts that did not exist ten years ago.

Q: What not to do?
Richard Gottehrer: For a start you have to keep your costs down. Do not spend too much money! You have to manage expenses and expectations. You may be someone with passion who finds artists, but you also have to know the digital world and how to promote and market online. You also have to be aware that physical sales are still a valuable business and sometimes vinyl can be good too for some styles of music. But you have to be careful not to manufacture too much products. Make sure that the artists you sign can tour and work. That’s how they build an audience. It does not need to be huge but it has to exist. Then you have to serve the fans. Before it was a far more closed society. Entrepreneurs have to be aware of that. That’s the new norm.

Q: What would you expect from someone who wants to start a label?
Richard Gottehrer: You have to have passion, passion for the business, passion for talent. Don’t think you are in it to make money. You are in a position to develop something that is special and unique. And you have to balance your passion with some business sense. You must also be consistent and perseverant. And in the end have a great deal of luck.

4 - Michel Lambot, PIAS: “Try to provide your artists with the best environment”

PIAS' Michel Lambot
Michel Lambot is CEO and co-founder of Belgian-based music company Play It Again Sam! which operates throughout Europe. He is also one of the principals at Impala, the European trade body representing indie lablels.

Q: Based on your experience, what are the advices you’d give to people willing to launch a label today?
Michel Lambot: If you were to launch a label today, I’d suggest you not to set up a label, but not in a negative way. What I mean by that is that you have to looks at things today from a different perspective. Don’t set up a “label”, which is too restrictive, but set up a “music house”, with a roster of artists, like they did in the 60s. And like they did in the 60s, try to provide your artists with the best environment for them to thrive and develop. You have to look at all aspects of their career and also get revenues streams from all aspects by getting access to all rights.

Q: And what do artists get in exchange?
Michel Lambot: Lots of works and smiles… (smiles) If you don’t mind me saying, this is a very 20th Century question! What we are talking about is access to the market, and the conditions have changed compared to the 80s or the 90s. Then, you had a very segmented market, dominated by majors. Today, you have to think in terms of how to set up a global marketing strategy and you are the agent making the possible intermediation between the artist and the audience. Therefore it is normal that you maximise your artists’ revenues and yours by tapping into all streams such as branding, live, merch, sponsorship, etc. A good case in point is Grace Jones, whose come back album (‘Hurricane’ in 2008), sold 200,000 worldwide, which is quite significant, but we also get a cut on her live music revenues because we provided a marketing budget that helped her reach her audience.

Q: How would you get started today?
Michel Lambot: I can start telling you how I started in 1977. I was 17 and had no prior experience in the music industry. From the moment I signed my first single and the time it came out, it took nine months. I was simply not ready, I did not know what to do. I went to see one of the biggest retailers in Belgium with a stack of singles, and he took 25, which was a lot for me. The buyer said he’d pay me Belgian Francs 64 per unit and I started to call him a thieve, because he was selling them to consumers for Francs 160. That’s when he told me there was something called VAT. I had no idea what it was. I went to [Belgian rights organisation] Sabam, talked to journalists, to many people. I was wondering how were all these new labels in the UK making it. The information was not available. Today all this info is there for grabs. And it helps. Ironically, you can have all the info in the world but you can’t find anymore retailers like the one who helped me.

Q: Does it help to be funded when you start?
Michel Lambot: It sure helps, but it also puts a lot of pressure on you to succeed and fast. So I’d rather say it is not the most important thing. I tend to think that what I did when I was 17 can be done today. It’s a different environment, but you can find a lot of space if you are smart. I believe there is space for people who are motivated, ready to work on Sundays.

Q: What are the qualities necessaries to launch a music company?
Michel Lambot: You have to have some entrepreneurial spirit. For a while, few people wanted to start something in the music business, but it is changing. Overall, I’d say you have to be crazy about music, hard-working and with a certain talent to spot talent. If you can combine all that, you will find money, you will find partners. But do not expect KKR [one of the biggest investment/private equity firms] to come sit at the table.

Q: What should people avoid doing?
Michel Lambot: When I started I did not know limited companies existed. And all was in my name. So when I went bankrupt, it took me ages to pay back my debts. So be careful. That said, all experiences are interesting... And it can help to have a very good lawyer from the start! Regarding artists, I would suggest a very simple rule: never make promises you know you will not be able to keep, even if you know it can cost you a deal. And if you think you can be true to your promises, then you have to make everything within your power to make it happen. Artists will not blame you for trying, but there is no better way to lose artists than not to keep your promises. You have to be honest, first of all to yourself, and be capable of saying, “Sorry no can do.”

5 - Korda Marshall, Infectious Records: “Embrace digital technology
Infectuous' Korda Marshall

Korda Marshall is co-founder of Infectious Records, a 1990s label that he re-launched two years ago with entrepreneur Michael Watt and Australian music legend Michael Gudinski. Over the years, Marshall held executive positions at RCA, Mushroom Records and Atlantic in the UK. Acts signed to Infectuous include Melbourne band The Temper Trap, General Fiasco and Local Natives.

Q: What would you say to someone who wants to start a label today?
Korda Marshall: Don’t do it! (Laughs) I sometimes say that majors are in the music business and indies in the business of music, if that makes sense. So to get there you have to have passion, a love of music and a lot of self-belief. If you are simply trying to set up a business, don’t start.

Q: Any advice?
Korda Marshall: The biggest advice I could give is…manage and control your expenses. The secret of making money is not spending. There are always ways to make money, through synch deals, PPL, direct sales, etc, so if you can control your expenditures you will make money.

Q: Is it necessary to have money to start a label?
Korda Marshall: These days, I’d advise you to have a certain amount of capital. But it also depends on the genre of music you want to be in. If you build up a brand in a niche you can build some value.

Q: How important is the A&R process and how should you approach it?
Korda Marshall: You have to have a love of music, of artists. In the early days of Mushroom, I had a strict policy of only signing artists under 21 or over 30. With over 30s you can have intelligent conversation about what they want to achieve and the under 21s are enthusiastic and keen to work hard. You have to have self-imposed rules. Sign artists that you would love and mortgage your house for. You also should look at A&R in terms of space. You cannot compete with majors because you cannot afford it, so find your own space.

Q: How close to majors should one be?
Korda Marshall: The ‘indie or die’ process of a few years ago does not exist anymore. I am not anti-major, and you can find interesting partnerships with majors. You can license music to them, do distribution deals, have them handle your digital distribution, etc. I am in favour of spreading the risk. I also believe that if you have a great piece of music, it will find its space in the marketplace.

Q: How about physical distribution?
Korda Marshall: Try to find the right partners. For infectious, we go through PIAS in Europe, Hostess in Japan, Michael Gudinski’s company Liberation in Australia/New Zealand. There’s no rule.

Q: How should indies approach digital?
Korda Marshall: Embrace digital technology and treat it just like a more complicated format because you have streaming, downloads, mobile, telcos, etc. For indies, it has a lot of benefits, because you don’t have to deal with manufacturing and stocks. At Infectious, 40 to 45% of our revenues in our first year come from digital. With four artists on our roster, we’ve sold over 400,000 albums in physical and digital format, and over 500,000 single digital tracks. By the way, most of our deals with artists are structured in a participative mode so that so that we also have income from live and merchandising. It is important to have a bundle of rights and not simply the rights to the master recordings.

Q: What not to do when starting a label?
Korda Marshall: Do not rush into anything. Do not think in the old school way of physical products only. Think forward. Don’t follow your head, follow your heart. And have fun!

6 - Martin Mills, Beggars Group: “Learn from your mistakes
Beggars Group's
Martin Mills

Martin Mills is chairman/CEO of Beggars Group, one of the leading British independent companies, which incorporates such labels as XL and 4AD. He is also an active member of AIM, the UK’s indie labels’ association, and Impala, the European arm of the indies.

Q: Based on your experience, what are the advices you’d give to people willing to launch a label today?
Martin Mills: Don't do it to make money, do it because you love it... The most important thing is to spread the word: if the music is wonderful and connects everything else will follow. And join organizations like AIM, Merlin, etc. They will help you.

Q: And what are the mistakes you’d try to avoid if you were to launch a label today?
Martin Mills: Music is an imperfect industry, you have to take risks and that means you'll make mistakes – accept them and learn from them.

7 - Simon Raymonde, Bella Union: “Try to be unique

Bella Union's Simon Raymonde
After a remarkable career as a member of Cocteau Twins, Simon Raymonde co-founded the label Bella Union, some ten years ago. Now the sole operator of the label, Raymonde looks after the careers of the likes of Midlake, The Acorn, John Grant, Beach Union, and Fleet Foxes.

Q: Any advice to people who plan to launch a label?
Simon Raymonde: If you want to start a label ask yourself this: ‘Is there someone out there doing what I would do if I had a label and if so are they doing it better than I could?’ If the answers to both parts is 'no', then you have half a chance. I can't see the point in having a label that's LIKE someone else's, or that signs bands that someone else would. I don't compete with other labels for bands and don't wish to. When I hear about other label chasing bands I have discovered I think: ‘Find your own! There are enough bands to go round!’. And if you're going to start a label which makes physical product, in general don't spend more than you can borrow and then afford to pay back.

Q: What are the mistakes to avoid?
Simon Raymonde: I think mistakes are good to make as long as they don't affect the bands! I would say don't go into business with someone else. And make sure that EVERYONE who works on your records, be they distro people, art people, press, marketing etc, be sure you like them and that they work as hard as you do. Working with dicks is a real pain and if you work with people you like, at least if the record doesn't sell, you KNOW they're nice and they did their best. Don't expect anything to happen, and don't get call the journalist the minute you finish reading his scathing review of your band. Wait ten minutes.

8 - Tim Renner, Motor FM: “Don’t sign to many acts, don’t overspend

Motor FM's Tim Renner
Tim Renner is the founder of Motor FM, a Berlin-based radio network, which has also evolved into a service company for artists and labels. Prior to that, Renner served as CEO of Universal Music Germany, the largest music company in the country, and worked with such acts as Rammstein.

Q: Based on your experience, what are the advices you’d give to people willing to launch a label today?
Tim Renner: Ask yourself why you are doing this. Only if you feel that you have a mission you should join this fast-changing marketplace! Your style or your mission has to become the blueprint for your label to build it into a brand. Being a brand is essential to access communication networks! Altogether, you have to stay focused. Don’t try to be an integrated media company while starting your label – build a catalogue and don’t go for the “fast hit” if you don’t have the money and manpower to compete with the majors.

And what are the mistakes you’d try to avoid if you were to launch a label today?
Tim Renner: Rule number one: don’t overspend! Music and musicians need time. You can only give them time while you still have resources… Don’t fear the effects of the digital age; make the best use of them instead. And don’t sign to many acts, this will prevent you from working each of them properly.

9 - Dan Storper, Putumayo: “Don’t spread yourself too thin
Putumayo's Dan Storper

Dan Storper is founder/CEO of US label Putumayo, which has made a mark by trying to sell music outside of the traditional music retail network.

Q: Any advice to people who plan to launch a label?
Dan Storper: These are my words of advice that I think are relevant not just for launching a record label:
Ensure that the music you’re offering is exceptional and has very appealing packaging to entice people to view it either in stores or online. Find the best possible ways to articulate persuasively why people should listen and help you spread the word about your music.
You’re probably the best advocate for your music. Get personally involved in selling/promoting your music so that the sales team and buyers are motivated. I’ve probably met 1,000 buyers myself as I’ve traveled around the world.
Be confident and persistent but don’t be annoying.
Make people aware via promotion, marketing, social networking, etc. Build word of mouth. Music unfortunately doesn’t usually sell itself.

Q: What are the mistakes to avoid?
Dan Storper: Don’t spread yourself too thin. Focus initially on key markets/retailers. Build internationally gradually by identifying the best potential partners. Midem is great to find potential partners but don’t always grab the first one that’s interested. Look for your best long-term partner and try to avoid settling.

If you found this post informative, you might be interested in the following stories:
The 10 commandments to successfully run a label [part 1]
Ten music marketing tips for the digital age
Ten points about copyright from MIDEM 2012


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