Labels are not dead, yet – They’re morphing

By Emmanuel Legrand

Strange, isn’t it, how perception is changing about record labels? Once vilified as an anachronistic leftover from a bygone 20^th Century business model, the tide is now changing and labels are finally viewed for what they are – useful service providers for artists and career enablers.

The difference from before is that labels were omnipotent, and were the single most important piece in an artist’s set up (not least because they had the money!). You could have a career as an artist without a very good manager, but you were toast if you had no label. Nowadays, artists need strong managers to coordinate and aggregate around them competences. And that’s where labels still have relevance.

There is know-how in labels that artists can still rely on. “A label invests, provides skill, provides contacts and provides context,” according to Martin Mills, chairman of Beggars Group, which includes Adele’s label XL Recordings, as quoted in the report written by BPI chairman Tony Wadsworth and Eamonn Forde for MusicTank. Made public on May 13 at the Great Escape convention/festival in Brighton, the report addresses the issue of labels in the digital age.

Wadsworth, who was chairman/CEO of EMI Music UK until the Guy Hands regime got the best of him a couple of years ago, was in Brighton to talk about his report (‘Remake, Remodel: The Evolution Of The Record Label’). The document is definitely worth reading for anyone in this business (costs £45). It provides an open and honest assessment of today’s situation in the UK, and most of its findings can be extrapolated to other territories.

MusicTank chairman Keith Harris is keen to emphasise that for the first time there is an snapshot of the changes that took place in the business (from a UK perspective). The report, he says, will help understand better the situation, and identify where real efforts need to be made. In his introduction speech, Wadsworth said labels have been changing and adapting to the new digital paradigm, even if sometimes they did it reluctantly. [The Guardian ran a rather positive story based on an interview with Wadsworth before the publication of his report]

While stating that labels do now venture in more areas than ever before, and have acquired skills in many different fields, and are for more open to unusual licensing deals than before, he admitted that it would take a while before the system fully adjusted to the new dynamics in the market and to the new business models.

Wadsworth was rather candid in his answers to the audiences’ questions. He did accept that labels were slow to measure the role and importance of the digital revolution in the early days, and he seemed to agree that they had not been a good job at exploiting the various streams offered to them, but he was equally adamant that labels, especially majors, were learning fast and were more open that ever before. [This vision of labels adjusting to new market conditions was embraced at various occasions during the Great Escape. On the panel ‘What digital?’ Omnifone director of licensing Jezz Bell stated that “majors were more receptive to new models these days” and were not adverse to risk-taking.]

In a question about how the possible forthcoming merger between EMI and Warner would affect market conditions, Wadsworth took the view that it would probably be better for the market if rather than having two super majors (Universal and Sony) and two mini-majors (EMI and Warner), there was a third with equal share. According to him, this would create a better level playing field in the market that would be beneficial to all, including indie labels. That view will certainly be challenged by the likes of Impala…

One of the most interesting aspects of the report is the chapter on the relationship with artists. This is probably the most significant change in the music business. And the report does not hide any of the aspects of the evolution, from the empowerment of artists to Warner’s admission of systematically asking for expanded rights in its contracts.

At the session on ‘The music company of the future’, Martin Goldschmidt, chair of the Cooking Vinyl Group, was refreshingly blunt in his assessment of what labels and artists can find in each other. His cue was that “nobody forces you to sign a [360 degree] deal. It is not a moral issue, it is a negotiation!” What will make the success of the relationship between artist and labels are the services that labels can offer and the end results. As a result, Cooking Vinyl has re-tooled its structure to offer more services to artists in a more open philosophy. As a result, he said Cooking Vinyl had for more projects recouping their investment and making money for both the label and the artists than ever before.

On the same panel, two managers said were also more open to give more rights to labels if they were adding value. One even floated the idea that another level in the relationship between the artists and their labels as “service providers” could be to create companies in which artist, manager, publisher, label and agent would all be shareholders and would contribute to the overall wealth of the company. Goldschmidt labelled the idea interesting but, always the practical man, he also asked “how does it work in terms of margins?” In other words, who gets paid for what?

On a panel moderated by yours truly (‘A&R is dead – Long live A&R’), panellists agreed that although their influence has diminished, labels could still play a major role in the A&R process, not least because artists need feedback and guidance, and also champions to help them go through the creative process. But it has to be a two-way relationship.

What we are seeing now is the beginning of a new era where labels and artists have common interests and do try to find ways to achieve together the same goals. In the old days, artists signed to labels for a big cheque and their job was to deliver the music, and labels would make superstars (or not) of them. Today, markets conditions forced labels to re-evaluate their role and artists to look at them in a different way – no longer as banks but as service companies – and if labels cannot provide these services, they will be history.