Remake, Remodel: The Evolution Of The Record Label

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Another label MD similarly described their approach as follows: ‘Whatever I have to do
to get the artist, I will. But my opinion is changing as it becomes increasingly
difficult to make money just out of recorded music sales. Unless an artist is truly
exceptional, we won’t be signing them without a share of gross ancillaries.’
Universal’s David Joseph, Universal Music UK Chairman and CEO, believes this area will
grow. ‘Non-recorded revenue is increasingly important’ he states. ‘It’s going to go from
zero to 10-15 per cent of record companies’ bottom line in the coming years.’
From strong resistance to multiple rights deals only four years ago, there has been an
acceptance from artists and their representatives that this is the way forward. One
senior artist lawyer says, ‘Is it acceptable? It’s part of the business now. The days of
labels owning and keeping everything have gone. Now they have to go out and do
business with other people as they are not making enough out of recorded music.’
David Joseph adds, ‘We are managing to get more rights with our A&R investment. Ten
years ago you’d fund everyone’s touring and see no money back from it because it was
viewed as a promotional benefit. Now that’s obviously not the case. You’re going to sell
less recorded music and everyone on the team – and I’d include lawyers and managers
here – have realised that the way to survive is by making things more equal. If you are
investing in someone’s live business, it’s only fair you get a bit of return on that
investment.’
Shabs Jobanputra (former President, Virgin Records UK) feels that all sides know that it
is necessary for survival. ‘They’ve tried all the other routes,’ he says. ‘It’s very difficult to
take the loss that comes with this business unless you have the depth and power to
swallow it. There are fewer deals around than there used to be and there is a reality
from both sides that we are all in it together.’
He continues, ‘There’s not as much money on the table now but it is moving to a
business whereby the artist needs, not just wants, a record company. That had been
lost in 25 years of CD growth. It was a boom, a bonus, a bonanza. What you have
now is a better state of affairs.’
Multiple rights: a panacea for some, an anathema for others
Not all labels choose or feel the need to insist on multiple rights deals and some major
players simply don’t buy into the idea.
Martin Mills, Founder and Chairman, Beggars Group says that his company looks at 360-
degree deals every year and is open to review its position. Inevitably, however, he says
‘we come back to what we are good at’.
He adds, ‘My personal opinion is that a 360-degree deal is an excuse to make a deal
more expensive than it need be. That means that in four cases out of five you’ll lose
more and in one case out of five you will have a resentful artist.’
Rather than taking it out of the race, this stance can actually benefit a company like
Beggars. ‘It has improved our competitive position as most artists don’t want to do 360-
degree deals,’ explains Mills.
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