Remake, Remodel: The Evolution Of The Record Label

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This pre-draft version is strictly for review purposes only and is not for general dissemination or sharing. Remake, Remodel: The Evolution Of The Record Label CONTENTS Foreword 1. Introduction 2. The Artist Relationship 3. Marketing 4. Investment 5. The Changing Record Company 6. Direction Digital 7. New Futures Credits About MusicTank FOREWORD There has been much talk in recent years, mainly uninformed, about the death of the Record Company, and in particular, many gleeful pronouncements about the decline of the major labels. Although it is clear that the recorded music sector is not the whole of the music business, and that the live sector has flourished by comparison in recent years, it has seemed to me that it would be very difficult to remove the level of investment that has been made by the labels from the music business ecology without inflicting a fatal wound to the whole of the music business. The big live acts do after all need to be nurtured and developed somewhere. A unique opportunity presented itself, when I realised that Tony Wadsworth, a former EMI Records Chairman, who knows the industry inside out, would be available to compile a report giving a detailed overview of the future of the Record Company. Although currently Chairman of the BPI, Tony has no current affiliation to any one label. As the industry goes through revolutionary change, it struck me that a detached overview from such a well-respected industry figure could be a valuable document in the reconstruction of a recorded music sector which has been battered by the advent of a series of disruptive new technologies. Tony’s access to a series of very senior music industry figures, and first-hand knowledge of the complications of running a major label provide a very useful insight into the problems of recent years, as well as a glimpse of the changes that point towards a much healthier future on the horizon for recorded music. Keith Harris Chairman, MusicTank May 2011 2
This pre-draft version is strictly for review purposes only and is not for general dissemination or sharing. CHAPTER 1 | INTRODUCTION I think it was about 1995 and I was Managing Director of the Parlophone label when the youngest and possibly brightest guy at the label thrust a blank CD-R into my hand. It contained, he said, the complete catalogue of The Beatles – the Holy Grail of pop music assets. He had ‘downloaded’ it from the ‘web’. It had taken 20 minutes and cost precisely nothing. After taking a while to process this information, which had been delivered to me in his usual rapid fire verbal torrent, I gradually came to the conclusion that, in the words of Bob Dylan, ‘things were going to get interesting right about now.’ It was the mid-Nineties and a period of unprecedented and continuous growth for record companies fuelled by the latest technological sound carrier, the compact disc, which had become the dominant format for music buyers only a few years before. At Parlophone, this industry-wide growth was boosted even further by a boom in exciting new British bands and we were fortunate enough to be working with some of the best – such as Blur, Supergrass and Radiohead – who added to an already healthily selling catalogue including legends such as Tina Turner, Queen and The Beatles. The arrival of the web suggested huge possibilities – but we were in the music business and had albums to sell. So our first application of the internet was in marketing and communication and we set out to build artist websites to complement the marketing monies spent in print radio, TV and posters. As personal emails became a commonplace reality, we built databases around artists and genres to keep fans informed of what was happening. The whole focus was still on selling CDs, signing and breaking new artists – and on maintaining that growth. Labels were not best positioned to make the link between this new web communication revolution and the delivery and packaging of their music. With the exception of Sony, record companies were no longer part of electronic and technological conglomerates. Philips, the inventor of the CD went on to sell PolyGram Records in 1999 and EMI was no longer a player in electronics manufacture. CD prices gradually fell from their peak on launch as the format became mass market and price differentiation was introduced – with mid- and budget-price CDs expanding the available catalogue range and bringing average disc prices down further. Despite this, and the fact that new release disc prices were lower in real terms than vinyl ever was, there was an ever-present grumble of overpricing from the marketplace. Software manufacturers Philips and Sony experimented with additional new formats – notably digital compact cassette (DCC) and MiniDisc (MD) – in the hope of prolonging sales growth through physical format changes, but none of these formats, nor later high-end experiments such as DVD-Audio and SACD, captured the public’s imagination. The market growth for recorded music continued for another five years, but beneath the surface an increasing number of tech-savvy younger consumers were discovering that 3
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