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. Marillion Arguably the pioneers of the DIY fan-funding route, Marillion (who were out of contract with EMI) marshaled 12,000 of their fans to order their next album in advance, before it had even been recorded. The album Anoraknophobia was released in 2001 and the band signed a distribution deal with EMI after its completion. This has provided a template for all of Marillion’s subsequent releases. Other bands, such as Idlewild, have adopted and adapted this model where a loyal fanbase becomes a way of funding recording and manufacturing costs in advance through pre-orders. Madness Out of label contract but still a huge live draw, Madness signed an investment deal with Power Amp in 2009. This gave Power Amp a share of the band’s different revenue streams in exchange for putting recording and marketing spend up front. The first fruits of this deal was The Liberty Of Norton Folgate album, put out through the band’s own Lucky 7 Records label, in May that year and it went top 5 in the UK. In October 2010, Power Amp announced that is delivered a 46.9% return on its net investment within two years while the band’s live revenues increased by 30% in the period. The band retain all their copyrights as part of the deal. Public Enemy As fan-funding platform SellaBand expanded internationally, it named Public Enemy’s Chuck D as its US ambassador in March 2009. That October he used the platform to raise funds for a new Public Enemy album. They struggled, however, to raise the original target of $250,000. This figure was subsequently lowered to $75,000 and they managed to raise it by October 2010. SellaBand filed for bankruptcy in Holland in February 2010 but was acquired soon after by a German investment company led by entrepreneur Michael Bogatzki. McFly Previously signed to Island, the band formed their own label (Super Records) and gave their Radio:ACTIVE album away in a deal with the Mail On Sunday newspaper in July 2010. The group then launched the Super City online subscription-based fan club in November 2010, charging an annual fee for £40 for priority access and exclusive content. It generated over £500,000 in its first two days and within a fortnight had signed up 15,000 fan subscribers. Existing big players in related areas of the business, such as the live music promoters and venue owner Live Nation, have made moves into the area of investing in artists’ recordings, but they have done so with limited success. Live Nation did deals with Madonna, Jay-Z and U2 among others, with a view to acquiring more rights than just live. Some insiders that we talked to felt that this was motivated by the tighter and tighter margins that they were forced to endure on major acts’ concert appearances. Anecdotally we heard of artists demanding 100 per cent of gross, leaving the promoter to make its margin on popcorn, beer and car parking. A move into investing in recorded music, it was felt, would open the door to them for early talent development. Getting to the acts early would mean that they were less likely to be forced into such punishing deals in which the artists kept all the gross. 24
This pre-draft version is strictly for review purposes only and is not for general dissemination or sharing. However, the investment needed to secure the major artists at the start proved to be ‘financially crippling’ according to one senior label executive. Live Nation has now merged with Ticketmaster, another giant in the live sphere, but with a much higher margin business. Often, going with third-party investment of this kind means working outside the label system. It was felt by the majority of interviewees that most of the interest for these new sources of finance is in established or heritage artists rather than new and developing acts. Brian Message felt that it was a threat to existing labels when an established act comes to the end of its deal and still has ‘currency’ – as was the case with Madness and Power Amp. He feels their focus is not so much on A&R in the traditional label sense but more about sustaining an act’s existing profile in areas like live and possibly increasing it. Consequently, an artist at the end of their deal with a label may consider alternative funding and this would likely be a more realistic option than for an emerging artist. Artists with a sales history are much easier for financial investors to get their heads around – they have a proven track record and a visible fan base. One senior artist lawyer was not convinced by these new entrants and models. They said, ‘Labels are still the primary investors; this City stuff is a fad. It’s overly complicated. I tell my clients they would be better off with a bank loan and selfreleasing through PIAS or EMI Services. That way they keep their copyrights and make more money per sale.’ Pre-label investment: a new development tactic? However, non-label investment can sometimes be borne by artist managers as a way of seeding and developing new projects prior to agreeing a deal with a label. Anecdotally, this very rarely exceeds £50,000, but is used to fund early live appearances and recordings in order to make the artist more market-ready prior to signing to a label. An artist that has been developed in this way should arguably give a greater level of confidence to prospective labels that see a reduced risk of failure in early development. Brian Message feels that labels are looking for acts to be ‘a little more conceived and rounded off’ and this requires seed money funding from management. In turn, it enables the artist and manager to negotiate a deal which better suits their needs (e.g. Mumford & Sons were able to agree an ex-North American deal with Universal and then structure a separate deal with US independent Glassnote Records for North America). This may also enable artists to secure a shorter-term licence for their recordings or a label imprint, underlining their independence in their early stages. But, as Emma Banks says, ‘You can’t launch a Lady Gaga without way more money than most managers have. Incredible talent needs to be nurtured. I don’t know how easy it is to do that without finance and expertise.’ 25
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