Remake, Remodel: The Evolution Of The Record Label

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From straight royalty deals to complex partnerships
A clear trend today is towards partnership where both parties can feel they are
incentivised to achieve the same thing. This can spread the risk for the record label
and increase the participation in success for the artist.
Brian Message of ATC, Courtyard Management and current Chairman of the Music
Managers Forum prefers the partnership to be as extensive as possible. ‘I am a big lover
of 360-degree partnership deals,’ he says. ‘The notion of all income and all costs being
shared by like minded partners with profits being split in whatever ratio is agreed,
works for me. The alignment of financial interests is especially key in my opinion.’
Message devised a partnership deal for his act Hadouken in 2007 and presented it to
record labels for consideration. The Atlantic label (part of Warner Music Group - WMG)
was interested in experimenting with deal structures and liked the band, so the deal was
finalised with them. Message sums up the deal as follows: ‘Atlantic had a share of all
revenue streams, as part of a partnership deal, but the act got back their copyright after
10 years.’
Message ultimately felt that the deal proved a step too far for senior management at the
label who, he says, found it difficult to accept the reversion of copyright after such a
short term. This is unsurprising as the traditional label model was based on labels
owning copyrights, and exploiting them in return for royalty payments to artists.
‘They [WMG] were in the business of acquiring copyrights as that’s the business they
have always been in and that’s the business they know,’ he says.
Message believes that the relationship between artist and label can benefit significantly
from deals along these lines. ‘Blaming the label is often is a cop out for acts and
managers,’ he argues. ‘But with a JV where the act and the manager are the key decision
makers, there is nobody to blame! Psychologically and creatively, it makes a whole scale
of difference.’
The role of the artist manager has become more important as the industry has
recognised and become skilled at exploiting the many potential income streams that can
be generated by a successful artist. The manager normally is the only person in the value
chain who is empowered to deal with every one of these income streams and advise the
artist how best to monetise each one.
In one sense, artist management is the original 360 deal 4 ; record labels are moving into
this area, through acquisition and internal organic growth of a wide range of artist
services across live, merchandise and artist management 5 .
John Reid, CEO, Warner Music Europe & International Marketing, Warner Music Group,
says this strategy is core to Warner Music’s thinking, but acknowledges that broadening
the skills mix is an on-going process.
4 Cheques, Hugs & Rock ‘n’ Roll: The Changing Face of Artist Management, Dec 2007 – last accessed 09.05.11
5 Deal Or No Deal? The Great Artist/Label Trade-Off, Feb.2008 – last accessed 09.05.11
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