Signing Artists in a Digital World

Back to the essence of this business being, effectively, spotting and scouting talent and promoting and commercializing the talent. Historically, was that with artists at a young age?

Without being over misty-eyed and nostalgic about this, the business, which really grew up in the 60s and 70s, has been built on relationships with talent, which lasted over many years and was developed. If you look at an artist like Bruce Springsteen, he was signed by a legendary A&R guy, called John Hammond, and the first couple of albums didn’t really cut it. But his talent was deemed worthy enough to continue to invest. But the difference between the game then is, for artists signed at that period, the royalty rate was, invariably, much lower. The upside could be that much greater because the volumes of physical product were there, in the market and the rights were, generally, in perpetuity. I guess you could take a longer view, because the rewards could be greater.

If you go back to the 80s, 90s and even 20 years ago, it seems as if the artist needs someone to distribute to radio, to physical, with scale. Whereas today, you can go viral, if you’re lucky and good, pretty quickly. Is the record label business somewhat predicated on signing that talent in the first or second album or quite early in the career?

It’s predicated on signing them out of the box. Again, you’re absolutely right. You can look at all the levers that the majors had, 20 years ago, where they not only controlled manufacturing distribution, but they controlled the relationships with media and retailer; you needed to be with a label to be able to have a proper global reach. Obviously, all that’s gone. The other thing which has changed dramatically, in the last 20 years, is that the cost of recording has reduced massively. You needed to go into an expensive recording studio to create a master quality recording, 20 plus years ago. Now, you can do it on a laptop in your bedroom. All the economics have massively changed.

I would look at the business, right now, and ask what the majors are, primarily, offering? Well, they offer cash and they offer reach. To be fair, there is an awful lot of expertise within major labels, as well. There are very good marketing people; there are very good digital marketeers. There are also very good A&R people in there, who can really help an artist develop. But as an artist and as an artist representative, you have to weigh up, okay, I’ll take a cheque from a major and, in exchange for that cheque, I get access to that expertise and access to that reach, but I’ll get, maybe, a 20% to 25% royalty; I’m giving away 75% of my income for that and I might actually have to give away rights, if not in perpetuity, but for 15 or 20 years. Versus, I can go to a third party and maybe access smaller funding, where I can build a team around me and I retain ownership of my rights and I’ll get paid 80% of my revenue share.

10 or even five years ago, there were far fewer options for artists to do that. Now there are a plethora of options for artists to do that. Even each major also has what they call a label services or artist service business.

These are not indie labels, but separate service offerings?

They are not labels. They are primary distributors, with services bolted on. You can either have a straightforward distribution which will give you a set of pipes; we’ll push it out to all DSPs. We can handle physical for you, if you require it, and we’ll account to you on a monthly basis.