Thursday, June 9, 2016

LABEL SERVICES: The future of the music business is now!


By Murray Stassen

(This article originally appeared in MUSIC WEEK)

     It doesn’t take a music business expert to recognize that traditional music companies have been challenged in recent years. The growth of the digital market, the rise of tech companies and the rapid development of their technology have given artists and their audiences the power of choice.
     Artists can decide how they release their music, without traditional gatekeepers blocking their path to market, while audiences have been given greater choice over how they consume that music, whether it’s on CD, cassette, streaming platforms, music video services or vinyl.
     The label services model offers artists a viable alternative to the traditional major label deal. An artist can release through an indie label or even set up their own label, retain full creative control over their music and still have all aspects of their business handled by experts in each field.
     “We are in the business to try and help as many artists and labels reach as many music consumers as possible,” says Dean Tabaac, managing director of US-based AMPED Distribution, which offers worldwide physical and digital distribution as well as sales and marketing. “We partner with artists and labels because we feel we have a mutual understanding of their vision and what is at stake, and will work together to achieve the best possible results.
     “We have found that adjusting our services to cater to the needs of each artist and label is more attractive and desirable than requiring them to fit into a rigid one-size-fits-all system,” he adds. “We do what we have a passion for and what we want to do, not because we have to, and that is very liberating, especially in today’s music business climate.”
    Vincent Clery-Melin, GM of label services at Kobalt Label Services (KLS) in London suggests that traditional music companies are having a hard time adapting to the fact that artists have so many options when it comes to releasing their music now.
     “Established artists with strong sales and fan bases looking for a label services [deal] these days are spoilt for choice, and that’s really a good thing, and more and more artists are shunning the traditional model,” he says. “Our vision of label services is that it is progressively becoming the paradigm that ultimately will replace the traditional label model - especially the traditional major label model.
     “At the moment, [label services] is a model that is particularly attractive to established artists with existing fan bases, as well as self-released artists at the very beginning of their careers – while they are largely under the industry radar. Month-on-month we are seeing more and more artists of all shapes and sizes adopt the approach.”
     KLS boasts internationally successful artists such as Die Antwoord, Lenny Kravitz and Pet Shop Boys on its roster. “We’re very proud of the Pet Shop Boys campaign so far,” he says. “Not only did we improve on the album sales of their previous record so far (over 120,000 albums to date) and on their first week sales and charts in all major markets - including No.3 album chart entry in UK and Germany - but we also worked closely with the band and both Apple and Spotify to move PSB into the streaming age and vastly improve on their profile.”
     KLS has also recently released debut albums by the likes of Norwegian DJ and producer Todd Terje and UK/Aussie rock act Sunset Sons - and Clery-Melin argues that “it won’t be long until an artist’s debut album will break through” by using the label services model.
Ben Rimmer, director of UK distribution and label services at Believe Digital agrees with Clery-Melin that there will soon be more emerging artists that will break through using the label services model.
“We will begin to see more examples of breakthrough acts succeeding through label services, and less of heritage acts breaking even,” he says. “Risk can be offset with new acts by using indicators like streaming data to underpin an investment.”
     He adds that label services will become more appealing to artists, because big advances don’t always guarantee long-term success. “More managers will value services, being made a priority and the targeted marketing spend label services provide,” he says.
     “High advances and wasteful marketing spend can often provide false hope and prevent artists achieving a fair artist royalty rate or regular revenue pay through.
“Having a long-term partner investing in services, assets, and marketing will be seen as much more beneficial.
     “If you’re not a priority act at a major there’s little guarantee you’ll be a success,” he continued, “whereas a label services model allows you to control your destiny, rather than majors dictating whether you will be a success or not.”
     All of the sector specialists that Music Week interviewed for this feature also cite transparency and creative control as two key reasons for using the label services model for releasing music, in addition to the appeal of having access to all the parts of a major music company without having to sign a deal with a major.
     “Label services provides a fairer, transparent and more productive way of working in partnership to allow for artistic freedom. One main difference with this model compared to a traditional record deal is that artists will typically deliver a finished record, so they have complete control over this initial creative process,” says Rimmer.
     He adds that the traditional label model can be risk-averse, whereas Believe is willing to take its chances on newer acts that they feel they can develop over time. “We are willing to invest in long term projects, rather than dropping an act if they see initial low sales, like the majors tend to do,” he says.
     “Currently, we’re working to develop acts like Brolin and Holy Esque under their own label imprints. For us, it’s all about finding and developing this new talent globally – and we’ve found business is strong with the acts we have taken risks on. So competition may be fierce for established artists, but our USP is in new talent.”
     Rimmer tells Music Week that Believe’s strategy is to A&R new talent to sign for label services as well as for its in-house label Believe Recordings: “We’ve A&R’d acts like Public Service Broadcasting and James Vincent McMorrow from their early releases. We’ve taken a risk on new talent and signed them right at the beginning of their careers, helping them develop over the years.”
     Believe provides services ranging from digital distribution to royalty reporting and analytics and also has a multi-territory in-house sync department, campaign management, digital marketing, video distribution and channel management. It also handles neighboring rights with 19 direct deals for registration and collection.
     “Ultimately, we fund projects to create assets and support marketing and promotional spend,” says Rimmer. “We are then able to work these projects internationally with our setup of over 30 offices and 300 staff in both key and emerging markets.
     “It’s suitable for any artists with active fan-bases who want to move beyond the DIY model, but don’t want to sign a traditional record deal where they would lose long-term rights, receive low royalty share, and control over their careers.
     “As we see more artists and managers wanting to control their own rights and develop their own label imprints, more will want to adopt the label services route, rather than go through a traditional major record deal and sign their rights away. If this is the case, label services will continue to grow steadily.”
     Believe Digital has seen a number of successes so far, with both Public Service Broadcasting’s album The Race For Space and James Vincent McMorrow’s single Higher Love achieving 60,000 and 200,000 sales respectively. “We also had US chart success with Big Black Delta, and numerous critically acclaimed releases from the likes of Holy Esque, Ciaran Lavery, and Lizzo,” says Rimmer.
     The company has also seen various successes in sync this year, including a string of US & UK placements in TV shows and commercials. Lancashire duo Aquilo’s track You There was featured in Unilever’s worldwide Farewell To The Forest campaign, which has racked up over 21 million views on YouTube, and James Vincent McMorrow’s Wicked Game is being used in the Game Of Thrones UK trailer.
     “Many managers and artists now see the value of a services partner who can provide a full service solution under a modern deal structure,” says Rimmer.
     “This has meant that label services has become a viable route for both artists and labels alike.”
With so many players now active in the market, there are naturally different views about what it actually means to be a label services company and what services should be offered in order to be defined as one. Clery-Melin concedes that there are a number of companies with a similar offering in the market but argues that KLS has a number of USPs.
     “We’ve seen over the last four years the emergence of a sector, with all the major companies, distributors, and marketing agencies launching a ‘label services’ division,” he says.
     “However, it’s difficult to talk about a sector when the offers are very different and the reality behind these services are very different. Label services, depending on who you are talking to, can be a marketing consultant for hire, a very traditional P&D scenario, or the runway into a major label system for acts that the major label doesn’t feel like signing yet.”
     Absolute Label Services MD Henry Semmence argues that one of the core issues within the label services sector at the moment is the perception of what label services actually is. “There are now many companies out there professing to be a label services business who don’t actually provide label services,” he says.
     “For Absolute, this has meant we’ve needed to spend more time clarifying what label services truly means. It’s very easy for a company to claim to provide a range of services in order to lure business and then not actually deliver on anything outside distributing the record.
     “For us, distribution is just the first step in a tailored, hands-on marketing process – leading to us looking for every opportunity to drive sales and streams around a record’s initial release and on-going life-cycle.”
     In spite of the rise of rival companies in the market, some of the executives interviewed for this feature insist that competition is healthy, while others encourage more companies to enter the sector.
“We embrace it, and as a business Absolute is as stable and strong as it has ever been,” says Semmence.
“We hope more players come into the market in order to keep the sector dynamic and positive, “adds Adrian Hughes, head of artist and label services at !K7. “It’s a vitally important area of this business as highlighted by Sony’s acquisition of Essential in the last few months.”
     Paolo d’Alessandro, chief international officer (CIO) at International Solutions suggests that the label services sector is starting to stabilize. “We are already seeing some signals of consolidation,” he adds. “The Sony Music acquisition of Essential is a perfect example.
     “The players that have established themselves in the past five years and are still there, including ourselves, will have a competitive advantage as we all work to consolidate and maintain our positions. But no one is ever safe from the next guy who will come up with an idea, a different twist, a different way of doing things, and suddenly force change. It’s how we progress as a species.”
     Semmence also feels that that Sony’s acquisition of Essential Music & Marketing is indicative of consolidation in the market. “As we have seen with Essential selling to Sony, it’s likely that there will be 
more consolidation within the field,” he says. “It seems like a case of ‘If we can’t beat them, buy them’.
     “The key to the label services industry thriving is establishing a better understanding across the music community as to what true label services entails – delivering tailored campaigns to artists where they call the shots and retain full control.”
     Dan Chalmers, president of Rhino, East West and ADA UK - which won the 2016 Music Week Award for label/artist services - says that there are a lot more players in the game today, but insists that “this is good news for everyone involved in the business”.
     “Artists get more choice and everyone has to stay on top of their game to remain competitive,” he adds. “We always keep an eye on the market, but our focus is making sure that the service we’re providing to the indies and artists is the strongest in the sector. ADA offers all of the services an indie label or artist needs to release their music anywhere in the world, to get the best possible results.”
     Absolute’s Semmence tells Music Week that distribution and marketing sit at the heart of his business and remain the basics of any of Absolute’s deals, but adds that in an increasingly competitive marketplace, their range of complementary services are just as important as distribution and marketing.
“Choosing a company that goes the extra mile in terms of services offered is essential to maximizing any campaign,” he says.
     “Neighboring rights collection, direct to consumer, sync and branding are three huge growth areas for Absolute and they continue to differentiate us from other label services companies,” he adds.
     “To address the growth of streaming we have dedicated staff successfully pitching playlists and working with the platforms in new ways to continually maximize support and income for our labels.”
     Absolute has seen recent success with the likes of Jack Savoretti, which the company works with in partnership with BMG. It has also enjoyed success with Babymetal, whose album Metal Resistance, released via Earmusic, peaked at No.15 in the Album Chart in April, making them the highest charting Japanese act ever in the UK.
     The company is also particularly active in the grime market, having been involved in the career launches of some of the scene’s biggest players. “We also released the 10th anniversary edition of the Lord Of The Mics compilation, where many talented MCs first made their name,” says Semmence. “That genre is growing at a frightening rate and we continue to attract the best new talent in that field.”
     Republic Of Music’s Mark McQuillan tells Music Week that he believes the term label services is “over-used right now,” and “just a buzz word, with many companies jumping on the bandwagon offering this so called service”.
     “As a result, the market is becoming a little saturated and competition is fierce, with some companies offering silly deals to get the business. Saying that, we are still getting many great projects to work and the business is flowing in, we have a very strong schedule for second half of year with albums from Teenage Fanclub to Joanne Shaw Taylor, Tim Burgess, Moby, Lambchop and The Spitfires to name a few.”
     Although competition is tougher, McQuillan suggests that there are a lot more artists looking to self-release now, and more labels looking for other services in addition to just distribution, which mean that there are now more releases for companies to pitch for each year, which is good news for the sector.
“At Republic Of Music we have had some great success in the past six months with a number of releases spanning many music genres. Floating Points has sold over 25,000 albums across Europe and he is lined up for a whole run of great festivals this summer so should continue to build. Hinds have also been a great success in the UK and also across Europe.”
     Republic Of Music have provided sales, marketing and distribution services since 2007 and the company also recently opened a sync division called Republic Of Sync, which has seen success with placements in ads by the likes of Coca-Cola, McDonalds, Axe/Lynx, Issey Miyake, Top Shop and others.
The company also offers manufacturing services within their label services deals and have a management division with a number of acts on the roster.
     “We have always tried to work incredibly closely with all our labels on their releases and assist and advise wherever we can, so we’ve just evolved with what artists are needing. It does seems now everyone is jumping on this term ‘label services’ and I’m not really sure what it actually means in reality, as it’s just what a good sales and distribution company should be doing anyway,” adds McQuillan.
     “Label services is a mind-set,” argues d’Alessandro. “Look at the individual services and you’ll see that they’ve been around forever. It used to be called independent distribution and the distributors, on occasion, would provide additional services such as promotion and marketing, whether outsourcing it altogether or having an in-house PR team and label managers to coordinate the effort.
     “So is it any different this time, or is it cosmetics and we’re just calling an old set up with a fancy new name? I think there is a difference and it’s all in the mind-set. Label services allows the repertoire owners to concentrate on what they should really be doing which is A&R, finding, nurturing and taking the next big talent to the world.
     “Breaking an artist is hard enough both creatively and financially without independent labels having to take on a financial burden that is going to cripple them at the first failure, and this business has a much higher rate of failure than it does of success.”
     International Solutions’ primary focus is international promotion and marketing. The company designs and executes multi-territory campaigns for album releases, single campaigns and international tours. “We work with an extensive network of local promotion teams and ensure that projects are centrally and globally coordinated by our in-house teams on the ground in London, Amsterdam, New York and Melbourne,” says d’Alessandro.
     “We can create a bespoke extension of your in-house staff, expand your business infrastructure for the projects you need, when you need it, for as long as you need it and when the project is done, the infrastructure goes with it, until the next one.
     “From where we stand we are seeing more and more labels, big and small, come to this state of mind which is typical of other industries – film to name but one – where teams are assembled and dismantled for every single project. That to us is what label services should be about and it is how we approach it. It’s suited for artists and labels of all sizes because – again – it’s a mind-set.”
     Although d’Alessandro is an advocate for the label services model, he doesn’t see competition from long-established, traditional music companies as a problem, and is optimistic that both the traditional and non-traditional can exist together, which, he argues, will give artists more choice and allow for a healthier music industry.
     “What really matters is that the music industry as a whole finds ways to take music to fans and while doing that, generates enough revenue for the performers and the songwriters to make a living and continue to grace their fans with their music,” he says.
“Our industry ecosystem has faced – and is still facing – serious threats to its existence, so the more ways we can find to sustain it, the better. More traditional label signings or more label-service based releases? More of both please.”
     The label services sector, like the rest of the music industry, has had to adapt to the shift from physical to digital and many labels have had to partner with label services companies who can provide full digital, physical and marketing services in order to consolidate their businesses.”
     “The fact that the industry continues to evolve at such a frantic pace means that there are new challenges for everyone each week,” says Semmence. “We have to be forward-thinking and flexible in order to keep our clients and services ahead of the curve. 
     “Whether it’s integrating with new digital platforms or implementing new digital marketing techniques to amplify a campaign’s reach, anyone worth their salt in this sector has to adjust their approach constantly to meet their clients’ needs and the demands of the modern market.”
     Believe’s Rimmer says: “These modern services have become key. Artists want the contemporary route to market with digital, streaming and video included, with the possibility to upstream into the full service solution including physical and traditional marketing.
     “Consolidating our physical distribution network with a reduction in the physical market has also been a tough challenge. We’ve overcome this by signing new deals with strong partners who offer wide service in key territories – such as Proper and Alliance. For example, Proper will provide warehousing and shipment logistics centrally for Believe.
     “Another challenge has been converting high streaming numbers - often occurring through heavy playlist additions through curation - into committed fan bases to provide multi-revenue streams and add to their own repeat listen playlists.”
     An additional challenge associated with digital grow this the increasingly large volume of data that needs to be processed by label services companies, according to !K7’s Hughes.
     “The scale and complexity of data that grows even bigger daily and the aggregating of multiple platforms simultaneously to achieve the most effective impact with the elements of each campaign [is challenging],” he says.
     “We are seeing how IT solutions are coming more into play in order to come up with answers to be able to manage data and processes in one manageable, central platform and it’s something we are driving within !K7.
    “Labels and artists want access to real time trends around real time events so it needs to be readily available in order to measure future performance and strategy.”
     Republic Of Music’s McQuillan also mentions digital growth as a challenge and tells Music Week that declining download sales, which are being replaced by streaming revenues have been a major obstacle his company has had to overcome in recent years.
     “You are often expected to cash flow a campaign and via streaming the revenue flows through far slower than it did with downloads, meaning it can take a lot longer to start seeing decent returns for your investments,” he explains.
     “Embracing the streaming model and helping labels to maximize their promotion on the key sites has been a challenge and I think now most labels and artists are seeing the benefits in return for time spent engaging with fans via artist playlists and on air/on sale streaming.
     “[Label services] will naturally evolve in the way music sales will in general across physical and digital going forward, with label services moving towards working closely with bands to create high end product for the core fan base and vinyl continuing to flourish, coupled with streaming becoming the norm for digital.”
     McQuillan suggests that, in future, we can expect to see the label services sector placing more of an emphasis on non-traditional methods to engage fans. “The emphasis will be on companies like Republic Of Music continuing to work very closely with artists and labels to create compelling offers and products that stores can sell and fans want to buy,” he says.
     “In a few years’ time there will be a much higher percentage of sales via direct-to-fan initiatives set up by label services companies and artists,” he adds. “If more and more artists choose to retain their rights and self-release then obviously this is good news for the so-called label services sector.”

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