Record Labels Are Really Important, Say Representatives of Record Labels

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November 17, 2012 by raconteurmagazine

by Sam Flintlock


The International Federation of the Phonographic Industry (IFPI) are a big industry group containing such luminaries as the BPI and the RIAA.  The Association of Independent Music (AIM) was set up by UK independent record labels although, unlike the IFPI, they do have a significant number of self-releasing artists in their membership.


The two groups, working in partnership, have released a report  on whether record labels are necessary in the digital age.


SPOILER:  They say yes.  Bet you didn’t see that one coming.  Also, Ian Curtis dies.


It’s still an interesting report though and worth a closer look.  Our lazier readers can read a reasonable summary of what it says in The Daily Torygraph.  In a stunning move of editorial independence, the Torygraph has decided that the best placed person to write their article on this is the chief executive of the IFPI.  Go Torygraph!  Way to stick up for journalistic integrity!  I’m glad the dead tree media can still show us new media upstarts how it’s done.


For some reason one of the main sources of statistics, this survey from The Unsigned Guide back in May is found in the IFPI news section, not in the main body of the report.  It’s also a survey done specifically in conjunction with the IFPI, not independently.  The Unsigned Guide also have a stated position on the issues, their editor being quoted in the main report as saying “. Where DIY demonstrates your ability to approach the industry in the correct manner, there is still no substitute for the experience of the industry to move your project forward.”  In other words, the editorial team behind The Unsigned Guide expressly see DIY as a tactic to make it big in the industry, not a goal in its own right.


So the report is obviously going to be a bit partisan.  I’m not suggesting for a moment that the results are falsified, simply that the questions asked (or at least being publicly bandied around by the IFPI) are going to reflect that.   The dog that didn’t bark, as Sherlock Holmes would say.


Note that I’m specifically analysing this from a British perspective, including only looking at British survey respondents, despite the report talking about the various global markets.  No slight is intended to our foreign readers by this focus, it’s simply a matter of me not having the context to look further afield.  Indeed, if any of you do want to write something about this issue from the perspective of your country, get in touch.


The methodology of the statistics being used is quite suspect.  It’s not random sampling it’s self-selection.  That’s probably unavoidable in a survey of this kind, but still liable to skewing.  Especially considering that the number of respondents was 301.  That would give a relatively high margin of error on an entirely randomly sampled survey, when you compare it to the number of unsigned artists in the UK.  With this kind of survey, that’s very low.


Which way it’s likely to have skewed the results is more difficult to work out.  I think it’s valid to assume that respondents to this survey are more likely to have firm opinions on the validity or otherwise of record companies.  But which direction that’s likely to be pointing in is impossible to say.  Equally, the fact that the survey is specifically aimed at readers of The Unsigned Guide may well have had an effect.  From the name, you might assume that The Unsigned Guide is specifically going to appeal primarily to those looking for a record deal.  While that’s a possible element, it’s not necessarily the case.  The Unsigned Guide (which is basically a contacts directory)actually goes far further then that, covering everything from gig promoters to rehearsal studios to web hosting.  So, because of that, it is actually going to be as useful to DIY bands as anyone else, arguably even more so.


None of this means that the statistics aren’t interesting in their own right or that they aren’t worth looking at.  I’m simply suggesting that we should use them as a useful jumping-off point for discussion, as opposed to assuming that they’re some kind of highly accurate representation of artist’s views.


Pushing that to one side, the survey has 71% of respondents stating that it is their aim to be signed to a record label.  Naturally, the IFPI is trumpeting this as a massive vote of confidence in the record label system.
It isn’t, not really.  It means that more than a quarter of unsigned musicians have no interest in being signed.  That’s not an insignificant proportion, by any stretch of the imagination.  We have no figures for past eras, but does it strikes me as unlikely that you’d have got that response in the pre Internet era.


So, the real story here is not that some artists want to be signed to a label.  That’s always likely to be the case; advances mean money and besides, some artists simply can’t be arsed with all the business stuff.


What’s noticeable here is that the DIY ethic is no longer the preserve of a tiny minority of bands.  It’s a minority, sure, but a sizeable one.  It certainly doesn’t back up the IFPI’s blanket statement, when summing up the highlights, that “unsigned artists want a record deal”.   There is a group of artists that no longer want to play the industry game. And considering that the Internet is still relatively new, compared to the music industry, that’s a group of musicians that’s likely to grow over time, not shrink.


Another issue is that this question paints with a very large brush.  There’s a lot of variety in the record label system.  If someone wants to sign to a small-scale indie operation is that really that relevant to whether the major labels are still needed, or vice versa?  Are we really expected to believe that a musician whose ambition is to sign to Bloodshot Records has the same goals and needs as someone after a deal with EMI?  Apparently so, judging by the failure of the survey to even try and distinguish between the different types of record labels.


It’s also interesting to look at the survey results on specifically why artists want to sign to a record label.


76% of respondents said that “marketing and promotional support” was a benefit of being on a record label.  (The survey actually words that question as “What do you see as the benefits of having the support of a record label?” which is not the most neutral phrasing they could have shown).  That’s an important statistic and it does show that promotional work is still an important issue for artists in these matters.  In fact, it’s the only benefit that a majority of respondents highlighted.


The next highest is “support for touring and live performances” at 46%.  That’s an important one.  In fact, this is one of the areas where the IFPI and I agree.  Despite claims otherwise by starry eyed idealists, live gigs are not replacing recorded music as a revenue stream for smaller artists and show no signs of doing so.  For touring to make a significant profit, artists have to be well established, which means having recorded music already under their belt.  All the high-earners in this area are bands that already had a big fanbase, normally through up on the music industry system.  There’s various reasons for this; the high overheads of touring, the festival saturation of the live scene, the gap in the medium-sized venue market caused by the decline in the university circuit.  But it all comes down to one thing.  There are not enough people going to see lesser-known acts for this to be feasible as a solution.


Then we move down to “getting upfront financial support in the form of an advance” which stands at 35%.  So, yes, a lot of bands would like a repayable loan while they try to establish themselves.  And it is fair to say that the record labels are both more adventurous investors and more willing to accept a loss than the banks, who will repossess your house, your children and your soul.


I won’t go through the lower percentages in detail, but there is one amusing one that stood out.  Apparently 5% of respondents see “creative input and guidance” as a benefit of being with a record company.  Compare that to the report, quoting Glen Barros of Concord Music:


“Sometimes people around an artist will be afraid to speak up if they believe the artist is heading in the wrong direction. But we feel that we have to give them open and honest – but respectful – feedback. There has to be an objective view. It’s the only way we’ll achieve mutually aligned goals and, quite simply, it’s in everyone’s best interests.”


Hmm.  It seems artists are a lot less keen on record company people getting ‘involved’ in the creative process then the record labels are.  Who’d have thought it?


Remember I mentioned a non-barking dog earlier?  Well, this survey has a great one.  Note the total absence of any kind of “why don’t you see a record label deal as right for you?” question.  Nor is there any apparent attempt to find out why current label artists might be unhappy with issues to do with their labels.  I think that says a lot.


Now, let us drift gently away from the survey onto the main body of the report.


There’s certainly some interesting statistics on there.  The four major labels have around 5000 artists on their labels, while the indies have tens of thousands more.  More impressively, just under a quarter (23%) of those were signed in the past 12 months.
But wait.  I don’t hear another barking dog.  How many of the new signings are on the majors compared to the indies?  The popular perception is certainly that indie labels are a lot more willing to take risks on new artists.  That could be wrong, but we simply can’t tell from these statistics.


This, incidentally, is why I generally think it’s a bad idea for the indies to work closely with the majors when putting out this kind of data.  There’s simply too many off-limit topics.  I’m talking about real indies, obviously.  Not major label funded astroturfed ‘indie’ labels that just happen to have independent distribution deals.


Even more importantly, what is the average retention time for these new artists?  If these artists mostly have three album deals and are being given time to develop, that’s genuinely impressive.  If they’re being dropped unless their first album does well, not so much.  If it’s made up of a lot of single album gimmick X-Factor type acts, not at all.


The report does proudly tell us that the findings on how important record companies “are supported by countless personal accounts provided in this report”.


Those “countless personal accounts” contain a grand total of three artists, Shy’m, Pablo Alborán and Lindy Morrison.  To be fair, there’s a higher proportion of managers on there.  But by far most of these personal accounts come from people working for the record labels.


Industry employees say nice things about the way they make their money shocker!  Seriously guys.  Most of this article is a mix of honest disagreement and analysis.  But using record label representatives to try and prove the worth of record labels is just taking the piss.
Another statistic that is to the music industry’s credit is the fact that they are currently spending 16% of revenue on A&R.  As a stand-alone statistic, that looks good.  Good enough that there was no need for the claim from Nick Gatfield, the head of Sony UK, that “No other industry even begins to take the level of R&D risk that we do”.


The report goes on to compare this figure to the pharmaceutical industry (15.3%), software and computing (9.6%) and technology hardware (7.8%).


Hold on a second guys.  There’s an obvious difference here.  In all the industries you’re comparing yourself the company takes on all the risk, the people developing the new products don’t take on any at all.  An advance is a speculative risk, not a loan.  A much more accurate analogy would be with stock market traders, who hope to come out better off overall, not necessarily on every single transaction.  This is all getting a bit disingenuous frankly.


So, to round this off, what does this report suggest to me?


It suggests that at least some musicians will be happier on a record label.  Realistically, that’s always going to be the case, despite the wilder rhetoric of DIY partisans, myself included.  Sorry guys, we’re never going to entirely replace the record label system.  We can provide a space for our bands to prosper outside it.  And, lets be honest, that’s all we want anyway.  You can’t be James Dean unless you have a square to rail against.


One thing that I haven’t tackled that the report covers in some detail (because it’s not my area) is major record labels and global support.  That probably ties into a wider point about the labels being better placed to create ‘superstars’.  The kind of people that the report suggests want to take an orchestra on tour with them.  Fucking hell.  Orchestras for a new signing.   You don’t get that at the Bull & Gate. I get the feeling we’re not in Indieland any more Toto.


For the ‘cult’ bands, labels aren’t necessary.  They might be preferable for some and I’d suggest that a genuine indie will almost always be a better option for those bands.  But signing to a label so they can do the bits you can’t be arsed with is a matter of bands not wanting to do stuff, not bands not being able to.  (Which is entirely valid.  Seriously, I’m such a lazy fuck I became a writer so I could smoke while working).


More importantly, in terms of what bands at that level want, it boils down to two things.  An advance and promotional support.  That’s what we’re going to be seeing as things develop I suspect.  Record labels that merely act as a loans company and/or a PR company and leave the artists to control the rest of it.  Because even the IFPI’s own statistics suggest that’s all an increasing number of artists want from a label.


And more and more bands are going to fall into the “we don’t want a record label deal, but cheers” category.   Research commissioned by Raconteur (AKA we asked some bloke with ironic facial hair who was sitting in the pub) suggests that group will have a statistically higher proportion of artists who are cooler, more talented and sexier than artists on a label.  Especially major ones, where our research suggests all X Factor acts will remain.

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