Chance The Rapper celebrating his landmark victory - Photo: LA Times

Take A Chance On Me: Independence Day

5 ways record labels need to adapt to a changing market.

Every year since the dawn of the millennium, two things have been consistently predicted: the apocalypse, and the death of record labels. Yet, despite the world and music industry faster than a lunatic dishing out executive orders, we’re all still clinging on.

Last week, the doomsday prophets were out in force thanks to unsigned hip-hop sensation Chance The Rapper walking away from the Grammys with awards for Best New Artist, Best Rap Performance and Best Rap Album, signalling to independent artists that “no mountain is too high.”

Fact Magazine’s Andrew Friedman has done an excellent job of pointing out why Chance doesn’t represent your average unsigned artist due to his ties with Apple. However, that doesn’t change the impact this has on labels. You need only take a look at the opponents on either side of 2011’s Stop Online Piracy Act to see that tech companies and record labels may have similar interests, but are two very different beasts.

One of the main strategic differentiations between tech companies and record labels is that of philosophy and their approach to change. It comes as no surprise that whilst majors were attempting to fight piracy through legislation, Daniel Ek was busy building Spotify, which has dragged way more people away from torrent sites than any anti-piracy law ever has.

If labels, particularly the majors, are to remain at the forefront of the industry, there’s a few things they need to address…

  1. Accepting The Situation
“Everything is perfectly fine…”

You can’t solve a problem you won’t admit to. Labels are not held in the same regard they once were by the artists they’re supposed to empower. Whilst it was once every band’s dream to make it on a major, labels are now seen by many as a stepping stone, with independence as the ultimate goal. Just sign up, take the money and publicity, accept the likelihood of being dropped (and your advance repayments being written off), and see what you can achieve within that timeframe to launch the your career.

Artists are not the only ones who are starting to see majors as lumbering dinosaurs fighting the next stage of evolution - tech companies are recognising it too. The success of Katy Perry’s new single “Chained To The Rhythm” (18.5 million streams as of Feb 10th 2017) can be attributed to a combination of her Grammy Performance (which upped the song’s sales sales by 45%), and Spotify’s gargantuan marketing power. Their effort to add Perry’s song to a host of curated playlists, alongside paying for billboard advertising in LA and London sent a definite message to labels: “You need us.”

Jonathon Dworkin, Universal Music Group’s SVP of Business Development and Strategy, gave a reassuring keynote speech at the NY:LON Connect Conference in late January, where he stated:

We as labels have an obligation to continually reinvent ourselves.
I’m genuinely proud to say that the teams at Universal put enormous energy and intellectual integrity into this transformation.
Not only do we need to discover, nurture and invest in talent, but we also need to constantly move ourselves closer to consumers.
Shifting technological tides often caused the re-imagination of the value chain - and labels need to build, modernise and reformulate our services to meet the rising waters.”

Hopefully UMG’s attitude begins to sink in with their competitors, but it does beg the question of what this metamorphosis will entail. Jonathon cited a need for more trust between artists, tech companies and labels as a primary concern - which, is undoubtedly true, but many would argue the ball is in his court to fix that one.

2. Realise That Like It Or Not, Music Is Now A Free Market.

A free market is defined as such:

“An economic system in which prices are determined by unrestricted competition between privately owned businesses.”

As I mentioned earlier, Spotify has been one of the biggest factors in quelling the scourge of piracy. Yet whilst it’s been effective in this sense, it’s also reduced the amount of paid downloads people are forking out for, making up 43% of digital sales in 2016 and rendering it revenue neutral for the industry as a whole.

The reason for this displacement is simple - Spotify is convenient, cheap and of high quality. It’s actually more convenient to pay for Spotify or sit through the occasional ad, than it is to try and find a working torrent of an album, with the same level of audio fidelity, that doesn’t secretly contain enough spyware to make the KBG jealous.

It’s the constant threat of being undercut by piracy that makes the sale of recorded music one of the most liberated of free markets. Total decentralisation occurs because the p2p sharing sites, Youtube to mp3/Soundcloud downloader apps and other such ways of acquiring unpaid downloads cannot be shut down. They merely spring back up and are mirrored, or the links that get removed from google are shared openly across internet message boards. The only way to draw the public away from piracy is simply to offer a more rewarding alternative.

Labels should thank their lucky stars for the advent of streaming services. Whilst the financial rewards may not be evident right now, there’s a world of opportunity available to further monetise these platforms, and their marketing power is currently unprecedented in terms of building a fanbase for artists.

Don’t fight the revolution; adapt.

3. Stay Invisible

When Scooter Braun launched Justin Bieber’s career through Youtube, he was intent on having Justin continue filming videos in the same manner as he did before acquiring management: alone in his room, devoid of an expensive camera, high end audio equipment or any specialist editing techniques.

Why? Because it made the audience feel like they were witnessing something organic that only they were privy to. A personal, candid performance, free from commercialism or any clear attempt to exploit the teenager for financial gain.

Independence is sexy. That’s one thing we can certainly conclude from the huge support for Chance’s Grammy win. It’s why Drake is proud to namecheck his label OVO in his songs, but refrains from mentioning that it’s an imprint of Warner - and also why he’s inked a deal with Skepta’s self-made Boy Better Know label.

It’s the reason Bon Iver’s debut “For Emma, Forever Ago”, recorded in his father’s hunting cabin in the Wisconsin wilderness with a primitive selection of microphones, is lauded for it’s lo-fidelity, rather than slammed for it.

In broader terms, it’s the reason why as a society, we celebrate rags to riches stories and sniff cynically at inherited wealth.

Music fans who are going to invest in an act financially, need to first invest in them emotionally. That’s a hell of a lot harder to do when you feel that there’s a big company in the background pulling all the strings.

Keep your brand separated from their brand, and you’ll actually make more money.

4. Focus On Targeted Spending, Not Trial And Error.

Having worked with numerous labels, and looked over/put together my fair share of tour support budgets, I can confidently say that there’s little consistency in how expenditure is prioritised and regulated. Often, the formula seems to involve investing a tonne of money into one marketing approach, then cutting their losses by dropping the artist if it doesn’t work. It’s an inefficient and highly wasteful approach that hurts both the artist and investor more often than it succeeds.

To paraphrase Richard Branson:

“The best kind of advertising is free advertising.”

This is in reference to the time he was awoken at 5:30 AM to the news that the British Airways sponsored London Eye had a technical hitch, and the team manning the construction were unable to erect the big wheel. The world’s press were waiting at the scene to cover the event, and Branson saw fit to take advantage of this opportunity by flying an airship onto the scene baring the Virgin branding, and the slogan: “BA can’t get it up!”

So how does this apply to breaking an artist?

Simply put, the gold standard for marketing in the digital age is viral content. The above image appeared all over the world, and not a penny was paid to a journalist to do so. The only expenditure was on the airship and banner, but that was immeasurably cheaper than what it would have cost to place a Virgin advert in every one of the publications that the stunt appeared in.

Labels must pair new artists with the right producer, not the most expensive. The right videographer, not the one who has the most impressive credits, but isn’t passionate about the act. PR that focuses on tastemakers and a demographic who are going to resonate with the artist’s vision and image, not just the marketing department’s go-to blogs and publications.

Make use of new media - there are Youtube stars and Instagram celebrities out there who have more subscribers than the entire readership of many mainstream publications, and all of them have some sort of taste in music. You may find a collaboration with these new age celebrities would have a more targeted impact than even a television appearance or even a movie trailer sync.

Innovate, recognise the value of novelty and aspire to virility.

5. Embrace Label Service Provision.

Companies such as Warner’s ADA, Universal’s Caroline International and Sony’s Red offer the kind of major label muscle and contacts that make it worth signing a deal - without you handing over your creative control to them. As more artists begin to earn a living independently, and indie labels are able to utilise the internet to launch artists more effectively than ever before, there’s going to be greater demand for such services.

Majors have deep pockets, and thus attract some of the best talent in the industry. I don’t see that changing anytime soon; as the idea of the music business is arguably more profitable than the records they put out (I’ll cover this in more detail another time…) and the perceived esteem associated with working for a big company is something which extends through business as a whole. It’s to the benefit of everyone to work with the best in their field and that’s what these label services divisions offer.

Moving forward, it would be great to see more acts being signed up for marketing and distribution deals, radio plugging deals or A&R consultations, effectively splitting the business model into numerous revenue streams to accompany the more traditional deals.

This would be a great way to build trust back between the artist and label, assisting in joint success and responsibility rather than commandeering projects. The opposite of a 360 deal, if you will, merely taking a percentage on the aspects of the project they work on, or receiving upfront payment for the services.

One of the most publicised successes in the label services field is that of Macklemore & Ryan Lewis using ADA’s radio plugging department for their album: “The Heist”. This article from Billboard covers it in plenty of detail - and it’s fair to say you rarely hear such high praise of major label services from an independent hip hop artist (see Hopsin’s entire discography for the opposite opinion…)

So back to Chance’s success…

He teamed up with a company with huge reach, enormous funds, fantastic public image and branding, who understand their place in the market and rely on numerous, expansive revenue streams rather than flogging dead horses in the hope they’ll cough up dollar bills. Sounds appealing?

Take note, and let’s all evolve together; the in-fighting is growing old.