Diplomacy

The terms of the music industry have always been dictated by labels.

Any negotiation that takes place involves labels and the consumer. From distribution to pricing, the battle plays out between these two giants. If one side has too much power, the other fights back.

But where is the artist? Are they even at the table?

Funny thing is - the artist is responsible for the creation. And now that they can connect directly to their audience, there is no longer a need for the middle man.

In the new music industry there is no need for battle.

What Next for Goldfrapp?

Alison Goldfrapp made an announcement last week that the band has ended their contract with EMI. This news does not come with any concrete detail - simply that their "time with EMI has come to a contractual end". Speaking on 6Music (according to popinstereo.com) Alison stated that the split is exciting - a new chapter with an "endless world of opportunity".

Goldfrapp are in an enviable position, and I certainly hope they use this transition zone to do something revolutionary. They are one of those groups who have built a strong community globally - through creating a diverse catalogue and a fantastic live show. Despite the relative lack of critical acclaim of the latest album Head First, their popularity has not significantly waned over the past decade (for the record - I thought the album was great). Which makes them an attractive proposition for any label or investor.

But will they go down this route? What stops them from setting out on their own - using their experience to establish their own business, record a new album, and embark on another tour. Or will they simply head off on the tried and tested route and find another big label? And if so, what would stop that relationship from going the way of their dealings with EMI?

My hope is that it is the former. I want a group like Goldfrapp to take control of their next step and set an example of a new model for the artist within the music industry. The band has every asset at their disposal - distribution, marketing, and a community that is waiting for their next move. Establishing their own strategy for this new phase of their career would demonstrate to others that this can be done - in fact, anyone can do it right now. Artists dont need to be discovered or fight for their place on a label roster - they simply need to understand what they want to get out of their careers, and take the right steps to achieving that vision.

My suspicion is that the band got out of a sinking ship and is now looking for the next one. Alison's statement of "what will we do and will anyone want us" is not suggesting the fans will turn their backs, but betrays a fear that the group feels it may not find another label home.

It may seem easier to put your career in the hands of someone else, but will it achieve your vision of success - or will you be fighting to realise theirs?

Label vs. Enable

Despite the fact that I in fact am in charge of a record label, I find it difficult to understand why artists feel the need to get involved with a label at all these days.

Sadly the intention to "get signed" appears to come down to cash. Artists have created something and/or want to increase their profile, so they seek out someone to fund, manage, distribute and market their product. All of which costs money - so essentially they need an investor. Enter the label.

I'm still astonished at how labels behave as majority shareholders in thier artist's careers. With high expectations, if the investment dosen't perform within its first year, the funds are pulled.

But creating music is different than making your average product. It is art - and it needs to be developed over time. Getting all your financial and strategic support from a label may seem like you have been awarded a fast track to success - however, this is increasingly not the case.

All businesses need investment, but the great opportunities of our new industry mean that any artist can actually ship their work themselves - and market it to a global audience. This hurdle that had necessitated both the network and the financial muscle of a label (never mind recording costs - which have also shrunk) is now lifted. Artists must realise that they have to invest more of themselves into their careers than simply making the music.

There are plenty of great examples of success by independent artists who have had the courage to step out on their own from the very beginning. Temposhark are a prime example - releasing both of their albums on their own imprint Paper & Glue. They bootstrapped their way into many a fan's heart with sheer determination - and some clever use of social media. Their latest album Threads was funded via Slice the Pie - the crowd funding site that allows fans to invest in an artist and even collect dividends.

Yes it is hard work - but the fact is it can work. Gaymonkey was set up under a similar premise - we simply couldn't bear the thought of working so hard under the constraints a major label would place on us. For us a record label is more than just injecting cash to take a share in an artist's success - we want to enable the artist to achieve their vision, whatever that might be. That involves working as a team, and each party taking responsibility for areas of the artist's unique business plan.

With the objective being to make great music, its a different business model to most - and one we're still perfecting. But I hope other artists will be inspired to do the same - rather than just look for a quick win from the men in suits.

Image by TheTruthAbout on Flickr

Streaming: Limitless Choice or Ultimate Connection?

The great streaming debate is not an argument over how long these types of music services will continue to exist. The discussion that is worthy of your 140 characters is around what functionality of the streaming genre will win over in the end? What does the listener want - limitless choice, or connection to the artist?

The front runners in streaming operate primarily as giant jukeboxes and customised radio stations. But some have greater potential to connect communities. So how do they measure up from the artist's perspective?

Spotify (5 million users) has come out as the media's favourite to hype. With major label catalogue from launch (and 6 million tracks in total), most of what the masses want to hear can be found on the service - unless you are on a small indie whose catalogue is part of the millions of tracks waiting to be uploaded (frustratingly our own work is still mostly absent). Perhaps this is being rectified before Spotify launches in the US this year.

Spotify remains, however, a one-way tool primarily for labels and distributors. Certainly artists get exposure by having their entire catalogue on the service. But there is no interaction between artist and music fan. Crucially, Spotify has no reporting tool - so the artist never knows who has been listening to their work.

Essentially Spotify is a bespoke radio channel - offering the seemingly limitless choice we have become accustomed to in the digital age.

Last.fm - who have been on the scene longer and boast 30 million users - offer a more personalised service - giving you the ability to not only play your favourite tracks, but also to scan your iTunes and deliver your own music collection when on the go or when working away from your computer.

Last.fm has also better captured the social aspect of listening by including networking capacity, and the "scrobbler" - which satisfies the desire to show off one's listening habits by measuring and displaying plays in your collection.

For the artist, Last.fm offers significantly more potential to reach your community. Artists have control to upload material instantly, give away tracks, advertise gigs, connect with listeners. There is no need to get a digital distributor involved - which allows small artists and labels to come and play. There are also statistics, including demographics so that artists can build a profile of who their audience is. And the service even measures who is listening when listeners aren't streaming - as the scrobbler captures iPod and iTunes offline data. This gives artists and labels hugely valuable insight into their audience.

Soundcloud is a dark horse that might become the niche label's bestfriend (with 100,000 users as at August 2009). More PR tool than streaming service, the site is a sublime Flash experience with embeddable players and instant track distribution. Every DJ, music blogger and maven should be on SoundCloud, connecting directly and getting fresh tracks from the artists they want to hear from - rather than relying on pluggers and PR companies.

SoundCloud's potential is still being realised - but the new mobile app is quite exciting. The opportunity to have a mini FTP on your iPhone with this functionality is revolutionary.

Of course there are other services operating but the three here capture the features that are currently available to the audience and artist. Spotify may be taking all the limelight right now, but is it over offering on catalogue and under performing on the extras that actually help artists to reach their listeners? Perhaps if these services hone what they are really good at we will actually have a handful of great resources to use.

Image from Flickr by Mark Heard

Can the Industry Change Its Spots?

This is a syndication of an article written today for the ever brilliant musicOMH

As an artist and owner of an independent music label, my intention and focus has been in making brilliant electronic pop music. We welcome any opportunity to help not only the creation, but also the promotion of our work. Over the years the internet has been a complete revolution for what we try to achieve – in fact many milestones in our success has been due to the web. It is no surprise then that I completely disagree with Warner Music's statement this week that services like Spotify are "not positive for the industry".

The "controversy" over music streaming services has very little to do with the two most important components in the debate - the artist or the music fan. In fact this argument, driven by the major labels, has rarely involved these two stakeholders at all; the recent missive from Warner indicating it may remove their catalogue from services like Spotify is testimony to this. Note that the consumer is not mentioned once in the rationale over music streaming, which is clearly becoming increasingly popular. What other business would get away with ignoring what the customer wants?

The central issue here is an industry resisting change, which is not about music piracy or the often cited devaluing of art - but rather a transition from commodity to experience.

Music enriches lives - this is experiential. Owning a piece of plastic does not fulfil this primary need. The desire for music in our lives has not decreased, and a new generation of listeners has arrived hungry for great tunes. It is simply the physical medium that has become irrelevant. Technology has allowed us this freedom and this realisation.

Music fans are continuously wanting greater access to musical experience. The internet offers this on a global scale. Like all content across the web, we habitually want it - and want it now. And in return, like never before, the artist is able to express themselves to a mass audience almost instantly. Music streaming - be it via MySpace, YouTube, or Spotify - has played an important role in allowing us to sample almost any artist's material, whereas previously we were restricted to hearing whatever the industry decided was worth marketing. With the massively increased bandwidth offered by the internet, every artist can find an audience. Not to mention the connections that artists can now make with each other! For an industry supposedly built upon creativity, this can only be seen as a positive asset.

In fact this democratisation of access is what scares the big labels the most. In the old industry he who shouted the loudest - via buying popularity through advertising spend - often reaped the greatest reward. Now anyone can broadcast their talent via services like Spotify. And the consumer has the reciprocal benefit of ultimate choice - no longer subject to being force fed content by the majors. When Warner restricts the audience access to their artists, which they have also previously done for content on YouTube, they are creating a massive competitive disadvantage. It is beyond belief how they could justify this decision to their artists.

Those leading the debate continue to stress that they are losing money and that giving away their content for free will bring the weakened industry to its knees. In fact streaming music is not given away for free - artists receive royalties per play. It might not amount to much for a single play, but it is a quantifiable and fair system. And as for the dying physical format, music revenue is not confined to the sale of a single product. There is licensing to advertising, games, film, live performances, clubbing, radio & TV broadcast royalties, publishing, merchandising ... all offering the potential exploitation of the artist and their craft.

Warner may not feel that "ad supported free services are a sustainable business model" - but there is clearly nothing sustainable about creating a business around a commodity that your customers are not interested in. Deserting new media because it has challenged your strategy is not a failure of the consumer - but of your own inability to adapt to the changing needs of your audience. It has become increasingly clear that sustainability in the new industry will involve nurturing talent and finding the best opportunity to connect it to an audience, not through the manufacture and sale of plastic discs.

If Unilever Ran the Music Business

So what would happen if the music industry had been run like other businesses? What if music was considered to be a FMCG product? If you consider heritage, recorded music was established on similar principles - a low priced consumable that was desired - and ultimately required - by the masses. Labels produced singles at an affordable price for kids to buy with their pocket money every week. Shelf life was limited to a few weeks before the item was out of fashion and replaced.

FMCGs have been popular for as long as our capitalist system has existed - many of the same brands exist today. So what do they know that the music industry has forgotten?

What if Unilever ran EMI - what advice would they give?

Invest in R&D

Unilever products are consistent - but also made progressively better (well, so we're led to believe!). Products are incubated and developed until they are ready for market. Today artists are expected to be shipped immediately from their bedroom studios to the top ten - failure to do so means you will be dropped, and with it goes the investment in your potential. There are rarely surprises in the launch of FMCG products. I'm not suggesting labels manufacture their artists - but a little less A&R and a bit more R&D to nurture talent (a la Kate Bush's career) can go a long way.

Innovate

Do we need several variations on a theme of James Blunt/James Morrison/Jack Johnson, released by various labels? Why do you think Unilever dosen't try to make ketchup? If Heinz does it the best, why bother? The duplication strategy worked in the 60s but popular music has moved on. Redefining is critical, especially as technology has forced the industry to completely reinvent itself. If you can't innovate, you won't be in the game much longer.

Find Your Market

Unilever knows that young men will wear Lynx - not because it is the most effective anti-perspirant, but because there is a social status attached to it. Young people need music in a similar fashion. And young people have disposable income. So why does the record industry insist on alienating them rather than seeing them as their greatest consumer - and instead make them brand loyal for life?

Believe in What You Do

People who work for Unilever firmly get behind the missions of their brand family. They believe that deodorant fulfils a social need for people to feel confident. And that soup stock holds a family together by making meal times an event. It might sound like a pile of marketing bullshit, but to employees at Unilever it works. Do people in the recorded music industry believe they helping to produce brilliant music - and in doing so, entertain and make the world a better place through what they release?

Establish a Trusted Family

Unilever has realised that it is actually a family of great household brands. They are creating a connection between their products and helping the consumer to identify them under the parent label of Unilever. They do this to capitalise on trust - if I trust that Lipton tea is the best, in time I will show favour towards Dove soap. Major labels have no glue to hold their catalogue together. Niche labels (and mid-weight labels such as Def Jam) have always used this to help connect their community of listeners. What could be said, if anything, of the EMI family?

Unilever don't know anything about making music. But then rarely is this talent exhibited by major labels these days either. In the end this issue isn't about the music - its about an ever changing industry that appears to be unable to adapt. Which is a shame as there is plenty of inspiration from great, thriving businesses all around us.

( E )ven ( M )ore ( I )nvestment?

If I was a shareholder in EMI, the big question I'd be keen to hear answered this week would be - what exactly are you planning to use my £100 million for?

As the home to some of the world's biggest artists - who continue to be as popular as ever, despite the company's insistence that the massive defecit is due to the recession and the "continuing rapid decline of the physical market" - one would think EMI would be able to maintain a strong position in the industry. The analysis this week of the company's position hints towards continued mismanagement and bad deals.

Like many sectors, the music industry is beginning to fall foul of lack of trust and transparency. Music fans are turning away from physical products and refusing to pay what they now believe to be too high a price for compact discs - which have for most become obsolete anways. Fans don't respect big record labels. But they are still investing time and money in the music and artists that they love. The superbrands under EMI - Kylie, Coldplay, Pet Shop Boys, The Beatles - all have huge asset potential beyond recorded music.

Its the equivalent of Unilever somehow suddenly failing to release that people still need deodorant.

EMI has stated that it will be producing a new business strategy in return for continued investment. Surely this is too late - especially if the business plan is just "more of the same but with emphasis of digital and less on physical products". They are going to have to come up with something remarkable, and fast. It is no wonder that the big players continue to get left behind, with faulty strategy resulting in both artists and music fans turning their backs. If they havent been paying attention, everything is changing. Keep up and stay ahead, or the banks will take control. And if that happens, another formerly great British business will certainly be over.

Buying Robbie Williams

Robbie might be onto something by selling himself off to private investors. While the recent publicity around his proposed intentions might be a bargaining chip / cry for help from EMI, his manager is correct in saying that Robbie dosent really require a label anymore to co-ordinate his career. Marketing, touring, distribution - all could be outsourced to various third parties.

As Robbie Williams is now an established brand, he no longer needs the umbrella of a label to nurture his career. And his brand has strong investment potential - with a proven track record and fan base.

I guess what is missing is the trajectory - where is his career going? Whilst Madonna could guarantee Live Nation that she could generate returns on her mega-tours (even despite any potential flagging album sales) - and Bowie's "bond" strategy was aligned to his constant innovation (although they faired as well as his subsequent material ...) - Robbie has been a bit hit and miss lately.

Certainly the prospect of him reuniting with Take That would send the price of Robbie shares rocketing - but without this carrot venture captialists might be wondering how they will recoup their investment. Still it poses food for thought - with artists increasingly in control of their own catalogue, finding good business partners could be more lucrative than being tied into contracts with unsupportive labels.

Image from Flickr by fortyseven