Words by Edward Israel-Ayide
Not to sound too brash from the get-go, but many times I see people pass commentary about the music industry and the business that goes on in it, and it tells me that there is a great danger afoot. You see, the danger is that of a single narrative. This narrative spread by most entertainment journalists, who have nearly no idea of how the music industry works, is that with the continued growth of the internet and digital promotion and distribution, the days of the mega-record label are over. Nothing could be farther from the truth, and I will explain.
Before I go on however, I must tell you a story; in 2013, I had just started working in the music industry and I had a talk with an artiste who had decided to go rogue, and was refusing to align with the provisions of the contract he had with his record label. Because this artiste was my friend, I wanted to understand why he was towing this path, and his answer bothered on the fact that he thought the record label where he was signed to, was only a roomful of shylock businessmen, who were getting fattened on the works of his hand. Closely tied to this was his belief that since he had already grown a significant followership on social media, he now had a share of voice in the marketplace, and as such could go on establish his own record label. When I asked if this was a business he had been planning to go into before then and how he intended to grow the business, his response was that at the moment he just needed to make sure that all the money made of his music comes to him, and maybe some time down the road, he might decide to sign some younger artistes and give them a fairer deal.
In 2013 he did start his own record label, after a keenly fought secret battle with his label, and he did quite well for a couple of months in terms of revenue, but by 2014, he was already suffering and had to go back to his first business venture; haulage and importation, to keep body and soul together. Now my friend did not fail because it is impossible for an artiste to transform into a music entrepreneur, my friend failed because of his motive of going into the business, and his lack of proper research of what makes the recording music business works. For the most part, he took an emotional division from position of weakness.
Source – New Yorker
Back to my assertion; the internet is not going to kill the mega record label. Not now, and not in the near future. However, the mega-record label models needs to evolve from what the industry has come to know it for and expect from it, into a aggregated service provider to a vast network of content creators.
This past week, I read an article that called for the Nigerian music industry to adopt an apprenticeship model for creating music entrepreneurs, and at first I was amused at how someone even think this, then I later understood that the writer was only speaking from a position of limited knowledge and I proceeded to share some insight on this with a friend. It was surprising to me that an apprenticeship model focused on churning out popular singles one after the other could be touted as a panacea for the many ills plaguing the Nigerian music industry.
Granted that world music is going through a singles phase, but to say the market for albums is dead is an error. What is happening though is that with the rise of digital music, marketing in the music industry is becoming more nimble, and singles are a quicker, less expensive win. Albums however are the “First edition collectors” item. And the market for them is not dead. The truth is this, the market still sees an album as defining moments of an artiste’s career. This thus faulted the writer’s premise; because in the time frame he was advocating for an artiste to go from being signed to a record label to being “set free” go set up his own operation and start his own entrepreneurial journey, I knew as an industry insider that it would be impossible to have fully developed, marketed and monetized an album.
In February, The Economist magazine in a piece The album is not dead-yet pointed out that “musicians from all corners of the industry—mainstream, middle-tier, independent, up-and-coming—continue to create albums. They are artistic statements, and build a body of work that artists can not only be proud of, but build tours around”
This is where a record label with the right experience, team, networks and clout comes in. When we think of the music industry as Nigerians, we only look at the sales from music and shows; the revenue stream that has got almost everyone in the music industry excited at the moment is digital music sales, and it is on these numbers that a lot of “experts” believe that the future smaller record labels will be built. But shows and content sales are only a tiny bit of the bigger picture. What place has touring, merchandising, publishing and proper licensing have in this model? Most mega record labels are the ones best equipped to help artistes exploit these channels, because most large music content and service buyers will rather deal with an established industry figure, than a start-up record label, or even directly with an artiste. The music business is a real business, and like in other business circles, people care about your track record business-wise and your ability to deliver.
Macklemore and Ryan Lewis
You probably must have heard of the success of the Grammy-winning duo Macklemore and Ryan Lewis who because of their distrust of the music industry decided in 2013 to release their debut album “The Heist” under their own print Macklemore LLC. In truth, they did go on to win lots of awards to show that they were right to have made this decision, but there is a part of whole fairytale that a vast majority of us forget: Macklemore and Ryan Lewis relinquished a chunk of their revenue to Warner Bros, which saw the major label take a chunk of their sales in exchange for distribution funding for their debut album, The Heist.
That is why the mega-record label is not going to die anytime soon, as long as start-up labels and independent musicians still need massive distribution, promotion and proper monetary exploitation of their content, they will still need the money and muscle of these labels. What the future of the mega-record label then needs to be is to become an equity investor into any viable project and take a share of the returns as payment for using its own goodwill, platforms, money and network.
The record label model I would advance is not one based on emotional short-term apprenticeship contracts that make no business sense; that model will only birth 2000 mushroom labels that will not have the clout to negotiate and better monetize their content. What I would proffer as a solution is an umbrella label that acts as an aggregated services provider to semi-independent labels and independent labels and artistes, providing legal, marketing, A&R, promotion and distribution services. One that would with its clout and collective bargaining power get artistes the best deals on the licensing, sales and publishing of their content.
Okeugo Paul, Audu-Maikori, Gbenga-Ashiru (Genevieve)
This is already happening; in 2013, Audu Maikori and Paul Okeugo began toying with the idea of a coalition of record labels in Nigeria to use collective bargaining powers to get the best deals for the artistes under the respective labels, the fruit of that idea is a company called 5ive Music Group. 5ive Music Group, a coalition made up of Chocolate City, Now Muzik, Storm Records and Cabal Music, is a music publishing company, primarily focused on acquiring and exploiting music publishing rights in catalogues currently controlled by the labels that make up the coalition, and to sign new songwriting talent, with a view to securing the fullest exploitation of all rights throughout the world.
One of its major successes is that it has been able to secure better artiste splits from Telcos for CRBTs, digital sales and streaming. What it means is that artistes signed to 5ive Music can get a better split from the sale of their music by Telcos because 5ive Music has a better bargaining power than an individual record label, or an independent artistes. That bargaining power is the strength of the catalogue 5ive Music controls. And that is what makes a record label viable and sustainable at the end of the day: the size and diversity of its music catalogue.
Edward Israel-Ayide is the Business Development Manager at Chocolate City Group, and also helps manage the brands of some of Nigeria’s biggest music stars. You can follow him on Twitter @wildeyeq