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Independent Labels A Better Artist Support

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Paper about independent labels

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  • 1. Independent Labels… A better artist support Miguel Rodrigues Class number 2 Student number: 11351 Intake code: BRA0906 Industry perspectives / RA203 Seminar Presentation Report Word count: 1327 words
  • 2. Independent Labels… A better artist support Table of Contents Page Abstract 3 Indies Objectives 4 Typical Structures 4 Finance 4 Deals 5 A&R 6 Marketing 7 CONCLUSION 9 REFERENCE LIST 10 2
  • 3. Independent Labels… A better artist support Abstract We believe independent labels offer a better support for artists. We chose this topic because we think that is an important aspect for the development of the music industry and music in general. We start our research asking ourselves questions about what objectives has a independent label, what are the typical structures of Labels, how they deal with finances, Deals and Marketing. So, we did an enquiry with some questions and sent it, by email to dozens of record labels with the help of the book “The unsigned guide – UK edition one”. Unfortunately, no one replied to our email. We structured our research in several areas that we think that are important when an artists or record label want to sell records, always trying to make comparisons between majors and indies to answer our question. 3
  • 4. Independent Labels… A better artist support Indies Objectives Independent Labels search for innovative and creative artists as a way to bring relatively unknown artists or ideas to the audience, this helps in creating a sonic image for the label as well as a mean to refresh the music scene. Indies are more on the lookout for newer market strategies, as the necessity of growth, makes them search for new means of marketing to outcome the major's strong financial power that indies do not have. Typical Structures Indies have different managing approaches as they use no conventional methods to manage their strategies, so the need of a certain number of departments changes from case to case. That is why it is so difficult to trace a common profile of an Independent Label. Finance Investments in new artists are always a big risk and this kind of investments are classified as an intangible asset because banks have no warranties that loans will be paid off and that is why it is so hard to get a loan from this type of institutions. The solutions are private investment or licensing to majors but, always on a later stage. ‘Traditionally what indies have done is to license their acts to majors in Europe…Thou most majors financing indies end up with the death of the indie’ (Lewis, 2002, p9, 2p, 4c, 1bw). This type of actions gives the artists enough time to develop their music. 4
  • 5. Independent Labels… A better artist support Deals Regarding with deals, we researched about contracts, royalties, profit-sharing deals, advances, exclusivity, options in contracts, copyright and merging. Royalties are usually bigger on an indie. Majors, usually, offer a percentage between 10 to 15% of the standard retail price (some times indies may try to imitate majors) and then they deduct for packaging expenses, free goods and other items. It is more common now, for indies to do profit-sharing deals with the artist. ‘The advantage of profit-sharing deals is that it is more understandable and it is a simple way of deal where the money comes in, expenses comes out and the profits are split between the artist and the label. The disadvantage is that more expenses are taken out of the gross revenue before the profit- sharing begins. In typical deals, costs of manufacturing, publicity, marketing, and other such costs are not passed on to the artist but are considered part of the label’s overhead. In profit-sharing deals, all expenses are taken into account, so it might take a while (if ever) for an album to show a profit, and, therefore, longer for an artist to actually receive any share. Once an artist is more successful, these deals become more lucrative for the artist.’ (Friends a, 2006). Major’s advances are much bigger than what an independent label can offer. The way that advances works have advantages and disadvantages. The record company pays a sum of money to the artist and then keeps the artist’s royalties until the money is back to the record company. The process of keeping the money to recover an advance is called recoupment and it is recoupable from royalties. ‘The advantage of having a small or nonexistent advance is that the artist will have less to pay back from his or her royalties, and could be earning record royalties more quickly. 5
  • 6. Independent Labels… A better artist support The disadvantage, since there are so many costs for the label to recoup before paying the artist their royalties, an advance is often the only money an artist will see for some time. The size of an advance can also depend on the artist bargaining power.’ (Friendsb, 2006). Usually, independent labels do not include the term ‘exclusivity’ and artists are not bond to options in their contracts. What independent labels do, is buy-out clauses, those are sets of rules that will apply if a bigger label want to sign the artist. This is a good exit deal for indies. Some small indies lack of information on copyright laws, thus they do not protect themselves or the artists. Copyright protection is acquired automatically when a tangible copy of the work is made and there is no need for registration. The ‘sound recording copyright’ is a protection of the sounds recorded and belongs to the record company who has released the work. Independent labels merge together to expand their market and at the same time to support each other in order to maintain their independence from the majors. A&R The A&R department of a label seeks and evaluates potential talent for potential audience’s tastes but it is not all. They also: • Provide creative input and direction on artist's songs • Find suitable producers and recording studios • Plan the recording budget with the financial department. 6
  • 7. Independent Labels… A better artist support On independent labels, the A&R department is closer to artists, as they concentrate more on local artists and as Nick Phillips, chairman of Warner Music said, ‘Independents are key to finding good artists as part of the artist and repertoire (A&R) process. They are a huge A&R source for everybody and the music business is healthy when they are healthy.’ (Allen, 2006a) Marketing The marketing strategy of a record label is divided in four areas: Artist and Product development, Promotion (Radio, TV and Internet Airplay), Publicity and Performance. Artist development deals with songwriting skills and music development. They create a consistent and coherent image of the artist. The artist development department also deal with copyright and publishing, co-musician and band issues, recording and mastering arrangements, as well as management and legal needs. Product development deals with all the issues that must be consider after a record has been made: cover artwork (design and printing), manufacturing choices, market research data, as well as distribution and sales strategies. Product development at a label means marketing strategy because it uses tactics and strategies that help selling the release. Promotion means Airplay. Radio, TV and Internet Airplay are the most effective means of exposing music to the public. It can be very competitive but the product development marketing ideas and a significant investment are the tools to have any real success. Publicity is the press and media campaign. It consists of a press release that contains materials like biographies, fact sheets, cover letters, photos and press clippings. It becomes necessary to have an effective campaign to get the music press to review the releases, write stories about the band and their music, as well as interviews. This campaign will act as a support for all others areas of the music marketing. 7
  • 8. Independent Labels… A better artist support Finally, the last area of the marketing strategy of record labels are live shows and touring plans or for other words performance. ‘Playing live in front of your fans is the best way to develop a loyal and dedicated fan base'. (Knab, 2006 a) Promotion, publicity and performance act as a support for artist and product development. All these areas are interrelated and interdependent upon each other, in order to get your product into mass distribution, the distributors want to know what your promotion, publicity and performance plans are, or, in order to get significant airplay the radio stations want to know what your product development, publicity and performance plans are. Also, in order to get publicity, the editors and writers at the magazines and newspapers want to know what your promotion, product development and performance commitment is, and to get the better live performance gigs, the booking agents and club owners need to know what success you have had with selling your product, getting press support and any radio airplay. Independent labels are very dependent on online strategies, because they offer a cheaper mean of promotion, having sometimes the same success as the majors marketing strategies. Indies have the capacity to create communities around the artists or genres of music that the majors do not have the ability to put that into practice due to a large variety of artists. 8
  • 9. Independent Labels… A better artist support CONCLUSION The way that Independent Labels work, push cultural boundaries creating space and market for new genres of music and new artists. On the other way, majors offer an office structure that is more conventional and based on huge budgets. This allows bigger and more intense coverage for a bigger artist catalogue. Whether, on an Indie or on a Major, investing in an artist is seen as an intangible asset. Obviously majors take bigger risks when investing in an artist. Thus, majors consider marketing investment more important and indies are “forced” to invest on intellectual property and believe more in the music. Indies tend to offer artists better royalties percentages with no options or exclusivity. Smaller rosters and better deals create more friendly and close relations between artist and independent labels. And this relations help to overcome the huge amount of problems that indies face throughout their “journey” such as copyright matters, financing, deals, etc. ‘There is still much scope for independent labels and publishers to carve a niche in an increasingly crowded marketplace.’ (Music Week, 27-03-2004, p22-23). In regards to the overall presentation of the group I personally thing that the objectives of how to do a research methodology were achieve and to conclude our research I think that independent labels are a better deal for new artists than a deal with a major. 9
  • 10. Independent Labels… A better artist support REFERENCE LIST Books: Loukes, S. and Donnelly, L. (2006) The unsigned guide UK edition one. Manchester: mcr music Ltd., 2006 Magazines: Garrity, B. (2006) Amp'd Mines The Indies. Billboard; 7/1/2006, Vol. 118 Issue 26, p8- 8, 1/3p, 1c Are indie labels better at artist development? Music Week; 10/29/2005, p12-12, 1/5p Brandle, L. (2005) SONY BMG ADDS RED INK FOR EUROPE'S INDIES. Billboard; 12/3/2005, Vol. 117 Issue 49, p10-12, 2p Bitar, F. (2001) Waiting For The Next Big Thing. Billboard; 06/16/2001, Vol. 113 Issue 24, pLM-4, 2p, 2bw Ashton, R. (2005) Indies call for chart delay over concerns they are missing out. Music Week; 4/9/2005, p5-5, 1/3p 10
  • 11. Independent Labels… A better artist support Paths to market for independent labels. Music Week; 5/22/2004, p10-10, 1/3p Indies in strong position as sync teams cash in on 'cool' Music Week; 3/27/2004, p22-23, 2p Lewis, T. (2002) Legendary indies put a price on independence. Music Week; 8/31/2002 Supplement, p9, 2p, 4c, 1bw Solomons, M. (1999) BPI Is Reshaping Itself. Billboard; 10/02/99, Vol. 111 Issue 40, p12, 2p Clark-Meads, J. (1999) Victory For U.K. Indies. Billboard; 06/05/99, Vol. 111 Issue 23, p6, 1/3p, 1bw Sexton, P. (1999) Britain's State of Independents. Billboard; 05/22/99, Vol. 111 Issue 21, p64, 2p, 1bw Solomons, M. (1998) U.K. report pegs indies as loss sector. Billboard; 08/22/98, Vol. 110 Issue 34, p7, 2p Garrity, B. (2004) Sony Connects To Indies. Billboard; 7/31/2004, Vol. 116 Issue 31, p43-44, 2p, 1c Legrand, E. (2006) THE INDIE WAY. (cover story) Billboard; 4/1/2006, Vol. 118 Issue 13, p25-26, 2p, 4c Ashton, R. (2004) Indies resolve dispute with iTunes. Music Week; 7/31/2004, p3-3, 1/2p 11
  • 12. Independent Labels… A better artist support Web Sources: Knab, C. (2006) An Introduction to the "Four Front" Music Marketing Concept Music biz academy [Online]. Available at: http://www.musicbizacademy.com/knab/articles/fourfront.htm (Accessed: 01-12-2006)a Knab, C. (2002) Copyright and Songwriting Basics Music biz academy [Online]. Available at: http://www.musicbizacademy.com/knab/articles/copyright.htm (Accessed: 02-12-2006) Knab, C. and Day, B. (2001) Deals That Await Successful Independent Music Labels Music biz academy [Online]. Available at: http://www.musicbizacademy.com/knab/articles/deals.htm (Accessed: 02-12-2006) Allen, K. (2006) Indie record labels form unlikely alliances with the corporations Guardian Unlimited Business. Available at: http://business.guardian.co.uk/story/0,,1935440,00.html (Accessed: 30-11-2006)a Allen, K. (2006) As record sales dwindle, indie labels form unlikely alliances with the corporate beasts Guardian Unlimited Business. Available at: http://business.guardian.co.uk/story/0,,1935440,00.html (Accessed: 31-11-2006)b 12
  • 13. Independent Labels… A better artist support Knab, C. (2001) Inside Record Labels: Organizing Things Music biz academy [Online]. Available at: http://www.musicbizacademy.com/knab/articles/insidelabels.htm (Accessed: 01-12-2006) Friends, S. Independent Label vs. Major Label Contracts Performer mag [Online]. Available at: http://www.performermag.com/IndieVSMajorContracts.php (Accessed: 01-12-2006)a Friends, S. Independent Labels What's the Deal? Performer mag [Online]. Available at: http://www.performermag.com/IndependentLabels.php (Accessed: 01-12-2006)b Knab, C. (2001) The Business of Live Performance Music biz academy [Online]. Available at: http://www.musicbizacademy.com/knab/articles/liveperf.htm (Accessed: 01-12-2006) Knab, C. (2001) What is Artist and Product Development Music biz academy [Online]. Available at: http://www.musicbizacademy.com/knab/articles/artistdevelopment .htm (Accessed: 01-12-2006) Knab, C. (2003) What A&R Reps Do Music biz academy [Online]. Available at: http://www.musicbizacademy.com/knab/articles/aandr.htm (Accessed: 01-12-2006) 13