The paradigm shift from physical to digital has really taken a drastic
toll on the major record labels.
Where there were six major record labels in the '80s and '90s, currently
there are only three.
Now, what are these major record labels?
Just what do they do?
Well, they aren't like the labels of old, where you had an entrepreneur who
might have been an artist or a songwriter, like Berry Gordy or Ahmet
Ertegun, that really got involved in the creative
process to a great degree.
These major labels are really major conglomerates.
And their primary job is manufacturing, marketing, and
distributing the music through all different platforms.
They may not get so involved--
to some degree they do--
on the creative level.
What they have are subsidiary and sub-labels that provide
those kind of services.
So you have three major record labels currently--
Sony Music Entertainment, a Japanese concern; Universal Music Group, owned
by French conglomerate, Vivendi; and the Warner Music Group, recently
purchased by Leonard Blavatnik of Russia.
These are the major labels.
And I should say the major manufacturers and marketers and
distributors of up to 85% to 90% of the records that are sold today.
They carry that kind of cloud.
All right.
Let's talk about the major labels and their subsidiary and sub-labels.
Universal Music Group has a number of influential and significant sub-labels
and subsidiaries like Island/Def Jam; the great Interscope
label, Geffen Records.
Berry Gordy's Motown Records are now distributed through
Universal Music Group.
And most recently, Universal Music Group purchased the catalog and
contracts of EMI, Priority, and Capitol Records, reducing the number
of major labels from four to three.
Sony Music Entertainment distributes the great catalogs and the artists
that are assigned to Colombia, Epic Records, Arista, J Records and Jive
Records, a great cadre of historic labels that has had a tremendous
effect on the music industry.
And lastly, the Warner Music Group distributes labels like Elektra,
Atlantic, and, of course, the Warner label.
You know it's amazing that even in this day and time of DIY, you find
many artists that want to sign with major labels.
But then at the same time, you have a number of other artists that would
say, why in the world would you want to sign with a huge company that may
not pay that much attention to you?
Well, the people that feel that they need to be with major labels like the
prestige of being with the major labels.
They feel that that gives them clout, not only as an artist.
But they may have aspirations as producers and want to work with other
artists that are signed with the labels and by saying that they are
signed to Columbia can open up new opportunities for them.
Most of these artists also mention the fact that these major labels do have a
distribution system that is wide and vast, particularly in
the physical space.
And I can tell you that that is really true.
And here's the thing.
Major labels are tremendous at expanding your market.
I find it remarkable that a major label can decide on a particular date
to have your recordings in record stores internationally.
They can gear all of their marketing effort for the release of that record
on that particular day.
And I have to say that I am very impressed with major record labels.
As an attorney representing artists, I've fought them
on a number of issues.
But years ago, I was able to get one of my client's marketing plans from
their record label.
And as I thumbed through the marketing plan, I was amazed to see in all of
the various areas the company had really structured specific marketing
and promotion activities.
And the cost of those activities, the cost to have an ad
in a national magazine--
thousands of dollars.
The cost to start an internet fan club or to promote through the internet--
thousands of dollars.
The cost to pay the expenses of the artist to appear on a nationally or
internationally broadcast or televised talk show--
thousands of dollars.
And so it's amazing to see that record companies are able to not only meet
those expenses but also to have a distribution network, which enables
them to have that record in stores nationally and even internationally on
a particular date.
Because as that marketing is focused for that release date,
they have the mechanism.
And you certainly want your audience, who you've targeted that marketing and
promotion to to be in a position to go into the store and pick up that record
on that date.
A growing trend in the music world today is for independent labels to
start off on an independent distributed basis and, as they build
their market, affiliate with major labels solely for distribution.
This market has really taken off over the past few years, as you've had
great new independent labels, like Big Machine Records, that releases the
recordings of Taylor Swift, great bands like Mumford and Sons working
with the independent label Glass Note, that is now distributed by a major.
Vampire Weekend with the Beggars Group.
Adele is also affiliated with the Beggars Group and is a tremendous
force in the industry.
Macklemore and Lewis had their own label that became so popular on their
own that they ended up affiliating just for distribution purposes through
one of the major labels.
So that's a growing area of the industry.
But now, let's look at this from the historical perspective.
Back in the '50s and '60s and even in the '70s to some degree, most
recording artists had to have a label in order for their product to reach
the market.
I'm talking about the pre-synth, the pre-drum machine, the pre-sampler age,
when you went into a studio as an artist.
Usually most artists didn't have the money to afford the cost of studio
time, hiring an engineer, paying all of the session players that you needed
to put together your recording.
Back in those days, you actually had to have a piano player or a
keyboardist.
You had to have a drummer.
I mean a real drummer--
traps.
Maybe a bass guitar in the rhythm section, a real guitar
in the rhythm section.
And then after the basic rhythm tracks were done, you had something that's
was called and is still called today sweetening--
horns and strings, individual players that played real instruments that had
to come in the studio to lay the tracks to complete the recording.
In addition to that, most artists didn't have the money to manufacture
their records.
They relied on the major record labels, not major record labels, but a
record label, independent record label at that time as well, to pay for the
cost of manufacturing.
And they certainly didn't have the distribution system when it was
strictly a physical market.
That was one of the ways that the labels had a
stranglehold on the artist.
In order to reach the market, pretty much you had to go through a label's
distribution relationship.
But a number of things have changed over the past 40, 50 years.
Well, how have they changed?
Well, now do you really have to pay recording costs for a studio?
Many artists have studios in their bedrooms, in their basements, maybe
even in their kitchens or bathrooms.
Do you have to have an engineer?
A lot of the engineering can be done on your laptop.
Do you have to manufacture a CD to be released?
No.
You can upload the file to SoundCloud or many of the other types of internet
outlets that can be used today.
What about marketing?
Record labels also provided marketing that the artist couldn't
afford years ago.
Well, the marketing costs have been decreased as a result of
social media outlets.
And creating viral videos even, YouTube, create tremendous, tremendous
marketing and promotion for the artist.
So in other words, maybe it really isn't necessary to have a
record label today.
Once again, entrepreneurship and innovation.
So if you have the talent to be able to record yourself and put together
all of the pieces of the recording, you could be in a great position to be
in business.
I remember Stevie Wonder years ago was one of the first artists to play all
of the instruments since synthesizers came in.
And it was really remarkable during that time, because artists were
looking at the fact that they had to bring in various session
musicians to play.
But when the Synclavier came in, drum machines came in, Stevie was one of
the first artists to record all of the music on his own.
And that kind of set the music industry on a path of people being
able to create their music in a very low-cost fashion using all of these
new technological advancements.
So where are we now?
We're in the age of DIY--
do it yourself.
Can you create that product on your own?
Maybe you can.
Can you exploit all the various social media outlets to really create hype,
create a great YouTube video that's going to really maximize your exposure
to the audience that you want to have?
Are you going to be in a position not only to create that initial hype and
develop that initial audience, but are you going to be able to develop that
audience and expand it to the next level?
That's primarily what the major labels are still saying to this day that,
wait a minute, when you really want to reach the broadest market, come to us.
That's what we do.
We can take you from this level to the next.
And many DIY artists are feeling that pressure once they've had that initial
audience reception and success, whether or not they should go to the
next level with the major labels or if they should continue to
try to do it yourself--
DIY.
Well, here's the difficulty with DIY.
In order for you to get from that one level to the next, I say it's very
hard to do it yourself.
It's very hard to have a DIY broad mass exposure, worldwide exposure.
Why?
Because if you're involved in the creative process and you're writing
your songs and you're recording your songs and you're into that creative
groove, it's kind of tough to have to turn that off and get on Twitter and
post an update, cut a YouTube video and post that and monitor it to see
where it's really trending and whether or not you're trending.
It can take away from the creative process.
A lot of DIY musicians are now finding in order--
and I anticipate DIY artists will get to the point that they're going to
find out that they need other people to help them get to that next level.
In other words, it's not DIY.
It will be DIO--
do it ourselves.
And by that I mean they can point to someone who's a music business major
and has the business experience to help on the management of
what they're doing.
They can find someone that's expert in social media and bring them into their
team to help them expand their career.
They can find someone who has contacts with sponsorships and endorsements to
help them to attract needed financing for them to pursue other ventures on
behalf of not only those companies but maybe their own
ventures, their own products.
So I think we're moving into a stage of not just DIY.
I think we're moving to a new stage of DIO--
do it ourselves.
I think it's important for new artists that have the ability to do this to
surround themselves with the kind of team of professionals and experts in a
vast number of areas to take their music and, most importantly, their
business to the next level.
You might be an engineer.
And trust me, powerful product is still one of the big P's.
They're going to need people that can put and mix the recordings, so that it
stands up over time.
You might be an expert in social media.
Artists are going to need great people to help them navigate the internet and
the market in their promotion through those means.
If you're a songwriter, if you're a musician who can provide services in
the studio as well, a manager, someone who can coordinate all these
activities on behalf of the artist, someone who could track down and
arraigned sponsorships and endorsements.
Maybe you can create a new tech app that's going to provide some kind of
benefit to expand the artist's career.
All of these vast areas and opportunities are only going to grow
as more and more people take advantage of the new technology and the new
digital age.