How A Big Record Label Could Make Itself Useful: Act As The Filter

from the bring-the-audience dept

Tue, May 27th 2008 8:44am — Mike Masnick

For a while now, we've been pointing out why there is still a space in the new music landscape for record labels -- but it's just that they need to adapt in significant ways. Last week, we wrote about some of what Warner Brothers Records was working on (even as its parent company seems to be working overtime to kill any goodwill). Now, Ian Rogers, the former GM of Yahoo Music who has written provocative posts about the industry before, has written an open letter to EMI's boss, Guy Hands, with some suggestions on how EMI can save itself as a record label.

Rogers starts out by making the key point: in the past musicians went to record labels to get money, distribution and marketing. However, these days, money is less important thanks to cheaper and cheaper recording tools, distribution help is less important thanks to the internet and even marketing help is less important (again thanks to the internet). Rogers suggests that the first two are basically meaningless to artists now, so all that really matters is if a label can help them market themselves better than they could on their own. And, on that front, he has a simple suggestion: affinity labels. Put together various mini-labels under which similar types of bands are associated. And, include on those labels a few of the "big name" EMI artists. Thus, for all the fans who are fans of some huge artist, by creating these affinity labels, it will help drive the fans of the big name artist to those other bands as well, knowing that they all have a similar sound or musical philosophy.

What Rogers is really pointing out is that thanks to the vast explosion of music available these days, bands don't need help getting "out there" any more -- they need help standing out from the clutter. Fans, on the other side, need a better filter to figure out what's worth listening to, and that's something that an affinity label could stand for. It plays the role of the filter, and allows the major label (like EMI) to leverage its connections with big name bands, to drive additional interest to lesser known bands by associating the names on the same affinity label. It's an idea that makes plenty of sense (in fact, there are a few small independent labels that already live via this concept -- within certain niches, you can find people who will buy nearly every album released on a specific label).

So would EMI go for it? Lucky for Ian (and for EMI), Guy Hands isn't a long-term music industry guy stuck to the old ways. He's a private equity guy who seems to recognize that the industry needs to change -- which has meant pushing back against the RIAA and the IFPI and even hiring a Google guy to run the digital strategy at EMI (though, hopefully, he won't be pigeonholed as "the digital guy").

While I agree with almost all of Ian's post -- there is one thing that I disagree with. I think that a label can certainly help beyond just the marketing -- and that's in managing some of the new business models that are coming out these days. We keep hearing people complain that musicians don't want to manage these new business models, and a smart music label could (and should) be helping on that front as well.

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Filed Under: affinity labels, business models, filters, marketing, record labels

16 Comments

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Crosbie Fitch (profile), 27 May 2008 @ 9:28am

4AD was one of the best ever affinity labels
4AD was one of the best ever affinity labels.
Cocteau Twins
Dead Can Dance
Clan of Xymox
This Mortal Coil
Wolfgang Press
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Anonymous Coward, 27 May 2008 @ 9:50am

This is an interesting idea in that this sort of service is something that Amazion and iTunes already try to do. By comparing your purchaces to the purchaces of others they try to guess what "your style" is. If bands themselves signed up themselves to an affinity label, then you have a human component giving you input in what other bands this new band is like. I think it would be a good move to make.
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Trerro, 27 May 2008 @ 10:17am

There's definitely a demand for this.
All you have to do is look at how popular Pandora is, and you can see there's a huge demand for this kind of service. Now we just have to hope a few of the big labels realize that this is the way to go, rather than suing grandmothers and children.
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Banshee, 27 May 2008 @ 10:32am

Great Post!
As a musicians ourselves, who are re-releasing music on our own, I can say I would like to see this type of 'service' rather than label. If marketing services were provided by these affinity labels in a non-exclusive venture we would be willing to give up to 10-40% of our sales to them for marketing. The percentage would need to be based on whether they are handling the manufacturing or distribution as well.

The offers we have seen from some of the smaller labels for non-exlusive agreements have ranged from $4 per unit to 50-60% as the band's cut - after expenses. The labels have also offered to handle manufacturing for about 30% more than we pay to do it ourselves.

One thing that is not offered has been digital distribution marketing. About all you can rely on for digital marketing is the actual store themselves by showing customers comparable music. Their service is lacking as it is not using digital fingerprinting like Last.FM or Pandora.com uses - which gives people a much clearer comparison of music styles.

Marketing is the labels strongest asset, they can do it better than most musicians and they have the best system to get radio play. They should focus on their strengths, or they will not survive.
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Man, 27 May 2008 @ 10:44am

Yes and...
Seems to me many of the bigger indies (including 4AD), figured that out long ago. 9 times out of 10 I roughly know what I'm getting, and appreciate that, from K, Jagjaguwar, Merge, etc. They all have solid brand identities, not to mention fiercely loyal followers...
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www.custompcmax.com, 27 May 2008 @ 11:07am

It is good to hear that someone in the music business is trying things outside the box. They need to change the way they are involved with music, if they want to continue existing. And until they figure it all out, we are stuck dealing with these dinosaur companies that don't have the faintest clue what their customers want. They only focus on what they want. http://www.custompcmax.com
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PaulT (profile), 27 May 2008 @ 11:12am

Re: There's definitely a demand for this.
Now if only the people in charge of licensing would realise how popular Pandora and the like are outside of the US... I downloaded a Don Caballero album from eMusic today, finally catching up with an act I'd first heard through Pandora but only just discovered on a non-DRM source in my region.

Anyway, fingers crossed with the suggestions - EMI does seem to be the only major label that's honestly open to new suggestions without major compromises right now.
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Anonymous Coward, 27 May 2008 @ 11:17am

Re: Re: There's definitely a demand for this.
Half the music I listen to today was found through Pandora. It's an amazingly useful service.
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Anonymous Coward, 27 May 2008 @ 12:37pm

Re:
You beat me mentioning the iTunes 'Just for You' feature but here's my $.02. That little gizmo plus 'Others who purchased this song..' has turned me on to more bands and thus convinced me to part with more of my money than any other promotion. That's a value added service I would be willing to pay for because finding the sound you like is more difficult than ever is this expanding market.
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Scott, 27 May 2008 @ 1:32pm

Songwriters and New Artists
I think the idea of a filter is key as there is so much out there now. There are a lot of opportunities for websites to act as filters for new artists. Lets not forget songwriters either, their still the people behind the scene pushing out some great music.

Scott
www.startmysong.com
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Anonymous Sources, 27 May 2008 @ 2:06pm

Most people need to be told what's worth listening to.
Affinity labels might help address the fact that the average listener, probably needs to be told what's worth listening to. The fact is, many casual music listeners don't care enough to worry about developing their individual tastes in music. This can clearly be seen in the fact that top 40 music formats are now pretty diverse stylistically and are still popular enough to draw a large number of listeners. Somebody is selecting which bands make it into the top 40 pool. Once in, through excessive exposure, the songs/bands become popular. For many listeners, RECOGNITION = APPRECIATION. People will often stop the autoscan on the radio whenever they hear a song they know (unless they really hate it). Record labels are really only needed to serve as promoters and payola check writers (not that that happens) in order to create the next big thing. People who really want to explore different bands and styles can do so on their own.
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mobiGeek, 28 May 2008 @ 6:36am

Re: 4AD was one of the best ever affinity labels
Though I agree with your assessment of 4AD, I must question your prioritization of the groups. I mean, how can anyone put Clan of Xymox ahead of This Mortal Coil??!?
:-)
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Chris, 28 May 2008 @ 9:05am

This is an old concept
For anyone that can remember, this model of marketing, or filtering as you put it, has been around since Shrapnel Records was founded in 1980, strictly dedicated to Heavy Metal music. Shrapnel Label Group then expanded in 1991 with Blues Bureau International, focused on the blues rock genre of the 70's. It's a good concept, but nothing that hasn't been done before.
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J. Phillips (profile), 28 May 2008 @ 10:49am

Someone started to touch on it...
While an affinity label seems like a great thing, eventually it will encounter the same problems that any label does: a limited amount of 'space' for new artists and a static listener base. The long tail becomes the same as it is today with 'manufactured' talent.
I'm not saying the idea won't work, but the devil is in the details. If a label can link exposure, consumer trust, ease of access and the ability for customers to become promoters, the best bands will bubble to the top, and the experience will be good for everyone. Let's all hope that ideas like this (and the addendum that Mike presented where labels help manage when needed) become the norm rather than the exception.
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Bruce Houghton, 8 Jun 2008 @ 6:23am

Ian Got It Right. But Here's Why It Won't Happen
I advocated for labels dividing into indie like teams with a common back office to serve the niches a couple weeks ago as part of an ongoing Can The Music Industry Save Itself? on Hypebot.com. (Here's the article: http://www.hypebot.com/hypebot/2008/05/can-the-music-1.html#more)
Why don't they do it? Fear of change. They've been chasing mega-hits for so long; they can't admit that day is over. After all one hit pays for many misses. And if they go for this plan then it means sweeping the rest of their old school buddies out the door. I don't think they'll need an "I Know How To Buy A Hit" label team.

But the idea could lead to the creation of some new major label groups created from the bottom up. For example, ATO - who just bought back their independence from Sony BMG for $5M and says it wants to form a "legacy" indie have the cash an the smarts to do it.
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Stuart Banks, 12 Jul 2008 @ 6:53pm

Its a nice idea but...
I am new to the music business just 4 years. I run a small independent heavy metal/rock label and I don't agree with the assessment regarding record labels. Certainly not by the experience I have had. It has been my experience that bands still want and are looking for good labels to support them and work for/with them. I believe that digital markets are important but they are not necessarily the be all and end all. I have embraced the digital age because it is important and it is growing. Its just right now no-one person or organization has that happy medium that one fits all' business model. I think in reality that's probably the music industry's holy grail, for want of a better expression.
The real problem is basically illegal downloading killed the cash cow that a lot of the music industry were milking preferring to gorge themselves on making as much money in the now with little or no forethought to the future. The way I see it is the Labels really need to stop thinking about how much money they are loosing in terms of profits and get on with the business of re-structuring in terms of investing in artists for the future instead of short term monetary gains. Dumping artists just because they have not hit a target expectation of sales is one example especially if the artists are selling reasonably well. I mean these days who wouldn't be happy with artists who have 50-60,000 units of first week sales, whereas several years ago that could have got an artists dumped.
Just because you are on the Internet have a DIY distribution are on My Space or Facebook does NOT transpose to good sales or great publicity You still have to get people to these sites. You are just another voice in the millions that are out there. All shouting out for the same thing. How do you combat someone going straight to a P2P and downloading for nothing rather than go and spend money on buying the product? It seems that no-one seems to agree and the RIAA while trying to do the right thing on behalf of its members is actually doing more harm than good. IP's won't be coerced into policing because that makes them take the burden of responsibility for other people's behaviour even by legislation. All that will result in is creating more costs passed on to other people. The big problem we are all suffering for is because no-one had the common sense to see past the greed of raking in as much money as they could while everything was going great and deal with the real problem of the knee jerk reaction of illegal downloading,by people who all too commonly believe that they are being ripped off by greedy record execs. And until the music industry takes responsibility for lack of dealing with those perceptions whether real or not, it is never going to win back the hearts and minds of its customer base.
Labels need to develop partnerships with artists and not contracts that nail them down to the Nth degree. I think better education tools and services provided by the Labels for artists and its customers might help. We've lost this generations battle for its dollars We could win the next by getting proactive now otherwise record labels as we know them may end up being forced to playing second fiddle to the hardware industry which is has taken the lead in how and where music is listened to.
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