SPEAK OUT: Reaping What You Sow – How Record Labels Can Matter Again

This past week, I’ve had some interesting conversations with friends about major labels and where the music business is headed. The general consensus amongst the group was that you’re crazy if you want to start or run a label now. So many majors are sinking and selling off their most prized assets (Abbey Road studios, Capitol Records building) and the music business has hit an all-time low in terms of physical record sales. For months, I have sat on the same bench with the doubters and the pessimists, proclaiming that the music industry is dead.

However, new information has shed light and I am slowly being converted into an optimistic cheerleader for the music business and label. I feel it’s an excellent time to start a record label, specifically for the purposes of turning people onto new music. I want to create some discussion around this and encourage entrepreneurial and business-minded people to invest more in the music business and artists. Why? Let me tell you.

Artists need labels just as much as labels need artists. The relationship is symbiotic and sometimes incestuous, but it’s necessary. As a person who’s been playing music for ten years, I understand that while many artists are very creative, they are also highly unpredictable, combustible, and, truthfully speaking, many musicians have an inflated sense of self. These are not the attributes of a good business person nor are they the attributes that lead groups to success. Labels have always provided a more grounded and stable outsider perspective for artists. In addition, they attempt to steer their artists’ careers in the directions which are most lucrative. How could that not be beneficial?

Now let’s talk about major labels being “evil.” Historically, the problem has been many large scale labels seek a certain amount of control and leverage over their artists. They no longer take the advisor’s role and they want to sit in the captain’s chair, navigating exactly where the trajectory of the artist’s career is headed. Moreover, record labels go through great lengths to hide their involvement or ties to an artist or group. One can look at pop artists like Susan Boyle and Justin Bieber and see how the label attempted to incorporate a “grassroots” strategy to make the acts appear more genuine. The truth is labels are and have been viewed as “evil” and “corrupt” because many of them lost sight of their own mission statements and forgot what their original roles were. The ones that are flailing cannot get in touch with that original spark that ignited a fire in their employees’ hearts and businesses that cannot remain in touch with their original passion will ultimately fail.

I want to address the business minds and capitalists now. The belief that one can make extraordinary amounts of money off a product with little to no demand is absurd. 21st century economics and business philosophy has very little room for ideas that don’t stick and products that can’t generate demand. The reason social networking sites like Facebook became so popular is because there was a built-in demand, it was the latent desire for people to reach out to others outside of their respective communities. Facebook enabled people to do that and before it, you had MySpace, AOL chat rooms, pen pals, etc. It’s the same concept. So the belief that you can take a product (original music) with no demand and have it sell millions and millions of records is absurd and almost a joke in our current economic situation.

It’s not about the recession; it’s what happened to the typewriter, clothespins, popcorn machines, and a ton of other products that lost their inherent value and demand to consumers. Nonetheless, we hang onto this notion that recorded music is different because it adds much needed cultural value to our society. But the reality of music business is that original music is a product and is treated as such. I have said this to elaborate upon a single point: it’s basic economics; there are diminishing returns and the opportunity costs have significantly increased, but the industry is and will be in a state of flux until they can create further demand for their product.

How do you increase demand? You do the ground level research and invest in making the best product — without the best product or a unique sell, your business/label fails.

Let me tell you about Pappy Van Winkle. The Old Rip Van Winkle Distillery produces a flagship brand of bourbon called Pappy’s. Their bourbon is aged for up to 23 years and that’s considerably longer than most bourbons. Moreover, they only age a select few barrels each year, keeping their stock low and all major business matters are discussed within the family. It’s a very small business, but Pappy’s has been able to drive up the demand for their product by 1) creating a signature brand and style 2) maintaining a low stock, creating an exclusive aura around their product and 3) investing in the initial formula to create some of the best bourbon whiskey in the world. Before Pappy poured out that first shot of bourbon to a potential customer, he knew it was golden.

Now I’m not encouraging label owners to peddle bourbon to their customers (actually a shot or two with a physical CD may increase sales, wink, wink), but think the same way as Pappy and other proud, rich distillers. Your artist roster is the gold; it’s your Fort Knox, the keys to the kingdom. You must develop this roster and invest in your artists. What worked for one artist may not work for the next, but that’s alright, you take the old blueprint, tweak it and use it in the beginning phases of an artists’ career. But then you have to give that individual or group time to breathe, be creative and evolve. I find it almost comedic when I see artists like Lupe Fiasco battling with their labels. Lupe built his career off of being an abstract outsider, but now Atlantic wants to make him fit into the crowd. I don’t understand the rationale behind it.

It is imperative that record labels operating in the current music business climate give their artists’ room to experiment. This space can and should be granted after the artist has proven themselves whether through digital and physical record sales, successful tours or overall increasing the label’s bottom end. I understand that is a tough pill to swallow; allowing artists’ to take free reign with a label’s hard-earned capital. Nonetheless, the more artists feel as if they are in the hands of an active and complimentary team, the more they will instill their trust in the team and will feel an obligation to satisfy not only their own personal interests, but the group’s interests as well.

A label roster should be viewed as an exclusive club or team; not everyone can get in and gain a members’ badge or jacket. But to the select few who gain entry, they must be groomed to be champions. Label owners need to take pride in their stock and act as advisors and mentors within their artists’ careers, not slave drivers.

Because the truth is there is too much supply and it’s overpowering the demand. It’s easy for anyone to put together a ragtag group and throw up some shoddy recordings on MySpace and Bandcamp. But as a label owner, you have to genuinely figure out where these people fit into your mission statement and how you can take them to the next level. It should all be premeditated. I feel the harder one tries to repeat a previous success with the same strategies, the quicker you’re digging your own grave. Labels need to invest more in their artists; it could be financial resources for recording and promo, providing their artists with practice and rehearsal spaces or just sitting down with them and their managers and discussing how to make them more musically diverse. As a record label, the music is the product and if it’s weak and transparent, music fans know this. They can tell when something is a quick snack and not a full course meal.

Think of a label as a business not much different from Pappy Van Winkle. Invest time in the artists and only market a select few. Drive up demand through exclusivity and corner the market in an area that’s been untouched. Don’t get caught up in repetition. Many of the strategies that worked before, won’t work now. The best strategies will only work if they are in touch with the label’s mission statement and reflect something about that business’ values. Most important, the artist roster is the mash and yeast in this bourbon equation. Invest in an excellent stock and consumers will find it hard to turn down the product.