When EMI’s new boss announced that the firm was to axe its A&R talent scouts and hand control over to the suits in marketing, it seemed like a confirmation of what every musician always believed about the major labels putting sales above creativity. So was it because of or despite this that EMI this month sank into administration with £4bn debts?
The digital revolution of the past 10 years has hit the ‘big four’ major labels – Universal, Warner, EMI and Sony – hard. The ubiquity of the internet and communication channels such as MySpace, Facebook and off-the-shelf blogging platforms has given independent labels – and every bedroom DJ, musician, author or artist of any kind – the ability to reach audiences without relying on the established old media groups and methods of distribution.
The International Federation of the Phonographic Industry reported in 2005 that independent labels generated 19 per cent of the world’s music sales, divided up between tens of thousands of small labels and a handful of large, established independents – for example, in Britain, Beggars Group, Domino, and Warp.
However, while the major labels account for almost 80 per cent of sales, those sales represent barely a fifth of releases. In other words, the independent sector is very busy selling not very many copies of a lot of records.
If that thriving independent sector and its music didn’t exist, would only the back catalogues of established artists, marketing-driven tie-ins with television franchises and slick pop or hip-hop acts remain? It is a chilling thought. With the existence of so much great music at stake, how do these mostly tiny labels survive? How do they cope with recording, distribution, marketing and booking? Does it pay, or is it just a labour of love?
“I’d say about 99 per cent of them are labours of love,” says Simon Singleton of Pure Groove, a label specialising in vinyl releases. “It’s about building the label into some kind of brand, something to attach to a gig night or blog to gain some recognition. It’s pretty rare to get to a point where you can make money just from selling records.”
There is certainly an element of luck: Australian label Modular Recordings’ first three releases were all hits, including The Avalanches’ award-winning album Since I Left You in 2000. Beggars Banquet, the largest UK independent, hit gold in 1979 with Gary Numan’s Tubeway Army and Are ‘Friends’ Electric? Stephen Bass, co-founder of Moshi Moshi Records, discovered Hot Chip – its first runaway success – after meeting band member Joe Goddard at work.
Singleton says: “If you can get in on a scene as it’s happening then you can beat the bigger labels to it and ride the wave. It’s much harder to take an artist and develop them into a big name.”
Stephen Pietrzykowski, of Tough Love Records, agrees: “You find that labels with a certain sound and aesthetic do better than those that don’t. It’s about a signature sound, something people can grasp,” he says. “That sort of specialisation by micro-independents is essentially doing the groundwork for larger independents, who are in turn doing it for the majors. It’s about getting the music heard. If a band plays a few shows, gets a record out, plays a festival, we’ve done our job.”
Pietrzykowski, who has released 40 records in five years and still has a day job, says up to a point contracts, fees and advances make no sense. “If you take on an artist and give them an advance, that’s a big responsibility. We make an agreement, put out a record, see how it does and split it down the middle between us,” he says. “It’s never been about the money,” he adds, “which is just as well.”
When margins are so tight – 500 vinyl singles might return £1.50 per record – a run of good releases can be affected by one that doesn’t sell, or an unforeseen event. “We nearly went under after a pressing plant went bust, taking our £1,500 with it,” Pietrzykowski recalls, ruefully. “We’ve lost money on most of our releases. We’re constantly on the brink of bankruptcy – or the next big thing.”
So, to keep afloat, labels have to not only offer the kind of personal service that the majors cannot, but to be creative in the way they generate cash from other sources.
Gigs and festivals are important, but so is providing band management or securing publishing rights to license. Moshi Moshi Records’ subscription scheme is an example: for £30, subscribers receive every single and album the label releases in a year. Building a recognisable sound is essential, says co-founder Michael McClatchey. “After all, you’re asking people to pay for singles they haven’t even heard yet,” he says. With a few hundred subscribers since November, it’s an idea to watch.
It was five years before McClatchey could quit his job in the music industry and work on the label full time. “Actually, it was a decision taken for me as I got made redundant,” he laughs. “It was an excuse to put out the stuff we couldn’t work with in our day jobs, but we’d taken it as far as we could by then as a hobby.”
Martin Brimicombe has a partner, children and a day job, but that hasn’t stopped him from running, and largely paying for, I Blame The Parents Records. Brimicombe started the label to release music by the band Extradition Order, whom he had seen live and was impressed with. “I had no idea, but there’s quite a punk, DIY way about it, it’s quite easy to find advice and get things done cheaply.” With no distribution deal, he takes records to independent record shops by hand, or sells them at gigs. Despite losing money on each of his 20-odd releases, he remains optimistic, if cautious. “After four years, I’d need to see some shift this year to carry on, but the bands I’m working with now are hard-working live acts that may do better,” he says.
At the other end of the scale is Beggars Group, which grew from a record shop in the early 1970s to the largest independent label in Europe. It is still owned and run by its founder, Martin Mills, who says: “It was done out of love then, and now, but it was much easier to sell records then.” Despite employing hundreds of staff in Britain and the US, Mills has never been the sort for spreadsheets. “We’ve never borrowed, and I’ve never really done business plans,” he says. “You have no idea how a record will do – you can only wait and see.”
For Mills, the music industry “ecology” means independents are as much a part of an artist’s success as the major that may eventually sign them. “Everyone starts on an independent, and to seem real to your fans you have to have come from somewhere and have grown organically,” he says. “It is a food chain, and it is important that food chain is supported top to bottom.”
He has no problem with staff running their own labels on the side, for example: “As labels fold or bigger independents get bought out, the sector needs to regenerate itself.”
Perhaps unsurprisingly Mills believes independents are the future, and predicts a resurgence of independent record shops whose fortunes are “bound up” with the less centralised, less corporate mechanisms of the independent music scene.
“Big labels will get smaller, and small labels bigger,” he says. “It will operate in a much smaller and more fragmented, but viable, way. It’s hard for musicians now, but you have to believe the industry will mature to encompass many ways of getting paid that don’t involve buying physical product.”
Perhaps Pietrzykowski puts it best as to why some are keeping the independent flame alive, even when all the signs are grim. “Being in music is great,” he says. “You meet interesting people and have great times. It might not be sustainable, but it’s something I love doing and one way or another it pays for itself. It doesn’t have to pay for itself in money.”