Sunday, February 17, 2013

Universal Music Sells Sanctuary, And Why That Matters

Iron Maiden image from Bobby Owsinski's Music 3.0 blog
According to a story in the LA Times last week, Universal Music Group has agreed to sell Sanctuary Records, home to metal acts like Black Sabbath, Motorhead, Iron Maiden and Megadeth, to BMG Rights Management. Universal was forced to sell the label as well as other assets as part of an agreement with regulators from the EU in order for the purchase of EMI to be approved.

What's interesting here is that BMG has quietly been acquiring publishing and record labels over the past 4 years, and now looks like it might position itself once again as one of the major record labels, which is good news to everyone in the business. After all, the more competition, the better. It's true that BMG was once one of the Big 5 major labels, but decided to go more into publishing after it merged and unmerged with Sony Music. Now it looks like it's back in the "record" business again.

If you've read my Music 3.0 book, you know that Sanctuary was a unique record label in that it lead the way to the DIY movement that we have today. The problem was that it got too successful and veered off-course, causing it to become just another label which was eventually acquired by Universal in 2007. Here's an excerpt from the book that explains just how influential the company was.
"In 1979 Rod Smallwood and Andy Taylor discovered and then managed the legendary metal band Iron Maiden. They subsequently named their management company after the band’s song “Sanctuary” and expanded their roster to include similar bands of the genre.
Soon afterwards, Sanctuary Management had a brilliant idea. As managers of so-called “heritage acts” that had long-term appeal and large fan bases but no record deals, the company decided to independently finance CD releases for the bands themselves. After all, the audience was built-in and rabid. They’d buy anything the bands would put out, so why not release it themselves if a major label wouldn’t? The bands were going to tour anyway, so they might as well have a product to sell. Little did they know at the time, but this was the beginning of the new business model where the tour sells the record instead of the record selling the tour, as it did in Music 1.0 to 2.0. 
In the past, if an act would get hot as a result of local radio play, they would then tour in that location to take advantage of the energized interest. The record sold the tour by virtue of the airplay it received. The record was selling the tour. If the record flopped, there would be no tour. 
But in the new Sanctuary model, since the act had a strong enough fan base to support a tour anyway, why not have some product to back it up? With these new economics of self-financing the release, the act could now make more money than ever on fewer units sold. And since it was cheaper than ever to create a release (since by then most musicians had a studio at home that was more powerful than The Beatles ever had during their heyday), the stage was set for taking advantage of both the technology and the consumer environment. 
For a time, Sanctuary Records and its artists succeeded wildly, to the point that the company expanded into a full-fledged record label (and a subsidiary of Universal Music) with traditional Music 2.0 staff and infrastructure. Soon afterward, however, it collapsed under the weight of that traditional infrastructure. The company had ventured beyond its original concept and comfort level, and eventually paid for it. Sanctuary was acquired by Universal at the end of 2007, but today Sanctuary Management continues to represent the likes of Fleetwood Mac, ZZ Top, Tommy Lee, and Velvet Revolver, among others, but has drifted somewhat from its initial intentions and goals. 
Sanctuary started the trend of an artist self-releasing a record during Music 2.0, way ahead of the curve and way ahead of what's commonplace today. Without knowing it at the time, the company paved the way for artists living in Music 3.0, where self-production, promotion, and distribution is not only commonplace, but becoming the norm."


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