Sunday, January 19, 2014

The New World Of Label Services

Macklemore and Ryan Lewis image from Bobby Owsinski's Music 3.0 blog
It all started with Macklemore and Ryan Lewis. Instead of signing a typical record deal with a major label, they opted instead to pay Warner Bros promo department to work "Thrift Shop" to radio, taking advantage of one of the attractive strengths that major labels still have to an indie artist. Thanks to Warner's muscle in this area, the song went on to be a world-wide hit, turning the team from modest success story to superstars.

Previously, in order to receive all the marketing and distribution clout of a label you had to sign a recording agreement with them that entitled you a split of the net revenue of between 12 and 15%. Today with an artist able to do so much of the work himself, it's no longer necessary or desirable to sign such a deal. There still are some services that only a major label does well (like CD distribution and radio promotion) that are desirable, and now all the majors have developed their own "label services" divisions to make those services available to indie artists.

For instance, Sony Music provides label services through its Red Associated Labels, Warner Music Group through its ADA unit and Universal Music has it's Caroline division (which handles Peter Gabriel and Korn). Plus BMG transitioned totally to label services when it sold its record label to Sony in 2008 and now handles Back Street Boys, Bryan Ferry and Anastacia, among others. Plus there's Kobalt (Pet Shop Boys and Prince) and in the UK, Cooking Vinyl (Madness and Amanda Palmer), as large indies getting into the arena.

While a brand new artist might not be able to afford these services, any artist with a small measure of success probably can, and should. Label services are a fast rising revenue generator for the industry, and truly a symbol of the new music business. It's a win-win situation for the artist and the label. The artist stays independent and gains the clout of the label, and the label gets added revenue without having to bankroll a new artist.

If you ever wanted to see the face of Music 3.0, this is it.

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