It's Up to Us: How to Grow Your Record Label in the 2020s

Bon Iver – an artist on Jagjaguwar, part of the Secretly group of independent labels.

It's Up to Us: How to Grow Your Record Label in the 2020s

There's a reason why some countries export more good music than everywhere else, and it’s down to the health of their independent label scene. But what are the secrets to starting and running a successful record label, and how can you avoid the classic mistakes? Gareth Murphy explains how to survive an unpredictable game.
 

If starting an independent record label has long been your life’s great calling, or if you already have a label that’s not breaking out of its own prison yard, then now is a good time to throw caution to the wind and get prospecting. As investigated in a recent essay, ‘2020 – Where is the Money in Today’s Music World?’, market conditions have been quietly recovering for five consecutive years. Thanks largely to the worldwide adoption of subscription streaming systems, all signs now suggest that for music producers – and indeed everyone who works around music – this will be a more stable, forward-looking decade of growth, normalisation and rebuilding.

But before we get into the finer details of how to access the $20 billion gold mine of today’s recorded music industry, a necessary foreword on definitions and scope: The ‘record label’ may seem to some like an archaic model to project onto a new decade that will almost certainly see streaming dominate as physical formats dwindle into relative insignificance, but look a little deeper into the small print. The internet has only revolutionised duplication and delivery. The money ducts still follow the three centuries old principle of copyright. So whether it’s vinyl discs being purchased at cash registers, or streamed songs playing randomly on a mobile phone app, it all leads back to the core asset: the recording, with its mandatory  and © credits, signifying the original producer and current copyright owner.

Recordings will remain the vital life blood of streaming platforms, radio stations, physical formats, TV advertisements, background music, soundtracks, nightclub dance floors, YouTube videos and other media yet to be invented. Even the live sector relies on artists touring new albums. Stop for a moment and contemplate what it means that the label boss is the only person in the entire music business who deals with absolutely everybody else: artists, managers, studio producers, pressers, distributors, retailers, video directors, photographers, PR agents, music publishers, journalists, radio DJs, TV producers, marketing agencies and gig promoters.   

Admittedly, many companies today aren’t so comfortable calling themselves record labels – particularly start-ups who’ve never pressed a physical record. But without wishing to be pedantic, think twice about adopting this gimmicky term of ‘music label’. True, its catch-all ambiguity did fit the panic of the early 2000s, when shell-shocked record producers, especially those who specialised in millennial pop and electronic dance music, learned to offset the collapse in recorded music revenues by schmoozing artists into signing away everything else – publishing, merchandising, management, even touring. We’ll say more about this controversial 360° model later and why it never took off amongst serious artists. Suffice to say that now that the recorded music industry has turned a corner out of crisis, this essay will focus on the monetisation of recordings – the independent record label model, geared towards genres of substance in the recovering 2020s market.        

Artists and repertoire
As every brilliant record label will tell you, success or failure is mostly about A&R. Artists and repertoire, that is – the standard term for talent hunting and artistic direction, inherited from the early 1900s when gramophone companies signed classical artists and music publishers traded in sheet music. Needless to say, A&R has kept evolving with every decade’s fashions and technologies, but the underlying recipe hasn’t changed much. Copyright only refers to a set of protective intellectual property laws. The market value of a recording is the sum of artist, song and a third magic ingredient that, although unrecognised in any legal sense, is central to recorded music: the sound.   

Considering the importance of sound, it shouldn’t come as a surprise that successful record labels tend to be run by record people. Outside of classical music, surprisingly few musicians have excelled as label founders or even A&R men. The vast majority of label pioneers stepped up from the beehive professions of record stores, radio stations and music magazines. Most, if not all, began as the type of record-obsessed teenager who spent weekends rummaging in record shops, going to gigs, listening to niche radio shows or compiling perfect mix tapes for their friends. Record people are evangelical record eaters who study entire genres in minute detail but who are capable of standing back and seeing the bigger picture of what these movements really mean. They’re the toughest customers and yet they’re the most convincing town criers when they do find something truly special. 

No record label can make the necessary critical judgments, or indeed build the solid commercial cases, without record people who’ve given their whole lives to truly knowing the stuff of good recordings. Assuming you’re that type of persuasive, slightly nerdy sound connoisseur who’s already influencing tastes in a particular field, let’s now sit down and discuss the facts of musical life. For even if you already have a small label, or own an old catalogue that’s ticking over in semi-hibernation, today’s improving conditions merit a back-to-basics look at what labels are supposed to do.   

Like making babies, nobody can do it alone. In fact, there’s no point setting up a company, or even rebranding an old imprint, until you’ve found at least one seriously promising new artist; preferably an artist you like as a person. In record production, affinity is the door to infinity. Success, if it’s ever to come, generally takes years, typically three albums. So, if you don’t really like the artist as a person, or if they don’t really like you, it cannot work. The road is too long and paved with too many pitfalls.

That’s why musicians don’t usually make the best label bosses. Whether it’s their solitary, temperamental nature or tendency to interfere in the creative process, ex-musician bosses can easily come across as frustrated artists, unsuited to serving others in a managerial role. The wider team chemistry is often easier, breezier and more constructive when the label boss is just an adoring record freak facilitating and monitoring projects from a respectful distance. Needless to say, there’s no magic formula for making brilliant records, but they tend to happen in an atmosphere of trust, confidence and lightness. Some call it ‘the quality of the silence,’ in other words, the air in the room.

Labels must be present in organisational ways; managing the schedules, coordinating with the artist on choice of producer, video director, sleeve designer, promotional strategy. The label is paying for everything and will have to sell the end product, so it must do its job of coordinating. But its core role is not artistic. It’s the gatekeeper, facilitator and disseminator. The labels who enjoy the highest batting averages choose their artists discerningly and live by the philosophy that once you do commit to an artist, you give them their shot. 

The name of the game
The founding spirit of a label is hugely important. That’s why nearly every brilliant label has a brilliant name that cleverly expresses the overarching cultural and spiritual mission. In boom times, names don’t matter as much. But in a tougher prospector’s market like today, a well-chosen name could be the difference between life and death. And by the way, if you already have a label imprint, now’s a good time to ask yourself an honest question: is it doing its job? Would your efforts benefit from rebooting with a completely new brand name or sub-label? It’s a question the very best companies ask themselves with every new era.  

The soul of any record business enterprise is its people and its underlying idea – the idea. The perfect brand name will radiate flag-like qualities. It will light up eyes, it will magnetise, inspire, federate and express something far bigger than its flawed, egotistical founder. That’s why you won’t find the perfect name until you know what it is you’re really setting out to achieve. The seeking of the name (even if you’re doing it a second or third time) is both an autobiographical and counter-cultural audit that will force you to focus your vision into one or two nail-hitting words. 

Names matter. A really good label name will put some new musical space on the map. Take America’s biggest indie success story over the last 20 years, Secretly Canadian. Its cryptic name began in the mid-90s as a private joke among three Indiana University friends who, at the time, were just penniless DJs at the college station. Inspired by the teenage shock of discovering that Neil Young, Joni Mitchell, The Band, Kate McGarrigle and Leonard Cohen were not actually American, ‘secretly Canadian’ became their own Wayne’s World variation of the hidden righteous principle. You didn’t have to be actually Canadian, nor even an artist: If you were a clued-in outsider who saw straight through mainstream America, you too were secretly Canadian. The name struck such a poignant chord in the early 2000s among alternative artists and marginal indies, that it’s now a multi-million dollar group and distribution hub leading the cutting edge of America’s rural underground.   

There’s a hundred other examples: Motown, Sun, Vanguard, Island, Verve, Okeh, Sub-Pop, Stax, 2Tone, Trojan, Mute, Ninja Tune, Blue Note… The history of the music business is an atlas of tribal enclaves, each with its own distinct identity and counter-cultural crusade. Some imprints become so synonymous with an emerging genre that the brand name spreads into society as a type of descriptive sonic adjective. Some symbolise a time, place or spirit. But once a label becomes its own beacon, what usually happens is that like-minded talent comes knocking. Great artists, having a strong sense of their own destiny, tend to join the army that’s already fighting the good war.   

No romance without finance
Next big problem: Money. The music business, as its double-barrelled name indicates, is like a pair of squabbling twins who can’t function without one another. Alas, good music is never enough. Running a label means wrestling numbers in the merciless sludge pit of private enterprise. The aim is to keep generating enough money to keep your campfires burning for decades. You don’t have to turn a profit. If you love what you’re doing – and love does make the music world go round – breaking even is okay most of the time. The harsh natural environment for any record label is a lot like an old family vineyard: In a typical decade, two years will be grand cru, two will be disastrous, and the other six will be mediocre.

To get started you’ll need to save, steal or borrow off a mad uncle. But whatever you do, meditate on the advice of the industry’s wisest elders. Take Martin Mills, the erudite founder and chairman of Beggars Group, which includes XL Recordings, Rough Trade, Matador and 4AD. A&R credentials aside, Mills attributes his group’s 40-year run to a strict financial rule: No overdrafts, no bank loans, no debts. Long-term survival is all about operating within your own cashflow – however modest your means may be. There’s no realistic alternative: any label that gets into bank loans or juggling credit cards gets suckered into making sales projection charts and other empty promises that can’t be delivered in such an unpredictable game as music. The clue in bankrupt is bank. Avoid them.

Just as importantly, steer clear of the indie’s most blood-sucking parasite: the landlord. Breaking your back every month just to hand over one or two grand to some dog-walking heir will in the long run destroy your mental and physical health, not to mention your relationships with those you’re meant to be paying instead: artists, staff, partners and family. Silly as this point may seem, it’s one of the unspoken secrets that distinguish the long-haul survivors from the crash-and-burn start-ups. Your precious profits must be kept in the copyright-creating ecosystem. 

Be cheap. Take Sire Records founder Seymour Stein, the man who signed Talking Heads and Madonna. In 1966, when he started his label, he schmoozed a supportive old man into renting him a brownstone building in the Broadway district for just $235 a month. Already dirt cheap for such a prime location, Stein discreetly sublet the front room to a PR agency for $150 per month. So, for the balance of $85, he got the other three rooms – all of them elegantly fitted with their original fire places. Considering it took Sire almost ten years to score its first hit, this is no minor detail. When the nice old man died and his heirs duly turfed Sire out, Stein had accumulated enough cash to buy the building of his next office. 

Such stories are not that unique. Nearly all the successful record labels understood from day one that to survive you have to be a type of deep-sea creature that darts after prey but metabolises slowly. If this idea shocks you, take a good hard look at any high street you’ve seen evolve through the decades. What’s the common denominator between every old shop, restaurant or pub that’s been there for donkey’s years without going bust? No rent. They own their own walls.

Should you work from home? It depends. Lots of successful labels began in suburban houses. Motown, Factory and Secretly Canadian to name just three – all of them in regional cities. Even the mighty Beggars Group is based in a converted house on a residential street in Wandsworth, south-west London. But all these examples began as bachelor flophouses with designated working and living areas. Artists were welcome to drop by unannounced, and boss had his own private space to withdraw into. So, if your home is first and foremost a family residence for rearing children, it’s unlikely you’ll ever be able to create the next Motown from an upstairs bedroom, or even a garden outhouse. One entrance is generally too narrow for two families. 

What matters is having a HQ where nothing else exists. Plenty of brilliant record labels grew from windowless basements or storage rooms hollowed into the back of record stores. Low-cost ugliness doesn’t matter. The soul of a label is its artistic output, its people, its aura. Find somewhere either dirt cheap or free. Like any school mess room, if your hive attracts the right crowd, it’ll become the place to be.   

The twenty-first-century market
It’s all about building a micro community and then plugging it into the wider international community. This brings us to the vital issue of commercial networks. Today is definitely the most complex age in the record business’ 130-year history. For the first time ever, the market is layered into about four generations – each with its own formats, promotional channels and cultural references. Nineties-born millennials – also called Generation Y, don’t read broadsheets, don’t buy CDs, nor listen to the national broadcasters. At the other end of the spectrum, 60-70 year olds remain the music economy’s most wealthy demographic, but they’re not signing up to Instagram or Spotify. Loyal to the traditional press, they’re mostly mail-ordering CDs in numbers too large to ignore. Between them, the forty- and fifty-something Generation X is buying the most vinyl and is most addicted to Facebook, Twitter and podcasts. And now, just reaching adulthood, a fourth group, Generation Z, is a slightly different brand of millennial than its 90s-born seniors. Although they’re also addicted to YouTube channels and Instagram, they grew up in the Great Recession. As such, nobody knows to what tunes this next wave of humans will howl at the moon. 

If you then study specific genres, there’s other cogs and wheels to consider. Electronic dance music, for example, has been centered around niche digital platforms like Beatport, Soundcloud or Juno. Catering for club DJs, high-definition sound files are the hard currency of dance floor music. As for the much reported vinyl revival, it’s happening in indie record stores which stock mostly avant garde rock, alt-folk and arty electro. Vinyl is addressing a completely different market of urban hipsters. 

There’s also massive geographical anomalies to factor in. In Germany, for example, streaming has been surprisingly slow to develop. CD sales still represent a respectable 40% of their market. Just next door, Scandinavia is the world’s most absolute streaming market. The UK, America and Japan, the world’s three biggest markets, are their own unique microcosms with their own habits and characteristics. The playing field is so wide and full of contradictions that even the smartest record labels can’t understand everything, let alone foresee what’s coming next. All that really matters is knowing the proverbial streets, alleys and characters of your own particular genre. To prosper you must survey your own market like a general about to attack a foreign land. Neighbouring genres should interest you also. The old idea of ‘crossing over’ remains the very essence of hit-making: capturing a niche phenomenon, then spreading it into the great wide open.

Just remember what every indie soon discovers: It’s damn near impossible to make ends meet if you get stuck in your own country. Across most of the music world, nations are in reality linguistic regions in which all media is concentrated in one big city. Even Britain, Europe’s biggest and most vibrant market, is too small on its own to sustain the costs of a label. As for America, it’s a continent with four time zones and over 2,000 radio stations. The astronomical costs of coast-to-coast promotion are unsustainable without money coming in from overseas. Every seasoned record boss will tell you this: The only way to run a label in any place, decade or genre, is to build a global network with things happening in as many capital cities as possible. Monetising recordings is an export business centered around cities. That’s how it’s always been. And that’s definitely how it is today.

To meet people and access overseas networks, join or follow all the indie lobbies like Impala, the union for European labels. The influential UK indie union AIM and its American counterpart A2IM are worth following even if you’re neither British nor American. Scoping out record stores in foreign countries is another way of widening your horizons, both intellectually and professionally. Record Store Day, which now has separate websites in every major music market, is a useful retailer directory to research foreign markets and locate potential allies. 

A smart label boss is reading wide, meeting wide, listening and looking panoramically. For as much as ‘Do It Yourself’ remains the sacred rallying cry of indie labels, nobody in reality can do it alone. It’s a global business of people for people. It’s not even enough to be a cute networker. Be a good friend and partner to your indie brethren. Reply to all emails as a matter of principle. Share information and contacts. Help others to help themselves. Organize, form alliances, cross-pollinate. Love thy rival. If you can’t pay a bill this month, pick up the phone and be clear. Manage all crises with humanity and fair-play spirit. It’s no coincidence that the world’s best labels are run by straight-shooting, community-minded people. They become leaders because they earn the trust and admiration of many.  

The curious thing about the music business is that on its lower slopes, it’s the parochial freelancers who lecture the merits of ‘professionalism’. Whereas on the sunlit summits, the true professionals who create employment and score planetary hits believe in higher notions of spirit and kinship. At the very heart of the hit-making craft is the knowledge that the best work happens when the work is play. 

How streaming works
Subscription-based streaming is clearly the future. But how do you access these systems? Unless you’re a big label, the likes of Spotify, Apple Music, Deezer, Ten Cent, Pandora, GooglePlay, Amazon Music or Tidal won’t deal with you directly. All the world’s streaming platforms (or PSPs as they’re called in IT jargon) outsource the administering of indie suppliers to a backline of distributors. Also called aggregators or providers, these brokers will swiftly put your stuff on multiple platforms and pay you one itemised royalty statement for all the combined listens.

This is the official list of distributors/aggregators that Spotify rates as recommendable, and here is the equivalent list on Apple Music. A few evenings researching and profiling these companies will open your eyes to the inner workings of streaming and help you find your natural partner. 

Data analytics is becoming a key criteria of distribution. Either through user-friendly dashboards or statistical reporting, these new tools enable indies to study who’s listening, when and where. If you’re already an ordinary civilian subscriber to any streaming service, you’ll have noticed the constant notifications you’re receiving about releases, exclusives, related playlists, picks of the week, gigs in your town, and various other hooks disguised as news. Through your listening habits, Big Brother knows your exact tastes, and he’s scarily good at recommending new music. Needless to say, hundreds of millions of users have been profiled in the same way. 

Of course, even with the help of analytical tools, the streaming market remains mind-bogglingly complex. However, what the marketeers working at PSPs and distributors across the world are all noticing is that in today’s new model there needs to be a story to launch any kind of album. Because although streaming is like selling, there’s no cash register moment. With direct debit subscription creating a type of lottery pot every month, all content suppliers are competing for greater shares of traffic. In this sense, streaming has more in common with radio than with the megastore model.

To engage people, streaming is about luring, teasing, elaborating and making sure by whatever means possible that these vast library systems are happening for individuals in a personalised manner. And the only way to attract crowds is by cleverly coordinating the analytical marketing with the label’s videos, podcasts, reviews and tour information. Over the coming decade, expect streaming platforms to improve their narrative technology. It’s no coincidence that Apple Music was launched beside two parallel platforms, Apple TV and Apple Podcasts. Expect increasing audio-visual convergence.

Other revenue streams
Considering the giant steps that streaming has already made, it’s reasonable to ask: Should you even bother with physical product? The answer of course depends entirely on what genre you’re in. Mainstream pop has all but given up on physical product. But if you’re in the business of folk, traditional, jazz, contemporary or other genres in which baby boomers are among your target audience, you’ll need to put CDs on Amazon and other genre-specific retailers. As for the resurgent vinyl format, scope out a few influential indie record stores like Rough Trade or Piccadilly and rummage around. If your music can sit next to what’s already there, there’s no reason why it shouldn’t. Put it this way: It’s very hard to pull off any kind of album launch without real-life product and street events. Physical product remains important to most non-pop genres, because there’s still a lot of musos and record collectors out there.  

There are approximately 1500 record stores in the US, and about 200 in the UK. To get your CDs and vinyl records stocked in these types of beehives, you’ll need to go through a separate physical distributor for each territory. For America, check out Secretly Distribution, RedEye or ADA. For the UK, there’s PIAS, Cargo, Kudos or Proper. In Japan, check out Beatink and Hostess. In Canada, there’s Outside Music. For Scandinavia, have a look at Playground. There’s a few in every country catering for different genres. Snoop around these hubs and keep digging. As you’ll discover, the real world still exists. And it’s a very big place, full of surprises. 

Consider all the other revenue streams that don’t get talked about. A well-run record label should be generating over a third of its revenues from spin-off business. Nothing is more lucrative, high-profile or easy than synchronisation, the term for licensing music to a film, TV show or commercial. A bit less sexy, but just as easy, is licensing songs to third-party compilations, corporate websites and events or even phone-waiting music. It all pays. One of the fastest-growing areas in recorded music today is the ‘performance rights’ that European collection societies receive from shopping malls, shops, hotels, bars, restaurants and other public spaces for playing tracks on their tannoy. As owner of the master copyrights, you’re entitled to a slice of that $2 billion gold mine. Merchandising is another growth area that can generate extra cash. There’s no shortage of backroom business to chase, negotiate and collect. And that’s the point, the more effort you invest in beautiful videos and vinyl pressings, the more easy business you’ll get back. 

Should you branch into music publishing? After all, don’t most big record labels also have publishing divisions? Yes, they do. But beware. Music publishing is becoming the most scrutinised end of the entire business. Note how newer publishers like Kobalt Music are now asking songwriters for only 25%; half of what used to be standard. Even still, what do publishers actually do? Compared to their nineteenth-century ancestors who printed and distributed sheet music for other musicians to play, modern music publishing is a casino model for accountants and dollar sniffers. They hang around talent pools, spot young songwriters, pay an advance, and bet on big, long-term paybacks. Once they’ve a contract, all they really do is collect on other people’s work. 

Nobody understands this better than labels. That’s why in the bad old days, when major publishing catalogues were built, it was common for record labels to gobble up 50% of an artist’s songwriter rights while the main record deal was being dangled. In reality, most labels’ publishing divisions were just a filing cabinet in the accountant’s office. Rookie artists either didn’t understand what they were signing away or were too young and hungry to protest. Of course, such practices made many a record mogul personally rich. Song catalogues became secret piggy banks. But chat off the record with veteran rock stars from that era and publishing scams are the number one cause of bad blood and ugly ruptures. When Bob Dylan sang the famous line ‘Businessmen, they drink my wine’, it was a reference to his publishing. His aptly named manager, Albert Grossman, was taking a backhander from the publisher he’d sold half of Dylan’s song rights to. 

So, unless you have a serious publishing operation with dedicated staffers doing nothing else but chasing business and pitching songs for pop stars to cover, levering record deals to acquire publishing points is tantamount to you personally registering co-writer credits on every song your artists will ever write. It’s greedy, it will cause resentment, and it will leave giant grease stains on your tombstone. Watch this space. If ever there was a domain heading for a #metoo wave followed by formal investigations, it’s music publishing and, behind it, the collection societies who are party to this vampire culture. 

Another bridge too far is artist management. It’s easy enough to convince a young wannabe signee that you’ll handle absolutely everything, even their management. But soon enough the artist will hate you. The same entity cannot be label, publisher and manager all at once. Stick to your main job and do it well. It’s far better anyway if your artist has their own manager and retains their own song copyrights. Most artists can get by on gigs. If they keep what’s dearest to them – their freedom and their compositions – they’ll accept that when a hit record finally comes, the label’s purpose is to reinvest the lion’s share into the next batch of talent. It’s an honest trade off. The artist came to the proverbial campfire to learn, grow and become famous. If they succeed and stay true to themselves in the process, everyone wins. And the show goes on. As it must.  

Like so many aspects of music, we return to the central issues of organisation, synergy, trust and regenerating capital. Every small label should aspire to the Beggars Group model: a family of separate A&R units powered by a fully independent mother company that acts as a bank, recycling its $100 million annual turnover back into royalties, overheads and new talent. No debts, no landlords, no 360° deals, no jiggery pokery. It’s become the biggest and hottest indie record label of the new century by sticking to healthy principles. 

Look at the whole music world through the prism of record labels and things get instantly clearer. There’s a simple reason why some places export far more good music than everywhere else. And it has no relation to the number of musicians per capita. If America, England and now Scandinavia are dominating our airwaves and playlists, it’s because they have the greatest number of independent record labels. More labels means better quality native music being pitched to their country’s radio and TV stations. It means rising standards, more jobs for freelancers, whole micro-communities getting schooled in the art of gold-standard sound. What labels do is get creative people working together. And let’s be honest, even the most motivated artists need orders, deadlines, challenges, contracts, and perhaps most importantly of all, the delicious company of living the times together. 

This is how culture works. Plant one hundred labels across the land, and in five years the air will be humming with life. Of course, no god or government is going to do it for us. It’s up to people like us to do it ourselves.   

 
 
 
 
 

Published on 15 January 2020

Gareth Murphy is author of Cowboys and Indies – The Epic History of the Record Industry. For his music business articles in the UK press, he won Writer of the Year at the 2017 PPA Independent Publisher Awards. He ghostwrote Siren Song, Sire Records founder Seymour Stein’s official autobiography, and lives in Paris.

 

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