majors
Major labels have been the dominant part of the music industry for many years. Well, in truth they still are, but there are fewer of them. In the power play that takes place in corporate business, consolidation and economies of scale often lead to bigger profits and seem a sensible pursuit. Most large corporations work in similar ways and the major record labels are no different.
There has been a tremendous amount of consolidation over the past decades to bring the whole industry to the “big four” that we currently know at the time of writing (Sony Music Entertainment, Universal Music Group, EMI Group, and Warner Music Group). For example, back in 2004 there were the big five labels but then BMG was merged with Sony to make Sony BMG in 2005 (now called Sony Music Entertainment).
This merger became a topic of conversation in the European Commission and while Sony and BMG were permitted to merge, it was not without considerable conditions. Conditions that included BMG selling off its publishing wing to its rival Universal, reducing overall market share.
These big four labels remain and it would appear that future consolidation, while perhaps sought by many a label’s board, may be resisted in many territories because of market dominance and monopoly restrictions.
Consolidation, to some, might give the impression that there might be less business going on, or indeed fewer opportunity for acts. While this might appear the case presently, this is not simply because of the consolidation itself, but because of the new economic marketplace we find ourselves in.
Each of the four big labels has taken on a whole host of sublabels in mergers over the years and therefore have many subbrands, such as Sony’s Epic label, for example.
The majors still dominate the majority of the industry. Many cynically believe these labels have become nothing other than large marketing machines more interested in taking on television talent show winners from the X Factor than developing real talent. There is some sensible business strategy in this. If the record-buying public in their droves votes for an act, becomes involved in an act, they’ll buy the act’s music. So perhaps for innovation and profits, this is a real business coup?
Submajors
These labels are distinct brands that the major label owns and trades under as if it was a going concern. Many brands have simply come and gone, being subsumed into the larger conglomerate label. However, there are labels such as Geffen which is now part of Interscope, whose parent label is the Universal Music Group. These brands remain and are often useful tools for the larger group to keep faith within the particular genres they operate in.
Independents (Indie)
Independent labels, or indies for short, have become valued places for bands over the years. These smaller, often more nimble, affairs have sprouted up from the ground promoting their acts well to provide a powerful alternative to the major labels.
There are some large independent labels out there doing very well in terms of the charts and success. Consider the well-known label Beggars Banquet which has had some current successful acts in the British pop charts in 2010. It has been so successful that it almost resembles a major label’s conglomerate parent, insofar as it has become The Beggars Group and has brought together household music labels 4AD, Matador, Rough Trade, and XL Recordings all into one powerful collection.
An independent can be characterized by the fact that it owns its own business and is not owned or controlled by a major label1.
Any label that is created by an individual for their own purposes could be considered an independent label too, but the following types require individual mentions.
Production companies
Apart from the standard independent labels as described above, others will also set up their own labels to meet their own needs and releases. One popular way forward at the moment is for production companies who develop artists and so on to create their own label to provide a much-needed conduit. To some degree, these have become valued
1www.musicindie.com/219.asp?sub=Join%20AIM accessed 13/08/2010//
content providers for the larger labels as they take on, sign, and develop acts. They resemble an external A&R agency in some ways. These acts, once the music and artist are ready, will become extremely interesting to the larger labels. In some ways, the risk is taken by the production company, and not the major.
Producers
Producers, in their own right, of course, fit into this category and are also taking the time to invest in their own artist development and exploring the many income streams that are possible from collaborating more closely with someone they might sign. This becomes an attractive option to both producer and artist as there is a need for them to work closely and with dedication to create a successful product. The DIY/360° type deals surrounding this are covered a little later.
artists
Naturally artists often create their own labels whether that is just to get the wheels working for their own music, or whether it is for the promotion of artists they like. Madonna’s Maverick label was one such business which successfully signed a young Alanis Morissette and launched her to the mainstream with Jagged Little pill. This is a more common option for the future of the industry and many people, with the universal shop front the Internet provides, consider this the way forward. This way they can manage their own affairs.
other: live nation and Starbucks
In recent years some interesting labels have popped into the marketplace, and gone. One such label has been that of Live Nation, which has “signed” acts such as Madonna to its roster. Their agreements are not for recordings per se, so they’re not just a record label, but a more inclusive all-in style deal where all Madonna’s income is accounted for.
Another strange entrant to the market, which has since disappeared, is the coffee chain Starbucks which launched its label in 2007. Soon after its launch it signed Sir Paul McCartney. Again there was some market sense in this proposition as “…you can reach 44 million customers per week through Starbucks stores,” reported partner in the venture, Glen Barros, the president of Concord Music Group.2
The two examples above show something interesting. The industry is starting to look at new business models and ways of working. It is debatable whether both new labels have received the success they had hoped for. However, what is to be learnt here is that new business models may work, succeed, and break the mold. The industry will innovate and it will be interesting to see what transpires in the coming years.
Distributors
Distributors are the facilitators of the industry. They logistically ship the physical records through their networks to the shops or arrange the supply of music to the digital download suppliers. Many majors use their own distribution arm or have considerable contracts with an independent distributor. Independent labels can either make approaches to the independent distributor or make a deal with a major to distribute the records for them.