Redefining Record Labels starting with Purpose [Patrick Clifton]
Why do modern record labels need to redefine their purpose and refresh their measures of success?
by Patrick Clifton from Medium
The Record Label Crisis described a threat to the longevity of the music industry and music culture, as the recorded music business struggled to break new artists and generate meaningful hits. There was some debate — and an encouraging diversity of opinion — about some of the fixes proposed in the piece. I’ll take a closer look at some of these ideas in a series of articles from this blog, starting here.
Industries are impacted by many factors — economic, technological, cultural — which are often not in their control, sometimes to the point of crisis. These crises urge an assessment of strategy, either to cope better with those shocks, or to modify objectives in the face of a new environment.
Record labels are the music industry’s traditional engines of artist development. This is a role now assumed by artist services companies and other organisations designed to help self-release, who appear more able to develop and grow musical artists’ careers. For labels to recover their traditional role as the cheerleaders for new music, they will need to reassess their strategy. The first stage of this must be to question their purpose: what is a record label for in 2024? Once we’ve defined that, what is success for a label, and how can it be measured?
As currently conceived, a record label is an entity that exists to release new music under an identifiable brand. It owns and trades in music copyrights, has economic interests in certain other rights and remunerates artists, so is in most cases a business.
As a creative organization, a label has a cultural purpose. It exists to find, curate, develop and elevate great new music and musical artists. It can also have guardianship of our musical heritage. In certain scenes and genres, it can provide a musical home for its artists and can engage in things like events and the creation of editorial content, which help sustain that culture.
A record label is a company, so its directors have a so-called fiduciary duty to make money for its owners. To keep doing that over time, it needs to generate enough cash to pay its employees and reinvest in A&R. It also has a legal obligation to share music revenues with artists and songwriters according to a contractual framework.
While these two sets of outcomes may seem oppositional, they should be complimentary — cultural impact drives the engagement of music-lovers, who will spend money on it. Commercial success generates a return which facilitates investment into recording, performance and other cultural output. Success is connecting great music to culture and audiences, which generates a sufficient return to compensate shareholders and artists, as well as to continue to invest in new talent and musical output.
Cultural impact used to be measured by the perceived credibility of an artist or a piece of music. In the pre-streaming transactional era, this came from the advocacy of so-called music experts: positive articles by music journalists, plays by specialist DJ’s, profile in certain independent record stores and endorsements from other artists.
In 2024, the cultural landscape is complex and paradoxical. Credibility is decided by music fans, not a set of elite tastemakers. Legitimate audience engagement is now an authentic marker of cultural impact, yet the lack of emotional connection in the context of the streaming experience means that engagement measured in terms of listens is not an effective indicator. The experience does not create an emotional connection between fans and artists — that happens elsewhere, in the live experience or through the fans’ journey to the consumption of merchandise or vinyl. A wider view of success and consequent set of measures is required. This includes the size and engagement levels of social followings, the ability of artists to power network effects through their followers, an artist’s live potential, their ability to sell physical products and the value of their cultural brand measured through non-music revenues like syncs and endorsements.
Why not just measure the money?
A label generates revenue from its copyrights; it shares some of these with artists and generates a profit for shareholders. Revenue calculation should be a simple measure of success and one that teams can work towards, but labels may now be in receipt of multiple different revenue streams which represent success over different time horizons; it might not be obvious to teams working on artist success how specific actions can impact these metrics. Measuring profit is problematic as it takes much longer to generate, and with different profitability frameworks per revenue stream, rules of thumb are hard to apply. At the same time, if there is a relationship between cultural and commercial impact, then revenue is the end-point of activity in pursuit of success. It may be that revenue across everything an artist is involved, from catalogue record sales to live tickets to merch, is collated and reported in a particular period, so that the evolution of the artist’s economic success can be tracked over time.
The music industry has had a measure of success for decades that combines cultural and commercial impact – the sales chart.
This weekly snapshot of best-selling titles self-evidently measured commercial success; it also measured cultural impact as it tracked the movement of music from the fringes into the mainstream. Yet since the evolution of streaming, charts all over the world combine different media into one metric anchored on the value of a sale, even as streaming has become the dominant mode of consumption. While this has had some unexpectedly positive outcomes, such as the rebirth of vinyl as a desirable format, it has tethered the industry to conceptualise success in terms of sales. A relentless focus on chart success is one of the causal factors of the Record Label Crisis. Sales drive greater chart impact than streams so artists who mobilise sizeable fan-bases to pre-order albums get high chart positions. Fanbases take a long time for new artists to grow, so they can’t compete. The perverse outcome exists where a tool designed in part to help promote new music limits that exposure.
The chart’s longevity as an industry benchmark is down to its simplicity — it is one number that encapsulates success and provides easy comparison to competitive releases. There isn’t a snappy metric that encapsulates success for artists in today’s music environment in the same way. Selling albums used to mean everything — it determined the artists’ success level in other aspects of their career and was a ready proxy for their own economic success. Yet recorded music doesn’t have the same cultural cachet as it once did. Whether this is due to the commoditisation that occurred at the end of the CD era, exacerbated by filesharing and streaming, is debatable; it’s just as possibly a symptom of the competition for consumer attention that defines the digital age. Regardless, recorded music doesn’t seem to hold the same importance in the musician’s or fan’s landscape, so why should a chart based purely on consumption of recorded music matter?
A symbiotic purpose – cultural and commercial
The narrow metrics of sales and streams are no longer sufficient markers of the effectiveness of an artist’s team at growing their career. As labels adapt to the industry they see before them, they measure success across an artist’s different activities and revenue streams, many of which they don’t control. If labels are to contribute to music culture, and recorded music is no longer the primary cultural driver, this now means events, merchandise and the creation of other content has elevated importance. With greater influence and control in these areas, labels can not only play to their historical strengths as coordinators of an artist’s careers; they can power investment into these revenue streams and can also evolve their brand identities to have wider scope and greater impact in the cultures within which they operate.
Perhaps we should change terminology, from record label to music label, so as not to limit the scope or ambition of this type of organisation. The dual symbiotic purpose – cultural and commercial – described earlier in the piece hasn’t really changed, but with the landscape around it now different, its purpose needs to broaden.
