Chapter 13 Music Business Handbook and Career Guide, 10th Ed. © 2013 Sherwood Publishing Partners

Chapter 13

Music Business Handbook and Career Guide, 10th Ed. © 2013 Sherwood Publishing Partners

Record LabelsChapter Thirteen

Start Thinking . . .

1. What does it take to get music recorded and distributed?

2. Who are the different people involved in this complex industry?

3. Are major labels receding in importance?


Chapter Goals

• Acquire an understanding of the history of the record industry and how it came to its present condition.

• Gain a true picture of the record business by analyzing it in terms of major versus independent labels.

• Learn how record companies function through their various structures.


Development of Recorded Music

Late 1800s early inventions

1900–1920s record sales begin, “commercial” jazz

1930s Great Depression , jukeboxes

1940s singles, jukeboxes, one-stops, LPs

1950s TV, rock and roll, rack jobbing, stereo sound

1960s social turmoil, retailing, Beatles, major labels

1970s indie labels, singer-songwriters, crossover recordings

1980s technological change, CDs, video

1990s home recordings, DAT, electronic delivery of music

2000s piracy and P2P file sharing, legal downloads, 360 deals


Perspective

• Major label owned and/or distributed by major distribution company

• Independent label indies lack affiliation with a major

• Majors dominate sales are well funded


Major Labels• Tremendous investment in recordings required

• Artists attracted to majors• large advances, prestige, promotion

• stability of established company

• more elaborate recordings

• Advantages in economies of scale

• Maintain inventories for longer periods

• Clear advantage in costly marketing of records

• Push weak recordings to sales success


Independent Labels

• First to find the “next big thing”

• Successful indies may be bought out by majors

• Technology blunted majors’ advantage majors focus on most popular + most lucrative leaves modest-selling artists + genres to indies

• Develop brand name awareness + consumer loyalty

• Connections at local and regional level


Specialty Labels

• Some of the most successful independents classical music

• Some release records “privately”

• Some may limit activities to certain demographic markets

• Gospel music effective promotional methods

• Specialty labels successful don’t compete with mainstream music don’t rely on traditional or expensive promotion


Record Company Structure

[Insert Figure 13.1]


Record Company StructureExecutive Officers

• CEO, COO, CFO, general manager

• CEO often strong entrepreneur who started label

• Two backgrounds for CEOs: Lawyer producer

• Must know “art of the deal”

• Must have good “ears”


Record Company StructureArtist & Repertoire (A&R)

• Concerned with finding + signing new talent

• Must keep informed

• Remain involved after signing assist artists administer production or budget details of album act as liaison between artist and label

• Large labels may have separate A&R departments


Record Company StructureDistribution/Sales

• Convince retailers to order and display CDs

• Get prominent “shelf space” at online stores

• Science in ordering specific quantities of CDs don’t want excessive returns don’t want empty shelves


Record Company StructureMarketing

• Product management

• Radio promotion heart of marketing get airplay and charting arrange promotional appearances, interviews, giveaways

• Video promotion airplay on TV video streaming on the Web


Record Company StructureMarketing

• Publicity media exposure less expensive than promotion

• Advertising co-op advertising trade publication ads

• Creative services design all marketing campaign materials


Record Company StructureSpecial Products (Catalog)

• Two core responsibilities:1. handle requests to license masters of older product

2. find new ways to redesign or repackage musico “best of” packageso themed multi-artist compilationso boxed sets


Record Company StructureInternational Department

• Oversee foreign sales

• Ensure effective communication between domestic and foreign affiliates

• Foreign sales may make up more than half of all revenue

• Foreign territories will maintain their own A&R operations


Record Company StructureBusiness and Legal Affairs

• Industry revolves around contracts and copyrights

• Legal department negotiates and drafts agreements minimizes litigation

• Larger companies may break these into two smaller departments


Record Company StructureAccounting

• Handles a host of financial functions recording budgets inventory manufacturing royaltieso (may be handled by separate department in larger company)


Record Company StructureMerchandise

• Historically supported concert tours

• Now handles artist-related merchandise

• 360 deals give labels a direct stake in merchandise revenue


Record Company StructurePublishing Affiliates

• Labels generally own two publishing companies ASCAP affiliate BMI affiliate

• Seek publishing rights from artists

• Publishing company must show profit from own operations may sign artists not on record company’s roster


Trade AssociationsRecording Industry Association of America

• Represents both major and minor labels

• Certifies best-selling records

• Lobbies government for label-friendly regulations

• Represents industry to consumers

• Collects industry statistics

• Battles online piracy and CD counterfeiting

• Most prominent force in the big music labels’ drive to curb piracy


Trade AssociationsNational Academy of Recording Arts & Sciences

• Hosts Grammy Awards

• Regular membership persons professionally active in industry

• Associate membership indirectly involved in record production

• Sponsors charitable endeavors

• Offers grants and assistance programs


For Further Thought . . .

1. What advantages do major labels have over independent labels?

2. How do you distinguish the difference between independent labels and specialty labels?

3. Why or why not will Do-It-Yourself recording and distribution make labels irrelevant in the future?


Documents

Chapter 13 Music Business Handbook and Career Guide, 10th Ed. © 2013 Sherwood Publishing Partners