The Record Labels Of The Future Are Already Here
In a landscape where record labels should be nearly extinct, Forbes Cherie Hu describes the next generation of record labels.This article originally appeared on Forbes
Running a record label has always been high-risk with an unknown reward. Labels spend as much as 15.6% of their revenue on artist development—a higher percentage than what technology, software, aerospace, healthcare and pharmaceutical industries spend on R&D. The risks are not unlike what one would take at a venture capital firm, except the startups are human beings who carry unique, abstract artistic capital.
With each month, the A&R landscape seems to get ever more competitive. Streaming services like Apple Music are stepping in to oversee traditional label responsibilities themselves, giving artists more direct access to their distribution and data (à la Frank Ocean). In addition, an entirely new collection of marketing tools and investment schemes (crowdfunding, investor-agency partnerships, accelerators like Zoo Labs and Techstars Music) has entered the business, making the future of artist development even more cryptic.
Emerging record labels are recognizing these new players and capitalizing on their strengths: giving fans more say in the recording process, building friendlier artist contracts through strategic partnerships, aligning artist incentives with those of startups and diversifying revenue beyond recorded music. By thinking and acting more entrepreneurially, they are paving a more sustainable and relevant future for themselves.
So, what do the record labels of the future look like?