Maintaining market share
July 19th 2020, United Masters were in the middle of their annual two day Select Con conference and their founder Steve Stoute and recording artist Russ had a conversation about independent artists. During that conversation, Steve Stoute stated that if Drake did not resign with Universal, it would be the end of the recording business. In this piece I will display why labels will never cease to exist, how they plan to continue to grow and how they have pivoted to acquire more market share.
The current standard of ownership within the recorded business leads to the label owning the copyright of the music in exchange for an advance. This is usually called the master, the particular expression of the composition. By owning the masters, labels are entitled to mechanical payments. Labels are paid by streaming platforms to license their catalogue and are also paid whenever a record is streamed. This creates a recurring revenue stream. To increase mechanical payments, music of the past can be repackaged to celebrate a significant day, for example Nas’ debut album. In 2014, Columbia (Sony) repackaged ‘Illmatic’ into a two disc album to celebrate 20 years since the release of the original. Nas does not own the masters to ‘Illmatic’.
Labels are currently breaking legacy artists on Tik Tok. The late David Bowie’s catalogue is one of many to have a presence on the social platform which has led to an increase in streams. According to Anya Du Sauzay (Parlophone), global streams of David Bowie’s catalogue has gone up by 25% since debuting on Tik Tok earlier this year. Tik Tok released a list of the fastest tracks to hit a billion views, Black Eyed Peas’ 2003 hit ‘Where Is The Love’ was part of that top 10. This in return means that Interscope Records (Universal) can clam mechanical royalty payments off a record that is eighteen years old.
There has always been a call for many artists to pursue the independent route, to reduce the need to give up their mechanical copyrights. In recent times, this has been done by acquiring the help of label services to distribute and market their music. Ditto, Believe and Absolute label service are a few of the many label services that offer their expertise. This allows artists to get the service that they need without having to give up their masters. Major labels are also involved in this part of the business too. ADA (Warner) Spinnup (Universal) and The Orchard (Sony) are all heavily involved. How can labels cease to exist if they have the capital and resources to spin off new forms of business to acquire more market share?
The music business is changing. More and more artists have leverage to negotiate their terms. Many are able to break themselves on social media platforms that can open many different avenues for them, without having to be restricted to the traditional record label option. Licensing deals are becoming more apparent which can allow artists to keep their masters. However, as we have seen with artists like Nas and David Bowie, the old way of doing things has solidified the presence of record labels for decades to come and nothing will appear to change that anytime soon.
