IFPI says labels DO invest in music
TweetIt sounds like an obvious thing to say, right? Of course labels invest in music and the artists who make it: that’s the definition of a record label.
Except in recent months, there have been claims that this is changing – and particularly that major labels are unwilling to invest as much in as many artists, preferring to keep their powder dry for a bigger push behind a few select acts every year, while focusing more attention on making money from their back catalogues.
At last week’s Music 4.5 conference in London, several speakers mentioned the idea of an ‘investment gulf’ in the music industry, with UK Music boss Feargal Sharkey announcing that his organisation is taking steps to combat it by courting investment from external sources.
The IFPI has published a report today that aims to counter the idea that labels aren’t investing in artists though, claiming that labels of all sizes invest around $5 billion a year in music talent – 30% of their sales revenues. It goes on to point out that there are more than 4,000 artists on major label rosters today, and claims one in four artists on all labels were signed in the last 12 months.
The Investing in Music report is co-published with indie label network WIN, whose chairman Alison Wenham has made comments clearly designed to take aim at the buzz around artists ditching labels to go D2C:
“Mixing the talents of business and creativity is often a minefield, with creativity often compromised by the challenges of running a business, which requires totally different skills. Artists generally prefer to leave the complex administration of a rights based business to someone else.”
Which is true, although the debate is around whether that someone else needs to be a label, as opposed to their management company, or people employed by the band to deal with exactly this kind of administration.
Even so, the report is a fascinating statement of intent from IFPI about how it sees labels staying relevant amid ongoing digital developments.
“Investing in music is the core mission of record companies,” says boss John Kennedy. “No other party can lay claim to a comparable role in the music sector. No other party comes close to the levels of investment committed by record companies to developing, nurturing and promoting talent.”
And there’s more: “One of the biggest myths about the music industry in the digital age is that artists no longer need record labels. It is simply wrong. The investment, partnership and support that help build artist careers have never been more important than they are today.”
The report also breaks down the $1 million estimated cost of breaking a pop artist in the UK and US: a $200k advance, $200k for recording, $200k on three videos, $100k of tour support, and $300k on promotion and marketing.
Getting back to the report’s main focus, though, we’re interested by the contrast between the IFPI’s bullish stance on label investment in artists, and UK Music’s seeming acknowledgement that other sources of funding are required. The latter body is due to publish its own report later this month on that very subject.
Tags: ifpi
March 9th, 2010 at 3:12 pm
[...] 1 votes vote IFPI says labels DO invest in music It sounds like an obvious thing to say, right? Of course labels invest in music and the artists [...]
March 10th, 2010 at 11:05 am
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March 15th, 2010 at 2:35 pm
[...] With the debates ongoing over where the music industry is heading, it’s been amusing to watch the major record labels try to remain relevant. One talking point they’ve hit on lately is this idea that record labels are the only ones who invest in artists. So, for example, when we point out that multiple studies have shown that more money is being spent on music today — just that it’s going to other providers, rather than the record labels — we’ve heard people come back by saying “but only the record labels invest in artists.” Perhaps sensing a valuable talking point (and getting sick of claims from many in the industry that the labels have seriously cut back on investing in new artists), the IFPI has put out a report that basically is the major record labels screaming “hey, look, we do invest in new music!” [...]
March 15th, 2010 at 2:38 pm
[...] Record Labels Put Out Report Insisting That Record Labels Do, In Fact, Invest In Musicians March 15th, 2010 by admin Leave a reply » With the debates ongoing over where the music industry is heading, it’s been amusing to watch the major record labels try to remain relevant. One talking point they’ve hit on lately is this idea that record labels are the only ones who invest in artists. So, for example, when we point out that multiple studies have shown that more money is being spent on music today — just that it’s going to other providers, rather than the record labels — we’ve heard people come back by saying “but only the record labels invest in artists.” Perhaps sensing a valuable talking point (and getting sick of claims from many in the industry that the labels have seriously cut back on investing in new artists), the IFPI has put out a report that basically is the major record labels screaming “hey, look, we do invest in new music!” [...]
March 15th, 2010 at 4:43 pm
OK, so the music industry “invests” in music. What is missing is the fact that in the free-market investing is a market risk. As such, one would assume that the music industry would not invest in projects that would cost them more money than they expect to receive.
The problem is that they are trying to use the concept of “investment” as a sympathy plea. We (the music industry) need protection so we can invest in our artists. That is bunk, if an investment in an artistic endeavor is potentially uneconomic then it should not be produced. Like the newspapers, if new technology is making your business model uneconomic; adapt or die.
March 16th, 2010 at 5:06 pm
So is IFPI trying to justify the labels investment in music to keep the major labels relevant? The labels are getting less and less relevant however they still do have serious capital to invest the question is how do they invest it? The fact that they no longer are investing like they did 10 years ago doesn’t take a genius to figure out. The major labels and the big artists both have to take responsibility and change their way of marketing and promoting new albums as that is where a lot of money goes. Most of the “big” acts still costs around $50-75k a day while on promotion. For example how much does a performance on X-Factor cost for a label or for that matter Wetten Dass in Germany or any of the major TV shows around Europe! I have seen artist costing the label more than $100k a day for promoting a new album around Europe which is insane in today’s market and that is just for the promotion. More to that IFPI claims it costs $1000k to break an artists in UK. If that number is correct we still need to remember that advance, video cost,and toursupport (at least 50%) is all recoupable so the investment is not really that insane. the marketing cost I can agree is steep but promotion doesn’t need to half of what they estimates.
May 22nd, 2010 at 6:13 pm
Getting a record label is important, no matter how big or small the label is. A lot of garage bands got signed on small labels before they made their millions.
Thanks for your post.
Peace.