Analysis

Beggars Group, AEI Media and Atlantic Records talk modern-day music companies


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Is it too much to hope that we’ve seen the last ‘death of labels’ story in the modern music industry? Labels are far from dying out as an industry entity, but they are evolving in interesting ways, as are management companies, publishers and music companies with their roots in the digital world.

It’s the blurring of the boundaries between the capabilities (and the business models) of these companies that’s the interesting story. At Music Biz and Music Ally’s NY:LON Connect conference in New York today, a panel explored some of the implications.

The speakers included AEI Group CEO Diluk Dias; Paul Sinclair, EVP of digital strategy and innovation at Atlantic Records; and Simon Wheeler, director of digital at Beggars Group. The moderator was Megan Healy, head of digital at Patriot Management.

The conversation started with culture. “Culture isn’t a starting point: it’s the starting point,” said Dias. “In this kind of market, consolidation, there’s great opportunities for independent companies to really differentiate themselves… For us, creating a really strong company culture: an environment people want to be part of, has been very important.”

He talked about the need to attract and retain colleagues, which in turn creates a culture that is attractive for artists.

Wheeler gave Beggars’ view. “Having a structure which doesn’t have any shareholders has been really beneficial for us: we can focus what the founder believes, or the founders of the labels we work with believe about the culture of their companies… We can work with artists that we truly believe in and love, and music that we’re passionate about,” he said.

“We’re having to work quite hard to ensure that the company culture is as diverse as possible. That’s something we’re very mindful of… We have a group board now which is equal in male and female, and we’re very happy that we’ve got to that stage. But it took quite a lot of work, because the music industry has been white, middle-class blokes – and our company was when we started looking at it. That’s not how the world is, and not how we think it should be.”

Dias talked about age as another lens to view diversity through. “Is this a problem? that there are less young people in the music in senior positions who, in my view are more connected to the audience?” he said.

Sinclair agreed, saying that he makes a rule of getting younger colleagues to present their ideas as often as possible. “If you just get out of the way and let the younger people talk about how they discover music, and how they find things on Spotify and Apple Music and YouTube, and all the services you haven’t heard of, it just works well.”

“Having more young people in senior positions in the company, as well as women, is important. It’s certainly something you see in the tech business, but it hasn’t translated to the music business just yet,” said Dias.

The panel talked about the transition to streaming. In 2010, Wheeler decided to scrap the idea of a digital department. “I wanted the company to become the digital department. I didn’t want this ghetto: physical v digital,” said Wheeler. “Making the company digital was one of the most important steps that we made.”

Sinclair: “We have reorged probably eight times in the 12 years that I’ve been there,” he said of Atlantic Records. “On the other hand we have kept the digital team, although we no longer call it multimedia or new media!” But over the last two or three years, Atlantic has hired more specialists.

“Someone who’s just a YouTube expert, and someone who just knows more about advertising than I do, and last year we hired a data storyteller – someone not just to be an analyst, but to interpret data for the rest of the company. We’ve hired illustrators to help artists create content for the video platforms,” he said.

Dias agreed with Wheeler. “The digital music business IS the music business, but I think it actually goes deeper than that,” he said. AEI Media has traditionally been organised into three departments: music, video and live. But: “Increasingly we see more success by working across company on an artist project, or a brand project, or a festival, rather than these silos competing for attention… We’re seeing far more success from people collaborating across the company than working in isolation.”

He thinks that’s a trend across the industry, which is blurring the boundaries – or at least fuelling collaboration – between labels, managers, publishers and the live sector.

“Our real head of digital is our CEO. The real solution is led from the top-down, by people who understand that everything is interrelated: touring, marketing, internet marketing, video… all of these things are one thing… And if the person at the top doesn’t understand that, you end up with fiefdoms across the company, whether it’s a 10-person company or a 100-person company.”

This isn’t a new concept, argued Wheeler. “But if we were starting the business again today, I don’t think we’d have these siloes. And new companies, I don’t think, are even seeing those differences.” Beggars label Young Turks is a good example of that, he suggested.

The panel also talked about changes in the industry: and the shift from localised distribution to the big, digital, global platforms.

“The thing about the internet and digital, is the internet in general is a way of targeting geographically-disparate audiences all over the world. This whole idea of carving out territories is largely a throwback to the pre-internet era, and internal politics between local offices,” he said. AEI Media tries not to do local licensing deals for that reason. “When we’ve done them, they’ve always caused trouble,” he said.

Sinclair gave the example of an artist with a song that’s exploding in specific territories – for example Spanish-speaking markets. “Let it go global, pick out the places where it’s working, and then start building from there,” he said. “And then saying okay, is this a song that’s only going to work in these 15 territories, or is there an opportunity to build it?”

Wheeler hailed the speed difference. “It’s really hard. The volume of data on a global basis that’s coming in. We used to get a statement from our distributor in one territory… but being able to get all these feeds now is a hugely-complex job. If you don’t have access to that data, you’re going to be behind in the game, but it’s a huge investment. I can’t stress how much.”

Beggars Group built its own data-handling infrastructure, starting about five years ago. “We spent huge amounts of money, not just in the technology, but in the people, which record companies never used to have to do. Data architects! These are very specialist skills that the record companies just never had to employ before.”

“It’s really hard to hire good tech developers as well. In my experience, working with developers is as challenging as working with artists. They’re a breed unto their own!” said Dias. “Data is an opportunity but also a threat… We’re drowning in data, but the challenge is coming up with good questions to ask, to come up with actionable insights.”

“And also knowing that the data is often misleading,” added Sinclair, citing the example of an unnamed track that seemed to be a flop across the world on streaming platforms, based on the data coming back. But Atlantic stuck with it “on gut feeling” and it eventually became a hit.

Sinclair said that Atlantic is careful to include data in its discussions about the strategy for artists and releases, without letting it drive the entire conversation. “We bring data to meetings where we brainstorm… You’re not allowed to walk in with a report. You have to walk in with an opinion,” he said.

He also talked about changing release schedules: an album is right for some artists and not for others, while singles, EPs and sudden track-drops are part of a growing number of campaigns. “Every single artist project should be a couple of years long, and you just keep going until the fans have decided to move on!” as he put it.

Dias talked about AEI Media’s move into the live business, running its own festivals and events based around the communities that it has built online. “We’re not in the festivals business. We’re in the food, travel and beverages business!” he said. “It’s also fun: it’s exciting. It brings what we’re doing into the real world, and it creates longevity.”

Dias also talked about YouTube. “I think it’s unfair to compare YouTube with other music-streaming services. In my mind it’s not intended as a music consumption platform, and it became a music-consumption quite by accident. It’s a great place to build an audience… you can build engagement and take that audience onto other platforms,” he said.

“For every dollar we generate on YouTube we generate 10 dollars off YouTube as a consequence of what we’re doing on YouTube.”

Wheeler responded. “I don’t 100% agree but I don’t 100% disagree. YouTube’s a platform, we use it, and we use it in different ways. It’s right: it didn’t start out as a music platform, but it turned into a music platform… For every dollar we earn on YouTube we earn a shitload of dollars off YouTube. But that’s because they don’t pay us very much!”

Sinclair gave Atlantic’s view. “We view YouTube as lots of different things: it’s a community of people. It’s the coolest kid in school with a bunch of followers. It’s a huge influencer with millions of followers… Sometimes it makes sense, it depends on the artist, it depends on the song, it depends on the people who you find to do it… YouTube, like other platforms, is an ‘it depends’,” he said.

Wheeler agreed. “There is no ‘this is how you put together a plan’. You need to look at each artist, each album, each campaign that you’re participating in, and cut your cloth accordingly. And that’s quite exciting really: when you can craft a campaign for each thing you’re working on rather than just go through the motions: ‘I’m going to tick this box, then that box, then that box’… That’s pretty exciting stuff.”

The final question: what’s coming in the next five years that will change the way these companies operate?

“Our ambition isn’t to grow and scale. We actually like the size we are, and we can provide the right services to our artists… We want to be really focused on what we do, and be really, really good at it. That’s our strategy,” said Wheeler. “Every time we’ve gone into something we’re not specialised in, we haven’t done a great job. And if you can’t do a job properly, you shouldn’t be doing it!”

“The reward for being in the music industry is the actual activity of being in the music industry… I think the best days are ahead of us,” said Dias, although he harked back to the first day at NY:LON Connect’s discussion about whether music could become little more than a background activity for mass-market streaming listeners.

“We shouldn’t be precious about the fact that there’s going to be 500 million people paying for a music subscription who maybe aren’t a passionate about music as the 100 million people who were buying CDs and vinyl,” he said.

Stuart Dredge

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