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What Do Brands Offer That Traditional Labels Do Not?

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For a start according to Jermaine Dupri head honcho at Island Def Jam Music Group nobody in the music business has the marketing budget he does. Why? Because Procter and Gamble have set up a joint venture called Tag Records (named after its brand of body spray) with the label. In Jermaine’s own words he has “…never seen anyone wanting to devote this much money to breaking new artists”. Yet are large marketing budgets all that really matter?  If brands can, and are outspending traditional labels on releasing records, then what incentive is there for a label to release records? What are the pros and cons for artists, brands and labels? 

Undoubtedly brands have marketing budgets to die for in comparison to ever decreasing record label budgets. But what are the labels selling to the brands in terms of the artist’s credibility for this massive cash injection? Or alternately what are labels competing against when brands go and set up their own labels independently of any traditional record label?

In the first instances above, brands obviously value being associated with successful artists, as it drives new customer acquisition and builds brand loyalty. It is easy to say this is a new and viable model. But are the majority of brands willing to invest in unbroken or new and upcoming talent? Talent that requires growth and development comes with high risks of failure. I’m sure brands would be extremely risk adverse in terms of brand association with artists commercial failure.

So, would this impact on the creativity of the artist? We have seen AT & T at work censoring Pearl Jams live concert broadcast. If brands own artistic output and the copyright associated with that, where does it leave freedom of speech and credibility in terms of the artist and any damage by association that may bring to a brand? Will artistic output be censored to prevent this? Only time will tell, yet going on previous experience it seems likely.

The opening paragraph outlined a partnership model between a label and a brand and the benefits it brings in terms of marketing. What happens when brands set up their own label and give away as well as sell the artists recorded music and merchandise almost in a 360-deal scenario? – Similar to the Bacardi Groove Armada deal. In this deal apparently the artists get a higher royalty rate, better marketing and owns 100% of their copyright after a limited period. In this respect I’m shouting that this is the way forward.

Can labels compete with these brands marketing budget wise, higher royalty to artist and 100% ownership of copyright to artists after a limited period? If labels were to offer the same, would it still be a viable business for them? Even within a 360 deal scenario labels only have the artist, music, merchandising and live income rights. Unlike major consumer brands labels possess no other product other than music that is core to their bottom line. Brands can afford to use their marketing budgets and music ties up as loss leaders whereas labels cannot.

Is it necessarily good to promote a further extension of devaluing music with brands giving away recorded music and tickets to concerts as loss leaders to drive their core product line sales? Well, if Prince and McFly can do it by giving CDs away via a nice payoff from a major newspaper why not brands you may ask? One could argue that it is all well and fine for artists who have already broken through thanks to large marketing budgets of labels a few years past to do the above. Yet what of the new up and coming artists trying to break through?

What do labels offer that brands do not? In my mind the key USP a label has over an above a brand is; experience in releasing records, especially new artists, knowledge of exploiting recorded music in broadcasting, radio, film, TV ads and new media. However, even saying that the major competitive gap is the higher marketing budgets, better royalty rates and artist ownership of copyright, which in my mind tilts the balance in favour of brands at this juncture. On the flip side new artists will no doubt still have to go down the traditional record label route, which over the longer term may lead down the path of brand collaborations with label or even a release via an FMCG brand.

New up and coming artists do not have the luxury of an established audience or large marketing budgets to break them from record labels unlike their older contemporaries. So what new models are actually viable for these artists of the future? We all know advertising funded, deals with major newspapers or brands are a non-starter for new up and coming artists. Whilst I find it great that brands are providing established artists with higher royalty rates, 100% ownership of copyright to artists and large marketing budgets.

So, I leave on this question – and yes there have been many in this post, food for thought I like to think.  Are these new fans funded business models á la Slice the Pie or Sellaband the only viable new business model options for new and upcoming talent in the world of music?

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