The recent moves into the live camp by several record labels have left opinions divided over motive, value, and most of all, just who’s territory it is.

Lock an agent and a promoter together in a room and they might wrestle over fees, but throw in a record label MD and they’ll unite to round on the new guy. Sometimes, it seems, there are bigger fish to fry, and when it comes to labels moving into live, there’s no more effective a bond.

The recent moves into the live camp by several record labels have left opinions divided over motive, value, and most of all, just who’s territory it is.

Lock an agent and a promoter together in a room and they might wrestle over fees, but throw in a record label MD and they’ll unite to round on the new guy. Sometimes, it seems, there are bigger fish to fry, and when it comes to labels moving into live, there’s no more effective a bond.

The EMI/Robbie Williams deal of October 2002 might have tipped off the direction of things, but it’s only in the last few months that a sector of the music industry, bathing in its renaissance, has witnessed the boundaries with its label neighbours blur.

Universal Music Group has purchased agency Helter Skelter and merchandise leaders Bravado through Sanctuary; SonyBMG has set up an in-house booking agency and purchased German management company MTS; an EMI imprint is following suit and adding a promotion arm to boot, and in the US, several labels are moving into venue ownership. And that’s all before the rumours of Live Nation stepping the other way with Madonna.

Are the demands for a share of touring revenues, or the setting up of in-house live divisions a fair call? Or is the encroachment on live’s patch merely a reaction to the festival grass really being greener? It’s a thorny subject, and considering that labels, in general, have been widely blamed for their own downturn in recorded fortunes, there seem few willing to ally with them.

“Record companies are the gatekeepers of copyright and they’ve done a fucking terrible job of it,” says David Enthoven at ie:music. “Everybody got really fat in the 80s and they didn’t think about what was happening. They had no vision and just kept on paying themselves bigger and bigger salaries, patting themselves on the back and saying how wonderful they were. They haven’t been particularly good stewards.”

“Labels are trying to grab at everything they possible can,” says Nettwerk Music Group’s Terry McBride. “They’re getting sucked into this vortex but they’re going down with their nails grinding.”

Back to the Future

Over the last 30 years, the division between record labels and their live cousins has increased from what was once a holistic, family affair. Throughout the late 60s and early 70s, when the recording industry’s star was rising in tandem with the acts it helped create, the live music element of an artist’s career was often nurtured in-house.

“Live was great but where it really was, was in selling records,” says Paul Conroy, who started out as an agent before running Stiff Records and later, Virgin. “We piggybacked on Virgin’s early start, and so did a number of agents like Allan McGowan and Richard Griffiths [whose Modest! Management now works in partnership with SonyBMG] to really utilise their offices to our own benefits to get different groups off the ground.”

Chrysalis and Island Records both had agencies, and in some cases it was the live departments that spawned the labels (Bron Agency and Bronze Records, for example). So are the recent moves merely a case of coming full circle?

“It’s not a brave new world we’re moving into – it’s been done many times before,” Conroy says.

The difference now, however, is the maturity of both industries. The live industry’s top guard might have cut their teeth on their host label’s protective umbrella, but in the decades that followed, they’ve built a formidable and complex industry; one that is far further removed from the sale of physical product than before, and equally as unique.

The latest circular term to be banded about the music industry is ‘360-degree model’; the idea of quite literally placing all of your eggs in one basket, or every degree of an artist’s career under one roof. The term was coined by Sanctuary Music Group co-founder Andy Taylor (who was sacked in May 2006 after an accounting review) and while Sanctuary struggled to shift the term from paper to practise, the 360-degree mantle was passed to Universal when it purchased the group for £44.5million (€63.7) in June.

According to one insider, since taking over, Universal is ceasing Sanctuary’s frontline label activities, but Helter Skelter, Bravado and artist services/management divisions including Twenty First Century Artists and Trinifold – the profitable areas of the group – will continue unaffected.

But as indicated by its ailing profits and recent takeover, Sanctuary’s success is more 180 than 360, and industry pundits are sceptical about the idea.

“It won’t work, they’re too big,” says Billy Bragg’s manager Peter Jenner. “When they were multinational record companies they couldn’t get it to work and they couldn’t release records all around the world. It pissed off endless managers and artists and destroyed many careers. What intuitively makes sense doesn’t work if you want those individuals companies to run as separate profit centres.”

Cardigans manager Petri Lundén is no stranger to the circular model. Having just become chairman of Sweden’s largest artist services company, Lundén’s first new client, Neverstore, already had a 360-degree deal with SonyBMG.

“They signed an agreement before we got involved,” he says. “It will be interesting to see whether they can deliver all parts of the deal to my client.”

The deal includes merchandising services, despite the fact that SonyBMG are not (publicly) operating in such an area. “It’s easy to sit on an executive level and look at income streams across the board, but when I tell them I need two extra-large T-shirts for the gig in Wolverhampton on Wednesday, that’s when the panic will set in, so we’ll see,” he says.

“If the 360-degree was the best in providing every degree in that model, then let’s go, but there’s nobody out there that’s convincing me that they are the best. If a label wants a share of the live income, and that share makes the tour not happen, who’s going to provide the tour support? It raises more questions than answers.”

The biggest factor likely to skew any label’s protractor is perhaps the size of its operation. Big is very often not beautiful, at least according to Anthony Shaw at Best Before Records, who believes that just such a model can work efficiently, albeit on a smaller scale. Best Before is part of the MAMA Group, the burgeoning UK operation which recently took over London’s Hammersmith Apollo and Forum venues and also incorporates Supervision Management, the Barfly chain of venues, a recently-signed merchandising operation and The Fly magazine.

“I won’t sign a band that everyone doesn’t love,” Shaw says. “It’s my personal yardstick for everything I work with. How do I guarantee that everyone here will be supportive? I go in with it and ask them what they think.”

The Barfly venues and The Fly have proved a formidable A&R source, and once signed, almost every facet of an act’s career can be serviced from one building. Shaw’s recent signing, Johnny Foreigner, was found by The Fly, given tours by the Barfly and are now in talks with Supervision.

“Originally I thought the label was the worst idea I ever heard!” he says. “But [CEO] Adam Driscoll saw a light at the end of the tunnel. He knew it would be a few years of taking a loss on it, but in the long run they knew it would be a good investment for the group.”

At Popkomm last month, Christof Ellinghaus of German indie label City Slang was vocal about diversifying from recorded music. “For me, 360-degrees is the only model if we're to survive,” he said. “Music [on its own] is a thing of the past. If I have the expertise to book a tour in-house, then I'll do it.”

All Change

While the format-swapping heydays of the 80s saw vinyl, cassette and then CD swell coffers beyond bursting point, the largely ignored peer-to-peer threat of the 90s mushroomed beyond belief. The rise of the internet and decline in physical sales (plus the emergence of the bargain-selling supermarkets at retail) has amounted to a perilously off-kilter business model.

“There are some really good people in labels, from the top to the bottom, but the actual structure of how it works is no longer relevant,” says Jazz Summers of Big Life Management. “They want to carry on with their stupid points and packaging and earn some money from live so the bands earn even less, but what they should do is look at their model, which doesn’t work.”

Tim Clark at ie:music goes further, saying: “The monopoly that allowed the major record companies to have such a hold on this industry – that which was really the power of their investment, plus the distribution and manufacturing tied to it – they’ve lost.”

Any label executive who refused to believe that their business model required radical renovation would be short-lived indeed; on this point at least, the live industry, managers and recorded sector are in agreement. The bone of contention is just how to update it, and whether infringing on other sectors is both beneficial for an artist, and right. 

Relentless Records’ Shabs Jobanputra has developed an organic offering, which stems from a lack of response to new acts from the live industry in the first place. Last year he set up The Village Agency and Big Wheel Promotions, both of which work with non-label acts as well.

“The artists that [we] sign aren’t mainstream…so it’s always been hard to get an agent or promoter,” he says. “When we’re putting such a big investment on board, it means that: (a) we can’t get the live part of that [artist’s] career going, which creates a problem; and (b) we’re making that investment, and therefore should have that expertise in-house and feel the benefits later on down the line.”

Through the boutique live add-ons, and having radically altered the structure of his deals, Jobanputra hopes to regain the trust of both artists and managers.

“The days of offering a flat royalty at 15% are over,” he says. “The nature of the deals is much more partnership based…less alienating and less exploitative. We’re investing, we believe in the artist creatively and want to work with them. We obviously have a commercial relationship with them but it’s much more transparent. It’s pretty clear, like the live relationship.”

And as much as there’s opposition to labels moving into live, Jobanputra is adamant that control should remain within the recorded music sector. “For far too long the agents have been dictating what happens, particularly after the artist has broken,” he says. “Because they make no investment, I find that quite galling.”

Other labels, such as indie stalwart Beggars Banquet, are investigating live but mindful of their limitations. “You wouldn’t take your car to a baker to get fixed,” says head of live Ruth Barlow. “For us it’s about what’s best for our artist, not diversifying our business so we can steal someone else’s revenues.”

Investment Vehicles

The most interesting, and arguably significant result of the recorded sector’s weakening powerbase is the return of control to the artist/manager unit; a cottage industry, the nature of which has remained inherently unchanged.

What has changed is the large advances that fund the entire gamut of a fledgling artist’s activity, paid out by record labels. “The reason we accepted giving away 90-95% of our recording income was because we got a huge advance,” Lundén says.

For years, traditional recording deals allowed acts to fund and subsequently generate income in other areas. Today, somewhat ironically, there are still few acts who gain a generous income from sales of traditional recorded product, but new revenue streams – video blogs, digital pictures, merch etc. – are proliferating.

“Nothing’s changed,” Lundén says. “The only difference is that record company profits are falling. Acts weren’t making that money anyway, and were always relying on other income streams.”

These days, the ‘advance’ – as capital to fund the start-up artist – is more often termed an ‘investment’, and when it comes to serious capital, the big-fish major labels aren’t alone in the pool.

“You don’t have to go just to the record companies for investment,” Clark says. “Now you can go to venture capitalists, publishers, promoters, agents, and all sorts of places. There’s a lot of money floating around.”

In 2002, Robbie Williams’ £80m (€115m) deal saw EMI share in the income from touring, merchandise and TV. What shocked the music industry at the time has formed the basis of many deals being offered today.

“David [Enthoven] and I had been talking prior to the deal to various financial institutions,” Clark says. “We were keen to find the cheapest money on Robbie’s behalf and make sure that it was being invested in the right things in the right places.”

Clark describes the deal as successful but with room for improvement. “It’s been a very profitable deal for EMI but I don’t think [all the staff] understood what this deal actually meant and should have meant to them. They didn’t appreciate that right here they had a model for the future.”

And EMI are far from the only major asking for more rights than ever. In an investor earnings call this June, Warner Music CEO Edgar Bronfman said: “Our plan is to partner more broadly and more deeply with artists in all of the revenue streams that are represented and that frankly flow from the initial investment that we make in an artist’s career…it certainly will include touring.”

But Clark is unimpressed with many of the partnership opportunities available. “We were in talks with Warner Brothers about one of our artists…but they weren’t prepared to shift from their model while they expected us to share revenue.

“If record companies are going to take an interest in everything in the cottage industry that is an artist, then it has to be done on the basis of a fair deal. They just can’t expect to continue to pay out 10% or less and receive a share from live and other areas.”

With more rights than ever to be shared, no-one is quibbling that an investing partner should not expect a decent return, but as Peter Jenner says: “It might be Nike or Coca Cola or Universal or Live Nation. What’s exciting for managers is that we’re going to have a lot more different offers.”

Material Girl

In August, rumours began to circulate about Madonna exiting from Warner to sign up with Live Nation in a deal worth upwards of $100m (€70m). If it goes ahead, touring giant Live Nation would share in income from recorded music, touring, merchandise and other business concerns.

Unsurprisingly, all parties are tight-lipped about the deal that if completed, would be a milestone in music business history. The very fact that discussions are taking place is proof of just how blurred the boundaries between live and recorded sectors are becoming.

Last month, New York-based label Righteous Babe opened Asbury Hall, a 1,200-capacity performance hall, and over the last two years, the Nettwerk Music Group has opened Synch music lounges at its offices in Vancouver, Los Angeles and Nashville.

“They’re multipurpose spaces where we can showcase our own artists or allow artists from outside to use,” says Nettwerk’s Terry McBride. “The idea was to break down this locked-door philosophy of labels to the public. It’s not like what some labels are doing which is opening up clubs for commercial gain.”

So, whether it’s through venues, agencies, promoters or any of live’s various sectors, quite how labels interact with tomorrow’s touring world remains to be seen. With the power firmly restored to the hands of the artist/manager, labels of the future are going to have to lay something more tangible on the turning tables, and while many are surprised that such crossovers aren’t occurring more often, the next five years, more than ever before, will see the landscape of the music business radically re-mapped.

“There are no rules,” Summers says. “It’s the Wild West and it’s great!”

Greg Parmley 

GREG PARMLEY