How to survive as an independent record label in 2018
Independent record labels are thriving by adapting to new models and branching out into management, distribution, publishing and clothing. DJ Mag finds out more...
If there’s any sector in dance music that has had to be genuinely run ‘for the love’ and ferociously adapt to survive the music industry’s turbulent climate, it’s independent record labels. Since the digital switch in the mid-2000s, indie labels have faced more challenges than you can shake a limited edition 10” hand- numbered picture disc at. Few make a profit for the first few years of business, even fewer will reach their 10th release. But could the tide be changing for this most vital, yet most financially tested sector? The numbers do look encouraging and have been rising for the last three years; in the UK, the BPI has just revealed a 10 per cent rise in sales for record labels thanks to the rise in streaming, and reckons this is the most profitable time for labels since the Britpop boom 22 years ago.
Internationally, things are looking relatively buoyant too, as both the IFPI and Worldwide Independent Network reported a near 6% rise in global sales in 2017. It seems, after the most technologically turbo-charged 15-year period the music industry has ever faced, things are looking up for the sales of recorded music.
But behind these feel-good stats lies a much more intriguing story. Yes, streaming is beginning to rebalance things for labels and, in many cases, can account for upwards of 80 per cent of their income. But for many labels this is a sweet revenue stream cherry on top of an already multi-layered cake. Brands are no longer following the traditional label model and have branched out in a multitude of ways to stay relevant, prominent and afloat — ways such as publishing, syncing, clothing, events, label management, artist management, DJ schools, record shops, mastering services, pressing services and distribution.
“A record label is many things: a talent agency, a tastemaker, a brand, a distributor, a trendsetter, an influencer — you name it,” lists Maykel Piron, co-founder of Dutch mega-indie Armada Music alongside trance don Armin van Buuren and David Lewis. If any brand represents how labels have adapted and thrived in the last 15 years, it’s Armada. Founded in 2003, Armada is responsible for 11 sub-labels and manages various artists including co-founder Armin van Buuren, Andrew Rayel, Thomas Gold and Orjan Nilsen among others. “Especially in the niche of electronic dance music in general, releasing records would yield no result at all without any of these parts of the equation,” Piron says.
“But ultimately the entire premise is to release music,” adds Jimmy Asquith, the man behind Lobster Theremin, a label that’s also adapted and thrived in recent times, albeit in a completely different way. Currently celebrating its fifth birthday, Lobster Theremin has become one of the most prominent underground indies to emerge in recent years. With multiple sub- labels, events, a record store and distribution service, Asquith’s Lobster bisque also bubbles with operative flavours. But even at the base level of releasing music, Jimmy understands the label to be a much bigger vehicle.
“Other than the purists who constantly bellow ‘it’s all about the music’, it’s actually about many other things,” he continues. “People, politics, art, community, spirituality, life. It’s important not to forget this and to stay connected to life as a whole within the context of how music can change and influence that experience.”
ALWAYS READ THE LABEL
Whether a label specialises in mainstream trance or underground techno, whether it operates with more of a cultural or a commercial philosophy, two things have been consistent for every independent label. As Jimmy described, one: labels really do have the power to capture a cultural and creative ethos, and two: for all their weight and influence in the industry, they really haven’t had it easy since the MP3 came along in the early 2000s, and with it, abundant piracy. Then came the recession and a rally of bust distributors losing labels’ stacks of stock. Then came streaming, which started to dent download sales just as they were beginning to take off. Each of these events heralded death knells for the industry, yet many of the most distinctive labels in existence today have weathered all, or at least some, of these storms and come out as stronger, more seasoned organisations.
“I remember back in 2003 when iTunes was just launching. Everyone was crying, saying it was the end of the industry,” explains artist, composer and label owner Richard Earnshaw. He’s the co-founder of Duffnote Records, a label that’s branched out in its own unique way as a music house that services the film and TV sector with scores, just as much as it serves the dancefloor with soulful tunes. “But it’s just another phase. Even back then, we felt downloads wouldn’t exist forever. It’s consumption. Technology controls the way the music industry goes rather than it being the other way around. But it’s still always about the music. People love it, they always have and always will. So how can we get it to them?”
“You have to keep up-to-date with every change, or you will get caught with your pants down,” agrees Mark Knight, who launched his label Toolroom Records with his brother Stuart at the swell of the digital tsunami in 2003. Now celebrating 15 years with the strongest stature they’ve ever had in house music, and most diverse range of operations they’ve ever offered (from a DJ academy to management for seven other labels), Mark’s never been caught with his pants down. But he admits it’s not been easy and, for the first eight years of running Toolroom, he invested most of his DJ income into the label. “We’ve not been that close to the wire because we’ve stayed up-to-date with the industry and how it changes and embraced it. It happened with downloads, and we were one of the first labels to sign up to Beatport. It happened with streaming, and we were very quick to start working with Spotify. You can’t resist changes, you have to embrace them at the most embryonic phase.”
Technological changes, economic conditions and consumption habits aren’t the only challenges labels have had to embrace, though. While the numbers are slowly rising financially, running a label in today’s market is still a tricky beast to tame, in a chaotic game where new competition emerges seemingly every day. You could have the best records on the planet in your hands, but getting people to stop and actually listen to them? Good luck.
“I feel sorry for the guys setting up labels today,” says bass producer and multiple label owner ZHA. “Almost three trillion are being set up every week in an incredibly saturated market, that has an even shorter collective attention span.”
When it comes to diversification, ZHA’s White Peach operations are a perfect example for this discussion. From one label, experimental dubstep outlet Fent Plates, he’s baked more pies than he has fingers to put in them. After Fent Plates came cult bass label White Peach, which led to a record store, which led to a distribution operation, which led to him brokering at a pressing plant and plenty more services. “You have to have something beyond just the label itself to provide an income,” he explains. “I don’t know how in your first 10 years any label can make a sustainable income unless they’ve locked down the next Burial for their 001.”
No matter when they were launched, no label makes a profit for the first years of existence. But as the body of work develops, so do the revenue streams — if they’re owned, registered and looked after efficiently. Diligence, doggedness and attention to detail do pay off. But not overnight. And the learning and developing never stops.
“Whether it’s syncing music to a computer game or holding a festival in Croatia or selling someone a T-shirt, we have to know we’re solid in how we take it to market and deliver it. That never stops,” confirms Chris Goss, co-founder of d&b indie behemoth Hospital Records. “There’s always something we’re all learning about. Neighbouring rights, animation, event production. Of course it’s not easy, we’re always learning and evolving and improving what we’re doing.”
SYNCING PUBLISHING LICENCING
As excitingly diverse as running a label may seem, at the foundation is one crucial fundamental: ownership, rights protection and knowing just how to make the music pay in every possible place it’s played or performed. Dry but necessary, it’s more vital for labels than events in idyllic locations and exclusive one-off runs of limited edition label branded teapots. “There are always going to be aspects in this creative industry that seem daunting,” agrees Goss. “Copyright, contract paperwork, legal language. These are necessary functioning parts of any business. Many aspiring producers and aspiring record labels would understandably choose to sub- contract to someone else, but it’s well worth taking time and making the effort to learn the core basics.”
“I think the music industry was set up to appear very complicated,” agrees Trevor McNamee, owner of leading UK funk indie Jalapeno Records. “Who collects what, who collects from who, how they collect it. It all seems very complicated, but it’s just a collections business. Through syncing music to film and TV, which in itself was a major help to the label as we were developing during the 2000s, I noticed we were generating significant money for external publishers who own the publishing rights to the music. If you don’t own those rights, you lose that money to companies who do very little for the artists’ careers.”
Publishing was one of the earliest examples of the ever-changing model of a record label. Having full rights and royalties from every licence, sync or placement, ownership of publishing rights opens up a whole new strand of revenue beyond the dancefloor. Hospital Records and Jalapeno set up publishing services around a similar time in the early 2000s, and both Chris and Trevor explain how moving into publishing was a lengthy investment, but one that’s become vital to their operations.
“My middle name is copyright, I protect everything I do,” laughs Earnshaw, whose label Duffnote also has a tight clutch on its publishing, and has provided music for everything from Sky Sports to CSI New York. He explains that whether he’s making something for a nature documentary or the dancefloor, two things are consistent: the quality of the music and how it’s used. “People feel they have to release a record every week. But they don’t. Make one good record a year, work it properly, make sure it’s used in every possible place and you’re signed up with PPL for neighbouring rights, and you have the publishing rights and copyrights in place, and you’ll make much more than you might selling 50 tracks a week on Traxsource.”
When a label has such an intricate understanding of ownership laws and how to capitalise on all possible uses and royalty streams of a record and how to work, market and distribute it, then another interesting method of diversification has been to apply this knowledge and infrastructure to other labels and have your team manage them, too. “We’ve got the infrastructure and assets, so why not let other people bene t from that back-end?” asks Mark Knight, whose label manages seven others, such as Solardo’s Sola imprint and Nic Fanciulli’s Saved. “We don’t want to manage thousands of labels or anything. But we do want to work with people who we like and who resonate with us. All these labels are growing nicely, and it’s great to see the marriage of passion and creative vision working with our infrastructure.”
“It’s about taking your knowledge and resources, letting other labels tap into it, and everyone enjoys the benefits,” agrees Roland Leesker, MD at Get Physical, who also label manage Kindisch, Poesie Musik, City Fox, Avotre, Afro Acid Digital and Metroplex. “We don’t interfere with A&R and artwork, or any of the creative process. But when the product is there, we turn it into a sellable release, do all marketing, and make sure it’s with the distributors and on the right playlists. It’s strength in numbers.”
Roland took the controls of Get Physical at a challenging time for the label. Booka Shade and DJ T had left the company, and the label, which dominated techno during most of the 2000s, was in disarray. Over the last eight years he’s worked closely with M.A.N.D.Y to change the entire business model. One particular method he uses is to sub-let Get Physical branding to A&Rs in international territories such as South Africa, North America and Brazil. Less of a diversification tactic and more of a canny way to find new talent far from any other label’s radar, it’s another example of how to creatively run a label in a different way. “We’ve built up these relationships with key A&Rs across the world,” he explains. “We give them our brand name, we help them with mastering and provide tools, and they can release their music on the label, but have control over their own profile. We can’t compete with big labels, so we work with music at source. If everyone is trying to manage artists and do events and provide all these services that they might not even be doing right, we will go the other way and just focus on music and increase our knowledge of how we do it best.”
EVENTS BOOKINGS AND ARTIST MANAGEMENT
While Get Physical have opted out of events, many other labels have most definitely opted in. Branded events are perhaps the most likely and natural way to keep a label in business, and the parallels between promoter and label owner are clear. Both curate talent, both celebrate a particular sound, both give artists a window to the world; both invest and take pretty big risks. And without either of them, dance music as we know it wouldn’t exist.
“It’s now the backbone of what a lot of labels do,” con rms Toolroom’s Knight. “It’s actually been so successful it’s turned the other way now, and promoters are becoming record labels, too. The lines are blurred; look at Defected, Elrow, Hot Creations. Events have become integral to how we operate.”
Branding on festival arenas and club-nights, especially in Ibiza, has always existed, but began to become far more commonplace in the early 2000s. It’s grown stronger ever since, allowing labels to become much bigger bodies that can tour the world and, most importantly, provide their own artists’ key bookings. That’s how Hospital Records’ event arm Hospitality began. “Around the late ’90s we’d started signing artists like Danny Byrd and High Contrast, and things were really developing, but in terms of bookings, we were largely getting room two gigs or warm-up slots,” explains Goss who, along with all Hospital artists at the time, was championing a more musical, deeper side to drum & bass than the heavier sound that was dominant at the time. “The only response to that, just like setting up the label in the first place, was to do things ourselves and make our own space. So we hosted our first Hospitality in the much-loved and long- lost Herbal.”
Seventeen years later, Hospitality events are now playing at a major festival level with key London one-dayers, such as Hospitality In The Park. This summer they’ll host their first ve-day event in Croatia (Hospitality On The Beach). They also have their own booking agency, Clinic Talent, which is another example of a more radical diversification approach for labels; just as some companies have serviced their back-end to other imprints, labels who have excelled in events are able to supply an infrastructure with their own acts. In Hospital’s case, it’s done with a booking agency (which its artists can sign to at freewill and are not contracted to), but with other labels, it’s a much more complex agreement which involves artist management, and can often be part of what’s known as a 360 deal where labels exclusively sign an artist and offer them management, bookings and releases. For Trevor at Jalapeno, artist management has bene ted Jalapeno at a grassroots level, and has been a great way to show artists how invested he and his label are in the talent.
“I actually encourage artists to seek independent management, but when bands start out and need to be touring, quite often we’ll help and step into the role of management, because it’s in our interest
to get them out there,” McNamee explains. “We’ve helped them tour, access funding, pay hotels and van hire, and things that can make a difference if you don’t have a skilled manager in place. And I’ll happily muck in and tour manage myself, if I can. I quite enjoy it. Being on the road, hanging out with a band for a week or so is fun, but also creates a much better relationship with the act. To have a label physically do this and say, ‘I’m invested in you and can cover this from the outset’ is priceless for bands during their early phases.”
For Mark Knight, Toolroom’s management services are also an investment in the future. Both that of the label, and his own. When Mark finally decides to hang up his headphones (which, he explains, won’t be for many years yet), management is a role within the industry he will position himself deeper into. For now, Toolroom currently manages 10 acts including Prok & Fitch, Weiss and up-and coming artist Wheats, a young producer who has graduated through the label’s own production school; Toolroom Academy. Toolroom’s latest diversified endeavour, production schools are one of the most recent ways labels have diversified their business and, as Knight puts it, “monetised the credence of what they’ve learnt over the last 15 years”. So far, only Toolroom and Armada run production schools at this level (although there are countless examples of individual artists running similar projects and offering their skills to budding artists), and the model isn’t dissimilar to that of youth football academies.
“The sports world has been doing this for years, so why not do it in electronic music?” suggests Knight. “Wheats has come through the academy, we now manage him, develop him and put out his music. He’s insanely talented and will be a superstar. It’s great to have played this role in his career and given him and everyone else who comes through the academy that type of opportunity. There are a lot of generic courses that have no real voice in the industry, but we teach people what they need to know, and if they’re good, there’s a very clear link to a role in the industry. It’s really exciting.”
RECORD STORES DISTRIBUTION COMPANIES AND PRESSING SERVICES
On the flipside to the 360 model, a deal which doesn’t suit all artists, there are also labels who provide a different type of back-end service such as White Peach and Lobster Theremin. Both started off as labels but, within the last five years, have diversified into their own record stores and distribution services. While both brands have very different circumstances leading up to these extracurricular label activities, they took on these roles because they could clearly see a gap in the market.
“The more I started to look, the more I realised that distributors just weren’t giving the same level of access to new labels as to ‘established’ ones,” explains Asquith, who had been self- distributing his Lobster Theremin releases since its debut single: Palms Trax’s pivotal underground anthem ‘Equation’. As more and more peers were asking him to distribute their records, he realised there was potential for a distribution service that did champion newness and fresh talent. “If I’d have been a distributor hearing that Palms Trax release for the first time, I’d have probably mailed back with a size 70 font ‘YES’ in pink italic underlined bold comic sans. For me that’s how it should be, and it’s that heart and willingness to push something new and to back something that maybe doesn’t even have many fans yet and say, ‘This. This is what’s really fucking good. And you should listen to and buy it’.”
White Peach also heralds the importance of specialism and championing new talent. Like all labels in this article, the founder ZHA has accidentally branched out in myriad directions in order to keep his business buoyant. White Peach is the perfect example of how labels fuse and hybrid services in today’s market. His online record store came about after he’d invested his last £500 in a stock fire sale when a record store went bust. His distribution service came about through his store. He invested in a pressing plant because he was getting lots of requests from peers on where to cut their singles. He also offers a mastering service, and even postage facilitation.
“None of it was planned at all. It was all completely organic,” he says. “The one active decision I did make was to specialise in dubstep, grime and garage. The idea is for White Peach to be recognised as the go-to place for that type of music, whether it’s the label, shop, pressing or distributing,” explains ZHA. “I’ll be honest, I wish I was just running the labels and just immersed in the cool creative side of things. But the responsible adult in me knew I had to make this side of it work... even if I have accidentally ended up creating a situation where half the time I’m doing jobs I didn’t really expect to be doing. But if that’s what I need to do for the labels to exist and release music I truly believe in? That’s what needs to be done."
CLOTHING AND FASHION
“If it was easy then everyone would be doing it, right?” grins Ryan Leech, the man behind the final example of how labels creatively operate in today’s landscape: music and fashion label Inspected.
“The fact that everyone isn’t doing it is a reason to try. People are turning rules inside out and doing what they want to do. Mainly because they have no option to do it any other way, but that’s still really exciting. It’s an interesting time to be a label of any nature.” Like ZHA, Ryan’s successful business was down to happenstance and opportunity. A graf artist prior to setting up his Inspector Dubplate YouTube channel in 2009, he had no intention of running a label, let alone a popular fashion brand whose limited seasonal lines regularly sell-out. The label came about because he was tired of seeing A&Rs benefit off the promo work his channel was doing, and snapping up artists such as KOAN Sound and Gemini. The brand’s famous moustache logo came about through a fan suggestion. A chance decision to invest a work’s Easter bonus on T-shirts kicked off his fashion line, when he saw how quickly they sold out.
“Some things you just can’t plan. But other things you definitely can,” he explains. For Ryan, one of the most important things he actively planned was the removal of the word ‘merch’ from the Inspected vocabulary, and present Inspected garments as high street clothes rather than an auxiliary product for the sake of it. Instantly elevating his products beyond standard branded lines that most labels offer fans, clothes have overtaken music as the brand’s priority on a day-to-day business level. It sells more and makes more profit than record sales ever could. Would he ever stop the label?
“No way,” he explains. “Music is in the DNA of everything we do. We try and cross-pollinate the two worlds in different and exciting ways. Being a record label has actually become a USP for the clothing brand, so it works both ways. Yes, it’s a priority and much more labour intensive. But just because I spend 10 times more man-hours on the clothing than I do on the releases, it doesn’t mean I don’t love the music. Surely that’s where it all starts for any label?”
Still running for the love. Still ferociously adapting but now operating with a few more odds in their favour; if there’s any sector in dance music that genuinely deserves respect and sets a template for how creative businesses can exist in a turbulent climate, it’s independent record labels.
Copyright Thrust Publishing Ltd. Permission to use quotations from this article is granted subject to appropriate credit being given to www.djmag.com as the source.