The mechanics of the new record industry

The music business is changing fast and as a label you need to be on your toes to reach the customers and make them pay for songs and albums. Reggaemani has dug deep into the mechanics of the reggae music industry and found some interesting things when interviewing Olivier Chastan, Frenchie and Adrian Sherwood.

The music business has had many rough years, and the reggae industry is no exception.

The list of small, independent labels that have folded contains well-known brands such as Blood and Fire and Makasound. Both were praised and loved by music aficionados and record collectors all over the world. But unfortunately, they didn’t make it.

Greensleeves saved
Legendary label Greensleeves was also on the verge of bankruptcy when reggae giant VP stepped in and acquired it in 2008.

Olivier Chastan is President of Greensleeves and Vice President of VP International

“Greensleeves was in really bad shape and was fast running out of cash,” says Olivier Chastan, President of Greensleeves and Vice President of VP International, and continues:

“It was our biggest competitor, and it made sense to acquire them. Greensleeves was a large music publisher and had hit songs by Shaggy and Sean Paul in their catalogue. They also had a better presence in Europe than we did.”

Olivier Chastan has been at VP since 2005 and knows reggae and the music industry.

“Now the label is doing well. We’ve fixed the financial side. The music publishing is very active with artists such as Etana and Busy Signal,” explains Olivier Chastan.

Fewer record stores and declining sales
Even though Greensleeves’ financial issues are straightened out, there are things in the music business to be concerned about – fewer record stores and declining sales are two key issues.

Adrian Sherwood – founder of several labels, producer and musician – says that running a label is thankless.

Adrian Sherwood is a veteran in the music business

“I mean, you cannot win. You have to maintain visibility and do the best you can,” he believes, and gives an example of why it is so hard today:

“There are not many record shops around anymore, which does not make it easier. Few today actually sell physical records.”

For many years the revenues from record sales have been declining, even though statistics from Nielsen SoundScan show a 1 percent increase in overall album sales in the U.S. for the first half-year 2011.

This does not, however, mean that the rise in units sold will translate into revenue growth.

Recipe for success
For Olivier Chastan the recipe for success is simple, and contains three main ingredients – good control of your finances, embracing new promotional tools and having hit songs.

“You need to keep your costs down and find new platforms. There’s not a platform we don’t touch. Piracy is not a big deal. It’s been going on since 2000 and you have to accept it. We take down illegal links from blogs and such, but don’t spend our day on it,” explains Olivier Chastan, and continues:

“In the U.S. sales of CD and digital download is about 50-50. In Europe it’s much lower. The only difference with digital is that you have no returns. Otherwise, it’s the same job  – you still have to do your artwork and mastering. iTunes is just like any other store for me. The real change is in digital promotion, with the declining power of TV and radio. How do you reach your customers today? No one has understood how to do it perfectly yet.”

“Move with what is going on”
New promotional tools are something Frenchie, producer at Maximum Sound, also has started to look further into. This year the label has begun using Twitter and YouTube. But an even bigger change is putting out their catalogue on iTunes.

“We have to move with what is going on. The 7 inch and CD sales are in decline. The licensing of tracks to other labels as well. So we have to try something else, as the digital format is the one of the future. If we want to keep on putting out music we have to go in that direction and embrace new formats to release our music,” explains Frenchie, and continues:

“You have to take the rough with the smooth. It’s too early to tell, but business wise it is definitely not what it was. Only time will tell if we will still be doing this in ten years.”

That hit song
The third ingredient is often the base for labels, producers, writers and artists around the globe – that one hit song or hit album.

“We need a massive, massive hit,” says Olivier Chastan, and continues:

“The scene is stagnant and making music for a core Jamaican market that is smaller and smaller every day. Why try to imitate T-Pain or whatever else is the flavor of the moment?”

Frenchie fills in:

“The industry is going through changes as more and more people just do things themselves and are going directly to iTunes to release their music and are not depending on bigger record labels to market their stuff. It’s a new strategy for a lot of small producers and artists. Only time will tell if it is a sound one.”

A shake-up is needed
VP had a smash hit last year with Gyptian’s crossover tune Hold Yuh, which peaked at number 77 on Billboard’s Hot 100. But Olivier Chastan believes that more needs to be done.

“The reggae business needs a shake-up,” he stresses, and continues:

“It’s too much RnB and hip-hop. There is no sense of direction. There are still producers that are doing the Jamaican-Jamaican sound. But where is it supposed to go next?” he asks, and concludes:

“Interest in reggae music outside of Jamaica has declined. It’s low temperature.”

Follow your vision
Adrian Sherwood’s recipe for success, on the other hand, is to not be reliant on hit songs.

“Labels that are doing well do not rely on hit records. Just look at Rough Trade and Island. They had to sell to stay in business. You have to follow your vision and have courage,” says Adrian Sherwood.

But he is on the same track as Olivier Chastan on financials, and illustrates his point with an example.

Pressure Sounds is not doing lots of stuff, but they have low overheads. It is basically only Pete Holdsworth. You have to be a specialist. That is the way of surviving,” Adrian Sherwood believes, and adds:

“It is almost impossible. Today it has to be part of something bigger, like merchandise, clothing and stuff. You have to be insane to start a label today. Just look at the business model. No one would start a label today,” he concludes.

Careful of the money you spend
Keeping track of costs is essential to Frenchie as well.

“You have to be careful of the money you spend on a project as it is very easy not to make it back. And you also have to understand the different markets in reggae today, what sort of music sells on mp3 or CD format and what sells on vinyl. A lot of labels and production houses have gone into management and are doing more and more live sound system shows with artists as well. We are thinking of going in that direction too,” says Frenchie, and stresses:

“Be critical with yourself and what you do. Don’t take what you do or yourself too seriously.”

“The problem is not in the music”
The decline in sales of CDs is also something VP and other labels need to cope with.

“The decline of CDs is going to accelerate, but CD will always be there. Vinyl sales are way up, but from a very small starting point. It’s not going to do anything for the industry as a whole. I mean if it’s growing from two to four, it’s a 100 percent increase. It’s great for music fans and a great format, but people are not going to run out and by turntables again,” says Olivier Chastan, and continues:

“The problem is not in the music. It’s about managing decline. CDs are still about 40 percent of our total revenue. But we have to embrace digital. If somebody starts a new platform tomorrow – we’re there.”

And that seems like a well-thought strategy since sales of digital tracks and digital albums rose 11 and 19 percent respectively in the first six months of 2011 according to Nielsen SoundScan.

Key issues ahead
Olivier Chastan points out two key issues in the coming year.

“To keep promoting and to diversify,” he says.

Frenchie will focus on downloads and maybe launch a live road show or a sound system.

Adrian Sherwood earlier pointed to the fact that a label today needs to be a part of something bigger, and VP is going in that direction. The label now has a clothing line, booking agency, concert promotion and publishing.

Olivier Chastan explains the development.

“You need to be able to manage multiple activities and to think outside the box,” he says, and adds:

“The Jerk Festival that we just put together in New York is a good example. It was not a big stretch from our booking and promotional activites,” he explains, and concludes:

“You can’t stay static. Sales are not going to improve in the next two years. Die or move. Pick your choice.”

3 Comments

Filed under Interviews

3 responses to “The mechanics of the new record industry

  1. I am a Reggae record label owner (New Brand Music). Vinyl sales for my recordings have given my label the best results over the last 3 years. That being said, overall, we have still been losing money steadily. This has forced us to become more diversified and creative in all aspects of our business. We are building a professional recording studio, launching a clothing and merchandise online store, and have plans to start an online radio station starting with podcasts of live performances, interviews and various content including radio and video segments. We believe that the industry is shifting from “selling product” to “licensing of content” on a plethora of different levels to a vast number of sources in multiple formats. This translates into unlimited opportunity in the future for those with the best content and the ability to market that content effectively. As was said above, that content still needs to be produced. Thus, the future looks bright also for those with content production facilities of a different type than traditional recording studios. Garbage recordings of great artists performing classic songs get millions of plays, and that kind of traffic could be generating large sums of money for strapped record companies if they just started posting quality content on these sites for free consumption. That is the direction New Brand Music is headed in. We need to have some of our content go “viral”. Once the traffic is established, endless possibilities open up for revenue.
    What you have just read is our short term success plan. It is part of a much bigger strategic masterplan that encompasses a new model for the entire music industry globally. It will apply to any style of music, anywhere. The model will eliminate the confusion and difficulties currently associated with producing, marketing, and even trying to find good music to enjoy.
    If you are interested in taking part in this massive project, please do not hesitate to contact me.
    Mistah Criss a.k.a. DJ Chris owner of New Brand Music, Everyting Criss Productions, and Pure Vibes Productions Recording Studio
    Bless

  2. Great read! Another point is to make sure you’re artists really understand where the market is at, what they have to do with you as a team to get the music into the hands of the true fans. There are a lot of great artists but many of them still don’t understand how to connect with their fanbase in this new era.

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