When agents and promoters take the label's job (and vice versa)

At a pace we haven’t seen before, the live business is rushing to get into the recorded-music business.

Since the start of the COVID-19 pandemic, Paradigm agents Tom Windish and Mike Malak and L.A.-based dance music promoter Space Yacht have all launched their own record labels. Concert streaming service LiveXLive launched an internal publishing division for its own video and audio content, as part of its growing “Artist Ambassador” program. Veteran promoter Michael Chugg (of Chugg Entertainment) has signed more artists to his labels City Pop Records and Chugg Music Asia. Also in Asia, Indonesian promoter Noisewhore launched a new online music store called The Store Front.

At the same time, in the other direction, labels have slowly been inching into their own live-events and livestreaming services. In October 2020, BMG acquired the German concert promoter Undercover, which will now offer live promotion and agency services on an opt-in basis for the former company’s artist roster. Over the past few months, Universal Music Group has built its own proprietary platform called Tunecast, which has hosted live virtual album-release parties for dozens of roster artists including Taylor Swift, Selena Gomez, Adam Lambert, Shania Twain, SuperM and Brasstracks.

What should we make of all this? Judged against music history as a whole, this trend doesn’t seem totally new. In line with artists’ changing needs and economics, boundaries between organizations and job functions have been blurring in the music industry for decades now. The best way to sum it up is that everyone wants the label’s job: Several distributors (e.g. Amuse), artist management companies (e.g. Th3rd Brain) and concert promoters (e.g. Astral People) launched their own labels in the 2010s, wanting their own piece of the growing streaming pie.

But the COVID-19 pandemic has put a whole new spin on these blurring boundaries, because it’s completely flattened and consolidated the competitive playing field for the entire music business.

The flattening of artist development

Whether you work at a label, publisher, artist-management company, booking agency or concert promoter, your idea of “artist development” pre-2020 was likely tied closely to brick-and-mortar touring. While releasing music online is essential for artists to grow their online audiences and brands, live shows are critical for artists to develop their stage presence and creative voice while strengthening relationships with existing fans.

In contrast, the pandemic has collapsed and flattened artist development into 2D space. In the absence of touring, practically every kind of work an artist does to develop their voice and audience now happens online or in digital form. From the fan’s perspective, this means there is no friction to exploration around a given artist, but all the friction when it comes to staying focused: We can now “travel” virtually among several simultaneous live performances on Twitch or IG with the simple gesture of pressing our phone screens or switching tabs on a web browser.

From the industry’s perspective, this shrinking of artist-development real estate has also collapsed differences among business partners, as virtually all sectors of music are looking at the same online channels for marketing, distribution and monetization. Labels, agents and promoters alike are trying to get in on brand deals, produce and market online events, advertise on social platforms and cultivate direct relationships with music fans online, often with the same exact artists at the exact same time.

At best, this overlap is mutually amplifying; at worst, it starts to feel redundant, and redundancies are detrimental in an environment with already limited resources.

Partially because of this redundancy, partially because of the resulting opportunity and partially because of the need to survive, promoters and agents are taking initiative and signing emerging artists directly to their own label ventures. “I was spending time waiting for the labels that weren’t signing artists for a couple of years,” Tom Windish told Pollstar in September 2020, speaking about the motivation to launch his label Wilder. “They were waiting for the data to come in and catch up. So I was like, wait a sec, why am I just sending this to labels saying, ‘You should sign it,’ when I could put it out?” Wilder has released eight singles since May 2020.

Since mid-October 2020, the promoter Space Yacht has released seven deluxe download music packs on their website with emerging electronic artists. Each pack costs $5, and many include additional perks like remix stems, extended mixes and other alternate edits (the original songs are also available on streaming services). Perhaps the most interesting part of Space Yacht’s label operation is that they run their entire A&R operation on their Twitch channel, where the promoter’s co-founder Henry Lu gives live feedback on artists’ SoundCloud submissions as part of a regular show called Tune Reactor.

“Openers have always been a strategic booking for us, because in 18 months they become the next headliners,” Lu told SF Weekly in November. “That same spirit and approach made it very easy for us to launch a label, because up to this point, those openers were the kinds of people we wanted to invest in. Now, they are the artists we want to sign.” Lu also claims that “about 80 percent of what the label has signed so far has come from Tune Reactor submissions.”

360 deals and the ownership dilemma

I’m somewhat surprised that labels haven’t invested in live-events companies at the same pace as the other way around. One potential reason that’s more political than commercial is that such investments could be framed in the public as the resurgence of the “360 deal.”

For the uninitiated, 360 deals are typically associated with record labels, and emerged in the wake of music piracy as a protective mechanism against the ongoing decline in physical music sales. In such a deal structure, labels typically take 10% or more of the revenue their artists generate from publishing, touring, brand partnerships, merch and other “ancillary” sources, in addition to the 70% share the labels are already claiming on master recording revenue.

In its initial F-1 filing, Warner Music Group revealed that 14% of its annual revenue in fiscal year 2019 came from “artist services and expanded rights,” which can be thought of as a more modular take on 360 deals (i.e. through the company’s Artist Services division, which provides a diversified range of ancillary services to artists as needed). Live Nation has also embraced 360 deals in the past, e.g. with Korn in 2006 and Madonna in 2007.

Fast-forwarding to today, though, a 360 approach has largely fallen out of fashion with a new generation of artists who want more creative autonomy and a larger share of their own revenue pie. In fact, the notorious deal structure was included in a recent VICE article as a prime example of how “the ‘bad deal’ isn’t an anomaly — it’s baked into the way the music industry operates.”

At the outset of the global COVID-19 outbreak, one prediction that kept coming up in my conversations with industry sources was the potential death of 360 deals, because the primary physical revenue streams implicated in those deals — namely, touring and merch — were all struggling financially. Warner Music reported that its artist services and expanded rights revenues fell by 16.5% year-over-year in 2020. Global merch sales at Universal Music Group tumbled 44.4% year-over-year in Q3 2020, and Mat Vlasic, the CEO of UMG’s flagship merch brand Bravado, resigned in late October.

But I can actually see the 360 deal coming back in a slightly different form. In particular, I sense a tug-of-war happening behind the scenes between the recorded and live sectors in terms of who will ultimately have a stake in the experience, data and IP around the online artist-fan relationship.

Livestreaming in particular has the potential to break down previously stubborn data silos between the live and recorded-music sectors, especially for more premium virtual events or for livestreams that can be marketed and promoted on DSPs like Spotify and Amazon Music. This is a major motivating factor for Universal Music Group to build its own social-listening platform Tunecast; fans log in by syncing their Spotify and Apple Music accounts, which is invaluable to UMG from a data perspective and also helps directly drive catalog streams. Dominique Casimir, BMG’s EVP Continental Europe Repertoire & Marketing, confirmed in an interview with MBW that “data is an important part” of BMG’s acquisition of Undercover, “giving us access to information about an artist’s keenest fans.”

Tech platforms themselve are also acting on this need for centralized data by acquiring companies outside their immediate purview, such as Eventbrite buying ToneDen, a popular marketing tool for artists, managers and labels.

On the IP front, labels already have a significant advantage over promoters when it comes to the recording rights the former group has over artists. The only reason why major labels haven’t historically invested in producing and distributing live concert recordings is because there was neither a sign of demand in the market, nor a clear path to recouping the expensive licensing costs involved.

Of course, the ongoing livestreaming boom has changed this picture dramatically, and is already driving changes in copyright and revenue-share policies in certain markets. For instance, GWVR, a collection society for German concert promoters, recently announced a new policy that would give local promoters up to 4.5% of revenues from audio and video recordings made at their events. On the flip side, UK collection society PRS for Music proposed an increase in their starting collection tariff on gross ticket receipts for livestreams from 4.2% to 8%, sparking some controversy in the artist community.

With all this said, at the end of the day, serving the artist’s needs is ideally being prioritized over any debate around data and IP ownership. In theory, artists’ partners can do better at their jobs when they have a more holistic understanding of their clients’ overall businesses.

As Mike Malak told Music Week in November: “The more I understand the ins and outs of the record and publishing world as well as spend true development time with an artist signed to [my label] Coldpress, it makes me a better and more empathetic agent.” Malak’s first signing to Coldpress is the artist Henjila, who has around 2,500 followers on Instagram and has yet to release a song on DSPs.

A flatter, virtual competitive landscape makes it easier, and perhaps desirable, for artist partners to diversify into multiple different job functions and revenue streams that are otherwise closed off to them. At the same time, artists technically have more leverage than ever to speak to and monetize their audiences directly online, with few to no middlemen in between.

This has led to a situation where, instead of focusing just on maximizing revenue and market share in their respective fields, recorded-music and live-events companies are now racing to stay relevant, and fighting for the same thing: Maximum share of the upside in the artist as a whole.