9 September 2017

Courier Talks with the founders of Boiler Room, Young Turks and Lost Music

2016 was revealed to have been the best year for the music industry in nearly two decades.

We hosted this Courier Talks session at Spiritland in King’s Cross. We talked streaming, live events and brand money with three people celebrating the news: Blaise Bellville (Boiler Room), Caius Pawson (Young Turks) and Tom Mansbridge (Lost Music).

Courier: It seems the constant gloom surrounding the music industry might be changing. Is this a picture you recognise?

Caius Pawson: Streaming this year finally overtook downloads – we’re about to hit a golden period of recorded music. I’m feeling very optimistic about the situation. Having said that, I got into the industry 13 years ago, so I’ve seen 12 straight years of decline.

Tom Mansbridge: When you benchmark it, this is the year of success; we’re seeing the consolidation of what technology has done to the music industry.

Blaise Bellville: There’s more music being made, more different types, and a far larger audience for each of those types globally than there has even been. Someone told me MTV had an audience of 80 million at its peak. Now billions of people consume and watch music.

To what extent has the industry resisted new technology?

BB: With the birth of the MP3 it went from being a very controlled, well-distributed, monetised ecosystem to falling wildly out of control.

TM: Technology was generally seen as a threat. Streaming is something that’s come off the back of labels feeling they have to be more open with technology. They can’t slow it down; they have to be part of that future instead of trying to stop it. I don’t think fans ever saw it as the enemy. Technology has radically changed the relationship between fans and labels – the fan has the power now.

How does money move around in streaming?

CP: It’s similar to how it was before. But let’s say you sold a CD before for £10, £4 went to the label and 20% of that went to the artist; those are big chunks of money at the beginning of your career. Now, although there’s a long tail, payments are considerably lower.

Labels love Spotify because their entire catalogue gets revived. All those Steely Dan records that Warner Bros have are suddenly making far more money than they were before.

But young artists and small labels depend on that cash injection. The majors quite quickly worked out how much money they were going to make, but small independents fought against it because they rely on the cash flow.

Are these economics fair?

CP: Every artist has a different deal with their label. If you’re small, you’re not going to be making very much money. But you probably weren’t making much money before. Where it gets dodgy is when the labels have non-disclosure agreements on the deals they do with the streaming partners.

TM: It seems the conversation is more about the relationship between the label and the artist rather than between Spotify and the labels. Universal have just renegotiated with Spotify and managed to get a good deal [where artists can release music to premium users first, allowing them to make more money]. It does feel like it’s going in a fair direction, empowering the artists.

How do the different streaming services – Apple Music, Spotify, Soundcloud and the rest – compare?

TM: They’ve all built their businesses in different ways. Soundcloud built a huge customer base and then started working with the labels. Spotify involved the labels from early on. Apple sits outside of this – music is just one thing Apple does.

CP: Spotify has an advantage in that they never had a service before. Apple struggles because it had iTunes. You’d think it’d be a strength because it already has everyone’s credit card details, but in reality, it’s very clunky.Google seems to be held back by Youtube; it’s difficult for it to build a credible alternative it can charge people for.

Spotify continues to lose money, though.

BB: Right now they have to pay out such enormous sums to labels to get that competitive advantage over Soundcloud.

It feels we’re getting too good a deal, like we’re in a period of experimentation where we’ve got just such an extraordinary music discovery experience. Maybe that won’t survive long-term.

How have labels responded to streaming services?

CP: We’re here to make music, support artists and amplify their vision. I’m not in the retail game; I’ve got no interest. Labels will continue to have a role as long as they’re the main people developing and backing new artists. I don’t think Apple or Spotify want to get into the market of developing acts. I think they want to be in the market of taking acts that are quite well developed already and buying them up. But I don’t think they want to be down The Dublin Castle [pub] teaching a band how to play the guitar.

How has the business of running a label changed in recent times?

CP: There’s a growing gulf between the majors and the indies. Going back 15, 20 years, if you wanted to be a recorded artist you’d have to either learn how to play an instrument or sing, then you’d have to work out how to record your music before the label could find you. Now all you need is access to [Apple’s music software] Garage Band.

It means artists are being exposed to the public at a much earlier stage, not as developed as they were before. The majors aren’t really interested in acts who haven’t developed themselves, so there’s a space for the indies to come in and develop acts.

BB: This is an extreme hypothetical, but if you took back catalogues away from labels, they would serve very little role beyond providing support for musicians to develop. So the labels doing well, the ones you’d invest in, would be the ones being innovative and playing a genuine role in artist development. Like Young Turks, with how they position artists and the distribution, you’re a much more bespoke package.

If you took back catalogues away it would expose the majors’ value to artists, which I think seems fairly minimal.

CP: There will be some artists who don’t need labels. But not many. The main reason that people go with labels isn’t just the money or the fact they’ve got a big catalogue, it’s because you want to build relationships with people who might help further your career. That could mean anything from artistic development to working on the music, the marketing, the promotions. It’s different for each artist, and according to the stage they’re at in their career. What established artists need compared to what they needed on their first record is completely different.

My advice to artists would be to find a great team. It doesn’t have to be a label, but it can be.

Let’s look at live music. The hypothesis is that live used to be about promotion, and listening was the product. Now, thats been inverted. To what extent is that true?

CP: The live industry is much bigger than the recorded music industry and has been for a long time. It’s easier to discover information about artists, and people’s connection to artists is stronger. So there’s more of an appetite for live experiences.

If someone can find a way of digitising that experience, then there’ll be a crash.

To be honest, I thought the live industry could have died after Boiler Room.

BB: We always get journalists asking, has Boiler Room replaced the live experience? But when DJs talk about why they value Boiler Room, they’ll always say, ‘I got bookings in countries I wasn’t being booked in at the time’.

Like Caius said, it’s piquing people’s interest.

From an outsider’s point of view, it seems like a lot of money coming into music at the moment is brand money. Is there a conflict of interest there?

TM: Brands have always been involved in music. Things have come a long way in terms of matching the right type of brand with the right type of artist.

If the brand is appropriate those partnerships can work.

BB: Sometimes it’s a dud and you’re just taking the money to do the thing you want to do, and sometimes you’re smart and the brand is smart, and you invest it back into something that’s actually of value. I’d say we’ve probably had about a 50/50 success rate with our brand partnerships.

CP: We’re at an interesting juncture. Kids aren’t really watching TV or reading magazines, so you’ve got to reach them in another way. Music has always been something young people are interested in.

I don’t think something like Boiler Room would have been possible 10 years ago, not just in terms of the technology but because of where brands were with spending money.

BB: A lot of the time when we talk about this we’re being really idealistic. We work with a lot of brands that artists, musicians and fans wouldn’t touch with a barge pole until they’ve been endorsed by Boiler Room or a credible artist.

CP: Malaysian dubstep brought to you by British American Tobacco?

Imagine. Seriously though, have you seen any real examples of terrible collaborations?

BB: Mixmag did a partnership with HSBC last year, where they were sponsoring a golf tournament. They had DJs playing with an HSBC banner behind them. On a golf course. It was just nonsense.

This is a condensed and edited version of a conversation that took place on 3 May 2017.

Why could 2016 be the year that streaming saved music?

For the past two decades, the music industry has endured sustained decline. Labels have tried and failed to protect their traditional sources of income and pursued legal battles as downloads, then streaming, became the norm for how people consumed music.

Yet things appear to have turned a corner last year.

For the first time in 19 years, the world’s music industry saw its income grow in 2016. Sales rose by £850m, 7% year-on-year. Music was worth £12.4bn.

Half of that total came from streaming; a medium which not that long ago was considered the mortal enemy of the music business.Investors in Spotify are nevertheless still holding out for the company to turn a profit; the dominant streaming company lost £133m in 2015.

Digital downloads meanwhile fell by 20%. Peer-to-peer file sharing was once the music industry’s bugbear, but MP3 is now widely assumed to be a moribund format.

First appeared in issue 17 Jun/July