Major Changes for Major Labels

In Beats + Bytes by Nue Agency

When I was a talent agent and manager, I was often reminded by my record label counterparts that they were the ones sleeping soundly at night, knowing their artists were locked into long-term deals. The labels were bulletproof, while everyone else lived one mishap away from being fired.

Label relevance has waned in recent years, and more and more creator tools are being generated to empower artists. It’s exciting to see the industry change for the better and to see pressure put on major labels to innovate if they want to stay atop the artist-business ecosystem.

Warner CEO, Steve Cooper, pronounced this week: “Becoming a more equitable and sustainable company is a moral, commercial, and creative imperative. “ That sentiment is important, and a flurry of deals that Warner announced seem to back it up.

First, Warner released its inaugural Environment Social Governance report, “the first-ever stand-alone report from a major music company, created to set a baseline for WMG to measure its progress in areas including employee well-being, social impact, climate change and diversity, equity and inclusion (DEI).”

On top of that, Warner announced two blockbuster NFT deals with two great platforms, OneOf & Blockparty. OneOf has created a preferred partnership with WMG that will see the company create exclusive NFTs for a range of artists across WMG’s catalog of music, while the Blockparty deal grants WMG access to what Blockparty calls their “cutting edge Web3 technology in the world of the NFTs.” This means that WMG artists will be able to use Blockparty’s decentralized exchange, which they describe as a revolutionary, community-focused platform that gives collectors the ability to swap digital assets in ways they have not done before.

Unlike OneOf, Blockparty is not creating exclusive NFTs with WMG. Instead, they are granting them access to technology that will allow WMG artists to engage in NFT swaps with creators (and vice versa) via Blockparty’s decentralized exchange platform.

The main differences between the two platforms are: OneOf operates on an eco-friendly basis, using 2M times less energy per NFT than any other platform; OneOf is more music community-driven; and OneOf’s products typically feature important figures (Pia Mia, The Game, Whitney Houston), while Blockparty supports a wider range of creators that sell their products on the platform.

The most monumental move, though, is Warner scrapping all recoupment balances for heritage artists (pre-2000 deals). Universal immediately followed suit, meaning countless artists are no longer holding debt.

Warner seems to have taken inspiration from Sony Music Group, which started the trend last summer with their own heritage artists and songwriters. This is a triumph for creators and will help the industry move towards a healthier future.

I expect more deals of this nature. I think every artist and manager would appreciate more transparent accounting, ownership of masters, increased diversity mandates, more favorable profit sharing spits and maybe equity or ownership in the overall label’s P&L. That’s where I believe the label system is headed.

When I look at the four majors and most of the great labels of the past, none of them are still founder-owned or run. That’s a difference maker for a company that wants to continue innovating and trailblazing, versus a company seeking only to maximize profits and capitalize on brand equity or market position. Savvy deal-making helps, but I think the next crop of great companies in music will be founder-led. In a Web3 world, that means fans will have a hand in creating the next great artist development brands.

That’s what I call equity.

No Fields Found.

Also published on Medium.