…and why any sane artist should avoid major labels like the plague.
Sometimes it’s hard to tell the difference between a major label and an indie label. A couple of weeks ago, Paul McCartney left his ‘major’ label, EMI, for ‘indie’ label Concord Music Group. It’s supposedly big news, but CMG is hardly what we commonly consider an independent music producer.
Concord is a grouping together of several dozen small labels. It began, in the 70s, as a boutique jazz label, producing artists who performed at California’s Concord Jazz Festival. Since then, however, it’s grown into a company that releases music alongside Starbucks, under the Hear Music imprint, and has its physical product distribution handled by Universal Music Group. Its parent company, since 2008, is Australia’s Village Roadshow Entertainment Group (formerly known as Village Roadshow Pictures).
An Indie Label Is What?
Despite what the media is saying about McCartney’s “indie” move, Concord is better known as a “mini-major,” one of the world’s largest indie labels, and ‘indie’ only in the sense that it remains a privately held company.
That being said, the ‘privately held’ part makes a big difference, and has played an enormous role in the evolution of the music industry. Privately held, or ‘indie’ record companies – of whatever size – make decisions about the music they produce based on the company preferences, business philosophy, and ideally, love of the artists they sign.
In a recent article, the L.A. Times portrayed Concord as a company that’s not in search of the next big hit, but rather a steady, long-term supply of great music that sells well. The Times quoted McCartney himself as saying that he was bored of “the old record company’s jaded view” and appreciated Concord for “our mutual love of music.”
Which is the essential difference, in the end, between privately-held indie labels and the majors. Because as far as major labels are concerned, love’s got nothing to do with it. What distinguishes a major label from an indie is that majors are publicly traded companies, and the people who run publicly traded companies are legally obligated to do everything in their power to make investors as much money as they possibly can. Hence the creation of a music industry interested solely in increasing profit margins.
Anatomy of a Major Label
McCartney wasn’t the first big star to break with EMI. In recent years, both the Rolling Stones and Radiohead have moved to other labels, because EMI has been in big trouble. And yes, dramatic drops in CD sales play a role in this story, but a bigger part of the catastrophe is a result of turning an art-focused industry into a business where only profits matter.
In 2007, already in up to its proverbial ears, EMI was bought by Terra Firma, a British capital investment firm. Terra Firm convinced its investors to buy EMI with a 4.9 billion dollar loan from Citigroup, an American financial services company, which assured Terra Firma chairman, Guy Hands, that the investment was sound.
Hands told Terra Firma investors that they’d be rolling in EMI profits by 2012, but as we all know, the years since have not been good to the record label. This spring, Terra Firma failed to make a loan repayment to Citigroup, and Hands is now asking investors (which include the Canadian Pension Plan) to funnel an additional 400 million into EMI to make a loan payment and save the company.
If Terra Firma fails to make a payment by mid-June, Citigroup may seize control of EMI, at which time it will be free to sell or dissolve the label in whichever way is most profitable to its own interests.
Terra Firma is currently involved in a suit against Citigroup, claiming that it was tricked by the financial services company into buying EMI for more than it was worth.
Uh, About the Music…
What does this have to do with music? Pretty much nothing at all, which is why McCartney took his post-Beatles repertoire and abandoned ship. While Concord Music Group is a big, powerful company, we still call it independent by default, because at the end of the day, it’s nowhere near the monster that the majors have become.
EMI is caught in a web of financial complexity so dense its’ hard to imagine what criteria it would use to select the music it produces. How can great music be produced when artists must answer to producers who answer to CEOs who answer to a private equity firm whose CEO is caught between appeasing angry investors and repaying a massive loan to a financial giant that he is in turn suing for tricking him into buying EMI in the first place?
To rephrase, luckily, this has nothing to do with music. As long as bands and artists steer clear of major labels and the trouble they’ve gotten themselves into, they can still have bright and brilliant careers in the newly emerging independent music industry. In truth, once all the dust has settled, EMI being absorbed into Citigroup might be the best thing that could happen to the music industry today.