I.B. BAD ON THE LABEL PLAYMAKERS & THE
NEXT-GEN HITMAKERS

THE BALLERS: Running a big-time record company is a high-risk/high-reward job. Those who succeed are showered with accolades and cash; those who fail to deliver are removed from their posts and rarely get a second chance to prove themselves. The complexity of the job, and the pressure that comes with the territory, are comparable to what a head coach in the NBA or NFL must cope with. These individuals shoulder huge responsibilities. They’re charged with moving the needle and making careers, and they compete with each other for talent, marketshare and airplay. Collectively, they control most of the repertoire worldwide, along with their U.K. counterparts, Jason Iley, David Joseph, Max Lousada and Martin Mills.

While the heads of the dozen major labels draw on the resources of deep-pocketed parent companies, the founders and chief executives of the most successful U.S. independent labels—most notably, Glassnote’s Daniel Glass, Big Machine’s Scott Borchetta and Cash Money’s Slim and Baby—are autonomous entrepreneurs who cover their own overheads and eat what they kill.

SHOCK OF THE NEW: For the last several years, the sales and airplay charts have been dominated by artists on their first or second albums, and every successful label head has his complement of talented newcomers. Taylor Swift, Adele, Bruno Mars, Drake, Mumford & Sons, Nicki Minaj and One Direction, whose breakthroughs as rookies comprised the first wave of this ongoing phenomenon, are now viewed as the old guard by such newer stars as Sam Smith, Lorde, J. Cole, Imagine Dragons, Meghan Trainor, Hozier, The Weeknd, Kendrick Lamar, Ariana Grande, Pentatonix, Iggy Azalea, 5 Seconds of Summer, A Great Big World, Bastille, KONGOS, Shawn Mendes and Lana Del Rey.

The latest generation of stars is a godsend for the labels, in part because most new-artist deals have lower royalties and smaller advances, meaning higher margins, unlike the contracts of the stars who preceded them. Because the album has become a diminished part of the hottest acts’ economics, getting them to deliver albums has become increasingly difficult for the labels. The touring cycle and branding protocol have put the label’s needs on the back burner in many cases, as the artists use recorded music strategically to make their brands more valuable. Hence, the traditional single/album-release road map is being altered, so that the Q4 release is important to artists primarily to set up their spring-summer tours, with the European festivals being ground zero for big paydays. Given this shift, and with another big-money advance likely off the table, certain of these veteran artists may elect to set out on their own, as Jay Z, Radiohead and Queens of the Stone Age have done.

COOL/UNCOOL: Jay Z’s Tidal has opted to ignore the new-artist sector in favor of superstars, and the strategy is not working. For example, it’s believed that Tidal’s total streams average around 1m a day, while individual tracks on Spotify regularly hit that number. Tidal’s top-heavy branding approach, with its emphasis on these older, established acts, simply doesn’t have the currency that Apple has maintained by prioritizing newer acts, having discerned early on that the discovery process is part of the cool factor. How is it that the world’s richest corporation has managed to retain its coolness while Tidal seems to have missed the boat? Not only have the initial Tidal exclusives failed to move the needle, the Rihanna video exclusive on “American Oxygen” appears to have actually hurt the launch of the song, which sold only 19k in its first four days. Deepening the irony, Jay’s Roc Nation is both her label and her manager. Thus far, Tidal is seen by most observers as a big miss.

UMG, SCOTT & SCOOTER: UMG and Big Machine have agreed to agree on a new distribution deal, continuing the fruitful relationship between Scott Borchetta and Monte Lipman. The renewed agreement is said to contain more favorable terms (i.e., a lower rate) but no big advances. Universal will not, however, be the buyer of Borchetta’s label group, and that situation remains fluid... Meanwhile, Scooter Braun’s Schoolboy label deal with UMG is up, making Braun a free agent. Had Universal wanted to continue the relationship, it stands to reason they wouldn’t have allowed him to shop Schoolboy elsewhere.

ALSO: Look for Viacom Entertainment Group head Doug Herzog, who added MTV Networks to his responsibilities when longtime MTVN chief Van Toffler decided to step down, to name Erik Flannigan as Toffler’s successor. Digital specialist Flannigan, presently EVP Multiplatform Strategy and Development for VEG, joined MTVN in 2006... The big industry takeaway from the latest set of WikiLeaks revelations is the dramatic difference between the compensation packages of Sony execs and those of their counterparts at other labels.

NAMES IN THE RUMOR MILL: Tom Corson, Sylvia Rhone, Joel Klaiman, Steve Berman, Charlie Walk, Michelle Jubelirer and Greg Thompson.