Summary:

Everyone, by now, is familiar with Radiohead’s no-label, direct-to-fan experiment last year. But a growing number of operators is playing wi…

imageEveryone, by now, is familiar with Radiohead’s no-label, direct-to-fan experiment last year. But a growing number of operators is playing with different interpretations of a thesis that’s been around as long as the internet – that the label nowadays is an anachronism, and that bands can finance and release music for themselves…

Case in point: 80s rock group Marillion, hardly a Top 10 draw nowadays, engages its fans so closely that they funded its latest album to the tune of £360,000. Erik Nielsen, who masterminded the strategy as MD of Marillion’s Intact Records business arm, told our London EconMusic conference: “About a decade ago, we set out to release the bonds of the record companies over the artists. We worked out that we needed 5,000 fans to finance an album – when 12,000 did, we thought ‘well, we can do this now’. We’ve continued to do that since 1999.” By releasing the digital version of that album specifically on to P2P networks this month – “just to see what might happen, because we knew it was going to happen anyway” – the band has tripled its normal sales of physical deluxe copies.

But can any band do a Marillion or, for that matter, a Radiohead? Most say the strategy fits acts that already have a loyal following, and Nielsen said email lists are vital: “Our model works really well because we have a worldwide fan base that we know exists. There’s no reason why it shouldn’t work for any established artist, as long as you know who your fans are.”

Marillion considered, then rejected the model being practiced by Slicethepie and Sellaband, which let fans invest in unsigned musicians, “because we thankfully had 10,000 fans who would jump when we ask them to and give us thirty quid”. But Slicethepie CEO David Courtier-Dutton said it’s “absolutely a viable way to kickstart your career”. “They end up with £3 for each album sold rather than £0.50; if you’re getting £3 an album, you don’t have to sell 100,000 albums, you could sell 10,000 and make yourself a living.”

But doesn’t selling fewer albums also mean making less money? Ed Averdieck, an OD2 alum who now heads Peter Gabriel’s Real World label, added: You can create fantastic a business nowadays out of selling 20,000 records, as long as you lower your break-even point and don’t go nuts on marketing. The interesting part of the industry is going to be lowering that break-even point so everyone can make a living, creating that sector between 5,000 records and 500,000.”

Fans as VCs: Sellaband CEO Johan Vosmeijer: I ran in to people from the BPI who said ‘what you’re doing is a nice adventure but there’s no money in unsigned music’ – two years later, people have invested £2.5m alone on my site just in unsigned music.” But aren’t budding bands better off continuing to build a head of steam through vehicles like MySpace? Vosmeijer said Sellaband bands use both sites: “We have bands on Sellaband who have 50,000 friends on MySpace but it doesn’t mean anything – we take MySpace to the next level and actually achieve something.”

Death of the label?: So, the end is nigh for the record companies, right? Wrong. Courtier-Dutton conceded majors have big overheads and are “at best, breaking even” – but they still have a part to play: “We’re in no shape or form a record label – we’re more like a financing hub. We don’t try and manage bands, we get professionals on board to do that for us.” Perhaps such sites will play some part in the A&R chain; Vosmeijer acknowledged his approach is closer to that of a label and, “at some point, I’m sure we’ll jump in together”.

(Photo Angela N, some rights reserved)

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