Are Indie Record Labels Still Playing Technological Catch-Up with the Majors?

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By Sergey Bludov
Senior Vice President, Media & Entertainment
Are Indie Record Labels Still Playing Technological Catch-Up with the Majors?

"The energies and engines behind technological innovators and artists are very similar. Both groups of people are trying to push out their vision and understanding of the world through highly specific languages, be that music or code or both. The present challenge is to bridge the gap between the languages of art and business."

Paul-René Albertini, CEO of Sushi Venture Partners & former Chairman and CEO of Warner Music International

The music industry increasingly relies on big data and technology as the market landscape continues to shift toward digital solutions. Forbes reports that Labels spend as much as 15.6% of their revenue on artist development—a higher percentage than what technology, software, aerospace, healthcare, and pharmaceutical industries spend on R&D.

There's no question that the major record labels have turned into data-driven companies, now able to closely monitor the incremental details of every step to market, including promotion, distribution, and retail. In addition to the great importance of collecting data, it's business-critical to successfully interpret and apply the raw figures into actionable terms that can be used to increase artists' sales and public profiles. However, this task requires massive amounts of time and resources as the amount of data increases.

Overall, the modern music business environment appears to be helping indies to thrive. Merlin, the digital rights agency which negotiates digital revenues for more than 700 independent recorded music members globally, recently announced that its agreements resulted in paying out almost $1 million per day to its members during the period from March 2016 to the end of March 2017. Remarkably, this figure was up 52 percent over the previous 12 months. As another example of recent indie label success, eOne Music was ranked as the second biggest independent label in the U.S. by Billboard, based in part on very successful releases by the Lumineers, Snoop Dogg, and Bel Biv Devoe.

These days, technology is an essential component of the success for labels of all types. Although major labels certainly have far more resources than indies, smaller companies typically employ simpler bureaucracy, which sometimes allows them to get new music out to fans' ears quicker than their larger counterparts. For example, Swedish independent music company TEN Music Group has launched a streaming and singles focused imprint called Tenacity with the aim to kickstart the careers of new artists by utilizing streaming to move swiftly when releasing new songs globally.

It's challenging for indies to keep up with major labels in many aspects of the music business, and technology is no exception. While the majors are investing in developing VR applications and other technological innovations, most indies simply don't have enough money to utilize all of these concepts for their releases. At the same time, independent labels must focus on technology as the collection and application of big data has become an integral element of the music industry at every level - from small companies to larger indies and major labels.

The good news is that there’s still opportunity for indies to invest in industry-beating technology proficiencies. Applying the right approach and working with the right development partners is the crucial step to catching up to competitors that have already reached the next frontier of improvement. The future success of the music industry rests on how aggressively both indies and majors move to overhaul their model and upgrade their capabilities.

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