Nine Inch Nails is one superstar act that has returned to a major label after going indie.
During the past two decades, the major labels have gone from riches to rags -- and, more recently, to a remarkable recovery. But some of the online services driving that comeback are now competing with them to sign artists, and the success of independent acts like Chance the Rapper has raised questions about the value of labels in a business increasingly driven by streaming.
According to a new report by Larry Miller, a professor in the music business program at New York University's Steinhardt School, though, labels remain as valuable as ever -- they've just morphed into service providers, with much deeper experience in some areas than their new digital rivals. (The report, Same Heart, New Beat: How Record Labels Amplify Talent in the Modern Music Marketplace, was funded by the RIAA, but the idea and approach were Miller's.) "In the 1990s, you needed to sign with a label to get distribution," he tells Billboard. "Today, there's an option not to do the deal, but at the same time, the essence is no longer distribution -- it's the deep and broad resources to compete and win in any service an artist might want or need."
Although major labels look the same from the outside -- they sign artists, promote and distribute those artists' music and, under most contracts, own it -- the value they provide has changed completely. It had to: Distribution logistics are no longer a barrier to entry in the online world, and blogs and online radio offer an alternative to radio and TV exposure. But labels still provide distribution, promotion, A&R and marketing on a global basis with no upfront cost. They also invest in artists in a way that streaming services do not, offering seven-figure-plus advances to untested acts in 2018. As Universal Music Group executive vp Michele Anthony told Miller, "Don't mistake millions of streams for a career."
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The idea that labels now provide a suite of services represents a significant change. "What surprised me was the degree to which they've invested in these services, but the perceptions haven't kept up with reality," says Miller, who interviewed over 50 major-label executives for his report. "Labels can be self-effacing because they're so good at telling the stories of artists."
A decade ago, as stars like Radiohead and Nine Inch Nails went indie, many managers believed they were better off without a deal. Now, some artists have come back -- like NIN -- and acts like Brockhampton that don't seem to need major deals are signing anyway.
Major labels are more interested in deals too: Miller's report says new artist signings rose 12 percent between 2014 and 2017, to 658. "For years, the vibe inside the major labels was about managing decline and managing the expectation that streaming would arrive," he says. "Now there's an excitement. The mood has changed, and I wanted to convey that."
Competition for signings is heating up too. Miller was speaking to Capitol Music Group president Ashley Newton and COO Michelle Jubelirer when the latter stepped out to take a call from the manager of an artist she was trying to sign. "I heard Michelle scream," remembers Miller. She was excited to sign the act.
"My point is to explain how valuable label services have become," he says. "There's a huge difference between being theoretically discoverable and an army of people focused on making you the biggest artist in the world."