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VCs and Record Labels
Rags has a great post comparing and contrasting VCs and record labels.
I really cannot argue with any of his observations. I think he's nailed the analogy as far as it goes.
Rags goes on to point out that the VC business model is better than the record label business model because the VC is the entrepreneur's parner in his entire enterprise whereas the record label is not.
That is true on a deal by deal basis, but certainly not true for the life span of the serial entrepreneur. So maybe the record label/VC relationship is closer than Rags thinks.
I have a friend who built a very successful record label and he made the exact same point to me last year. My friend feels that the future of the record label business will look more like the VC business over time wtih the record label getting into the publishing and artist management functions. I don't know if he's right, but Rags thinks so. Rags says:
Like others, I believe labels will evolve to be less dependent on recordings and more holistic in their approach to artists by taking a smaller piece of all of the revenue streams rather than a huge piece of the one. I know EMI is/has tried it with Robbie Williams and am not sure how successful that has been but, even if it hasn't, it makes a lot of sense to me. In fact, I can see labels horizontally integrating with artist managers &/or concert promoters (and publishers). After all, the label is instrumental in building the brand of the artist, they should get a piece of more than just the recorded music. So should artist managers and other players based on their relative contribution to the success of the enteprise that is the artist.
Great post Rags.
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» Record Labels as Venture Capitalists from IPcentral Weblog
Interesting blog discussion of how record labels are (and are not) like venture capital firms, at Rags Soapbox. For example: # Both find and fund risky ventures, artists and entrepreneurs/startups respectively, via equity stakes. # Besides cash, both p... [Read More]
Tracked on May 13, 2005 7:50:10 AM
Posted May 11, 2005 in Venture Capital and TechnologyComments
Very interesting, and I think the smaller independant labels are in a position to do this very well. The majors will fuck it all up as they do everything else...
Posted by: jackson | May 11, 2005 12:32:33 PM
Hi,
Thank you for the blog, it's all about the tings I think a lot about and is therefore an interesting read.
I have a big media idea. It's in regards to Internet and television news. I have a lot of experience working in production and then management at organizations like CNN and the Associated Press. Very little experience in raising money. I'm certain this idea is being looked at and have a unique perspective in how it might be executed. I was wondering if we could schedule a meeting or call in which I could run it by you and here your thoughts on how I might proceed. Thanks, Bill
Posted by: Bill Raffo | May 11, 2005 12:54:05 PM
I spoke about this topic a year ago on Om's blog.
Have you ever heard of Robbie Williams? Very popular in UK, etc.
His latest record contract emcompasses touring, merchandising, etc.
So you guys need to catch up, with the big boyz. tic.
Posted by: Charlie Sierra | May 11, 2005 4:02:13 PM
VCs are like mob loan sharks - think that analogy through.
Posted by: lae | May 11, 2005 5:59:35 PM
You make an excellent point about record labels and artists. There are owners of record labels that are serial entrepreneurs. One comes to mind -Russell Simmons owner of Def Jam. It may not be Emi, but he does alright. He even does an excellent job of marketing his wife.
Posted by: ellen | May 12, 2005 2:05:35 AM
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