No Echo from Echo
August 19, 2008 5:22 AM   Subscribe

The Echo Label (splash page, site offline) a subsidary of Chrysalis, is "an independent creatively driven record company which nurtures artists before they sign deals with major labels." Blaming a "challenging macroeconomic environment" for hampering sales of CDs, a decline in synchronisation revenues from music used in TV programmes, films and advertisement, Chrysalis recently warned its investors that the Echo Label has performed below management expectations, with "marginally higher" write-offs for new unproven artists, noting that it had not "upstreamed" any artists to major labels in the third quarter.
posted by three blind mice (26 comments total) 2 users marked this as a favorite
So, wait. A record company is doing badly and not bringing new talent to the stage?
Huh... That's crazy.
posted by Balisong at 5:46 AM on August 19, 2008

The recording industry is dead.
posted by chillmost at 5:48 AM on August 19, 2008

See, "upstreaming" is your problem here. The intent of this organization seems admirable - (as far as I can see from the links,) but the critical weakspot is that at the end of the day, the decision to sign a band is still a speculative decision made by what amounts to an A&R man. This person says "I will take a chance on this band, given what I know about prevailing tastes, the current market and the feeling I get in my ding ding when the guitarist pouts." As we say on the internet DIGITALSOCIALDEMOCRACYFAIL

"Since rejecting a bid from EMI and ending talks with other potential buyers in April..."

Well that looks better. There's a long standing joke in the UK music industry:

Q: How do you stop the spread of AIDS?
A: Give it to EMI to distribute.
posted by Jofus at 5:49 AM on August 19, 2008

The recording industry is dead.

If only there were some other way to produce and distribute music.
posted by fleetmouse at 5:57 AM on August 19, 2008

I am all for this failure to upstream bands. I can see the acts I like for about $20 a show. The major label acts are charging about a month's discretionary income. I get sad when my favourites get popular not because they are selling out but because I am getting priced out.
posted by srboisvert at 6:42 AM on August 19, 2008

This is a really interesting FPP. I'm currently taking a year off to write my MBA dissertation, but during my course of study we got to work through (in the context of our classes) ideas for various businesses.

One concept that I pitchedfor a few of my classes was a low scale record label focused exclusively on live shows of pub bands.

If we look at bands that are capable of attracting, pretty consistently, 50 people or more to a show at a pub, there is a very viable business that can be carved out. Specifically, record the live show at pubs, then sell CDs of the event to folks that attended. Keep prices fixed at five pounds, it's a low resistance, impulse purchase.

Secondary distribution channels proposed were via iTunes and direct, selling CDs at £2.50 to the band who can sell them on for whatever they could earn. Sourcing CDs from China could cost as little as £0.25, with liner notes and minimal cover art (the latter being part of the labels brand, simple and cheap).

In terms of money, my business plan presented a case for someone working part time, handling two bands at a time, gradually expanding (methodically, every three months take on two new bands, drop underperformers), insuring the bands cross publicised the label on MySpace and other places, you could easily ramp up in three to five years (lots of factors influence the end state) from zero to a business generating about £70K pa in gross revenue with net margins of about 60%.

Profits are split largely 50/50 with the bands for direct (i.e. pub) sales and iTunes, with the band keeping whatever they made from their own CD sales (as the label would net about £1.50 for every CD sold to the band for resale).

In terms of contracts, short term and favourable to both sides. No BS about IP and "building a portfolio"; six months minimum to sell the current show, mutually cancelable afterwards, and no need for anyone to get greedy. I used to run art galleries in New York with pretty much the same legal background; I always wondered about the ethos of those gallery/business owners that were out to take every penny from the artists they were working for. How they slept at night was anyones guess, but I suspect drugs & alcohol were heavily involved.

Segmenting the target market, I saw three groups to be targeted - Followers -- folks that would never miss a show, Cross Overs -- folks that followed a similar band, and could be cross sold this bands sound to, and Homebodys -- people that would purchase but not visit a pub. I could project a CAGR in terms of fan of some 49% pa, again starting from just two bands.

In terms of competitive analysis, when I wrote this business plan back in January, 2006 (and in London at least) there was nobody else focusing solely on live music, and a couple of competitors (with fairly decent energy, they answered questions from me, a lolely MBA student) the delved into the odd live show, but didn't focus solely on that niche.

Another constraint I had was zero to minimal (less than one thousand pounds) start up costs, with the business bootstrapping itself from retained earnings; I'm usually messing about with one or more companies on the side, at present I've got a small business in London importing mp3 players and other nifty toys, and I don't like debt as it saddles a business. If always told folks if you've got an idea for a GOOD business, make it an idea for a GREAT business by figuring out how to bootstrap. Most businesses fail due to lack of working capital, and the last thing any new enterprise needs is debt service.

Now keep in mind this was just me thinking of this business, putting together a business plan and pitching it to my colleagues at Business School. It stood the test of their criticism as well as my professors (actually was refined somewhat to the state I just described), so I do think it was (perhaps still is) viable.

What I'm leading up to here is considering that I put together a viable business plan for a start up record label, one that could easily support someone full time (perhaps more, depending upon how much they wanted to work), I can't help but wonder what kind of a business a major label could carve out, given their resources and willingness to take on debt.

But, then again, my concept record label was lean and mean, no middle men, no layers of management, no upstreaming, unorthodox distribution. Exists for one purpose - get the sound out to the people, as cheaply and as widely as possible.

The major labels would never do it.
posted by Mutant at 7:04 AM on August 19, 2008 [13 favorites]

Mutant - we need an "Awesome Business Plan" flag.
posted by Jofus at 7:15 AM on August 19, 2008

posted by davemee at 7:52 AM on August 19, 2008 [1 favorite]

That's pretty well excellent, Mutant. I'm not a business guy, but I can tell you from the technical side that it's dead on. A laptop, audio interface, and a couple of decent directional microphones would be all you'd need. $2000, tops.

I've seen a couple of bands doing this kind of thing around, but it's always been the band itself that organizes the recording. Lots of bands haven't the technical inclination to do it themselves, but would love to have someone do it for them.
posted by echo target at 7:54 AM on August 19, 2008

mutant: that sounds similar in many ways to what i'm trying to do with my own small record label. we're in the early stages of implementing the business plan and it's still evolving, but many of the basic ideas are the same. we advance our artists physical CDs (we're also planning to start offering prepaid downloads soon) to sell at performances, then we recoup our share of the royalties from the artist's sales after the fact. we also sell music on-line, both in on-demand physical formats and through digital retailers. we're able to keep our costs in line with actual demand by using short-run manufacturing to produce both the CDs sold at live performances and through our other physical distribution channels (per unit, short-run manufacturing is far more expensive than mass-production, but cutting out all the pesky middlemen makes up most of the difference; and when an artist finally does draw sufficient demand from physical retail distributors, we can always start mass-producing then); we also rely heavily on digital distribution.

so far, it's working out pretty well (the label proper has been revenue neutral or even returned modest positive revenues for a long time now, although that's not taking into account any spending our artists might choose to take on for themselves out of their own pockets), but we've got a long way to go. the business is so small right now 'micro' doesn't even capture it. that's not due to any deficiencies in the business model though; my own compulsive risk aversion and general thriftiness are primarily to blame for that. ultimately i'd just rather keep it a small-scale operation for the time being. as it stands, we have no debts or other major outstanding obligations. on live sales, the artists take their cut before we do, and we pay out on all other sales twice a year. although we don't make big profits (though i don't see why we wouldn't if we were larger scale, with more budget for promotion and other expenditures that can increase revenues), we make enough to put out good music more or less without it costing us anything. so the growth of the label is not a high priority for me at the moment. i originally undertook it more as a proof of concept than with the intention of growing it into a large-scale shop.

but the general kind of business model you envision, in my experience, works wonderfully. if a low-profile business model like this were put into practice by people with the right skill sets and start-up capital, i have no doubt it would work.
posted by saulgoodman at 8:22 AM on August 19, 2008

Hey! Let's do the show right here!
posted by Jofus at 8:27 AM on August 19, 2008

I just put an early revision of my marketing plan up on the web.

While the numbers were ultimately tweaked somewhat from those in this copy (bands added each quarter instead of annually, etc), this document does give insight into how the business is supposed to work (much like saulgoodman's idea), presents a SWOT analysis, competitor analysis, overall review of the operating environment and lots of other background information.

I'll try to find a later version of the marketing plan as well as my overall business plan, where most of the financials captured in this document were sourced from. Even so, this document should be pretty useful. If not interesting.

And maybe even it will help someone!
posted by Mutant at 9:11 AM on August 19, 2008

Specifically, record the live show at pubs, then sell CDs of the event to folks that attended.

Maybe even make a video of the show and sell copies of those to attendees at a bit higher cost?
posted by NoMich at 9:37 AM on August 19, 2008

Videos might not be practical. There's a lot more encoding that has to happen to the data before you can burn it, and I doubt you could make it happen fast enough to have DVDs to sell at the show. With audio, you can burn a CD from a WAV file in a minute or two.
posted by echo target at 9:53 AM on August 19, 2008

Haha. Yeah, back in 2002, I was part of the first Priceless Edge internship put on by Mastercard, Belmont College, and a variety of music businesses. As each person had to come up with an idea to get them there, there were more than a few folks who proposed variations of the live-to-immediate-CD model, and I've seen a fair number of clubs adopt that set-up. There are a couple of problems—that sound mixing for recording is different than live sound, that the set-up costs can be surprisingly high (it's easy to set up a burner, it's hard to have a burner that can do enough CDs within a short enough time to avoid a wait that stymies impulse buys), and finally that there is already a fair amount of competition for merch table space, and that clubs are often wanting to take a piece of it (because they're run by scumbags, generally). Because of that, many of the clubs have contracts with folks to produce the live CDs there, with the club being the brand rather than the band.

So, just saying that variations have been tried here, with varied success.

(My first idea, involving short-run music mags tied to specific tours has largely been replaced—rightly—with blogs, and my second idea, to be able to use music pattern recognition software in cell phones or PDAs to be able to discern, purchase and download music onto mobile devices still seems like it's impossible at the current level of technology. Also, I'd probably have to code it or something, and I don't know how.)
posted by klangklangston at 10:15 AM on August 19, 2008

Mutant's idea is certainly admirable but there is one major (potential) hitch in the plan I can see: the idea of using the "pub band" as the salable commodity.

The Pub Band is a very different beast than I think what most people consider Artists and thus, not necessarily a source of music you'd want to buy. People listen to Pub Bands because (a) they're in a pub, and (b) the pub has other people and booze, and (c) they're often a hell of a lot of fun. But the music performed by a Pub Band (let's just assume we're talking about a really good, entertaining and talented Pub Band, of course) isn't necessarily something that your average music-buying consumer wants to take home with them. Even if they're playing originals part or even all of the time.

A great Pub Band is awsome and definitely a money maker within that context. I just don't know if the business model would hold up. The music is context restricted, I would think.

Where the model would completely fall apart is if the Pub Band in question only performed covers (OR even the occassional cover which might be all that keeps a pint-drinking audience wait around and engaged). The issue of licensing and performance rights, while currently not a showstopper for Pub Gigs, would certainly destroy any notion of selling recordings (although, not necessarily the spread of bootlegs).
posted by RockCorpse at 11:28 AM on August 19, 2008

Marillion pretty much do this for their Marillion Weekend. They perform on Friday night and have DVDs and CDs ready for Sunday when all their fans leave.
posted by PenDevil at 11:35 AM on August 19, 2008

Also just checking if your pub band is a cover band (which is 95% of the pub bands I've seen) and you're selling their covers, surely royalty payments kick in?
posted by PenDevil at 11:43 AM on August 19, 2008

(ah--see, i thought pub band just meant "touring band"... that is kind of a major hitch.)
posted by saulgoodman at 11:56 AM on August 19, 2008

Mutant is clearly a financial whiz, but he does not understand the bar band marketplace. There is only a tiny sliver of bar bands who can even make a living themselves, and the majority of that living comes from: tips, cover charges, payout from bars selling beer at the show and weddings. CDs and merchandise can be profitable, but even a really popular local bar band has a limited following. They make money because they can get folks to hang out in a bar and drink, and they do so several times a week. If you're terrific maybe you can get a couple hundred hardcore fans to come see you every week + whatever other folks are at the bar. Neither group is going to buy a CD of every show. Maybe you'd be able to sell a couple copies of tonight's show per show for the most part. It definitely wouldn't cover someone's time to record it. And you definitely aren't getting those cds produced in China. I don't know for sure, but I'm guessing the professional bar-band musicians I know probably make maybe $20k/yr. playing shows most nights of the week. Squeezing $140K (or whatever the exchange rate is) out of a few of these bands is a totally insane idea. If there were that kind of money to be made the band members themselves might live in actual houses and have some healthcare, etc. Or not work in the meat department of the grocery store, etc.
posted by snofoam at 12:24 PM on August 19, 2008

I was intitally going to just come into this post and bitterly say "hahaha, fuck you Chrysalis", due to deep reserves of resntment I still hold after they entirely shut down the live comedy subsidiary I was signed to in 2001 because they'd spunked all their money into the first internet bubble.

However, now I just want to be part of Mutant's business plan. I agree, it depends on your view of what "pub band" means - it's useless for the good times cover band whose job is to get the drinkers in an even drinkier mood, but could potentially be great for the "room above a pub" indie circuit and all the bedsit promoters who put those shows on.
posted by flashboy at 1:10 PM on August 19, 2008

If you're terrific maybe you can get a couple hundred hardcore fans to come see you every week

PFFFT. If you're like, nationally famous, but not a superstar, you can get a couple hundred hardcore fans to see you a couple times or once a YEAR. Hence, touring, which is no great money maker for medium/small size bands these days either, pretty much a money pit in the latter case.

The only people who get a really sizable crowd to hometown, regular shows are REALLY famous. Les Paul, at his weekly show in NYC, for example.
posted by tremspeed at 2:36 PM on August 19, 2008

Echo also dropped Engineers and canned their second album, which is a crime against humanity, so fuck them.
posted by mykescipark at 4:09 AM on August 20, 2008

I unfortunately agree with snofoam's analysis. The money just isn't there for mutant's business plan. While I'm sure you can run a little in the black, if you don't pay yourself for your work, I don't believe there's any way to run it as a business where you're equitably compensated for your time (at least, I'd love to see the numbers...)

You can eke an existence out in the music industry as a lark for a few years. The question is, how can you make a living out of it?

There's a classic proverb in the business, "No one makes a good living out of music." When you first hear it, you ask, "What about the Beatles? Bowie?" and get the reply, "That's not just 'a good living'."

Sure, there are some people, engineers, session musicians, that sort of thing, who makes a good living, but these are people with specific, technical skills they can turn on at the drop of the hat, who aren't really being paid to do art, but more craft (nothing against that!)

I am working on implementing a plan for my own music which I hope will work. I won't vouchsafe the plan because it could be imitated easily, but here's my ground data.

I've been working around musicians in New York City for 25 years and I've realized that only two types of people actually consistently make money selling their own material: people writing dance music, and people in a specific experimental niche who put out a lot of material.

Let's look at the second one. Before Dutch East India folded, I knew someone who worked there, who told me that their biggest seller was Muslimgauze. I was quite surprised because it's certainly a niche but I learned that Muslimgauze would put out half a dozen "regular" albums a year which would sit in the catalog and sell well, and one "premium" album a year with a fancy cover and make sure to put into all the stores they distributed to. So the back catalog would sell steadily and the new album would sell tens of thousands.

Muslimgauze's music is a niche; it's actually all pretty similar; but it's predictable, if you like one you'll like 'em all; you don't have to think too much about it; and there's a lot of it.

There's also a constant hunger for new-sounding dance music platters. I was surprised to learn that one producer I knew sold tens of thousands of 12" disks every year at $20 but he told me that they limited the pressing of each title, and DJs are willing to pay a lot to have something new to surprise people. Producing dance music might fall into the "specific technical skill" category, however.
posted by lupus_yonderboy at 9:09 AM on August 20, 2008

There's a classic proverb in the business, "No one makes a good living out of music." When you first hear it, you ask, "What about the Beatles? Bowie?" and get the reply, "That's not just 'a good living'."

ha yeah. it's either feast or famine.

Sure, there are some people, engineers, session musicians, that sort of thing, who makes a good living, but these are people with specific, technical skills they can turn on at the drop of the hat, who aren't really being paid to do art, but more craft (nothing against that!)

and the full-timers I know that are even in this league work their asses off, playing fill-in slots for money, teaching, doing stuff for commercials, part-owning studios, etc. it's not that it's necessarily tough to make a living as a musician, it's tough to be the kind of person who can juggle (and be good at) all that. i'd say, for me, it's also tough to not have any idea of one's finances a couple weeks into the future.

I've been working around musicians in New York City for 25 years and I've realized that only two types of people actually consistently make money selling their own material: people writing dance music, and people in a specific experimental niche who put out a lot of material.

good point. dance music has the advantage of it mostly being one or two dudes working at home. until recently, live performances were in no way the norm for this type of music- with LCD Soundsystem, Justice, and Daft Punk this is no longer strictly the case, though. many dance music artists become successful based on their networking efforts, more so, I'd argue, than rock musicians. and experimental musicians are often actually paid for their live performances, and their fanbase, as you stated with the Muslimgauze example, is willing to pay a premium for limited-run, well-packaged product.
posted by tremspeed at 8:46 PM on August 20, 2008

You can eke an existence out in the music industry as a lark for a few years. The question is, how can you make a living out of it?

The future reality of the working musician is the present-day reality of the working poet: you'll have to have a day job. And nobody will take what you do very seriously.

Lupus_yonderboy and tremspeed are right. With the exception of the statistically marginal super-artists at the very top, it's rare for anyone to make a living from their music. It's even rarer for them to have the luxury of living anything resembling a comfortable or stable life. It's ugly out there.

All my label's business model does, basically, is keep us and the other artists on the label from having to go into debt whenever we want to release a new album. It costs us practically nothing to release a new title, excluding any promotional services or advertising we might buy (of course, that's actually the biggest expense these days). One of our bands is touring the East Coast in September, so we'll see how that turns out, financially, when all's said and done. At least one of our bands might just go broke yet.

Lest some of you think all this talk about how hard the musician-folk have it these days is just so much belly-aching, consider this fact:

• Less than 90 titles accounted for 40% of 2006 new release sales. About 1,000 albums made up 80% of all new release sales. Three-fourth of all new release titles sold fewer than 100 units. (Slide 19)

In 2006, of the new releases tracked by SoundScan (the majority of which tends to be titles released by major labels, their subsidiaries or the bigger indies) 75% didn't even sell 100 copies. If you know anyone still dreaming about the day they finally land that golden ticket record contract and become a millionaire you should cite this statistic to them as further proof they should get over it.
posted by saulgoodman at 9:58 PM on August 20, 2008

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