Sunday, 21 March 2010

A record label and how it will use you for money

In this blog I will look critically at Polydor’s catalogue and compare the strengths and weaknesses of Negus’ 4-point portfolio classifications (1999) relating to 4 artists. I start with a brief explanation of Negus’ theory, then a background for the label, Polydor. I then look at the different artists, their characteristics and how these ‘profiles’ fit the theory. I will conclude to what extent my example shows Negus’ theory to be accurate and offer alternatives based on the background reading and research I have carried out.

As there is a lot of uncertainty in the music industry and it is very difficult to predict the response of the consumer to a new artist or record, the record companies have increasingly begun to use portfolio management to make sure their catalogue will continue to be profitable. Different aspects of artists or records (hereon in referred to as ‘the product’) are beneficial to a record company depending on market conditions. Negus (1999) quantifies these different qualities of the product into four main areas: Stars, Cash Cows, Question Marks and Dogs.

Stars are high-turnover, high-investment vehicles for the record companies and are the main investment aim of the record company. The product requires a highly skilled workforce to facilitate their commercial success, but achieve very high dividends for the record company’s investments.

Cash cows require less interaction and influence from record companies as they appeal at a lower turnover level and a more fundamental musicianship level. They provide continual income through stable streams for substantially less investment.

Question Marks are the green shoots or research and development aspect of product diversification in portfolio management for record companies. These represent new ventures, accessing new markets for record companies and provide the evolving nature of the industry. Some further aspects of pursuing the question mark product are increased market capitalisation, labour force development and investment in new arms or departments inside record companies to focus specialist knowledge required for the product.

Dogs represent the non-profitable but non-economically beneficial catalogue of products sustained by a record company. Previously Classical music, more abstract Jazz as specific genres and the continuation of products released under specific labels have all contributed particular benefits to record companies through non-economic factors such as the development of image, informal organisational structure (social interaction inside companies) and cultures. (Negus 1999)

Polydor Records are a subsidiary of Universal Music and have their own label, Fascination (pop oriented). Their headquarters are London, UK and they have US distribution rights as well as some back catalogue US artists on other Universal labels. Polydor began as an independent sector of Deutsche Grammophon Gesellschaft for German exports. The two split when DGG became a classical music label in 1946 and Polydor began with popular music recordings, but continued to be the export label for all types of music for DGG for many more years as there were concerns about cultural and lingual differences. Polydor signed The Beatles in 1960 as ‘The Beat Brothers’ playing alongside Tony Sheridan, which set the precedent for the labels future. (Polydor 2009)

Over the next 50 years, experiencing business cycles, Polydor went through 3 company-name changes and 2 umbrella company shifts as labels were shifted around inside Polygram and PolyGram Label Group (PLG).

Universal Music was founded in 1934 as Decca Records and is one of the ‘big four’ music recording companies. It is the parent company of Polydor and has a longstanding history as the largest company in the industry with revenues of $6.14billion. Universal Music Group (or UMG) owns 10 major labels throughout the world, based in New York City, Universal City (its own tax-haven city set up on the edge of California) Santa Monica, Nashville, London and Romford. (Universal Music Group 2008). Polydor is part of a very large umbrella corporation which influences the company culture. Negus points out that the production of culture through the music business is in a direct two-way relationship with the culture of production that any single company chooses to adopt. With this in mind, we can look at the parallels between Polydor and Negus’ model of 4 types of artist.

Take That are a good example of the Star character-type in Polydor’s catalogue.
They are very high selling artists with record sales in excess of 25 million, alongside 2 very separate promotional pushes by their labels. Take That do not qualify as a cash cow even with their longstanding careers as they had a 9 year gap between their mainstream successes with no music created together. Take That have been branded ‘pop’ by numerous magazines, newspapers and reviewers which in turn rules them out of qualifying for question mark status, and their mainstream success clearly shows they do not qualify as dogs. Take That are an example of a ‘Style Band’ (Ridgeway, 2006) which means one of their unique selling points is a basis on carving out new styles, fashions, trend setting and a strong focus on culture. This in turn requires the large investments characteristic of a Star under Negus’ definitions, and the investment is (when successful) returned with high value endorsement deals, high record turn-over and a high turnout at live events.

One of the cash cows in Polydor’s catalogue would be ‘Van Morrison’.
Van Morrison would qualify as a cash cow for Polydor mainly because of his longevity in the industry. He has been actively inside the industry for over 50 years and is not noted for major-selling continual singles (drawing on the likes of Michael Jackson as comparison in the Star world) – it could be argued that ‘Moondance’ and especially ‘Brown Eyed Girl’ qualifies Morrison as a Star, but this alone does not
justify Morrison’s transcendence to the higher level when argued that these songs are introduced over 50 years with low funding and little meddling (apart from early years with poor contracting) from record companies – such is the characteristic of a cash cow. His album sales have remained steady and his label changes suggest an artist in development when considered alongside his fan base, rather than desperate. Morrison has provided steady income coupled with a high level of musicianship – he started playing guitar, harp, and saxophone with an Irish band and is still today referenced as a very highly skilled musician – which are key factors in deciding Cash Cow status.

A Question Mark example would be ‘La Roux’. La Roux has taken strong influence from 80’s synth and reinvented the electropop genre as a serious competitor. It is characteristic of the question mark type because it has been a new venture for the new millennium, potentially opening up the label’s (and the owner, Universal) back-catalogue of 80’s music for reconsidering, thus targeting a ‘new’ market in today’s climate. (Petridis 2009) The evidence for the creation of a new genre with its own characteristics is shown in the act’s promotion with focus on Ms Elly Jackson – the female lead vocal – where the artist setup is an equal partnership between Jackson and Ben Langmaid. This shows that promotional tactics are in place to present a new venture for the label because it is being selective with the artists as to how they are promoted. It is a developmental process testing the waters and seeing how receptive the consumer is to this revisiting, and is the more specific, developed successor to the more Noughties-oriented Lady Gaga, who is on the same label with a similar approach.

In the final section, a Dog example would be ‘Yusuf Islam’. First we must realise that the characteristics raised by Negus’ theory are not all necessary for qualification into one of the categories: The portfolio management of a label will contradict the assumptions of the ‘dog’ as it will always try to (and indeed often achieve) increase record sales even when appealing to niche markets. Here, Cat Stevens, the well-known folk singer/songwriter went through an image re-launch appealing to the more fundamental characteristics of his previous works and exploring more freely his own folk, storytelling style. This justification applies to the newly-formed image of Yusuf Islam on Polydor Records rather than the cash-cow that Cat Stevens products represented. The image taps into Muslim culture, which although far from a ‘niche market’ is a newly tapped unique selling point for the British music industry. (Islam 2008)

Take That could be argued to be a cash cow through their large discography and proven long-term track record. They show their worth through sustaining commercial demand throughout a 15 year period at a level in the industry where genre preferences, styles and fashions are constantly changing. Their backgrounds in playing instruments and the point that they write their own songs is an indication that they can potentially appeal on the level of improved musicianship, characteristic of a cash cow product.
Further arguments against Take That qualifying as a Star product could include that they may not have required the same level of funding in marketing and promotions as they did their first time in the 90’s and so either investment levels, or equally, risk behind investment, are both dramatically lowered beginning their second release.

Van Morrison has a string of very high grossing releases throughout 50 years of culture change and musical influence in which he appears to have achieved worldwide success commercially. This would qualify him as a Star depending on the investment made in him to sustain his career and productivity; if this was very low, it could also be argued Van Morrison has the credentials of a cash cow, especially backed up by his high level of musicianship.

La Roux was a very quick start-up and so even though the artist can have been developed in the mindset of a question mark – that she is carving a new direction and genre with lifestyle hand-in-hand (du Gay 1997) – La Roux has very quickly risen to the level of star. Some more of the characteristics associated with star material would have been the large investments required by the label to enable the production of the culture surrounding La Roux and the large marketing budget that follows to minimise risk on investment.

Yusuf Islam is a particularly difficult characterisation in that he as an artist has many of the credentials of each of the areas Negus proposes.
Some aspects of the career, the bestselling albums as Cat Stevens, the large fan base, for example, constitute strong characteristics of Star performer. Other aspects may point towards the cash cow bearing in mind Islam’s long-standing music career and development.
Further still it could be argued that Yusuf Islam was a question mark investment by the label into a new genre rather than sustaining a more cult genre such as is typical of a ‘dog’.

The main strengths of Negus’ model are that it is an effective summary of the main portfolio management strategies implemented by record labels, and that through creating a division such as this we can more clearly see the intentions of artists and labels.

Some weaknesses that have shown very strongly include the cross-boundary characteristics of many of the artists, particularly with more established, long-term artists. It is found that the segregating of different artists in this way is also very limiting and can lead to a misrepresentation of the artist. Furthermore the grouping of ‘Dogs’ can be seen as both derogatory and counter-intuitive as today’s labels are more competitive, resisting working at a loss and in many instances showing success in their more a-typical acts – the business model of a label implies that loss making artists will not be contracted by the label as the responsibilities fall upon individual, career-seeking artist and repertoire managers.

Focusing on the wider implications of Negus’ model, channelling each act into one of these four areas has mixed implications. The simplification of such a diverse art form could be restrictive for acts and therefore misrepresent the label they are signed with and its cultural representation, although this simplification creates a much easier target market structure for media or commercial ventures, drawing example from the American radio system (e.g. Hot AC, Chart, Rock, Rap, etc. As genres being the markets and culture simultaneously (Negus 1999)).

Bearing the above factors in mind, the market direction and development including future portfolio management strategies could be affected by Negus’ suggested theory in a number of ways. If it is taken as dogma, the theory could fragment the marketplace, causing difficult structural mobility across genres and promoting insular, non-developing music over the long-term. Bands could become restricted to certain markets and demographics and this ‘production of culture’ could affect public perception creating an us-and-them scenario. If the theory is considered in a more liberal sense, it can promote the easier understanding of simple diversification of products for commercial use by labels, and help all areas of the industry gain an understanding of corporate strategy at major labels.

I have endeavoured to provide the least biased views of the content mentioned, but as many sources take strong vested interests it is sometimes not certain views are represented accurately or weighted appropriately. This text is an amalgamation of differing opinions and sources to create one particular analysis

Theo Smith is a session musician studying Music Industry Management at the University of East London

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