What are the biggest mistakes that record labels have made?

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26 October
13:12
October
2016

The standard answer to that is that they were so busy making money out of CDs in the 1990s that they didn’t see the internet coming. That is only partially true because, of course, they did see the internet coming. They were pioneers in websites before most other creative industries were. However, what they didn’t fully deal with – and I still have this massive question mark as to whether they were even capable of dealing with it – was the answer to how to make the music available digitally at a price before the piracy thing took off.

Part of me thinks that was inevitable because it happened to every other creative industry that deals in media than can be packaged and reproduced digitally. It hasn’t happened to those creative industries like live music where things cannot be reproduced. I think that’s a correction that everybody had to go through. There is a school of thought that the industry should have made a deal with Napster. But the industry tried to do a deal with Napster and couldn't. That is convenient history. The deal that Bertelsmann made with Napster came too late. 

CD was such a cash cow. The received wisdom at the moment is that vinyl is great and CD was shit. Not in the 1990s when CDs were really selling. CD was seen as a major improvement on what had gone before. It was adding incredible clarity and was really convenient. It boosted the market phenomenally. Every year in the 1990s, the market was increasing, sometimes in double digits, because of CD. Was that so intoxicating to record labels that they didn't realise that something else was around the corner? Maybe.

The received wisdom at the moment is that vinyl is great and CD was shit. Not in the 1990s when CDs were really selling. 

The idea of not controlling formats and distribution was something they had to get their heads around. And are still probably finding it difficult to get their heads around – certainly the bigger record labels. 

Another mistake is in always trying to get the best deal when it comes to working with artists and songwriters. I think it has created a lack of trust between the creative community and both record labels and music publishers. It was probably unnecessary. There are so many artists who are in historical agreements that pay peanuts that it wouldn’t hurt to proactively shift those agreements to something fairer. They have been very slow to do that. 

Major labels have wiped off debts on certain artists, but they haven't made a big deal of it – probably because they didn't think anybody else would. You are not giving anything away by wiping off the debt of somebody who is never going to be able to repay it. It is just a false economy. I think the cost in terms of [lack of] good will and lack of trust is not worth it in terms of what could be gained. I always tried to buck that trend wherever possible. Not by being stupid in deals; but there are times when you really have to put the barriers up because there are people trying to abuse their position on the other side. 

There was one particular deal in America that Capitol Records did in the late 1980s where they made the minimum royalty 10% – on everything. I thought that was an amazing thing to do. So everybody got 10%. Now 10% in a new deal at the time would have been regarded as relatively derisory, but compared to a penny an album or whatever that you might have been getting in the past, it was revolutionary and it made a big difference to certain people’s living. 

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