It’s a drizzling Tuesday evening on a street behind Savile Row and I’m waiting politely on the wrong side of a velvet rope, hoping to eventually enter London’s Embassy club. Suddenly, just as it’s my turn to enter, I’m barged to one side by the entourage of one-time X Factor winner Alexandra Burke. While clipboard-wielding door staff check for Burke’s name, she poses willingly for assembled paps and I feel conflicting emotions.
Granted, only a heartless monster would deny this angel-voiced chanteuse her chance to glide unbothered into a private party. She’s a platinum-selling superstar! Then I think, hold on: I’m making way for someone last seen on the Argos shopping channel flogging her exclusive range of watches. One of which, she noted on air, was inspired by Fearne Cotton.
And then there was her endorsement deal with Sure deodorant, the subtext of which seemed to be, “this popstar glows like a horse”. But then, it’s 2012: in music everyone seems to have at least one endorsement to their name.
By the time I get downstairs, Burke has found herself a safe spot in a corner, and US megastar Ne-Yo is taking to the stage. He’s shifted more than 20m singles in his relatively short career, routinely sells out arenas and has written tunes for Rihanna, among others, so there’s a massive buzz around tonight’s event.
Child-faced teen sensation Conor Maynard is also here, cocktails will flow freely until we’re kicked out, and professional photographers jostle alongside amateurs holding iPhones above their heads and hoping for the best. The scene might sound familiar to anyone well-versed in tales of glitzy record label parties. But this event — and Ne-Yo’s five-song live set — isn’t about launching a Ne-Yo album, even though he has one out in a few weeks.
Instead, the whole thing has been organised by a booze company. Ne-Yo is promoting the launch of Malibu Red, a brand of rum, of which he is, so the press release goes, chief creative director.
After the show, Ne-Yo informs me that he is feeling “fan-damn-tastic”, which is nice to hear. He tells me about Malibu Red, which he says he invented then pitched to Malibu. “I’m not a very good tequila drinker,” he begins. “I’d always take the original Malibu and mix it with my tequila to take the bite off. I learned that other people dug it, too — especially women — and Malibu Red was born!
"We took it over to the Malibu people, they dug it — I even helped design the bottle.” And to get the flavour just right, he also attended a tasting session. “Now that was an interesting day,” he chortles.
After doing the Malibu deal, he binned his planned album title — it’s now called Red — and recorded a song, “Burnin’ Up”, to accompany the launch. Isn’t it slightly weird, I ask, to write a song about some rum? “I approached it the same way I’d write any song,” he reports. “The smooth element of who the guy is versus the fiery element of who the woman is. If you take it in terms of Malibu Red, it’s the smoothness of the Caribbean rum with the fiery Mexican tequila.”
In 2008, when Groove Armada signed a landmark deal with Bacardi to release music through the drinks company, it seemed a bit silly and mercenary. These days, this sort of partnership is de rigueur and a world away from the quaint endorsement deals of old: Beatles lunchboxes, Michael Jackson setting his hair on fire for Pepsi, and so on.
As Ne-Yo explains, for many stars it’s the only way to stay afloat. “If you’re an artist who isn’t writing your own songs, it’s a hot little minute before you see any money,” he says. “Hopefully you’d be an artist who’s really pretty, so you can get a deal with a make-up company, or really stylish, so you can get a deal with a suit company.”
I ask him where most of his money comes from, which sounds blunt, but not quite as blunt as the extended plug Ne-Yo himself gave Malibu Red on stage earlier tonight. (Choice line: “It’s a party in a bottle!”) He laughs. “For me, money comes mainly from my songwriting,” he admits. “There’s absolutely more money behind the scenes than there is in front of them.”
And how much, I wonder, does he stand to make from this Malibu deal?
“Let’s just say if Malibu Red does well, I do well. I don’t want to go into numbers. You don’t walk up to a guy and ask him what he has in his wallet!”
Actually, what do you have in your wallet? “You see!” he laughs. “There you go again!”
While he’s cagey about figures, Ne-Yo is typical of a generation of musicians who by necessity deal in the conspicuous accumulation of money in a way artists once did not. His entrepreneurial sense — he also has a range of headgear — runs alongside his career in pop music.
“I try to keep it classy,” he says. “Or as classy as is humanly possible.”
Keeping it classy is a luxury the music business can ill afford, or so goes conventional wisdom in an era when barely a day passes without some doom-laden missive from the frontline of a supposedly bankrupt industry.
Certainly, some statistics make for miserable reading: 10 years ago, the UK music industry was worth £1.2bn; by last year, it was just £795m. So that’s about a third of its value up the spout. In the first six months of 2012, album sales were down to 44m from 50m just 12 months earlier, meaning that not even a surprise Adele album will stop this being the eighth successive year in which album figures have dropped.
And while single sales were up 6.3 per cent year-on-year, this was no way to make up the shortfall. Naturally, it’s a story that is repeated in a global scale. In the US, recent figures from official tracking company Nielsen SoundScan showed that annual CD sales dipped to less than 130m units — more than 20m down on the previous year. Digital sales were up, but not enough to match the deficit.
Analysts warn that streaming services like Spotify and Deezer have unsustainable business models, and big-sellers — albums whose enormous sales traditionally prop up less profitable endeavours — just aren’t as big any more. By June this year, only 11 albums had broken the 500,000 sales marker in the US, compared with 16 the previous year. Rihanna scored a UK Number One album earlier this year by selling just 9,578 units in one week — the lowest sale for a chart-topping album in almost two decades.
As has been widely reported, the labels have tightened their belts as far as they will go, haemorrhaging staff and leaving those who remain able to spend less and less time on more and more artists. Forced into a corner, the music industry has also come out fighting, and it has been able to do so because, despite conventional record sales being decimated first by illegal downloading then by legal streaming services like YouTube and Spotify, music itself has not declined in popularity.
It’s not as if the generation refusing to pay for music is also refusing to listen to it; in fact, they consume more music now than their parents or grandparents ever did. Only they don’t pick up the bill.
Those who accept that, for many, paying for music is as old fashioned a notion as sliding a wax cylinder into a mechanical phonograph, have been able to rethink everything about the way a music industry should, or at least can, operate. In turn, there’s been a significant shift in those who hold the power.
They are people like Scooter Braun, the manager who brought Justin Bieber, Carly Rae Jepsen and “Gangnam Style” to a global audience. “This isn’t a dying business,” he said earlier this year. “It’s a changing business.”
Central to this is the concept of the 360 deal, where a label pays an advance for a cut of an artist’s total income, like Robbie Williams’ £80m deal with EMI in 2002, or the $150m 10-year contract Jay-Z signed with Live Nation in 2008. With the former, EMI would make money from Robbie’s touring, merchandise and so on; with the latter, concert agent Live Nation make money from Jay-Z’s shows and recordings. These examples illustrate how most major music companies are surviving by moving into each other’s territory.
The long-term problem is companies that once complemented each other now compete; but in the short term, whichever angle the companies come from, there’s money to be made.
For music on a TV ad, an artist could earn £40k for a UK campaign, going up to £250k for a worldwide deal. You might get a £10k flat fee for online-only use on a fashion website in Argentina. A fragrance deal for a mid-ranking UK pop personality could bring in six figures, or a cinema ad campaign with a tech manufacturer might net £50k. A clothing line with a high-street shop would typically be £80–100k, depending on the royalty structure.
Then there’s product placement in pop videos. Not everyone can command fees as high as the hundreds of thousands of pounds Virgin Mobile reportedly paid to appear in Lady Gaga’s “Telephone” promo, but everything counts. For a mid-ranking British act, a handset manufacturer might pay £20k to appear in an £80k video.
Sometimes watching the music industry re-evaluate what it actually has to offer is like the day-before-payday feeling one gets when discovering an empty fridge. We rummage in cupboards, work with what we’ve got, and get creative. In the kitchen, this usually stalls at the reluctant deployment of pasta and tomato puree.
In music, it means we see the rise of the “super-deluxe-edition” box set — a classic album in absurdly opulent packaging, retailing at upwards of £150 — or the VIP concert package, where fans can upgrade tickets and spend anything from £100 to £2,000 to meet their idols backstage. Some artists meet and greet up to 200 fans per night.
Wherever it comes from, the money quickly adds up. In 2011, record labels generated £76m on top of CD, DVD and digital sales, accounting for one-fifth of the industry’s total turnover, with sync deals growing by 12 per cent.
A few days after my audience with Ne-Yo, I find myself in a corner office looking out across west London. I’m here to meet Marc Robinson, a music exec in his mid-thirties whose impressively long-winded job title is managing director of globe, creative and commercial for Universal Music UK.
In plain English this means that five floors below, on Kensington High Street, it’s hard to move 100 yards without seeing Universal-signed artist Lana Del Rey’s deliciously stroppy visage on the side of a bus, plastered across a billboard or brought to life in a shop window.
But, like the Ne-Yo gig that wasn’t really a Ne-Yo gig, the shop window with Del Rey in it doesn’t belong to the local branch of HMV — that shut last year — but to H&M, the fashion retailer with whom Robinson’s department recently did a massive deal to sit alongside Del Rey’s existing deals with Jaguar and Mulberry, whose “Del Rey” bag was inspired by the singer.
Robinson talks me through how the deal came together. “Sarah Leon, director of special bookings at Next Models, gave us a lot of advice on how to position Lana in order to achieve what we wanted,” he begins. “So you keep off the Heat magazine’s ‘worst dressed’ lists, and you make sure you look good on the right red carpets, and you don’t take the £20k deal today, you wait for the big H&M deal later on.”
While lower-value product deals — “cash-and-grab”, Robinson calls them — might be tempting in the short term, they can be hugely damaging to long-term prospects. “Something that’s perceived as cheap can stop you getting in front of a certain photographer who then gets you the cover of Vogue, which then gets you a global Gucci campaign,” he adds. “It’s ruthless, but when you get there the payoff is much greater. ”
How big was the H&M deal?
“It was...” He pauses, as if actually considering naming the price. Of course, he doesn’t. What he eventually says is: “Substantial.” He smiles. “It was worth holding out for.”
The H&M campaign was timed so that the boost in profile would feed back into Lana Del Rey’s career. As part of the deal, she recorded a cover of “Blue Velvet” for H&M’s global TV ad campaign. This in turn was bundled onto a reissued version of her album, which was released as the campaign hit worldwide. As Robinson notes, “the mentality of ‘here’s £100K, Rihanna will walk through the door’ is dead. They want more for their money now.”
Robinson accepts that this is an area in which there is still reluctance from many artists; their stock response, he says, is “it depends what it is, but no”. At one point, he seems to suggest that most artists have their price. “At the same time, though, there’s no point pitching Mumford & Sons for Toilet Duck.”
Of course, managers are often reluctant to sign their artists to labels on 360 deals — they want to be free to make their own deals outside the record contract — but labels will often insist, and unless they’re working with a buzz band, managers have less leverage. I ask Robinson how strict labels are. How would he respond if a manager said, “we’re not doing a 360 deal, we’re not doing any brands stuff”? Would he tell them to go and talk to a different record label?
“I’m not sure if we’d do that,” he says. “But I’d tell the band to sack the manager.”
Later, I speak to a band manager who will only talk freely if she remains anonymous. It quickly becomes clear why: her views are unfashionable, to say the least. “Endorsement deals are good news for music companies,” she says. “But many artists or bands are ashamed and embarrassed to admit that they’re a business.
They’ll say, ‘we are singers’ or ‘we are musicians’, and they don’t want to be TV stars or people who appear in adverts. Yet, in their heart of hearts, they know that it’s precisely these things that’ll open other doors and allow them to keep going as singers and musicians.”
Resentment, of course, starts to grow. One recurring theme seems to be that while labels are doing an impressive job of repositioning their offering in an evolving market, many artists and their managers are doing their very best to work outside that traditional label framework. From the smouldering ashes of the old music business, new types of entrepreneur, new types of artist and new ways of connecting with their fans have risen.
US musician Amanda Palmer knows all about this. She made her name with The Dresden Dolls, the self-styled “Brechtian punk cabaret” duo who were once signed to a conventional record deal, but the pertinent story here, in brief, is that earlier this year she signed up to Kickstarter, the crowd-funding website that allows anyone to invest small sums of money in the development of an iPhone case, or a jellyfish aquarium, or a documentary called Open Sesame: The Story of Seeds. When a Kickstarter project reaches its target, everyone who’s put money in the pot gets a reward.
Increasingly, this sort of direct-to-fan idea is the best bet for new and even established artists for whom a deal with a major booze brand or camera manufacturer is unlikely to materialise, and would be unappealing if it did. For Palmer’s own project, she told fans she needed $100k to release her new album, and offered everything from copies of the album to dinner dates with big investors. The popularity of her campaign rather took everyone by surprise, and she ended up with $1.2m.
I put it to Palmer that it was once the case that being independent — or at least independent of spirit — meant that artists were required not to discuss or even admit any awareness of money, but that in 2012 an act of true independence like hers requires complete honesty about the cold reality of getting a record out.
“The artist-as-business-person is something people have a fundamental queasiness about,” she says. “We have this collective fantasy that if you’re a good artist you’re supposed to be absolutely uninterested in the nitty-gritty. I think you’re seeing a massive shift in cultural consciousness about where art meets business.”
Just as teens in 2012 share intimate details of their lives online in a manner that would make their parents blush, so alternative bands in the modern world can often be stunningly frank about the ways they make money, and it’s increasingly rare to hear someone being called a sellout. But I ask Palmer if she feels exposed, knowing that people think they know about her finances.
The popular misconception, I say, is that she simply has over a million bucks sitting in her bank account. “Except no one knows how much fucking money I’ve got!” she roars. “Unless people are really astute and paying attention, they think I’ve got more money than I do.”
The way Palmer explains it, that magic figure of $1.2m was broken down something like this: $250k paid off bills and loans and $105k went on 7,000 “high-end CD books and thank-you cards”, then there was $80k on art books, $80k music videos, $20k went on visual artists, $150k for her manager, lawyer and other staff, and up to $100k for Kickstarter’s own fees and payment processing. This leaves about $100k for Palmer herself. Considering the long-term nature of the project, this works out at a rather modest £30k a year.
This does bring up a big question that hangs over the entire issue: how much is someone entitled to earn for singing a few songs and dancing a bit? “The correct wage,” Palmer says, “is that you don’t have to have a shit job that gets in the way of making music.”
It’s a nice idea, but it’s hard to imagine that definition going down too well with someone like the rapper Pitbull, who recently told me that he wouldn’t be happy until he owned his own island and could finish each working day by hurling his BlackBerry into the ocean, only for a fresh one to be delivered the next morning.
Perhaps in this new music business we should forget what we once knew about rock stars in mansions and recalibrate our notion of what a musician should earn, or what lifestyle they should lead. Mind you, even a modest wage like Palmer’s will prompt howls of disdain from more militant quarters of the online community who now expect everything to be free.
“Everybody knows that artists need to make money,” Palmer argues. “That rent must be paid. That to make products and tour you need capital and gas money. Everyone fundamentally knows that. But nobody wants to rip back the curtain and accept that an artist they have a fantasy about — living in a garret, suffering, banging on a piano — is actually downstairs in the kitchen on her computer dealing with a distributor and publicist. It’s not a romantic view. But it’s true.”
“The Script — Currys or River Island. Taylor Swift — Amazon. David Guetta — well, he recently did Coke. Owl City — O2. Little Mix — Superdrug or Tampax.”
Over at the London office of brand partnership experts Frukt, the company’s charismatic co-founder Jack Horner is looking down a printout of the latest Top 40, picking artists he’d match to brands. I could go into heavy detail about what the Frukt HQ looks like, but it should suffice to say that the open-plan office contains a classic Apple computer displayed like a work of art, a 5ft mechanical penguin guarding the door and, in the board room, a canvas bearing the phrase “THIS IS WHERE THE MAGIC HAPPENS”, perched atop a bongo.
Frukt was founded 12 years ago when Horner and his business partner decided, as he puts it, “that we wanted to change the world”. So he left his job at record label Warners and set up a company that would work as a conduit between the old music business and the new music business. One big coup was to talk David Bowie into working with Nokia. More recently, they pulled off a big deal with Jessie J and Vitaminwater. Crucially, clients are brands rather than artists, so Horner is almost the opposite number to Marc Robinson back at Universal.
“The brand partnerships teams are a pain in the ass,” Horner says. Frequently, then, Frukt will go straight to managers. “The problem with labels is that they’re just interested in bringing money. They’ll keep asking for more. And we’ll say to them, ‘we’ve got a brand committing tens of millions of dollars of marketing spend to this campaign — don’t fuck this up for yourself by demanding an extra £100k, or we’ll move on to the next person’. There is always a list, and the next person down it will probably say yes.”
He adds that often artists aren’t selling themselves, per se. Instead, they’re selling access to their fans. For instance, if you’re a mobile handset manufacturer who wants to connect with smart, teenage boys, you go to Tinie Tempah.
At one point Horner mentions the act on a lot of the more optimistic brands’ wish lists — Radiohead. Thom Yorke is well known for being the sort of principled chap who says no to this kind of thing, which naturally makes the idea of his endorsement all the more appealing.
But this is a reputation he has earned over two decades in music. I wonder whether, if Radiohead were starting out now, with no studiously earned reputation to jeopardise and no risk of upsetting serious fans who expect better, Yorke’s stance would be quite so defiant. Would their old label EMI — which prides itself on flagship 360 deals with the likes of deadmau5, whose logo is purchasable as headbands, iPod speakers and projecting keyrings — even allow that defiance to take root?
It strikes me that the first stages of an artist’s career are vital when it comes to sowing the seeds of big deals that may come to fruition years later, so my next stop is an early planning meeting at Universal Music in London for a promising new pop dance artist, Vela, real name Jenn. She is with publicist Lauren Lunn Farrow, manager Will Blake, A&R man Rich Castillo and Naz Idelji, marketing manager for label All Around The World.
There’s all sorts on the agenda — the DJs showing early support, the pop websites likely to run Q&A interviews — but there’s an early problem. In the last two days it has become clear that an international artist, also called Vela, will launch legal proceedings unless Vela changes her name. Will is on the phone to All Around The World label boss Matt, who has suggested Vela with some sort of “X” suffix. This suggestion is relayed to the room.
“VelaX sounds like lube!” Idelji shouts.
“She says it sounds like lube,” Blake reports.
“At least we could get some good endorsements,” Vela jokes, aware she is about to enter a world in which boy band JLS recently boasted their own line of Durex condoms.
“Can we do ‘Vela’ with triangles for the V and A?” Blake ponders hopefully.
“Start with triangles and people will think you’re Illuminati,” Idelji says.
Eventually, it is decided that Jenn D is the likely name, and we move on. Idelji is tight-lipped regarding the marketing spend to kick-start Jenn’s career, but quickly dismisses the “£1m to launch an act” notion that was once seen as standard. Mind you, the structure of All Around The World is incredibly efficient. Their mini-empire boasting four TV channels including Clubland TV, Massive R&B, and Channel AKA and their Clubland compilation series has spawned 18 Number Ones on the comparatively buoyant compilations chart.
In 2008, they took Clubland on the road for the first time as a live proposition, and they even have a dating section on the Clubland website. Over the last 10 years, the Blackburn-based label have scored more than 25 Top 10 singles — and while the Top 40 isn’t quite as meaningful a metric as it once might have been, you can’t argue with a Number One. All Around The World have scored seven.
“We can really get the name out there,” Idelji explains, “because we automatically have an avenue to market.” A new artist like Vela, for instance, could establish her name with a tightly defined demographic by featuring on one or more compilation albums, then perform on a Clubland tour, then have her videos hammered on the label’s TV stations.
Once she’s had a hit, her presence on a future Clubland compilation will help sell albums which, in turn, could feature tracks from other up-and-coming artists. All the major labels have similar interests, but All Around The World almost feels like a hermetically sealed ecosystem.
There are no endorsements lined up yet for Vela — the team are keen to establish her as a musician in the first instance — but she thinks Topshop could eventually be a good match. Talk turns to the notorious solo deal Girls Aloud’s Nadine Coyle signed two years ago with Tesco, which saw her album exclusively available through the supermarket.
Within an hour of the deal being announced, fans were posting mocked-up “Tesco Value”-themed album sleeves on Twitter. The campaign was a disaster with the single failing to crack the Top 20 and the album stalling at Number 15, with Tesco — despite its strong retail infrastructure — seeming unable to turn it around in the way a more traditional label might have done.
Coyle’s was an innovative idea, and Tesco partnerships had previously worked for DVD releases, but the supermarket association seemed to cheapen the music release. Fans might now be happy to see U2 partnering with BlackBerry, or Gorillaz designing a Converse range, and in the urban marketplace product placement is a status symbol as much as a money-spinner, but a Girls Aloud singer teaming up with a supermarket was, perhaps, too much.
Along with the likes of Alexandra Burke’s Argos watch range, it raises a question surrounding the reality of music’s favourite new business model: more than ever before pop is about perception and PR spin, but does an artist finding their natural brand partner totally blow the game? You can market a girlband like Stooshe as the British TLC all you like, but when Hasbro unveils them as the new face of Furby, questions are likely to be asked.
And there have been similarly ill-fated ventures with big brand deals for Burger King (Mary J Blige’s ad in which she extolled the virtues of a crispy chicken wrap was so widely derided that Blige was forced to publicly distance herself from the project), and Nivea, which cancelled its contract with soirée-friendly popstar Rihanna, Nivea boss Stefan Heidenreich observing rather snippily that “Nivea is a company which stands for trust, family and reliability”.
Jenn is similarly skeptical when I bring up the rather brave Tampax deal one UK girlband signed a few years ago. I ask her if a £5m paycheck would change her mind.
She thinks for a while. “If I say yes to £5m, then you’ll ask if I’ll do it for £2m. And then you’d ask if I’d do it for £500k...” In fairness, she has predicted my entire line of enquiry. “I wouldn’t want to be the face of Tampax,” she states, firmly.
“I’d better cancel the next meeting then!” her manager hoots.
It’s a funny moment, but one that offers the perfect snapshot of the tension that still exists between art and commerce. It will only intensify in the coming years, as one-by-one every artist will find themselves faced with the reality of flatlining sales revenue.
At the same time, brands — with all the power and only so much money to go around — will surely begin driving harder bargains, making deals less and less lucrative. But for the time being, somewhere between “not wanting to be the face of Tampax” and the next meeting, there’s a deal to be done. This is the music industry, after all: there’s always a deal to be done.
Not everyone can align themselves with a product as cool as Beats, the headphones brand dreamt up by Interscope boss Jimmy Iovine and Dr Dre and promoted by Dre and other artists such as Lady Gaga and will.i.am, but in the UK 26-year-old rapper Tinchy Stryder is giving it a shot.
Several years ago his music career began to gain traction just as his Star in the Hood clothing line also became a mini-phenomenon; when he signed a deal with Island Records, it was on the understanding that they would help develop both sides of his business. Latterly, he met with Jay-Z, who admired Stryder’s entrepreneurial spirit, and his Roc Nation company also got on board.
I arrange to meet Stryder at London’s Tottenham Court Road branch of PC World. We’re here because PC World is where you can exclusively buy into Stryder’s latest business venture: his own range of branded headphones and speakers.
In the sort of functional, dimly lit back room in which one imagines Saturday afternoon shoplifters might be waterboarded, he talks me through his range. I try a pair of large white over-ear headphones with some music from my iPhone. “This sounds good,” I report. It’s hard to know what else to say when assessing headphones, but Stryder seems satisfied.
For this partnership — which involves Tinchy’s face and signature on every box — Stryder received a lump sum up front, and stands to make money on each pair sold. Naturally, he won’t go into detail, but he confirms that £70 spent on these headphones would make him significantly more than £70 spent on his CDs.
As we walk onto the shop floor, he explains that he’s cautious of getting into bed with brands — he recently turned down an energy drink — and was particularly wary of headphones, as they’re so closely associated with music. No musician wants to be known for crap sound. “The first time they came back from China, I was like, ‘I’m not sure about this’,” he recalls. “They went back, and came back better.” He looks across at the Beats by Dre range, a few feet from his own display. “Mine are better than Dre’s,” he says. “And they’re less than half the price!”
Would you say that to Dre’s face?
“Yes, but before that I’d tell him how much I liked his albums.”
We’re about to leave when we’re joined by Stryder’s manager Jack Foster, who’s been with Stryder since the early days of Star in the Hood. I point over to the white goods and ask whether they’d consider bringing out a branded Tinchy Stryder washing machine if the price was right.
Without missing a beat, they both answer at the same time.
Stryder’s immediate response: “No.” Foster’s immediate response: “Why not?”