It is time for the international marketing systems of our industry to be re-built.
At major labels, the decision of which artists will be global priorities is made at the corporate level, but the profit centers are spread across the world.
The country where the revenue is collected gets to keep about half of it, whereas the rest of the revenue is sent back to the territory who signed the artist.
Back in the day, the international territories got to keep even more than half of the revenue on their P&L’s, but back then, they were manufacturing CD’s, distributing them (signing to a label was the only way you could get into stores), getting the artist on the radio, and placing them in front of an audience via their media relationships (TV, magazines, etc).
In a global streaming economy, how much do these foreign countries contribute to the artist’s success in their market other than getting radio airplay for the biggest pop acts and an add on the occasional playlist?
The three to five global priority artists often benefit from the worldwide infrastructure via a global strategy. The pressure to deliver hits at radio, big outdoor marketing campaigns, and extensive digital activations for these artists is a top down mandate from the corporate executive level.
For the hundreds of other artists signed, what is the incentive for the international territory to focus on a developing emerging artist from another territory when they can focus on their own emerging domestic artists where they get full rate and 50% of international exploitation in each territory across the globe?
Furthermore, the communication required in today’s world to create global plans across such large infrastructures may not even be possible for dozens of artists at a time. Instead, there is a need for at source decision making for global campaigns, which is why more and more international campaigns are being directed from the center.
While some acts are may be dissatisfied with this reality, as long as the labels still have the biggest artists and marketshare, why is this a bigger issue needing to be addressed?
One reason is joint ventures are the foundation of many of the biggest wins in music. Labels are wisely leveraging their funding capabilities and infrastructures to create joint ventures in order to partner with many of the brightest entrepreneurs in music and bring them and their artist’s into the label’s ecosystem.
Some of these joint venture partners are disgruntled by the lack of international support for their artists. Many have to hire their own independent contractors (publicists and radio promoters) to market their artists. However, when the artist wins, the JV’s still have to share the revenues equally with the international territory company (regardless of the territory’s contribution to the artist’s success), before splitting what’s left again with the parent company (under the joint venture terms).
There will need to be a more effective support system and financial breakdown in place to continue to incentivize these companies to stay in the ecosystem or join in the first place – if it’s not fixed, future companies will opt solely for distribution as Ultra Records has done with Sony and TenThousand has done with Universal.
Lastly, as labels begin to make this shift of pulling the profits from the international territories to the domestic markets, a lot of international executive talent will become available in the marketplace as their salaries and bonuses will no longer be supported by the revenue shift. Many of these individuals possess extensive knowledge and relationships in coordinating international artist campaigns in their local markets and will be sought after to contribute their energy and efforts to the emerging artist marketing needs. However, leading strategic marketing campaigns at a start-up level (like a boutique company) may require a very different skill set from some of these executives’ previous roles leading companies.
When it comes to international marketing for emerging artists, the #1 thing an act can do to appeal to a market is to tell their story via social media in the language or style the foreign territory understands. That way when somebody in that country discovers the artist’s music, they can immediately follow their journey because it’s being told the way the country is used to consuming stories and sharing them. Despite social media reaching maturity here in the states, most acts and their teams still have a long way to go to have a social media set-up capable of scaling messaging regularly across the globe.
Regardless of your perspective on the above, one thing is for certain – the music industry is instantly global upon a release. While some of the old methods of international marketing can still lead successful blockbuster campaigns, many strategies and protocols which worked previously to bring artists around the globe need to be adjusted significantly for the consistently evolving new world.