It’s hard to imagine it now, but in the eighties there was a thriving music distributor – pre-digital, of course – that was jointly owned by some of the major labels.
When I ran Van Records in Holland, I visited Record Service Benelux, or RSB, many times.
RSB was a joint initiative between the managing director of Warners, BMG and EMI. Virgin was still independent for most of that time, but its distribution in the Benelux went through BMG. And as I remember it, in the end, Universal joined.
It worked wonderfully well. When you visited, it was this huge hall and on the ground floor you would see the Warner office, the BMG office, the Universal office and the EMI office.
“Each of the majors put money into RSB. there were no complaints. It was harmonious.”
These guys all knew each other, and the rest of the entire operation was a united distribution powerhouse. It was by far the most modern distribution centre in the whole of Europe at that time.
Each of the majors put a certain amount of money into the whole RSB setup, based on market share. And then based on yearly results they’d also each pay an annual fee. No-one complained, risk and overhead was shared. It was harmonious.
RSB closed in 2003 – ironically, the year before iTunes launches in Europe. That fact still makes me shiver a bit.
We all know by now that, for better or worse, the industry signed away control of the distribution of its music to Apple when it licensed iTunes.
So when recall a meeting I had in Holland on the board of the NVPI – the Dutch record label trade organisation – five years before iTunes arrived, my heart sinks.
I started Van Records, an independent label, in 1990 with 5,000 Guilders- around £1,500. By the mid-nineties, we’d grown really nicely, to the point that we were working with BMG years before it merged with Sony.
Originally, only major labels were allowed on the board of the NVPI, but the independents had 32% of the market. That was a bit strange, to say the least, so I asked my friends – Wally Van Middendorp (PIAS), and Tony Berk (Dino Music) – to help elect me as a representative of the indies.
Before long there I was, sitting alongside Warners, EMI, Universal, Sony and BMG at the top table.
I had been so impressed with RSB and the way that major rights-holders worked together for the greater good, that in the late nineties I started really contemplating this new-fangled thing called the internet.
This wasn’t because I was some kind of forward-looking genius. It was because of the practicalities of running an independent company – always keeping your nose to the ground and watching the pennies.
“I asked a major label boss for his email. He said: ‘Yes, hang on… it’s w.w.w…”
I remember 1998 very clearly, because that was the year I walked round my office and it hit me: sales were already in decline and I had 20 people on the payroll. The writing was on the wall.
I started mentioning the internet in every conversation I had about my business, but no-one offered a solution to my worries. In fact, my major label friends at the NVPI kept telling me: “This is alien, William. You’re a fool to worry too much about it. We think this is just going to be an indie thing.”
One memory in particular jars the most. In that fateful year, 1998, I started to believe that there a simple solution of how record companies could take back some control as the internet age dawned: let’s make an online RSB – a digital download store owned by all of the major labels, with some independent equity if we can manage it, that can service the market just as we do successfully in the physical world.
I brought the idea to the NVPI and raised it. The first response was laughter. Lots of laughter.
All I heard through the chuckles was: “We’re not going to work together with Warners!” “We’re not teaming up with EMI!”
I protested that this was already happening at RSB, that this kind of collaboration was already well established in the Benelux, but to say it fell on deaf ears is an understatement. It fell on the ears of people that couldn’t hear me through their bemusement.
When I say these guys had no clue about the internet, I’m not going out of my way to bash the majors – it’s the truth. Honest story: in another meeting around that time I asked one of the major label Benelux bosses if I could send him an email and take his address. He said: “Yes, hang on… it’s w.w.w…”
In my view the record industry has never really recovered from this ignorance. It handed its future on a platter to Steve Jobs
But there is a silver lining, I think. Today, the recorded music rights-holders are still the ones with the magic, the music, on their side. That has not been eroded. So long as labels don’t spend all their time and investment on marketing rather than A&R, that will always be the case.
“In my view, the record industry has never really recovered from this ignorance. It handed its future on a platter to steve jobs.”
Retail has never been able to live, and will never be able to live, without the music. So don’t be surprised if in ten years’ time a big part of music retail is directly owned by the labels. It’s not too late.
For that to happen, though, just like all that time ago in 1998, the majors will have to stop eying each other with such suspicion, and learn to work together like they did at RSB.
Time is of the essence: I have a sneaking feeling that soon Amazon and Apple will start to create music content. Labels will have to start looking into possibilities of direct retail to their customers – whether through acquisition of a digital retailer or building their own platforms.
There are other huge benefits to labels working together. I remember in Holland we had a platform in the nineties that brought together the heads of the labels and the heads of the retailers.
Once every quarter or so, all of these guys would come together in a room and argue! But out of that argument would come combined Valentines, Easter, Christmas promotions. Again, sharing the risk and maximising the benefit. If you do a £250,000 campaign and can share the cost between labels and retailers, everyone is in a more comfortable position.
How I long for those days of collaboration.
Today, I nervously watch a music streaming market which is very crowded and whose economics remain, famously, unproven.
I suppose I am on the other side of the fence from the labels: a music-loving retailer who has enjoyed some success online, and benefited from the fruits of partnerships with the likes of Amazon and ebay.
But ever since those iTunes deals were struck 11 years ago, I have asked myself the same questions: Do labels sometimes forget why they are selling music?
And if they do, are they selling it at the right price – to the right people?Music Business Worldwide
