Why are record labels restructuring?

Record labels around the world are in a serious crisis. We are in an era whereby the traditional structures labels have are no longer as effective hence why some are shutting down and others are changing their structure to a distribution based model.

The advent of streaming platforms and social media platforms have transformed the way people produce and consume music.

Prior to the 2010’s, labels had a traditional structure of Artiste & Repertoires (A&Rs) who scout underground talent, refine their sound and ensure there is a particular target market for the sound. They had branding and marketing teams who focused on the image of the artistes and ensured it matches with the sound and message of the artiste so it will reach its intended audience. They had a community relations team that helped in community building which is the foundation of any artiste’s fan base.

Nowadays, we have the roles of A&Rs being reduced to just numbers. A&Rs now focus on the artistes with the biggest Spotify monthly listeners or the artistes with the biggest tik tok numbers. This has reduced the quality control in music because in some cases, it’s just a part of the song that is catchy and not the whole record that actually goes viral.

It has also made the roles of branding and community relations teams redundant because some artistes have no branding before having a viral record. The brand and community relations team now have to play catch up most times while facing the problem of the record being way bigger than the artistes because the artistes have no strong brand or communities to turn the listeners of the songs to actual fans of the artistes. This is why we don’t see new artistes have strong communities and fan bases like Beyoncé, Nicki Minaj or have strong brands and generational talents like Michael Jackson, Wizkid, Burna Boy. etc

So in a typical record label and artistes scenario right now, we see labels signing artistes that have big numbers online with big advances just because they have a viral record . They sign 2-3 album deals with the artistes based on a viral song and they start facing problems in recouping their money because the artistes are not talented enough, have little to no branding and no strong community to push their music.

Labels have realized that restructuring and focusing on their music distribution arm and supporting label services is the best way to stay afloat in this era. This means that they provide distribution services and take a percentage of the artistes earnings for distributing the record. The label might also feel the songs are good enough to invest in, so they give the artiste a cash and marketing advance which is calculated according to the artiste streaming and earning numbers to show safety on their investments. This advance will be given in return for the label licensing the song or project for a period of time, usually three years and above. They can also support the artiste in terms of marketing and that’s where the label services come in.

This restructuring is being seen in Roc Nation as they shut down 90 percent of their record labels to focus on their distribution arm.

This new structure labels are taking is more profitable for them but has seriously watered down the quality of music, artistes and have made streaming platforms and social media algorithms be the tastemakers of music and not real passionate people that actually have a high knowledge of music and want the best music to be heard.

This new model has made labels focus their investments on catalogues and not the artistes who create the catalogue. This has removed the artiste development stage and has greatly affected quality of music, quality of fan bases and quality of branding for artistes. For us to go back to the era of quality artistes, music needs to go back to the traditional label structure that emphasizes on artistes development. This is the only way we can produce artistes that have a long successful career time span.

Hamiid Abaniwonda is a music executive, publisher, A&R and talent manager. He is also the co-founder of Wuta Entertainment and Soniq Hill.