The BMG And Concord Merger Means There’s Now A 4th Major Label

It was announced yesterday that the two largest indie labels, BMG and Concord, would merge. This would effectively make it a 4th major label, although smaller than the other three – Universal, Warner Music Group, and Sony. The creation of the new company is significant to the average artist or songwriter in some ways, and not so much in others.

The new company will operate under the BMG name, and its publishing division will be called BMG publishing, while the recorded music division will be known as Concord Records.

It should be noted that Concord is owned by Great Mountain Partners private equity company, which will own 33% of the new BMG.

Does A Major Label Mean Anything Anymore?

The fact of the matter is that the three existing major labels have effectively stopped doing the one thing that got them in their positions in the first place, and that’s developing new stars and new music. It’s become such a numbers game that their A&R departments are more data analysts than music execs listening to new music to find the next big thing.

The big question with the new merger is, will BMG invest in new music, or just rely on catalog for revenue.

Keep in mind that a private equity company is involved (Great Mountain Partners), which usually means that all efforts are concentrated on investors and not on artists or music listeners.

Catalog Is Everything

Major labels in recent years have become so reliant on their catalogs of their revenue, that it almost seemed like a loss-leader for them to invest in new music. And when you look at it from the Wall Street perspective, that makes sense.

Catalog music (basically hits from the past) keeps increasing in value. As new mediums are created, so are new music opportunities. Not only that, it’s a high margin product since there’s no creation or marketing costs involved.

From an artist’s perspective, it’s an entirely different proposition.

Where once a label was willing to take a chance on an unknown artist and even suffer through 3 or 4 poor-selling albums before the breakthrough major hit, you’ll probably not find a single case of that from a major in the last decade.

The Good And The Bad

Today a major doesn’t want to touch an artist until the artist already has traction online. At that point, many artists say, “Why do I need a label now since I already did all the hard work?”

The problem with this thinking is that major labels are still the quickest pathway from stardom to superstardom, as they have the international infrastructure to make that happen, and that can’t be easily replicated by an indie label or artist.

Most artists never get to that point though, so it almost makes that argument irrelevant, but most artists still would like nothing better than career help from a label.

The bottom line is that fact that an artist no longer has to rely on a label in order to see success, but that independence comes at cost of much more work and investment.

Will the new BMG see a return to old-fashioned artist development? We can only hope, but with a private equity partner involved, it’s unlikely.