VCs and Record Labels

Rags has a great post comparing and contrasting VCs and record labels.

I really cannot argue with any of his observations.  I think he’s nailed the analogy as far as it goes.

Rags goes on to point out that the VC business model is better than the record label business model because the VC is the entrepreneur’s parner in his entire enterprise whereas the record label is not.

That is true on a deal by deal basis, but certainly not true for the life span of the serial entrepreneur.  So maybe the record label/VC relationship is closer than Rags thinks.

I have a friend who built a very successful record label and he made the exact same point to me last year. My friend feels that the future of the record label business will look more like the VC business over time wtih the record label getting into the publishing and artist management functions.  I don’t know if he’s right, but Rags thinks so.  Rags says:

Like others, I believe labels will evolve to be less dependent on
recordings and more holistic in their approach to artists by taking a
smaller piece of all of the revenue streams rather than a huge piece of
the one.  I know EMI is/has tried it with Robbie Williams and am not
sure how successful that has been but, even if it hasn’t, it makes a
lot of sense to me.   In fact, I can see labels horizontally
integrating with artist managers &/or concert promoters (and
publishers).  After all, the label is instrumental in building the
brand of the artist, they should get a piece of more than just the
recorded music.  So should artist managers and other players based on
their relative contribution to the success of the enteprise that is the
artist.

Great post Rags.