Paris-headquartered Believe is one of the biggest players in the global record industry.
A specialist in both distribution and services for independent artists and labels, Believe also owns DIY platform TuneCore and works with its own family of labels, including All Points, Naïve, Nuclear Blast and Tôt ou tard. To give you an idea of Believe’s magnitude, the company tells MBW that it employs over 1,200 people worldwide, and realized around $700m in digital revenues last year. The firm has seen an average 40% annual growth in group turnover across the past three years.
The CEO of Believe, Denis Ladegaillerie (pictured inset), has agreed to pen a series of dispatches, exclusively for MBW, giving insights into what’s happening to the industry during the global COVID-19 pandemic – offering specific advice for artists and managers. (Believe’s own, recently-released Creative Marketing Playbook is packed with further guidance for artists right now, and we recommend you check it out.)
Here, in his second blog for MBW, Ladegaillerie offers his observations on how the physical music market might decline as a result of COVID-19 quarantine – and why, despite that pain factor for artists and labels, there may be a silver lining in the digital world…
Here’s the tough news: We at Believe don’t believe that CD sales will really be meaningful again until at least early September, when people come back from the summer holidays.
We are closely observing countries like France or Germany, which only got into COVID-19 confinement recently, or the US, which is still not in complete confinement everywhere. We are taking the assumption that confinement isn’t likely to be lifted for another five or six weeks, which takes us into May. After that, you’re still going to see restrictions on retail – let’s say that takes us into early June. Then it’s the summer, which is typically a quiet time for physical music sales anyway.
Believe provides physical services with Nuclear Blast and Groove Attack in Germany, which is still a strong physical market, and is therefore a good test case. The assumptions we’re making in that territory, internally, is that, between now and the summer, our physical music revenues will be between 10% and 30% of their normal levels.
“We’re assuming that between now and the summer, our physical music revenues will be between 10% and 30% of their normal levels.”
Obviously that’s mainly because of all the closed shops, but also shipments from the likes of Amazon are taking longer which will see online ordering take a hit. We are in permanent contact with Amazon and other online retailers in general, to help make physical products available. Amazon needs to focus on household and medical supplies, but are working hard to provide as much as possible on shipping new releases.
Most of the revenue we do take on physical during this period will be direct-to-fan. In France we are putting a task-force together to organize D2C business on most of our releases and build initiatives even more after the lockdown. Direct to fan works very well on hip-hop, as well as metal – the artist Kekra recently made almost 60% of his sales first week with purely D2C physical sales.
While releasing physical releases by top artists is difficult, Groove Attack, working with management, has been able to keep the release date of Rich Rich (pictured), the new album by German rap star UFO361. We have been able to ship around 20,000 Boxsets and CD/merch bundles via our merchandise partner 30Grad direct to fans.
Another example: Nightwish kept the release date for their highly-anticipated new album Human II Nature, which arrived on April 10 via Nuclear Blast. The band and label were able to ship more than 10,000 special products direct to fans.
And yet, as expressed in my previous blog, we are suggesting that some other physical-leaning artists, in specific situations, think about postponing album releases until Q3 or Q4. In every case, it is crucial that most artists keep releasing singles, EPs and engage more than usual with fans on social media while they’re ramping up to release.
One good reason for majority-physical artists to do this is because of the way the current situation is going to dramatically change the music business, as a huge accelerator of user behavior on the digital side.
We are making the assumption when physical sales return in September, they will return at levels that are 50% lower than they were pre-this crisis; we like to be on conservative side of things, we hope it’s going to be better than that, but that’s what we’re forecasting.
“For genres like metal, classical and others that were not super-digital before, we are expecting to see a strong acceleration in people adopting paid streaming subscriptions.”
Yet, on the plus side, because of this expected change in user behavior, we are expecting a substantial surge in online digital usage. This could accelerate a physical-to-digital music consumer transition that, we believe, would have taken two or three years to happen in normal circumstances.
The positive news: particularly for genres like metal, classical and others that were not super-digital before, we are expecting to see a strong acceleration in people adopting paid streaming subscriptions.
For that reason, Believe’s key message to artists and labels today is to try to make the best out of this situation by accelerating your knowledge of the digital business – via things like our Playbook – in response to the likelihood that you will be a more digital artist at the end of this.
Online engagement with fans is all the more important because so many artists and labels will be rushing to release albums in a limited window during that Q3 or Q4 period, with artists competing for a limited amount of people’s attention. The stronger digital relationship you can build with your fans now, the better for your physical release in the future.
Unsurprisingly, one of the biggest concerns for artists and labels in this period is their ability to withstand the storm from a financial standpoint.
We’ve told our teams: Let’s make sure we are in contact with all of our artists and all of our labels, and make sure that when we need to extend advances, or increase recoupment times, we do whatever we can do to help.
The artists who have tended to start those conversations so far are the artists whose sales base is largely physical, because they are the ones suffering the most; digital-leaning artists and labels have a source of revenues that’s not going to decrease as materially as the physical side.
“We’ve told our teams: Let’s make sure we are in contact with all of our artists and all of our labels, and make sure that when we need to extend advances, or increase recoupment times, we do whatever we can do to help.”
At TuneCore, our team has had huge success with virtual mentoring sessions of artists, where they can come and get advice about engagement on TikTok, YouTube, social media, making content available etc.
One other point about releasing records right now: don’t forget that music heals – it will actually help people get through this period.
So, yes, by releasing tracks or EPs today, you might not be perfectly optimising your revenues. But with your music you can stand by your fans and build that goodwill.
Short-term monetisation is important – but so is showing yourself as an artist who wishes to connect meaningfully with your audience in the long term.
Read Denis Ladegaillerie’s previous blog for MBW through here.Music Business Worldwide