Interview with My Major Company CEO PR Albertini on Fan-Funding and Record Labels
Recently I spoke with Paul-Rene Albertini, the CEO a new internet-based, fan-funded record label called My Major Company.
In this interview, Albertini and I talk about various aspects of fan-funding and how it's posed to shift the current music landscape.
Kyle Bylin: Well, thank you for chatting with me today. What led you to start MMC?
PR ALBERTINI: My pleasure. In the last few years, I have worked a lot on all of the possible models to adapt to the recorded music industry transformations. The MMC model is here to stay and definitely has its future in the upcoming ecosystem of the recorded music industry.
Kyle Bylin: Definitely, fan-funded record labels and engines are becoming more prevalent. Do you think we're overestimating the number of active fans interested in participating?
PR ALBERTINI: Not at all, whether you are a compulsive music fan or just someone who likes music, you do want to check your favorite artist on the web. Whether we like it or not, we have all been impacted by ten years of TV talent shows where you are asked to be part of an A&R process of some sort. I am not suggesting every fan is, but a lot are interested in sharing, supporting, and being part of the A&R process.
Kyle Bylin: In the digital age, the barriers to becoming an active fan are much lower, information is abundant, and the social technology is more advanced.
PR ALBERTINI: Indeed, so to me it seems almost organic that among all possible interactions between fans and artist some will be around the business model of recorded music itself.
Kyle Bylin: What do you see as the challenges of running a fan-funded platform?
PR ALBERTINI: You have to make sure there's a lot of transparency and that artists and fan communities always find they retain ownership of what is happening – even though it is the label's task to make things happen and progress on their behalf.
Kyle Bylin: In other words, you have to be able to let the effort of the fans rule the day and enable them to take ownership of the artists and their music. Research shows that when people exert effort and take ownership of things they feel more attached, which increases their perceived value.
PR ALBERTINI: Absolutely, when MMC was started in France in 2008, some of the fans were calling or writing to radio stations not playing "their records" – that to me is ownership and passion, money is only part of the motivation.
Kyle Bylin: Very true. It's important to find ways for fans to exchange value more directly with musicians and for them to feel connected to that process. Rather than having their relationship exclusively mediated by multi-national corporations, artists can now leverage the web and enable a more direct connection.
This is how fan funding came to be, but is it sustainable for artists in the long-term?
PR ALBERTINI: I guess this is a larger question: Is the recorded side of the music industry the "entry point" it used to be for all artists working nowadays? Obviously, this gate gets narrower by the day.
As well, can this amazingly talented upcoming generation of artists use the DIY scene to meet their audience and monetize their art? Not quite either. Can you remember any DIY who has made it in the Top 200 Charts in the last 3 years?
To me, fan funding is emerging as one of the "gap fillers" in this new landscape, not only because artists come from the field rather than from the top, but also due to pure necessity. However, you look at it, there is still a need for help and professional support at a certain stage to make a difference in the "monetization" of your art
Kyle Bylin: I want to refer to your previous point. The validly of the label model is certainly a hard call. Right now, Rolling Stone is holding a contest where the winners get on the cover and gain a major label deal.
It's hard to say whether a label deal offered will be a prize or a prison sentence. One could argue that in these times, a great management team and digital strategy would've sufficed – no label required.
PR ALBERTINI: Well, I guess the old cliché is still out there, a record deal with major label still sounds like a "major" advance, so that is probably the sexiness Rolling Stone is using there, but there are worse prisons than that no? What is probably misleading there is that there are less and less opportunities offered by the big labels, again by pure necessity.
As far as the utility of having big labels at all, well you know about my own background so I guess I am well placed to avoid some seductive but over simplified short cuts.
I guess if you have a great management and a great digital strategy as you say, you have (assuming you have great talent as well!) solved a large part of what is necessary for you to monetize. But you are still far from making it globally, unless you can afford to hire a large team around you working in perfect co-ordination with you and the manager and all third parties to make things happen. But this sounds already like a label. What is the size or the shape or the name of it makes no different, the truth and the matter is that the artist needs professional (digital or B&M) support to monetize substantially.
Kyle Bylin: How does an artist attract interest from MMC?
PR ALBERTINI: At the moment we are at the beginning of our cycle in the UK, so we have a "closed roster", i.e. a limited number of artists that we are selecting ourselves, on the basis that they have a project, enough titles, are reasonably close to go to the studio, are ready if not touring already. All this because, as I said, we want to be placed in a position to max our chances to deliver to the fans / investors.
Kyle Bylin: What do artists stand to lose/gain by signing on?
PR ALBERTINI: From the artist point of view, we offer deals, which are greatly simplified, straight forward, which are presenting much more favorable terms than big labels these days.
From the fans, they can register and follow their favorite bands' activities. They can also opt to become an investor at which point they may want to buy shares of the recording contract of their favorite artists. From there only the fans commitment becomes firm and they are engaged into a process where they could make returns if and when the artists recording contract generates revenues.
Obviously there is a risk that this money is lost if the artist makes no revenue, but there is a serious up side if the artist generates revenue. There are currently many web investors who have made in excess of 20 times return on their initial investment.
Kyle Bylin: That's getting back into the notion of transparency. Not only do you have to create a system that fans understand – where they know where their money is going – but you also need a system where artists know where that money is and what stake in it they lose by partnering.
At this point, it's much harder to do bad deals, because word gets out.
PR ALBERTINI: Absolutely. As I said, we keep it simple so everybody can understand. What we do is pretty transparent and easy to figure out. Net receipt is what we get from all third parties vendors on the 360 contract with the artist – from net receipt artist get 20 % net no deduction from record one.
The web investors receive 40% from record one. MMC retains the 40% balance. The money raised is spent in total consultation with the artist and / or artist manager.
Kyle Bylin: How have some of the latest deals with artists gone?
PR ALBERTINI: In France, as I said, the model is further in its cycle so they now have a UGC open roster of 10K artists. Initially, in their first version in 2008, they used to have like MMC UK today a closed roster of 30 artists. Some of them made a massive success. Gregoire sold over 1M units! (Web Investors got a massive return.)
Kyle Bylin: I know I've heard fan-funding companies like PledgeMusic say that their users now ONLY want to buy records through this process. More connection and the added products – new scarcities – make them feel like they are getting more value for their money than a CD can provide.
PR ALBERTINI: Not to state the obvious, but crowd funding is already part of many artists daily life and I have a lot of respect for all the platforms offering them the opportunity to get all possible support (including financial support from their fans).
In principle, their business model is to offer this service to artists and fans and take a commission on it.
This is not at all what we do and our business model is fundamentally different, we are a "collective "or "participative" record label. WE DO SHARE REVENUES WITH THE FANS! (INVESTORS) and by the way, it does not take anything away from the opportunity of sharing and receiving from the artist scarcities and entertain a direct relationship. If the artist makes it with the help of your financial support, you participate in the returns.
Kyle Bylin: That's a very interesting take on things. Do you think that revenue sharing with fans further incentivizes positive behavior?
PR ALBERTINI: There are two different issues. One is the relationship between fans and artist, and how personal and how intimate it can be. The web makes that possible and easy and that is wonderful. Some platforms make this their business, and again, respect!
However, as I said we are introducing as part of the fan artist relationship an opportunity that takes into account the business aspect of things. We believe it is only fair.
You cannot consider fans as funders and not give them at least the option to get returns on their own money if there are any financial rewards to the artist and label. I believe this is the minimum counterpart to their initial crucial financial support to the "artist Inc."
By the way, I do not see this as an either/or relationship between the artist and fans.
I understand some fans want to get a free recording or a visit of the artist for their BD etc. but they may also want to be part of the recording process and its potential commercial success.
Kyle Bylin: The web certainly does create the opportunity for many different relationships with artists to take hold.
PR ALBERTINI: Very much so. Our choice is to offer a platform that could deal with the current paradox, a tech-savvier, and more creative than every generation of artist who can share with fan and call them daily at no cost, and at the same time a landscape with so little access to monetization.
Where major labels used to sign ten artists they now can afford to sign two , does not mean the other 8 left over have less talent! Actually probably more than ever.