We were the first industry that suffered the digital transformation, and now we are the first to show a new sustainable business model. " From his luminous office in an old industrial zone of Madrid, Nando Luaces, founder of Altafonte, takes chest of the trajectory of his company, born of a small label specialized in hip hop in 2011, when the record industry had not yet reached the bottom. In the office, the gold discs and recognitions to successful musicians such as Izal, Amaral, Marlango and Zahara seem to agree with him.
Altafonte is the label of those artists, but the beauty of the matter is that it is not exactly their label, but, according to Luaces' own definition, his "music and technology" company. To understand it, a small trip in time may be necessary.
1999, year 0 of the It was Napster. Music is played mainly on CDs, there are no smartphones and nobody knows what is the streaming. The music business – then more than 25,200 million dollars, according to the IFPI, the closest thing to the employers of the sector – is dominated by major labels, which attract and develop talent through professionals called A & R, for artists and repertoire.
They are a kind of scouts, who spend their lives listening to models and based, basically, on their sense of smell and experience. And they have a lot of power: if your finger points, the record tab, bet and promote. The jump to fame will come, if everything goes according to plan, with the key push of the radioformulas. Yes, there was a long time when you did not listen to the music you wanted, but the one you were playing.
2018, year 19 after Napster. The 25,200 million dollars of 1999 have lost more than 30%, to 17,300 million dollars. But the worst has happened: the fund was touched, in global business terms, in 2014. Now, billing grows, and music is not bought, but it is rented on platforms of streaming, led by Spotify, and seen on YouTube. According to the report Putting the band back together, of the American bank Citi, the advertising revenues of YouTube for musical contents reached in 2017 the 2,900 million dollars.
Change the consumption of music, its distribution and its production. The cost of marketing music has become considerably cheaper. "Before, recording was very expensive," recalls Luaces: the recording studio was rented for about 60 euros an hour, with nothing in particular, and the final cost of a production "without a problem, 100,000 or 200,000 euros." In addition, we had to add an even larger figure, that of marketing and promotion. "Now any artist can have a quality study in their own home, and marketing has been replaced in part by direct communication with the public through social networks." That audience, moreover, is global: fewer borders, more chances of success.
Francisco Buendía, founder of Melboss music technology consultancy, believes, as Luaces, that "access to music has been democratized: now many more artists have the chance to live on it". Somehow, they count in Altafonte, the artists, and their managers, "Have been empowered". "Vetusta Morla can gather 40,000 people in the esplanade of the Caja Mágica in Madrid practically without leaving either on the radio or on television," stresses its president.
And what happened with the A & R? Besides being an active musician, Jordi Tello was one of those powerful professionals from a couple of decades ago; today he maintains that function, with more corporate status, as artistic director of Sony.
And it does not hide the loss of power of the great record companies; before, he says, they could practically hear how manager or the musician's phone fell out of emotion when he received the call from a major; today "there are things that happen without the direct intermediation of the companies".
The A & R are still working with models, and the record labels are necessary to amplify the work of the musicians, especially in global terms, "but it is no longer about betting by 10 or 20 artists from that first moment, but to detect what is happening and amplify it. " "What's happening" happens in concert halls, as always, but also on YouTube, Spotify and social networks, especially Instagram.
So much so that, as discussed in a recent professional talk, Sony did not sign Rosalía, but Rosalía signed Sony: the Catalan artist produced, recorded and promoted her first album, she licensed it with Universal, she became a global cultural phenomenon and then she made her conditions clear to a giant of the industry.
From the point of view of the business, the secret of success is, therefore, in joining the snowball when it is beginning to take on size; before, the record company was the only one with the capacity to start the phenomenon. To achieve this, everything is collected, everything is measured and everything is used to decide: a contract, a new launch and even the stops of a tour.
Consequently with this new panorama, appear in the discográficas, big and small, experts in the analysis of data and social networks. As an example, approximately two thirds of Altafonte's workforce – 70 people – are dedicated, according to their own definition, to "digital marketing".
After 25 years in this, the essence of the business has not changed: no one yet knows why an artist triumphs. "
Their task is, among other things, to try to position the songs on the platforms of streaming, trying to conquer their algorithms organically: to be or not in certain playlist It can be the border between success and irrelevance. And all of Sony's business units have experts in data analysis, from A & R to marketing, to digital sales.
While musicians learn to emancipate and plan on their own, the experts in viralizing content on YouTube and Spotify are now the great object of desire of the record companies. Looking for artists to bid for nerds of the data: has the transformation of the industry reached such a point? Probably not.
Tello defends the importance of professionals' sense of smell to detect talent and potential; Luaces says that "after 25 years in this, the essence of the business has not changed: everything ultimately depends on the artist's personality. And nobody yet knows why an artist triumphs. " Fortunately.