Record industry hits out after Arts Council chief says new fund is required to counter market failure

By Chris Cooke | Published on Wednesday 29 May 2013

If the aim was to ensure everyone in the music industry was aware of the new Momentum Music Fund then remarks made by Arts Council England chief Alan Davey on Radio 4’s ‘Today’ programme did the job yesterday, though if aim was to encourage everyone in the music business to embrace the new initiative – ACE’s first ever new talent development fund aimed at pop and rock music – then maybe less so.

As previously reported, the Momentum Music Fund is a new funding initiative launched by Davey at The Great Escape earlier this month, and the first time the tax payer-funded arts organisation has had a new talent initiative in the pop and rock space, the State traditionally funding more projects and institutions operating in the classical, folk and jazz genres.

To be fair to the Arts Council chief, the starting point of yesterday’s ‘Today’ piece was along the lines of “why the hell are you giving half a million of tax payer money to the pop industry that has all that One Direction and Adele cash to spend?” Faced with that line of questioning, Davey countered that the record label system – and especially the major label system – was failing new artists, and that ACE therefore had a duty to intervene.

Said Davey: “We have identified that currently in pop music there is a market failure at the beginning end of talent, and that is what we are trying to address here in the same way we address it with classical, jazz and folk. [The major labels of today] want talent to be delivered to them ready made, they are not prepared to take a risk over a long period of time. They concentrate on giving the public what they want, rather than exploring, and getting the public to find things they didn’t know they wanted”.

While Davey’s response was really aimed at the naysayers amongst the ‘Today’ audience who would prefer it if State arts funding was reserved for opera and abstract drama no one much wants to see, his remarks were also heard by senior players in the record industry, who regularly talk up what a good job they do when it comes to investing their hard earned profits into brand new, unproven and risky talent.

Responding for them, BPI boss Geoff Taylor was quick to tell reporters: “Alan Davey’s remarks about the lack of risk-taking in pop music are ill-informed and out of touch. UK labels have invested £1 billion over the last five years in new music. The results speak for themselves: five out of the top ten best-selling albums last year were from the UK. It is difficult to see that global breakthroughs such as Adele, Mumford & Sons, Emeli Sandé, Ed Sheeran, Muse and Jessie J represent short-termism, or a failure to back talent”.

Noting that the BBC report was somewhat disparaging about the record industry’s big telly talent show, Taylor continued: “Huge successes such as One Direction who emerged from the ‘X-Factor’ should be celebrated too. The new Arts Council fund represents a drop in the ocean – around a third of 1% – compared to annual investment by UK labels. New funding for investment in UK talent is always a good thing, but the Arts Council should be supporting the music industry’s excellent record of breaking talent, not attacking it with ill-judged soundbites”.

Ouch. Of course, it is true that the record companies, in the main, are taking fewer risks with new signings now than they did at the peak of record industry excess in the 1990s, simply because – with a third less revenue generated by recorded music today compared to then – there is less profit to invest in new bands. This means fewer new acts are signed overall, labels generally look for new signings to have a more established fanbase, and an awful lot rides on the first album.

It’s also true that the big labels massage their talent investment figures a little by often including the ad spend for the new One Direction or Lady Gaga album in the “A&R budget” when declaring R&D numbers.

But at the same time, it’s wildly unfair to say the labels, and even the major labels, are only interested in the next One Direction – or even that they are only signing ‘ready made’ acts – a quick scan of the sorts of new artists the majors are signing can confirm that.

And while the big labels may look for new artists to be slightly more developed than they once did – both in terms of creative output and fanbase – and that may well put more pressure on management, it also means that a good manager can subsequently negotiate a first record deal on much more favourable terms than fifteen years ago.

It’s during that incubation period that the £5000-£15,000 grants the Momentum Music Fund is offering will really come into play. Not because that sort of money can actually launch a new act, but because it will help artists and their management teams get themselves ‘label ready’, both in building that initial fanbase, and also in identifying the kind of label deal – or similar – that will be most appropriate.

The new ACE funding initiative, therefore, may help labels reduce a little of their risk before pumping half a million of their money into just one band, but it should also help empower artists and managers so they can strike up business deals that will actually work for them.

The Momentum Music Fund, therefore, complements rather than replaces the record label system, in a way that is beneficial to both the record companies and artists. Though I suppose Davey was never going to be able to explain all that in the 78 seconds of breakfast time radio he was given.