U.k. Indies Blossom

Amid the global downturn in music sales, several well-known figures from the U.K. industry are looking for an upside.

These 21st-century entrepreneurs are hoping that the financial troubles that have battered the music business and caused uncertainty at the majors have created a fresh opportunity for well-run independents.

"While the business is going through its current set of dramas—very much like the mid- to late '70s—it's a good time to return to the values that caused so many small labels to flourish then," says Paul Conroy, the former president of Virgin Records U.K., who has "started again" with indie label, management, and publishing operation Adventures in Music (Billboard, Dec. 14, 2002).

Other U.K.-based music notables hatching new labels include Simply Red vocalist/ songwriter Mick Hucknall, artist manager and independent record promoter Ian Brown, and Mike Stock, formerly part of the prolific Stock Aitken Waterman (SAW) production team.

With the business deep in a down cycle, some might say such industry veterans should know better than to jump in at this juncture. But each has enthusiasm for his new endeavor, despite the uncertainty of the moment.

Still, the new labels are entering the fray with caution, in terms of both staffing and rosters. None has signed more than a handful of acts.

The labels vary in their approach to marketing and distribution partnerships. In some markets, they have indie partners; in others, they might work with a major. In all cases, flexibility seems to be the key.

Conroy, who operates the Adventure Records label with his wife, former EMI director of international promotions Katie Conroy, has started the label with what he describes as a "patchwork quilt of companies around the world" to handle distribution.

In the U.K., Adventure Records is coordinating its own marketing but has a distribution agreement with indie powerhouse Pinnacle. The label, which is self-funded, has set sail with two album releases. Former Squeeze member Chris Difford's I Didn't Get Where I Am was issued last November, and Danish modern-rock act Nu's AlphaBravoShockpopDisco is due June 16.

Adventure Records has completed label deals for some additional territories, including fellow independents Gresham for South Africa and Liberation in Australia and New Zealand. Individual deals for Nu are in place with UP for France, ARS in the Benelux market, and Skeye in Italy, with "more offers coming in," according to Paul Conroy.

Instrumental in creating this patchwork, he says, has been General Overseas, a U.K. licensing and international office for indie labels and production houses that watches out for the business affairs, marketing, and promotion aspects of the deals it brokers. Active for more than 10 years, General Overseas has represented such labels as Gut, All Around the World, Inferno, and Ministry of Sound.

Some of Adventure Records' label partners have major distribution deals, such as UP and Liberation with Warner and Skeye with BMG, while others handle their own releases. What's important, Conroy says, is not so much physical independence but independent thinking.

"That can sometimes be found in the structure of a major. Dare I say, that's what Virgin had, or what we strived for, during my tenure.

"On marketing, it's hard for us in the U.K., as Pinnacle just distributes us. We have to put in the marketing bucks. Abroad, the labels we've chosen to go with have certainly presented us with excellent marketing plans. You have to live and breathe what you're working on, and you certainly push yourself harder when it's your own money."

Similarly, Hucknall, a global hitmaker as the frontman of Simply Red since the act's 1985 debut, has stitched together label and distribution deals that are already reaping rewards.

Hucknall and management company Silentway have taken their time putting together the new enterprise, called simplyred.com. The process began after Simply Red's departure from Warner-owned EastWest Records, which issued the act's last album, It's Only Love, in 2000.

The new label, which is funded by Hucknall and Silentway, began rolling out the group's new album, Home, in March.

In the U.K., the album appears through heavyweight dance indie Ministry of Sound, with distribution by TEN. Across Europe, it has been released chiefly via a network of hand-picked independents, such as SPV in Germany, V2 in Holland, and Nun in Italy. But in other territories, including France, Australasia, and Latin America, simplyred.com is going with major distribution through Universal Music International.

"In 75% of our market, we're taking the independent approach," Silentway's Ian Grenfell says of simplyred.com. "This was the chunk we put in place first. Then we looked for a major to help in Latin America and Asia, where we found it harder to do the independent deals we wanted to do."

In the U.K., where Grenfell says Home has shipped 350,000 copies, the album enjoyed first-week sales of 87,000 units and debuted at No. 2. It also debuted at No. 3 in Italy, No. 4 in Holland, and No. 5 in Germany, where Grenfell says shipments total 150,000.

Grenfell adds that European shipments will surpass 800,000 when France becomes the last market in the region to issue the album in early June. He expects an initial shipment there of 40,000-50,000.

A U.S. release of the album is expected in August, with distribution now being finalized.

Hucknall has found the early results of the label to be liberating. "This is one of the most exciting times in my life," he says. "I feel so much more involved in my career and motivated to make this project work. Everything's great right now."

Grenfell says there are no plans to sign other artists to simplyred.com, which he describes as "a template rather than a label." But he is "very open" to a future advisory role for established acts that want to take a similar route. "There's no reason this model shouldn't work for anyone with a quantifiable global fan base."

Ian Brown, who operates indie label Flying Sparks, agrees that the independent route is preferable for certain artists, especially those with an established fan base.

"Majors don't work well because they're corporate, and the nature of corporates is to devalue the product so they can control it," Brown says with trademark candor.

"It's like, 'If one act ain't selling, fuck it: We've got another.' Sanctuary and other [indies] win because they take established artists of quality and don't overspend to get market share. Because the artists are quality, they sell."

Brown will shortly launch a new label, Hungry Dog, as a vehicle for English singer/songwriter Thea Gilmore and her upcoming Avalanche album, which is due Aug. 11. "She's gigged forever, she's had great press and got a great fan base, and now she's ready to sell records," Brown says. "I haven't made any money from her yet, but I will."

Brown, who also is funding his own label, says "a couple" of other signings will follow Gilmore. He has yet to announce any marketing and distribution affiliations but acknowledges he may seek alliances at home and abroad with a major—if he can maintain creative autonomy.

Meanwhile, pursuing a fully independent path in the U.K. is Mike Stock, who, as part of SAW, helmed countless hits for Kylie Minogue, Jason Donovan, Rick Astley, and many others.

Stock's new label, Better the Devil Records, will launch June 9 with the novelty single "Fast Food Song" by Fast Food Rockers (Billboard, May 10). Domestic U.K. distribution will be handled by Nova through Pinnacle.

"The reality is, it's always been difficult to be an independent label, [but] I don't believe it's noticeably harder to launch a label now than before," Stock says. "Our philosophy is to release hit singles that appeal across the age groups that will develop into album projects. We won't be spending ludicrous sums to sign an 'album artist' and then throw money at recording an album that the public may or may not show interest in."

Better the Devil commercial director Bob Patmore has secured substantial private investment for the label. "The level of funding is significant, because there's no point launching a label with insufficient fiscal power," he says.

The label has also signed British pop vocalist Natalie Powers for the world and New York-based band the Hazzards for the world outside North America.

As for marketing Better the Devil releases outside the U.K., managing director Graham Stokes says discussions are under way with foreign indies, "with a view to them licensing our tracks and us obtaining the U.K. license for their products." He says he also will talk with majors about "more long-term relationships."

For all of these new indies, keeping costs down is the key to viability.

Brown offers specific insights into the cost structure of working an album as an independent. For a dealer album price of around £8 [$13], he estimates distribution expenses of £1.20 [$1.96], with manufacturing, copyright fees, and artist royalties accounting for a further £3.80 [$6.22]. "That leaves £3 [$4.90], which has to cover all your marketing, and so on. [You should] try to keep marketing to £2 [$3.27] initially, so you have a bit up your sleeve."

Regarding simplyred.com's structure, Grenfell says, "Break-even point is substantially lower, as the overhead costs are small compared to a major. After break-even, we're looking at three to four times the profit per CD. Also, synch licenses and other uses give us a greater profit, and most importantly the artist owns the masters."

"Indies do have lower break-even points, because we cut better deals. We have to," Brown says. "Do we have less marketing clout? The best marketing is a great record on the radio and in the shops. A retailer wants to sell records as much as I do, so if you've got radio and a genuine public demand, you're away."