Wednesday 22 February 2012, 12:26 | By Chris Cooke
Q&A: Danny Ryan, Kudos Records
Danny Ryan set up London-based music distribution company Kudos Records 20 years ago, recognising the need for a specialist distribution service for the then newly emerging dance music genres. Quick to embrace digital music when it started to take off a few years later, Kudos now supplies content from the labels it represents to all sorts of digital services, from the big players to the more innovative and niche platforms. As such, he knows a thing or two about the digital market, which made his response to last year’s backlash to Spotify et al all the more important. Ryan is generally of the opinion artists and labels should be embracing the streaming services.
Tomorrow night he will bring those insights and viewpoints to the latest MusicTank debate, which is titled ‘Can Streaming Go Mainstream?’ Spotify’s Steve Savacoa, Beggars’ Simon Wheeler, EMI’s Cosmo Lush, the FAC’s Mark Kelly and One Fifteen Management’s Paul Loasby will also take part in the debate. A small number of tickets are still available, while MusicTank members will be able to watch the event streamed live, more at www.musictank.co.uk.
Ahead of the MusicTank event, CMU Business Editor Chris Cooke spoke to Danny Ryan about his background, the current state of digital music, and its future.
CC: Tell us a little about your background, how did you end up in the music business?
DR: I worked for Tower Records in New York in the mid 80s. They transferred me to London when they opened their Piccadilly Circus store (mainly because I had an Irish passport so they didn’t need to organise a work visa!). From Tower, I went on to work for a couple of distributors (PRT and Greyhound) before setting up Kudos in 1992 with Mike Hazell (who has since left the industry).
CC: What motivated you to set up your own distribution company?
DR: In the early 90s, the DIY ethos in dance music and ‘electronica’ was really coming into its own. Distribution for many small labels consisted of running around a network of wholesalers and one-stops, selling 50 twelve-inches here and 100 there. I felt there were enough quality labels operating in this fashion to warrant a specialised distribution service that could effectively pool this talent and get it to a wider audience. Our first labels included Rephlex (Aphex Twin’s label), Touch (Biosphere, Fennesz), B12 and Pork Recordings (Fila Brazillia).
CC: Kudos was set up before downloading was invented. When and why did you get into digital distribution?
DR: We got into it pretty early. It was a natural progression. I viewed it simply as a format change. I am also a bit of a geek, so the tech side of it didn’t really scare me.
CC: You now offer all sorts of other services – including marketing, manufacturing, e-commerce solutions – how do you decide what areas to move into?
DR: We just try to consider what services our labels might want or need. It’s worth pointing out that, on the distribution side, we work entirely on commission only. As a result we are very A&R led. We are a music company first and foremost.
CC: Are your primary clients still labels?
DR: Yes, though quite a few are “producer run” labels.
CC: What kind of digital platforms do you deal with?
DR: We deal with all the major platforms, from a la carte services like iTunes, Amazon MP3, 7Digital, Beatport and Juno, through to streaming services like Spotify, Rhapsody, MOG, Rdio and We7. We also work very closely with the more niche stores like Boomkat, Soul Seduction and Bleep. We probably have one of the widest account bases as we think covering these more specialist services is really important. We have over 70 different delivery points, many of which serve multiple store-fronts. All our tech is in-house which enables us to be pretty flexible.
CC: When new digital business models come along, how do you assess which ones to engage with?
DR: We start with deciding whether there is actually a market for the service; is it something the consumer actually wants? We then look at the model and consider its viability. After that, we take a similar approach as we would with a physical store. What are their accounts like? Will we ever get accounted to and paid?
CC: Is it hard to persuade your labels about the benefits of new platforms?
DR: I think for the most part they trust our judgement. There have been a couple of labels who have removed their content from the streaming services – which, of course, is entirely their prerogative – but 99% of our labels have stayed on board after we stated and explained our broadly supportive position.
CC: Vinyl was important in the dance and electronica genres long after other areas of the business had dropped the format, but then the dance community seemed to suddenly go all digital overnight! Would you agree with that observation?
DR: I think that’s more true of what I’d call the ‘main room house’ world, where Serato and Traktor are now the DJ medium of choice, but we carry a lot more leftfield dance – and funk, soul, jazz, and more experimental music – so we actually still sell quite a lot of vinyl, as DJs in those areas are, perhaps, a bit more traditional.
CC: There seems to have been a real backlash against the streaming services, and especially Spotify, in the last year, why do think that is?
DR: Partly down to simple fear. I think we are an industry that is still suffering from post-traumatic stress disorder! I think many have looked at streaming income and placed it in the wrong context; comparing streams directly to download sales. It’s a very different sales profile that works over a different time frame; it’s about a piece of music earning from a much wider audience over a longer time period. It can be a difficult concept to grasp, especially when you have spent the last ten years getting punch-drunk from the effects of piracy. There has also been, in my opinion, a lot of misleading information and some very skewed analysis doing the rounds.
CC: You’ve been something of a defender of Spotify as some artists and labels take there content off it, why is that?
DR: Dictating to the consumer how they consume music has never served us well, so Kudos doesn’t favour one type of service over another. The lion’s share of our digital business does still come from a la carte downloads, but, over the past two years, we have seen our streaming income grow dramatically with, at this stage, no perceivable evidence of a negative effect on our a la carte business. It now represents a very significant part of our digital income, and is still growing.
However, the viability of those services depends on a decent conversion rate from the free options to premium paid-for options, and that really depends on catalogue availability. Consumers simply won’t pay a subscription unless the service is top notch. So we all have an interest in as much music as possible being in there.
As criticism of Spotify became more vocal last year, I felt it was important to share our experience with it and streaming services in general. It seemed to me that only one perspective was being listened to. We also need to remember that if the consumer wants a streaming service, they will get one. The danger is that it won’t be a licensed service. Rogue services will (and already do) fill the vacuum.
CC: Do you see a la carte download revenues declining in the future, and other digital revenue streams growing? Or can download and streaming platforms co-exist, meaning more revenue overall?
DR: I think they can co-exist, but ultimately the consumer will (and should be allowed to) decide what is right for him/her. For many, ‘ownership’ is an important quality that the ‘access’ model doesn’t provide.
CC: Do you think the digital music industry will develop along the lines of pay-as-you-go downloads and subscription-based streaming – with some ad-funded platforms – or do you think there are all sorts of digital business models we just haven’t thought of yet?
DR: Who can say, though I don’t think ad-funded alone is viable. It’s a great gateway for selling subscriptions, but there needs, at least as it currently stands, to be an up-sell avenue. I am very encouraged by the amount of diversity in terms of service types and business models already available. There is something to suit everyone. Though I honestly believe we are nowhere near realising the full potential of digital music.