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Another Big Money Record Label?

Updated: Sep 8


Gibson has just announced that they are launching a new record label that will be releasing Slash’s new album at some point. The numbers aren’t clear now as to where this places Gibson Records within the sphere of record companies and labels, but I presume with the partnership of one of the big four, Sony BMG this will put them near to the top or at least a subsidiary of this illustrious group of companies.



Gibson Les Paul Gold Top Guitar
Gibson Les Paul Gold Top Guitar

Gibson have a rather impressive list of artists that they have worked with over the years, everyone from Jimmy Page to Tony Iommi, John Lennon to BB King. Which makes me wonder if Gibson Records will be targeting acts, they are currently working with to get them into the fold? With the “Big Four” (EMI, Sony BMG, Universal Music Group and Warner Music Group) having an estimated 88% of the market, it’s these sorts of acquisitions that concern me.

I mean, I find it strange that back in 2018 Gibson Guitars was bankrupt and now three years on they are not only starting record labels, but they have also bought out Mesa Boogie, that apparently cost them tens of millions of dollars. According to the BBC Gibson struggled with and eye watering amount of debt, $500 million worth to be precise. They also made a big mistake by acquiring Philip’s consumer audio division back in 2014 for $135 million, which did not work out so well. “Lenders” stepped in, and Gibson said they will “focus on musical instruments”. So, who the hell buys a company that has this much debt and has made some ill-fated acquisitions? I hear you asking. Well, that’s a great question and I had to do a little digging because most articles just referred to them as “Lenders”, but it seems that the heroes of the hour fall to KKR. KKR is a credit advisor company. They have a portfolio of 116 companies in their private equity funds that generate a staggering, $238 billion in annual revenues.


With this in mind, it means that Gibson as a company, has the potential for vast quantities of cash for its endeavours and its partnership with BMG is probably a relationship of consulting, rather than one of finance. What does this mean for record labels further down the food chain and not just the music industry but the entertainment industry in general? And what does it mean for Hard Rock and Metal Music genres?

Well, it’s a bit hard to say now but with these big music companies coming under scrutiny and a UK Government committee saying:

“There is no doubt that the major music groups currently dominate the music industry, both in terms of overall market share in recording and (to a lesser extent) in publishing, but also through their ownership of the most valuable music rights and through mergers and acquisitions of competing services.
We recommend that the Government refer a case to the Competition and Markets Authority (CMA), to undertake a full market study into the economic impact of the majors' dominance. The Government must also provide the CMA with the resources and staffing to undertake this case”.

It seems there is a fair point to be made regarding the dominance of these record companies and how they have managed to literally buy most of the market but if you look at just the Big Four’s rosters, you will see a few Hard Rock and Metal bands within their lists. Warner seems to have the most with bands like Deftones, Disturbed, Stone Sour and Slipknot. Metallica are with EMI. BMG have acts like Tool, AC/DC, Cradle of Filth, while Universal has acts like Limp Bizkit, Kiss and Nirvana. With BMG having some top acts on their roster, I do wonder what BMG are gaining from this enterprise and is Slash’s new album the only offering that they are involved with or is there more to come? Also, will BMG be the only partnership or will any of the other “Big Four” get involved? At this point in time, I don’t think many, if anyone knows the answers to these questions but it will be interesting to see how this new label pans out. Hopefully Gibson Records will be looking for new acts and be willing to take a few artistic risks. It seems to me that they have a good groundwork not only from financials but from a Music Industry point of view.


Personally, I hope this brings a little attention to how skewed the music industry is regarding market share and how money is distributed. I feel there needs to be a shift that allows acts to get a fair wage, especially when is comes to streaming royalties, which are pitifully low. This part of the music industry needs to be modernised and brought into the 21st century. The bigger question is how this happens in a way that creates a win-win for all parties involved because the current system seems to give the record companies a massive return on their investment, while leaving most artists struggling to make a living.


Resources:

BBC- https://www.bbc.co.uk/news/business-43967923

KKR- https://www.kkr.com/businesses/kkr-portfolio

Mesa Acquisition- https://www.guitarplayer.com/news/gibson-announces-acquisition-of-mesaboogie

House of Commons Committees-https://houseofcommons.shorthandstories.com/music-streaming-must-modernise-DCMS-report/index.html?utm_source=committees.parliament.uk&utm_medium=referrals&utm_campaign=economics-music-streaming&utm_content=organic&fbclid=IwAR0jCJdpRKG5kuH9WazKWZ7lPezmcscpYdLmnL_HXiIMKzPBBSUZr0iuOyY

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