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Sony merges its label services division with Cooking Vinyl’s Essential

By | Published on Thursday 3 March 2016

Red Essential

So, if you want a TL;DR: distribution is essentially red, by which we mean a major record company kind of thing, but the vinyl will continue to be cooked independently. I never said the TL;DR would make sense out of context.

Sony Music has acquired Cooking Vinyl’s label services business Essential Music And Marketing and is merging it with its own indie label distribution division Red, to create a new company called Red Essential.

The merged entity will be jointly led by Essential chief Mike Chadwick and Red UK MD Ian Dutt, operating out of the Cooking Vinyl Group’s Acton, West London HQ. No personnel changes are planned at the merged company, beyond Red staffers having a different commute and fewer shopping options during their lunch break.

Independent distributor Proper Music, which has handled UK physical distribution for Essential for over two years now, will continue to do so for Red Essential, meanwhile the Cooking Vinyl record company – although using the services of the all-new Sony label services unit – will remain wholly independent.

However, the deal does mean more indie labels tapping the infrastructure of a major music company, which is something some in the indie community are a bit sensitive about, not least because it boosts the perceived market share of the majors, who usually include the catalogue they distribute and service as well as that which they own when bragging about their market dominance.

Market share bragging is more than a mere ego exercise these days, because market share stats often influence a major’s negotiating power with digital start-ups, especially when it comes to demanding equity on a first licensing deal. More indie label distribution means more market share which means more equity. So much so that since Warner and Sony have committed to share the profits of any such equity with their artists, some indie labels distributed by those majors have wondered why they aren’t getting a share too.

Then again, there has always been a sound logic to indie labels locking into the infrastructure of a major record company, so that the independent can say to its artists “you get the culture and A&R support of an indie, but with access to the marketing and distribution network of a global player if and when we need such a thing”.

Indies using a major’s infrastructure isn’t new. We just now call the major label divisions that work with indies ‘label services’ instead of ‘independent distribution’. And those rebranded divisions do generally offer more services and often enjoy more prestige within the major, partly because of the market share/streaming equity thing.

Explaining the logic of the Essential/Red alliance from his perspective, Cooking Vinyl Group chief Martin Goldschmidt told reporters: “Eighteen months ago Cooking Vinyl Group undertook a complete audit of the sales and distribution sector and saw increasing market congestion, which was not providing real value to independent labels. Our conclusion was that our company needed to make a strategic move to offer independent labels global market access and a compelling alternative to what already existed”.

The deal with Red was that strategic move. “After discussions with a number of key players it was clear the team at Red shared our vision”, Goldschmidt added. “And that an alliance with them would be the best fit for our business, the labels we represent and our staff. This new agreement is good for Cooking Vinyl, good for Red, good for Essential and good for the independent community”.

The boss of Red in the UK, Ian Dutt, who previously worked at independent music firm [PIAS], said: “We view this deal as an alliance, as a marriage of equals with both parties bringing a lot to the table. Essential has been a trailblazing company in the independent sector and our combined experience and resource mean that we can offer artists and labels a really fantastic combination of hands-on expertise and global reach alongside market-leading tech solutions”.

And Essential’s Mike Chadwick added: “I have known Ian for many years and have always admired his achievements both in the independent sector, where he worked for many years, and latterly at Sony Music. When he suggested joining forces it took very little convincing to buy into that vision. I truly believe Red Essential offers a compelling alternative for labels and artists who up until now have lacked real choice in this sector”.