The Record Label of the Future. Lean. Mobile. App-enabled. Social. Real-time.

Last night, I had a conversation with my mentee, Chris Anokute, the (now) Senior VP A&R at Island DefJam Records.

We’re on two different coasts, and don’t get to talk as frequently as we did when he was still in NY.

So our conversations tend to go on for hours.

Yesterday was no exception.

His label recently exercised the renewal option on his contract, and he wondered aloud, what the future held for him at the label.

At any label for that matter.

As we talked about his options – stay at the label, entertain offers from others, pool a few investors and set up his own company – the discussion invariably turned to what the future music industry would look like.

I told him that the music industry, as we know it, is dead.

Record labels are the walking dead.

Artists who are still trying to catch that brass ring, a record deal, are disillusioned zombies.

The future of music lies in embracing technology.

Period.

Any label exec, artist or producer, whose strategy isn’t explicitly tied to leveraging technology should call it quits – now.

2012 was the first time that digital music sales topped physical sales.

Worldwide, digital music sales exceeded $10B.

This trend is only going to continue.

And while the record labels are still giving out plaques for physical sales records, unsigned artists are generating revenues in the hundreds of thousands.

Without labels.

When he asked what the record label of the 21st century looked like, I told him.

And now I’m telling you.

1. It’s lean. Record labels today are bloated with unnecessary and often duplicative staff. You only need a few cats, who know their shit, to run a label effectively. A good A&R, product/project manager, marketing & PR specialist, radio promotions & street team, and a techie. Add a publishing guru, competent counsel, an anal accountant, a few eager beaver interns (for grunt work) and you’re set.

2. It’s mobile. There are more mobile phones than people on earth. But the labels don’t know that. Visit any label’s website from your phone. Universal Music Group, Virgin Records, Capitol Records, Epic Records, Island Records, Sony BMG, EMI, Warner Music Group. Not one of them – NOT ONE – had a mobile website. Or rather, not one of them had a site that was enabled to auto detect mobile browsers and render the appropriate content for the device viewing the site. If you’re going to connect with fans, you’ve got to make your site easy to navigate from a mobile device. a full HTML site on a phone is a shitty experience. Can we say “increased bounce rate”?

3. It’s app-enabled. I remember trying to convince Chris that he should drop an app when he released his next artist’s single. He told me (to my shock and horror – and I’m paraphrasing now) “apps are for established acts only.” That was the label talking – not Chris. Like hell! One thing that should accompany the release of every new artist is a free app. The app should be your personal portal into your favorite artist’s world. At a minimum, the app should include the artist’s bio, picture gallery, discography, music videos, songs, Twitter stream, and upcoming show dates. The app should have e-commerce capabilities, allowing a user to purchase a song, tickets to a show, or any media/content available for sale.

4. It’s social. Social media and music fit together like a hand in glove. Listening, discovering, sharing, liking are all the things fans do with their music. Apps like Spotify, Pandora and Last.fm let you stream music and share what you’re streaming/listening to via social media. Social media makes it so much easier to let your personal network know what you’re into and get them into it too. Labels of the future should make sure that everything they do is equipped to leverage social media to the fullest.

5. It’s real time. Labels are always whining about leaks and lost sales due to content being pirated and available to the public before its been officially released. You know how you prevent that? Make content available to consumers as soon as its ready! Artists are prolific, and production costs are remarkably low. So instead of trying to filter music before its released, release it and let the public decide what they want to pay for. Rabid fans want it all, even the crap. Look at all those Prince and the New Power Generation (NPG) albums that Warner Bros. sold. Not his best work, but you couldn’t tell Prince fans that.

The record label of the future is one that acts like a unified system, providing fans with seamless unobstructed access to the artists on the label.

In the second coming of the record labels, websites will be a one-stop shop, where you can browse artists, listen to music, watch streaming videos, download songs right to your device (and have them perpetually available in the cloud for future download/use on as many devices as you own), comment, like, favorite and share via any of your social media profiles.

They’ll rely less and less on iTunes, and as a result, see more profits as fans start purchasing digital music directly from the labels (again) and not from resellers.

Their marketing will be personal and focus on the mobile device and a primary point of entry.

They’ll operate less like record labels, and more like software companies, continually tweaking and updating their offerings to give their users the best user experience possible.

The 360 degree contract was the record label’s reaction to the fact that they weren’t recouping the bloated album budgets from record sales.

Tomorrow’s label has to be more focused on creating alternate revenue streams for the content they produce, and less reliant on the artist’s alternate sources of income.

Video games, toys, digital greeting cards, third-party apps, all represent new opportunities for labels to leverage their catalogues.

Needless to say, I’ve got opinions.

Chris and I will talk again.

And I will give him another earful.

But for now, you’re dismissed.

I hope you were taking notes.