Wednesday, May 8, 2013

Music Business Journal #2: MAJOR AND INDPENDENT RECORDS LABEL (Case Studies of Universal Music Group and SM Entertainment)

Fadil Pinandita
Music Business, Intake March 2013
SAE Institute Jakarta
May 7, 2013

Music Business Journal #2:
(Case Studies of Universal Music Group and SM Entertainment)

I.                Foreword
Major records label and independent records labels are the most common topic in music industry. Currently, there are three major labels that are acknowledge worldwide and often referred as the ‘Big Three’; Universal Music Group, Sony Music Entertainment and Warner Music Group. According to the statement above, the rest of the records labels in the world should be counted as independent records label.

What makes them different, the major and the independent? Usually, the major records labels have the larger scale of business and distribution networks, also the larger budget. On the downside, it’s often said that major records label hold more control power of their artists. Meanwhile, the independent records labels are often assumed as the more freedom-giver to their artists, with less creative control over the artists’ works and more lenient contracts. And on the downside, independent records labels often associated with the lacks of distribution networks and funds. But, were that sufficient enough to explain the differences? I feel there’s more left to be unfold as there are still lots of grey area in this matter.

On this paper, I’d like to take a comparison between two companies; Universal Music Group (UMG) as the representative of major records labels, and Star Museum Entertainment (SM) as the representative of the independent records labels. What I’d like to do here is to explain the systems and strategies that are used by both companies with unbiased feeling, so I try to present as much as the facts that I can get from the worldwide web.

II.              Universal Music Group Overview
Universal Music Group (UMG) is counted as one of the ‘Big Three’ major records labels in the world. On their own website, they stated that they are the global music leader with strong position in recorded music, music publishing and merchandising.  UMG is known as one of the largest American music corporation, with the headquarters that are located in Santa Monica and New York, United States. But in fact, UMG is 100% owned by Paris-based media conglomerate, Vivendi SA, since the complete takeover of Matsushita shares in 2006. And now UMG acts as Vivendi SA’s subsidiary.

With the long-running history in the music industry since 1934, under the name Decca Records, UMG acts as a parent of some of well-known records labels with strong history in the music industry. There are some notable mentions, in the likes of Interscope Geffen A&M, The Island Def Jam Music Group, Republic Records, Decca Music Group and several others. UMG has their branch offices all over the world to take care and manage the local artists. UMG also owns Universal Music Publishing Group (UMPG), one of the largest companies in the world that operate music publishing businesses.

It would take too many spaces to list UMG signed artists, but here some big names on their artists’ roster with recent released records: Justin Bieber, Will.I.Am and Michael Bubble. Not only recent artists, UMG also owned the music catalogue from some legend musicians like ABBA, Bob Marley, Marvin Gaye, and some others.

III.            Star Museum Entertainment Overview
Star Museum Entertainment (SM) is an independent Korean multi-purpose company. SM acts as records label, talent agency, producer, event management and music publisher. SM Entertainment founded in 1989 by Korean entrepreneur, Lee Soo Man.  And in 1995, the company became a publicly traded company and traded as KRX: 041510. SM was an abbreviation from Soo Man’s name, but now it’s changed into Star Museum. SM Entertainment headquarter is located in Seoul, South Korea.

During its progression, SM Entertainment owned several subsidiaries: SM Tin Tin Hall, SM Entertainment Japan, SM Academy, SM Beijing, SM Pictures, SM Entertainment USA and many others. Its recent subsidiaries are SM Town Travel and SM Culture & Contents that founded in 2012.

In music department, SM Entertainment holds the exclusive contracts with some Korean big names like Girls’ Generation, Super Junior, TVXQ, BoA, Kangta, Shinee, f(X), EXO and TRAX.  SM also owned all their artists’ music rights, including their old rosters like H.O.T, S.E.S and many others.

IV.           System Comparison
In this part of the paper, I’d like to compare the systems that are used by the both company in music industry. I try to divide the comparison into two parts, the ‘Artists Signing and Music Publishing’ and the ‘Distribution and Promotion’.
a.       Artists Signing and Music Publishing
                                                i.     Universal Music Group
As the parent company of several records label, UMG is not responsible in searching the talents for them to be signed. Those records labels act as the feeder and filter for UMG. One does not simply send their music demo to UMG, the material itself has to be recommended to UMG’s A&R Department by well-known manager, producer, agent, radio DJ or other music industry professional. The artists’ contracts and well-being are controlled by those respective labels. The contract itself can be varied depending on each artist agreement with the certain records label under UMG.

Under UMPG, UMG takes care of the music publishing for songwriter and music supervisor. UMPG also takes care of direct signing and catalogue acquisitions. By the work of UMPG, UMG does not need to get their hands on directly for the music publishing.

                                              ii.     Star Museum Entertainment
As an independent records label, SM is responsible to search and sign its own talents. Since SM Academy is founded in 2003, SM scouts and handpicks all the talents through audition. All the chosen trainees are subjected to a long-term contract for 13 years. But due to dispute that the contract was referred as the ‘slavery contract’, now it is changed to 7 years, if the artist is going to be promoted in South Korea, and 10 years, if the artist is going to be promoted globally. And since then, all the artists that published by SM are picked from the academy.

As music publisher, SM takes care and handles all the music that used by their artists. Until now, there are only a few composers and songwriters that are signed directly by SM. The rest of the composers and songwriters are contracted by their songs that are used by SM’s artists.

b.      Distribution and Promotion
                                                i.     Universal Music Group
In the United States, a sub-company named Universal Music Group Distribution (UMGD) manages and takes care of the sales, marketing and distribution of UMG assets in all formats including digital, physical, streaming, subscription and mobile. UMGD has been the industry market share leader for the past fifteen years.

In some markets outside the United States, UMG companies handle their own distribution and sales. In other markets, UMG companies have sub-contracted services to third parties or entered into distribution joint ventures with other record companies.

Most of the global promotional activities of the UMG’s artists and music are going in the worldwide web through its official websites, including the websites of the artists and the records labels. But the other promotional activities are varies according to the artists’ scoop and each records labels’ policy.

For case study, I pick the Justin Bieber’s 3rd studio album ‘Believe’. The album was released on June 2012 by UMG’s Island Records. But before the album was released, the first single of the album, ‘Boyfriend’, were released first in March 2012. And after the album was released, other promotinal singles from the album were released consecutively. The last single that released was ‘All Around the World’ on February 2013. The physical album itself distributed globally through records stores all over the world. The digital copy of the album is distributed worldwide through iTunes and Amazon.

The success of the album is followed by more than 100 shows of ‘Believe Tour’ that are still subjected to be going on until August 2013 in North America, Europe, Africa, Asia and Oceania.

                                              ii.     SM Entertainment
Until 2011, SM self-distributed its own releases in South Korea. Korean Music Power Holdings (KMP Holdings) took over the responsibility. KMP Holdings are joint venture corporation that limited by shares that are created by seven big records labels and music publishers in South Korea, including SM.

Outside the South Korea, SM only distribute their music officially through distribution labels in several country including Japan, Taiwan, Malaysia/Singapore, Philippines, Thailand and Hong Kong/Mainland China. Some big local music distributor in the likes of Avex (Avex Group, Avex Music, Avex Asia), Universal (Universal Music, Universal Records),  EMI, Warner Music, MCA Music and several others are associated as SM’s music distributor. SM also has SM Entertainment Japan, SM Beijing and SM Entertainment USA in their subsidiaries list to manage some the distribution and promotion activities in Japan, China and United States.

For better explanation, I choose Girls’ Generation’s 3rd studio album, ‘The Boys’, as the case study. The Boys is the first album of Girls’ Generation that including an English version single. On October 2011, the first single with the same title was released. And the full album came out later in the same month, and on November 2011 the album was re-released with their second single Mr. Taxi. The physical album is sold only in some countries by some associated music distributors, and the rest of the world must order the album straight from South Korea. The digital copy of the album is released in iTunes on November 2011.

In United States, the album was released and distributed on November 2011 by UMG’s Interscope Records. And in Europe, the album was released and distributed on February 2012 under UMG’s Polydor Records. The Japanese version of the repackaged album is released and distributed on March 2012 in Japan by UMG’s Nayutawave Records.

The promotional activities of the album including several music performances and local TV show programs in some countries. ‘The Boys’ also extended the ‘2011 Girls’ Generation Tour’ that has previously held in South Korea on July 2011 and China on September 2011. The added tour schedules are in Singapore on December 2011, in Hong Kong on January 2012 and Thailand on February 2012.

V.             Closure
Based on what I’ve been explaining above, the distinctive differences between UMG and SM are the artist signing system and the distribution system. If the UMG relies on its records labels as the feeder, SM relies on its audition and academy program to sign the artist. On the distribution system, UMG has their own company that manages the distribution of its assets while SM has to rely on their deals with other distributions companies outside South Korea.

And with this paper, I’d also like to erase the mainstream ideas that make the major label became the evil side that take full control of their artist, while the independent records label, like SM, even has the artists tied up with the long-term contract. And about the funds and budgets, SM might needs some distribution channel to distribute their products but that doesn’t mean they are lacking in money. In its progression, SM even built the kingdom by having some subsidiaries.

And finally, even though this paper is made as a school’s paper. I hope the little comparison that I’ve made could be media for knowledge and bring the positive attitude to the world’s music industry for whoever that reads it, especially in my country music industry. There’s a long and winding road to reach a success in music industry, and the choice of which road to choose could help to reach the glory.

VI.           References

Monday, April 8, 2013

Music Business Journal #1: The Beginning

I’ve already passed my first week as music business student in School of Audio Engineering (SAE) Jakarta. But, let me write a little bit about myself for a starter. Before I even entered the college life again, I already had this dream about starting an entertainment company in the future, a company that will produce and manage the next generation artists and musicians. With my past experiences as a DJ, a band member and an event organizer, also with the knowledge that I retained from that plus some from the world wide web, I lead myself to believe that I will grasp my dream later on, after I finished this music business study and got in touch with several people that matter in this industry. And as I stated in the first line of this journal, I’ve passed my first week in my music business study. Now, I successfully trashed that dream aside.

If I put it in a softer way, I packed my dream up and stored it in a room with no guarantee when it will be re-opened. That was some cocky dream I had, and now I feel that I’m being knocked down to my senses. My experiences aren’t sufficient enough and my knowledge is quite shallow, it’s going to be a disaster if I keep moving towards that dream in my current state.

First, I had ‘Music and Multimedia’ class with Ziad Sofyan a.k.a. Emenk. Even though he’s working as graphic designer, and this class is mainly about the multimedia, he said one important thing that caught my most attention, it’s about shaping and branding myself or the identity I wish to present in the future. The second class was ‘Music Industry’ with Aldo Sianturi, the very first discussion that this class had is about music history. I regard that knowing history as the important thing in everything because it helps to understand the current matter better. Well, it’s a tricky thing to retrace something back, but it’s indeed needed. And the last class was “Audio and Live Sound” with Asmoro Jati. Between the three classes, I thought that this class had more direct approach to reality. Basically, this class was the main reason why I decided to toss my dream aside. I came to realize the fact that I didn’t know the real music industry and all this time I just barely scratching its surface.

I’m not stating that all the classes killed my dream, instead they made me realize that I was too proud with my unprepared self. So that’s why I tossed it aside and try to focus my attention to what these classes have to offer for me. Maybe, I’ll find my way to relive my dream someday. Or maybe, I’ll find my way to a bigger thing. I’ll let the future speaks for itself later.

April 8, 2013
Fadil Pinandita
Music Business

Tuesday, July 31, 2012

False Awakening

Eyelids flutter rapidly
Try to open the eyes but
The light's blindly bright
Feels so right yet so unreal

Distorted colors and shapes
Awfully weird and fascinating

Everything goes beyond logic
As insanity becomes reality

Then eyelids flutter once again
They're all back to grey
What was once feel so real is just a...

"False Awakening"

1. Thievery Corporation - Beautiful Drug
2. Mandalay - Beautiful (7'Canny Mix)
3. Dntel - Why I'm So Unhappy
4. Blonde Redhead - For The Damage
5. Lamb - Gabriel
6. Media Distorsi - Confession Pt. 2
7. Oceanlab - I Am What I Am
8. Massive Attack - Protection
9. Thom Yorke - Harrowdown Hill
10. Bjork - Isobel
11. Active Child - Playing House
12. Portishead - Roads
13. Broken Social Scene - Anthems For A Seventeen Year-Old Girl
14. Goldfrapp - Hairy Trees
15. Garbage - Milk (Massive Attack Trance Mix)

Download the mixtape here

PS: For those who down for downtempo, hope you enjoy it

Saturday, December 31, 2011

NYE 2012 Special: Trash it, dance it, break it, do whatever you like with it

With no further ado..

"NYE 2012 Special: Trash it, dance it, break it, do whatever you like with it"

1. MGMT - Kids (Soulwax Remix)
2. Bloc Party - Ares (Villanins Remix)
3. Autokratz - Stay The Same (Edit)
4. Girls'Generation - The Great Escape (Brian Lee Remix)
5. Feed Me - Silicone Lube
6. N.A.S.A. - Gifted (Steve Aoki Remix)
7. Sebastian - Ross Ross Ross
8. Groove Armada - Get Down (Japanese Popstars Remix)
9. Skrillex - Kill Everybody
10. Aaren San - Apes From The Space (Dirtyloud Remix)
11. Alex Gopher - The Game (The Bloody Beetroots Remix)
12. Ladytron - Ghost (Toxic Avanger Remix)

Download here

Happy New Year!! Enjoy yourself in everything you do, forget the others, have fun!!

Credit for the Artwork:

Thursday, August 25, 2011

Lost In Space

Where's the fun?
When it's all certain and meant to be
A boy who came from Venus, and a girl that born in Mars
Fate intertwined
World turned upside down

Don't you miss something unexpected?
Beyond logic and explanation
The awe in not knowing

Even a magician turns to be a plain liar
When the tricks are out
Where there is no room left for imagination

So.. Close your eyes, shut your mouth, hold your breath,
Open wide your ears, then start walking
Prepare yourself to...

"Lost In Space"

1. Alex Clare - Relax My Beloved
2. Chromeo - Night By Night (Skream Remix)
3. White Lies - Death (Chase & Status Remix)
4. Eskmo - Cloudlight
5. Starkey feat. Charli XCX - Lost In Space
6. Feed Me feat. Tasha Baxter- Cloudburn
7. Katy B - Katy On A Mission
8. Robyn - Call Your Girlfriend (Feed Me Remix)
9. Nneka - Heartbeat (Chase & Status Remix)

Download it here

Have fun getting lost..

1. The original artwork is made by Thiago Rage with the same title, 'Lost In Space', but I rotated it to 360 degrees.
2. The fifth song is also has the same title, 'Lost In Space', I placed it in the middle as the core of this mixtape.
3. Can you guess my reason why put all those songs in such order? Well, if you're in, have fun guessing.. :)

Friday, August 12, 2011


Feel so familiar, seem so strange
Lost track of everything
No use search for anything
It's all there, it's nowhere

See in blindness
Listen in deafness
Wander in stillness

Vague in crystal clear
What was, what is, what will
Which never, which ever
Embrace the Grace

Gravity won't matter, time won't bother
Serene, sagacious

Don't look back
Don't think
Don't even...


Then you realize
In spur of a moment,
You just get caught in a...


1. Ifan Dafyd x Amy Winehouse - No Good
2. Massive Attack - Baby Boy (by Thea)
3. The Antlers - French Exit
4. Warpaint - Undertow
5. The Go Find - Over The Edge
6. St. Vincent - Save Me From What I Want
7. Miike Snow - Sans Soleil
8. The Shoes - Wastin' Time
9. Chad Valley - Now That I'm Real (How Does It Feel)
10. The Cure - Lullaby

Download it here

Catch yourself in a reverie..

Thursday, June 30, 2011

A Dream Within

Everything starts with a dream..
Visualize it..
Things that you'll do, what you'll become, which route you'll take.
Step by step, to the highest ground.

Feel it..
Sincere thoughts as a human being, the lust and the greed.
The never ending needs to be satisfied.

Face it..
It always fun to dream, chase the glimmers of hope.
Stop asking, start to dream.

Because in everything you do, there's...

"A Dream Within"

1. Aeroplane feat. Sky Ferreira - Without Lies
2. Grandadbob - Mmmnnn
3. Mono - Life In Mono
4. Chapterhouse - Mesmerise
5. Air - Run
6. The Radio Dept - 1995
7. Erlend Øye - Sudden Rush
8. Miike Snow - Cult Logic
9. Frou Frou - Let Go
10. Warpaint - Elephants
11. Saint Etienne - Who Do You Think You Are

you can download the mixtape here.

So.. Start dreaming, dear..