Compass Records Executive Summary
Business Descriptions
In 1993, Brown launched Small World Music in Nashville, Tennessee with husband Gary West and then went on to create Compass Records in 1995. Compass records is a small, independent artist-run company that established their niche in musical genres such as folk, roots, and celtic. In the context of the 2-billion dollar music recording industry, Compass Records has low market share in comparison to the multi-national corporations dominating the business. Brown was formally an investment banker with an MBA from University of California Los Angelos. In addition to her business knowledge and experience, Brown is also a talented musician who won a Grammy on her first album as a Banjo artist. By 2005, Compass Records had 50 artists on contract and were averaging approximately 20 releases a year, with 40% of their albums selling over 5,000 units. Their company makes profit on approximately 80% of their titles. In May 2004, Brown and West acquired a recording studio, which gives them flexibility in the creative process and contributes to their low production costs from not having to rent out a workspace.
Key Issues Affecting the Music Industry * Stagnated Growth in Music Industry: There has been stagnated growth since 1995 in the music recording industry. In 2003, it shrunk to 32 billion, down from its peak level of 40 billion in 1995. * Small Fish in Big Sea: Large multinational corporations dominate 86% of the music industry, including Universal, Sony, Warner, and EMI.
Licensing Contract vs. Recording Contract A recording contract is an agreement whereby the label has the right to promote, own, and market recordings of the artist’s music, indefinitely. In contrast, a licensing contract is when a record company licensed an artist’s finished recordings for a limited period of time. With each new client, Compass records had to determine whether to “produce and own” Adair Roscommon’s next album or “license” her finished recordings. Adair
In 1993, Brown launched Small World Music in Nashville, Tennessee with husband Gary West and then went on to create Compass Records in 1995. Compass records is a small, independent artist-run company that established their niche in musical genres such as folk, roots, and celtic. In the context of the 2-billion dollar music recording industry, Compass Records has low market share in comparison to the multi-national corporations dominating the business. Brown was formally an investment banker with an MBA from University of California Los Angelos. In addition to her business knowledge and experience, Brown is also a talented musician who won a Grammy on her first album as a Banjo artist. By 2005, Compass Records had 50 artists on contract and were averaging approximately 20 releases a year, with 40% of their albums selling over 5,000 units. Their company makes profit on approximately 80% of their titles. In May 2004, Brown and West acquired a recording studio, which gives them flexibility in the creative process and contributes to their low production costs from not having to rent out a workspace.
Key Issues Affecting the Music Industry * Stagnated Growth in Music Industry: There has been stagnated growth since 1995 in the music recording industry. In 2003, it shrunk to 32 billion, down from its peak level of 40 billion in 1995. * Small Fish in Big Sea: Large multinational corporations dominate 86% of the music industry, including Universal, Sony, Warner, and EMI.
Licensing Contract vs. Recording Contract A recording contract is an agreement whereby the label has the right to promote, own, and market recordings of the artist’s music, indefinitely. In contrast, a licensing contract is when a record company licensed an artist’s finished recordings for a limited period of time. With each new client, Compass records had to determine whether to “produce and own” Adair Roscommon’s next album or “license” her finished recordings. Adair