Streaming threatened music label but it sold for $100m
The chairman of a leading music label has revealed how the rise of streaming could have ruined the business.
Lohan Presencer leads the Ministry of Sound label, which was launched in 1993 as an extension of the popular South London nightclub.
It made its name with a string of hit dance music compilation albums which racked up sales of more than 70 million around the world.
Despite being among the world’s most successful dance music companies, the arrival of Spotify and other streaming services threatened its very existence.
“We could see what streaming was going to do to the music industry, turning music into a globalised commodity, predominantly denominated by an American army of artists,” Presencer told a recent business growth transformation breakfast hosted by HeyHuman.
“We had seen the end of the [concept of the] album, very quickly – and that people were just streaming hit music.
“You could see that curatorial brands like ours were going to have no value to the independent businesses.
“They might have a value to larger content owners, like big record companies, who could pack those playlists full of their own music and they might have a value to big music services, like Spotify and Apple Music, who could attract users to their services.
“So, counter-intuitively, with 2015 being the most financially successful year in the history of our record company, we put our label on the market.”
→ READ MORE: MINISTRY OF SOUND CO-WORKING TENANTS ANNOUNCED
In 2015 Apple Music had approached Ministry of Sound with a view of getting it on to its new platform, but Presencer dug his heels in.
“We were the largest company in the world not to be on their service,” he told the audience. “I carried on haggling and after three months we got nowhere.
“The last day of conversations was where they said ‘sign the deal that everyone else has signed, or it may have an impact on the other business you have with us’.
“Could I be bothered to fight back? Could I be bothered to publicise that? Or did we take that as another warning sign of transformative change? It was the latter.”
In August 2016 Ministry of Sound was sold to Sony Music International for $100 million following what Presencer describes as “a very competitive sale process”.
“Business is a journey. It’s not about a destination – you reach various points along the way,” he said.
“We spotted, I think, various opportunities and various threats and those things combined force you into moments of transformations.”
Last year Apple Music and the Ministry of Sound struck an exclusive playlist deal which saw the label de-list - but not delete - its compilations from Spotify.
Apple Music recently surpassed 50m paying subscribers worldwide.
READ OUR REPORT ON THE RISE OF PODCASTS IN OUR INTERACTIVE MAGAZINE - CLICK BELOW