Laurent Bizot, director of No Format
Johannesburg, April 2020
“I’ve been based in Johannesburg for two years now, and from here I manage the No Format label which was created in Paris in 2004. In this framework, I produce records of course, but also tours, films and documentaries. Our musical spectrum covers the different regions of the world.
Record contracts and royalties
I was a lawyer at Universal for eight years. When I set up my label, I wanted to change the rules. All contracts in France are based on the wholesale price of a record excluding tax (HT). By wholesale price excluding tax, we mean the price of a record sold to a retailer. To put it in a nutshell, let’s say €10. From this €10, we have to deduct roughly: €1.5 to €2 for the manufacturing (for vinyl records it is much more), €1, i.e. about 10% for the rights of the authors-composers (what is called in France the SDRM), €2 to €3 (i.e. 20 to 30%) for the distributor. The total of these fees is therefore 50%. Out of the remaining 50%, the producer keeps 40% to recoup his production costs and to ensure the promotion of the record, and finally pays 10%, or €1 to the artist.
At No Format, we chose to adopt the English model of profit sharing. In this system, the producer first reimburses his investment, then shares the additional income with the artist according to a distribution key to be negotiated. At No Format, we’ve chosen to go even further: we don’t wait to be reimbursed for our production costs before sharing with the artist. As soon as there is 1 € coming in, we share it with the artist based on a distribution deal that varies between 40%/60% or 50%/50%. The advantages of this system are the following:
● Transparency. The artist knows where he/she is as soon as the first Euro comes in.
● Simplicity. There are no more 50-page contracts with different discounts depending on territories and types of products. Calculations and negotiations are also much simpler.
● Confidence. The artist who knows a little bit about the business quickly realizes that this is by far the best contract he/she will have seen in their career. This makes it possible to develop a real collaboration between the artist and producer.
We quickly noticed that some of our customers were not content to just buy an album by Blick Bassy or Mélissa Laveaux on our site, but bought 3 or 4 other albums in the process. A part of our audience seemed to be inclined to follow the artistic adventures of the label. On top of that, physical sales were decreasing, computers no longer had CD players, record stores were disappearing or reducing their stock. At the same time, digital sales were growing, but from such a low level that this growth was not enough to compensate for the drop in revenues from physical sales. This was ten years ago, but it is still going on. Today, the number of people subscribing to a streaming platform is on the rise
which is encouraging, but the revenues are still ridiculous.
I was then inspired by what some farmers’ associations in the Paris region were proposing at the time: the direct sale of baskets of organic vegetables. This process made it possible to offer quality products that the consumer bought directly from the producer. Moreover, the purchase is not made individually, but on a yearly basis. You register and pre-pay one basket per week. Once the producer has found a sufficient number of year-round subscribers, he no longer has to worry about going to the markets, about unsold products. His crop is pre-sold. Rather than spending a lot of time and money promoting our records, why not get our customers interested in our productions together? Once a certain
number of subscribers has been reached, there would be less need for this type of promotion/marketing to make a project visible. It would already be pre-bought by people who want to listen to good music!
Today, someone who buys a No Format pass will receive all our productions for the year: records, but also books, scores or silkscreens that accompany the release of the record. All the music and any derivative content from the albums are part of the subscriber’s “basket”. The annual cost of the CD subscription is 50 €, that of the vinyl subscription 100 € and that of the digital subscription 40 €. As a bonus, subscribers can attend acoustic concerts in small venues (apartments or galleries). Today we have about 1000 subscribers. The day we have 3,000
of them, we’ll have enough to run for a year. Our only concern will then be to satisfy the people who have trusted us by producing good albums. We will then be financed by the community of people who have paid in advance for the year’s musical harvest.»