For an Industry Ravaged by COVID, There’s One Shining, Bright Spot
For an Industry Ravaged by COVID, There’s One Shining, Bright SpotNovember 16, 2020
Baldo Gallego and Paul Marele didn’t plan to start their business in the middle of a pandemic — it just happened that way. Their decision to take over the distribution arm of Barcelona’s Subwax record shop had been in the works since last year, but by the time that all the paperwork was finalized and all of their new accounts were up and running, Spain was in lockdown. Like everyone else, they were worried, but after months of preparation, they had little choice but to get down to work.
“We just did it,” says Gallego. “Of course we didn’t know it was going to last this long. We thought it was going to be maybe two or three months, but we just stayed busy, learning more, and looking for ways to improve our business.” To their credit, that strategy has largely paid off, even as the world has floated in and out of lockdown over the past eight months. Aside from an initial slowdown when the pandemic first hit, sales have generally been steady, and in some cases have improved, especially as Gallego and Marele have made a concerted effort to expand and bring new labels into the Subwax fold. They now have more than 100 imprints on their roster, including labels like Limousine Dream, Butter Side Up, and SlapFunk, and they’ve even taken on new labels that started up in the middle of the pandemic, such as Maricas and Mindhelmet.
2020 has been short on good news for the electronic music industry. The year’s festival slate has essentially been wiped out, and while clubs did re-open (in a limited fashion) for a few months in parts of Europe, the reintroduction of lockdown measures has basically put an end to that as well. International travel remains difficult (or, depending on your location, impossible), artists are stuck at home and nobody is quite sure when any of the industry’s live-music machinery will be up and running again. This has also affected electronic music media, as reduced advertising dollars from club and festival promoters (and in the case of Resident Advisor, a near wipeout of its revenue from ticket sales) have pinched budgets that were already stretched to begin with, prompting several outlets to either lay off or furlough staff while reducing their freelance budgets.
“The gig world is obviously decimated,” says Jimmy Asquith, founder of Lobster Theremin, a UK-based label and distributor. “All of that is in a really tough place at the minute. But when it comes to releasing records and releasing music, I’d say it’s super healthy.” His words may seem surprising, but despite all the pandemic-induced worry that’s out there, electronic music sales have been a genuine bright spot. “Record sales have jumped and digital has had a jump simultaneously as well,” says Asquith. “It’s actually been a really good six months for record labels and distributors overall, especially within the realms of dance music.”
Lobster Theremin, which started in 2013 as a label, added a distribution arm (Lobster Distribution) in 2015 and now has a roster of approximately 300 labels, including Local Action, Shall Not Fade, Naive and Hardline Sounds. During the years before the pandemic hit, Asquith had already seen several ups and downs in the vinyl market, but he feels that the current surge in sales largely comes down to lockdown restrictions and macroeconomic factors, like government stimulus checks and furlough programs, that are essentially out of the industry’s control. “The majority of the vinyl market, if we’re being honest, is home DJs, not club DJs,” he explains. “So what are people going to do if they’re spending all of their time at home? They’re going to spend money on things that they can use at home. And because they can’t go to raves, they want to be DJing at home. If you’re being paid 80 percent of your wage and you’re not spending any money on going out or eating out, tell me you’re not going to buy a load more records than you were before.”
As a label, Lobster Theremin — which actually serves as an umbrella for numerous imprints, not all of them known to the public — is having a banner year. “We’re releasing more than we’ve ever released,” says Asquith, who notes that they’ve already repressed at least 15 different releases from 2020. Amongst fans, there’s a genuine excitement about buying new electronic music, particularly around genres like UK garage and the faster end of techno, and many record shops seem to be benefitting. They’re definitely buying more stock, as Lobster Distribution has seen larger stores taking 80 or even 120 copies of certain new releases (and occasionally even more), while more niche shops will sometimes ask for 20 or 30 copies of a highly anticipated record. These numbers represent significant jumps, and mean a lot when only 300 or maybe 500 copies of a release are being pressed in the first place.
Clone Records has been going strong for nearly three decades, operating out of Rotterdam as a shop, label, and distributor. Its distribution roster, which currently numbers more than 100 labels, includes Delsin, Hivern Discs, трип, and Nous’klaer. Sales, both physical and digital, have been steady for the Dutch outpost this year, as Hans Verhaag, co-manager of both the physical and online Clone stores, explains. “There was a brief slowdown in the spring when, especially in countries like Spain and Italy, everything was closed, including the stores. That put a dent in our volume, but now it’s pretty much back to normal.” Oddly enough, one of their biggest initial challenges was convincing other entities — particularly labels — that it was safe to move forward. “Initially, a lot of labels were perhaps a bit anxious about how sales were going to be with the pandemic happening, so a lot of releases got postponed,” says Verhaag. “We made an effort to make labels aware that it was important to keep the stream going because the demand is still there, regardless of the coronavirus.”
Although Clone hasn’t seen a major uptick in business, they also haven’t had to reduce their staffing levels or make any major adjustments to how they operate. The physical shop has fewer customers than before, and safety measures like mandatory masks and gloves for both staff and customers have been put in place. But online sales are solid, and barring some sort of unforeseen downturn, there’s no looming existential threat to the company. “We’re not looking at any kind of desperate measures,” says Verhaag, whose many years in the industry have given rise to a notably pragmatic outlook. “Of course, it’s a rough year and this will affect the company’s finances, but honestly, even in a good year, it’s really not too easy to maintain a healthy business selling vinyl.”
Back in London, however, Lobster Theremin’s Asquith is feeling undeniably optimistic. “Overall, 2020 is more open-minded, less gatekept and a massively exciting time,” he beams. Although he doesn’t cheer the setbacks faced by the music media — whose reviews and coverage theoretically help drive record sales — he’s also realized that their work has less of an impact than most people realize. “The traditional channels of press and journalism have been massively thinned, but those channels didn’t necessarily affect vinyl sales,” he says. “We’ve pushed artists who’ve sold thousands of records and you’d never see them on Resident Advisor.”
Knowing that, Lobster Theremin is looking to put its current run of success to good use, refining its business practices and leveraging its influence to bring new voices into the fray. On a practical level, that means partnering with more new labels and new artists. And while that drive began before this year’s Black Lives Matter protests and the subsequent discussions they prompted within dance music circles, the company has now further expanded its efforts to work with more people from communities that are underrepresented in dance music — and the vinyl market in particular.
Many of these partnerships will involve pressing & distribution (P&D) deals, which are actually quite common between distributors and small labels. Traditionally, they involve the distributor fronting all of the costs for pressing a release, which they then distribute in hopes of recouping their money and, if all goes well, turning a profit that is then split with the label. For a label, especially a young one, this kind of deal can be great, but the risk level for the distributor is quite high, especially in an era when profit margins, even for successful releases, are often razor-thin. As such, most distributors are quite selective about which labels they will offer P&D deals, leaving anyone without the clout to qualify — or the capital to press their own records — outside of the vinyl game.
To help combat this, Lobster Distribution began rolling out “hybrid” P&D deals late last year, in which labels front a small amount — something like £500 — as a deposit. The remainder of the pressing costs are covered by Lobster, which then proceeds as normal with distribution, recouping its costs through sales and settling the balance sheet with the label approximately six to eight weeks after the initial release date. By mitigating some of the upfront risk involved, the company is able to offer more of these deals, and in some cases — like imprints with a proven track record or artists, labels or collectives from underrepresented communities — the deposit paid by the label is negotiable and can even go all the way down to zero. For Lobster Distribution, these hybrid deals are essentially a form of investment, widening their network of artists and labels while simultaneously platforming new voices, scenes and sounds. “I wouldn’t be surprised if we see a lot of really pivotal projects, labels and artists come about over the next 12 to 24 months,” says Asquith.
Although Clone’s plans for the future are less ambitious, Verhaag is certainly pleased that 2020 hasn’t shaped up as disastrous for the company as some people feared. “I’m so happy to see that even in a weird year like this, most people are staying remarkably positive,” he says. A similar sort of cautious optimism has taken hold at Barcelona’s Subwax, where Gallego and Marele received an unexpected (albeit welcome) surge of new releases in September and October. “The labels are feeling optimistic and thinking that everything will come back to normal, but we’ll see,” says Gallego. “We’re not making any plans past February.”
“We don’t know what’s going to happen” adds his business partner Marele, “but we’re proud to do this. We’re helping the people who make music to continue putting their music out, and whether the clubs are open or not, dance music has to be alive.”
Shawn Reynaldo is a freelance journalist and editor based in Barcelona. Author of the weekly First Floor newsletter, he was a longtime contributor to RBMA, previously served as Editor in Chief at XLR8R, and has also written for places like Pitchfork, NPR, Resident Advisor, DJ Mag, Bandcamp, and Electronic Beats. Find him on Twitter.