Andy Taylor Has Least Fashionable Band as Ringtone
Gimme SanctuaryAndy Taylor has built a music-industry powerhouse by doing what's best for his artists.
From: Issue 90 January 2005, Page 31
By: Ian Wylie
Aside from his cigar, the portly accountant couldn't look any less a rock-and-roll impresario. But when a call comes in, his cell phone belts out "Two Minutes to Midnight," a headbanging showstopper by heavy-metal gray hairs Iron Maiden -- one of his acts.
Andy Taylor, 54, organized college dances at Cambridge University until he and friend Rod Smallwood discovered "the Maiden" in a London pub in 1979. Since then, this "least fashionable band on earth" (Taylor's words) has sold 55 million records with scant airplay -- and Taylor and Smallwood's $248 million Sanctuary Group Plc. has become a monster hit in a flagging industry.
As the music "majors" -- Universal, EMI, Warner, and Sony BMG -- shed staff and ax artist rosters amid declining CD sales, Sanctuary is enjoying a five-year run of profit growth. Why? Sanctuary creates long-term, soup-to-nuts franchises around artists, many cast off by bigger labels. It's the UK's largest independent record company. But it's also the biggest music-management company on the planet, looking after 120 acts. And with 150,000 songs on its books, it's one of the largest independent owners of music intellectual property rights.
Taylor calls it a 360-degree business model. Sanctuary recognizes that CDs represent only a small slice of the public's musical appetite. So it records the Strokes and the Libertines, among others, but it also arranges tours for 350 acts, sells merchandise at shows, and licenses the rights for commercials, movies, music downloads, and cell-phone ringtones.
Sanctuary favors "long-term artists" -- acts that have dropped off the Top 40 yet command unswerving loyalty among fans who'll pay $70 for a concert ticket and $40 for a T-shirt. Take Morrissey, a former singer with the Smiths. His last album for Universal's Mercury Records, 1997's Maladjusted , sold barely 100,000 copies. Seven years later, his You Are the Quarry has hit nearly $1 million in sales for Sanctuary, and his live concerts consistently sell out.
The formula works because when it adds artists, Sanctuary often retains their managers as employees to look after the relationships -- enticing them with bigger roles. That's why Mathew Knowles moved to Sanctuary in 2003. His daughter Beyonce was pop's biggest star, and he also managed Destiny's Child, the biggest girl group since the Supremes. Now he heads Sanctuary's Urban division. "When I met Andy Taylor I realized our belief systems were the same," says Knowles. "What's best for the artist is best for the company."
Source: FastCompany.com
1 Comment
Mmh... for those interested in Sanctuary, read this:
Sanctuary, the music group run by the amiable Iron Maiden nut Andy Taylor, punches well above its weight when it comes to publicity.
A strategy of signing up typically ageing acts, who the fashionistas at the record majors have grown tired of, has looked rather cute at a time when golden retreads are all the rage.
But Sanctuary's share price tells a different story - down 50% from its millennium-boom high and stuck in a 40p-50p rut for the past two years.
An explanation could be found in yesterday's results statement for the year to end-September. Investors need to ignore the supposed "highlights", which include the heroic creation of a "normalised pre-tax profits" figure. They should ignore, for now, an £11.4m exceptional charge, which triggered a profits warning on Tuesday and which has actually taken this business to a pre-tax loss of £1.8m for the period. And they should certainly ignore all the guff about Alison Moyet, Nancy Sinatra and the other exciting Sanctuary signings.
Instead, they should delve into the financials and have a cold, hard look at the cash flow statement - because this company is haemorrhaging the stuff.
Raw cash outflow jumped 65% during the year to £22m, inflating Sanctuary's debt pile by more than 40% to £74m.
Gearing, at about 60%, looks manageable and the company has never made any secret of the fact that it needs to spend cash (often as advances to artists) to fuel its growth. But the obscure ratios being quoted in yesterday's results statement to argue that the cash position is improving ("conversion rate of cash to ebitda, before artist advances," for example) just draw attention to this stressful little matter.
Source: The Guardian