MASTER THESIS
The Hybrid Record Label
Reconciling the Tension between Conformity and Differentiation in the Dutch
Independent Music Industry
Name Eugenio Olmeda
Student Number 11375612
Date June 23, 2017
Supervisor J.F.E. de Groot
Program MSc in Business Administration
STATEMENT OF ORIGINALITY
This document is written by Eugenio Olmeda who declares to take full
responsibility for the contents of this document.
I declare that the text and the work presented in this document is original
and that no sources other than those mentioned in the text and its
references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the
supervision of completion of the work, not for the contents.
Table of Contents
Abstract
5
1. INTRODUCTION
6
2. LITERATURE REVIEW
9
2.1 Cultural Industries 9 2.1.1 Gatekeepers 102.2 Independent Record Labels and the Decision-Making Process 11
2.3 Institutional Theory 13
2.3.1 Institutional Isomorphism 14
2.4 Optimal Distinctiveness Perspective 15
2.4.1 Optimal Distinctiveness within the Creative Industries 17
3. RESEARCH METHOD
19
3.1 Research Design and Method 19
3.2 Sample Selection and Data Collection 20
3.3 Quality of the Research 22
3.4 Research Ethics 23
3.5 Strategy for Data Analysis 23
4. RESULTS
25
4.1 Independent Record Labels: Gatekeepers of the Dutch Independent Music Industry 25
4.2 Conformity and Differentiation Pressures in the Dutch Independent Music Industry 28
4.3 A&R Managers and the Decision-making Process 30
4.3.1 Phase 1: Research of the Artist 30
4.3.2 Phase 2: Selection of the Artist 35
4.3.2.1 Selection Phase Based on Rational Criteria 36
4.4 Record Labels' Balancing Acts 37
4.4.2 Interchanging the Record Labels' Releases 39
4.5 Shielding Independent Record Labels from Conformity Pressures 41
4.6.1 Alternative Financial Resources 47
5. DISCUSSION
44
5.1 Conformity and Differentiation Pressures 44 5.2 Research Phase 45
5.3 Selection Phase 46 5.4 Record Labels' Balancing Act: Towards Optimal Distinctiveness 47 5.5 Shielding Record Labels from Conformity Pressures 49 5.6 Discussion of the Theoretical Implications 49
5.7 Managerial Implications 51 5.8 Limitations and Further Research 52
REFERENCES
54
Abstract
This study attempts to explore the decision-making process undertaken by Dutch independent record labels in discovering and selecting the right artist for their rosters, and to analyze how pressures for differentiation and conformity interact at each level of this process. This is done by drawing upon the optimal distinctiveness perspective to see how A&R managers and owners of independent record labels manage the tension between differentiation pressures for creativity and conformity pressures for financial resources when it comes to select a specific artist.
An in-depth analysis of the empirical data gathered through fifteen qualitative interviews with A&R managers and owners of independent record labels shows that independent record labels adopt specific balancing acts either in the composition of their portfolio of artists or in the scheduling of their releases, with the specific aim of reconciling the aforementioned competing pressures. The findings highlight how these balancing acts adopted by independent record labels are reflected on the decision-making process undertaken by these organizations to search and select artists.
Furthermore, the study also highlights the fact that for some organizations pressures for conformity are completely null. Organizations avoiding these balancing strategies are forced to quest for alternative financial resources provided by side projects linked to the core business of the record label, or by secondary jobs completely disconnected from the core business of the record label.
1. INTRODUCTION
Scholars operating in the realm of the institutional studies have tried to understand why organizations performing in a specific industry tend to conform to each other, increasing similarities among them (e.g. DiMaggio & Powell, 1983). Organizations tend to adopt general rules and conventions that lead to isomorphism, namely the resemblance in structures and practices of the organizations (Tschang, 2007). Institutional studies report that one of the main causes generating isomorphism among organizations is the uncertainty of the environment in which these firms operate (DiMaggio & Powell, 1983). Actors in the same organizational field look to others for confirmation and inspiration. By doing so, these firms strive to avoid penalties that can derive from unconventional practices that could make the access to resources (e.g. financial resources) extremely arduous (Zuckerman, 1999).
This phenomenon has been identified also in the creative industries, where organizations tend to observe peer organizations for inspiration and confirmation to then imitate their actions/choices in order to cope with the high level of uncertainty typical of these industries (see Franssen & Kuipers, 2013; Ahlkvist & Faulkner, 2002). In the music industry, for instance, Hitters and Kamp (2010) find evidence for this phenomenon, who show that the high uncertainty typical of this industry (e.g. Frith, 2001; Seifert & Hadida, 2007) encourages both independent and major record labels to adopt mimetic processes in order to manage and potentially decrease the risks of releasing music products.
Nevertheless, the music industry, as much as the other creative industries, is driven by a constant search for novelty (Lampel et al., 2000) each canon is continuously recreated and renewed in order to satisfy the ever changing consumers’ demand (Peltoniemi, 2014). This continuous search for novelty is mainly undertaken by independent record labels, small organizations operating at the fringes of the market that scout and select innovative artists that will be delivered to the market (Mol et al, 2008; Hitters & Kamp, 2010; Philip & Owens, 2004). These organizations refuse to adopt proven solutions (Peltoniemi, 2014) and persist in identifying original, novel artists, contributing to increase the heterogeneity of the music field. Hence, a tension may arise between the necessity of the independent record labels to provide innovative artists that can satisfy the consumers’ expectations for novelty (Lampel et al., 2000) while at the same time they imitate each other by promoting more similar artists in order to cope with the high uncertainty typical of the music industry and increase the chances of achieving consumers’ approval and hopefully profits (Hitters & Kamp, 2010). This tension is not unlike, as already reported by Zhao et al. (2017), to the tension between differentiation
industries.
Several scholars affirm that organizations can achieve a position in the market that can reconcile the pressure of the organizations to be different from, but also to conform with the other peers operating in the same market1 (Deephouse, 1999; Zhao, 2017; Roberts & Amit, 2003; Basdeo et al., 2006; Lieberman & Asaba 2006; Das & Teng, 2000). Achieving a balance between these pressures - to be same and to be different - ensures the organization a position of “optimal distinctiveness" in the market (Zuckerman, 2016).
A small number of studies across the creative industries already identified the tension between conformity and differentiation and the potential benefits that the organizations can obtain when reconciling these pressures (Tschang, 2007; Alvarez et al., 2005; Durand & Kremp, 2016). Nevertheless, no one of these previous studies systematically studied how gatekeepers operating in the creative industries strive to balance these conflicting pressures in order to achieve optimal distinctiveness in the market. Therefore, this study contributes to reduce this literature gap by arguing that competing pressures for differentiation and conformity drive independent record labels to quest for optimal distinctiveness.
In summary, this study aims to answer to the following research question:
How do independent record labels reconcile the pressures for differentiation and conformity in order to achieve a position of optimal distinctiveness in the market?
In order to explore this tension and to identify how these record labels strive to balance the above described competing pressures, this research will focus on the independent record labels’ decision process underlying the selection of artists and bands. The decision-making process plays a key role within the planning operations of the organization and it is shaped by both the external environment in which the firm functions and its internal operations (Fredrikson & Mitchell, 1984; Franssen & Kuipers, 2013). This suggests that by delineating each phase the decision-making of the record labels, it will be possible to identify the potential interactions of both pressures for differentiation deriving by internal organization motivations, and conformity pressures imposed by the uncertainty of the music industry.
This study contributes to the scientific literature by implementing the perspective of optimal distinctiveness in a sample that has thus far been mostly ignored by academia. No previous empirical research exists on the decision-making process of the independent record
1According to Navis and Glynn (2011), differentiation means the extent to which an organization is considered by stakeholders as distinct from the other organizations. This research only considers consumers as stakeholders assessing the degree of differentiation of the organization.
labels and on the interaction that pressures for conformity and differentiation have at each level of this decision process underlying the selection of the artist. Furthermore, this study contributes to the existing literature regarding the concept of optimal distinctiveness by providing an alternative application of this theory on an industry different from the few that already adopted this conceptual model.
In terms of practical relevance, this study attempts to provide to the managers and owners of independent record labels a clear description of the optimal distinctiveness perspective, and the benefits that the implementation of this theory in the management of their record labels can entail to their organizations. This study aims to encourage manager of independent record labels to critically select artists and to be aware of the potential strategies that can be employed in order to reconcile pressures for differentiation and conformity.
In order to aim the research question, this study will be structured as follow. First, the study will briefly review the characteristics of the cultural industries in general, with a specific focus on the music industry. Following that, the concept of gatekeepers will be introduced with a specific attention on the role of the independent record labels in the music industry. Furthermore, relevant concepts from institutional theory and optimal distinctiveness theory will be described. The second part will focus on the methodology applied in this study, which is a qualitative multiple case study approach, based on fifteen interviews with A&R managers of different independent record labels in the Netherlands. Subsequently, the data analysis and discussion will be presented. Finally, conclusions and limitations of the study will be provided.
.
2. LITERATURE REVIEW
In the introduction, the main motivations underlying this study have been outlined. This chapter consists of the study’s literature review. Firstly, the core characteristics of the cultural industries – with a specific focus on topics such as gatekeepers and independent record labels – will be reviewed. Secondly, the main concepts of the institutional theory and optimal distinctiveness theory will be presented.
.
2.1 Cultural Industries
Creative industries are all those businesses concerned with design, media, fashion, games, filming, music, and performing arts (Peltoniemi, 2014).
Available literature provides many definitions of creative industries. For example, Peltoniemi (2014, p.3) defines cultural industries as “those that produce experience goods with considerable creative elements and aim these at the consumer market via mass distribution”. Meanwhile Caves (2000) identify creative industries as those that “supply goods and services that we broadly associate with cultural, artistic, or simply entertainment value”. Where these two definitions meet is the fact that the goods and services typically produced by these industries are not produced only to create economic value. They, in fact, convey a high-level of symbolic and non-utilitarian value aimed to serve aesthetic and expressive needs of the consumers and to pursue entertainment aims by generating amusement and emotions (Peltoniemi, 2014). By providing creative goods, cultural industries shape consumers’ values and attitudes and they have an impact on the consumers’ lifestyle (Lapel et al. 2000).
Cui, Lui & Guo (2012, p. 43) suggest that cultural goods, as experience goods, “require feeling or experiencing, they are more difficult to describe using specific attributes, and may render varied experiences across consumers.” In other words, the value of these creative goods is subjective. This means that the same creative product can stimulate different emotions or appeal to consumers for different reasons. Therefore, the same creative product can satisfy various consumers’ needs in different ways. This intrinsic non-utilitarian characteristic of the creative goods makes extremely arduous the evaluation of the quality of these products (Lampel et al., 2000). Therefore, market success of cultural goods is extremely complex to predict, since the producer will not be able to forecast the audience consensus until these products are in the market to be consumed and experienced. Caves (2003)
summarized this concept with the simple expression “nobody knows”, which refers exactly to the fundamental uncertainty producer of a creative good constantly has to face. Furthermore, if we consider the high-velocity nature of the creative industries that stems from the ever-changing consumers’ taste and preferences (Hirsch, 2000) and from the continuous fads that affects this market (Zhao et al., 2017; Tschang, 2007), the uncertainty that cursed the creative industry is even strengthen.
Another peculiar characteristic of the cultural industries is the persistent oversupply of output or in other words of creative labour and artists. According to Throsby (2001) there are so many creative goods and artists on the market that it is extremely arduous for them to achieve success.
Overall, creative industries are characterized by a constant oversupply of products and by a dramatic uncertainty that makes generating profitable “hits” extremely difficult. For example, Seifert and Hadida (2007, p.790) reported that “on average, only three out of ten featured films produced in Hollywood break even. Of these only one will turn a profit.” Simlarly, Hitters and Kamp (2010) reported that the music industry is one of the most unstable creative sectors where the failure of the artist is common since the demand of consumers is ever-changing and thus extremely difficult to predict.
The constant overabundance of creative goods and artists, and the experiential nature of the creative goods has seen the necessity to establish a filtering system aimed to reduce the number of artists, and consequently creative products that can reach the market through the work of the so-called gatekeepers (Peltoniemi, 2015).
2.1.1 Gatekeepers
In context of high uncertainty and overproduction, such as previously discussed for the music industry, the figure of the gatekeeper is fundamental in order to regulate the access of cultural products and artists to audiences (Hirsch, 1972; Currid, 2007; Caves, 2003). According to Hirsch (1972) gatekeepers occupy a “boundary spanning position” in the cultural industries and they are defined as “brokers who mediate between artists and audiences” (Foster et al., 2011, p.248). Basically, gatekeepers help audiences to choose by filtering and selecting from the variegated supply of creative products and artists present in the market by continuously scouting for new products and creative talents. Furthermore, gatekeepers are fundamental
for the artists since they collaborate with them in order to develop their careers and build their reputation in the cultural fields (Janssen & Verboord, 2015). It has also been demonstrated that gatekeepers play a crucial role in shaping the consumers’ taste and delineate the consumption patterns within the cultural field (Bourdieu, 1984).
In executing their function of brokers, several scholars identified different roles that those gatekeepers can fulfill in the cultural sectors. They can act as tastemakers (Shrum, 1991; Hsu, 2006), as co-producers (Peterson & Berger, 1971) and finally as selectors of, for example, the right movie writer (Elsbach & Kramer, 2003), the right artist for a specific music club (Foster et al., 2011) or the talented artist for a record label (Seifert & Hadida, 2006). Focusing especially on this last role operated by gatekeepers, the selection of a specific artist responds to the need of the cultural industries to judge if the creative individual will be worthy to be produced and then delivered to the market (Janssen & Verboord, 2015). This role is easily noticeable since the majority of the artists are most of the time rejected and even not considered by creative companies (Peltoniemi, 2014). Furthermore, even if artists continually strive to be considered by these gatekeepers in order to achieve support and sponsorship provided by creative organizations, selectors operating in the creative industries vigorously search for new talents and creative products. This search approach has already been demonstrated for example by Foster et al. (2011) in the night club music scene, or by Franssen and Kuipers (2013) in the publishing industry. In conclusion, gatekeepers such as A&R managers of the record labels or art curators of galleries decide if an artist will be included in the cultural organization in order to support him to reach the final consumers in the market.
2.2 Independent Record Labels and the Decision-making Process
The literature identifies two distinct type of gatekeepers involved in the selection or rejection of artists: “downstream” selectors, (critics, retailers, media, etc.) “exerting influence on whether a finished product reaches an audience” (Peltoniemi, 2014, p.6) and upstream selectors, which are organizations “with whom creative artists make contracts (recording labels, film studios, etc.) and who finance creative projects” (Peltoniemi, 2014, p. 13).In the music industry, independent record labels are among the most relevant gatekeepers, and they act as upstream selectors of musicians and bands (Peltoniemi, 2014). As reported by Seifert and Hadida (2006) every musician or band in the music industry has to be
valued and judged by specific gatekeepers. In the case of independent record labels, they rely on the expertise of the A&R mangers who conduct these evaluations.
The first core characteristic of these organizations is the fact that they operate in the music industry without the funding of the major record labels. Secondly, these record labels are typically small organizations that employ a small number of people (Scott, 1999) and they operate with few financial resources in comparison to the major record labels (Peltoniemi, 2014). Lastly, these organizations are devoted to the production and promotion of innovative bands and artists (Peterson & Berger, 1971; Philips & Owens, 2004), and they are specialized in one or a restricted amount of different music genres (Mol et al., 2008; Phillips et al., 2004). Considering all the aforementioned characteristics, it is possible to categorize these gatekeepers as “small specialists” (Peltoniemi, 2014, p. 6). More specifically, organizations with high cultural capital and dense information-sharing networks (Peltoniemi, 2014), operating at the fringes of the market to scout and select novel artists (Mol et al., 2008) and contributing to the heterogeneity of the music industry (Peltoniemi, 2014).
According to Janssen and Verboord (2015), upstream selectors make decisions instead of simply selecting or rejecting a specific artist. This means that independent record labels, when selecting an artist to be included in their roster, pass through a decision process. The decision-making process regards all those choices that affects the organizational health and survival (Eisenhardt & Zbaracki, 1992). The set of decisions undertaken by the organization are the core of each firm’s strategic planning process which aims at “finding and exploiting a fit between its external environment and its internal structures” (Seifert & Hadida, 2006, p. 792). The formulation of the overall strategy of an organization depends primarily on a decision making process implemented by an individual or a group of people operating at the organizational level (Fredrikson & Mitchell, 1984). This emphasizes the relevance for this study to explore the decision-making process of the independent record labels to better understanding process of differentiation and conformity. Reconciling the pressures for differentiation and conformity can be the result of strategies implemented by these organizations that can be already identified along the decision-making process underlying the selection of artists.
Seifert and Hadida (2006, p. 798) report that “choosing the right artist is a strategic decision process involving rational analyses, collective intuition, experience and learning”. The authors consider this decision process as part of the strategy of a record label because the “indies”, by carefully selecting artists, can build a portfolio of artists that strives to match as much as possible the consumers’ expectations and tastes. Achieving this goal, means to
An artists or a band, in fact, “ultimately provides the face of the music company and consumers’ incentives to buy a record or a concert ticket” (Seifert & Hadida; 2006, p. 795). Furthermore, artist selection affects all the subsequent processes of musical value creation undertaken by the record label, especially the marketing activities performed to increase the profit of the organization by promoting the label's artist (Seifert & Hadida, 2006). A&R managers of independent record labels strive to select those artists that can satisfy the expectations of their consumers. Nevertheless, forecasting consumers’ reception of the music of an artist is almost impossible, especially for these organizations that refuse to go with proven solutions (Peltoniemi, 2014). As previously discussed, independent record labels strive to differentiate the offer of the music industry by selecting and promoting innovative and original artists (Mol et al., 2008; Philip & Owens, 2004). This inclination of independent record labels to select innovative artists increase the risk and uncertainty typical of the music industry. This uncertainty, might encourage independent record labels to adopt mimetic strategies to increase their chances to obtain financial resources (Hitters & Kamp, 2010). Clearly, these mimetic strategies also enhance what is defined as institutional isomorphism, in other words compliance and similarities among the organizations operating in the same industry (DiMaggio & Powell, 1983) with the direct result that these organizations will opt for artists not so innovative but more similar with the artists promoted by the other peer record labels.
2.3 Institutional Theory
Several scholars have drawn insights from the institutional theory in order to study the gatekeeping process by adopting a wider point of view instead of focusing only on the organizational level (e.g. Foster et al., 2011; Franssen & Kuipers, 2013).
The Institutional theory is “a widely accepted theoretical posture that emphasizes rational myths, isomorphism, and legitimacy” (Scott, 2008). This theory assumes that norms, rules, routines and schemas established in a social context affect the overall social behaviors and outline what is considered appropriate or not (Kostova & Dacin, 2008). More specifically, the institutional theory affirms that organizations operate in specific social contexts, defined as organizational fields, which are composed by consumers, key suppliers, competing organizations and other relevant stakeholders (DiMaggio & Powell, 1983). Each field
organizes a specific industry - in this case the music industry - by structuring norms, rules, sanctions and general beliefs that shape and influence organizations’ operations, actions and behavior (Alvarez et al., 2005). Overall, organizations operating in the same field adopt specific behavior and undertake practices and actions that are embedded in the organizational field and are driven by the necessity to achieve social justification for their operations and outputs. This is to attain inclusion in the organizational field (Dacin et al., 2007) and approval by consumers, to then gain financial resources (Hitters & Kamp, 2010).
These pressures just aforementioned push organizations to do what the other organizations in the same field do, with the direct result that they resemble one another, hence enhancing in this institutional isomorphism (DiMaggio & Powell, 1983).
2.3.1 Institutional Isomorphism
DiMaggio and Powell (1983) affirm that there are three isomorphic pressures that encourage organizations to resemble one another within the organizational field. These isomorphic pressures are coercive, mimetic and normative. Mimetic pressures are based on the assumption that isomorphic behavior of the organizations can occur due to the high uncertainty of the field in which they operate. Furthermore, they report that “when goalsare ambiguous, or when the environment creates symbolic uncertainty, organizations may model themselves on other organizations” (DiMaggio & Powell,1983, p. 151). More specifically, “actors in the same organizational field look to others for confirmation and inspiration. Successful strategies are often copied, leading to increase institutional isomorphism within given cultural fields” (Franssen & Kuipers, 2013, p. 51).
The adoption of this strategic behavior could be identified in several studies within different fields of the creative industries. For example, Franssen and Kuipers (2013) discovered that editors of publishing companies, when selecting a manuscript, tend to look to other editors for confirmation and inspiration in order to control the uncertainty and decrease the risk of selecting a book that will be published, increasing again conformity and similarities among these organizations. Ahlkvist and Faulkner (2002) reported how commercial radio stations tend to imitate each other when selecting the music that will be played on air. Lastly, Hitters and Kamp (2010, p. 463) reported that the high uncertainty of the music industry “encourages isomorphic mimetic processes at both major and independent companies; they can structure their organizations in similar ways and can apply product
Following that, it seems reasonable to affirm that the gatekeeping process undertaken by the independent record labels can also be analyzed by considering the external environment in which they operate, in other words the music industry field. Therefore, the selection of an artist does not reside only within the organizational level, and does not only respond to the willingness of these organizations to exclusively select innovative and original artists in order to appear different to the consumers. The decision to select a specific artist instead of another one can also be in response to isomorphic behavior adopted to cope with the uncertainty typical of the music industry and, consequently, in order to avoid potential financial losses, as already demonstrated by the previous literature regarding the production of culture perspective (Franssen & Kuipers; 2013; Hitters & Kamp, 2010; Ahlkvist & Faulkner, 2002). The direct result may entail a decrease of the level of novelty and diversity of the artists distributed in the market with the direct result of an increasing homogenization of the independent record labels, promoting music of artists that resembles the one promoted by other peer organizations.
In conclusion, it is possible to see that independent record labels work under two different pressures: the first one pushes them to differentiate themselves from the peer organizations by providing innovative artists, following creativity and artistic expressions; while the second one encourages them to resemble one another in terms of the type of artists that are promoted by these organizations. Reconciling these two pressures means achieving optimal distinctiveness in the market (Zuckerman, 2016), in other words a strategic position in the market of the organization that can respond simultaneously to both of the pressures of differentiation and conformity.
2.4 Optimal Distinctiveness Perspective
The optimal distinctiveness perspective is part of the broader social psychological theory, and seeks to explain the tension within the individuals in trying to simultaneously achieve inclusion and differentiation within a social group (Brewer, 1991). This perspective has also found applications at the organizational level. Considering the evident paradox generated by the opposing pressures for conformity and differentiation that the organizations experience, some scholars emphasized the necessity for the organizations to achieve a position of optimal distinctiveness in the market, a position that reconciles these two opposing pressures (Deephouse 1999; Tschang, 2007; Zhao et al., 2017; Alvarez et al., 2005) allowing the
organization to increase its performance in the market (Durand & Kremp, 2016). Studies regarding this perspective try to explicate how managers should balance pressures for differentiation and pressures for conformity in order to provide substantial benefits to their organizations (e.g. Zuckerman, 2016).
Deephouse (1999) has been the first to conceptualize a theory, the strategic balance perspective, which suggests that managers should adopt moderate levels of novelty in order to achieve a point of optimal distinctiveness in the market. Deephouse argues that organizations operating in the same field strive to differentiate themselves in order to achieve a competitive advantage in the market. Nevertheless, the author also argues that the same organizations should also benefit from conforming themselves with the other peers, especially in case of a market characterized by high uncertainty, as reported in the previous chapter. In summary, the strategic balance perspective “conceptualizes firms as betwixt and between the competing demands of conformity and differentiation” (Zhao et al., 2017, p.94). On one side, organizations conform to each other in order to avoid potential penalties due to deviant actions or behavior that do not respect the norms and beliefs established in a specific organizational field and in order to decrease the high level of uncertainty of the market (DiMaggio & Powell, 1983). On the other side, however, organizations strive to differentiate themselves form the other organizations, aspiring to achieve competitive advantage in the market by exploiting resources that are unique, valuable, rare and no-imitable by the competitors (Barney 1990; Miller & Chen, 1996). By scoring a balance between these two pressures, the organization achieves an “intermediate level of differentiation” (Deephouse, 1999, p.162) becoming optimally distinctive in the market.
A number of scholars have appealed to the concept of strategic balance in order to explain the outcomes of organizations operating in specific contexts. For example, Roberts and Amit (2003) demonstrated how the innovative activities undertaken by Australian banks aimed to obtain a competitive advantage in the market could not diverge too far from the other common activities considered as normal within the bank industry demonstrating, thus, how a strategic balance was perceived as necessary by these organizations. Basdeo et al. (2006) found that when firms strive to differentiate themselves by adopting specific strategic actions they still try to be sufficiently similar to the other peer organizations. Finally, Lieberman and Asaba (2006) affirmed that organizations strive to find a balance between innovation and imitation when operating in the market. The authors discovered that in contexts characterized by high uncertainty and risk, organizations opted to conform with the other peers operating in the market, decreasing the level of innovation of their products.
2.4.1 Optimal Distinctiveness in the Creative Industries
Zhao et al. (2017) reports that even in creative industries organizations seek to achieve optimal distinctiveness. The authors, states that pressures for differentiation and compliance exist in these industries, although they are described by the literature with different labels, in particular as pressures for creativity and pressures for financial stability (Glynn, 2000). These pressures have also been identified by Lampel et al. (2000) who stated that creative organizations have to manage the tension for the creative thrusts typical of all such organizations, and pressures for economics of mass entertainment. The authors then reported that organizations capable of successfully balancing such pressures might benefit in terms of market performance.
This tension has been clearly demonstrated by Tschang (2007) who found that independent video games studios perform a balancing strategy that consists in switching the production from innovative video games to less innovative and more familiar video games. The author found that video games studios devoted to the design of novel video games, have to find a balance between creative pressures and financial pressures, that force them to decrease the level of novelty in their products, increasing similarity among the organizations producing video games. Tschang (2007, p. 1001) reported that “organizational similarity may involve more than market mechanism” supporting the idea that such organizations resemble one another because they strive to manage the high uncertainty in promoting a video game that is completely extraneous to their consumer and to prevent potential financial losses, providing therefore an isomorphic explanation of such a phenomenon.
In the same way, Alvarez et al. (2005) demonstrated how maverick directors of the European filmmaking industry search for optimal distinctiveness in order to balance the pressure for creativity, dictated by the need of these directors to pursue artistic goals, and pressures for conformity to the general norms, rules and beliefs of the movie field in order to gain profits. By achieving optimal distinctiveness, the directors can shield their idiosyncratic styles from the isomorphic pressures of the European movie field. In other words, by finding a balance between differentiation and conformity, these directors can innovate and experiment while still making profit.
Lastly, Durand and Kremp (2016) argued that musical directors adopt specific balancing strategies over the orchestra programming choices. The results highlighted how orchestra programs were composed of a mix of more canonical compositions, chosen by the director of the orchestra to avoid potential financial losses, and less conventional compositions in order
to satisfy the interest of the director to pursue artistic goals, in this way achieving positive rewards and recognition by the audience.
Considering that, this study argues that independent record labels may manage the tension between pressures for creativity and innovation and pressures for financial stability. By reconciling these two opposite pressures, these organizations strive to achieve optimal distinctiveness in the market, in other words a position that reconciles pressures for differentiation deriving from the willingness to select and deal with innovative and original artists, and pressures for conformity deriving from the necessity for these organizations to decrease the high uncertainty of the music industry and avoid potential financial losses.
3. RESEARCH METHOD
In this section of the thesis the methodology is disclosed. Firstly, the research design and method employed will be described. Secondly, the sample and the process of data collection will be presented. Following, the quality of this research will be evaluated in terms of credibility, transferability, dependability and confirmability. Lastly, the model of the data analysis is described.
3.1 Research Design and Method
For this research, multiple case studies of the Dutch independent music industry are adopted. The use of multiple case studies stream from the fact that they can enable the researcher to obtain rich and in-depth data, and identify new interesting insights.
The case study research “can involve qualitative data only, quantitative only, or both.” (Eisenhardt, 1989, p. 538). For this research only the qualitative data is employed considering the strong management aspect that will be analyzed and because previous researches in this specific field are mostly overlooked. The main objective of this thesis is to allow for a better understanding of the nature of the gatekeeping process and how this selection process is managed in order to cope with the tension between conformity and differentiation of the independent record labels in order to achieve a point of optimal distinctiveness in the market. This research is essentially exploratory, devoted to trace specific patterns embedded in the
gatekeeping process of the independent record labels and develop in-depth understanding of the dynamics regarding this process. The inductive approach is the best suited, since it is the dominant logic behind qualitative research and it allows the maturing of new insights through the observation of specific behaviors and contexts (Sawhney, 2004).
Primary data was collected by semi-structured face-to-face interviews with owners of independent record labels or A&R managers, both involved in the selection process of the artist therefore especially suited for the kind of questions regarding the decision process underlying the selection of artists. Most of the interviews took place in Amsterdam, most of them were conducted in public spaces such as cafe, bars and restaurants. Only one of the respondent agreed to have the interview in the office of the record label. For what concern the other interviews regarding record labels operating outside the city of Amsterdam, all of them agreed to have a Skype call.
The length of the interviews was most of the time more than the expected time frame of 30/45 minutes lasting, in a couple of occasions, more than one hour.
The choice of employing interviews as the main research instrument of this study is reasonable and is based on the fact that these interviews have ensured more rich and deep information compared to a quantitative approach (Yin, 2009). Furthermore, semi-structured interviews allow the researcher to adapt its questions in order to face potential new themes that can emerge during the interviews, a possibility that does not have to be underestimated especially in researches aimed to explore and identify new insights. In the course of the research, in fact, the path of the interviews was continually adapted and enhanced. Therefore, this research has not applied a fully pre-formulated guideline.
3.2 Sample Selection and Data Collection
The research considers the Dutch independent music industry, thus this research is based on a theoretical sample instead of a random one (Yin, 2009). The population under examination for this study consists of all the independent record labels operating in the Netherlands, of which fifteen have confirmed their participation for the interviews. The decision to interview only independent record labels stems from the fact that this kind of organizations present a high inclination to innovation and originality of the artists when promoting new music in the market, they seem much more subject to the artistic pressures for distinctiveness and financial pressures for conformity.
In order to access with the independent record labels, it has been asked to to Dutch friends and colleagues to suggest for specific people working or having a contact with independent record labels operating in the Netherlands. Secondly, Resident Advisor - an independent electronic online music magazine - provides an up-to-date list of independent record labels operating in some of the most popular Dutch cities (e.g. Amsterdam, Haarlem, Rotterdam, Utrecht) meanwhile Facebook provides the possibility to search and find independent record labels operating in specific geographical regions. Finally, snowballing sample technique has been employed. At the end of each interview, the respondents were asked to suggest potential other record labels available for an interview.
By exploiting all these means it has been possible to select the proper record labels and contact them via email (Appendix C) or via telephone by obtaining these information on their Facebook pages or websites. Despite a high participation was expected, only a small portion
of the organizations engaged reacted positively by showing their willingness to contribute to the research.
The following table outlines the different independent labels identified, specifying the role of the respondent inside the organization and other relevant characteristics. For confidential reasons, neither the names of the interviewees nor the labels’ name are mentioned.
Independent
Record Label Location
Years of activity in
the Label Job Position
A Rotterdam 7 Owner
B Amsterdam 6 Owner
C Rotterdam 6 Co-Founder
D Amsterdam 20 Owner
E The Hague 2 A&R Manger
F Amsterdam 6 Co-Founder
G Amsterdam 4 Owner
H Amsterdam 7 A&R Manger
I Amsterdam 2 Owner
J Tiel 5 Co-Founder
K Amsterdam 4 Owner
L Amsterdam 5 A&R Manger
M Haarlem 4 PR/A&R Manager
N Nieuwerkerk 3 Owner
O Amsterdam 1 A&R Manger/Label
Manager
Each interview began with a brief introduction regarding the background of the respondent, his role in the organization, the story of the organization, his structure and the main scope. After that, more in-depth questions were asked to gain a better understanding of the gatekeeping process of the independent record labels with a more specific focus, in the last part, of the tension between conformity and differentiation interacting in he selection process
of the artists. The interview guide, including the core questions and other sub-questions, can be found in Appendix A.
3.3 Quality of the Research
According to Thomas and Magilvy (2011), there are four criteria that must be followed in order to gain quality and trustworthiness of a qualitative research. These criteria are credibility, transferability, dependability and confirmability.
Credibility “refers to the trustworthiness, verisimilitude and plausibility of the research findings” (Tracy et al., 2010, p.842). This study ensured credibility by providing abundant details and in-depth data collection of the different case studies analyzed. By adopting this strategy, the research provided what is known as “thick description” of the research (Tracy et al., 2010).
Considering the fact that the research sample is quite small because of the adoption of the qualitative approach, the results obtained from this empirical study cannot be statistically generalized (Tracy et al., 2010). However, by providing rich descriptions of the case studies, the results can still be transferred to other contexts by adopting proper caution (Tracy et al., 2010).
Gilbert and Ruigrok (2010) affirm that dependability of a study is accomplished when the research is documented in detail, allowing a future investigator to replicate the work. In this study, dependability is ensured by providing transparency of all the steps of the study, and by furnishing accurate description of the data collection and documentation. Furthermore, by providing the transcripts of each interview, the dependability of this study is further strengthened.
In conclusion, confirmability is enhanced by ensuring self-reflexivity of the researcher considered as the “authenticity with one’s self, one’s research and one’s audience” (Tracy et al., 2010, p.842). In other words, researchers can have presupposition regarding the topics that will be treated during the interviews that can generate potential biases. This problem will be solved by allowing the respondents to lead the entire interview by asking neutral questions.
3.4 Research Ethics
Anonymity and confidentiality were guaranteed to each interviewee. For this reason, the names of the respondents and the name of their relative independent record labels in which they are working have not been mentioned in this document. The reason underlying this decision stems from the willingness to guarantee full freedom of expression to the interviewees in order to obtain clear and specific information regarding the particular topics dealt within the thesis.
Furthermore, at the beginning of each interview, the reasons and the main purpose underlying the research have been pointed out to each respondent, specifying that all the information obtained through the interviews would have been used only for research purposes and contained in a specific database of the University of Amsterdam. In conclusion, after each interview, the purposed outcome of the research has been discussed with each respondent.
3.5 Strategy for Data Analysis
In order to analyze the data gathered during the interviews conducted with A&R managers and owners of the independent record labels an in-depth analysis has been implemented in order to disclose key themes and relevant information.
During all the interviews, respondents were required to specifically illustrate their statements with the use of examples and the description of significant events in order to facilitate the understanding of each topic discussed. Each interview was recorded and transcribed in order to simplify the analysis of the data. By reading the interview transcripts and notes it has been possible to identify patterns and themes and to generate first impressions.
Subsequently, each transcribed interview was imported in Atlas.ti to start the coding process in order to organize the data gathered and to identify relevant patterns. The codes were generated by constantly going back and forth between data-gathering and data-analysis, adopting therefore an iterative approach. Some codes have been redefined other also discharged. The coding tree can be found in the Appendix B.
Successively, a comparative analysis has been exploited in order to identify patterns, regularities, explanations and propositions among the different cases studied. To achieve this objective, a cross-case analysis (Yin, 2009) proved to be the best methodology. Each case has
been analyzed separately, then cases have been compared in order to identify potential similarities and common features among all the interviews analyzed. Matrices and tables have been employed in order to display the data and to ease the analysis process. Finally, the data have been interpreted and summarized.
The next session will report the results obtained through the analysis approach by providing a rich description and discussions regarding the findings obtained.
4. RESULTS
The following section will describe the results obtained from the analysis of the interviews. Relevant quotes will be reported to support the description of the outcomes. Matrices, tables and schemas will be provided to visualize the results.
4.1 Independent Record Labels: Gatekeepers of the Dutch
Independent Music Industry
Before focusing the attention on the decision-making process underlying the selection of artists undertaken by the independent record labels, this chapter will briefly describe the organizations involved in this research without taking into account already pressures for conformity and differentiation. The relevant information obtained by the analysis of the interviews are summarized in the following table 2.
Record
Label Location Genre Number of Employees Years of Activity
A Rotterdam EDM 2 7
B Amsterdam EDM 1 6
C Rotterdam EDM 2 6
D Amsterdam EDM 3 20
E The Hague Varied 13 3
F Amsterdam EDM 2 6
G Amsterdam EDM 1 4
H Amsterdam EDM 3 7
I Amsterdam Varied 1 2
J Tiel Rock/Indie Rock 2 5
K Amsterdam EDM 1 4
L Amsterdam EDM 4 5
M Haarlem Rock/Indie Rock 5 20
N Nieuwerkerk EDM 1 3
O Amsterdam EDM 3 3
All the respondents emphasize the importance for an independent record label to produce and promote original artists, set new trends and stimulate the proliferation of new music genres: “I think it is really important to be original with your own stuff (…) you should make the trends not following them. I think it is more important as a record label to be like a tastemaker” (A&R manager, Organization H). This role of tastemaker played by the independent record labels is interrelated with the selection of the artists: “(…) my record label lives to promote new artists different from the usual offer typical of the Dutch music scene and to breed eventually new music genres” (Owner and A&R manager, Organization I) .
Of course, owners and A&R managers all affirm that this approach does not ensure them substantial profits as exemplified, for example, by the A&R manager of the record label H: “(…) for us, it is about break-even because you don’t earn a lot of money anyways with this business. The first thing is always about getting it break even”. Following that, it is possible to notice how much the artistic and creative pressures play a fundamental role within these organizations, which are mainly guided by the idea of art for the art’s sake instead of the economic objectives such as the maximization of profits.
Another interesting feature that emerges from the analysis of the interviews is the fact that most of these organizations are involved in the production process of the artists. This role of co-production is expressed, in one of the cases studied, as a serious commitment of the member of the record labels in shaping the artist’s productions in order to help it to score specific label’ standards and expectations:
(…) we are so involved in the process of making music, like that we want to find writers that can match with our producers, or singer that can match always with our producers, so now is more about creating the content and creating the package and also selling it, and this is our main goal now (A&R Manager, Organization E).
However, in most of the cases, the role of the co-producer of the record labels is manifested only in the form of simple advices and suggestions, leaving complete freedom to the artist in the course of the entire production process:
(…) most of the times we like to suggest them how to do stuff, because they are in the wrong direction in the production process and they are going on in that direction, so we advise them to change something (…) I mean the band always has the last say on
everything, but we are really active in all the areas of the band to make it successful
(PR/A&R Manager, Organization M).
According to managers and owners, the motivations underlying these predispositions of the record labels in helping the artists along the production process is due to the need for these record labels to promote music of high quality. In this way, record labels can deliver a product of a quality good enough to be sold in the record stores, played in the music clubs or consumed via streaming services. Clearly, record labels can implement the aforementioned operations only after that they have selected the “right” artist from the overabundance of musicians present in the music field.
In conclusion, most of the record labels included in this research accomplish all the three roles played by the gatekeepers operating in the creative industries already identified by Janssen and Verboord (2015) (Figure 1). Even if these roles are related to each other, this study is only focused on the selection process.
Figure 1. The three roles of the gatekeepers
Gatekeeper
Co-Producer Selector
4.2 Conformity and Differentiation Pressures in the Dutch
Independent Music Industry
Independent record labels emphasize the fact that they want to differentiate themselves from the other record labels by selecting and then promoting innovative artists, as exemplified by the following quote:
(…) if you wanna sell records to make money you have to put out the same sounds of the top ten on the charts, or you just wanna do what do you think is original, (…). Like do it for the art. I mean that’s the biggest challenge, because it is your thing, is different from what the others are doing (…) (A&R manager, Record label F).
In the same way the owner of the record label A reports: “you try to be unique and not the next label in the row that is releasing the same music. (…) we don’t want to be just like the others, we want to differentiate us, we want original artists (…)” (Owner, Record label A). These quotes suggest that independent record labels experience the pressures for differentiation that entails these organizations to select artists that are original and unique in comparison of the other peer record labels. In this way, these organizations can be perceived as different, considering the other peer record labels, by the consumers as reported by the owner of record label G: ”(…) they expect something new and surprising from me, not like the way the commercial music is going, you know which path it is going, you see it grows in a certain way, but I like conflicts, I have and want to be different” (Owner, record label G). However, all the respondents agree on the fact that the music industry is extremely uncertain, it is almost impossible to predict the consumer's response to the introduction of a new artist in the market: “The music of the artist comes out and then you hope that people will buy it. But that's not a 100% certainty. You never know (…) so it is always a little bit of a gamble” (A&R manager, Record label F). This uncertainty is even more stressed when the release of the music is of an innovative artist: “(…) it is risky to promote original music. It is difficult because you want some originality but if the artist is too innovative, too experimental (…), the people are not really interested in that (…)” (Owner, Record label A). The unpredictability of the consumers’ reaction to the introduction in the market of original artists encourages the selectors to also consider artists that are not so original but more attuned to the consumers’ expectations and more similar to the overall offer of other peer
record labels. This decision responds to a specific financial logic: “you promote maybe an artist which is less original because you want to, for example, make some money in that kind of period” (Owner, Record label N). By selecting artists that are more familiar to the consumers and conform with the general offer of the other peer record labels, selectors strive to manage the high level of uncertainty typical of the music industry and ensure financial returns to their organizations: “(…) we have to break even, so sometimes we release music from an artist that is not really original and that is more similar to the other releases of the other record labels” (Owner, Record label A).
This tendency of selectors to rationalize their decision and select artists that are similar with the offer of their competitors encourages them to monitor the market and in the specific other peer organizations: “(…) I watch what the other record labels are doing, which kind of artist, people like specific artists so it is better to stick with your own but I also watch and listening which music is being sold and what is happening so to say” (Owner, Record label D).
More specifically, the owner of the record label N affirm:
I always follow other labels, for sure. I listen to the labels, which style they are releasing because in the dance music genre the music evolves and the artists together. (…) I always try to follow the trend in what to release. (…) I follow the trends, like of the other record labels, what they are doing, because you want to stay on the path
(Owner, Record label N).
The unpredictability of the consumers’ reaction to the introduction in the market of original
artists impose a pressure for conformity that encourages the selectors to consider artists that are less original, entailing similarities among peer organizations that offer the same kind of artists.
The next session will delineate the phases of the decision-making process in order to identify how and where these pressures interact at each stage.
4.3 A&R Managers and the Decision-making Process
A&R managers of independent record labels are the main actors of the selection process and are involved along all the decision-making process, from the research stage to the selection of the artist and the final release of its album, EP or single.
A&R managers show great autonomy in accomplishing their role of selectors since the other members of the organization rely on the experience and expertise of these individuals. Nevertheless, the interviews show that the entire decision-making process is the result of continuous interactions between the selector and the other members of the organization. Most of the time, A&R managers discuss with the other members of the organization in order to receive feedbacks and exchange opinions: “Most of the time I work with my partner [name of the partner], we usually discuss about artists that we want to select (…)” (Co-founder and A&R manager, Record label J). These interactions ease the difficult job of these individuals to assess the artist’s music, its potential fit within the record label and if it is worthy to select:
(…) when I am deciding about an artist and I think that it could be worthy to do a release with him and also the other A&R manager is gonna say yes and also our CEO is gonna say that, then I have like three people that I know and that I trust and that have done such great jobs in the past that I am almost sure that it is ok to select the artist
(A&R Manager, Record Label E).
Clearly, for some small organizations characterized by the presence of only one person, these interactions are obviously not present and the decision process depends exclusively upon the owner of the organization.
4.3.1 Phase 1: Research of the Artist
The decision process starts with the research for new artists. Most of the A&R managers of the record labels periodically receive demos from ambitious artists that want to get the support of these organizations. Nevertheless, most of the A&R managers affirm that this kind of approach is really time consuming and most of the time even unproductive. Listening to many different demos is really demanding and almost all the time the music received is not good enough for the label or for the expectations of the selector. Such circumstances lead
selectors to decide to adopt a more active research approach (Janssen & Verboord, 2015; Foster et al., 2011) as exemplified by the quotes below:
(…) I receive a lot emails per day and if I don’t delate them for weeks I just get overwhelmed by a huge amount of emails from people proposing to me a demo. But the problem is that basically all the time that I give a try to the demos that I receive, they are for the 90-99% of the times horrible, pretty […], so it does not really work this method. I search for new artists (Owner, Record label D).
A&R managers, therefore, prefer to actively search talents that will eventually be selected. In order to do that, these individuals exploit specific internet resources, displayed in Table 2.
Web Sources Record
Labels
SoundCloud Spotify YouTube Bandcamp Music Blogs Beatport Discogs
A x x x B x x x C x x D x x E x F x x G x x x H x x I x x J x K x x L x M x x N x x O x
Another way for A&R managers to search for new talents is by exploiting their personal networks of artists, friends, booking agencies and other A&R managers working either within
the same organization or in other record labels: “(…) I am in a network of people that also own labels (…) a lot of times I get demos that do not fit the label’s roster I pass these artists to other labels that I think can appreciate more the artists and the same happens to me, the other way around” (A&R manager and Co-founder, Record Label C). “(…) we rely on our network, (…) people that maybe you know that have the same music interests and same music taste, people that you trust. Also other artists with which you have some contacts and that you rely on. (…) we also had signed some artists that came as a recommendation” (A&R Manager, Record label F).
Some of the respondents affirm that exploiting personal networks allows the managers of the record labels to seek for original artists who, once promoted, can differentiate the label from the organizations present in the market as reported, for example, from one of the manager interviewed:
(…) for us having a personal network formed by different artists, other people that we trust and who have our same tastes, is not only important, but it is the only way for us. (…) We have a network of people that we trust and our network is very physical not digital. It is very different from the other labels out there. By exploiting this network, we are sure that we can find artists that are completely different from the artists promoted by the other record labels (A&R manager, Organization O).
In the same way, the owner of the record label G reports that specific kind of web resources are not ideal in order to find original artists, and that these resources in some ways conform both the kind of artists that can be found within these platforms and consequently the record labels that exploit these resources in order to search for artists: “(…) artists connected with the network of Soundcloud follow certain kind of artists, they follow certain kind of labels, and the other way around, so what you get is that on SoundCloud, artists and labels naturally go to a certain common direction” (Owner, Record Label G). This brings some of the A&R managers and owners of independent record labels to exploit their personal networks that, according to their claims, allow them to search for more original artists:
(…) it is like a network, speaking with other people. Exploit the knowledge of the other people, there are people that listen and search for music in a almost sick way. Some of them they have a selection for only rare stuff. And these people are useful for me because they provide me only rare stuff, so I am sure that what I am releasing is not a
copy of what the other record labels put out (Owner, Record Label G).
In the same way, the A&R manager of the record label L reports when speaking about the research process:
(…) it is like using Bandcamp and Soundcloud even if they are pretty boring to search an artist, considering the huge amount of similar artists using this networks, but we also rely on suggestions of our friends and people that we rely. It is the most important part this one, our personal network, because we trust it. It is from these people that the most interesting new artists come from (A&R manager, Reocord label L).
Therefore, A&R managers actively search for new artists and this process can be implemented through the use of different sources, classifiable in web resources and personal networks. How the pressures for conformity and differentiation influence the choice of the managers in exploiting one particular kind of resource instead of another one is somewhat unclear. Some of the respondents seem suggesting that personal networks are more reliable resources in order to find more original artists, responding therefore to pressures for differentiation. Meanwhile, web resources such as SoundCloud or Bandcamp provide artists that seem pretty homogeneous, entailing conformity for those organizations exploiting these web resources.
4.3.2 Phase 2: Selection of the Artist
Once the A&R managers have a list of potentially interesting artists they have to assess their quality, therefore they start to listen carefully to their music: “(…) you have to listen to the tracks many times. So you have to consume the music which takes some time” (Owner, Record label B).
At this point, it has been asked to the respondents to illustrate the selection phase in general and the potential criteria that are used when judging the music of the artist and forecasting its potential appealing to the consumers. This stage of the decision process is considered the most difficult one by the selectors interviewed. Consequently, the respondents find particularly arduous to be specific and clear when describing this phase.
