Lorde's manager says industry is broken
Tim Finn couldn't do it. Neither could Shihad. Nor Bic Runga. But Lorde has.
Cracking the United States - accounting for around half of the global music industry and tastemaker for the other half - turns what effectively is a cottage industry in New Zealand into big business.
"It's massive. You only really understand that when you land - it's f-king insane," says Scott Maclachlan, who first signed 12-year-old Ella Yelich-O'Connor in 2008 and now works as her manager.
The past eight months have seen contracts and communiques criss-cross the globe as Maclachlan played off music industry heavyweights, even turning down the offer of a private jet to attend meetings, in order to negotiate a publishing deal for his suddenly-famous client.
"You are essentially spinning plates" he says of a courtship that first winnowed five contenders down to three, and finally culminated in a co-publishing deal with Songs Music Publishing being announced last week.
He says reported advance payments from SMP in both the Wall Street Journal (US$4m) and Billboard (US$2.5m) are "completely bullshit", but won't provide a number of his own.
In any event advance payments are, in business terms, essentially meaningless as any sum advanced is deducted from the artists' split of publishing income.
According to industry insiders these deals - signing over to a third party the rights to collect royalties and fees from licensing a song for use in films, movies and television commercials - typically see artists keep between 80 and 95 per cent of this income.
Maclachlan won't disclose the number he got for Lorde, but hints it lies towards the higher end of the scale.
"Suffice to say, when deals get competitive, these splits tip even more in favour of the artist," he says.
Maclachlan admits he isn't quite sure exactly how he's ended up at this point, holding business discussions with super-producer Simon Fuller and meeting Randy Phillips only weeks after the AEG Live boss escaped a civil suit over the death of his then-client Michael Jackson.
He says: "I'd love to say I was a Svengali guru figure, but none of this was planned."
While Maclachlan wouldn't disclose his cut of Lorde's multi-million dollar earnings, typical contracts in the industry entitle management to a 20 percent commission of their client's earnings, meaning his boutique firm Saiko Management is likely closing in on its first million from its first client.
Not that Maclachlan is counting his cash before it's arrived, and has turned down some six figure offers.
"She's been offered ridiculous sums of money, which would be very handy to commission on. But I want to be working with Ella for the next 20 years and don't want her to turn around in two years and say ‘You took me for everything you could.' That's completely not my style," he says.
But there's still more to sell. Another Lorde song, Tennis Court, was getting play on centre court during both Wimbledon and the US Open.
Second single Team is just beginning to be pushed in the United States, to be followed by months of touring and ticket-selling.
Lorde's success comes despite the industry both here and abroad facing near-crisis as revenue streams collapse.
According to financial statements for Universal Music filed to the Companies Office between 2009 and 2012 the sales of physical CDs, the traditional cash-cow of the sector, slumped 41 per cent.
Despite digital sales in the same period more than doubling - from a low base - there's a gaping chasm on the revenue statements of the music industry.
"And digital sales are now plateau-ing. You've got this massive deficit and it's really tough, it's incredibly tough for record companies," Maclachlan says.
And it's even tougher in New Zealand where the industry is so tiny most record labels operate out of the same building in Symonds St (to save on overheads they share a receptionist), recording executives wear multiple hats and successful artists have day jobs.
"When I first got here I worked with Smashproof and they had the longest-running number one in the New Zealand charts with Brother. I was trying to get them to do morning TV, and they said "Nah, I can't. I'm working at the Warehouse that day," Maclachlan, now 44, says of his arrival in New Zealand in 2008.
He landed here thanks to wedding bells - his wife is a Kiwi - following a career in the United Kingdom. The decision was made to fly south before their two children got to school-age when a move would be more wrenching.
And his career in music was almost accidental. Born and raised in Essex Maclachlan graduated with a Masters in English before attempting to follow the family tradition and get a job as a journalist. "I was a big fan of war correspondents and war photographers and had a romantic notion that that's what I'd do," he says.
"But I couldn't get a f-king job, and ended up as a gardener."
Meanwhile, the young Mod Maclachlan, between running battles with skinheads, discovered rave culture and started DJ-ing house music.
"It was a very can-do, entrepreneurial optimistic time, driven by copious amount of drugs - which I wasn't a big purveyor or taker of," he reminisces.
His musical hobby landed him a job packing records in a warehouse, soon graduating to running his own boutique label, before landing a job as talent scout. He first worked for an independent company, and then major label Universal.
It was shortly after his arrival in New Zealand while working for the local subsidiary of Universal he first signed Lorde, and also became her manager.
To begin with this dual role didn't come with tensions, as Universal was supportive of a slow-burn development process and marketing strategy that took three years to produce its first recording.
But lately success made the two positions untenable. Maclachlan says he's resigned and finishes up at Universal at the end of the year. "It was getting to the point where it was becoming a conflict," he says.
Maclachlan says the low-key approach of Lorde - keeping overheads low and slowly building a fanbase online - offers a potential salvation for a reeling industry.
"Hopefully people can understand this is another approach. I pray that everyone feels there is an opportunity to see this as something to build on - everyone in the industry can look at this say ‘F-k me, we can do this too'."
Cutting ties with Universal gives Maclachlan the freedom to grow Saiko and the firm is getting offices and a third staff member next month. Aside from representing local music acts Mt Eden Dupstep and SOL3 MIO Saiko's also mulling a move into sports management.
Maclachlan says "brands", whether musical or sporting, have synergy.
"I've finally found one hat that fits," he says.
This week Lorde's single Royals continued its reign at number one on the Billboard singles charts, where it has remained for the past eight weeks. This tenure puts the song in rarefied company: Since 2010 only five tracks have had a longer run at the top. Adele's popular song Rolling in the Deep – which reportedly pulled in US$500,000 from airplay royalties – only managed seven weeks at number one. "I get an update daily, territory by territory, how this stuff is selling. The American figures still shock me every morning," Maclachlan says. According to him, Royals has sold 7 million copies, and Lorde's debut album Pure Heroine another 800,000. These figures eclipse the sales of all music in New Zealand over the past 12 months. According to Sunday Star-Times calculations these sales – and accompanying radio play – have generated $4m in gross income for Lorde to date.
- Sunday Star Times