How One Indie Label Paid For New Releases Using Older Songs

Cash flow is a constant concern for indie labels, so finding new sources of investment and revenue is critical. Abducted Records used this unique approach.
August 16, 2017

Running an independent label is equal parts challenging and rewarding.

There are few better feelings than bringing new music into the world from artists you believe in.

But cash flow is a constant concern. New releases tend to create a spike in sales, but can then quickly level off. Lagging payments can strain budgets. And signing the new acts needed to keep momentum going gets expensive.

So finding new sources of investment and revenue is critical.

That’s what brought Abducted Records founder Dorian Whitcomb to Royalty Exchange.

Whitcomb started volunteering with street teams for local bands at age 13, and has remained in the music business ever since. He evolved from throwing his own shows, producing his own music, and eventually putting out digital releases under his labels Abducted Records and Abducted LTD.

In his eight years running Abducted, he’s had his share of success. Highlights include a number of tracks that reached the top 10 overall on Beatport, a leading dance music online retailer, as well as getting placement on major networks such as ABC and FOX.

But in the electronic music space, particularly in the niche that Abducted focuses on, success can be fleeting.

“It’s hit and miss,” Whitcomb said. “It’s a very fickle market. For a lot of us, digital sales plummet after a quarter or two. Especially the more niche it is.”

Which brings us back to cash flow. When incoming royalties fall to a trickle, Whitcomb might have only a few hundred dollars to spend on acquiring new catalog. So he turned to Royalty Exchanges to collect several years worth of royalties upfront.

To do so, he invited investors to buy into half of the incoming sound recording royalty revenues earned from a select portion of his catalog. This allowed him to raise several years’ worth of royalties upfront, while retaining the other half as ongoing revenue. And, he keeps full copyright control.

The portion of the catalog he put up for sale earned just under $4,000 the year before. By selling it, he raised $17,000—just over 4 times that amount—to reinvest in the label. Now, he has the money to buy additional catalog and support new releases. And any revenues he makes from these actions are all his, not shared with investors.

“This is a good concept for what we do, and very advantageous for labels like us,” he said. “To get an influx of capital right away is a good thing. It doesn’t make sense to get a loan that I need to pay back. I’d rather have the buyout and have three to five years of revenue to reinvest into the label.”

Whitcomb plans to use the proceeds to acquire and promote new releases to put out on his label, and help artists he’s passionate about gain more exposure.

After all, running a niche indie label isn’t really about the money. It’s a labor of love. Love for the music. Love for the fans. And love for the artists.

“I push music that I love and give exposure to artists I really appreciate,” Whitcomb said. “I would like to create an environment where the artist gets paid decently. (Royalty Exchange) created a good platform to do so, and I think it was run really well. I’m definitely interested in repeating this in the future.”

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