Surviving in a shrunken music industry is challenging, but Grant Dexter, co-founder, president and chief executive officer of MapleCore Ltd., is having a great run, with the company reporting cumulative double-digit growth – and some triple-digit growth – in its varied businesses over the last seven years.
Founded in Toronto in 1999 with a vision of how musical artists could use the Internet to promote and sell their wares, the company first launched MapleMusic.com, an e-commerce site that now provides online stores for more than 1,000 artists, including Martha Wainwright, Kathleen Edwards, Jann Arden and Chantal Kreviazuk. It went on to partner with Universal Music Canada to create two record labels and a music distribution arm.
But the biggest key to the company’s success was a strategic move in 2009 into other entertainment services. The 35-employee company is currently divided into a music services division and an online division; its umbrella of companies now includes its two record labels, Open Road Recordings and MapleMusic Recordings; the e-commerce site MapleMusic.com; online ticketing agency TicketBreak; music distribution company Fontana North Distribution; music publishing company MapleMusic Publishing; and Pheromone Recordings, a boutique label of which it is a partner.
Last year, non-music services accounted for more than half – about 60 per cent – of the company’s total revenue of well over $20-million, Mr. Dexter says.
Mr. Dexter, 41, a former management consultant at PricewaterhouseCoopers LLP, particularly enjoys signing and developing new talent. Besides numerous music industry awards, MapleCore won an Ontario Business Achievement award, the RBC Royal Bank award for small business, in 2011.
Q: What’s the damage to the Canadian music industry?
A: The music industry in Canada was worth around $1.3-billion in 1999 and we’re probably around $400-million right now. Imagine that loss in 12 to 13 years. What happened was when the music sales stopped, the record companies stopped being able to promote, publicize and market the records. At first it didn’t seem to matter because the record companies were still spending money, but then artists realized that their marketing money had been cut from a typical budget of $10-million to $2-million, or their tour support cut from $1-million to $50,000, so the whole eco-system started to fold in.
Up to two or three years ago, there were always naysayers about how the music industry had changed. The artists were naysayers at first but then they realized that all their budgets were crushed. Then it was the public saying no, we’re not stealing music, but then we all realized that anyone between 12 and 25 doesn’t pay for music. Not to mention books, movies and all the other intellectual properties that I adore. So when I defend music, I’m also defending authors, movie producers and people who work on sets. If people don’t pay, there’s no money to invest back into it.
I’d say in the last two years, more people can name songs rather than bands. Major labels, because of the pressure put on them, are all doing singles deals so there’s all these bands coming out that are singles-based. An artist might do a bit of touring from that, but not build a career. The worry there is that they’re not going to have a touring base, or a publishing or merchandise base. So the worrying thing in the industry is clearly the lack of music sales.
What’s your strategy?
One is to be the best you can be in a specialized market. We’re a boutique label so we’ve always handpicked the artists we want to work with. The tiny ray of hope is, just like when I was growing up in the seventies when there were only seven or eight TV channels, now there’s 500. The audience is fragmented so it’s allowed for specialization. We can handpick artists we want to work with who have decent-sized audiences and unique marketing abilities.
The second thing we’ve done is to diversify our revenue stream. Last year, over 50 per cent of our revenue came from non-music sales, whereas, three years prior, almost 95 per cent of our revenue came from music sales. So in three years, we’ve diversified our revenue base by 50 per cent. That includes ticketing, and VIP ticketing packages [offering exclusive seating, meet and greets and merchandise] with bands that we work with like Hedley, The Tragically Hip and Our Lady Peace. Instead of using an intermediary or third party like Ticketmaster, artists can build a transactional relationship with their fan base off their own website with custom-made tools.