Instrumental invites independent labels to join its AI-powered ‘Label Builder’ program – with guaranteed 20% streaming revenue growth

What’s that you say? A new “AI-powered” distribution/services offering – making big promises to independent labels/artists/entrepreneurs in 2023?

Eyes already rolling upward? Perhaps roll them back into focus, just for a while.

Because in this instance, the home of the offering in question – Tencent-backed Instrumental – has a weightier pedigree in the world of artificial intelligence than most firms you’ll come across in the entertainment biz.

Plus, Instrumental’s new offer is anchored in something rather unusual for indie labels: A guarantee that it can grow their business’s streams by at least 20% within 90 days.

If for any reason that milestone isn’t hit? Said indie labels get to walk away – no questions asked.

What’s more, these labels will be paid, in full, by Instrumental for the minimum 20% streaming revenue growth they were promised.

“We’re determined to do almost everything differently to the established ‘indie’ distribution companies out there.”

Conrad Withey, Instrumental

“We’re determined to do almost everything differently to the established ‘indie’ distribution companies out there,” says Instrumental co-founder and CEO, Conrad Withey.

“They want to lock label clients in for a set period of time? We won’t. They don’t guarantee growth? We do.

“They’re just now jumping on AI? We’ve been doing it for nearly a decade.”

Reflecting on Instrumental’s decision to guarantee new label clients the cash resulting from a promised 20% uplift in streams, Withey adds: “We wouldn’t offer it if we weren’t confident we could achieve it.

“So far our early partnerships have seen clients grow streams, on average, by +58% in the first 3-6 months. That’s a metric we plan to maintain and hopefully improve.”

To understand Instrumental’s confidence, a brief history lesson is in order.

London-headquartered, the company emerged as one of music’s first AI-powered ‘A&R’ scouting tools eight years ago. Able to discover and track emerging artists making noise on socials and streaming services, it quickly found major clients such as Warner Music Group, Republic Records and Live Nation; the Financial Times even heralded it as evidence of “Music’s Moneyball moment’.

Then, in 2020, following Tencent’s investment, a pivot: Instead of inviting outside clients to take advantage of Instrumental’s proprietary AI tech, the firm started exclusively hogging it for itself, using it to build out its own internal label, FRTYFVE.

FRTYFVE has since racked up over 3 billion streams, establishing itself as a significant player in the indie artist services world, working with acts such as Rachel Grae (2.7 million Spotify monthly listeners), SadBoyProlific (2.6m), and Micky (2.7m).

Along the way, adding to its A&R ‘Scout Bot’, Instrumental has continued to invest in tech to power FRTYFVE developing additional data and AI-enabled tools including: (i) ‘Collab Tool’, which matches artists to their optimal collaboration partner; (ii) ‘Pitch Pal’, which helps unlock algorithmic marketing tools across DSPs; and (iii) ‘Forecaster’, which uses scouting and streaming data to predict future income from new deals, helping reduce risk and increase ROI.

Which brings us to today – and Instrumental’s latest launch.

Having honed its craft on FRTYFVE, Instrumental is returning to its B2B roots and opening up its tech stack to outside indie labels – as a third-party distributor and services provider.

Via its new ‘Label Builder’ proposition, Instrumental says select indie label clients can access its AI tools to discover new talent, sign better deals and optimise their new releases and catalog.

“Label building in the modern music business is about a blend of new technology and new techniques” says the company’s CTO Simon Christian. “We’ve built tech that can help any label entrepreneur make smarter future-facing decisions based on data that delivers real time insight on the recent past.”

He adds: “Instrumental will continue to invest in developing powerful tools that span the whole lifecycle of recorded music – from discovery to assessing market potential, forecasting futures to running dynamic P&Ls, as well as optimizing track performance using algorithmic tools.”

“We’ve built tech that can help any label entrepreneur make smarter future-facing decisions based on data that delivers real time insight on the recent past.”

Simon Christian, Instrumental

Instrumental can also offer advance financing – with a multi-million dollar fund through its partnership with BCI Capital – plus distribution to over 100 DSPs.

“Distribution these days is a utility – anyone can do it,” reflects Withey. “Only a fool would claim that offering distribution in and of itself was anything special.

“Our ‘secret sauce’ is everything we layer on that to change the game, across a suite of AI tools and our in-house expertise.

“This toolkit is used by the FRTYFVE team on a daily basis to drive their growth further which means it just keeps getting better and better.”

Instrumental’s new offering for indie labels sees the company paid via a commission structure, which Withey says is “in line” with the typical 15%-25% share of revenues taken by rivals in the field.

As for Instrumental’s “guaranteed” streaming growth offer to new indie label clients? It comes with one particularly important caveat: Instrumental isn’t accepting just anyone into its roster of partners.

“At FRTYFVE, they’re very particular about the artists they work with,” says Curan Tahim, Instrumental’s new Label Partnerships Director. “They have to buy into our methodology and be ready to lean into our ways of working, which are tailor-made for the modern era of the music business.”

“It’s going to be exactly the same for us at Instrumental; we will only be working with labels that ‘get it’ and that we really believe we can deliver value for, through both our tech and expertise.”

He adds: “It’s quite a Darwinian system – but we aren’t playing the volume game. We want the growth to come from our label partners’ future strength and success – not from onboarding thousands of labels and just leaving them to it.

“It means we’re very serious about buying into shared goals and guaranteeing growth for new clients.”Music Business Worldwide