The Label of the Future: How ONErpm Scaled Without Investors

Emmanuel Zunz, the CEO and founder of ONErpm, has spent 16 years building one of the fastest-growing independent music companies in the world, across 40 territories, with a staff of over 500, and without a single round of outside investment. In this episode, he breaks down exactly how that happened.

This week on the podcast, Emmanuel and Dmitri get into why the traditional definition of independence is outdated, why Taylor Swift can be on a major label and still be completely independent, and what it actually means for an artist or company to be in control of their own destiny.

They also dig into the convergence happening right now between distributors and labels, the race to the bottom on margins that's pushing funded indie companies toward acquisition or collapse, and why Emmanuel believes the label of the future is built on scalable technology, diversified deal structures, and a global roster rather than big advances and market share at any cost.

If you work in music distribution, run an independent label, or are trying to build a sustainable creative business on your own terms, this one is worth your full attention.

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Episode Transcript

Machine transcribed

[00:00:00] Dmitri: our topic today is the label of the future, and our guest is Emmanuel Zunz.

He's the founder and CEO of the independent ONErpm, a data-driven hub providing solutions for both DIY creators and established artists and labels around the world. Currently operating in 40 territories with a staff of more than 500, maybe it's 600, ONErpm is one of the fastest growing independent music companies in the world.

Born in Paris, France, Zunz is a former classical guitarist and undergraduate music major, and launched a record label with a $50,000 grand prize at NYU's Business Plan Competition. And over time, ONErpm was developed out of this label, Verge, their transparent approach to the music business starting that, ONErpm, in 2010.

And now ONErpm's building the record label of the future, leveraging technology, scalable marketing, and innovative deal structures. And welcome Emmanuel.

[00:00:51] Emmanuel: Thank you. It's nice to be here. I'm happy to see you guys again and talk to you.

[00:00:56] Dmitri: Awesome. Happy to have you here. Appreciate you joining in. so let's dive in. How have you grown ONErpm without any investment and maintained your own independence? It's pretty impressive.

[00:01:07] Emmanuel: Well, I think it's... we just... you know, part of it is timing. You know, starting at the right time. We started in 2010, although I had the idea in 2007. So I wish I had, was able to start in 2007. We'd be further along now. but we started in two... It took me three years. Once I had the concept for ONErpm, it took me three years to get the technology right.

Lost hundreds of thousands of dollars. And then, uh... but got lucky and finally got, was able to launch the, um- Well, it wasn't the first iteration of Warner Chappell. The first iteration of One RPM was launched in like 2008, 2009. And it was really more of like, um, it was a DSP actually. It was kind of a DSP with an upload tool for artists to, to self-upload, kind of inspired by Myspace and...

But there was like an e-commerce component to it where you could download music, and there was a streaming component and then a multimedia component. And it w- it wasn't actually all that different from Spotify in many ways, and I, and I didn't know anything about Spotify at the time. Unfortunately, that platform lasted no more than nine months, 'cause it was, the technology was terrible.

 the ideas were interesting behind it, I think, but the technology was no good. And so when we launched in 2010, it was really much a, just a simplified platform for distribution. I wanted to really focus on distribution. So we started off being very much like a, a, well, we were a DIY distribution company, similar to, uh, CD Baby at the time.

[00:02:21] Dmitri: Yeah.

[00:02:21] Emmanuel: And, and- So, but part of what, you know, helped us grow was just the timing of it. Like I said, we launched in 2010, and, very early on, And I decided to launch it in Brazil as opposed to launching it in the US. And very early on there was a request for marketing services, very basic marketing services.

 and so it was really a one-man show at the time, so I did all the pitching, I did all the, quality control and, um, you know, the operations and customer service. Um, but very early on we started adding marketing services. and then, you know, over time we established a very strong presence in Brazil, and by 2015 we then started to, you know, I started to open other offices in Colombia and Mexico.

We had a small office in New York. We opened a small office in Nashville in 2016. But that's, starting in 2015, we really started to expand, but it was really because we had established a very strong presence in one market, in a big market, which gave us the strength to then go on and expand into other markets.

And I think what happens, And I think we were, or we were able to do that early on because, partly it was the timing, but also, you know, having a strong presence in one market gives you that strength to go out in other markets, whereas if you, if you were to do something like that today, it would be almost impossible to do that without investment, because just the market is so cluttered and the market is more developed.

So I think, that's one of the reasons. So it was the timing and f- kind of first mover advantage, although we certainly weren't the first. We're more of a second generation distribution company. whereas the first generation distribution companies like The Orchard or IODA or, uh, Believe were much more label interfacing and, and we were more artist interfacing because we kind of came after that first wave.

[00:03:55] Dmitri: Hmm.

[00:03:56] Emmanuel: Um, so that's one of the reasons. I have more. Do you wanna hear more or...?

[00:03:59] Dmitri: Sure. Let's hear a little more.

[00:04:00] Emmanuel: Okay. Yeah.

[00:04:00] Dmitri: So,

so the reason being-

[00:04:01] Emmanuel: It wasn't just timing. It was, it was, uh... And then it was, you know, it's constant, evolution of the business. So, you know, we started off very simple, 90/10, and then we went to 85/15 splits, very simple distribution deals.

 but then as time went on, we started to add services, and then our margins went up. so part of the, uh, part of w- our ability to grow was to take the earnings that we had and just constantly reinvest, reinvest in the business as opposed to, you know, just keep the cash for ourse- for myself or for others.

We, we never really kept the cash for ourselves. We just kept reinvesting. And so understanding the nature of, of the deal structures and being able to take our earnings, uh, and you know, reinvest those in the business, that's very important. And, and part of the secret of that is having strong recoupables.

So if you have, you know, deals that recoup quickly, deals with advances that recoup quickly, then you can reinvest the money back into the business quickly. If you have long recoups, which essentially, uh, indicate not so healthy deals, then you know you're gonna be able to grow less quickly. So we were able to, uh, reinvest quickly into the business and kind of just continue to, you know, to fuel the business that way.

And I think lastly, it's also a constant evolution of, tech and reinventing our technology and building scalable processes. Um, so it, i- the trick in, in this business, in my view, is how do you continue to grow without sacrificing quality of service? And I think actually our quality of service has improved over time, because we started adding better and better, services, better marketing services, hiring better people.

As we got bigger, we started hiring, you know, better quality personnel that brought, you know, expertise that I didn't have or we currently didn't have in the company. And that's, constantly what we're doing, so we're, we're... It's a constant evolution. So the trick, again, is to be able to not, uh, lose quality of service as you grow, which I think is the hardest thing, and we see a lot of companies, uh, struggle with that.

And therefore, then at the end of the day, then they're, they're focusing on price points, uh, which isn't, you know, or big advances, which doesn't help you grow, and that's not a scalable business model. Whereas we, our margins actually continue to grow. Our gross margins continue to grow 'cause we're actually evolving in a way that is beneficial, creating better processes, and being able to, um, sustain growth that way.

And so, that's not something that's easy to do, but that's something that we really invested in. And so rather than create, like, the best interface for our clients necessarily, which we try to do as well, but we really invested in, the tools to manage our business, better so that our employees had access to information, um, had ways to see what they were doing.

We had scalable processes and scalable technology that allow us to essentially improve quality of service over time.

[00:06:45] Dmitri: Gotcha. Cool. So I'm curious, you're, you've, you've spoken a lot about being an independent company, and you mentioned you're the second generation of distributors.

[00:06:53] Emmanuel: Mm-hmm.

[00:06:53] Dmitri: How has the meaning of independence changed in recent years?

'Cause it feels like it's accelerating in terms of what's, what's evolving there.

[00:07:00] Emmanuel: Well, you know, people- Think about this concept of being independent in different ways. the most basic, you know, concept, which I don't agree with anymore, is if you're a major, you're not independent. You know, if you're not part of a major, you're independent, so to speak, right?

And I don't believe that anymore because I think that, you know, you could be, you know... Taylor Swift is with a major label, but she's completely independent. The reason being is she's in, she's in control over her future, over her destiny. So it's really about putting artists in control. If you're... And, and the same with a company, you know?

So if you're in control over your own destiny as a company, then you're independent. But if you have, you know, potentially a lot of stakeholders that are essentially forcing you to go into a certain direction, you as a founder or as, you know, as the CEO of the company might no longer be fully in control over your destiny, therefore I'm not sure whether you're really truly independent anymore because, you know, you have all these stakeholders.

 so I think it really comes down to that. That's the definition we use is that is the artist in control of their future and their destiny, whether they're with a independent company or with a major label? if so, then they're independent. if the company itself is in control over their future and making the moves without having to get a bunch of other people's approval, then I still think, I think they're independent.

 if they've raised a ton of money and, and, they're no longer really in full control over their destiny, then they're not independent. That's my definition.

[00:08:28] Dmitri: Yeah. I'd

[00:08:28] Emmanuel: be curious to hear other people's definitions. Um, but- Yeah ... that's how, you know, that's how we, that's wh- how we think about it today.

[00:08:33] Dmitri: I, I love that. I'm glad to have you kick it off in that way. let's talk about labels. How are labels shifting as a result of the growth of independence and, say, the use of technology?

[00:08:42] Emmanuel: s- can you ask the question again,

actually?

[00:08:44] Dmitri: Yeah. I mean, we're, we're, we're watching this dynamic shift around the, the control of independence about people trying to figure out how they can maintain control of their careers, their destiny, as you called it.

[00:08:53] Emmanuel: Mm-hmm.

[00:08:54] Dmitri: How are labels shifting as a result of this growth of independence?

[00:08:57] Emmanuel: Well, I mean, I think, both major labels and independent labels, again, I'm, you going back to the, you I would say outdated definition of what independent means, is that, um, they've had to adapt their business models. Many companies have had to adapt their business models, including the major labels, from going from, uh, a royalty deals to licensing deals, which are beneficial to the artists.

 so I think the market has gotten more competitive in that way. the market has been democratized over the last 15, 20 years through distribution. But what you've seen essentially over all these years is you've seen a convergence of, you know, the traditional major label or traditional indie label and then the distributors on the other side- And distributors, you know, uh, started layering on more and more services and became closer to labels, and labels started doing more and more distribution deals.

And so, you know, we're kind of... There's this big convergence that's happening. And so now I don't really think it matters whether you're a label or a distribution company, whatever you wanna call yourself. What matters is, are you providing good service? Are you providing good quality of service? Is it appropriately priced?

Is it mutually beneficial to both the client and the label, so that everybody can grow? I think what we've seen in some instances, in many instances actually, is you've seen kind of a, a race to the bottom over the last 10 years in that everybody's, margins are going down, therefore y- you're then, creating deals that are very short term but then also aren't creating a lot of value to the artists.

 and then everybody's unhappy. The label's unhappy or the distribution company's unhappy, the artist is unhappy 'cause they're not, you know, they're not getting what they really want. And you have to find that equilibrium between the quality of service that one expects at the appropriate price so that everybody...

So that it's mutually beneficial. And I do think that at some point, that equilibrium will come back to the industry. I don't think we're quite there yet. I still think that there's a lot of, uh, movement towards, you know, getting... Maintaining market share no matter what the price is. And what you've seen over time, especially with funded indie companies, is that they tend to run out of gas, and then they, you know, they go belly up or they're forced to be acquired.

 and so you see a lot of consolidation because of that. You know, one of the things that I think, um, you know, that I've benefited from and One RPM has benefited from is we've, we've actually continued to grow without any funding, without any debt. Although I have no problem getting debt. I think we might actually raise a round of debt at some point soon.

 but, um, that's after being in business for 16 years, uh, without having to raise debt. But it just allow us to grow a little quicker. But the point I'm trying to make is that, you know, we're in a really great place because we don't need that money 'cause we have been able to create a self-sustaining business where we continue to reinvest our earnings and our profits.

We continue to grow. Our net earnings continue to grow year over year, um, so that we really truly are in the driver's seat. Uh, so I think, there's a struggle right now going on in, in the industry where, people are still trying to figure out h- where they're gonna land and how they're gonna land in in a healthy way.

Um, and you still might see, you know, a lot of consolidation in the coming years. it's... I think that's kind of a, a solution for some folks to kind of, uh, figure out how to be more competitive. you know, and may- maybe it'll work for them, maybe it won't. It's hard to s- it's hard to tell. I don't know if that answers your question.

[00:12:19] Dmitri: Well, I'm curious. I mean, going, going from there, what, what do you think the label of the future looks like?

[00:12:24] Emmanuel: So my definition of the label of the future is w- is a label that, number one, operates at scale Okay, so it's a combination of, one, operating at scale, meaning you can service many different types of clients from all walks of life.

That includes record labels, producers, artists, legacy acts, all kinds of clients from all over the world. Uh, and then you can provide them with different types of deal structures. So it's many different types of clients, so you have a diversified portfolio. And then you have

 different types of deal types. so that allows you to become very diversified, from different client types, different deal types. and then you have tech that allows you to operate at scale, which allows you then to grow and become a bigger business.

So those are the, all the different types of things that you need to be a record label, in my view or- or more of a modern label. There's nothing wrong with having a smaller label, uh, or a more traditional label, but the record label of the future is one that can grow and operate at scale leveraging that technology.

 and so you do see, you know, a lot of companies are providing these, like, white label platforms, uh, for distribution. I think we're just starting to scratch the surface of what that, kind of tech to these indie labels or even bigger labels, what that's gonna look like. Because I think right now there's a lot of different platforms, that do one aspect of something and then so labels are, are, are taking, "I'll use this platform, my distribution.

I'm gonna use this for accounting and royalty processing. I'm gonna use this for payments," and yada, yada, yada. And so I think you're gonna see a lot more innovation in the space where, uh, technology providers are gonna be providing better solutions to labels so they can actually evolve and become more modern and more scalable in their activity.

[00:14:07] Dmitri: Interesting. Yeah, I see this sort of like you're talking about a convergence of what is a distributor versus what is a label. Once you are able to scale with technology, it starts to feel a little bit like a distributor in that sense, but you're trying to do a diversity of deals that could look a little bit more like label deals, more services, things like that.

[00:14:23] Emmanuel: Right.

[00:14:24] Dmitri: I have one more question for you.

[00:14:25] Emmanuel: Mm-hmm.

[00:14:26] Dmitri: how can we grow the total addressable market for music? The reason I ask that is that's emerging as a major theme of the Music Tectonics Conference this year.

[00:14:34] Emmanuel: Yeah.

[00:14:34] Dmitri: Um, you know, a lot of people will look at music tech or music innovation and see it as a disruptive force.

Mm-hmm. But I think we're now at a place of maturity of the music market as a whole that we can also look at what innovations grow the possible revenue, grow the pie, you know, raise the tide for everybody. And so I'm curious what you think that'll be. What's, what's missing to supercharge growth?

[00:14:55] Emmanuel: Well, there's a lot of consumption, uh, going on on platforms, uh, like social media platforms like Instagram or TikTok or Meta, Facebook, I mean. But we're not s- we're not seeing a lot of, uh, of value creation for the music industry. We're seeing, you know, consumption that then gets diverted to, you know, a streaming platform, and that's fine.

But, you know, I think YouTube did a really good job of creating value for the music company. we were big partners with YouTube. We've always been focused on YouTube since the early days, and part of that was because when we launched it in Latin America and Brazil, the only game in town was YouTube.

That's how you made money, and so we focused on it very early on. I don't see... I see platforms like TikTok and Meta very similar to, to YouTube. They're social media platforms, but we're not generating nearly as much revenue on those, so I think that's a start. you know, I don't have the market power to, to negotiate, you know, these types of deals.

 but I think the industry itself needs to figure it out with ByteDance or TikTok America or whatever, you know, whatever it is now with the new structure in, in the US. But I think that's a start. I know there's, um, there's a lot of interest in AI. I, uh, still need to do a lot more work on understanding how, how we can leverage AI to, to, to make money.

I know that, we've had some interesting, you know, examples of AI in the creation of music with, with some of our clients. we had two instances where one was bad and one was good. Uh, one bad one was in November of last year, where some, some fraudster, and we should have never approved it, but he basically uploaded, um, a, an album of a deceased country legend, that immediately, you know, struck a chord with the fans.

The fans really liked it, and the music was actually really good. I ac- I listened to it, and I thought it was fantastic. But it was fr- it was fraud. It was fake. It wasn't benefiting anybody. It wasn't benefiting the estate. And then we currently have a project... And, and the fans were excited about it until they realized it was a fake.

 and then we had a, a project currently right now in Brazil from Elis Regina, which is the estate actually doing this, uh, creating a, a collaboration with a living artist using the name and likeness, uh, of Elis Regina to create this new content, which is truly benefiting the estate and respecting the honor of this, this incredible artist.

And so those are very interesting, uh, ways to, to, to use AI in terms of the production of content, which I think is great. in terms of the consumption of, you know, these, like, these new platforms, I'm really not familiar with them, that familiar with them yet. I should be more familiar with them. Part of it, believe, is because, you know, we haven't secured a lot of those rights to work with those platforms on behalf of the artists, and so that's a process that we're gonna start doing now.

I know because- YouTube, Meta are also asking for, uh, broader rights around AI, and that's something that we, uh, as a, as a partner to them need to, to address and figure out pretty soon. so, you know, I think, you know, just kind of if you wanted instant money for the music industry, it would be great if we could generate more, money though from these social media platforms like we do with YouTube.

YouTube, you know, there was for many years suffered the criticism of the industry through this value gap, but I think they've done a really good job creating value for the music industry and we're very happy with that. So if we could get... see more of that, that would be huge, you know?

[00:18:17] Dmitri: Yeah.

Awesome. Great. Well, I appreciate you diving into that question and, and all these questions. That's, that was really fun. Thanks, Emmanuel.

[00:18:23] Emmanuel: Thanks.

Let us know what you think! Find us on LinkedIn, and Instagram, or connect with podcast host Dmitri Vietze on LinkedIn.

The Music Tectonics podcast goes beneath the surface of the music industry to explore how technology is changing the way business gets done. Weekly episodes include interviews with music tech movers & shakers, deep dives into seismic shifts, and more.