Independent record labels and urban artists have had successful relationships with one another in the past, but as Hip-Hop and R&B transitioned into the mainstream, the thought of an artist signing with an indie didn’t sound quite as appealing as it once did. But things have suddenly changed and Koch Records is a major reason for the resurgence of artists seeing the value in signing with smaller record labels.

In the past five years, the label has produced some of urban music’s most recognizable hits: “Sexy Can I” (Ray J); “Baby Girl,” “We Fly High,” and “Byrd Gang Money” (Jim Jones); “We Takin’ Over,” “I’m So Hood,” and “Brown Paper Bag”(DJ Khaled); “Walk It Out” (Unk); and “Blow Your Mind” (Styles P). A&R Department decided to speak with the man responsible for putting out those records, Alan Grunblatt, Executive Vice President of Koch Entertainment, to get his perspective on Koch’s position in the marketplace, the business model of the label, and the current landscape of the music industry.  

 How has Koch positioned itself as a credible competitor to major labels despite not having as many resources?

Our sort of theory is Koch is really the equal of the major labels. We’ve broken Jim Jones, along with DJ Khaled; Ray J. So really there’s no difference between us and the majors; there’s no difference in the resources between us and the majors. It’s just purely a definitional thing.

What is it about Koch that has attracted so many commercially viable artists to sign with your label?

We don’t really over A&R the projects with them. We do a lot of deals with the artists’ labels and stuff. And like ninety percent of the cases we really rely on the artists themselves to A&R the project. A lot of artists really like that and seems to be working out.

So I guess that falls into the type of business model that Koch employs?

Everybody has the same model in terms you need hit records to sell albums. How that relates to what the artists makes and stuff like that is sort of over-exaggerated because you’re spending so much to break these records and what it really does is it enables the artists to make so much more money on the other side. We certainly allow artists to have a lion’s share of the proceeds and to make a bigger profit, but it’s just really in today’s climate the promotional and marketing dollars are so expensive that that’s really the key point of the focus on it.

Has the rise in digital distribution affected the way your company approaches selling records?

Yeah sure, because it makes it more of a hit driven business. See album sales are really struggling, but if you have a hit, you can sell millions and millions of singles on iTunes. And that certainly changes … It made us more hit driven as opposed to signing like more culty kinda album artists.

Where do you think labels need to exert their resources in order for a project to see positive results?

You gotta get on the radio. Get radio going and get a video going.

You think at this point that’s still the primary focus?

Absolutely.

What about online?

You know online’s important but it’s really … it reflects radio and video. The artists who purely break online is not as big as everybody thinks—in my opinion. It’s part of the marketing mix but the most important things are having a hit record and having a video on.

I would say, depending on the advance, if an artist scans 25,000 units that can be a successful project. You know 25,000 units sold is a quarter of $1,000,000. That’s a significant amount of money; multiply that by ten that’s $2,500,000. 

Since the needs of your label differ from that of the majors, how does Koch assess a successful project?

I mean it’s a tricky question because that depends on how much the deal is. But I would say, depending on the advance, if an artist scans 25,000 units that can be a successful project. You know 25,000 units sold is a quarter of $1,000,000. That’s a significant amount of money; multiply that by ten that’s $2,500,000. If you have ten projects like that…

It seems that part of Koch’s appeal with artists has been due to the label’s creative flexibility as well as the potential for your artists to reap larger financial earnings from album sales. What is your view of the 360 deals?

It’s not something we really do because on the hip-hop side it’s very hard to take an artist’s touring income away from him and stuff like that. We like to do our deals, we like the artists to have other lanes to make money. So sort of like, it makes it a healthier relationship for us…

With record sales down, artists and labels are trying to find different opportunities to compensate for the decline. What are some of the ways that Koch is generating ancillary revenue?

I mean really it’s the digital side: CDs, iTunes, ringtones. Those are the main things. Sure you know like we work your music into movies, video games, stuff like that. But for us it’s really CD sales, digital singles, and ringtones. That’s what we really focus on.

Many of the urban acts on your roster already have a respectable name in the marketplace with an established fan base due to either their current or former affiliations with major labels. Is that part of your organization’s strategy?

You like to sign an artist with some base, as opposed to somebody who’s brand new. I mean, like even Unk who was a new artist was part of Big Oomp Records, had a big club buzz when we signed him. So we like to have the artist have something going on. Like, we’re never going to sign an artist cold like that. That’s not our philosophy. It’s not so much purely … like, they don’t really have to have records out, but there has to be a reason for us to sign them besides the quality of the record.

Is it a cost effective thing also?

For us it is, otherwise it would be way too expensive. Otherwise you would have millions and millions of dollars in making a record and we can’t afford that … Jim Jones is my partner; Cameron Giles was my partner. My successful deals was always … The best deals I ever did was I had Ruthless Records with Easy-E, Eric was my partner; I had Suave House with Tony Draper, Tony was my partner; I signed Three 6 Mafia, Hypnotize Minds was my partner. That’s how I really like to do it. This way you don’t have to worry about stuff. You get the record and then you deal with it. Hey look, it’s certainly working, like Cash Money is a great … Wayne’s the number one artist in America and that’s their example, and I’m sure Universal is very, very happy that they deal with Slim and Baby like that. So that’s our preference if we can, but sometimes it’s difficult to do that. But that’s how we really prefer it.