How Casino Labels Will Change The Industry

Casino funded record labels will change the music industry.  Slight rephrasing – “if” casinos spawn record labels, it will forever change the music industry by setting the bar so high major labels can’t compete.  With new label players such as Wynn Casino partnering with NYC indie label Ultra Music and the Hardrock organization birthing HardRock Records, what’s all the hoopla with labels?  Labels today mean something different.  They’re not just about selling records and turning profits.  Many organizations could care less about “music based” profits; rather they use music as a marketing tool to drive sales elsewhere (i.e. anti-360 labels).   Casinos happen to be the latest associations jumping on the label train – and if they do it properly, casino labels will change the industry.

People assume the record industry is sucking wind – it’s not.  Casinos however find themselves in a desperate situation, a condition that calls for a severe recalibration.  Las Vegas, the epicenter of entertainment, faces a punch to the throat that makes the record industry piracy days look like a misplaced dime.  In 2011, the Las Vegas Convention and Visitor Authority reported 38.9 million visitors to Sin City; but most of these visitors didn’t come for dice and cards.  Paralleling this statistic, the Nevada Gaming Board claims only about 46% of the cities revenue is generated from gambling (down from 60%).  Out of the 46%, only 34% of the revenue is generated via food and entertainment.  In short – casino generate less revenue from gambling and even less from entertainment.  The Vegas entertainment model of old can no longer be sustained in Vegas today.  You may argue casinos continue bringing headline entertainment to their showrooms so what’s the problem.  True – casinos will frequently drop crazy money for headline dates, but most of the time these are “one off dates” that the casino never plans on booking for long-term nightly shows like a Celine Dion.   One off dates can’t revive an entertainment economy; it’s simply a short term money maker.  However this piece isn’t about what Vegas does poorly; it’s more about what Vegas (and casinos) do right.  They invest in entertainment, they brand entertainment and subsequently, they don’t care about entertainment.  It’s a beautiful model.

Music today is consumed differently.  Labels must marketing to the masses, selling albums to as many people in the mainstream market that will purchase it.  This is the only way to survive in the label business.  This is a difficult model because it’s reliant upon (a) selling music, and (b) selling music to as many people as possible in order to generate profits.  Profits spawn more potential artists’ signings, which can increase label visibility and penetrate more potential music buyers.  Again, the model boils down to (a) music sales, and (b) selling music to the masses.  This is a terribly model plus it’s not reality.  Reality is a niche marketplace.   Effective businesses have perfected the art of narrowing the mass market into a specific niche, than controlling the niche by maximizing sales.  This in return generates customer loyalty and niche specific products.   What does this have to do with casinos and record labels?  When Hardrock Records launched, co-head of A&R Blake Smith said “the label is a nonprofit venture designed to put the focus on artists.  We talk to artists and they’ll assume that there’s a catch, and there’s not a catch.  You (i.e. – the artist) keeps everything the whole time, and if labels come knocking, we say, we hope they sign you.”  This mentality can only be adopted by casinos.  To quickly defuse naysayers that the above statement isn’t reality, it is – our firm negotiated the Hardrock Records contract – they truly give it all back to the artists.  Couple the mentality of giving everything to the artists (i.e. – we don’t care about music profits), back to what I said earlier about casinos understanding entertainment.  Casinos by design are 100% entertainment.  Everything is essentially a theatre within a theatre within a theatre.  Casinos care about entertainment only to the degree it generates revenue on the casino gambling floor, hotel occupancy, and food/drink sales.  Essentially casinos spend money on entertainment but they don’t expect money from entertainment directly.  This is a stark contrast from the model I previously identified which labels need to sell music and sell music to as many buyers as possible to turn a profit.  Casinos know the exact dollar amount correlation generated on the casino floor and hotel room occupancy based upon the concert attendees.

With the soon to be success of Wynn and Hardrock and their respected labels, I’m convinced more casinos will start record labels simply to fill the diminishing gambling revenue.  These labels won’t care about music and they won’t care about record sales, but they will care about marketing.  Marketing is the ultimate currency for casinos because it means exposure; exposure translates to potential tourists which subsequently generates gambling revenue.  Labels give casinos the opportunity to constantly market themselves.  Not only can casinos generate constant branding opportunities and product tie ins (ex. Motley Crew had logos on the felt tables at HardRock), they can invest top dollar to assure sold out shows and guarantee some of the most beautiful venues in the world.  For casino labels, hitching onto a band means promotion.  Albums can showcase the casino trademark, product tie ins, albums can be recorded LIVE in the showrooms, etc. -sssentially bands become the brand ambassador for the casino just like artists have done at Converse, Mountain Dew, and RedBull.  The difference in what could make casino labels more successful than other anti-360 labels is simply the gambling revenue.  If an artist generates positive conversation for Mountain Dew, Mountain Dew may sell a can of sugary pop.  Despite the positive outlets anti-360 labels create, it’s expensive to use bands for marketing to simply drive sales on an inexpensive product.  Generate positive conversation for a casino, and the casino will make money on the gambling floor, hotel business, food, drink, and various entertainment.  Wynn Las Vegas, via Ultra Music and their respected YouTube page has generated 1.8 billion views.  Can you image what that does for Wynn visibility and potential gambling profits on their casino floors?   They have tapped into 1.8 billion folks without spending top marketing dollars yet their marketing machine is continually promoting 24/7 365 thanks to musicians.  If the casino label revolution takes off, major labels could be done for overnight.  It’s impossible to compete with an organization willing to give artists everything, bankroll projects and not demand recoupment, along with provide top shelf marketing without demanding anything in return.  Casinos are the only organization structured to get away with such proposal.

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