The health of the UK scene, streaming, music festival financing and tips for FDs and CFOs... Read on for all this and more, from Johnny Evans - CFO of AEI group.
- You left the music business and then returned. What lured you back?
After spending 14 years in the music industry I found myself in an area with a dwindling customer base, poor returns and general lack of enthusiasm from the management and team. This clearly had an impact on my outlook on the music industry. It seemed like it was all starting to implode. So I felt a radical change was required. The recession was starting to bite and I wanted to hone my corporate finance skills so headed to the City and spent 8 years in Telecoms. It was extremely dull but I learnt so much. I took that role as far as I could but yearned to be back at the forefront of the EDM scene. That desire is rooted in my first job in the music industry - at RTM (a small record distribution company born out of Rough Trade / Beggars / 4AD / Mute). It covered a vast array of UK and international indie dance labels which got me in to djing and clubs. I was hooked from there. That need to be at the cutting edge of the EDM scene has never gone away. It was a natural move to want to return and that is exactly what has happened with my move to AEI Group as the new CFO.
- How does you rate the health of the independent UK Music Industry?
It’s never been in such good shape! The model is so different from when I first got in to the music industry 24 years ago. It was very label driven whereas now it is very much artist driven. Technology has obviously had a huge impact with the shift from physical product to digital consumption. And also in the way that music is made. Bedroom producers are driving an explosion in new talent. Social media has also had a very important part to play. Curators are key and YouTube is a driving force. Platforms such as Spotify clearly lead the way. There is much wider access to music. New geographical markets are opening up all the time (most notably Asia and S America). I don’t think things have ever been so good. Predictions are that music consumption is set to explode over the next few years. I am just glad AEI is in a good position to benefit in all aspects from publishing, recordings and streaming to live events and festivals. - How has the growth in streaming impacted things for CFOs? Is this a positive or negative development from your perspective?
For me it’s simply a different revenue stream. We still have physical product sales. Now we have companies such as Merlin reporting to us monthly for a plethora of streaming platforms across the world. We obviously have less control over the pricing of a product but developments in technology have clearly led to accessibility to music and consumption had therefore boomed. This can only be a positive development. We have seen amazing revenue growth at AEI in the last few years with 2018 being another fantastic year. Streaming is clearly at the forefront of this.
- Live events are notorious money-drains - what's your secret to keeping them profitable?
We have learnt to be very selective over the projects we work on. We have a tight investment criteria for projects to pass before we fully engage. All live events must be seen as long term investments and funding has to be in place to get through the first few years. The early years are clearly setup and loss making. You must be aiming for a profit from year 3, recouping the initial investment by year 4. Many festival properties have been running 10 years and have not recouped. Such long term loss is not a sustainable business model. There are several key elements to maintaining our approach – aggressive / targeted marketing, careful ticket planning, good cost control and a lot of luck with the weather!
- What tips do you have for FDs and CFOs to keep things in line?
Keep learning and developing. If you are not constantly growing, you cannot expect others around you or the company to grow. Surround yourself by the best team possible. Aiming for a best-in-class finance team is one of my key priorities. This are essential to time management and not feeling overloaded. I started off life at AEI trying to solve all problems at the same time, single handed. With a solid team around me I can now focus on driving the strategy of the company knowing that the operational side is looking after itself. Finally a reliance on solid systems and processes is key. Only then will a business be easily scalable. I have spent 12 months turning AEIs finance around and 3 months focusing on strategy. The next 12 months will all be about the utilisation of technology to drive the business forward and scale without adding more bodies in the office.
- Which AEI event is your personal favourite and why?
Which to choose?? El Dorado is one of our main festivals and is such a good laugh. The whole team are there. It’s really tough work running the finance office from 9am till 4am for 3 days solid but very rewarding. I always ensure there is time to relax though. This year will be no different as the line-up is amazing. It’s set to be a huge year for El Dorado. The Drum&BassArena Awards are also huge for AEI and one of our flagship events. Again the whole company gets involved (I worked the guest list last December) and the awards show was epic. There were a lot of sore heads the next day…….