Interview with Nettwerk Music Europe Managing Director

The Canadian music label Nettwerk has opened its European headquarters in Hamburg. We spoke to Managing Director Martin Schuhmacher about why the label chose Hamburg as its location, how the label is trying to build up artists in the long term and what impact AI developments are having on the music industry.

nextMedia: Martin, you've been Managing Director of Nettwerk Music Europe GmbH since the beginning of April 2023. Briefly catch us up: What is Nettwerk and how did it come about?

Martin Schuhmacher: Nettwerk is a Canadian music label with a focus on singer/songwriters, but most recently also alternative in the broadest sense. The label currently employs around 200 people worldwide. I myself have been working for Nettwerk since January 2006. At that time, the company wanted to gain an independent foothold in Europe. I initially looked after the EU market on a retainer basis. Over time, the company continued to grow and the idea of setting up a limited company matured. I was asked whether I would like to set up this GmbH and manage it as Managing Director. I wanted to and since April last year I have been the head of a team of eight employees in Hamburg. Two others live in the Netherlands and one in Berlin.

nextMedia: You decided on the Hamburg location. Why?

Martin Schuhmacher: Firstly, I've been in Hamburg for some time. I used to work here for Yo Mama's Recording Company and Edel Records. On the other hand, Nettwerk in Canada is interestingly not based in the music metropolis of Toronto, but in Vancouver. Perhaps it's a coincidence, but the question of whether Berlin would be a better location never came up. What's more, hybrid working is just as common here as anywhere else. For example, one of our A&Rs lives in Berlin, the other lives in the Netherlands. And if we look at the USA, it's even more blatant. We used to only have product managers in Vancouver and L.A. Today, they are spread all over the country.

nextMedia: What makes Hamburg attractive for you then?

Martin Schuhmacher: There are two aspects. Firstly, Hamburg is more serious than Berlin. That has changed somewhat in the meantime, but the cliché of the "I'm working on 10 projects in Berlin at the same time" is still often confirmed (laughs). Hamburg is still more of a business city and this mentality can also be found here. The other thing is the size. It's perfect because international acts play here, but at the same time the distances are so short.

nextMedia: I'm asking because I read in an article that you want to work more closely with the local music community.

Martin Schuhmacher: That's true and we've already started doing that. For example, we maintain good contact with FKP Scorpio and various management agencies based in Hamburg. However, we don't compete with Grand Hotel van Cleef or other Hamburg labels, as we concentrate on English-speaking artists. Especially those who have already achieved initial regional success on streaming services but are not making any progress abroad. In most cases, the artists lack the access they need to get on newcomer playlists or similar there. And that's where we come in with our network.

nextMedia: How can I imagine that?

Martin Schuhmacher: Let's take a German band that already has good streaming figures in the DACH region and plays concerts in front of 600 people. When such bands are signed by major labels, the following often happens: The artists' releases are hardly noticed by the other European outlets (Paris, London, etc.). As a result, there is no international development. We try to build up such artists locally and make them better known abroad through our communities.

nextMedia: Playlists play a major role in this. Spotify recently announced that it will use AI to focus even more on personalization. Are such developments exciting for you?

Martin Schuhmacher: Spotify is extremely important. That's why we monitor such developments very closely. It's true that playlists have an enormous influence on the success of artists. But relying solely on editorial playlists, i.e. curated playlists with lots of followers, is a gamble - especially for acts that are not yet established. For us, building followers that ensure organic streaming therefore plays a crucial role, as this also promotes and strengthens algorithmic streaming. In our opinion, there will be more AI and algorithm-based playlisting in the future. Therefore, data analysis is an important factor in our work.

nextMedia: What data do you mean and why is it so relevant?

Martin Schuhmacher : Spotify provides its partners with a comparatively large amount of data. This includes streaming figures, of course, but also information on reach and target groups. We process and analyze this information. It is important because it helps us to optimize our strategy. In this way, we have discovered that communities, i.e. groups of artists, can help to reduce natural streaming fluctuations and stabilize or even increase the number of monthly listeners over longer periods of time.

nextMedia: That sounds interesting. How exactly does it work?

Martin Schuhmacher : As with other platforms, the algorithm rewards continuous publications. It would therefore theoretically be ideal if an artist were to release a new song every five to eight weeks. This stimulates the algorithm and increases the likelihood of songs ending up in playlists. Among other things, this also explains why significantly more than two songs are released as singles before an album release these days. As attention wanes some time after the release of an album and the number of streams decreases, it is up to us to find ways to reduce these fluctuations. One of the ways we do this is through communities, i.e. groups of different artists from the same genre. And the more artists in a community we have under contract, the better we can coordinate release cycles and utilize the effects of the releases.

nextMedia: How should I imagine the concept of these communities?

Martin Schuhmacher: We know the principle from "fans also like" suggestions. In other words, references to other artists that are heard by the same users. It's more complicated, but you can imagine it something like this. That's actually a nice thing, because we used to assume that artists cannibalized each other. Back then, if you wanted to buy a CD and had 15 EUR to spend, you had to choose an artist. The opposite is now the case here - they support each other, so to speak.

nextMedia: What will the use of AI change in the music industry?

Martin Schuhmacher : What we can already foresee is that functional music, such as that curated on playlists like Deep Focus or Peaceful Piano, will increasingly be produced using AI. With the support of AI, you are able to generate a much higher output. The supply is growing and this reduces the likelihood that you, as an original artist who doesn't release under dozens, if not hundreds of project names, can make a living from your music in this area. Also because this type of music is mainly listened to via playlists and has very little organic reach.

nextMedia: Is it relevant for you as a label whether your artists* create songs with AI or not?

Martin Schuhmacher : If you use AI for your art, it doesn't bother us. On the contrary, there is a lot of potential. For example, if you completely change your voice via AI, it can even be a characteristic stylistic element. AI won't replace the artist, but it will make production and work more efficient.

nextMedia: Thank you very much for the interview!