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We’ve all watched the sad death spiral of Britain’s Sanctuary Records over the past few years, but I didn’t think it would end up like this:

Universal Music Group purchased the company for about forty U.S. cents per share.

On one hand, as it evolved through the late 1990’s, Sanctuary was a great model for the kind of “long tail” record label that could be wildly successful in the 21st Century. It made loads of investments in heritage acts — many of whom had been bumped off of major labels in the downsizing of the post-Internet era. It championed the idea of deep interaction with loyal fanbases. It also validated the idea that you could still be financially successful, even if you didn’t necessarily hit Gold or Platinum status on every release.

To facilitate some of these ideas, Sanctuary gravitated into live event production as well as artist management. Traditionally, you wouldn’t want to have your record label involved in the management or booking side of your career — remember that the steps you’ll take to market a record are almost the opposite of the steps you’ll take to market a tour. However, Sanctuary’s business model was so different that it didn’t seem to ring that many alarm bells.

Sadly, the business became overextended. As is the case with most business ventures gone sour, Sanctuary tried a line extension with the American Urban market — something very different from the European rock and metal acts it was very good at promoting. With key executives stretched too thin and with artists starting to feel like their careers were being mishandled, it was only a matter of time before things fell apart.

Universal’s swooping in to pick up a pretty substantial back catalog that continues to sell well, especially on iTunes. Uni’s now got their hands on something like 150,000 additional copyrights — many of which are from bands that they dropped from their own roster as few as ten years ago.

But there’s a little icing on the cake for Universal, and it bodes poorly for baby bands who want to get signed to major labels. Universal’s publicly talking about reviving and expanding Sanctuary’s management business, so they can have more control over the careers of the artists they sign.

What makes very good business sense in this case is bad news for artists. Music business success teams — managers, record execs, booking agents — evolved in silos because they each have a different agenda for their artists. Without a good manager in place, you might be tempted to sign a really bad record deal.

What happens if your manager IS your record label? Who’s going to alert you if you’re signing a deal that’s going to leave you penniless and in debt five years from now, no matter how many records you sell? It’s a slippery slope.

Technorati Tags: music+business, Universal, Sanctuary

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