The Record Business in Croatia: There Are More and More Crocodiles in Our Small Pond

Last weekend, we witnessed a historic event, at least when it comes to the domestic music scene: Marko Purišić aka Baby Lasagna won second place at the ‘Eurovision’, the international music competition held this year in Malmö, Sweden. This is Croatia’s greatest achievement at this competition since it became sovereign. For weeks, there was talk and writing about a potential victory in Sweden, so much so that even those who do not follow music competitions had to peek at the odds in the betting shops. Regardless of how much we all wished for Baby Lasagna’s victory and for next year’s ‘Eurosong’, or ‘Eurovision’, to be held in Zagreb, the jury of the competition has spoken, and next year performers will have to travel to Switzerland, the country of this year’s winner. The excitement around ‘Eurosong’ and dancing to the rhythm of the song ‘Rim Tim Tagi Dim’ prompted us to take a closer look at the domestic music industry, specifically the domestic record business.

A Dramatic Period

Namely, the music industry, and thus its record component, according to the founder of the record label Campus Miroslav Škoro, has been going through a very dynamic and at times dramatic period for a while now. The advancement and development of technology have forever changed the way music is created, recorded, distributed, and consumed, and new stakeholders have emerged in the industry, which is why the old monetization system of music no longer works.

– Telecommunications companies, digital services, UGC platforms, e.g., YouTube, the change from analog to digital format, and extremely high piracy along with the problem of P2P (peer-to-peer) networks are the record reality and the reason why there are more and more crocodiles in our small music pond, which has remained the same. The revenues of the record industry drastically fell at the beginning of the new millennium, primarily because legislation did not keep pace with technological development. It seems to us that everything has been somewhat put in order in recent years, and everything indicates that the record business in Croatia will survive, claims Škoro.

So what exactly revenues did Croatian record companies achieve in the past year? We decided to take a closer look at some of the most well-known domestic record companies. According to Fina’s data, the largest and most well-known company, Croatia Records, achieved total revenues of 5.82 million euros last year, which is an increase of 2.50 percent compared to the previous year, and recorded a net profit of 426,855 euros, which is a decrease of 43.28 percent compared to 2022. We also looked at the business results of Dallas Records, which achieved total revenues of 518,590 euros last year, an increase of 11.45 percent compared to the previous year. It operated with a net profit of 8,407 euros, a decrease of 40.17 percent compared to 2022. Furthermore, Aquarius Records achieved 1.21 million euros in revenue in 2023, 13.72 percent less than in 2022, and its net profit was only 962 euros, 98.66 percent less than the year before. Škoro’s Campus achieved 632,227 euros in revenue last year, 68.56 percent more than the year before, and a net profit of 205,647 euros, or 121.31 percent more than in 2022. Furthermore, the record company Dancing Bear recorded 1.91 million euros in revenue last year, 11.11 percent less than the year before, and a net profit of 193,129 euros, 19.27 percent less than in 2022. Scardona achieved annual revenues of 410,134 euros in 2023, an increase of 13.63 percent compared to 2022, and a net profit of 104,660 euros, 8.74 percent more than the year before.

The domestic record business seems diverse, and with streaming services, the way music is consumed has changed, and so has the strategy for its placement, claims Tena Lovrić, music streaming services manager at Scardona. Some have been forced, she says, to release three to five singles, or songs, annually, while others make one and promote it for the whole year. According to Lovrić, user attention has become currency, and everyone is fighting for it.

A Vinyl Renaissance

– On the other hand, we have a significant return of vinyl, and I believe this trend will continue considering that there are more and more manufacturers printing them and that the production time has drastically shortened. Previously, we waited half a year for production, and now it takes almost the same time as for CDs. Interestingly, vinyl buyers are people who do not have a turntable at home. We will attribute this to nostalgia or the fact that they consider them memorabilia, says Lovrić, emphasizing that independent record companies that are not owned or co-owned by the three main companies dominate in Croatia, and most of them are in the Regional Association of Independent Record Labels (RUNDA), whose goal is to connect the region into one alliance and approach global streaming services together.

That vinyl has experienced a renaissance despite the rise of digital platforms like Spotify, Apple Music, Deezer, and similar ones is confirmed by the director of Dancing Bear, Silvije Varga, a company that recognized this situation and decided to reissue classics and limited series for the enthusiast market.

– We are extremely proud of the role we have in developing domestic talents, primarily in the efficient use of streaming and other digital platforms and tools, as adapting and introducing innovations is the best way to stimulate the development of both performers and listeners, as well as record labels in the industry, says Varga.

Welcome Diversity

While many will say that streaming destroys the record business because today anyone can release their music to the market, Škoro says that they operate normally with streaming services with the help of aggregators. Until recently, he claims, it was the Austrian Rebeat, and recently the domestic Croatia Records.

– Distribution and payment channels have somewhat stabilized, it is easier to breathe because revenues are regular. We do not have direct competition from abroad. A few foreign record labels operate in our market, but they have been here for so long that they have become domestic, Škoro states.

However, Dancing Bear is the only company in the Croatian record market that uses Warner’s distribution platform, currently the strongest global channel for distributing independent music.

– Thanks to Warner’s distribution channel, we avoid the lengthy process of working with intermediaries and unknown partners and have the privilege of direct contact with editorial and marketing teams on streaming platforms, which allows us to effectively promote our releases. This is crucial for advertising music on platforms and resolving conflicts in this complex ecosystem where more than a hundred thousand songs are released daily, Varga explains, who believes that music, whether it comes from outside our borders or from the region, is not competition but contributes to the richness of the entire music industry and stimulates continuous growth and innovation.

This diversity, he claims, stimulates creativity and raises competitiveness to a healthy level in both the domestic and regional and global markets.

Every year brings more new songs. You can make a song publicly available with or without a publisher. The consequence of this, Lovrić tells us, is a flood of both good and bad songs, which overwhelms listeners, editors at radio and television stations, streaming services, and people working in the record industry.

A Phase of Transition

– It is quite difficult to process this amount of new music and make good decisions. It takes time and experience that those without a record label sometimes do not have. When a new song is in the making, the record label must pay attention to several things: is the song radio-friendly or more for concerts? Accordingly, it should pay attention to when to release it, is there a festival nearby, which season the song fits, is it too long, does it have a catchy chorus that will capture the audience’s attention when placed on an Instagram Story, does the music video have a good shot that matches exactly with the chorus when cut for all short forms, will it meet the criteria of the existing audience or is the performer turning to a different audience, etc.? Every time has its own. Until recently, YouTube Shorts did not exist, and now they significantly contribute to the development of your channel; until recently, there was no TikTok, and now it is an important promotional channel if you are releasing a new song aimed at a younger generation. Openness to change is important, so you can quickly adapt and move on, Lovrić notes, adding that an additional challenge is promoting streaming services among audiences that do not yet use them because the income from streaming is not large enough, making it difficult to reinvest in new music.

There are significant challenges for domestic publishers, Škoro claims, in recording the use of recordings they own and manipulating vast databases that record that use.

– Every recording, especially popular ones, can have tens and hundreds of thousands of uses in a certain period, and individual revenues can have four, even five decimal places. Large multipliers are a guarantee of earnings but also the cause of significant problems in data processing, adds the founder of Campus.

It is worth noting that the Croatian music market, according to Varga’s opinion, is in a phase of transition and continues to adapt to global trends in digitalization.

– To cope with this challenge, we invest equal efforts in promoting music on radio and traditional media such as newspapers and television as well as in promoting music on streaming services and social networks, explains the director of Dancing Bear.

MP3 Economy

All in all, the Croatian record scene is living life to the fullest. Many new names have emerged, Lovrić says, and even some new genres have managed to reach the airwaves.

– Speaking of airwaves, we as an industry should work on a plan to promote as much Croatian music in the media as possible, especially on the radio. Take Italy as an example, which provides significant support to its performers and authors precisely by ensuring that domestic music dominates the airwaves, thus keeping money within their country. In our case, some stations do not even play the legal twenty percent of Croatian music. If they do play it, they do so during night slots. Imagine going to Spain on vacation and not hearing their music; I believe your impression would not be complete, Lovrić says.

That evolution, not revolution, has occurred due to digitalization, was confirmed by Škoro, who stated that the rights of phonogram producers still ensure record labels a privileged position compared to digital services. – Primarily due to the old catalog. An individual can do little or nothing because the big ones do not want to work with you if you do not have at least several tens of thousands of recordings in ownership. Therefore, you are dependent on a record label and enter the grind of the MP3 economy, where there is very little money for end users, who are performers and authors. The new Copyright and Related Rights Act, unfortunately, has not helped resolve the problem of using and collecting music for those at the beginning of the food chain of the music industry, concludes the founder of Campus.