Founded in Hull by Matt Abbott and Chris Chambers, Label Worx is the world’s largest digital distributor of dance and electronic music to iTunes, Beatport, Spotify, Amazon, Google Play and more.
The company, which features in the Tech Nation 2016 report, was one of the first in Hull’s digital sector and built its tech from the ground up with few of the short-cuts that are available today.
We caught up with Matt to hear more about their startup story, including how they went from being DJs and music producers to starting their own record label on vinyl, developing a new platform pre-cloud, the affordability benefits of starting out in Hull, and the transition from being the underdog to being “one of those businesses that others are competing against”.
What’s your elevator pitch to investors?
We never had any investment. Label Worx is the biggest dance music distributor in the world and a leading supplier to independent record labels. We provide tools, services and software for independent record labels to run their business anywhere in the world.
Our products are in 106 countries, and the company went limited in 2008.
What’s your startup story?
Myself and co-founder Chris Chambers were DJs and music producers. We started our own record label on vinyl in the days before digital and we had to duplicate content, so we wasted a lot of energy and time.
We set up a platform to distribute music and account royalties to the artists. We do everything to minimise what needs to be done with digital data to make it more efficient. We’re solving real-world problems for our customers.
The original interface we had took about six months to a year to get the first element up. We’ve been constantly developing it since day one.
We were originally working at Label Worx part time before we took the plunge and quit our jobs.
What challenges did you face starting out?
Everything. From the technical side, when we started the cloud didn’t exist and we had to build our own infrastructure, get our own racks, and learn to maintain servers and run databases.
We had to write the technology and store things online. There were no short cuts, because we had to build everything to run it, as well as running the business side of things.
We were a very small record label and we didn’t have contacts with music labels. We had to get an introduction for each one. We had to learn marketing and branding, VAT charging etc in every country.
We knew what we needed to do and what we could do and could achieve. What had been done already fell short – there were some solutions but they were way too expensive for the average small record company.
We worked out how many record labels and how much penetration we needed to generate enough money to pay two of us to do the job and work for ourselves doing something we love. Any more was obviously better, but even on the worst day, it was a viable business model.
Why was Hull your chosen startup location?
I’m from here, and I was living and working here. Chris was in Birmingham and he moved back to Hinkley.
We built it from here because there was no other option; we didn’t have contacts elsewhere.
Tech startup VC investment was in its infancy. The cost of living in Hull allowed me to work three days a week and then do two days unpaid on the company. It cost us 50 per cent of what it would have cost in London, so we have been able to grow faster and take on staff.
It has never prevented us from growing. The majority of labels we work with are outside the UK and it’s largely irrelevant where you are to people in other countries. It’s easy to get the train and be in London for 9am and come back on the same day if there are people who want to meet in London.
Unless there’s a specific reason for something especially needing to be in London, when you’re developing a website with a platform of people, keeping the startup costs to a minimum is must.
This location has a lot to offer other startups as well.
What’s Hull’s digital tech scene like?
It’s in its infancy compared to other cities. When we started we were isolated, we were working from a bedroom.
Now there’s a hub, developers, we’re here, and new companies coming along can get advice from us and pick my brains.
There have been pockets of growth but people in Hull didn’t even know we were here.
But it can learn from the mistakes of other cities. The internet here is amazing, there is space and it’s a good foundation. It’s on the up.
Have you found that digital companies in Hull collaborate and learn from each other?
Previously they didn’t, because there was an unawareness that they even existed in the city. Now there are a lot of events and that has put a stamp on what people are doing.
There is more and more collaboration. It has come on in leaps and bounds. We were approached by a radio synchronisation company in Leeds that I’m going to consult and help, using my expertise with the development skills of other members here in the C4Di in Hull.
It’s happening more and more, with people becoming aware of what other companies are doing.
What challenges does Label Worx face now?
It’s no different from any other growing business. You have success doing what you’re doing, and as you get bigger and bigger, you have to transition from the underdog into being one of those businesses that others are competing against.
It’s important to keep the reasons why we appeal to customers – we’re small enough to work with them but we’re trying to scale the business as well.
When we first did it, it was a disruptive technology. Nobody did that – the promotion, royalties and distribution. Now the thing is to keep on top and develop new tools. We have to have the latest technology and not become yesterday’s newspaper.
It’s easier for people to develop what we do or do their own off the shelf, so we need to keep developing so what we’re providing outstrips what’s available. It has to be better and give a quicker result, so it’s a labour saving product that’s efficient for the customer.
How do you innovate as well as keeping on top of the day to day?
You get into a tech company because you are entrepreneurial; you naturally innovate, you’re that kind of person or you’re not.
Everything we do, we look at how it could be improved. You have to get down to the coalface and look at it day to day as a user, and see solutions to problems.
Once you get up the food chain, doing the accounts etc, if you forget to look at the coalface and what the guys are doing day to day, you can’t stay efficient in the company or see their struggles.
You need to be a customer and see it from their point of view and listen to what they’re doing. That’s what we did originally.
What are your thoughts on the Tech Nation 2016 report findings?
There was no benchmark for it. The volume of the sector is bigger than I thought and the value is larger.
But I kind of knew it’s a booming area; it’s more of a shock to people who didn’t think tech was viable in our area in Hull. They see big companies that employ a lot of people but they don’t see digital as viable and a thing to invest in.
But if the report provides the insight that digital is thriving, more people may invest in it. It might attract more people into Hull.
I was surprised that we had the second cheapest average salary after Belfast.
What’s the best thing about the digital scene in the North?
The whole community and the spirit with it – northern people’s get up and go.
There is a united spirit and a willingness to work together and be more versatile, but it’s much cheaper than London.
There is standout collaboration that you don’t get in the South, where it’s more competitive.
What do you think would improve the digital economy in the North?
Investment from Government and private investors. They need to come and see what’s going on; London is not the centre of the world. People should be willing to look at the North as a viable option.
The infrastructure is great but we could do with better links making it easier to get to London.
We need more investment in awareness because people leaving college and university are going to Leeds or London. They don’t know what exists here and they write it off.
We could do something here to get people to stick around and start a business. There should be better awareness of the possibilities, investment for startups and the communities that are here.
What’s next on the agenda for Label Worx?
More of the same. We’re doing other projects and moving forwards. If we’re to maintain the success and momentum, we have to keep going.
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