Studio City music label Varèse Sarabande Records is turning the volume way up on its film soundtrack business.

The new track is part of a shift in strategy after its recent acquisition by Cutting Edge Group, which invests in movie music rights and partnered last year with New Haven, Conn., investment firm Wood Creek Capital Management to buy the label.

With the new backing, Varèse is looking to at least double its already heavy output of about 50 albums a year, said Darren Blumenthal, who put the transaction together and was installed as the label’s chief executive after the purchase.

Many of Varèse’s new releases will come by way of Cutting Edge, a U.K. firm with an office in Beverly Hills that helps fund the creation of film soundtracks in exchange for ownership of the master recordings and the right to exploit publishing rights for ancillary uses.

The company already controls the rights to the soundtracks of such films as “The King’s Speech,” “Looper” and “Drive,” which came in one-off deals with producers to fund soundtracks and provide music supervision services. Now, the company aims to invest in music rights across entire slates of major studio releases.

The addition of Varèse gives Cutting Edge a platform from which to market the music it holds the rights to and the studio deals could greatly increase the marketability of Varèse’s catalog.

However, the strategy comes fraught with risk, not least of which is a declining market for the product.

Varèse sold about 172,000 albums in 2012, according to Nielsen SoundScan, a year in which sales of soundtracks fell 5 percent, to about 12.3 million albums. At the peak of the market, in 1998, about 62 million soundtrack albums were sold.

“Certainly to look back at the ’90s – in the world where the CD was the only choice – that’s a tough road to look back on,” said Dave Bakula, senior vice president at Nielsen Entertainment in Los Angeles

Varèse’s core business has been releasing scores, which include music composed to accompany scenes in a film.

However, soundtracks that use popular music are generally costlier to release than those that rely on original scores – for example, licensing a classic tune by the Rolling Stones can be a lot more expensive than licensing a classical composition.

What’s more, Varèse does not typically release the types of best-selling soundtracks with original music from pop acts that can top the charts, Bakula said.

“There are certainly types of soundtracks that do very well,” he said.

“The Hunger Games” soundtrack, released last year by Universal Republic Records, featured original music from Taylor Swift and Miranda Lambert and sold 175,000 copies – more than Varèse’s annual sales – while topping the Billboard chart in its first week of release.

More commercially viable material is already coming to Varèse through its new parent. The label is releasing the soundtrack to “Stuck in Love,” a forthcoming Millennium Entertainment drama centered on a writer played by Greg Kinnear, in vinyl, CD and digital formats.

The soundtrack will be peppered with original music from pop band Bright Eyes that was commissioned for the film by Cutting Edge, which has a staff of music supervisors that work to create original music as well as to secure talent and strategize with musicians. The soundtrack also features licensed music from the likes of Elliott Smith and Bon Iver.

Commercial push

By venturing into studio slate deals, which link investors and studios for multiple releases, Cutting Edge believes it can become a new co-financing partner, complementing the existing relationships studios have with outside financiers to defray production risk.

But a soundtrack represents just a tiny portion of a studio’s overall budget for a film, so Cutting Edge’s upfront money might not be as alluring for studios as it is for independent producers, said Clint Kisker, director at film finance firm Screen Capital International in Beverly Hills.

“It’s good for indie films or capitally constrained films,” he said. “That tends less to be the case with a studio.”

What’s more, studios often try to own the rights to all revenue-generating assets related to their intellectual property. To add to the challenge, they will often cherry-pick potentially chart-topping soundtracks to be released through labels such as Columbia Records, owned by Sony Corp., and Walt Disney Records that fall under their same corporate umbrella.

To get the company’s foot in the door, Blumenthal said he and other Cutting Edge executives are making initial deals with producers that have studio distribution deals while hoping to strike more difficult deals directly with studios at some point.

He also said Cutting Edge will be open to making arrangements to own half or more of the music rights rather than owning them outright.

By adding the record label to Cutting Edge’s offerings of upfront cash and music supervision, Blumenthal said the company’s pitch to producers is only stronger, since the company can now offer a complete package. He noted that Varèse has expertise in exploiting the rights in other ways as well, such as producing live concerts.

“We’re not only providing dollars towards their budgets,” he said. “We can exploit the rights in a valuable way.”

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