The Future of Music Business

Note: This is a collection of interviews with people who, because of their job/role in music biz bring a variety of opinions regarding its future

With all the flux in the current music scene, how will the future shake out? Here are the views of Jay Boberg, former president of MCA Records; David Codikow, Velvet Revolver’s manager; Leonard J. Beer, editor of Hits Magazine, Danny Goldberg, chairman and CEO of Artemis Records; and Jeff Leeds, reporter for the Los Angeles Times, offer different scenarios of what’s ahead for the music industry.

Former president, MCA Records

I think that this is an incredibly vital time in the music industry where the chips are just being reassigned. It’s going to just be a different layout.
I think musically, this may end up being an incredibly vital time because of the fact that people are making music for themselves. They’re not making it to get a record deal. I mean, I think there was a point where maybe three, four years ago where even on a grassroots level, everything was aiming towards getting a major record deal.

I now talk to many musicians out there who have no interest in a major record label deal. What they have an interest in is trying to make their music. They do want to get paid, they want to find out a way that they can actually make a career of it, but they’re much more hands-on. They’re much more willing to understand the process themselves of what’s involved in doing it and to find out a way of doing it where they’re not as dependent on other people.

Now, do I think record companies are going to go away? No, I don’t. I think a great value is added by a great record company — or at least the people at a record [company], because record companies are not entities, it’s the people in them. And, you know, what is a record company supposed to do? They’re supposed to recognize exceptional talent, they’re supposed to help develop that talent — whether it be their imaging, whether it be introducing them to people who can help them in a recording process or a songwriting process, or in any of the aspects that sort of gets their music ready to be out there and be presented. They’re supposed to have relationships to help them market themselves in terms of touring or presentation.

They’re supposed to, in many ways, provide a certain amount of financial capital to at least get the ball started and rolling. And it doesn’t have to be a lot of capital. In some cases it is, but many examples would have been very modest expenditures.

And then they’re supposed to have an expertise of knowing where in the marketplace that particular art that this musician is creating might resonate and be able to target that market to see if it does resonate. And thus then spread it from there and try to pull it into the greater marketplace and the greater population.

Those are skill sets. Those skill sets are still going to be needed. The question is can the artist do some of that, more of that, themselves? Will it be a manager who does more of that themselves? Will there be independent companies that will be doing more of that that used to be done by the majors? Or will the majors adapt and create different types of companies that are staffed differently to provide different services that are more attuned? I think the answer is a little bit of all the above, but it’ll be very different.

[What do you think of the current state of the music industry?] an interview with David Codikow, manager of Velvet Revolver

… The way I look at it is that the music business to me is fairly healthy. It’s the recorded music business that may not be as healthy as it once was. And again a lot of it has to do with, you know, the record companies blame the Internet, the kids and the artists blame the record companies, there’s not great artists, there’s no artist development like there used to be.

And it still sort of goes back, just from a corporate perspective, [to] looking at brands. Do you think in the next 35 years you’re going to have a Rolling Stones that lasts 35 years, or an Elton John or a Paul McCartney? Or some of the groups that have been around for years and years and years and still tour? I don’t know. I don’t know if artists will have that kind of longevity.

There are some incredible new artists, it’s just a question of, you combine the Internet sales, you combine the numerous other avenues that kids have to spend their money. Kids and adults. I mean, 18 to 34 year olds spend their money on DVDs, on records, the cost of a movie goes up — you know there’s just so much disposable income. So everybody’s fighting for that dollar. Record prices are going up.

And the Internet, again I go back to the Internet only because there is a tremendous amount of downloading. Sometimes I believe that downloading is good. I think in certain respects, in certain limited respects, if you really have a tremendous buzz and a lot of people are looking to download your songs, there’s incredible promotional opportunities through viable marketing on the Internet. The issue is, does it take away from record sales? I’m not saying anything anybody hasn’t said or doesn’t know. But those are sort of the issues.

[David Codikow is the manager of Velvet Revolver. Here, he explains how the band got a record deal and talks about the buzz surrounding its launch. He says that Velvet Revolver will likely make most of its money through touring. ” The global marketing excitement for this band is fantastic,” he says. “They could probably sell out 3,000-seat venues across the United States, just on who they are without even hearing the music.” This interview was conducted on Feb. 9, 2004.]

When people talk about this perfect storm moment for the business, consolidation of the business, consolidation of radio, all the elements, the Internet, what do you think? It’s a great phrase, is it a reality?

Yeah I believe it is. I think that, again, my opinion, is record labels will become sort of — I mean they are to some extent venture capitalists, in the way that they invest in a piece of talent. But they only have the rights to derive income from the record sales.

I believe that the future’s going to be if a record company invests in breaking in artists — which a record company does spend time, energy, effort, marketing, promotion, distribution, sales, and numerous other ways to help break an artist — they’re going to want a piece of the publishing, the merchandising, the touring. I mean some of that has started on some level, and that’s how it used to be years ago. But I think record companies are going to go that way again.

Or die.

Or die, yeah. I mean I don’t think they’re going to die in the relative future, and the relative future is the next five or 10 years. Again, it’s really complicated, and it’s way beyond the scope of what I can say at this moment. But brick and mortar retail sells 99 or 98 percent of all records sold. It’s really hard to, quote “overnight” have the people that sell 99 percent of your product go out of business. That doesn’t happen overnight. But it happens over time with the Internet, and the sophistication, the technology growing. You know, that’s how it works.

Let’s just talk a little bit about Velvet Revolver. Who, what, why, where, when, how?

Basically I had been Slash’s lawyer, and my law firm represented Scott Weiland. So I had pre-existing relationships with both. I hadn’t seen Slash in several years and I ran into him at Tower Records, when he and Robert Evans were doing a record signing for the soundtrack album to “Kid Stays In The Picture.”

And we talked, and he said, “I’m looking for a singer, we’re looking for management.” And I always thought that, you know, if several of the guys from Guns N’ Roses, the biggest band in the world for a period of time, got back together, and they found their quote, “new singer,” it could be amazing. It could be unbelievably huge.

So we started working with them March of last year. I think they hooked up with Scott Weiland in May. And, you know, the future is their oyster to a large extent. I mean it’s incredible the ride we’ve taken in less than a year. Between putting together a soundtrack — they did the theme song, the untitled song, for “The Hulk”, the Universal motion picture. We also did a song for “The Italian Job,” all as an unsigned artist, which first and foremost is extremely rare to have an unsigned artist do — contribute major songs to major motion pictures.

What does it mean, “unsigned artist?”

Meaning they didn’t have a record deal at the time. They weren’t signed to anybody. We’d been approached by record labels in Europe, record labels in Asia, we were exploring the possibility of talking to Apple, we were exploring the Internet. At the time there was a lot of interest in the band, and we were exploring a number of different distribution avenues to see what we wanted to do.

In the end, June 19, 2003, the band played sort of an unannounced gig the day before the release of the motion picture “The Hulk.” And at that time a number of record label came down, and the buzz started to heat up, and several labels made offers. We ended up going with Clive Davis at BMG and RCA.

Did Clive say something wonderful, or was it that it was Clive? What happened?

Well Clive is a legend. What can you say? I mean there are no rules for originality, and he’s an original. He’s sort of done everything in the music business and still stands the test of time. So there was a lot of competition, great labels, I think the guys felt that, you know, Clive Davis is this interested and he’s the head of the label. You know, it’s a hard thing to say no. Plus the deal was unbelievably fantastic. But all the deals were competitive and all the people were great, it’s just Clive has an edge because he’s Clive.

What of the deal can you tell us?

Nothing. It’s a short-term deal with a lot of royalties and at the end the guys own their masters. That’s positive.

I could say once upon a time there was Guns N’ Roses and Stone Temple Pilots, they operated under the old world, the old rules, the old universe. Then there’s a kind of big bang moment, something happens in the business, and now this is a template for something new.

Yeah, again, we all at times, you know, have wishful thinking. We all think this could be huge, and knock on wood it will be. But I don’t like to speculate because many times I’ve speculated on how big something’s going to be and it was just the antithesis of that.

In this instance though, you do have a group that collectively, the guys have sold 70 million albums around the world. Guns N’ Roses, at the time, was too big for stadiums in Europe and in South America. They played speedways. Scott Weiland is a complete and utter rock star. Scott Weiland is a genius and in his own right his own band sold 20-25 million albums. You combine these two people, the record is fantastic…

The global marketing excitement for this band is fantastic. The other interesting thing about this, although they are a new band, they are the type of artist that could sell out venues that are larger than what a typical new band can start. You know, they could probably sell out 3,000-seat venues across the United States, just on who they are without even hearing the music.

So when you have these kind of intangible, extra-added bonuses, you never know what you’re going to get. It could be lightning in a bottle, like I said before. …

Tell me about Duff and about Matt.

Duff McKagen, bass player Guns N’ Roses, bass player Velvet Revolver. Matt Sorum, drummer for The Cult, left The Cult I believe in 1990, joined Guns N’ Roses from ’91 to ’97. Just, you know, brilliant guys, fantastic writers, worked with Slash — again the chemistry between Slash, Duff, and Matt is something you can’t manufacture. They’ve played together — Duff and Slash in particular have played together for 15 years. And, like I said, their small shows were arenas. Their big shows were speedways. So when you play together and, you know, Matt played with them as well, for about six or seven of those years. So you can’t manufacture that kind of chemistry.

The other interesting thing about this is Dave Kushner, the other guitar player, and Scott, all five of them write. A lot of bands you’ll get just one or two people in the band that really contribute. Sometimes three. Here, everybody contributes, everybody writes. Everybody brings in ideas. Everybody brings in comments, suggestions. They’re smart, they’ve been around the block. They’ve seen it from the highest levels there are. And they’re great writers.

What’s new in the world of the release of this record now? …

Well the thing that they face most of all is, again, really when Stone Temple Pilots first or second record came out, I think it was ’92, ’94, ’95, and Guns N’ Roses I think released in ’87 and then in ’90 or ’91 — the Internet, for all intents and purposes, didn’t exist. I mean, it’s a whole different marketing strategy, a whole different concept. There’s instantaneous, immediate global access to a musical composition when it’s put on the Internet. Is that good, is that bad? It depends.

One of the things that we’re doing, or I should say RCA is doing, is what’s called “spoofing” some of the tracks. They put the tracks on the Internet and they see how many people are actually searching for these tracks. I think we had over 350,000 people searching for Velvet Revolver songs. For new, unsigned artists that are just coming out, I mean again, there’s a lot of awareness here. But that’s fantastic, that tells us a lot. It tells us there is awareness. It tells us people are excited. You know, they’re anxious to hear the songs. Things like that.

You can use that, with a lot of other marketing tools, in really sort of defining what you may mean out there. So the Internet is the biggest thing.

… Alright, so two questions: How do you keep everybody from stealing this? … And then what happens. How do you make money?

Well, again, we’re selling records. And typically, kids that are downloading songs also like to buy the CD. They like to have the artwork. There’s also some surprises we’re going to have, possibly in a marketing campaign, with the CD that basically enhances your desire to buy the CD. But most of the kids, even though they may download, also a lot of them are buying now, you know, songs, through Apple iTunes and other companies, but they’ll still be buying.

We always hear about the additional merchandising aspects, the posters, the tour, the everything else, that’s that where the real [money] is anyway. Is that going to be the case for Velvet Revolver?

Again, you have to look at certain type of artist. I’ll start with the general and then I’ll talk specifically about Velvet Revolver. But a lot of artists, depending on who you are, you may never go out on the road. You may never have a band and may just do what’s called “track dates.” That means you don’t really tour, you don’t play larger venues, and you don’t make the kind of money one can make as a touring artist.

Rock bands traditionally have probably made their biggest money, if they’re a major rock band, from touring. Why? Because you get paid every single night. And nothing that’s, per say, recoupable. Under a record deal you get paid semi-annually, and most if not all of the money that the record label spends is recoupable.

That means they take their cut first.

Well the record company advances the artist a certain amount of money. And then they get to recoup that advance prior to the record company paying the artist their royalty.

So years could go by before you made any money.

Or never. Or right away. Meaning, there are many artists that weren’t successful, that never recoup, and there are artists that were given millions and millions dollars and may sell 3 or 4 million albums, and didn’t recoup. If you’re a major artist, you recoup.

… What will you be looking for on the release of Velvet Revolver? How will you know, what temperature do you take, what’s the thermometer you stick in the bird to know the thing’s done?

… Eighty to probably 85 percent of all records, quote, “fail.” Again, what’s failure? I don’t know what failure means. I have my own definition. Not recouping on the first album, is that a failure? Maybe not if you recoup on the second or the third, you become successful. Getting dropped, or failing to hit a gold record, is that a failure? I don’t know, but a majority of the records that are released don’t recoup. And a minority of the artists do pay for all the other things.

In this instance though, again, there’s some intangible sensation that you feel, and everybody around it feels, about an artist or a group of these kind of guys. They’re great guys, they’re extremely talented, they’re visionaries in their genre. People like them, people want to see them succeed, and they have an unbelievable record. And at the end of the day, it’s all in the music. It all comes down to music. The gatekeepers of the music are the radio program directors. If they love it, it gets on the radio.

It’s still all about the kids. If the kids want to request it, it gets played more and more. The more it gets played, the more people buy. The more people buy, the more records they sell. The more records they sell, shazam, you’re a rock star. You know? It’s not, you know, Euclidian geometry, but it definitely can work. And with these guys, you feel that undertow. They made an amazing record. And our radio department already told us they’ve been playing the single for a lot of people, and they’re feeling really good about it. It’s much better than not feeling good about it.

… I have an impression that two of the guys, at least the two we met, are really involved in every step of this as well. Is that rare?

Again, it is and it isn’t.

But I heard them talking about how much it costs to be in the studio and watching every penny and every nickel.

Well, they’ve made records for millions and millions of dollars in the past. This record was made for much, much less. They’re brilliant musicians, they do a lot of pre-production, they rehearse, they know what they want. And if you think about great records, classic records that have stood the test of time, not only is there a great producer, but the artists are just involved in the production as the producer and the mixer. And they were involved every step of the way. Great mixer, great producer involved in this.

Like they said, they hired a guy named Josh Abraham, young, young producer, great. They co-produced it with him. And you hear their signature, you hear something that’s really contemporary but yet sort of harkens back to these melodic sounds that both bands were known for.

And yeah, they were involved. They’re involved in every aspect. They’re involved in planning the video, the artwork, the touring element. They meet with us regularly, we talk to them everyday. They’re not 23 years old. And, again, not to say that 23 year olds shouldn’t be involved either, a lot of them are. But it just depends on who you’re dealing with. Some people want to be involved in everything, some people don’t want to be involved in anything except, “Where do I play?” These guys want to be involved in everything and they can play.

an interview with [Leonard J. Beer,editor in chief of Hits Magazine, a music industry trade publication. In this interview, he talks about the effect of MTV on the music industry. “MTV is the most powerful force that’s probably ever happened in the music business,” he says. “You can make a star overnight if they make the right video, and if the right magic happens.” But he warns that the flipside is that the exposure can cause an artist’s popularity to burn out faster. Beer also argues that teenagers have become accustomed to expecting instant gratification and that record companies need to find a way to adapt. “Can you imagine a world where everybody [has high-speed Internet access]?” he asks. “You could put up an ad in the newspaper tomorrow that the new Eminem single is available at nine o’clock tonight. Wherever you are in the world, the way you hook up, you can have that song. Can you imagine how many records you would sell?” This interview was conducted on March 12, 2004.]

… What moment in your life or what circumstance in your life led you to the music business?

Well I graduated with an MBA from NYU and tried to get a job, a straight job. The only company that offered me a job was Clairol. I went to work at Clairol, and I had to wear a suit and tie everyday and, you know, I had long hair and didn’t want to do that.

I had a friend whose father was one of the great songwriters of all-time, a gentleman who’s passed away recently named Carl Sigman. His son Mike Sigman was working for a magazine called Record World in New York — an industry trade magazine that was competing with Billboard at the time. A job opened there, and I was working at Clairol making $17,500 dollars a year. It was my first job. And this job at Record World magazine opened up and it was paying $8,000 dollars a year except they were all wearing t-shirts and going to rock concerts and getting free records. It seemed great over there, and wonderful, and I was offered a job and I jumped immediately.

Over the arc of your life from Record World to where you are now, what has happened in this business?

Incredibly wonderful things, and unfortunately it appears right now to be rather apocalyptic things. The business has blossomed, it’s had peaks and valleys and great times for a lot of people who made a lot of money. Saw a lot of great music. Met a lot of interesting characters. All the people that you’re reading about in the books now, Ahmet Ertegun, Walter Yetnikoff, you know, I got to interact with all these people. And right now things are not so good.

I know there’s the mist of time problem. That is, we all at our age say, “Whoa was it good then.” Was it good then?

It was good then. It was. The music was great, it was exciting, it was new, it was fresh. There was mystery. Going to see a rock show was the first time you ever saw someone. You know, the artists were rarely on television. There was “The Ed Sullivan Show” when I was young and whatever, but there wasn’t a lot of music on television. So you had to go to a concert to see someone. To pull the veil of mystery away and, you know, go see the Rolling Stones, or go see the Doors or go see David Bowie, or some of the incredibly exciting things — Pink Floyd — and when we were young, the amazing things that you would see for the first time when you went to a concert.

Now, you know, with MTV taking away that veil, you know you get to see everybody. There isn’t that much mystery anymore, and I think that’s one of the factors that’s hurting the business.

That’s a really interesting point. Of all the people we’ve talked to, nobody has said that. When they talk about MTV they usually talk about the fact that it emphasized hits.

… Well, MTV — I think the expression is, they make them quicker and they break them quicker. They burn them out quicker.

MTV is the most powerful force that’s probably ever happened in the music business. You can make a star overnight if they make the right video, and if the right magic happens.

It also burns them out quicker. You know, you saw somebody like Pearl Jam who had the biggest videos on MTV for years and then all of a sudden they decided they didn’t want to be on MTV anymore because they felt it was hurting their long-term career. And whether it did or didn’t was a very big issue at the time. They’re the first group that I can remember that took a stand like that and it was very controversial when it happened.

What happened to them?
They had a career for awhile. They still sell concert tickets. But they diminished, you know. I think they did need the MTV force behind them because they were one of the great MTV icons.

When MTV started, did you think it was a good idea? Did you get the idea?

It was amazing. It was amazing. Well for me, when I was young and in the business I was going to cover concerts and going to see two or three shows a night. I just got burned out on going to the concerts and I started to get a little scared when I was a room with 15,000 people holding up lighters and, you know, all of a sudden I’m in a room that looked like a fire. I started to get a little older and it became a little scarier, and it was easier to stay home and whatever.

But MTV brought all the stars to me on television. So for me it was great because being in the business I got to see everybody. You know, you see them for three minutes. If you’re bored, they go away. You don’t have to sit there for an hour and a half if you’re bored and you get to see their best song, and them shot in the best light. You get to see everybody. Easily.

When you would write about these artists, what did you think about them? Were you into them as artists or was it a business story? What was it for you?

When I was young, it was about the art. I’d spend a lot of time in the New York City folk scene covering, you know, Steve Goodman and Jonathan Edwards and John Prine and all these great young singer-songwriters that were blossoming at the time in New York, in the early ’70s. It was wonderful. And they all had something to say. … That was a great time.

And then?

You know seeing Paul Simon when he was young. I saw Bruce Springsteen at The Bottom Line. I saw Billy Joel with 15 people upstairs at Max’s Kansas City. I mean that kind of intimate magic when they were young and vibrant and everything was incredible.

But over the years everything became more business, business, business, business. And now unfortunately the industry appears to be all about business, business, business.

What happened?

In a nutshell, the big corporations happened and the entrepreneurs went away. When it was Mo Austin, and Ahmet Ertegun, and all these great icons of our youth, if they wanted to sign something, they would sign something, and if they wanted to work it, they would work it. If it would take two or three albums before the artist broke, and they believed in it, it was about art. Commerce of course, but it was about art. And art led to commerce.

But now with the corporations it’s about short-term profits, it’s about the bean counters being in control, and the really bad thing comes when the bean counters take control and then all of a sudden they believe that they’re also creators of art. …

What happened to them?

They’re gone now. They came; they went. They made some corporate profits; they lost some corporate money. They probably made a lot of personal fortunes. But, you know, it’s the music business, it’s not the music art.

The last great influx of art that we saw was when rap music happened. And rap music happened outside the corporate system. It happened from the smaller companies that were willing to take a chance on this new sound. And develop it from the streets and give it time to nurture and find the greatest artists of this new emerging art form. And then all of a sudden the corporations came in and ate them all up. Bought up all the little companies. Took the artists and burned them out and used them and abused them and then threw them away.

So when people talk about this being a kind of perfect storm moment: Consolidation of radio down to Clear Channel, Cox, and Infinity; five companies, maybe four–

Maybe three.

Maybe three. No artist development, piracy and Internet downloading, and burning CDs.

And competition. When I grew up, there was music. There wasn’t the chance for a 15-year-old boy to sit at his computer and look at pornography all night for free, or watch DVDs, or play video games. It was just the music. We would sit there, we would read the lyrics, we would care about the music, we would talk about the artists. Now it’s just one of many things. So you can’t expect that excitement and that energy to be there like it was. Not saying that today’s youths don’t care about music, they do. They are very passionate about their music, but it’s one of the things they’re passionate about. It doesn’t have such a high priority.

… And so the effect of these perfect storm elements is what?

The effect of these perfect storm elements is that the corporations are trying to wring short-term profits out of the business. So they’ll release artists and if you don’t have a hit single right away, bang, zoom, next. “We lost some money on you. Next. We’re not going deep in the hole to create a career artist. We’re trying for a short-term hit single that’s going to give us short term corporate profits.” So they can go to the stockholders or whatever, or to … whatever it is that’s buying all these companies up, and say, “Look we made profits. Now we can turn it and sell it to somebody else and it’s their problem. It’s just a place for us to make a short term score and get out. It’s not a place to build up an art form and create something.”

So when Danny Goldberg says, “Yeah, but, once upon a time we all dreamed that it was great. But there were one-hit wonders, they were everywhere. There was crappy music, there’s always been crappy music. There’s always been–“

Yes. There’s always been crappy music but there was also the Beatles and the Rolling Stones, and where are they now? Where’s Bob Dylan now? Where’s that great person that’s going to capture, you know, the economic times, the political times? We’re in a time of war, we’re in a time of terrorism, and nobody is really speaking to that. Nobody’s speaking to today’s youth other than, you know, a little ditty, hit single.

We all like hit singles. That’s why they’re hits. But that doesn’t mean you’re going to buy the artist, and buy the album, and care about the album. And so you can swap a song with a friend and you’ve got the song and when that song goes away you’ll have another song. But you’re not going to be buying 20 Bob Dylan albums. Where’s the long-term career? Where’s the great stars?

I’ve asked a lot of people, 35 years from now — I mean I know who I listen to in elevators, I know who’s still around. 35 years from now am I going to be listening to Nelly in elevators?

No. The rap music has not created a catalogue market. It’s a short-term score market. Yeah I think some people will be listening to Dr. Dre in 20 years because he’s the best. But they’re not going to be listening to the fifth best, and they’re definitely not going to be listening to the 10th best.

That’s bleak.

Yeah, well, I think things are bleak right now. I think that there’s going to need to be a turnover in the generation that’s at the top of our business. There’s going to have to be almost a going back to how the business started, when there used to be a record company in Memphis and a record company in Detroit and a record company in Seattle. And they would work local artists and help their careers, and when the record would start to happen they would call the guy in Detroit and say, “Hey I got one. Why don’t you release it in your market?” And it would start to happen like organically and naturally.

Now everything is being forced and everything is being quick. You know, Norah Jones, who’s probably the biggest star in the music business right now, happened outside the corporate center. You know it happened off of Blue Note, a jazz label. An old-time record guy named Bruce Lundvall who just heard it and thought it was magnificent, and didn’t really care whether it would sell a million copies or not and just thought it was great and that he could make the record for a reasonable price, and put it out, and people found it, and it became like the greatest word-of-mouth record in history. And radio still, in most cases, rejects her because she’s a little outside the norm and radio wants to play the norm.

And this thing that I suppose happens in every business, happens in the picture business and everything else, which we hear all the time, “This is the new Norah Jones. We think we have the new Norah Jones. We’re looking for the new Norah Jones.” Right? Even Blue Note, they have a woman named Keri Noble they think is the new Norah Jones.

Norah Joneses happen by magic, they don’t happen by formula. Will there be other people who take her style of music and wrap it around what they do? Of course. You know, every style of music — when Nirvana happened everybody said it was a fluke, but it wasn’t a fluke, and it led to Pearl Jam and it led to Stone Temple Pilots and Soundgarden and a whole birth of a different kind of a sound.

Norah Jones may evolve into having, you know, the Jonesettes, who use some of the adult influences and some of the jazz influences and some of the country influences that she uses and create other music that people care about.

People care about Norah Jones’ music. That’s the great part about it. So if there are more people that are going to make the people young and old care about them — You know there’s an artist right now named Joss Stone who is a 16-year-old girl from Devon in England, who sounds like an old-time R&B singer and she’s a 16-year-old white blonde girl. And people think she’s magical, and the magic is touching her.

The entertainment business is not about a formula. Look at My Big Fat Greek Wedding. The movie was pretty much over, they were pulling it out of the theaters, they were releasing the movie on video already, it didn’t get great reviews. And then all of a sudden the magic happened and it did $250 million dollars. Entertainment business has always been about magic, not about formula.

… We’re following some people, I mentioned them to you earlier. Let me ask you about them, the importance of them once upon a time, and the career trajectories, ups, downs, ins, outs, what’s ahead for them, what’s behind them. David Crosby.

… Crosby, Stills and Nash — I remember when I bought their first album at EJ Korvette’s in New York. I was at the record store and I just saw that album cover. And it was an impulse buy, I didn’t know who they were. I just thought the album cover was cool and I bought it and I took it home, and it was like one of the great joys of music.

Why?

The sound was incredible, the harmonies were incredible, and they had things to say. They spoke to my generation.

It’s singer-songwriter lyrical music.

Right. It had everything. It sounded great, they were cool, they had cool lives. You know, they were dating Judy Collins and Joni Mitchell and it was cool. It couldn’t have been cooler.

And in many respects they were at a kind of career peak when Woodstock happened, they sang there, they were the opening song in the movie, they were in so many ways iconic I suppose from that time. … [What is] the meaning of David’s, and I suppose Nash and Stills and even Neil Young’s kind of eclipse at some moment in the ’70s, and certainly by the early ’80s? What did it say about the business that maybe they were no longer in fashion?

I don’t think they necessarily went out of fashion until they self-destructed in many different ways. And permutated in every possible way so that we had albums individually and by two of them, and by four of them, and, you know, when they added Neil Young it, it just made it even more interesting. They always sold concert tickets. Even when they were having, you know, valleys in record sales. Eventually they just got old. And David had his problems, well chronicled in his book and the newspapers. But you know, they caught the moment. They rode the moment and they rode the wave. Who could not like them?

Exactly. And David in a way now represents, at least for me, this other thing that’s happening and maybe it’s always been happening in the business. … The Rod Stewart remake of the standards. James Taylor’s back, Michael McDonald covers [Motown.] There is a kind of retro-rebirth of a number of–

Well, the adult buyers are being marketed to now because the adult buyers aren’t stealing. So the adult artists are flying up the charts because the rest of the stuff has been pushed back by piracy. So they’re probably not really selling that much more than they used to be, they’re just appearing to be more important and people are therefore spending more money to support it, and then make it even a little bit bigger.

But James Taylor pretty much, you know, sells 700,000 to a million albums on every album he releases. And nothing’s really changed other than that it appears bigger now because other things are smaller. …

We talked to the guy who runs Sanctuary Records. He’s kind of done the new generation, or this go around’s version of what Danny [Goldberg] did for awhile with Bonnie Raitt and Stevie Nicks — find an individual artist who’s kind of gone into an eclipse, Crosby’s one of them, sign them up–

Sign them to a small deal, give them some ownership, maybe sell a little less records and make more profit.

That’s the business model.

Yeah that’s the model.

And?

It’s okay. They’re making money. They’re one of the few companies making money. They’re not trying to create any new art in any way. They just have a good business model for right now. Perhaps they’ll expand it. They’re pretty smart guys. They’re doing management, you know they’re starting to get involved with some new artists. But mostly they’re sort of skimming.

And they’re feeding an impulse of people like me and you.

Right.

Is that what it is?

Yeah. I mean, it’s more comfortable for you to buy somebody that you’ve already bought than a new artist. If you heard, like you said Bonnie Raitt, if you heard that there’s a new Bonnie Raitt album and one of your friend’s told you it was good, there’s a good chance you might buy it just out of curiosity, just because you have a warm spot in your heart because you’ve bought her other records. It brings back some memories. The fans are still there. You just have to find a way to reach them and motivate them.

But this isn’t fueling the music business?

No this isn’t fueling the music business. This is skimming. …

So take somebody like our Sarah Hudson Daughter of the almost famous Mark Hudson. Cousin of the famous Kate Hudson. What’s ahead for her?

I’m sure because of who she is and who’s behind her that she’ll be visible. People will get a chance to decide. Which is really hard to do. She’ll get some exposure, I’m sure she’ll get some People Magazine, she’ll get some TV shows that other people wouldn’t get. She’ll have a chance.

V And the chance is good — by the way, most people don’t have a chance. They’re fighting to get that chance. So she has the chance, a better chance. Will she make it? I don’t know. Too early to tell.

What’s she up against?

She’s up against everything. She’s up against Lord of the Rings. She’s up against Madden Number 6, she’s up against the LeBron James bobble head, as well as every record there is in the world. She’s up against the new Avril Lavigne record that just came out this week. She’s up against everything.

… Plus, the record labels only have so much time to spend and so much money to spend on their new artist and they’re looking for one that goes boom. At some point if she doesn’t go boom she just gets pushed aside. And it’s bad, and it’s hard, and it’s awful, and the closer you are to anybody that’s trying to do this, the more torturous it feels.

… Tell me about recoupment. Is she ever going to get her money back? I mean even if it’s a big hit, does she ever see any money?

Well the big music stars don’t usually make their money from royalties unless you have an album that’s gigantic like Norah Jones or Alanis Morissette or something like that. You’re not really making your money from record sales. Because there’s the expense of the video — it’s just really expensive so there’s not a lot of money that way.

The big artists make money on tour, they make money from merchandising, they make money from guest appearances, they make money from licensing. There’s a lot of ways for a recording act to make money. Royalties from records is probably the smallest of it.

So you really do have to hit?

Oh you have to hit big, yeah. You know, it’s hard being a star. How many real stars are there?

How many real stars are there?

I don’t know. How many are trying? Zillions! My 19-year-old daughter the other day told me, “Daddy I want to be famous.” “Well that’s great.” It’s not so easy to be famous.

Her father Mark, one of the Hudson Brothers, summer replacement to Sonny and Cher.

Cher, Cher is famous.

Live action Saturday morning show, “The Hudson Brothers.” What happened to them?

I’m sure the Hudson Brothers made money in their career. They were on for a long time, they did okay. I would put them in the “W” column.

“W” meaning win?

Yeah. You know, they didn’t have the biggest win but they had a good win.

And he has this angst that says, “I always wanted to be John Lennon. I didn’t want to sell out like this.”

You know, that’s another problem. The music business wants to put everybody in the simplest box.

What does it mean?

John Lennon broke at a time where there were — you know, he could break all the rules. There were people that were letting people be creative much more than there are now. It’s harder and harder. Everybody wants to get you with the hot producer and have the sound that’s hot right now and hope that you get a hit single. Then they’ll see if they can build a career out of it. But once you break in a certain way it’s hard to say, “Well I’m not really that.”

If you break as like a pop ditty hit single, but tell people that you’re really a deep, sensitive artist, they’re not buying it. You are how you first break. And it’s hard to break that mold. It’s even harder to break that mold than it is to break through the first time.

So I’ve got good news and bad news, right? The good news is you broke through, the bad news is you’ll never be any different than you are right now.

Right, that’s what usually happens. And that’s why people live and die by their next hit single and they don’t have a real career. And as soon as they stop having the hit single, “goodbye.” And it’s really hard to keep having hit singles.

Why?

You know, how many people are like a Billy Joel which you can get a double greatest hits album and say, “Wow he had 40 great songs?” Or Elton John, or somebody that, that has lots of great songs? Most people, if they have three great songs that’s really good.

Because they took five years to write the first album–

Correct. And five months to write the second one.

And it’s derivative of whatever image they created or was created for them.

Right. And they’re in a different place when they write the second one. You know, take Alanis Morrissette. She broke all the rules, you know. She went down on someone in a theater [laughs], and everyone went, “Wow she said that?!” And then she made a lot of money and she came back and wrote an album that said, “Thank you India.” And all the little girls that loved her and thought she was amazing went, “what?”

One of the people we interviewed was Nic Harcourt, who said, “Sarah needs a story. Everybody needs a story. They need a story to get to the radio disc jockeys, they need a story to get, airtime on “Oprah” or “Good Morning America” or whatever it is. True?

Well they need a hit. They need a story, they need a hit. The story helps them become bigger if they have the hit. You know, Britney Spears gets married for 24 hours and is on the front page of every magazine and newspaper in the world. Then her album gets released. Janet Jackson takes off her clothes on national television and then her album gets released. Jennifer Lopez gets married, engaged, every other time she has a movie coming out. And she’s on the front page of everywhere. So everybody’s looking for their story.

Correct. But they sure do get a lot of attention. It’s not a lot about art right now.

And now let’s go back just for a moment to MTV — this idea of form over substance.

I’m very pro-MTV. I think MTV has probably created the best brand in television that anybody’s ever created. The MTV networks make zillions of dollars. They own the kids almost from the time they come out of the fetus, you know. My kids grew up watching Nickelodeon and got moved into the MTV networks, and you know, it’s the cultural beat of their generation. And it has been since the day it went on the air. You know Tom Preston and these people, Judy McGrath, they invented one of the great art forms of our time. 

And when somebody says, “Yes but it killed the album. Albums used to be all of side A and then a song that would kick you over to side B and we’re all about messages, and what MTV did–“

Well it does make them and break them quicker, but if it gets your attention to something, and you buy it, it’s better than if you don’t and it gives the artist that much more a chance if their album really has something to say and touches people. If it is just one good song and a bunch of filler, well, people find that out quick too and tell their friends. Again, it’s a double-edged sword.

And the idea that this is a certain kind of person? A handsome, attractive, beautiful person makes it, but David Crosby never makes it on MTV?

Well David Crosby’s too old now, but if there was a new Crosby, Stills and Nash for this generation, they’re on tomorrow.

No matter what they look like?

No matter what they look like. Not everybody on MTV is as beautiful as you are.

Tell me about radio, by the way. What happened? Speaking of perfect storm moments, and consolidation.

Which parts of radio? You know there’s the Nic Harcourt, the non-com[mercial] part of radio that’s wonderful and will take chances on new things and cares about music. Hits a tiny little part of the audience but it can matter. It can help start a career, it can help explode a career.

I remember when no one wanted to play the first Fiona Apple album. And they thought it was bizarre and weird, and KCRW played it and the album went to number one in sales in Los Angeles just from them. Again, magic.

So there’s that good part of radio, and there’s the commercial, homogenized part of radio that just wants to play songs that all sound alike so that they can sell commercials. That’s all they care about, that you don’t push the button. They basically want every song to be OK. They don’t want it to be too much passion, they don’t want it to be too much paydirt. They want those songs in the middle that make you almost not notice the radio and so you leave it on and so you hear their commercials. And so they’re doing all of what they call “call-out research.” And they’re checking what the passive audience wants.

C They care more about the people that they’ll do research studies on. They’ll say, “Yeah that song’s okay I kind of like that song, yeah play that song.” They care more about that then looking at the record sales and seeing what people are really passionate about. There’s lots of radio stations that when you’re trying to promote a product to them, and you go in and you say “Norah Jones is number one in the country, it’s number one in your market and you’re not playing it.” And the guy will say, “Well it’s not really right for what we do.” That’s the problem.

And the effect of that?

The effect again is the more homogenization, the more one-hit wonders, the more one-song albums. Because radio doesn’t care, you know. There’s going to be 10 records in the top 10 every week and they’ll play them. And they want them to be a certain type of song.

And that’s the world Sarah’s trying to break into and sing in.

And that’s the world Sarah’s trying to break into and it’s really hard.

… Now let me ask you about Velvet Revolver The new Clive Davis-paid for, genetically engineered, about to be super-marketed everywhere, hybrid of Guns N’ Roses and Stone Temple Pilots.

Right. They’re almost going to have to be an adult rock band now. I don’t know if they’re going to get the kids. The kids are sort of like past whenever that was, that moment that Stone Temple Pilots had. So they’re going to get a shot on the radio right away. And the music that I’ve heard so far I liked a lot. So they’re going to get a run. You know, we hope Scott stays healthy. And, you know, Stone Temple Pilots made great music in the past. And let’s hope for the best. …

Now we’ve spent a lot of time with the marketing guys, and the RCA people talking about how they’re going to handle this band. And they have, you know, high-end management here. I mean they have serious people behind them, and they’re managing every single step of the way. Worldwide tour about to happen in speedways everywhere, right around the time the album comes out.

But like we said before, just because you do everything right doesn’t mean that the magic’s going to happen. They’re creating a scenario where if the magic does happen it will be really big. By doing things right. But just because you do things right doesn’t mean the magic’s going to happen.

If you had to guess, based on your experience, just as we guessed about Sarah, and just as we know about David Crosby, what do you know about these guys? What’s your guess?

What would I guess? It would be a semi-success. Maybe do between a million and 2 million albums.

Why?

Because there’s going to be a curiosity and there’s going to be a following and there’s going to be a lot of exposure. So it’s going to get a strong head start. And from what I’ve heard, the music is good. It’s competitive in my opinion. I think they’ll do okay. I don’t think it’s going to be a blockbuster.

You know I was interviewed by MTV before the Justin Timberlake album came out. And they said, “How do you think that one’s going to do?” That was an easy answer. Everything was aligned. He’s an incredible talent, he’s the right age, he’s perfect for the MTV generation. … I don’t think everything’s going to align for Velvet Revolver. But if they did, you know, if they do a million and a half it’s a win.

Win means what? They get to do it again? …

Well, if they could sell a million and a half albums they could make a fortune on tour. And that’s their win. It’s not a big win for the record company but it’s a big win for them. If they could sell a million and a half records and keep their songs on the radio for about a year, they could make a fortune on tour. Because they already have a touring base and the base would be energized.

So for the band this is, this could be a big win. For the label? You know, they’ll do better with Clay Aiken and Ruben Studdard.

… I [asked their marketers], “How do you keep the kids from stealing this music?” You know if kids are the market share you’re after, how do you keep the kids from stealing the music?

Well that’s why I’m saying that they’re going to have to really be an adult rock band. They’re going to have to sell to 30+ people who are less inclined probably to steal the music.

Well they say, by the way, they have a foolproof method that they are employing that stops people from stealing.

I don’t believe it. I don’t believe it.

They say that they have hired the services of the sneaky computer guys.

First of all, there’s always a smarter computer guy. And there’s always the guy who’s going to crack any system that appears. Piracy comes in many different forms.

I have a friend who has a management company. And a bunch of young people live there and they’re voracious music addicts and the Radiohead album came out and one of them went and bought it. He brought it back to the office, and everybody downloaded it onto their computer and all of a sudden 20 people had it on their computers and they threw the CD out.

So how do you stop that? That’s the bigger problem. The copying and making 20 copies for every one. There’s the problem. What’s going to make somebody care about the ownership? That’s the key to this whole problem that nobody’s solved.

We’ll sue them and we’ll arrest them.

Forget that. How many times have you bought a DVD just because you wanted to buy it, and probably never even opened it? How many people you know that are like that? Okay. Because there’s that ownership, “Oh there’s a new version of Citizen Kane, I have to buy it again!” Or, “I’ve seen every one of the Lord of the Rings but now I have to buy the box set because I have to have it, so that when my girlfriend comes over I’m cool!”

But that “I’m cool” factor from the records that we used to have, when we used to date girls and “Come over to my house, you’ll look at my record collection, you’ll see how cool I am,” that’s not happening anymore. So we need to come up with a product that’s going to be special and cool. And that’s the problem. And until somebody solves that problem, getting the next generation computer geek to stop piracy on your record for a little bit — we may curtail it a little bit, congratulations, but the genie is out of the bottle.

So spoofing is not the solution? I mean literally that’s adding Madonna’s voice to something that you’ve named “Like A Virgin” and then she comes on and says, “Why are you stealing this f—ing record” is not the solution to the problem?

Right, that’s not the solution. And running ads on TV saying, “Don’t steal my record, or don’t steal my movie,” isn’t the problem. “Say no to drugs,” that really worked well. Everybody told us when I was in college, you know, “Don’t smoke pot.” Everybody smoked pot except Richard Nixon, and I’m not so sure about him.

You know, that’s not the answer. Somebody’s going to have to come up with an incredible new product. That’s the answer. Or a subscription service.

Is iTunes the solution?

iTunes is a step, yeah. iTunes is a really good step. The solution comes, in my opinion, when you can plug in your iPod or whatever generation gizmo you’re going to have, while you’re at a restaurant. And you can plug it into the wall and get a song. Or whether you can push the button on your car when you hear something you like, and own it instantly.

It’s instant gratification. You know, when I grew up, and I wanted a new pair of sneakers, and my parents said to me, “Okay this weekend we’ll go shopping and we’ll get you a new pair of sneakers.” That was a big win for me. But when my kids grew up, and on a Tuesday or Wednesday they talk me into buying them a new pair of sneakers, the win wasn’t “Okay I’ll do it on the weekend.” The win was, “Let’s go now.” The instant gratification generation is not being given instant gratification.

By going down to Tower Records at some moment and buying a CD? They want to get it off their computer immediately.

They want to get it now. I saw it happen with my wife. This is a great story. During the holidays she came running into the house going, “I heard this great song on the radio. And they didn’t back announce it,” which is another one of the big problems because you hear something and you don’t know what it is. Well luckily she sang it for me and I’m in the business and I was able to identify it as the new Five For Fighting single. And she said, “Oh great, I’m going to go to my computer and go to iTunes and get it.”

And she goes to iTunes and she clicks, and like 10 seconds later it’s on her computer. And she’s yelling at everybody, “Come here you’ve got to hear this song, you’ve got to hear this song.” And everybody that came into our house during the holidays she pulled over to her computer and told them they had to hear this great new song.

Well the system still works, but the system’s broken. Because first of all she wouldn’t have been able to find her song because the radio’s not telling her what it is. Second of all, not everybody has the high-speed line and the computer and the access she has to get it right away.

But can you imagine a world where everybody does? And you could put up an ad in the newspaper tomorrow that the new Eminem single is available at nine o’clock tonight. Wherever you are in the world, the way you hook up, you can have that song. Can you imagine how many records you would sell? Or how many whatever it is you’re going to call it’s you’re going to sell? How many songs you’re going to sell?

But see you’re starting about a real revolution. What you’re talking about is the idea that the record companies, owned by Bertelsmann, and water companies in France, and stuff, are no longer marketing and distribution companies because that’s probably going to be Apple. What they really are, what you would ask them to be is artist development companies?

There, bingo.

Who would prepare the music to hand it over to Steve Jobs.

Or hand it into the system of distribution. They’ve always done that. They handed it to Tower Records for the last 30 years right? But all of a sudden when the digital revolution came, they thought that they could control distribution also. They really thought people were going to buy their music from sony.com. They thought they were going to care about labels, that they would buy Sony music because the Sony site was cool.

Well the public doesn’t care about labels, they care about songs. They either like it or they don’t like it. And if they like it they want to buy it at the most easy, accessible instant gratification way, and they can’t. And they want to buy what they want, and they can’t.

You hear a great song by the Beatles, and you want to buy that song. You can’t buy that song. You have to buy the whole album. And you can’t get it quickly, because it’s not accessible. You’ve got to drive to the store and go to Tower Records and see some kid with 47 piercings on his face and ask him, you know, if he has the new Barry Manilow album. And the kid’s going to look at you like you’re from Mars or something, OK? The system is broken.

But if you could do it and just push a button and get Barry Manilow in your house, or whoever you want, whether it’s cool or uncool, whether it’s classical or rock, or theater music, or whatever music — if you could do that without anybody judging you, and by getting instant gratification, then the system will work again.

But nobody’s trying to really fix the system because they’re all trying to wring out that corporate profit. Wring it out, squeeze a little bit of profit now instead of really fixing the system.

To fix the system it has to be a revolution, and things have to really change. Well, the guys at the top are trying to make quarterly profits. And Thomas Lee and partners, who just bought Time Warner, they don’t want to hear about eating two years of losses to fix the system. “Well what can we do? How many more secretaries can we fire? How many more local promotion guys can we fire? How many more sales guys can we fire, so that we can make a little bit of profit, so that we can turn this thing in three to five, and make money for our investor?” They’re not trying to fix the system, they’re just trying to wring out the last morsels from the system.

At some point the system’s going to change, we all know that. Is it five years? Is it 10 years? Is it 20 years? It’s going to change. People are going to get what they want. 

an interview with Danny Goldberg[Goldberg started in the music industry as a rock critic, before doing publicity for Led Zeppelin and starting his own PR company. He has also managed Bonnie Raitt, Nirvana, and the Beastie Boys and worked for Warner Music Group. Goldberg is currently the chairman and CEO of Artemis Records. In this wide-ranging interview, he provides perspective and insight into the ups and downs of the music industry over the past four decades. Despite current trends, Goldberg is optimistic about this future.
“I think middle-aged people who are grumpy about the music business need to hang around with teenagers and see the way they react to MTV, the way they react to the iPod, the way they react to artists like OutKast and Pink,” he tells FRONTLINE. “I don’t think there’s any emotional difference between the way teenagers process music today and the way they did when I was a teenager.” This interview was conducted on March 2, 2004.]

…When one goes into the world of music, describe it. What is it?

Well the music business is kind of like a wheel with a couple of dozen spokes on it. There’s all different aspects of it. There’s the aspect of recording, which involves, especially in the ’60s and ’70s, there was a real important skill set having to do with acoustics, getting a good drum sound, engineers, mixes, stereo was just coming of age, multi-track recording was just coming of age. So there was a whole world of people that knew about recording.

Then there’s a whole world of people who knew about touring, which involved the logistics, among other things, of lights and sound and traveling. Of booking, of how you combine different artists, you know, into a show to attract people. And what do you [do], one encore, two encores, and whether or not you have a set or not. And the energy involved in the business of touring.

And then there’s the business of record companies. You know, which has many different aspects to it. From manufacturing, to sales, dealing with retail, to radio promotions, dealing with the radio station.

… So it’s not one business, it’s a cluster of many businesses. Nobody knows about all of them, and certainly nobody knows about all of them all at the same time. …

What were the economics for the artist in the late ’60s early ’70s, up through that ’77 period?

The economics evolved starting from the late ’60s up until today. In the late ’60s, you’d have artists getting a royalty of 3 to 5 percent of the retail price. Today, typically an artist will get 16 to 20 percent. That’s sort of been pushed year by year, having to do with market forces and the clout that artists have. Similar to what happened with baseball players and baseball teams, or movie stars and movies. Performers really are the driver of enough of the income, and the people who represent them figured this out and over the course of time it increased the amount of money and the percentage of the money that goes to the performers. Because they’re the key element in the business.

And did it work the same as it works now? That is, there was recoupment and all of that when somebody cut an album.

… In general, the economic model has been that the recording costs and artist advances are considered an advance to the artist and those are recouped … prior to initial royalties being paid.