Weekly Wire
Austin Chronicle The Rules Have Changed

Deconstructing the Music Industry

By Dave Marsh and Daniel J. Wolff

JUNE 26, 2000: 

In the age of electronic media, the roundtable discussion has evolved into a forum that begins with three simple words: "You've got mail." This particular symposium, held in cyberspace between rock critic emeritus Dave Marsh, editor and publisher of online mainstay Rock & Rap Confidential (www.rockrap.com), and frequent collaborator Daniel Wolff, author of You Send Me: The Life and Times of Sam Cooke, finds the two writers philosophizing on the continued viability of record labels in a new century. Given that Austin's music community has produced dozens of classic albums over the last two decades in a largely DIY fashion - major labels coming and going in the careers of everyone from Joe Ely to the Butthole Surfers and Spoon - we thought local music enthusiasts might be stimulated by the pair's e-mail dialogue and ultimate bottom line: Record labels are dead. We think they may be right. This being a dialogue, both scribes, as well as the Chronicle, invite other opinions to a debate that could well shape the music industry in the decade to come. You've got mail. -- Raoul Hernandez

A jam session on our musical future. If there were a Web site for radical rock writers, one of the most important items in its FAQ (Frequently Asked Questions list) would be, "So what are you in favor of?"

I'm not the only Jeremiah out there, either. Al Kooper wrote a particularly good tirade for a recent issue of EQ magazine. After he read it, Daniel J. Wolff, a poet, essayist, and activist with whom I frequently collaborate, began asking just such questions about the shape of our musical future. I've reprinted it as it occurred, an e-mail dialogue, because how it takes shape suggests something about the process it will take to rebuild a musical community, which is really the task before us.

In case the very idea of operating without record labels seems hopeless, consider what Christine Lavin wrote to Billboard recently: "Why are artists 'surprisingly silent' on the subject of Napster? It's because, as one Nashville business journalist succinctly put it to me, 'The music business is the only one where, once the mortgage is paid off, the bank still owns the house.' Napster may rip off record labels, but so many record labels have been ripping artists off for so long, it's giving them a taste of their own medicine. If the music on Napster is good, listeners will seek out the artist in a live venue where artists make their paycheck. If the music is mediocre or bad, it will evaporate into ether, so sales aren't affected. The rules have changed: Get used to it."

In this exchange, Daniel and I are two people who are trying to get used to it. Both of us have written about music quite a lot; I've lived my entire adult life around music, musicians, and music industry folks. Still, we could take things only so far, because record-makers is something we aren't.

I've left in our e-mail addresses, so others, perhaps already making music in a version of that future, can continue the exchange. We look forward to hearing from the angry, the amused, the annoyed, or anyone we might have inspired.

From: Daniel J Wolff renziwolff@prodigy.net
To: Dave Marsh marsh6@home.com

At the risk of sounding hopelessly naive, it feels like the job that needs doing is for someone to outline how the music business ought to work, not how it doesn't. Yea, the big fish is gobbling the little. That ain't new. Sam Phillips sells out to RCA; Motown ... ya know.

Someone wants to make music and wants to make a living doing it. Okay, so other people not only have to hear it, they have to pay for the privilege. Now where do we go from there? What is the role of a record label, or shouldn't there be such a thing? Do the record companies simply deliver the milk? Are they in the business of finding and feeding the cows?

I don't mean for this to sound as stupid as it does -- and maybe it's Economics 101 (or Marxism) I failed -- but it seems to me we have to say how we dream the distribution of music should work. Give something for folks to aim for.

Personally, I'm not going to be much happier downloading my music (with a fee to the "labels") than I am with the present system. I mean, I like buying books that way. I like browsing in a really good bookstore.

Am I missing something here?

From: Dave Marsh
To: Daniel J Wolff

I think if we can find a way to state the way things ought to work, basing it on the experience of how things do work currently (or don't work currently, I guess I mean), we have gotten "A" grades in both economics and Marx.

From: Daniel J Wolff
To: Dave Marsh

All right. Can we start with models? Is Ani DiFranco a model of how an artist/label ought to work, or an aberration? Are the various collaborative labels that have come and gone models? Is an independent a good idea?

Let's say I've made a CD of my music on my home DAT, and I want to know what to do with it. I can: a) shop it to majors; b) shop it to small labels; c) put it out myself; d) put it up on the Web for downloading; or e) some combination of all of the above. Okay. Never mind us having the answers. Who's asking these questions in an intelligent way?

From: Dave Marsh
To: Daniel J Wolff

We're asking them. And coming up with answers. So are lots of others. Thing is, you can't really get an answer to the DiFranco-type question. Except yes and no. DiFranco, first of all, started about a decade ago.

What she proved was that you didn't need majors to make money -- she probably does not yet sell the amount of records she would if she were with a major, [but] the difference is that she gets paid for all of them, and at something closer to the work's worth. So she makes a lot more money than if she were getting paid for the count determined by the record company and at standard royalty rates for an artist who sells only about 250,000 per release.

There are all kinds of ways to do that, including working with the majors to some degree -- Steve Earle's now doing it with E Squared by being distributed by Artemis (Danny Goldberg's mini-major). So, DiFranco is both aberrant and a model; perhaps the news is that the system has broken open enough to allow an aberration to prosper.

I don't think the idea of whether or not an independent is a good idea goes far enough. I think there's really only one question of consequence in this -- is having a record label at all worth it? Frankly, I don't think so. You cede 80-95% of income (presuming you trust the count; if you don't -- and you shouldn't, at least until you can audit the pressing plant, which you can't -- it's probably more like 85-99%) in return for the following (post-recording/manufacturing):

  1. distribution
  2. marketing
  3. promotion
  4. advertising
  5. capitalization

A) Is just: How do you get people to possess the music? Since music is intangible (is it the only purely intangible art? I think so), you do not have to have a physical product, not at all. If you want a physical product, and I kinda do, you can still use the intangible drivers -- MP3, other Net exposure -- more effectively than radio. You do not need a record company to make sure you have discs in stores in Peoria.

Additionally, there is not a record company on the surface of the earth that can assure you that your records actually are in Peoria for anything but a tiny fraction of its overall releases. Yet maintaining the physical distribution system is probably the second greatest figure in record company overhead, after artists' costs including publishing.

B) The vast majority of record label releases, no matter the size of the record label, are never marketed. A few sticks of type in a catalog, maybe an image of the album cover, is not marketing.

C) An even smaller number of record company releases are "promoted" -- whether that means actively plugged to radio and the press, or aggressively taken to listeners/buyers in any other way.

D) Ad budgets begin when you start selling in quantity, not a second sooner -- no other records are advertised.

E) This is the real nub of it. On the surface, because the record companies often -- less often nowadays, but still quite frequently -- advance the price of recording, it's easy to assume that the company capitalizes the artist. In reality, it's the other way around.

The artist's royalty account -- which reflects some minimum valuation of sweat equity -- is charged back for everything, somewhere between 50 and 100% of video production charges; 100% of record production expenses; most or all of any out-of-pocket costs of promotional, marketing, advertising, etc.

The record company is allowed to recoup all of this, plus its profit, before the artist royalty account goes back to zero. This alone is reason enough not to want a record company in your life, in my opinion. They're worthless vestiges of an era almost as dead as it deserves to be.

What would you put in their place? I have some thoughts but will wait for you to ante up first. I think this is going somewhere; I know not where, but I have some ideas.

Hint: Chuck Philips, the L.A. Times music-biz reporter said to me the other day, "Well, it seems obvious that the idea of intellectual property is dead." And Chuck's not a radical, either; just a solid business reporter who knows daylight when it slips through the cracks.

From: Daniel J Wolff
To: Dave Marsh

If we follow along here -- and I'm still the musician with a self-made CD, wondering what to do with it -- I have to assume from your information that majors have very little to offer me. I'm not going to get any of the five things they pretend to offer an artist. But I probably need those five things somehow, from somebody. That is, people have to know what I do and how to get it, and I have to make enough [money] to keep going -- maybe even a little more.

So I do have to put something in their place. You say I can get my product to people over the Net easily enough, if they know where to look. Seems to me that the way to do that is to pool resources somehow, so the other people like me can also be found in one place.

In fact, that site might take care of advertising as well as distribution, in that people would come to it looking for music and I could offer up some blurb about what I make. But I'm still not exactly being promoted or marketed. Look at DiFranco or a score of others or back into history, and the way people hear about you is to hear you: touring. Maybe as a revenue producer, but even more so as a way of getting the word out.

Which brings us back to capitalization, no? In this imagined world, the band/artist plays a bunch of gigs to reach the public, who go to buy the product online. Still, I need someone to front me the cash to put my band on the road and/or go into the studio (even if it is my basement, I've still got to buy the Fritos while I'm in there cutting). Maybe I should preserve the idea of intellectual property, but redefine it. And/or put it up for sale to someone else -- someone more in my corner than a record company. Someone who can help me on this different tack.

'Cause I'm worried that, if I drop the idea of intellectual property altogether -- in a country where the idea of property still rules -- I'll be as fucked as signing with Ahmet [Ertegun, longtime Atlantic Records CEO].

So help me out here!

From: Dave Marsh
To: Daniel J Wolff

You should:

  1. Avoid record labels of any kind, at any cost, including majors and independents, which means:

  2. Not signing anything with anyone that relinquishes control of the copyrights and publishing in your work -- fuck the higher royalty rate, just don't do it, you'll never regret it.

  3. Put together your own business team to market, promote, and distribute the disc.

  4. Always remember that the function of the record is to represent you and your music, rather than your function being to represent it.

  5. Not quit your day job for a while yet. Those rules may or may not lead you to Internet marketing -- that's not where they led Ani DiFranco, for instance -- but they will allow you to keep whatever value the music may have in economic terms in your hands.

From: Daniel J Wolff
To: Dave Marsh

All right and amen.

One way to look at that result is that intellectual property no longer exists as a barterable item the way it has been defined via record companies; that there is something more cooperative which is emerging.

The other way to put it is that we can't even consider who owns or profits or benefits from a piece of music until it gets out of the record companies' hands. As long as they control it, there are no questions, only answers.

If I follow your advice (and keep my day job), I will have this thing I love and care about and control, and the drive to find a way to share that ought to turn up new opportunities. That is, I will have my CD heard, and not through a company so something's gonna move the music from inside me to you.

There are thousands of musicians who know about this firsthand, and I'd sure like to hear what they have to say. Not the stories of being screwed by the labels, but the stories of what happened once they refused to go that route.

From: Daniel J Wolff
To: Dave Marsh

Now those are radical thoughts. And probably mean that it's time to go public with this. Wonder how much trouble we're in?

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