Uh oh….
I just imported all of my Blogger posts here, and it seems from the Tumblr dashboard that they loaded backwards, giving you 2006 posts as current. Heavy sigh….
Please check the dates on what you read. Some things may be out of date….at least til I resolve the problem…
New Blogs and Updated Websites from Wendy Day….Yaaaay!!
I’ve just set up two new blogs through my websites. They are a blog where I’m posting ALL of my articles (in one place so there aren’t 5 article archive sites with articles, just 1….and that blog is:
www.rap-coalition.com
And then I’ve set up a personal blog where I talk about life and music industry stuff (everything BUT articles I’ve written)…and that blog is:
www.WendyDay.net
Also, my new eBook dropped today and you can get it here:
I’m reading an article on the Navy SEALS. It recounts Hell Week, wherein you either pass or fail, make it or don’t. Only 21 of the author’s class of 220 survived the test. What does it take to succeed?
“What kind of man makes it through Hell Week? That’s hard to say. But I do know - generally - who won’t make it. There are a dozen types that fail: the weight-lifting meatheads who think that the size of their biceps is an indication of their strength, the kids covered in tattoos announcing to the world how tough they are, the preening leaders who don’t want to get dirty, and the look-at-me former athletes who have always been told they are stars but have never have been pushed beyond the envelope of their talent to the core of their character. In short, those who fail are the ones who focus on show. The vicious beauty of Hell Week is that you either survive or fail, you endure or you quit, you do - or you do not.”
Sounds like an audition for “American Idol”. Did you see that article wherein the stars of “The Voice” were shown to have appeared on previous TV shows? (http://bit.ly/kq3KDV) That’s taking the easy way out, that’s a desire to strap yourself onto a rocket to the moon, real stardom demands more. It’s not a lucky break, it’s all that preparation when no one is looking. Making it comes when you least expect it, when you’ve almost given up but are still slogging along on sheer adrenaline.
It is about character. Much more than talent.
“Some men who seemed impossibly weak at the beginning of SEAL training - men who puked on runs and had trouble with pull-ups - made it. Some men who were skinny and short and whose teeth chattered just looking at the ocean also made it. Some men who were visibly afraid, sometimes to the point of shaking, made it too.”
You can’t predict who is going to be a star. That beautiful girl with the fantastic pipes in high school, where is she today? Your buddy who could wail on the guitar?
Making it is like becoming a Navy SEAL. You’ve got to endure all kinds of horrific abuse, when no one is watching. Are you gonna flake out for the doughnut or hang in there? Used to be getting a record deal was like becoming a SEAL, the beginning. Now even that doesn’t count. People wanting record deals are pussies, they want someone else to do all the work. Today, if you want to survive, you’ve got to do the work.
It’s a battle.
Very few can make it in music. Even fewer than can make it in movies. You can fake it in acting (Arnold Schwarzenegger?), but you can’t fake it in music.
Oh, don’t complain about the pretty faces with Top Ten hits written by the usual suspects. Everyone knows they’re not real. Which is why they can’t sell a ticket and are forgotten almost instantly.
And the old labels don’t want to do the hard work and neither do the concert promoters.
The old labels just want to plug you into the system. Get you TV and radio exposure, play online games to make you famous. If the labels wanted to do the hard work, they’d sign people who sounded nothing like what’s on the radio and break them. That’s what they used to do, but now it’s too hard. Just try getting a deal at a major label if you don’t make Top Forty music.
And once upon a time, promoters broke acts. Before consolidation, when agents and managers were loyal. Now promoters are conglomerates focused on the bottom line, it’s about anything but music. Live Nation trumpeting the success of the Charlie Sheen tour? Would Bill Graham have promoted that? Money doesn’t trump everything. Let’s see you try to book ANOTHER Charlie Sheen tour. In the old days, the acts started small and ended up big. Charlie Sheen started out big and ended up small.
The reason we haven’t had many new breakthroughs, in both music and business, is it’s so damn hard to do. Techies want instant returns and so do the acts. No one wants to put in the hard work.
What struck me about all the e-mail regarding the Outsiders was that this was not everybody’s first band. Jimmy Fox was in many before forming the James Gang. Greatness takes a while to pan out. You don’t make it immediately. You keep slogging on, rejiggering, practicing, refining, getting it right. To the point when people discover you you look like an overnight success, yet you’re anything but.
On some level, that’s what’s wrong with America. No one wants to do the hard work.
But some do. And they’re the ones who succeed.
“The Seal Sensibility”: http://on.wsj.com/lofLcq
—
Visit the archive: http://lefsetz.com/wordpress/
—
http://www.twitter.com/lefsetz
—
If you would like to subscribe to the LefsetzLetter,
http://www.lefsetz.com/lists/?p=subscribe&id=1
If you do not want to receive any more LefsetzLetters, http://lefsetz.com/lists?p=unsubscribe&uid=f6430a43ca1300809830ae7295d35c50
—
Powered by PHPlist, www.phplist.com —
Post with 6 notes
360 Deals ARE Today’s “Record Deals”
By, Wendy Day from Rap Coalition (www.WendyDay.com)
I gotta state right upfront that I am biased against 360 Deals. I understand WHY they exist, I just find them unfairly oppressive in the label’s favor in an industry with a draconic history of jerking artists out of money. I stopped negotiating deals for artists in 2005 because I refuse to do a 360 Deal for any artist! How strongly do you have to hate something to stop your own income over it?
In the early 2000s, the music industry went through a severe change. Music sales plummeted, the importance of the internet reigned supreme, and there was an influx of artists into the industry causing an over saturation never seen before. It’s gotten worse, not better, for the major record labels.
Once used to a healthy profit margin that afforded grand lifestyles for those at the top of the food chain, the major labels became disgruntled as sales dropped while they missed the boat on less profitable digital sales. Taking on the role of dinosaurs fighting for survival, they tried everything from stopping the new digital revolution, to fighting it, to suing it, to band wagon jumping too late. Nothing worked for them. And they still haven’t learned from their mistakes—they still continue to fight the ways the consumers want to receive their music.
So to justify their continuing existence, they decided to take an even larger share of the pie from the ONLY aspect of the equation that they controlled—the artist (or the “content” provided for digital download). Back in the day, labels took roughly 87% of the pie while giving the artists 12% of the money AFTER the artist paid back everything spent on them from that 12% share. This means that if the artist sold $500,000 worth of CDs, and it cost $50,000 to market and promote that CD (a very low example), the artist share of $60,000 (12% of $500k) would be divided between paying the label back that $50,000 and a check for the remaining $10,000. The label would receive $490,000 for its investment and belief in that artist while the artist made $10,000. In exchange for giving up the lion’s share of the sales, the labels always told the artists that they’d make 100% of the touring. Any show money, was the artist’s to keep!
When the shit hit the fan financially for the labels, they decided to tap into the show money, and all other streams of income for the artists, as well. After all, if your profit margin is made smaller, you need to eat more of everyone’s income to keep the fat cats at the top, and the stock holders, happy. Most 360 Deals share in endorsement income (15% to 30% depending on the artist), performance income (10% to 30% depending on the artist), merchandising income (20% to 50%) and Film/TV money (15% to 40%). Before I go any further, I have to thank the good folks at Warner Bros Records for leaking me a major label contract for an artist’s 360 Deal. This enabled me to write about REAL contracts instead of just what I’d heard from lawyers, artists, and label folks.
How do labels justify taking an even BIGGER share of the pie from artists? They complain that they are doing all of the developing, investing, marketing, and promoting. Their argument is that they believe in the artist when the artist has nothing, and they feel that assuming the lion’s share of the risk should result in sharing in a lion’s share of the profit. If the label is developing and building the artist to a level of super stardom, they feel they have the right to share in a percentage of everything that super stardom affords the artist. So if they drive the artist platinum, they feel they should get a piece of the tour that came from the fame the label helped the artist build, and a piece of the endorsement deal or film income that came from the fame that the label helped build. I guess I could see this argument better, if I actually agreed that the labels did their jobs well of building artists.
I have a different vantage point of record labels. I see major labels based in tall glass buildings in NY and L.A. that have little interaction with the streets, fans, or the artists. I see them sign artists that have already started to build a buzz or sell music themselves, and then I see them sit back and let the artists’ teams continue to do much of the work themselves. I don’t see major labels taking much risk with their artists, but do continue to put them through a system that is almost an outdated cookie cutter version of how to sell CDs. The labels rarely interact with the fans and are quite out of touch about what the fans want or are willing to buy. They seem to create this assembly line of artists who all sound similar and fit a certain format at radio. They seem to throw a lot of music into the marketplace and work whatever catches on quickly and easily. Most labels do what’s best and easiest for the label, not what’s in the best interest of the artist. Now, in a way, it’s very unfair of me to make this sweeping generalization, because there are some amazing people who work inside of major labels and really go all out for the artists. But I find these people to be the exception, not the norm, and I also find them to be frustrated most of the time because they constantly have to fight with their bosses and the status quo to succeed on a project.
I also find that competitor labels usually hire the best people away from the labels who are experiencing some success, thereby breaking up the synergy within a team once they all learn to work well together. This is why a label like Def Jam or Universal could be so strong in the late 90s and yet be struggling to succeed today. I find that artists rarely look at the teams working at labels and just fiend for a record deal no matter the success of the label or who’s at the label (staff or other artists).
So labels got further away from the fans, the staffs got lazier or more frustrated (perhaps more work for less pay?), the artists took less risk because there were more of them and they were just happy to have a record deal, and the fans started expecting music for free because they could just download it if they didn’t feel like paying for it. Major labels continued reducing spending, slashing budgets, cutting pay, and signing “sure things” (whatever that means). And to justify the spending they were still doing, they decided to offer deals that cut into more of the artists’ income. The argument was that out of 50 artists signed to their label, only one was successful and funding the 49 losses. No other business on earth has such a backwards business model. Imagine if Ford built cars and accepted the fact that every model but the Taurus was meant to be a loss leader, and that the Taurus sales had to make up the loss of every other brand under their umbrella. Huh?
Or imagine if banks lent money for mortgages expecting 99% of the mortgages to default, and 1% of the mortgages were expected to make up the bank’s profits that year. Further imagine if each homeowner paying back their mortgage didn’t actually get to keep ownership of the house after their mortgage was paid back! The bank’s argument would be that they took all the risk on the house, so they should get to retain ownership. The people that lived in the house would still have to pay for all the repairs and upkeep, but the bank would own the house. That’s how the music industry is built. And the folks at the top with the most to lose are the ones fighting to keep this backwards system alive.
People ask me all the time what I think is wrong with the music business. I would like to blame our troubles on the greed of major labels, the proliferation of bad music that the fans don’t seem to want, or the free downloading of (stolen) music. But the truth is that if the artists didn’t agree to these incredibly bad deals, there would not be incredibly bad deals. If a bank existed that kept ownership of your house after you paid back your mortgage, you would never do business with that bank. Yet all day, every day, there is a long line of artists willing to sign their lives away to record labels because they don’t understand, or possibly don’t know about, the consequences. Or maybe they just don’t care. Maybe the need for fame overpowers the need for money…until they realize they aren’t making money but someone else is. I find that it takes artists 3 to 5 years to realize they are getting jerked. In that time, a lot of money is lost and one or two things happens: either the artist is replaced with a new artist willing to make less money, or the artist has enough value to renegotiate their deal and share a larger piece of the pie. Sometimes, they even start their own labels and repeat this onerous process with their own new, unknowing artist! They got jerked, so they turn around and jerk someone else.
But back to 360 Deals. This new model will exist until artists are willing to say “no!” and I don’t see any signs of that happening. What I do see happening are artists becoming more entrepreneurial, and instead of signing to major labels, I see them finding their own investors and building their own teams who can help them succeed. There are enough laid off employees of record labels who’ve experienced some success out here to hire to run and work at indie labels. There’s a huge void in the marketplace to deliver the kinds of music fans want…and that’s not just one kind of music.
What I learned from both the buzzes of Drake (lyrical mainstream artist who’ll succeed at radio) and Gucci Mane (not-so-lyrical street artist with gutter stories and experiences to share) is that fans still want music. Major labels are still slow to respond to the needs of the streets and the internet is only speeding up and splintering demand further. There’s still a market for good music that the fans want. Our job is to give it to them. And if we do so with a fair and equitable split of the profits, the artists can build lifetime careers and we can all make money!
I hear the artists who sign 360 Deals say that they feel they have to sign these deals because the label won’t work their projects if they don’t give up a bigger split. I hear the artists say they want the labels to help them land endorsement deals, major tours, and TV Shows and film roles—but I’ve yet to see a major label do this. Let’s be realistic, these major opportunities go to the biggest stars and the ones who apply themselves directly in those alternate areas. If you hire a film agent, and take acting lessons, you may get increased roles in film and TV. If you increase your fame through music sales, your endorsement opportunities increase. Beyonce landed a Revlon contract because she was a star, Revlon did not make her a star. How many new artists are the major labels building to be stars? In 2009, it was Taylor Swift and Susan Boyle out of all of the releases that came and went. And neither of them were developed by the major label system—one was a product of an indie label and the other a product of a TV show. The majors had access because they did deals with middlemen and then applied their systems behind those movements that were already happening. Maybe that really is the job of a major label in today’s environment.
In my opinion, a 360 Deal is an excuse for a major label to take a bigger piece of the pie without doing any additional work. It’s insurance on their part. If the artist does blow up by chance, it gives them more opportunity to make a bigger cut. And that’s just smart business. I guess if they called it what it really is, I’d be less annoyed by it: the price of doing business with a major label. If they played a bigger role in building overall success, I’d be happy to see them share in a bigger piece of the pie at the end of the day.
Example of a “360 Deal” Artist (this is not an actual artist example):
Male rapper based in Atlanta with a strong following. He has his own team of inexperienced friends and family around him and a very strong street following. The DJs, fans, other artists and industry are supporting him and propelling him forward. With no real single or CD in the marketplace, demand is high—he’s getting $30,000 a show and performing three or four times a week for the past few months. This will last about 6 months, approximately. He’s put out a series of mixed CDs, for free, over the past year. The label signed him a year ago to a 360 Deal but hadn’t begun to promote him yet because their roster was full. The artist got tired of waiting and began putting out a new mixed CD every month to build his buzz.
Advance: $75,000
Album Budget once popularity increased: $350,000
Recoupable Marketing and Promotions: $750,000
Monthly Show Income: $420,000
Endorsement Deal: $50,000
Album comes out and sells a total of 350,000 copies (it was a very commercial album but the artist had been very street, almost gutter, up to the point of his album release so fans didn’t really embrace the album as expected).
Album income for label: $3.5 million
Artists’ Share after Recouping: negative balance of $405,000
$750,000 + $75,000 = $825,000
12% of $3.5 mill = $420,000
$825,000 - $420,000 = $405,000
Artist’s endorsement Deal Share: $37,500
75% of $50,000
Artists Share of Touring Income: $1,764,000
70% of $420,000 x 6 months
Artists Share of Publishing Income (50%): $100,000 (estimate of mechanicals and ASCAP/BMI royalties)
Income for Label: $4,773,500 gross income on an investment of $825,000
$3,500,000 sales
$405,000 recoupment
$12,500 endorsement income
$756,000 tour/show income
+ $100,000 publishing income
$4,773,500 gross income
Less Staff costs
Less Day to Day operating expenses
Less Taxes
Income For Artist: $1,122,375 income
$37,500 endorsement income
$1,764,000 tour income
+$100,000 publishing income
$1,901,500 sub total
-$405,000 recoupment
$1,496,500 gross income
Less 20% management fee
Less 5% Business Manager fee (Accountant)
Less Tour costs/legal costs/tour manager/DJ/Operating expenses/taxes
Let’s compare gross incomes…
Artist made 1.5 million while label made 4.7 million
Artist share: 24%
Label share: 76%
Let’s compare Net incomes before taxes…
Artist made approximately $1 million while the label made approximately $4.5 million
Artist share: 18%
Label share: 82%
If the label is taking all of the risk (they are not), putting up all of the money in all of the right places (they are not), devoting all of their attention to this one artist (they are not), and doing most of the work (they are not), then this business model makes sense for everyone involved. But if the artist is doing the bulk of the work, risking their career in the hands of the label, and coming out of their own pocket for many expenses, then this business model is hugely skewed in favor of the major label.
Perception Is Reality
By, Wendy Day (www.WendyDay.com)
One of the most difficult parts of being in this industry, is accepting that perception is reality. What people THINK is true, IS true to them. Let me explain. If you think an artist is wack, he is wack. Even if 2 million screaming fans buy his music, you still think he’s wack. It would be difficult for anyone to convince you otherwise.
To millions of Americans, Michael Jackson was a pedophile, OJ Simpson was guilty and his all-star legal team beat the system, Obama is a Muslim socialist born in a foreign land (that’s just too funny), and Tupac is still alive. Proof or no proof, the belief is there. Their perception is their reality.
This mindset travels into business as well. If a record label thinks an artist is a good risk, has a strong buzz, and is talented, they will sign that act. But if the label thinks otherwise, that artist doesn’t have a chance in hell of getting a deal unless he or she does something to change the perception. So whether an artist has real talent or not, has never been of much relevance in the music industry—it’s the perception of talent that matters. Labels chase perceptions, because that is what’s accurate and real to them. If Waka Flocka is the hottest rapper on the streets of the south right now, then labels will scramble to sign him, work with him, and look for other artists like him. Perception is reality.
Once you understand this simple concept, it makes it far easier for you to move forward in the music industry.
If you are looking to get a good record deal, one that could actually lead to some longevity and success in the music industry, you will need to change (or control) the perception that labels (or those with money) have about you. If the perception is that you are a star, then you are a star. If the perception is that you are surrounded by a team that doesn’t understand the music business, then you don’t understand the music business.
When I have shopped deals in the past for artists, I always focused on changing the perception to be what we needed it to be to get the deal done. And for the most part, I did so with artists who were talented and could back up their 15 minutes of fame with some real artistic value. I learned this lesson very early in my career when I was shopping Eminem.
In 1996, I went to speak on a panel at an event in Detroit at the Athenium Hotel (I think it was called Music Mecca). I had driven there from Chicago with a rapper called Rhymefest, and there was a whiteboy rapping outside in a cipher that ‘Fest immediately recognized as hugely talented. Eminem was one of the best lyricists I had ever heard, but he was white and I knew the stigma of white rappers. Back then, the industry was just recovering from Vanilla Ice, a pop sensation that had a lot of money and promotion sunk into him, but he was later found out to be “pre-fabricated” (therefore not real), accounting for a huge loss to the label and industry as his career plummeted into obscurity.
So my perception of Eminem was that he was an incredible talent, but it would be hard to get a label to sign him. Enjoying a good challenge and being a little crazy, I offered to shop him a deal. For nine months, I took his package around to the labels trying to get anyone to see the value in his lyrics and ignore his skin color. Slowly some progress was made, and The Source Magazine covered him in the Unsigned Hype column (the holy grail for any unsigned rapper at the time, yet a small percentage of rappers covered in that column actually went on to have successful rap careers so the perception at the labels didn’t change much) and the Lyricist Lounge monthly showcase in NY embraced him. At that time in the industry, labels were less excited about an artist’s lyrical prowess, and more excited about the hype and buzz surrounding them. I knew that if we were going to get Em a deal, we’d have to change the perception of white rappers and change the perception of lyricists in the industry. I also knew we’d have to get some CDs out on the streets to try and build/expand the buzz.
I wasn’t alone in recognizing Em’s talent. He had Paul Rosenberg (he was a brand new lawyer at the time trying to be a brand new manager) shopping him a deal, a production company I never met or spoke with called the Bass Brothers, and a guy who owned a magazine named Mark who is outspokenly bitter about being cut out of the equation early on by Paul, Em’s manager. I have no idea whether he was or wasn’t, as he was gone by the time I started shopping Em’s deal. Truth is, I dealt as little as possible with Em’s team, just reporting back to Em or Paul regarding my progress, or lack thereof.
To shift perception, I put together an event called RapOlympics. My plan was to showcase lyricists in a competitive atmosphere and get M-TV and BET to cover it. If it became a hugely talked about event, it would showcase lyrics in a positive light while bringing attention to the best of the best—the winners. With RapSheet Magazine, a handful of volunteers, and the best lyricists in the country, I pulled it off in Los Angeles in 1997. I took a wicked financial loss (sadly, not my biggest one—Twista was the biggest financial loss I ever had in this industry), but my plan worked. Lyricists were brought into the spotlight (it wouldn’t last, unfortunately), Dr Dre signed Eminem to what I thought was an above average deal for a new artist, and fans of lyricists were encouraged that talent mattered once again.
I recall this story for you only because a few days ago, the manager of an unsigned group with a strong buzz called me to ask for advice getting his group signed. They had offers on the table, but the offers were low and were 360 Deal offers. He felt they weren’t in line with what the buzz and hype of the group warranted. He was 100% correct. As I called around to label presidents on another project, I struck up conversations about this hot group to see what the perception was, and every label had similar comments. The perception was that the team behind the group made bad business decisions, and once signed, the label feared this team would negatively impact their ability to make money. Their distaste ran so deep that most referred to the lawyer and manager by name, something labels rarely do. So the offers were low enough to counter this risk. It’s very hard to reposition disbelief in a team. It was especially frustrating to hear because I found their manager sharp and intelligent—the opposite of what the labels’ perception was.
Although I never voiced my opinion, I felt the only real way to counter this perception was to change the team (or the illusion of who the team was with a new manager and a new lawyer that the labels would respect, while keeping the old team involved behind the scenes). Or, create a new outside offer from an investor that would be higher than all of the low offers from the major labels. This would either drive the price up at the Majors, or give the group a deal within the price range they felt was worthy of their situation with an investor. I see many deals lost or lowballed because the labels don’t respect the manager, the lawyer, or the negotiator. In 2005, I did a deal at Motown for an artist whose lawyer received an offer for $350,000 and 15 points in August. It was the only label interested in the artist, so raising the stakes would be nearly impossible. The artist found out the lawyer wasn’t well respected at that label, fired him, and hired me. Within 30 days, the artist was signing a deal for a $650,000 advance with a 50/50 split on the backend—a far better deal. Perception is reality, so make certain it’s always to your advantage.
Behind The Scenes
By, Wendy Day
To those outside of the music industry, the business of music appears easy and available to all. It’s not. Part of what has led to this mistaken impression, is the amount of idiots that work in the music business (or pretend to work in the industry but really just keep busy all day accomplishing nothing real or of value). As people outside of the industry watch the spate of reality shows based around the music industry, or meet these idiots who appear to be employed (but are working for free or slave wages), the mindset becomes “hey, if he can do this, then so can I.”
People enter this industry each year by the thousands thinking they understand it and have access, but they really don’t. To me, it’s not damaging until folks try to enter with funding, because more often than not, they end up wasting it, trusting the wrong folks, and losing hundreds of thousands of dollars in a matter of a few short months. Very few of you actually read articles like this or meet people with legitimate strong track records of success, in order to build a successful career.
Fortunately, all of the excess bodies come and go very quickly. Very few people have the dedication to take the beating of the music industry (financially, emotionally, and mentally), nor do they have the staying power to work for the few pennies tossed to them by those in power. The reality of the music business, is that those at the top make millions and those at the bottom work for free (and rarely, if ever, make it to the top) and every one in between is scratching, clawing and stepping on each other to become the ones at the top. Most never do. [If you are a history buff, see “share cropping” for a historical reference you can apply to the music business psychology.]
For every one person that succeeds, hundreds fail.
The major labels depend upon artists and their teams not knowing or understanding how the music industry works. They encourage ignorance so they can take advantage financially, after all, if an artist has a knowledgeable team, the label makes a smaller share of the pie. I’ve even seen members of the artists’ own teams keep the artists ignorant and away from legitimate established people just so they can protect what they see as their cut. Just this week, I watched an Atlanta lawyer who is not well-respected tell a group he represents not to hire an outside person to shop or negotiate their deal, when he had tried and failed twice himself. The major labels have no respect for the group because their team appears stupid. He seemingly was protecting his own fee over doing what was best for his group that could potentially be superstars if they had better advisors. Someone will sign them for cheap and squeeze out the manager and lawyer within a few months, and steer their own choices in place. For the record, no label should ever have input as to an artist’s manager or lawyer, as those positions are naturally adversarial to the label. In a perfect world, you want someone the label respects, but isn’t employed by the label or too close to the label.
I’ve put together a list of some of the things you can do, and avoid, to properly prepare for your foray into the music business, or to strengthen what you’ve already built during your stint in this snake-filled industry.
1. DO THE RESEARCH – Watching BET every day (or American Idol) does not qualify you to work in this industry. Read all the books, and study the websites and blogs every day to learn who’s who and what’s going on behind the scenes in the music industry. Follow the behind the scenes folks on Twitter, not just the famous artists. See who they talk with frequently, what they say to each other, and what issues are important to them. Ask questions (specific ones like “how do 360 Deals adversely and positively affect artists in today’s economy?,” not general or selfish ones like “how do I get started in the music business?”, or “how come you never return my calls?” or my personal least favorite one: “Follow me back!”).
2. DO VOLUNTEER OR INTERN – Very few people enter the music industry without doing some free labor of some sort, unless they start their own businesses. Working under a legitimate, well connected person in this industry can be more valuable than any money you could have ever been paid. Even if you decide to start your own management company, record label, or be a publicist, it’s important to gain some knowledge, connections, and experience in this business prior to going out on your own. Hey, P Diddy started as an intern.
3. DO BUILD RELATIONSHIPS – This is a “who you know” business. You need to build real and lasting relationships with people. The bulk of paid work and opportunities that you get will be referred by someone else. I can’t even begin to tell you the number of paying jobs I’ve helped people get in this industry—not because they asked me to do so, but because someone mentioned they needed a road manager, or marketing person, or good publicist, or radio promoter, and I’ve plugged in folks I know and respect. I don’t hook up friends, I hook up people who are right for the job. They tend to go further in positions and make me look good for recommending them.
4. DO NOT BURN BRIDGES – I have burnt a lot of bridges in this industry, but they have all been well thought out, planned, and as a last resort. This is an ego driven business and there’s nothing worse than insulting someone and then finding yourself in a meeting with that person years later needing something from them.
5. DO NOT ASSUME – There’s so much that goes on in this industry behind the scenes that you can’t possibly assume you know what’s going on. When you are at the Barbershop talking about why an artist got shelved or signed, you look stupid for speculating. If you’re at a party talking about the latest rapper getting arrested based on what you read on the internet, you’re an idiot.
6. DO NOT ALWAYS BE “ALL ABOUT THE MONEY” – being fiscally smart is a good thing. Always attaching a price to everything you do will get you left behind. Even the top folks at the most successful companies have their pro-bono and spec projects that they work on strictly for the love. If you are seen as being all about the money, you will gain a reputation of being a “culture vulture,” and those who are willing to pitch in and work free on special projects or special events will surpass you in their careers.
7. DO SURROUND YOURSELF WITH LEGITIMATE PEOPLE – This industry is really just a minute big. We all know who the fuck boys (and fuck girls) are. If you are so desperate to get into this business by working for or coming up under a scumbag (artist or company), expect to always be seen as a scumbag. And if you end up working for a snake because you didn’t know any better, too bad! See #1 above.
8. DO BE LOYAL, BUT NOT LOYAL TO A FAULT — Loyalty is one of the most important traits in this industry (or in life). Misplaced loyalty is not. You can do the right thing, but if you do the right thing in loyalty but for the wrong person, you can really get burned. I’ve seen people take bullets and razor cuts for their team, but then watched the team not make a call, pay a hospital bill, pay for funerals, fund the bid, or even visit the family. Be loyal to those who will be loyal to you in return.
9. DO NOT BE BLINDED BY FAME – Fame is attractive and intoxicating. Do not trade your money or dignity for fame. It is fleeting, short lived, and those who have it will try to fight to keep it (but never succeed)—even at your expense. Just being “down” with an artist doesn’t make you famous or rich. It makes you just another groupie. And when you leave that camp, even though you’ve moved on, the stigma of you selling out to be a groupie stays forever. See any famous sidekick for proof of this fact.
These are just a few thoughts to help you move forward in your career in the music business, behind the scenes. Truth is, maybe ten people reading this out of all of the tens of thousands will still be in this industry next year, and maybe one or two will really succeed.
Changing Times
By Wendy Day
OK, so writing this article is the first productive thing I’ve done since I got my iPad. It’s crack to me. I’m so addicted to my iPad apps. I can’t get any work done. And I’m gonna have to take out a loan to pay for all of these expensive ass apps I am downloading onto my toy! The apps on my iPhone were 99 cents to $3.99. The iPad? The business apps are $9.99 and up. Games and books and shit? $4.99 and up… crazy. But I’m officially addicted. I have to pay to play.
Which brings me to the internet and technology… The playing field has been leveled. The price of recording equipment came down so anyone could record songs at home without having to spend a lot of money to record in a 64-track studio. Then, with the social networking sites, artists could go direct to fans and promote. With companies like TuneCore.com, artists can upload from home, and digitally distribute their music while collecting the bulk of the income from the sales. Could it get any better than this?
But here’s the downside: the internet with its relatively free access has led artists to believe that this is all they need. And that message was welcome news to most ears because—well, let’s face it, artists are almost always broke. So when led to believe that all they need is to upload their shit to the web and promote for free from home, they ate that up!! And still do. Unfortunately, it has made any internet millionaire artists in the music industry.
This thinking of “oh, that’s easy, I can do that,” spawned an entire new generation of people who jumped head first into the industry. This not only included artists and producers, but anyone who was able to invent a job within the music industry and look important. People able to copy news and information from the major hip hop web sites became bloggers and started blabbing their personal opinions and called themselves “sources.” Anyone able to collect email addresses and press send on a mass email became email blasters (for a fee). People with the ability to email bloggers and websites started calling themselves publicists and charging for it even though they lacked the relationships, skills, and experience to get successful placements for their clients. The more enterprising scammers toured the country doing seminars and showcases for a fee, as if they were the New Music Seminar meets American Idol. Except they taught next to nothing useful in the real world, and gave artists little more than experience performing in front of other artists, for a fee.
On the social networking sites, like Twitter, people with no experience and no access gained instant access to the inner circle of the music industry. You can “friend” or “follow” Julia Beverly, Puffy, Steve Rifkind, and every star and convince yourself you have a relationship with them. You can retweet what they say, or repeat it in an e-blast and lead others to think you have access and inner knowledge (reminder: you don’t).
Industrious folks quickly learned they could sit at home and surf the web in between computer games and would call it “grinding.” They could print up business cards and charge other unknowing folks who jumped into the industry to publicize them, promote their music, buy beats or hooks, subscribe to their eblasts, and pay good money for a variety of useless and ineffective services. Up sprang a cottage industry of conference calls, record pools, DJ coalitions, award shows, and seminars.
So an industry already rife with bullshitters and scam artists went into hyperspeed. Intent on making money off of artists’ dreams, these less than experienced “fuck boys” (including women) started promoting themselves and their services as if that’s what it took to succeed in this business. Only, they were wrong.
Even Souljah Boy, who is credited with being the first rap artist to use the internet effectively to promote, didn’t build his career solely by promoting on the internet. He got out on the streets and promoted to actual living people, as well as utilizing the internet to its fullest extent.
The internet has almost single handedly wiped out the need for retail stores and CDs. So what all of this created was an industry that was over crowded, inexperienced, and full of shit. It made it next to impossible for anyone to make a living doing music. It became overcrowded and saturated. The ancillary services were reduced to a few very talented people and a sea of bungling idiots. Many, many people lost large sums of money banking on the wrong people to help them.
But the Internet and technology aren’t the only things that negatively impacted the music industry. In the mid-2000s, the labels caught on to 360 Deals, and instituted them like they were fresh air. Not only wasn’t anyone getting a deal or being promoted at the label level unless they agreed to and signed a 360 Deal, but they became the new industry standard.
360 Deals impacted the industry quickly and heavily. Because the labels were now partners in every revenue stream possible for artists, the focus switched from building a career to making the artist a pop icon as quickly as possible. For example, where it took TI four albums to go from street rapper to pop radio superstar, and Young Jeezy three albums, Gucci Mane tried to do it in his first major label release. Labels became keen to drive their artists to urban radio and into the domain of pop radio so they could quickly impact tours and endorsement money. A rapper with a hit pop record could transcend into film, tv, endorsement, bigger touring opportunities, etc. It became about the financial split instead of about building a sound career with a foundation. Artists have become disposable. When the fans grow tired of Eminem (or he ages out of the target demographic), there’s Fergie and Black Eyed Peas to pick up the dollars. If and when Black Eyed Peas sales start to lag, the label can impact with Lady Gaga. It’s a constant cycle of filling the label’s coiffures. VERY smart business. Very damaging to the art form of music.
And since I’ve mentioned touring, let’s talk about how that has changed for the worse. When new artists were coming up (like Yo Gotti, Plies, Jeezy, Lil Wayne, etc) there was a market for artists to make $5,000 to $10,000 a show. Up and coming artists who had developed a street buzz could make a living doing shows. When I first met Yo Gotti, he was doing very well for himself performing for $3,000 to $5,000 a show, three or four nights a week. He could eat, his manager and his team could eat, and it helped to build his reputation and buzz with fans and with the industry. He built a solid foundation.
In today’s economy, artists seem to raise their prices quickly, so they become more expensive than they can attract fans. Here’s what I mean: Nicky Minaj had a wonderful buzz. Before she had a single or an album to promote, the word was she was charging $16,000 a show. That is a wonderful thing, but here is the reality of that. In a smaller market, which is what makes up the bulk of America, to make a profit on a $16,000 show, the promoter has to have a venue that holds at least 3000 people willing to spend $15 or $20 a ticket. In a smaller market, there are very few clubs that hold 3,000 people and very few people who can afford a $20 ticket a couple of times a week. So newer artists go from being a regular feature in a small town to a once in a while event.
There was a point this past Spring where the show prices of artists either fell into the $1,000 to $5,000 range (Travis Porter, Roscoe Dash, etc) or the $15,000 to $25,000 range (Yo Gotti, Waka Flocks, etc). While I absolutely LOVE seeing artists get money, I can’t help but wonder what the promoters did who needed shows in the $5,000 to $12,500 range. Sadly, I know the answer—they stopped doing rap shows. They couldn’t make money. The artists who commanded the higher price point ended up doing spot dates in bigger markets, and couldn’t tour properly because the economics didn’t make sense. I worried about Gotti and Waka when their planned tour ended after just a handful of dates. Touring not only brings in income for the artists (and now the labels) but it also promotes the artist amongst the fans all over the US. Not being able to perform in Albany, GA or Columbia, SC, or Nashville, TN hurts the artists, the fans, and the industry as a whole.
So when I pulled up SoundScan last week, I noticed that very few rappers have gone Gold. The artists who’ve sold the most are the mainstream pop acts, the artists like Black Eyed Peas, Lil Wayne, Kanye, Rick Ross—the ones who’ve already built their careers on a solid foundation. The ones who no longer need the smaller markets or the smaller clubs to make a living.
Here’s the light at the end of the tunnel: bullshit comes to light very quickly and the folks that will remain after all of the dust settles, are the ones who were passionate enough to ride out the turbulence and stick it out. The artists savvy enough to think longterm and who realize that it’s better to work for 7 nights at $2,000 a night, instead of once a week for $10,000, are the ones who will have the staying power and the solid careers. The rest will fizzle out and go by the wayside. Natural selection at its best!
Mistakes Artists Make
Mistakes Artists Make
By, Wendy Day from Rap Coalition (www.WendyDay.com)
I’ve learned so much from mistakes—both my own and others’. Mistakes are NOT necessarily a bad thing (provided you can fix the situation when things go wrong), if one learns from them. The cool thing about mistakes is that it means that you are trying new things and taking action (assuming you aren’t making the same mistake over and over)! Here are some mistakes I have learned from and that I’ve seen others’ learn from—some are small errors in judgment and others are million dollar career killing mistakes. If this prevents one person from making one fatal mistake, it was worth the time it took to research and write it. Thank you to everyone who shared their painful stories to help others avoid the same pitfalls (I’ve protected your identity, as promised). These are in no particular order of importance…
Surrounding Yourself With The Wrong Team: If the best player in the NBA stepped out on the court alone, against the worst team in the NBA, the worst team would win. Why? Because they are a team working against one player. There’s a powerful force that occurs when multiple people come together with one goal in mind—especially if each person plays their role and stays in their lane. And teamwork is especially powerful if you have key players who are the best at what they do, all coming together to move forward towards one goal.
New artists don’t often choose the best teams. They often surround themselves with their friends and family who know very little about the music industry or how the business works. Whether due to trust issues or laziness in finding the right people, I’ve seen more careers end because an artist has trusted their careers to the wrong people.
There are people in the music business who are good at what they do, and even more who are not. Unfortunately, because it’s a “who you know” business, one’s popularity in the music business is not conditional upon being good at what one does. If an artist doesn’t do thorough research on a person to find out if their skill level is sub-par, they could very easily have a team member who sucks at what they do. For example, having managed a major recording artist is NOT a sign of aptitude, it’s a sign of access. Managing multiple recording artists successfully IS a sign of strong management skill.
A team consists of a manager, an entertainment lawyer, an accountant, a booking agent, and a publicist (I am the only person I know who includes a publicist as a mandatory part of the team, but if there’s no one broadcasting the artists’ moves and triumphs, no one will know). Since this is a “who you know” business, relationships, connections, experience, and aptitude are all important.
On the flip side, often artists choose the wrong people to surround themselves with and are outcast by the industry. This fact may be hidden temporarily while the artist is experiencing a little success or popularity, but it really shows itself down the road when there are no endorsements, limited media coverage, reduced shows (burn a promoter one time and your show money is affected all over), etc. Everyone will put up with a bullshit team while the artist is riding a hot record. But where it matters is on the upside or downside of that hit record, and this is where a strong team comes into play. This is the main reason why urban artists have such a short shelf life….they often have shitty representatives and terrible teams.
A contract can protect your rights, but it can also hurt you. It’s important to have a well-connected, experienced entertainment attorney look over everything before you sign it. It’s often what’s missing from a contract that can hurt you more than what’s in there. You need professionals on your side to advise you.
Indecision -Or- Jumping From Plan To Plan: Quite a few artists go from person to person in the industry seeking a quick and lucrative way into the industry. When one plan doesn’t seem to lead anywhere, or even before giving it a solid chance, they meet someone else that they think can advance them forward and they jump from person to person, plan to plan, or crew to crew. Aside from being exceedingly disloyal, it doesn’t make good business sense to do this. The best way to find a direction and plan for yourself that will work, is to learn as much as possible about the music business, devise a plan that’s best for your situation, and then move forward to enact the plan with the proper team. If you’ve given one plan a solid try and enough time to work, and it doesn’t, then it makes sense to rethink your plan and try another angle. But to jump from industry person to industry person alienates the folks who really can help you, and makes you appear desperate for success, thereby attracting to you all of the bottom feeders who may want to take advantage of your desperation. There are numerous paths to success in this business. Find one that works for you, make a decision, and stick with it long enough to see if it is the right path for you.
Waiting Too Long To Realize Something Is Wrong: As I am writing this article, I got a call from a major platinum producer who informed me that he was never paid his royalties on a number of #1 hits he had with a record label. I remember these hit records because they are classic records today, but they were in the early 1990s, which was almost ten years ago. My first question to the producer was: why did you wait so long to try and collect your money? “We were family,” he said, and “I was hoping I’d get more work from that label.” I won’t mention that the label eventually hired in-house producers and this guy hasn’t made a record for that label in at least 5 to 7 years. How long did he hang onto hope of more work?!
In law, there is a statute of limitations on everything including collecting back royalties, and except for a case of fraud (which is difficult to prove) an artist has a limited time to file a claim against their royalties due. That time can be anywhere from 2 to 4 years, and is stipulated in whatever agreement was signed at the time. Additionally, most artists and producers have limited financial resources for legal fees and filing lawsuits against labels that are international conglomerates with very deep pockets and lawyers on staff. It’s important to chase your money immediately—twice a year, every year. Royalties are paid in March and September of each year and part of your team’s job is to chase money due, audit regularly, and keep track of what’s owed and outstanding.
Do not let a label or powerful artist bully you. By speaking up for what’s due you, you are NOT hurting your career, not stopping more work coming your way, or creating tension. By not being paid properly, they are fucking you out of what’s rightfully yours. If the money isn’t coming to you, it’s going to somebody—you earned it, so collect it in a timely fashion.
Self-Destructing and Making Bad Decisions: This mistake is the most popular one I see artists, producers, and DJs make in our industry. I don’t have a solution for this one beyond getting your shit together as an artist and getting some professional help if you continually do dumb shit and can’t stop yourself. I most often see this occur surrounded by drugs and alcohol. The music industry is naturally a “party” industry and has a fun vibe. Most artists spend their time in clubs when they aren’t recording, so the influence is constant. But many artists take partying to the extreme— to the point where they miss important events in their schedules, get arrested, exercise bad judgment, or do inferior work. I’m not saying not to have fun, or party. I’m saying that if you have to take drugs or have “chemical cocktails” on a regular basis, you are a junky (the industry seems to have a fascination with syrup, ecstasy, Viagra, pills, cocaine, and weed—and often mix them, hence the term “chemical cocktails”).
But self-destruction doesn’t just come in the guise of excessive partying. I’ve seen rappers have babies like they are accessories, spend more money than they make, fight to prove their “realness,” beef with people who ether them, make music that is outside of their lane, date the wrong women, do prison bids mid-career, die, not pay people properly, say or do dumb stuff publicly, etc. Self-destructive behavior comes in many forms. In my opinion, the goal in life is to be the best human being you possibly can be, and if you are a miserable scumbag that can’t even stand to be around yourself, it’s time to change some things about yourself. No time like the present!!
I have also seen artists make horrendous decisions about their careers—like a street rapper choosing to let his label bully him into making super commercial pop music. Or an artist has a very public negative event happen (a sex tape leaks, domestic violence, a drug overdose, and public fight or shooting, an arrest, etc) and doesn’t handle the situation immediately with qualified publicity firms that specialize in damage control. Exxon has a major tanker accident with the Valdez, killing the eco system and wildlife for generations and for hundreds of miles and recovers, yet you punch someone in the face or have a sex tape release and your career never recovers…. Mel Gibson gets arrested and spews anti-Semitic remarks in a drunken stupor in an industry where his livelihood depends mostly on Jewish executives and it doesn’t even dent his career, but you get into a verbal battle with another rapper and it ends your credibility and career? C’mon son… learn from others who’ve survived worse.
Not Understanding How The Industry Works: Back in the 80s and early 90s, I understood how artists got jerked. It was difficult to learn how the label system worked and hard to do any research on the aspects of the industry that effect artists. But in the mid-90s all of that changed with the internet. Today, anyone can research and find out anything they need to know about anyone or anything. Not understanding how this industry works is unacceptable for anyone considering a career in the music industry. So if you come into this industry just thinking you can rap, sing, make beats, or DJ and that’s all you need to know, you are an idiot.
You don’t get “put on” in this industry without getting pimped—so building your own buzz and leverage so you put yourself on is a good career move. A great connection doesn’t lead to a great career, but it does lead to making someone else a ton of money at your own expense. Sending out demos to record labels won’t get you “discovered,” but it will allow an idea, a beat, or a whole song to be stolen from you (even if you copyright your songs, so you have enough money to sue and enough proof that they took your song?). Promoting yourself at industry convention after industry convention doesn’t build your buzz with fans and people who buy records (the ones that REALLY get labels’ attention), it just makes people like me hug you a lot. Getting signed to a record deal isn’t a guarantee that your career will take off you will be successful. More people sign to labels each year than records come out by that label. Just because you have the funding to start your own label doesn’t mean you have the talent or know-how to do so. I’ve seen some mediocre artists spend millions of dollars to fail.
Take the time to study the industry, learn who the players are, and find out who’s on the teams behind each successful artist (this shouldn’t be difficult to do since so few artists are successful today). Attend industry events and actually network with industry people and attend the panel discussions instead of macking hoes or looking for your next boytoy. Read as much as you can about the music industry. Some great books are Confessions Of A Record Producer (Moses Avalon), Everything You Need To Know About The Music Industry (Donald Passman), Dancing With The Devil (Mark Curry), Hit Men (Fredric Dannen—this is a history book more than a how-to book), etc. Meet with as many successful people who are doing what you want to do, as will meet with you. Many won’t take the time for you, but many will. Build relationships with those who will.
A solid understanding of how publishing works, performance rights societies (ASCAP and BMI), and how to get a record deal, will prevent you from getting jerked out of money by others. A little bit of education goes a long way in this business. We can’t stop the huge amount of fuck boys in this industry who will try to steal your dreams from you to make a quick buck, but you can educate yourself so their pitch doesn’t make good business sense to you. You can keep yourself from being a victim.
Focus On The Talent, Not The Money: In the mid-90s, the music industry shifted from being about talent to being about money. It seemed to become the new dope game. Folks were trying to get into this industry to hit a quick lick, not because they wanted to impact music or propel the artform of Hip Hop forward. International corporations got involved, either as record labels or through endorsement opportunities with international superstar artists hawking their products.
Rather than choosing the best music or writers for songs, companies and even artists themselves began choosing people that were signed to them or their own companies to create for them. Rather than choosing the best producer to compliment a rapper, labels began choosing in-house producers to make the beats because the label would retain an additional 50% of the ownership, or get a kickback from the producer or writer of the song.
Some employees at companies quickly tired of seeing the money wasted by their employers and figured out enterprising ways to get a bigger share of the pie—they started secret production companies with the artists they signed, took big kickbacks from artists in exchange for record deals, signed artists and then cut out the teams and producers who got them where they were, chose producers based on kickbacks or co-ownership of the music, chose song writers based on kickbacks or co-ownership of the songs, etc. Even the artists started their own companies so they could eat off of the artists coming up under them—there’s a lot of money in being a middleman, especially if others are doing all of the work.
It hit the internet last week in a study by Tom Silverman that a label that I had built and consulted, TMI Boyz out of Houston, were the second largest selling independent release last year. And while it would have been nice for us to hit #1, I am quite happy with the #2 position as well, of successful indie releases from last year. Upon our first week release, we hit the Billboard rap chart in the Top 10, which as an indie is always exciting. That week we outsold BloodRaw, another artist I had consulted who was signed to Young Jeezy’s CTE and distributed by Def Jam.
Last week, Tom Silverman (he built the most successful indie label in urban music in the 80s and 90s—the Tommy Boy Records empire was responsible for Afrika Bambaataa, De La Soul, Queen Latifah, Naughty By Nature, Information Society, Coolio, House of Pain, Everlast, etc. He owns the New Music Seminar), published a study on numerous music industry websites. (You can see his study and read an interview with him at www.MusicianCoaching.com).
He pointed out that in 2009, there were 1,500 independent releases in all genres. Of those 1500, only 13 releases sold over 10,000 units (that’s only $70,000 to $100,000 in wholesale sales). The #2 release was the label I consulted, TMI Boyz. They were the ONLY rap act on that short list of 13. And that list was based on the (inaccurate) SoundScan sales of 30,000 CDs sold. While on the road for a year and a half, TMI Boyz sold 2 mixed CDs and a full length CD. Tom’s research was based solely on the CDs that were sold at FYE stores in the mid-South. Since we weren’t focused on SoundScan, just on making money, we weren’t trying to have each sale counted. The bulk of sales were at shows, Mall parking lots, state fairs, flea markets, street corners, gas stations, car washes, high schools, clubs—anyplace where a mass of people were gathered so TMI Boyz could jump out of their wrapped van to make a sale. You may have never heard of them, but they made $1.6 million in sales in 2009. Isn’t that the best measurement of all? But being #2 is good, too.
Here’s what Tom said about the State of the Music Industry:
(Excerpted from Musician Coaching from January 2010)
Last Thursday, the new 2009 statistics came out from SoundScan and what we’ve been identifying at the New Music Seminar is that overall music sales are up by 2.1% — 1.545 billion sales were made. That includes physical, digital, singles, albums, everything, video, music video. Total album sales including digital are down 12.7%. Digital tracks are up 8.3%, which is pretty great considering everyone is saying digital is leveling off, and I find that to be hype. The percentage of increase is slowing down, but that’s because it’s a numerator/denominator thing. The actual amount — the number of additional units was almost 100 million more digital tracks sold this year than the year before, and 100 million is nothing to laugh at.
Vinyl sales are up 33% going from 1.88 million to 2.5 million; so, the increase on that was about 700,000. Full-length digital albums are up 16%, but then again they started at only 65.8 million, so they’re only up to 76 million. The interesting trend we follow at the Seminar also is the ratio of singles to album sales. In 2004 there were virtually no singles sales— it was all albums. Last year there were 2.5 times as many digital download singles as albums, physical and digital combined. This year it’s moved to 3.1 times as many, so look to see the ratio of singles to albums to increase. A lot of this comes from the radio hits. What’s happening is that where the major labels play, they’re getting marginalized faster than the indies and the smaller artists. We identified that the Top 10 has dropped 65-70% since 2000, probably 70% as of this year. If you just take records that sold over a quarter of a million that’s down 65%; but if you take records that sold under 10,000 it’s only down three or four percent.
In 2008 there were only 112 releases that sold over a quarter of a million copies. The major labels can’t survive on that. They need sales larger than 250,000 copies sold to survive. So those 112 records are the only records they could make money on at all. Probably 25-50% of those didn’t make money either. So only 60 releases make money, and the amount of money they make except for maybe four or five giant hits – the Lady Gaga and Black Eyed Peas level of hits – aren’t really making significant money. In the old days, one hit used to pay for 20 stiffs. Now one hit doesn’t even pay for one stiff.
What if half of those 112 didn’t even make money or broke even. To sell 300,000 albums and not make money? That’s not a good thing. It’s because they were hoping to sell 600,000 or 700,000 or 800,000. The labels are getting more cautious. So here’s what’s happening, and this is what we discuss at NMS. The labels— majors and independents, are more conservative; they’re not going to take risks on artists or invest in artists just because they hear the demo and they like the songs or just because they can pack a house. That’s not enough – at least not the major labels. They need to know the artist is going somewhere between 30 and 60 miles per hour already to make an investment in it. They can’t start from scratch anymore, because so few artists are breaking.
Here’s another statistic: in 2008 there were 1500 releases that sold over 10,000 album units. Out of that, there were only 227 of them that were artists that had broken 10,000 for the first time. So in the whole year only 227 of the artists were artists that had broken what we call the “obscurity line.” When you sell 10,000 albums, you’re no longer an obscure artist; people know about you. You may not be a star yet, but you’re in the game. That gets you out of the glut and into the game. We looked at the 227 and identified that only 14 of them were artists doing it on their own and all the rest were on majors and indies; a little more than half were on indies. And that includes Lady Gaga in that number of 227. It includes the biggest artists and ones that sold 10,000 as well, whether they sold a million or 10,001. That’s a pretty daunting number.
By starting the New Music Seminar again and doing tons and tons of research deep in the data, we’re identifying what’s happening and not happening. We’re talking to people who are making it happen and doing it alternative ways; we’re identifying what the opportunities are out there. Tommy Boy is more than a record company; we don’t consider ourselves a record company anymore, we’re much more than that. Now we’re sort of a strategic artists positioning company, and our job is to take an artist from where they are in revenues to a much higher number. If we work with Artist A that’s making half a million dollars a year, our goal is we take them to a million in year one, two million in year two, and three or four in year three. That’s our goal. And then we take a percentage of that revenue. And we’re talking about dollars, not record sales, because we may decide to give the records away, and we may only make about 10% of our money from the music and master use or 20% and the rest of it will come from touring and merch, publishing and possibly sync and other things. We’re not concerned with where the money comes from as long as it comes.
Tommy Boy is known for building brands, from Queen Latifah and Ru Paul, to De La Soul and Afrika Bambaataa, Naughty by Nature, House of Pain, so many household names now that you know. When you mention the name, you can see them; like Digital Underground, when you close your eyes, an image of who they are comes up. Coolio … they all became significant brands, and that’s what we did. Tommy Boy is itself as a significant brand. We’re not just a record company. Our business always was building brands. How we used to make money was selling records; but we don’t see it as the way we can make money now. It’s one of the streams of revenue that we can make money from, but it’s no longer the most significant or even the second most significant way we’ll be making money. We can no longer be limited in how we see artists to the music domain. It’s more than the music. We have to work with the artist’s positioning.
So, back to the New Music seminar. As it’s harder for artists to break, no labels are going to come to an artist just because they like the demo, and that’s hard for artists to take. Artists don’t want to hear that. They’re spending all their time, because they’re musicians making a cool record. And that’s what they should do, but that’s only the very beginning of it. One of the things we identified is that three times as many people buy singles as a whole album, so it probably doesn’t make any sense to make a whole album, or it’s a waste of time and money in the studio making an album when they’re just getting started, because every artist breaks with one song. And they might as well focus on finding that one song before they waste the money on the album.
As you build fans, if you’re touring – and every artist should be regardless of genre right now to build their fan base and also sell merch and actually make money – they should be touring all the time. You create music to satisfy your live audience. Once you have fans that are coming to your site, then you need to keep flowing new music to them on a regular basis to keep them engaged, and hopefully good music. You’re going to say, “I’m no longer an album every 18 months or two years. I’m a song every two months or a song every month. I’m a monthly publication or a bi-monthly publication.” You look at yourself as more of a periodical than as an album-making business.
I think the album days are coming to an end. Unless you’re already established and you already have hundreds of thousands of fans, in which case the touring and album making might make sense. I just talked to one of the writers and producers for Black Eyed Peas, and they’re going out on tour right after the Grammys. They’re bringing out two tour buses that are studios, so they’ll be recording while they’re touring. I think that’s the new world, is that artists will do their shows and then they’ll go into their mobile recording studio and write and record. Now that recording equipment is so mobile, it’s easier and cheaper to do that, and the top artists are going to do that, and even the smaller artists are going to have to be writing on the road constantly. And whenever they’re in a place where there’s a studio, they may want to drop a track or they can record live tracks to perform and practice and rehearse and do live tracks and record those live tracks and make them available. The flow of music from artist to fan is going to be more important. It didn’t used to be important because there wasn’t the kind of 24-7 contact between artists and fans. So as you build your fans, they’re not going to be happy with one album every two years anymore. That’s not going to work. After three months, they’re off finding another artist that’s going to take your place. If you want to keep their interest, you have to keep at the top of their consciousness, and that requires new creative on a constant basis.
So at the New Music Seminar we talked about all of this. We talked about the new model, which is no longer based on records, it’s based on fans and the relationship between artists and fans, and how you monetize that relationship. We talked about the fan relationship pyramid. We have to look at our fans based on their levels of passion and their levels of spending. What kind of content we see delivered to our fans – whether it’s for money or for free – depends on their level of passion and their level of spending.
So somebody that doesn’t want to spend any money – a tire kicker – probably shouldn’t get something first. They probably shouldn’t get exclusives. The exclusives should go to the most avid fans. That’s the new world. And there’s a science – we call it “fan migration science.” How do you migrate a passive fan into an active fan? How do you capture fans? The new music business is about getting fans. That was always the business, but we – artists and labels – were always confused. We thought it was about selling records. Record sales were how we used to make money. It may not be how we make money now. But really how we made money from it is that fans bought our records. Passive fans bought the single, active fans bought the album, super active fans bought the album and went to all the shows, and bought the t-shirt. So we have to look at our audience in that way from now on.
When I think about the indie artists that are doing it themselves, like Sufjan Stevens or Bon Iver or this guy Corey Smith.. This is a guy from North Carolina who was a school teacher and about three years ago and his manager got him up to about a million dollars in revenues, then the next year he got him up to four million in revenues. Really, the game is how can you build your revenues, not how can you sell more records. You may not sell records at all. You may decide to give records away to get your revenues up. If your revenues go up, that’s what you care about. Tommy Boy is in the “how do we make more revenues” business and “how do we create a strategic plan to do that?” That’s what Tommy Boy has molted into. It’s kind of what we always did, but we just never really looked at it that way.
When you have 105,000 albums in 2008 released and 17,000 of those releases only sold one copy, and 80,000 of them sold under 100 copies, it’s a pretty depressing scene. You can’t just build it and they will come. You have to do more than that. I was going to say before that Sufjan Stevens, Bon Iver and Corey Smith are selling a significant amount – above 10,000 units – a lot of which is at their shows, and they’re not active online. They’re not Twitterheads. They didn’t break from the Internet. They broke from touring, and they had a good story, and the good story spread like wildfire through traditional media like NPR.
I’ll tell you the one thing that works: if you’re great live and you bust your ass on the road, that works. And it’s the one thing that has always worked and your social network is at the show. You come to the show and everyone who comes is into the band, so they all have that in common and it’s a social network. But you can actually see them and talk to them and scream with them. There’s an excitement that happens at a gig that never happens online. The online thing is great for finding out about stuff, looking things up or for making purchases; but for exposing stuff, so far it’s been disappointing.
That may not be true with webcasting – Last FM, Pandora and Slacker and some of the other big webcasters as they start to invoke discovery tools and more and more sophisticated discovery tools to suggest and discover new music get better and better. Maybe we can fix some of that, but when the Web was proposed for music ten years or twelve years ago, we all thought this would be the Golden Era and that there would be an Elvis that would break every three months, or some big act. There’d be a Lady Gaga every two weeks, but it’s not happening. It’s not happening at all. And Lady Gaga didn’t break off the Web. She broke by hard, hard work touring and doing promo shows and every place she could go, we saw her. There was nowhere she wasn’t. They pushed and they pushed and put posters on the street – old analog shit. I’m sure they did the online stuff too. A lot of artists think if they do a big online push that’s enough, and it’s really not enough anymore. In fact, you could probably break without any online work at all; but you can’t probably break without any offline work at all. So that’s the big myth that’s being purported.
You know where the investment money’s coming from in the music business now? It’s coming from venture capitalists that are investing in businesses like Spotify or any of those artist service businesses. There must be half a billion dollars in online investment in the music business over the two years. That’s more than all the labels in the world have spent on A&R in the last five years combined – a lot more – and probably on marketing too. That’s where the money’s coming from, so they’re leading the press. So of course everybody thinks shit is selling because of the technology, but it’s not. That’s the hope, and where the investment’s been, but that’s not the reality. We’re really not seeing any evidence that stuff is breaking off the Web.
There are a lot of groups that are breaking because of a big write-up on Pitchfork that leads to maybe a usage on a TV show like The Hills or something like that. People see something on TV or MTV or something like that or hear some song on MTV. The combination of that plus touring might work. If radio and print are moving towards the Internet and they can get enough reach and frequency, which has been the challenge for them so far, like the Huffington Post or maybe you can say Pitchfork. There are Pitchfork bands that consider themselves Pitchfork bands. They’re not going gold and platinum, but they’re getting booked and they’re starting to break that obscurity line. I think the more powerful Pitchfork gets … I mean, Oprah wasn’t Oprah in the very beginning. It took her years to build an audience. Now she can talk about a book and that book goes into the Top 10 on the Best Seller list the next week. There’s not a lot of people that have that kind of juice online. In fact, I don’t think there’s anyone that has that kind of juice online yet. There will be something that everybody watches just like they watch on television online or that they look at that will move the needle substantially. Right now it’s still really early days for that.
And a lot of artists are really putting all their faith in that and focusing on online, but when you look at the numbers, the artists that are doing it are the ones that are doing the grinding on the road. At the Seminar we want to talk to artists about if there’s 120,000 albums that come out in a year, how do they differentiate themselves from all of them? Because clearly it’s tough. There’s such a glut, and how do I break through the glut? The best way to break through the glut if you’re limited in funds – and everyone is – is to differentiate yourself. So we talk about how do we differentiate ourselves in every one of the four important aspects that define an artist: 1) the songs, 2) the recording, 3) the image & concept, and 4) the live show. The concept is really big. It means- “what do you stand for?”
That’s why Susan Boyle sold more records in six weeks than anybody else in three years, and she wasn’t even American and had no radio play or anything. She had a story, and it was a compelling story. Anybody with a compelling story that can get that compelling story told. It is a lot easier to get exposed with a story because everyone wants to talk about and write about a compelling story. You have to have a good story.
The Live show is important too. Your live show has to be great, because so many artists are breaking from the stage now. You’re much more likely to get exposure and get a buzz if you have an unbelievable live show that makes people talk than if you have an unbelievable record. Records are not going to get radio play, because the radio stations that are left are hardly playing anything, and there’s nobody listening, especially in the rock area.
I taught a class at FIT in NY. There were 40 kids in the class, and I asked them, “How do you guys find out about new music? Do you listen to the radio?” And only four or five kids listened to the radio in that whole class. All the rest of them said online— they find out about it some way, or word of mouth. That’s with every genre. Still, pop and urban are still breaking on the radio, and those are the ones that Eric Garland at Big Champagne said people are downloading and not paying for. The biggest radio hits are the ones that are more pirated. Everybody talks about peer-to-peer being a great way to expose new music. It’s not a great way, because 90% of the files being traded on peer-to-peer are the hits. It would be a much different ratio if it was a discovery tool. People aren’t using it as a discovery tool. They’re trying to get the songs that are already exposed. What we’re doing at the Seminar is saying, “Where should we go to get the exposure?”
In preparing for Los Angeles New Music Seminar, [Tom Silverman] wanted to learn more about how many new artists are breaking each year. After all, the New Music Seminar is dedicated to helping more new artists break. First we had to determine the definition of breaking. At the New Music Seminar we identify the obscurity line arbitrarily as 10,000 albums sold in the year of release. That is not a hard number, nor is it the only meter of success. 300 hard ticket sales for a headliner in multiple cities might be another definition. 25,000 paid single downloads might be another. I’m sure there are many more but 10,000 albums doesn’t sound as elusive as gold or platinum (those archaic arbiters of success) or even 50,000 which only a decade ago might have been considered below the obscurity threshold. Looking at the 1517 albums that were released in 2008 and sold more than 10,000 units in 2008 we find that only 225 of them were by artists that had surpassed 10,000 for the first time in their career (either by themselves or with another band).
The vast majority of these were released by significant indies (110) or majors (103). Last Friday, I thought that only 14 of those were self released artists or artists on start up labels. Further inspection disqualified two of them. One was a gospel record whose Bishop had exceeded 10,000 in the past under a slightly different name and the other was a Soundscan placeholder for a title distributed by Anderson Wholesale, the distributor for Walmart, that showed the title “TBD.” We had thought it was a Dutch electronic artist called Anderson but alas, nay.
Who were these valiant artists? A quick inspections indicated that beyond Bon Iver, the real indie artist success story of 2008, there were three hip hop artists, one that had financing of $10 a unit in marketing spent to sell under 30,000 units, another associated with the big indie hip hop powerhouse Tech N9ne and the last a gospel hip hop artist. The rest were largely alternative rock artists, two had been contestants in America’s Got Talent or American Idol and a few others were on small labels with big budgets.
What does this say about the Chris Anderson “Long Tail” promise he outlined in his book? Clearly the ease of making and distributing music does not benefit “breaking” music. Breaking music requires mass exposure which requires luck or money or both. I can say with great authority that less new music is breaking now in America than any other time in history. Technology has not helped more great music rise to the top, it has inhibited it. I know this is a bold statement but it is true.
Perhaps the greatest challenge to all of the technologists that participate in the New Music Seminar is to correct that issue so that great music can rise to its true potential regardless of politics, power or money. I believe that the next decade will bring improvement to the music web that allows that to happen. In the meantime, artists can still make a very good living without selling 10,000 albums by careful cultivation of their fan relationships. This is another theme of the New Music Seminar…redefining the music business around the artist/fan relationship…how to manage it…how to monetize it. Records are no longer currency in the next music business…fans are.
Here’s the list of the 12 artists that sold over 10,000 albums in 2008 for the first time. Remember these are 12 albums out of 105,575 new album releases that year.
BON IVER
Record Label: Jagjaguwar (US/CAN)
Album: For Emma Forever Ago 103,112
TMI BOYZ
Record Label: TMI Entertainment
Album: Grindin’ For a Purpose 29,119
CAS HALEY
Record Label: CaptainHooks, also Big Karma Records, a “Texas start up label”
Album: Cas Haley 22,580
DUKE SPIRIT
Record Label: SHANGRILA
Album: Neptune 19,403
EYES SET TO KILL
Record Label: BreakSilence Recordings
Album: Reach 16,133
PROZAK
Record Label: Strange Music Inc./ DeadMan Productions Inc.
Album: Tales From the Sick 14,929
SLIGH*CHRIS
Record Label: Brash Music
Album: Running Back To You 14,785
REBEL SOULJAHZ
Record Label: GO Aloha Entertainment
Album: Nothing To Hide 14,262
BLIND PILOT
Record Label: Expunged Records,
Album: 3 Rounds & A Sound 11,281
MORNING BENDERS
Record Label: +1 Records Album: Talking Through Tin Cans 11,201
STS9
Record Label: 1320 Records
Album: PEACEBLASTER 10,601
TRIP LEE
Record Label: Reach Records
Album:20-20 10,003
Measuring Success
By, Wendy Day from Rap Coalition (www.WendyDay.com)
One of the many changing things in the urban music business is how we measure the success of an artist. Measuring Rap, R&B, Reggae, and even Dance music sales has always been challenging, and even though companies like the Neilsen-owned SoundScan claim to have been 100% effective, they were not.
SoundScan is a company that began measuring music sales in the early 90s by supplying willing music retailers with special scanners and software that counted and tallied up bar code (UPC) scans at the point of purchase (cash registers). Every Sunday night that tally would be automatically downloaded to SoundScan headquarters in White Plains, NY for publication the following Wednesday to subscribers with very deep pockets (the subscriptions are costly), meaning major record labels.
One of the problems with SoundScan is that it has never been able to measure EVERY sales outlet. Many of the independent retailers around the country, where the bulk of rap sales were happening in the 90s, were reluctant to have any counting system overseeing their business. Whether it was for tax reasons (did not want the IRS to know how much music they were really selling) or for business reasons (fear that a chain store would get their retail sales information and open a store directly across the street with lower prices thereby putting them out of business—which ironically happened anyway), many didn’t want to report their sales to anyone. It also didn’t count venue sales until somewhat recently—and they are self-reported, which means it depends upon the honesty of the person reporting.
To make up for this lack of accurate data, SoundScan weighted certain of the willing-to-report stores more heavily than others. This meant that when an independent store, in say St Louis, scanned one sales copy of a CD, it could count as four sold copies to make up for the area’s lack of actual SoundScan reporters. Additionally, many of the SoundScan stores realized early on that there was a business to be made of selling SoundScan scans to labels. Aside from being treated better by the labels because they were a SoundScan reporter (meaning promo dollars spent in their stores for key pricing and positioning campaigns), an economy of “seeding” sprung up around the country which caused labels to send extra boxes of CDs to retailers for additional scans for a price. Some would scan the chosen CD at the register daily no matter what other title was sold, while others would receive boxes of free product to scan throughout the week. Smart labels controlled the scans and made it appear as natural as possible, sometimes to have a big first week (hitting #1 on the Billboard chart was a sure way to garner extra press and attention which led to additional sales) and sometimes indie labels used this method to land a bigger deal with a major label.
Buying SoundScan in urban music (at least in the areas in which I travelled) became such a popular practice that when I was shopping deals at the major labels from 1995 to 2005, I used to separate out the SoundScan sales from the independent retailers, and if it was more than 15% of overall sales by the artist, I knew (and the major labels knew) they were buying SoundScan. I would pass on shopping those deals because I knew the Major labels would see the fraud and I didn’t want that fake shit to sully my otherwise stellar reputation for doing deals (I’m proud to say that I’ve done some of the best deals in urban music from 1995 to 2005 when there were good deals to be had). I was proud that my deals led to superstar sales levels (except two) and fake scans weren’t the way to achieve superstar status (at least not as an indie).
In the early years of the 21st century, however, I watched urban sales switch from a full length CD marketplace to a downloaded singles market. I also watched Best Buy and WalMart—the biggest music retailers become replaced by iTunes in importance and overall sales volume. I also noticed that the core rap fans were not really the active downloaders, the mainstream and pop fans were. So while 50 Cent and Kanye West were fighting illegal downloads, artists like Young Jeezy, Boosie and Webbie were still able to sell large amounts of CDs, especially in the South. I watched an increase of bootlegged CDs pop up at carwashes and swap meets throughout the ‘hoods in the South though, as CDs sold 3 for $10 in most cases, and as the RIAA resorted to suing college kids for illegal downloading instead of shutting down the shops with multiple burners to bootleg CDs. Music became “free” (or close to free) among an entire new generation of fans.
In a way, this shift benefits the indie artists who are out here selling their own CDs. Enterprising bootleggers don’t mass produce music until there is a mass market of sales, and the fans still seem to admire and support the grind of artists who sell their CDs hand to hand, or who travel from town to town promoting their music regionally. While artists and major labels all around me were complaining of bootlegging and lost revenue, I watched the TMI Boyz sell hundreds of thousands of CDs while on the road for almost 18 months straight. Very little of it was measurable by SoundScan.
But even with the inaccuracies in the SoundScan system, the urban music industry used to be able to measure the sales, the response to promotional and marketing efforts, and measure the buzz or hype an artist had. We could see it in the attendance at shows, merchandise sold, and CDs sold. More importantly, we could measure it by area. When I was managing David Banner and Twista, this was important because I knew what areas to target with shows based on sales data, radio spins, and buzz factor. And consequently, knew what areas to target to increase our sales, make sure product was heavy in stores in certain areas, and could target our campaign effectively around those key target areas (Banner was heavy in MS, Washington DC, IL, TN, AL, and GA; while Twista’s main fanbase was IL, TX, LA, MS, IN, OH, and MO).
When I met the guys from Trill Entertainment in 2004, we saw Lil Boosie’s and Webbie’s largest fan base was northern FL, AL, GA, MS, LA, and TN. It was easy to measure and track. The buzz was easy to measure as well, based on their show bookings every weekend and the sales of the indie CDs in the marketplace mostly in those key markets. When radio adds for Webbie entered the equation, it was a no brainer as to where we should go. We didn’t have to wonder where anonymous downloads were occurring, they weren’t.
Today that measurement process is more challenging. I noticed it when Gucci Mane got out of prison in March of 2009. He had a good buzz on the streets from dropping back to back mixed CDs and from OJ Tha Juiceman keeping Gucci’s name alive while he was locked down. But I don’t think anyone could have predicted the $30,000 to $50,000 per show booking price that he’d command almost instantly, with no album in the marketplace and no hot single at radio (this was months before “Wasted” hit radio). There was no way to measure his buzz prior to that. He was kept busy doing shows but still managed to record mixed CDs and keep music in the marketplace. Most of it was downloaded for free (by his choice) from websites and blogs that had become the way to receive new music. Fans at his shows could sing along, word for word. They didn’t need radio singles.
While his MySpace hits increased and his popularity on Twitter was apparent, there was no legitimate measuring system in place to gauge his media mentions, count the downloads (too many sites had music posted), track the shows and price increases, or measure the increase in success he was experiencing. His increased popularity also led to an increase in popularity of the artists surrounding him: Nicky Minaj, OJ Tha Juiceman, and Wacka Flocka Flame.
In today’s music business economy we have no real accurate (or even semi-accurate) way of measuring success for artists. With SoundScan tracking mainstream sales, only the mainstream artists seem to be faring well (Lil Wayne, Kanye, Taylor Swift, Susan Boyle, etc). Meanwhile, I haven’t heard a decrease of music coming from or playing in the ‘hoods of America. Even without SoundScan sales, kids are singing along to every Gucci Mane and Yo Gotti song during their shows (music is from their mixed CDs). They are listening to a larger number of unknown, independent, and unsigned artists than ever, and they aren’t getting the music just from the internet.
As this change is occurring, I’m watching folks who thrive on research and numbers scramble to count MySpace hits, Twitter and Facebook friends, downloads from myriads of websites and Blog sites (too many different ones to count), World Star and VladTV views, etc. Yet none of it is accurate. Software programs can boost numbers on the web as easily as SoundScan swipes could be duplicated at indie retailers in the 90s. Music magazines are becoming obsolete, so purchases of issues based on our favorite artists on the covers are becoming a thing of the past. I guess we’re going to have to let the fans tell us. And this means we need an even closer one-on-one relationship with the fans, the streets, and the internet. What was as easy as picking up SoundScan reports on Wednesday mornings is no more. Oh how I long for those days….
I guess the key, at least for indie labels, is to keep your eye on the sales and the relationships you are building with fans. Last week, Tom Silverman who built the Tommy Boy Records empire in the 80s and 90s (Afrika Bambaataa, De La Soul, Queen Lafifah, Naughty By Nature, Information Society, Coolio, House of Pain, Everlast, etc) and who owns the New Music Seminar, published a study at www.MusicianCoaching.com . He pointed out that in 2009, there were 1,500 independent releases in all genres. Of those 1500, only 13 releases sold over 10,000 units (that’s only $70,000 to $100,000 in wholesale sales). The #2 release was the label I consulted, TMI Boyz. They were the ONLY rap act on that short list of 13. And that list was based on the (inaccurate) SoundScan sales we tabulated at 30,000 CDs sold. While on the road for a year and a half, they sold 2 mixed CDs and a full length CD. Tom’s research was based solely on the CDs that were sold at FYE stores in the South. Since we weren’t focused on SoundScan, just on making money, we weren’t trying to have each sale counted. The bulk of sales were at shows, Mall parking lots, state fairs, flea markets, street corners, gas stations, car washes, high schools, clubs—anyplace where a mass of people were gathered so TMI Boyz could jump out of the wrapped van to make a sale. You may have never heard of them, but they made $1.6 million in sales in 2009. Isn’t that the best measurement of all? Besides, being #2 is good, too.
FROM BOB LEFSETZ BLOG:
The Warner Music Group is making money. The publicized loss is due to accounting, having to do with amortization and other issues Wall Street understands and lay people do not. But what is the future?
You can read the transcript of the Warner earnings call here:
http://seekingalpha.com/article/187591-warner-music-group-f1q10-qtr-end-12-31-09-earnings-call-transcript?page=-1
And if you trudge through it, you’ll learn some fascinating things.
Like Warner is not about to authorize Spotify in the U.S. That’s big news on the Interwebs today. Edgar Bronfman, Jr. said no free streaming. Hell, let me quote exactly what he said:
“Well, first of all we don’t know what consumer behavior is going to be in the cloud and whether we can correlate purchase to sort of subscription or other kinds of models. But we do a lot of sort of modeling work here to talk about what – to think about what kind of scale is necessary at what pricing and we do see that the opportunity to expand music consumption and music purchase, whether that’s by track, by album or simply by service across a vastly greater number of consumers is net extremely positive for the industry. That having been said, free streaming services are clearly not net positive for the industry. And as far as Warner Music’s concerned will not be licensed. So this sort of get all the music you want for free and then we maybe we can – with a few bells and whistles move you to a premium price strategy is not the kind of approach to business that we will be supporting in the future.”
Actually, it’s not as bad as it appears. Because Bronfman is for licensing at the ISP level, or bundling the cost of music into a mobile device. This is not a bad strategy, one that Spotify itself is trying to employ. Maybe you get music with your Internet access. Might seem free to you, but someone’s paying Warner and other rights holders for that content. Is this imminent? One would hope so. And a far better strategy than Bono and his manager beating up on the ISPs. Better to come up with a business solution than to jawbone someone into accepting a responsibility they don’t think they have. But we see how long it took Nokia’s Comes With Music initiative to launch, and it was a bust upon final release. Speaking maybe to software. Which augurs for a relationship between music companies and third party software companies, allowing streaming and possibly downloading of music easily. This could come tomorrow, but will it? Every day there’s no reasonable solution is
another day people steal music.
Then there’s Vevo. Which Universal is trumpeting as a savior and Warner refuses to join. Bronfman says there’s more value to be extracted by monetizing individual bands on Websites. I like that he believes in his acts, but is the future about aggregation or individuation? About subscribing to everything or cherry-picking? I’d say the former, which makes me wonder whether Bronfman wants to keep Universal at arm’s length, whether that’s the real reason he refuses to join the Vevo consortium. That’s an excellent strategy, for Universal is both a bully and old school. It’s Warner that’s pioneering digital initiatives, it’s Warner that makes the highest percentage of revenue via digital, not Universal. Vevo is a minor step by a rearguard company. You don’t want to be pulled down by a slow enemy.
Which brings us to 360 deals. Warner wants ‘em. And will pay dearly for these rights. But they won’t overpay for the flavor of the moment without them. Bronfman says they’ve lost acts to competitors who are willing to make these deals. But, without 360 degrees of revenue in the future, the company cannot thrive.
And Bronfman says that 360 rights are not always tied to the length of the recording agreement. In other words, you can make five albums and be free to record elsewhere, but you might be paying a percentage of touring and merch for years thereafter. Smart on Warner’s behalf, good for an act? Try selling your recording rights to another company without these other rights… Probably difficult. Meaning that you will probably be signed to Warner for the length of your career. Because in order to release more records, you renegotiate the entire deal, extending it even further. That’s how renegotiation works, you get more money for more time, for a greater commitment.
So should you sign a 360 deal?
This is where the call gets truly fascinating. Bronfman is asked about the Live Nation/Ticketmaster merger:
“Yeah. Look, I think we think of Live Nation-Ticketmaster largely as a complimentary business to the business that we’re in. I think Live Nation-Ticketmaster is a business of scale, it’s a business of consumer relationships and venue relationships, and it deals almost entirely with artists that have proven that they have a significant ticket purchasing capability.
Our business, on the other hand, is essentially a venture capital business where we’re betting on a bunch of unknown artists who have yet to develop that opportunity. And when we sign those artists we sign, as I said, essentially all of them to expanded rights deals which means whether they go through Ticketmaster-Live Nation when they’re eventually touring or through some other form, we’re going to partner with the artists in the revenues derived from their tours. So our sense is that these are largely complimentary businesses, not really competitive businesses. I think Live Nation-Ticketmaster has the opportunity to be a very strong and powerful company, but in an area of the business where we do not currently compete, although we do expect to derive significantly increased revenue over time.”
What Bronfman is saying is Warner invests in its acts, Live Nation does not. Live Nation wants to tour established acts, Warner establishes them.
But does it have to be this way?
Make no mistake, Live Nation is strapped. Is it willing to invest in artist development? Is it willing to pay to build artists who can play its venues?
It all starts with the manager, and in this case, Live Nation has the largest management company, Front Line. If you’ve got a manager, do you need a label?
Managers today have radio promotion departments, marketing departments, but they’ve always looked to deep pockets to fund their acts. Should they step up and risk money themselves?
Boutiques will not, they haven’t got access to capital, the risks are too heavy. But Live Nation? Can Live Nation build acts, that will tour their buildings, make exotic merch and distribution deals, leaving out the major label completely? It takes money, will Live Nation/Front Line pony up? And will Live Nation require said acts to tour its buildings? Its own 360 deal? Are we robbing Peter to pay Paul, or is Irving Azoff going to save the artist from the big bad labels, keeping all the money for the talent?
This is the big question.
Warner has attempted to enter the promotion sphere. We see whenever the company ventures from its core capabilities there’s trouble, whether it be Bulldog or LaLa. I don’t think Live Nation has much to worry about here.
Whereas Azoff knows every element of the business. He’s run a major label and has been a manager, to say he’s familiar with live entertainment is an understatement. But is Azoff in for the long haul, or does he want to get another paycheck and ride off into the sunset with Don Henley?
If Azoff wants to continue to play, watch out. Sure, he’ll make a major label deal on exorbitant terms. But really, it all comes down to what’s best for his artists. And why pay a third party if you can do it yourself? Anyone can distribute one’s music online. Anybody can hire a radio promotion and marketing team. But are Azoff and Front Line willing to risk, signing unknowns and investing in them? Hell, managers always sign unknowns, but are they willing to pay for development? If they are, Warner should be very afraid. Warner will have its catalog, and..? Live Nation might be able to offer an act more, a hell of a lot more, the act giving up less in the process.
In other words, are we on the verge of a revolution, or are managers just too cheap and will continue to make onerous deals with deep-pocketed labels?
We’re gonna find out.
—
Visit the archive: http://lefsetz.com/wordpress/
In my last post, I posted an article Tom Silverman wrote about the indie music business. As a disclaimer, I must say that I set up and consulted the label for TMI Boyz—the group listed as the second most successful indie label in 2008 and 2009, AND the #1 successful RAP indie label of all indie releases in 2009. Of 200+ labels that year that released indie projects, only 13 sold above 10,000 copies. TMI Boyz came it at #2 accounding to SoundScan, but since our goal was NOT to ever sign to a major label, most of our sales were not SoundScan sales, and the group did faaaaar better than it would appear from the article.
Congrats to TMI Boyz. They are always Grinding For A Purpose. #1!!
More Bob Lefsetz:
The Tommy Silverman Debacle
Tommy’s larger than life, but so old school as to make Will Ferrell seem like a high school student.
Tommy’s a hustler. Who made it on his own ingenuity and ears. But does what he have to say today truly apply?
Maybe you’re not in the same network as me, but I’ve been e-mailed Tommy’s interview with musiciancoaching.com again and again in the past twenty four hours (musiciancoaching.com? Does that make you want to run or what?)
It’s just plain wrong. It states that no one breaks from the Internet, everybody needs the deep pocket of a label.
I’d say money helps, although I wouldn’t take the money of a usual suspect label…
But this is the kind of thinking that would have Kodak saying that they’re relying on film, or newspapers saying they’re relying on print, or labels saying they’re relying on CDs. Just because you can’t see the cliff from where you are, that doesn’t mean it doesn’t exist. Everybody said no one would read a book on a hand-held electronic device, and suddenly everyone’s saying the opposite, Kindle’s got many competitors and Apple’s unreleased tablet gets more press than a starlet without panties getting into a car outside a bar.
The old ways are history. But am I really going to respond to musicianscoaching.com? Actually, doesn’t matter what I say, that’s what I love about the Internet, you can’t steer, you can only jump in the river and keep your eyes open, and try to detect where the current is going. In other words, the public triumphs, it has control, the only way to possibly steer is to be so far out ahead, no one knows what you’re doing. That’s the Apple paradigm, not the major label paradigm.
Anyway, Jeff Price of TuneCore decided to respond to Tommy. And even if you don’t read Tommy’s ravings, you should read Jeff’s. They’re incredibly eye-opening. The labels’ advantage wasn’t their money, but their lock on distribution. TuneCore is the labels’ worst nightmare, for almost nothing your music can get distributed and you can get paid.
Read what Jeff has to say here:
January 21, 2010
How people use Neilsen to hurt musicians.
I read an article today at Digital Music News about comments by Tommy Silverman - founder of Tommy Boy and the New Music Seminar.
With all due respect, his information is wrong. But worse, the conclusions he reaches from this faulty information could be damaging to artists.
Some highlights include statements like:
Silverman counted 105,575 new album releases that year, and found that just 225 of those were new artists surpassing the 10,000 unit threshold for the first time. Of that, just 14 were do-it-yourself artists, unaffiliated with a major, indie, or other entity.”
and
“What does this say about the Chris Anderson ‘Long Tail’ promise?” Silverman blogged in Musician Coaching. “Clearly the ease of making and distributing music does not benefit ‘breaking’ music. Breaking music requires mass exposure which requires luck or money or both. I can say with great authority that less new music is breaking now in America than any other time in history. Technology has not helped more great music rise to the top, it has inhibited it. I know this is a bold statement but it is true.”
I wrote a response to the editor of the blog where the article appeared, I do not know if he will post it, but I feel so strongly about making certain word gets out, I am re-posting my response to Tommy’s statements here
——————
I hope this email finds you well. I am writing you in response to Tommy’s information and posting - the good news, he is dead wrong. The truth is more artists and bands are breaking now in America, and around the world, than at any other time in history. Technology has absolutly helped more great artists and bands rise to the top.
The Nielsen data cited is not only incomplete, but also provides a false analysis.
Let me provide you some hard stats to back this up:
According to Nielsen and Tommy there were:
“…106,000 new (music) releases in 2008”
In 2008, TuneCore released approximately 90,000 newly recorded releases
This means, according to Neilsen and Tommy, almost every single new music release in 2008 was distributed via TuneCore.
I know this simply not to be true - the base assumption that Tommy is making is as dead wrong as his other statistics.
Another example, Tommy states:
” just 225 of those (the new releases) were new artists surpassing the 10,000 unit threshold for the first time. “
This is an empirically false statement for a few reasons.
First, in order for Neilsen to accuratly track sales, the UPCs for those albums must be pre-registered in their database. If the UPC is not registered in its database, Neilsen can not match the sales data to an album (or song). For example, if a digital store tells Neilsen it sold 100 copies of UPC # 123456789, and Neilsen has no idea what UPC # 123456789 is, it can not report the sales.
Next, the majority of the 90,000 releases via TuneCore in 2009 were not registered with Soundscan therefore making it impossible for them to track or report on the sales.
But these two points are actually kind of moot. Music is no longer bought by the album, it is bought by the song across an artist’s catalog. Tracking album sales as the sole indicator to determine if something is “breaking” is analogous to tracking only vinyl album sales to determine if something is “breaking”
Some examples:
When they were unsigned, the following TuneCore artists sold the following quantities of songs across their releases:
Kelly sold over 2,000,000 million tracks
William Fitzsimmons sold over 150,000 tracks
Soulja Boy sold over 200,000 tracks
Boyce Avenue sold over 1,200,000 tracks
Ron Pope sold over 250,000 tracks
Colt Ford sold over 300,000 tracks
Secondhand Serenade sold over 250,000 tracks
Tapes N Tapes sold over 200,000 tracks
Nevershoutnever sold over 1,000,000 tracks
Drake sold over 300,000 tracks
MGMT sold over 225,000 tracks
The Medic Droid sold over 150,00 tracks
Nickasaur sold over 150,000 tracks
Harry and the Potters sold over 200,000 tracks
This is just a very quick partial list that goes on and on and on
Under Tommy’s model, none of these artist sales count as they are not “album” sales.
With all due respect, Tommy might discount selling over 1,000,000 songs by an “unsigned” artist as not “breaking”, but I do.
On a macro level, in 2009 alone, the internet allowed the “long tail” unsigned artists that used TuneCore to generate over $32,000,000 in music sales by selling over 42,000,000 songs - this is more than one song a second selling by a TuneCore Artist on iTunes. This “long tail” catalog that TuneCore’s Aritsts represent is now one of the most valuable music catalogs in the world. And this all happened due to the net, social networking and access to the media outlets (like YouTube).
“Breaking” is not just about selling albums or even just the music - it is about generating revenue off of fame. This is done via merch, gig, publishing, music sales, ad revenue and more. Nevershoutnever sold over 35,000 t-shirts in a number of months via a regional sales program with Hot Topic. Surely Tommy does not mean to discount these sales and revenue simply because the artist is selling merch? How about if the band sold no music but consistently sold out 1,000 venue clubs and made $15,000 a night? Why does Tommy discredit bands for their success if they are not selling “albums”?
Another distributing and incorrect point suggested by Tommy is that music sales are down due to the fact that there is more music available to buy, share and discover.
As a matter of fact, its quite the opposite
In the late 90’s - also known as the “golden age” of market share and revenue for the music industry - more music was being released and bought than ever before (as an example, Warner was releasing one new release a day). Despite this increase of releases, sales (not just revenue) went up, not down.
Or from a pure logic perspective, if iTunes had 2,000,000 less songs, would an artist that is not selling now as no one likes their music magically start selling. Or to flip it around, I would suggest more music on the virtual shelf causes more music to sell as it allows the music buyer to discover music via the digital stores own recommendation association engines.
Tommy’s goes on to state:
“Breaking music requires mass exposure which requires luck or money or both.”
This statement is also dead wrong - and he knows it based on is own experiences at Tommy Boy.
Historically, in the music industry, 98% of what the record labels distributed, spent hundreds of millions of dollars on to market and promote and get played on commercial radio and MTV did not “break”. If “breaking” simply “required mass exposure”, there would have been a 98% success rate, not failure rate. But music is not a math equation, and therein lies the problem with Tommy’s statement. Yes, to break you need exposure, but that by no means guarantees success. The music has to cause reaction. For example, if “Smells Like Teen Spirit’ was not a song that people liked, it would not have mattered how much money was spent on getting you to hear it.
And that’s the excitement and beauty of the internet. The masses now have direct access to the media and “music discovery” social networking outlets. - i.e. YouTube, MySpace, Facebook, Twitter, Pandora, Jango and more. These new social networking and media vehicles allow mass communication in an instanteous fashion at a click of button. Suddenly one person’s opinion does matter and can can impact a bottom line. Even the digital stores themselves provide a vehicle to market and promote yourself off off (i.e. iTunes iMixes or recommendations of other music to buy). Through these vehicles the internet has delivered the ability for anyone to “break”, and they actually are. The masses now have access to the media outlets to get heard. The problem is the old school view that “breaking” is simply defined by selling albums. This could not be farther from the truth.
Tommy also goes onto say:
“I can say with great authority that less new music is breaking now in America than any other time in history. Technology has not helped more great music rise to the top, it has inhibited it. I know this is a bold statement but it is true.”
It might be a bold statement by Tommy to help get headlines, but it’s also false (and kind of silly). The truth is more artists and bands are breaking now in America, and around the world, than at any other time in history. Technology has absolutly helped more great artists and bands rise to the top.
The distressing part for me about this is based on Tommy’s statements, if an artists’ release is not counted by Neilsen than it is not actually released. If music does not sell as an album then it has not sold. In effect, he is de-legitimizing artists.
With all due respect, I believe an artist’s release should “count” even if not recognized by Neilsen as this de-recognition closes off possible opportunities based on the perception that a release is not “real”
I also find it distressing that the media, and other outlets, turn to Neilsen as the definitive source to determine what is occurring in this industry thereby decreasing the opportunities for musicians and artists that are not part of this old school system.
The reality is the majority of music is now being created, released and sold outside of the traditional system. Ad agencies, music supervisors, video game manufacturers, radio programmers etc turn to Neilsen for information to discover music in an attempt to use/license it. They need to understand that the Neilsen information is an incomplete and an inaccurate portrayal of reality. This inaccurate perception is holding back opportunity and validation for others. Tommy needs to stop propagating this false perception as it hurts artists.
It’s important that an accurate picture of what is occurring be presented to fans and businesses to provide additional choice and opportunity for musicians. They work hard enough as it is, the last thing we need to do is propagate a false reality to hurt them. Tommy’s heart is in the right place, we are here to help musicians, but let’s start with a more accurate description as opposed to a “bold” but false statement that helps promote an agenda.
Here’s the Link to Tom’s original article:
http://musiciancoaching.com/
Tone Deaf
Forty years ago, if you worked hard and saved your pennies, you too could live the life of the rich and famous, if only for a night, or a weekend. Now the gulf between the worlds of the rich and the poor, between the haves and the have-nots, is so vast as to seem uncrossable, and the public is pissed. Not only right wing Tea Party members, but left wing Democrats. How did we get such a raw deal?
You need to read Frank Rich’s column in yesterday’s “New York Times”. Because he nails it. It’s about jobs and foreclosures, stupid! How did Obama and his minions get it so wrong? Beholden to Wall Street, not in touch with the average man, the Administration has squandered its political capital.
Just like the music industry.
Once upon a time, it was a dream to work at a record company. Unless you knew someone it was impossible to get a job. Hell, it was impossible to get a job in music retail, far from the halls of Warner’s ski lodge and Black Rock. Music was where it was happening.
But no longer.
It starts with the acts. The acts were our beacon, pointing the way to truth, justice and the American way. Yes, if you were really good and worked really hard you could get rich, but nowhere near as rich as today’s Wall Street fat cats, even adjusting the dollars for inflation. Hell, you criticize the underprivileged for dreaming of playing in the NBA? What are the odds you’re going to work hard, get into Harvard and be accepted in the white corporate world? Not high. You’re better off shooting for the NBA, which might only pay for a decade or two, but it’s better than dealing drugs.
And let’s not equate athletes with artists. Athletes show their skill physically, artists radiate something intellectual, from the inside.
And suddenly, there are no artists.
Not in the mainstream.
It started thirty years ago, with the advent of MTV. First and foremost, you had to look good. And then you had to play the music MTV aired, because radio took its cues from the TV monolith. Suddenly, what was acceptable musically got really narrow. The opposite of the FM days a decade before. You used to listen to the deejay as he took you on an aural trip around the world, from folkie to metal monsters. The criterion was that something be good, not what genre it was made in. We had a very big tent.
The tent got smaller and smaller.
And those inhabiting it no longer played the game of Mo Ostin, but the construct of Tommy Mottola. Let’s homogenize it to the point where every media outlet will promote our wares for free. Let’s sell tonnage!
Sure, a lot of people liked it for a while. But they liked buying houses and watching them go up in value too. In other words, both paradigms were built on nothing but air, there were no underpinnings. Who wants the music that Clive Davis promoted in the nineties? Who wants any music from the nineties?
Those acts that remained, ironically aged classic rockers, could no longer get airplay in this new world. So, they toured playing oldies to great demand, raising prices all the while. Employing shenanigans like scalping their own tickets in order to book even more revenue. Hell, if the Wall Streeters could do it, why shouldn’t they?
And speaking of Wall Street, Robert Sillerman rolled up the independent concert promoters into what is now known as Live Nation, which just merged with Ticketmaster, and suddenly you’ve got a giant enterprise that needs to put on shows to make the whole thing work and is thus willing to overpay for talent, resulting in ever higher concert ticket prices. Indie promoters can walk away from a bad deal. Behemoths need to book revenue. Just ask Detroit, which produced cars whether people wanted them or not, it was easier to keep the factories humming then reconstruct, i.e. deconstruct. After all, it was all about market share.
But what does a fan care about market share? Hell, a fan doesn’t care who puts on the show, as long as the talent appears and delivers.
But with prices so high, you rarely went. And couldn’t understand how people wanted to see the evanescent pop stars at all. Why was the media trumpeting these stiffs, especially after MTV stopped airing videos, after radio crumbled, after the Internet destroyed the monoculture and the world split into niches?
Media doesn’t want to acknowledge niches, because then it has to reevaluate its own place in the landscape. But that’s the land we live in today, a zillion acts with their own audience. As for having contempt for another niche, for someone else’s music, does a fan of A&E put down people who watch Discovery, or Bravo? Railing against another’s taste makes no sense in this market, where everybody gets to listen to what they want, assuming they can find it.
But people can’t find it, can’t find the new music they want to hear. Top Forty is too sold out, and the hipster acts too far from center. Really, listen to the Dirty Projectors and tell me the mainstream cares. Please note, I’m not evaluating the quality of the Dirty Projectors, if you love them, great. All I’m saying is one listen will tell you that they’re niche, most people won’t like them. Yet, the Dirty Projectors have gotten the most media coverage of any new act, and the public that’s paying attention is throwing up its hands and saying huh?
The music industry is in deep shit. Not because of the Ticketmaster/Live Nation merger, but because of the gulf between the industry and the public, which is sick of overpaying for everything, meanwhile, not wanting much. To trumpet the success of Top Forty acts is like hyping the sales of Harley-Davidson. Sure, there’s a market for these overpriced American bikes, but most people want a much cheaper foreign job.
But at least Harley-Davidson has cred. Imagine if Harley-Davidson had the image of GM!
Enough with the analogies. The point is, music has squandered all its advantages. It no longer evidences truth, more quickly than any artistic medium. Radio is unlistenable. And the public has been ripped off for decades. You can tell people they shouldn’t steal, that music is a great value, but you’re just wasting your time, because the public is pissed!
I really don’t see how the usual suspects worm their way out of this one. Because to succeed in the future, you’ve got to develop, earn trust, give plenty and leave something on the table. And that’s anathema in the modern music world. Rather than argue about scalpers, make everybody show ID to get in. But most acts don’t want this, because really, they want that extra ticket revenue themselves, ergo platinum packages and American Express pre-sales.
The public wants good and affordable.
It hasn’t been that way for eons in the music business. It’s like we’re selling $60,000 Malibus. And you wonder why Hyundai has made inroads, it’s cheap and it’s good!
Music can come back. But the artists need to be about songs, not endorsements. You’ve got to want to play music first, and get rich…way down the line. And your handlers have to have this same philosophy. And you’ve got to stand for something. May sound easy, but looking at the landscape, it appears to be damn difficult.
FRANK RICH’S OP-ED PIECE:
January 24, 2010
Op-Ed Columnist
After the Massachusetts Massacre
By FRANK RICH
It was not a referendum on Barack Obama, who in every poll remains one of the most popular politicians in America. It was not a rejection of universal health care, which Massachusetts mandated (with Scott Brown’s State Senate vote) in 2006. It was not a harbinger of a resurgent G.O.P., whose numbers remain in the toilet. Brown had the good sense not to identify himself as a Republican in either his campaign advertising or his victory speech.
And yet Tuesday’s special election was a dire omen for this White House. If the administration sticks to this trajectory, all bets are off for the political future of a president who rode into office blessed with more high hopes, good will and serious promise than any in modern memory. It’s time for him to stop deluding himself. Yes, last week’s political obituaries were ludicrously premature. Obama’s 50-ish percent first-anniversary approval rating matches not just Carter’s but Reagan’s. (Bushes 41 and 43 both skyrocketed in Year One.) Still, minor adjustments can’t right what’s wrong.
Obama’s plight has been unchanged for months. Neither in action nor in message is he in front of the anger roiling a country where high unemployment remains unchecked and spiraling foreclosures are demolishing the bedrock American dream of home ownership. The president is no longer seen as a savior but as a captive of the interests who ginned up the mess and still profit, hugely, from it.
That’s no place for any politician of any party or ideology to be. There’s a reason why the otherwise antithetical Leno and Conan camps are united in their derision of NBC’s titans. A TV network has become a handy proxy for every mismanaged, greedy, disloyal and unaccountable corporation in our dysfunctional economy. It’s a business culture where the rich and well-connected get richer while the employees, shareholders and customers get the shaft. And the conviction that the game is fixed is nonpartisan. If the tea party right and populist left agree on anything, it’s that big bailed-out banks have and will get away with murder while we pay the bill on credit cards — with ever-rising fees.
Politically, no other issue counts. In last weekend’s Washington Post/ABC News poll, 42 percent of Americans chose the economy as the country’s most pressing concern. Only 5 percent picked terrorism, and 2 percent Afghanistan. Obama’s highest approval ratings are now on foreign policy and national security issues — despite the relentless hammering from the Cheney right — but voters don’t care.
Does health care matter? Not as much as you’d think after this yearlong crusade. In the Post/ABC poll, the issue was second-tier — at 24 percent. Obama has blundered, not by positioning himself too far to the left but by landing nowhere — frittering away his political capital by being too vague, too slow and too deferential to Congress. The smartest thing said as the Massachusetts returns came in Tuesday night was by Howard Fineman on MSNBC: “Obama took all his winnings and turned them over to Max Baucus.”
Worse, the master communicator in the White House has still not delivered a coherent message on his signature policy. He not only refused to signal his health care imperatives early on but even now he, like Congressional Democrats, has failed to explain clearly why and how reform relates to economic recovery — or, for that matter, what he wants the final bill to contain. Sure, a president needs political wiggle room as legislative sausage is made, but Scott Brown could and did drive his truck through the wide, wobbly parameters set by Obama.
Ask yourself this: All these months later, do you yet know what the health care plan means for your family’s bottom line, your taxes, your insurance? It’s this nebulousness, magnified by endless Senate versus House squabbling, that has allowed reform to be caricatured by its foes as an impenetrable Rube Goldberg monstrosity, a parody of deficit-ridden big government. Since most voters are understandably confused about what the bills contain, the opponents have been able to attribute any evil they want to Obamacare, from death panels to the death of Medicare, without fear of contradiction.
It’s too late to rewrite that history, but it may not be too late for White House decisiveness. Whatever happens now — good, bad or ugly — must happen fast. Each day Washington spends dickering over health care is another day lost while the election-year economy, stupid, remains intractable for Americans who are suffering.
On the economic front, Obama needs both stylistic and substantive makeovers. He has stepped up the populist rhetoric lately — and markedly after political disaster struck last week — but few find this serene Harvard-trained lawyer credible when slinging populist rhetoric at “fat-cat” bankers. His two principal economic policy makers are useless, if not counterproductive, surrogates. Timothy Geithner, the Treasury secretary, was probably fatally compromised from the moment his tax lapses surfaced; now he is stalked by the pileup of unanswered questions about the still-not-transparent machinations at the New York Fed when he was knee-deep in the A.I.G. bailout. Lawrence Summers, the top administration economic guru, is a symbol of the Clinton-era deregulatory orgy that helped fuel the bubble.
The White House clearly knows this duo is a political albatross. After the news broke that 85,000 more jobs had been lost in December despite some economists’ more optimistic predictions, Christina Romer, a more user-friendly (though still academic) economic hand, was dispatched to the Sunday shows. This is at best a makeshift solution.
Obama needs more independent economists like Paul Volcker, who was hastily retrieved from exile last week after the Massachusetts massacre prompted the White House to tardily embrace his strictures on big banks. Obama also needs economic spokesmen who are not economists and who can authentically speak to life on the ground. Obama must also reconnect. The former community organizer whose credit card was denied at the Hertz counter during the 2000 Democratic convention now spends too much time at the White House presiding over boardroom-table meetings and stiff initiative rollouts instead of engaging with Americans not dressed in business suits.
When it comes to economic substance, small symbolic gestures (the proposed new bank “fee”) won’t cut it. Nor will ineffectual presidential sound bites railing against Wall Street bonuses beyond the federal government’s purview. There’s no chance of a second stimulus. The White House will have to jawbone banks on foreclosures, credit card racketeering and the loosening of credit to small businesses. This means taking on bankers who were among the Obama campaign’s biggest backers and whose lobbyists have castrated regulatory reform by buying off congressmen of both parties. It means pressing for all constitutional remedies that might counter last week’s 5-to-4 Supreme Court decision allowing corporate campaign contributions to buy off even more.
It’s become so easy to pin financial elitism on Democrats that the morning after Brown’s victory the Republican Senatorial Campaign Committee had the gall to accuse them of being the “one party who bailed out the automakers and insurance companies.” Never mind that the Bush White House gave us the bank (and A.I.G.) bailouts, or that the G.O.P. is even more in hock than Democrats to corporate patrons. The Obama administration is so overstocked with Goldman Sachs-Robert Rubin alumni and so tainted by its back-room health care deals with pharmaceutical and insurance companies that conservative politicians, Brown included, can masquerade shamelessly as the populist alternative.
Last year the president pointedly studied J.F.K.’s decision-making process on Vietnam while seeking the way forward in Afghanistan. In the end, he didn’t emulate his predecessor and escalated the war. We’ll see how that turns out. Meanwhile, Obama might look at another pivotal moment in the Kennedy presidency — and this time heed the example.
The incident unfolded in April 1962 — some 15 months into the new president’s term — when J.F.K. was infuriated by the U.S. Steel chairman’s decision to break a White House-brokered labor-management contract agreement and raise the price of steel (but not wages). Kennedy was no radical. He hailed from the American elite — like Obama, a product of Harvard, but, unlike Obama, the patrician scion of a wealthy family. And yet he, like that other Harvard patrician, F.D.R., had no hang-ups about battling his own class.
Kennedy didn’t settle for the generic populist rhetoric of Obama’s latest threats to “fight” unspecified bankers some indeterminate day. He instead took the strong action of dressing down U.S. Steel by name. As Richard Reeves writes in his book “President Kennedy,” reporters were left “literally gasping.” The young president called out big steel for threatening “economic recovery and stability” while Americans risked their lives in Southeast Asia. J.F.K. threatened to sic his brother’s Justice Department on corporate records and then held firm as his opponents likened his flex of muscle to the power grabs of Hitler and Mussolini. (Sound familiar?) U.S. Steel capitulated in two days. The Times soon reported on its front page that Kennedy was at “a high point in popular support.”
Can anyone picture Obama exerting such take-no-prisoners leadership to challenge those who threaten our own economic recovery and stability at a time of deep recession and war? That we can’t is a powerful indicator of why what happened in Massachusetts will not stay in Massachusetts if this White House fails to reboot.
Page 1 of 30
