Copyright 1999 The New York Times Company
The New York Times
May 9, 1999, Sunday, Late Edition - Final
SECTION: Section 2; Page 1; Column 1; Arts and Leisure Desk
LENGTH: 4493 words
A Chance to Break the Pop Stranglehold
BYLINE: By NEIL STRAUSS
THERE are two great pop music dreams. And they usually follow each other, like marriage and divorce. The first great dream is to get together with friends in a basement or garage, write songs, make music, feel the magic and perform at local clubs until a big record label rushes in waving a contract. And then the label takes care of the rest: hit singles, arena shows, limos, parties, a new house for mom. But the dream, even for those few who actually get to live it, has usually been a nightmare.
That's when the next great dream kicks in. This is the dream of independence, of breaking away from the record label and going it alone. It's about rethinking the first dream, remembering that the most exciting part of being in a band was when you did it yourself. There was the joy of selling the first three copies of a CD or cassette you made on your own. Back then, you actually made a few bucks off those sales. Now, under a record label, promotional costs are so high that you may see no actual money, even if you're lucky enough to sell a million albums. And then there are the long tours spanning four continents, the executives that keep sending you back into the studio asking for hits despite the fact that you considered your album finished months ago, and the three-year gap between the release of each record. Signing to a big label suddenly doesn't seem like a step up anymore; it seems like a sacrifice.
"There's no contract you can sign in modern life that resembles a recording contract; they're absolutely unconscionable," said Bart Bull, the manager and husband of Michelle Shocked, the singer-songwriter who spent four years extricating herself from her contract with Mercury Records after the label rejected her new songs for being inconsistent with her style. "You take those 48 pages of a typical contract and hold it in front of anyone familiar with other types of business contracts, and they think it's insane."
A slew of recent events -- from the panic at major labels over the distribution of music on the Internet to the bloodletting following large music company mergers -- has made it clear to musicians that the structure of major record companies is not conducive to either their financial or, more important, their artistic goals. Talking to everyone from up-and-coming bands to those who have been signed for more than a decade, from artists with low sales to superstars, from lawyers to former executives, there is a growing dissatisfaction with a system that has been building its fortress for more than 100 years -- since a company called Columbia sprung up to challenge Thomas Edison's exclusive distribution of prerecorded cylinders to be played on the phonograph he invented.
This dissatisfaction stems less from the fact that the companies are owned by multinational conglomerates than from the belief that the labels are simply too big, numbers-driven and inefficient. Artists who could be much farther along in their creative work get bogged down in the bureaucracy. Waiting for the new record from Perry Farrell of Jane's Addiction? Keep waiting. It's already been rejected by his record label, Warner Brothers, several times. And what ever happened to Joan Osborne? Her label hasn't liked her new material either. The Verve Pipe? The label made the band write dozens of additional songs for its next album in search of a new hit. And Beck? He has just been sued by his record label over a contract dispute. And this is how the labels treat their favored artists.
Today, we are at an important moment in music history. Thanks in part to the rise of the Internet and music-business consolidation, a window has opened, one in which making this sacrifice of artistic freedom for commercial success may no longer be necessary. In the next few years, either a lot of best-selling musicians are going to climb through that window or the window is going to slam shut, tighter than it ever was before.
Take a look at the music industry today. Manufactured teeny-bopper bands are dominating the pop world, corporate mergers are squeezing hundreds of musicians out of the business without even giving them the rights to their recordings, and executives of major record labels are meeting behind closed doors to develop a way to police and control the distribution of music on the Internet.
These events are pointing the way to an exit from the status quo by fostering dissent and inadvertently giving musicians the freedom to act on it. In recent years, several people have stepped up to try to make the business work better for musicians and their fans, among them the musician, computer whiz and virtual-reality pioneer Jaron Lanier and the progressive rock guitarist Robert Fripp of King Crimson. They are developing new companies in hopes of chipping away at a business that loses money on far more records than it profits from.
Despite the rhetoric on the Internet about an on-line music revolution bringing down the record establishment, it is not the Internet per se that is going to grant musicians their freedom. It's the idea of the Internet -- in other words, the knowledge that there is an alternative to the system.
The golden age of the Internet -- as a freewheeling, chaotic world where all information is available free of charge and everybody is equal -- is fast coming to an end. There's too much money at stake for it not to be transformed into a new revenue stream for corporations. Look at the record labels. It may seem as if they are running scared because recent technological advances have made it very easy for Internet users to copy and distribute their favorite CD's on line without authorization, but the truth is that the labels have already found a way to turn this new technology to their financial advantage.
Most major labels have added what's called a new technology deduction clause to the contracts they offer bands. What it does is subtract 15 to 25 percent of the royalty rate of 12 to 13 percent that a new band receives for each record sold. The labels maintain that the clause is necessary because of the costs of Internet-related technology. This rationale seems strange because the distribution of music on the Internet is supposed to save record labels money in CD manufacturing, packaging and shipping costs.
"Even the lawyers with the most power can't get rid of those clauses," said Ken Freundlich, a top music-industry lawyer. "It's the same mind-set the labels have had since the CD: bring on the new technology, cut the royalty rate."
The head of a record company, speaking on the condition of anonymity, said he wasn't worried about artists releasing their CD's independently on the Internet. "How are they going to compete with someone putting $10 million into another Web site?" he asked. "Do you know how big the Internet's going to be? You're going to need infrastructure."
Putting control of the Internet in the hands of the corporations means that a utopian musical vision may be dying. The vision is of a level playing field where all bands regardless of their record label or financing have equal access to the ears of the consumer. Instead, the chances of a dystopian world are increasing, one in which record companies have even greater control over music distribution, and new bands are signed not because of how they sound but because of how many visitors come to their Internet site each month.
At present, record companies have a great deal of control. A record deal is basically a service contract that puts the musician in the employ of the record company. In all but the rarest cases, by signing a deal musicians forfeit their ownership of any music they make under that contract. And, from the outset, the musician is put in a position of accepting debt. That tantalizing million dollar advance, for example, must be paid back to the record label at an interest rate far higher than that of a bank loan. Because the debt is paid out of the small royalty that musicians make, most acts never see a penny from their record sales. The record company executive said: "A lot of lawyers and artists don't understand how the record business works. Artists don't have $50 million in overhead. We don't make money on their T-shirts and concerts that we market and promote."
For the music fan, far more disturbing than the financial toll record labels exact from artists is the creative one. Except in the case of an extremely slow, laborious songwriter like Leonard Cohen, artistic creativity moves at a much faster rate than the current system allows. Even in hip-hop, in which musicians tend to turn around albums quickly to take advantage of shortterm trends, there is frustration over inertia on the part of the record labels.
"Years ago, there was a 9- or 10-day turnaround after an artist turned in a record; now it takes 9 to 10 months because the record labels can't handle the traffic and need a year to set up their marketing and promotion systems," said Chuck D of Public Enemy, a pioneering rap group that left a major label in January and will release its next record through an Internet company called Atomic Pop. "If the majors cannot adapt to change, they become solely banking systems. If they could sell Brillo pads with a slice of cheese on them, they'd do that, because the music is irrelevant to them."
There are many musicians who probably belong in the major label system, particularly those using music as a route to money and fame or those who see their calling not in artistic achievement but in mass entertainment. Then there are songwriters like Aimee Mann, the former singer in 'Til Tuesday, who has a strong fan base and is an accomplished songwriter. But her experiences trying to release records have been soul-crushing, and as a result she has only put out two albums in eight years.
Her first label, Giant, got cold feet and canceled her contract before releasing her first album. Her second label, Imago, folded before her second record came out, and, just after Ms. Mann completed her third album for her third label, Geffen, the company was consolidated into Interscope as a result of the merger of both labels' parent company, Universal Music, with Polygram. Ms. Mann thought she had finally caught a lucky break when she became one of the few artists whose contracts were not dropped in the merger. But soon after, she was told that Interscope -- her fourth label -- wanted her to continue working on an album.
"I'm officially at the end of my major label rope," she said.
Labels have built their business on hits. If they had developed a model that could profit from a record that sold 200,000 copies, the way many independent labels do, they could have made money by putting out the five or so records that Ms. Mann -- or the scores of other performers in similar situations -- might have released.
This mishandling doesn't just happen with serious artists. Another merger casualty was the English teeny-bopper band Boyzone, which suffered a setback in its chance for success in America when, to meet a quarterly quota, its label, Mercury, quietly released 30,000 copies of its album before the merger instead of waiting to set up the record properly. A spokeswoman for Mercury said that the record had been released to get "a running start" for the band's promotional campaign this summer.
Another problem is that labels judge with weekly sales reports and not their ears, giving up on a band that doesn't do well in the short term but may generate future catalogue sales. History has proved over and over that one decade's failures (whether it's the Velvet Underground's proto-punk or Joni Mitchell's redirection into jazz) can become the next decade's classics. But the history of the music business is one of inefficiencies, dating back to the late 19th century, when less than half the sheet music released paid back the high cost of marketing the music, despite the tactic of paying well-known performers to include the song in their repertories.
"For an artist like me, who is somewhere in the middle saleswise, I've maybe had a couple of records that once made the record company money," said David Lowery, formerly of Camper Van Beethoven and now in Cracker on Virgin Records. "But now, I doubt a gold record could make them money anymore. They need a platinum."
Here is one more story, a common tale with a new twist: Josh Clayton-Felt, formerly of the rock group School of Fish, spent three years working on his second solo album for A&M Records. Every time he thought he was finished, label executives sent him back into the studio with the four words that have become anathema to working musicians, "It needs a hit." Mr. Clayton-Felt turned in a total of 22 songs, then waited for executives to set a release date for the record. But after eight months, A&M was taken over by Interscope. Mr. Clayton-Felt was one of some 250 artist dropped after the Universal merger.
A free agent, Mr. Clayton-Felt asked if he could release the music he had recorded during that time elsewhere: the label said no. He asked if he could buy it back and release it himself, and again the answer was no. Label executives said they would negotiate only with a major label. So he decided he would rent a studio and record new versions of the songs. But Universal still said no: a clause in his contract prevented his rerecording the songs for five years.
BOB BERNSTEIN, a spokesman for Universal, said that Mr. Clayton-Felt had been told that his album could either be released independently for a limited term or shopped to a major label. "If he garnered interest from a major, Universal would be willing to negotiate a sale of that record," he said.
For four months, Mr. Clayton-Felt wrestled with the label and with himself. "I started to look at why it has gotten to this point, that record labels have so much power," he said. "And the reason is because artists have given them far too much control. We need to start looking out for each other. But we so badly want a piece of the pie that we've knocked each other down in the process of pursuing it."
Mr. Clayton-Felt considered changing his name to record the songs or performing them in a concert that his audience was encouraged to bootleg. Finally, he realized that there could be as many as 100 artists in similar situations because of the merger. And, legally, he could bring together a dozen or so of them and record an album on which musicians take their best songs stuck in the Universal machine and give them to another performer to record. Currently, Mr. Clayton-Felt is working on the compilation and hoping to use the proceeds to start an artist-run cooperative label.
"God, I never thought I'd say these things," he said after explaining his plan. But Mr. Clayton-Felt is only echoing sentiments held by Chuck D, Ms. Mann, Ms. Brooke, Mr. Lanier, Mr. Fripp and Mr. Lowery. What is more surprising is that a large number of popular musicians -- even lawyers and label executives -- are agreeing with them. No one wants to give the system another chance. The idea of the Internet, the alternative, is much more tempting.
There are three things musicians want from a major label: money for recording and touring, national marketing muscle and wide distribution. If another system could be developed that offered musicians this trinity, then perhaps when their contracts expired they would think twice about remaining with major labels. Especially considering that when asked, many artists said they would rather sell 200,000 copies of 10 records each than 7 million of 2.
"If we didn't have a record deal, I would explore manufacturing the records ourselves," Mr. Lowery said. "I'd make an arrangement with an independent distributor, maybe hire some Internet marketing firms, make deals with MP3 sites and run the business more like a software company. I would like to see if doing it that way is going to afford us more creative control and make us more money and get our music to the people we think would like us." (By MP3, Mr. Lowery is referring to a popular technology that enables music to be converted into relatively small, high-quality computer files that can be easily distributed on line.)
As for alternatives, there are a few different possibilities. The first is simply doing the work yourself. Lately, being on their own label has paid off for musicians like Ms. Brooke, Kristin Hersh, Jane Siberry, Ani DiFranco and, most popular and dramatically of all, the artist formerly known as Prince. Not only did he sport the word slave on his cheek while under contract to Warner Brothers, but he also announced that he would be rerecording all 17 of his records for the label to spite it for not giving back his master tapes when he was released from his contract in 1995.
But there is a downside to independence. Just as it is unfortunate for artists to waste away creatively while waiting for a record label to put out their music out, it's also a shame when they spend more time doing business than making music. "I'm swamped with the business side of things," said Ms. Brooke, whose independent record has sold more copies than her major-label ones did. "So it's very hard to put on the other hat, close the door and start banging on my piano again when I feel like I should be calling up the indie promoters and publicists working the record."
ANOTHER alternative is a holdover from the 70's: setting up a label based on a set of artist-friendly principles and trying to get other musicians to join the collective struggle. In 1991, Mr. Fripp, the British guitarist, formed a company called Discipline Global Music. There is little chance that it will even cause a blip on the radar of the current music business, but its ideas could inspire a related movement that will.
"Any culture whose artists are directed or controlled by commercial interests is in mortal danger," Mr. Fripp begins one section of his company's manifesto, going on to declare: "Any record company who asks an artist, 'You want to sell records, don't you?' should be avoided. Any A&R man who tells the artist to record a single because their album can't be promoted without one has just told the artist to change labels."
Then there's a third, more ambitious alternative: to devise an entirely new way of doing business. That is exactly what Mr. Lanier is doing. Recently, he drew up a five-point strategy, formed a musicians' collective called Musicisum with Kristen Stavola and signed up more than 45 artists to begin a noble experiment that involves the Internet, subscription fees and music filling stations.
The plan provides that giving artists equity in the companies that market their work would motivate them. They would receive dividends, a much larger share of royalties, the rights to their master recordings and short, standardized contracts so that everyone would be aware of the risks and rewards in the deal. On a more radical note, the proposal suggests that successful musicians be asked to take a stake in new acts to help them get started. In turn, so-called music pirates would be encouraged to become mini-retailers instead and sell CD's and concert tickets on their own Web sites for a small profit. "The hacker kids are the indie retailers of the future," said Ms. Stavola.
Mr. Lanier, cautiously optimistic, predicted: "If we do it and get crushed like bugs, we'll still have shifted what the business does so it will be better for fans and artists. At least they will be educated. But I don't think we will get squashed. There will just be a variety of different businesses in place -- the supertankers and ours, which will have the best music."
There are several other schemes similar to Mr. Lanier's that have been suggested. What they all involve is finding a way for musicians to finance the release and marketing of their albums that does not involve their signing away their rights. In such proposals, it is the artists who hire the companies that promote, publicize and distribute their music. This way if any company isn't doing its job, it can be dismissed without serious consequences. And it is the Internet that serves to market -- and help distribute -- an artist's music by building up a network of dedicated fans not unlike the way the Grateful Dead did in the real world. Of course, the best of the plans don't rely entirely on the Internet, since its capabilities to distribute music lie in the future and a large portion of music sales will take place outside the home for years to come.
The main problem with most such approaches is capital: where does the start-up money for groups to record and promote their music come from? The solution requires building better banks: Mr. Lanier suggests having "musician-friendly entities" or more successful artists serving as guarantors on a loan for start-up bands. Others suggest having financiers invest in a band in exchange for a percentage of the royalties but no other involvement, though this could create a new set of business problems.
As anyone who's studied European revolutions knows, the revolution often becomes as tyrannical as the establishment it overthrows. Or, as the Who once sang, "Meet the new boss, same as the old boss." Public Enemy's Internet deal with Atomic Pop may be revolutionary because it will result in the first new album by a major artist available for direct download on the Internet before it is in stores. But look who is running Atomic Pop: Al Teller, the former head of two major labels, MCA and Columbia, for which Public Enemy recorded its first albums. Of course, the problem in the business is not necessarily the people in charge; it's the system they're entrenched in.
The anti-major-label sentiment expressed by Mr. Lanier, Mr. Fripp and others is nothing new in pop music. It is actually what drives the business. Periodically, popular music veers into a period of stagnation and major labels shut their doors to new talent and innovation. Those shut out develop their own voice, usually through independent labels. This happened in the mid-50's with rock-and-roll, what's now called classic rock in the late 60's, punk rock in the late 70's, alternative rock in the late 80's and gangsta rap in the mid-90's. And maybe it is happening again.
Of course, the next step is that once the major labels see the success of outsiders, they embrace them and bring them into the system. The result is that the alternative becomes the mainstream, demoted from rebellion to trend. It is then diluted with successively cheaper imitations until the myopic gatekeepers slam the doors shut again, allowing the next band of renegades to gather their forces as the labels once more focus their resources on the superstars. This means that today we stand at the threshold of a revolution or a repetition.
Making and Ally of Piracy
Since January, major labels have been meeting to develop a system of distributing music on the Internet to combat what they see as piracy.
Jaron Lanier, a virtual-reality pioneer and a musician, sees things differently. He is developing what he considers to be a more sensible plan for the emerging digital economy, and here is an excerpt from his manifesto, "Piracy Is Your Friend."
Piracy is a phony issue that record labels are hyping to rip off artists. Piracy has always existed. That's why there's a mountain of blank cassettes in any big electronic store.
When someone decides to buy your music instead of copying it, they're doing it for a lot of reasons. Maybe they're ethical. Maybe they like the convenience of not having to hassle with the uncertainty of copying something -- Will it come out right? Is it done yet? Maybe it's their way of expressing good will to you.
But face it, if your music wasn't available for free in some form, no one would have a chance to hear it to decide to buy it in the first place. The old form of "free" music was radio (which is often taped by pirates) and MTV, but eventually the Internet is going to take over everything. There will still be TV and radio, but they'll be implemented digitally. Give it 10 years. When that happens, the idea of not giving away music for free will be exactly the same thing as never promoting music at all.
The real question should not be, "How can I keep my fans from hearing my music for free?" It should be, "How can I best make money from my fans?" Those are two different questions. Sure, you "lose" money to pirates. But you also lose money to a label that isn't doing anything for you.
It used to be that a label was needed to finance, manufacture, store, ship and market your music. That's how they earned their cut. The arrangement made sense. If the music business wasn't shrinking before our eyes, it would still make sense.
But in the digital era, it costs nothing to ship your music over the Internet to a fan. So the biggest reason for labels just went away.
As for financing, well, if advances were stacked up against finance deals in other industries, they'd look a lot like usury -- except that they aren't even loans: once they're paid back, the label still owns the master. There is simply no worse conceivable form of financing. We can do better if we take charge of our own careers.
But what about marketing? Can labels still do that? Of course they can, for a few big acts. But once you are established, your own Web site connects with your fan base better than the label can.
Even if you are a huge artist, think whether in the course of your whole career, not just the next couple of years, you lose more money to pirates or to labels who will be taking most of your money for no reason at all?
When somebody in a dorm room buys thousands of dollars' worth of gear and stays up all night hacking MP3's just to get "free" music, that's what you call an opportunity, not a problem. You have found yourself a new generation of fanatics. The only problem is that computer companies are making the money right now instead of musicians.
Labels can't prevent piracy. No one can. I know computers as well as anyone on the planet, and I promise you, kids will break whatever copy protection scheme the labels come up with. And the industry knows it.
In fact, the easier it is to copy music, the less of a threat piracy will become. When piracy gets easier, professional pirates have less to offer. The only pirates left will be fans. And there are lots of ways to make money from fans.
The reason the Recording Industry Association of America and the labels are pushing anti-piracy laws and technologies has nothing to do with preventing piracy. They're doing it so that they can control the new digital music channels. To keep anyone else, like you, from sharing the power. They're doing it to rip you off. Period.
You can make more money in the new era of "free" digital music. But only if you break free of label mind control.
GRAPHIC: Photos: SIGN OF DEFIANCE -- The artist formerly known as Prince wore the word slave on his cheek while under contract to Warner Brothers. He also announced that he would rerecord all 17 of his albums for the label when he was released from his contract in 1995. (Stills/Retna)(pg. 1); Chuck D of the rap group Public Enemy, above, and Kristin Hersh were dissatisfied with the restrictions of their major-label contracts. (Ebet Roberts)(pg. 51)