January 30, 2012

Article: Independent’s Day (Part 2)

In this second and final part of Independent’s Day, find out how Dru Ha (Duck Down Music), Travis O’Guin (Strange Music), Brent “Siddiq” Sayers (Rhymesayers Ent.), and Mike Tolle (Mello Music Group) view the pros and cons of giving away free music, the impact of direct sales and the significance of vinyl in their respective business models. Also, these four gentlemen clear up some misconceptions about 360 deals and provide valuable, objective insight as to how all parties can benefit in this arrangement. If you missed the first part or simply need a quick refresher, check it out here. Otherwise, enjoy Part 2 and please let us know in the “Comments” section of the independent labels/companies you would like to see interviewed in upcoming articles here at allindstrom.com.

Do you embrace giving away music for free?

Strange Music: I’m down! We put out Tech N9ne’s Absolute Power in 2002 and shot a video for “Slacker.” We spent a lot of money trying to get this song to connect via a traditional route -video, radio, etc. It never really connected. Someone came up with the idea of getting Tech N9ne arrested to gain some promo. That’s crazy! Instead, we had the idea of having people come and download the album for free. If they liked it, they were encouraged to go out and support it commercially. Many people thought this idea was crazy, but I believe good music sells. After the campaign, we had a 480% increase in sales! Conversely, we only had a 12% spike going the traditional route and spent $200,000 in the process. I believe people will buy good music when they’re not feeling like they’re being robbed. The important thing about free music is that you’re only as hot as the last thing you drop. It has to be album-quality material, not filler.  Singles, albums and mixtapes have to be quality even if it’s been given away for free. If you give away music, you have to give away good sh-t. We’d have better music, in general, if more people did that.

Duck Down: I hate it! (laughs) I don’t like it. I’m “old school” and I come from the era of bootlegging and flipping over those tables when they were illegally selling our music. Conversely, it’s a catch-22 because if you’re not being bootlegged, you’re probably not hot and not selling records. The music that was being bootlegged was the hottest stuff out at the time. This is what we do. We’re spending our money on marketing and production and then it’s being given away for free. Then we, as the label, have to find new ways –licensing opportunities, corporate sponsorships, and merchandise sales, etc.- to make up for that loss in revenue

Rhymesayers: I’m a proponent of it. It’s helped us more than it’s hurt us. Granted, we could sell more units if it wasn’t so easy to get free music. When you give it away, you’re kind of playing into that by the dependency your creating on receiving music free. It gives us exposure to people who may not be part of the Rhymesayers’ base. You are also part of devaluing of the music, too. You’re dealing in a change in our culture and you can’t fight it. The majors have tried and have lost massively. It’s more about the supporters than just about those who receive free music. It strengthens the base more than anything else as rewarding them because they value us. Even with Atmosphere, a free EP accompanies almost every release, too. I’m a middle-ground type of guy; no extremes and you get the best of both worlds.

How do you feel about staggering release dates for different media forms (i.e. digital and physical -CD & vinyl)?

Mello Music Group: It’s essential for us. If you send out review copies of the CD and digital album in advance, you start getting leaks the week before release. So, we figure you may as well make the album available digitally that week in advance, let the anxious fans support the artist they love. We also believe the people who buy CDs are not the same people who buy vinyl and they are not the same people who buy digital albums. You do have some overlap but typically people buy what they buy where they buy it and they don’t mix it up. That said, putting it on iTunes doesn’t mean someone who shops at Fat Beats is going to even know it’s out. So we stagger things according to manufacturing schedules and staggering certainly can provide more exposure time, too. It can really allow us to focus on each formats release and market rather than throwing everything out at once and trying to treat all the fans as if they are the same people.

Duck Down: To make it fair and easy, we try to make it all in one day. However, digital retailers will sometimes ask for the product ahead of time in exchange for better placement. This might be worth it to you. If the physical world isn’t supporting the product, you might want to give it to the digital retailers first. Also, the vinyl may take longer than the CD to produce so that also contributes to vinyl hitting later.

How do you translate live tour marketing to product sales?

Strange Music: We are trying to build careers for our artists. It all starts with the music, an album. We’re trying to give fans complete projects, not just one or two singles and the rest is filler material. When I talk to fans, I want them to give me different songs on the album as their favorites, not just same one or two and that’s it. We’ve been doing over 200 shows a year globally for the last five years. It’s even bigger for 2012. Touring has been the main component. Similar to how Country music shunned Hank Williams or how Kid Rock found his niche; I studied their stories. I talked to Hank Williams personally about this and how he made his shows and presence undeniable. He sold merchandise while touring, as it was an important component in his success.

I put together this Hostile Takeover Tour in ’02. We did 44 shows and I thought we were doing big stuff (laughs). We played a show in San Diego and only seven people showed up. I lost $82,000 on that tour, but we did a tour. We got in front of people. Without major radio, how else do you get in front of people? The Internet wasn’t as dominant in music then either. It was a painful endeavor, but we planted the seeds. The next tour we lost $20,000 and the one after that we finally broke even. We’re building and it’s growing and growing. We did seven shows in Spokane, Washington in one year and sold out all of those shows. College towns have been a huge market for us, too. When those kids leave school and go back to their towns all across the country, the word spreads even more. Plus, Tech’s stage show is really incredible. He connects with his fans and gives a show like nobody else in Hip Hop. In Denver, Colorado we’re consistently selling out venues that hold three and four thousand people. Our shows are at 90 plus percent on ticket buys.

Duck Down: Touring is a huge part. It’s an opportunity to make money off merch and sell product in addition to making money off ticket sales. The number one question that artists and managers ask us is: “How can we get more shows or tours?” Getting the artist in front of audience is vital and touring is a critical component of that.

Rhymesayers: We’ve built our bread and butter on this! Our first album released was in 1995 and we did not have traditional distribution until 2004-05. People don’t realize that because of the numbers we were doing; we were off the radar. This way allows us to connect with the fans. This is our radio and video coming from a region that nobody cared about and you’re selling merch and moving units on the road. A lot of companies were trying to get distro deals and we fell back from that; we built demand and they’ll come looking for us. The early Def Jam model is what we instinctively, not purposely, did. The industry was not in our backyard. We easily have one of the best reputations in this business in terms of professionalism and work ethic. Fans, promoters, and venues want us to come back because of this. Our music was being passed around and spreading the word before the Internet was what it has become with our little tapes and such. Our first show in LA was a sold out show. We didn’t rush progress.

How are you getting physical copies into “box” stores if you’re selling fewer than 10K the first week?

Mello Music Group: We haven’t worried about “box” stores until recently. As a label that’s been around for less than five years, we started off focused on catering to our niche. As our niche has expanded, the “box” stores have become a factor. Most of it has to do with distribution. Does your distributor cater to them and have a good inside line? Also it appears to be about co-op advertising and having enough fans to justify it. If you are selling a few physical thousand copies you may not need to be there; but, if your artists are starting to sell 5000 plus units physically, you should consider investing in larger advertising and manufacturing so as to be a viable product for the “boxes” to carry. For us, it’s something we are currently learning about, so I keep my eyes and ears open and ask a lot of questions. A good distribution rep will educate you if you’re ready though.

Strange Music: It has an effect on me. With Best Buy and “box” stores not being as dedicated to music, it impacts the bottom-line; but, we’re diverse and able to adjust accordingly. A question I would like to know: “How do the major labels adjust to this change?”

Rhymesayers: You have to entice people to want to buy physical product still. Now, we are well established and the corporate headquarters of Best Buy and Target are in our backyards. However, they are not trying to be involved with physical music anymore; it’s not secondary as much as it’s almost nonexistent. Once you’re in, you have a reputation with them. Now, it’s tough because Best Buy is not even doing its own buying. There were a lot of out-of-stock stores that did not have enough Evidence product (Cats and Dogs) in stores first week and it was a good week because of the other releases that brought buyers to the stores.

Duck Down: You make money on the road and outlets like Best Buy and Trans World Entertainment (f.y.e retail stores, for example) want to know what you’re doing to determine if they’ll carry your material in the markets you’re touring in. You’ve got to have the right one-sheets, the right marketing, and the sales history to get them to consider you when being an independent. It’s changing. A couple of years ago, we were 80/20 (physical/digital) and it’s not like global warming where you hear someone say, “Is it hotter here than last year?” The change in the industry is definitely taking place and in the next five years it will swing even more towards the digital side. Four major physical retailers in the U.S. have already closed their doors: Musicland, Virgin, Tower, and Circuit City. You know where the trends are going.

How do you generate direct sales? What are you doing to drive business directly to your websites?

Rhymesayers: That’s the direction it’s going. Within the next year or so, we’ll be easily doing 50% or more, both digital and physical. Physical is definitely going that way with record stores closing and/or phasing it out. As computers are coming with no CD drives now, technology is dictating this trend as well.

Duck Down: Direct sales are growing. Duck Down.com has been around for 10 or 12 years now.  We’re constantly changing the store and allowing fans to get items they can’t get anywhere else. It’s a big business for us and important when the fan who buys the CD will also buy other merchandise. We use Fan Bridge and other resources like that to see who’s buying our product. Also, we capture a lot of the info (mail, gender, email address, geographic location, etc.) when people do buy directly and we have newsletters, Twitter and Facebook, too. You can then check the profiles of your fans/customers by seeing their pages.

Strange Music: Direct sales are huge for me. I have to train the fans to understand where to buy the music and physical goods going forward. When I was a kid, the Independent Center (a shopping complex near Kansas City, Missouri) used to have four music stores there. Today, there are none.  With that said, on the last Tech N9ne album (All 6’s And 7’s) we did nearly 10,000 in direct sales (pre-sales) before the album dropped. My price is higher than retailer as to not alienate them from selling at a reduced price. To illustrate this point further, we had a two-week sale where merchandise was 50% off and we did a half a million dollars in sales in 14 days on-line!

Mello Music Group: We don’t push direct sales as much as some people, perhaps down the road. For now, I think that having a strong team is important; no one can do it alone and so a distributor and good retail outlets are part of that team. I like to push traffic to iTunes, eMusic, Fat Beats, Dusty Groove, ughh.com, and others because those people work hard to support Mello Music Group. Those sites and stores believe in our music, so I believe in their stores. Giving them their share is part of my tribute to all they have done in the industry. Part of what I learned about music is because of those stores and distributors. So, I like giving that back.

How does vinyl fit into to an artist’s game plan? What percentage of total sales does vinyl constitute or is it more of a prestige/image device?

Rhymesayers: It’s important to the culture and the art side to me. We’re only going to do specialty vinyl with color vinyl or a picture disc, at a premium. It’s not a money- maker, but there’s a “cool factor” in doing it. The digital gets serviced with the physical product –CD or vinyl- as well.

Strange Music: We still do vinyl -colored vinyl even- and I love putting stuff out on vinyl. I like the nice deep cut vinyl, too. You can get a whole different sound out of vinyl than you can from a CD.

Mello Music Group: Vinyl is not something you do for money; it’s something you do for love that also brings a small reward. Because we have been willing to commit to vinyl, a lot of fans try really hard to support Mello Music Group releases. To be honest though, even if it is only 10% of the gross revenue, I think people would be crazy to pass up 10%. But that also works for us because our artists have a connection to vinyl, so the fans know that and feel it – the music sounds right on vinyl. For example, when I got Apollo Brown’s test presses for Clouds, I was blown away. The horns and strings were so lush, so rich on vinyl. That experience is something worth offering and in the end it does add up and help out.

With all this talk about 360 deals over the last several years, what is your take?

Rhymesayers:  It came as a necessity –and common sense- because we were management; we were the record label; but, we didn’t call it a 360 deal back then. In hindsight, it was a 360 deal for our core group of artists. We’re losing money initially and we have to find other ways to make more money from the artists’ tours, merch, etc. As an actual approach from the majors, that came later. For us, it makes sense because we are doing so much in terms of developing the artists; we’re partners with the artists themselves.

Strange Music: Majors sign artists to these deals when they don’t have touring departments and/or merchandising departments. The guys making the t-shirts and setting up the tours are making the money instead. We did this as a necessity, not an after thought.

Mello Music Group: Truth is, we found most artists want their label to book them shows, license their songs, and make them merch. And, as a label, we build those options into our deals because we want to be creative, too. We want to be able to spend our time making those deals and pushing our team in every direction we can without having to negotiate every time we find something. Of course, if a label does those things they want a percentage. So we do all that and have it agreed upon upfront in terms of splits. We don’t get a cut from anything we don’t actually do the work for. If an artist of ours books his own shows, we don’t take a dime. If we do the legwork and promote it, we get a cut. Likewise, if the artist wants to make his own licensing deals, cool. Everything is open and both sides work for what we get. In the end, it always comes down to options. We want our artists to have options so they can do anything they want -that keeps them creative.

Duck Down: If a label is spending its resources and not selling the units it once did, we have to find more licensing opportunities and corporate sponsors to help subsidize costs of videos and overall production and marketing. Record sales are not enough to justify spending that money on a project nowadays. Then, the 360 talk becomes easier to have with artists when you’re bringing value to them and their work. Artists need to keep an open mind on this subject and see what the label is giving in return for this specific type of arrangement. Keep in mind: it’s not a “locked in” type of 360 deal either. Both parties have to bring value to each other to make it work.

I want to thank Dru Ha, Travis O’Guin, Brent “Siddiq” Sayers, Mike Tolle, Al Lindstrom, and Richie Abbott for helping make this article happen. From a fan’s view, I thank all these people and other independents, too, for contributing to the advancement of Hip Hop music. Many blessings and success to all of you.

Peace and GOD BLESS

Chris Moss

 

Related posts:

Mediabase Monday: Charting for 7/2/12 by @DaveHouseWHW
News: A Look Into The Mobile Future (Inforgraphic)
Toca Tues: @GrandeMarshall Freestyle w/ @Atrak and @DJTONYTOUCH on @Shade45

3 Comments

  1. claaa7 says:

    another great article!
    very interesting stuff and i love how we get several different perspectives on how to make it and label politics. the part about how they feel about the download situation was especially fascinating.

  2. edder diaz martinez says:

    interview more indies!

  3. Chris Moss says:

    The interviews are on the way. Thanks for your input.
    Peace

  4. [...] we bring you the first installment of the Independent Spotlight series at allindstrom.com. As the Independent’s Day pieces illustrated the business models of four record labels and their talent personnel, we want to [...]

2 Trackbacks

  1. [...] Read More [...]

  2. By Article: Independent Spotlight-Mining For Diamonds on February 15, 2012 at 3:47 PM

    [...] we bring you the first installment of the Independent Spotlight series at allindstrom.com. As the Independent’s Day pieces illustrated the business models of four record labels and their talent personnel, we want to [...]

Post a Comment

Your email is never published nor shared. Required fields are marked *

*
*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>