Deutsch took some time from his busy schedule to answer some questions about the state of the industry, his “Jerry Maguire”-esque approach and why he’s not spending his time trying to “defeat the Internet.” Interview by Natalie B. David
So to get started, kind of a broad question, since Downtown has had a lot of success, especially with Gnarls Barkley, why are smaller labels becoming more powerful and successful with the current state of the industry?
Um. Well, why are smaller labels becoming more successful? I don’t know that I would make that generalization, that smaller labels are becoming more and more successful with the state of industry. We’re going through a very challenging time on the recorded music side because physical sales are down significantly; There’s tremendous subtraction in retail; Digital sales are growing but not at a rate that offsets the decline of physical sales. So with all of the obvious piracy issues that are facing us, it’s a challenging time.
I think in a general sense, it’s also a time of great opportunity for entrepreneurs because for the online distribution of music, that has kinda decentralized distribution away from the major labels, so, I think that it’s a challenging time for everybody, major labels and independent labels alike, but also, with radical changes in consumption patterns, there are some opportunities there for people to do things a little bit differently. And that has certainly been something that’s been exciting for us.
Definitely. You mention distribution, and I know you have a joint venture deal with ADA-
Actually, we don’t have a deal with ADA anymore. We have a joint venture deal with Atlantic. We were distributed by ADA, which is Warner’s independent distributor. We have some titles that stayed with ADA, but we made a switch to Universal about a year ago and are now distributed by Universal Fontana. But those are not joint venture deals, those are distribution deals. We have a number of joint venture deals on different artists, like Gnarls Barkley stays in the Downtown-Atlantic joint venture, and we have a number of artists that are distributed by ADA that kind of were in the system and will stay there, but after last October on an ongoing relationship all of our new titles we moved to Universal.
Oops. I didn’t know all that.
That’s ok. That’s really, really technical stuff, and most people don’t, nor should they be interested by the way, in the mechanics of the differences between distribution and venture deals and all that stuff.
But we’re a complete, full-service independent label. We’re distributed by Universal, and some projects we do have relationships with other label partners, major and independent, but we’re not owned by any major label group.
How essential are those distribution deals? I know major labels used to just kind of scoop up indies so has that helped Downtown be a sufficient label on its own?
Well, that’s not really the thing that that contributes to downtown’s success and self-sufficiency. Just so you know, the major labels, they all have independent distribution arms that are home to hundreds of successful independent labels that they distribute where the distribution is just a commodity where they just make sure the records get put in the stores and get serviced to all the online outlets. There are as many as thousands of independent labels that are distributed by a number of great distributors, some of whom are owned by the major labels. Fontana, Universal’s independent distributor, has, you know, 100 maybe labels. ADA is Warner’s independent distributor and has Sub Pop and these huge labels. Red is Sony’s independent distributor and they have, you know, their own hundreds of labels.
So, you know, a distributor has to think that an independent label is going to do a certain volume of business before they’re gonna be interested in distributing them. You have to have a reason for them to offer you a distribution deal, but just having a distribution deal is nothing new, and having it doesn’t mean that you’re going to be successful or not. It’s hard to have success without a distribution deal, but to have success you need to be able to do everything associated with signing artists and creating a demand for them in the market place so that a distributor can actually fulfill on that demand by distribution.
And at Downtown, our whole situation is different than most independents and most majors, and I think the things that have been successful about our model, are not distribution based.
So then how much emphasis have you placed on artist development and is that one of the things that has made the label succeed?
Yeah, artist development is a huge part of our DNA. I think most people talk about artist development, but in this business climate a lot of labels just will put a record out there and promote one single, and if it doesn’t happen then move on to the next thing or just put it out and see if something happens. For us, artist development is sticking with an artist for an album for a really long period of time and doing all of the little things along the way and capturing every opportunity to help build a sustainable career.
A good recent example is Santigold. We’re still working her first record 14 months after we released it. We’ve just gotten a proper video on MTV. And she has had a tremendous amount of success. She’s sold almost 200,000 records. She’s all over the place and it’s just now that we’re starting to have mainstream success, so that’s been a very, very long campaign involving real artist development, which is measured in online marketing, touring, press, radio, television and strategic marketing. Licensing has been a critical component in the success of Santi. Since we publish, unlike most labels, and unlike all major labels, we publish most of our artists, that allows us to work these records in a completely different way than most labels.
But, the answer to your question is artist development is everything to us. And generally it involves a very long sustained effort where a number of small successes along the way will ultimately get you to an end goal that you really have to grind. Justice is a good example. We worked that record for well over a year. We started out when they were just DJing and at the end they were doing the MySpace tour at the theatre of Madison Square Garden. So that’s a big artist development story, really without the benefit of a quick, radio hit or some immediate media drive. So to us artist development is just working projects that you really believe in over a long period of time and trying to build an audience. It’s not particularly sexy, but it is what we’re trying to do here. The whole thing is very Jerry Maguire: less artists, better service.
So that said, do you sort of focus maybe more on making albums rather than the singles format?
Well, we do both. We release music in all configurations, singles, EPs, albums, sometimes albums and singles and EPs are all part of the process. I think people are consuming music a lot differently these days, so we try and be as flexible as possible and explore new ways of reaching people and getting artist’s music out and capturing the sale.
Like Mos Def’s record. We released the album in 5 different configurations: We released it digitally, we released it with a physical CD, we released it through SanDisc as a slot chip campaign, we made Mos Def branded flash drives with the album and some extra digital memory, we actually released a T-shirt with the album cover image on the front and the track listing on the back with the download card, so that you could buy the T-shirt and then download the music. And that would be incorporated within the price of the T-shirt. So we’re interested in exploring every possible configuration to get our music in front of any consumer.
That’s a really good idea, with the T-shirt. And it’s really cool that you can do things like that these days.
Yeah, it’s been great. Look, we feel an urgent need here to be as innovative as possible in terms of offering product to consumers right now. People can get music by so many different ways. In Asia, everything is happening on your phone, so you know, besides just ringtones people are buying whole albums and bypassing everything else, so I think there’s lots of opportunities for us in the mobile space.
Now, iTunes is projected to sell something like 4 billion songs this year. So when anyone can sort of throw a song up on iTunes, how do you make sure your artists get heard through all that noise?
Well, we have an amazing relationship with iTunes and they’ve been very supportive of us from day one. And if you spend any time at the iTunes store, you know it’s one thing to just throw your music up and it’s another thing entirely to get real placement on the page. For example, if you go to iTunes and you look at the store, we have Amanda Blank’s record which came out yesterday and she’s got a tremendous amount of real estate on the page. She’s got a splash on the new artist page, she’s got a rotating brick on top of the home page, she’s mentioned in new and noteworthy, she’s a part of the Tuesday new music newsletter, if you go to the electronic sub category, she’s got another, you know, advertisement for the album. She’s all over the site, and that’s probably one of the reasons why she is, let me check right now, she is currently number 11 on the overall album chart and number 1 on the electronic chart.
So it’s not just about getting your album on iTunes, which that is great, but it’s about creating the demand. And part of that is managing the relationship with iTunes. Many of those decisions on iTunes, by the way, are editorially driven, so if they don’t like it or unless it’s really selling, they’re not going to necessarily promote it. But that’s part of having a great relationship with them. So part of our retail awareness campaign would be to make sure that when Amanda’s album comes out that it’s really easy to see on iTunes, and other DSPs.
And of course, other than just people going and browsing, which is not necessarily how people buy music, if they’re even buying music, is you have to do all of the stuff associated with creating demand. Airplay. Press. Video play. Online and other sorts of online activity. If you look at Hype Machine any given day, you can see most of our artists are in the top 10 most blogged artists. You’ve got to get people interested. It’s a bit like the conversation we had earlier about distribution, it doesn’t mean anything if you can’t create the demand.
So for any individual person who lists something on iTunes, it doesn’t mean a thing to me because it doesn’t really matter unless you can drive people to iTunes. You need to give people a reason to buy it. That’s everything associated with having a full national staff.
And Amanda is a good example because it came out yesterday and I mean, she’s everywhere on every genre page, and that’s not something that happens organically.
Right. Now, this may or may not be true, but you’ve been attributed as saying that kids sharing music online actually helps long-term sales. So why are you less scared of that idea than some of the other players in the industry?
I think that sounds like something I once said, turned into something else. [Laughs] I wouldn’t have said it like that. What I would say about that is that we’re dealing with the most powerful distribution medium any of us has ever seen in our lifetime and it wants to share. So I think that’s a powerful way to expose, and this may be stating the obvious, but expose tons of people to an artist’s music. It obviously threatens in a major way the traditional model of music only being available through major labels and distributors and retail. And the ease with which somebody can share music online and consume music without paying for it, I think does pose the biggest challenge, not just for the music business, but for any content company. You can see The New York Times is having the same problem monetizing its content when it’s giving it away free online. So I think there’s good news and there’s bad news, right?
I would say that we’ve accepted at Downtown that the bad news is there’s nothing to suggest that that’s going to change. So we’re trying to leverage through a variety of means the power of online distribution of music, if that makes sense. This is a scary time for anyone in the recorded music side of the business, less so in music promotion and in licensing, but we’re not going to spend our time trying to defeat the Internet. That doesn’t make any sense to me. [Laughs]
So I try and focus our energies on operating a business that’s consistent with the flow of the medium. We’ll use all of the people’s interest in blog and in online music to create big online communities for our artists that otherwise you would have to tour the country 50 times, but now you can put out a remix and get the same number of impressions. So you can give something away for free and reach as many people as you might have back in the day had to reach, but it would have taken you years to build those communities. The trick is to then monetize those sales in a climate where sales are obviously declining as a result of the same thing, but it does create a lot of opportunities in terms of helping new artists reach a much wider online audience, and we try to be really aggressive about doing that and then converting those experiences into sales.
I would say something super longwinded like that, I wouldn’t say that it’s “all good.” It’s not all bad.
It seems like from what you said there’s almost more good to the technology than the bad, when all you ever hear about is the bad.
I’ll tell you what, it forces you to be innovative. If you want to be in the record business now, innovation is the key. The old ways of doing things are obviously not working.
One of the questions my editor had wanted me to ask you was, he had recently read an article about the days of good A&R, early A&M and Atlantic, because they were the kind of tastemakers for the industry. So are those types of guys just all dead and gone? Or who is doing that job now?
I don’t think that…I think that the mechanics of A&R is done and changed, but I think a lot of the rules apply. Great artists, great songs. Those can come from A&R people at record companies or I think probably, like, the bloggers have become great de facto A&R people. Rock music discovery sites where people, including A&R people, can go and find new music. You know, things are different than they were back then. I don’t really even know how to answer your question, but there are still a lot of really talented A&R people making real contributions at labels, both independent and major. I don’t think it’s the same as the way it was because the online proliferation of music has created so many other opportunities for people to find and discover new music so they don’t necessarily just look to the labels as a discovery source anymore.
So in a way you can look at Hype Machine or RCRD LBL or Last.fm as your own personal kind of A&R guys, if you’re a consumer on the consumer side of it. In terms of how the labels operate, most of the major labels have large A&R staffs, we have a small A&R staff, but we also have a number of joint venture partners, you know, Diplo’s label Mad Decent, Steve Aoki’s label Dim Mak, A-Trak’s label Fool’s Gold and these guys are such artists and visionaries in their own right that I prefer having them as a de facto, not exactly A&R staff, but a repertoire source, than having a bunch of A&R people running around.
You can cover a lot more ground now than you used to be able to cover, you know, because for all the obvious reasons. I think the whole process has changed a lot, but I would say the fundamentals, for me anyway, haven’t changed a bit since I started, which was quite a while ago. It is still about really compelling artists and really great songwriting.
