One of the great things about history is that it doesn’t change – it just grows. As excited as I am to be webcasting this semester’s class live, we ran into a little trouble with the wireless network for the History of Entertainment Technology presentation given 08/31/10. Fortunately, I had taped the same presentation last semester, so it’s very similar if not entirely accurate. Enjoy!

Today was great. Not only did it mark the start of my third year back at Belmont, but we live-webcast the whole thing. Don’t tell anyone, but I think it might become a regular feature on the site. Wanna see? Ok!

Video Link: http://www.ustream.tv/recorded/9164600

It’s just a primer. A general overview of what to expect of the class.

Will there be more? (Maybe.)

Could this become the new Pinky Gonzales video blog??

If they’ll let me.

In the meantime, sit back with some popcorn and a can of whatever-the-crap they try to sell you on the opening commercial. Free video streaming, as it turns out, comes with lame advertising attached. In this case, freeloaders can’t be choosers.

Lemme know how it goes.

-Pinky

So it turns out that starting a new business and blogging are inversely proportionate.  The more of one there is, the less room there is for the other.  But today I get to have my cake and eat it too. (And I love cake.)

Last night at 7:30pm EST facebook made a very big announcement.  They have entered the “location” space, meaning that anyone who uses their mobile application can now “check in” to nearly any commercial establishment with the click of a button.  Twitter has had a lesser version of the same thing since March, but it’s a little company that ‘could,’ foursquare, that has popularized the concept itself over the last year and a half.

It works like this…

Anyone with a modern smart phone, be it an iPhone, Android, Palm or Blackberry device, has a built-in GPS chip, so your phone knows where you are.  foursquare, and now facebook, tap into that functionality by displaying a list of places in your immediate proximity.  In simple terms, you select the place that you’re at and hit the “check in” button.  That’s it.  These services then deliver a status update to your friends, show you who has checked in to that particular place the most, and savvy retailers might even give their top customers a little gift of thanks, be it free guacamole or an icy cold brew.  It’s a pretty neat little system.

Enter Pinky Gonzales

So I started using foursquare sometime in March and it occurred to me that fans should be able to check in at concerts!  It seemed like a pretty obvious next step for the technology.  And then I thought that sponsors would probably see value in sending those fans a little note when they did so.  But the thing about sponsors is that they usually have locations of their own, such as the stores where their products are sold.  It doesn’t take a genius to realize that the combination of artist+sponsor locations can add up to a pretty substantial map, and every time a fan checks in at any one of those places, they can earn points.  Points that can be redeemed for just about anything, from gift certificates to concert tickets, merch, downloads… whatever.

There’s a much longer version of the story that I’d be glad to tell you over a beer, but to keep it simple, I hooked up with a couple of really smart guys that were working on a new system of their own called Carl Says.  (Think Groupon for location.)  We built a platform together that works WITH foursquare, Twitter and now facebook, that allows you to check in with any application you like while receiving messages directly from us.  Win-Win.  The big difference between our platform and any other is that it’s completely white-label.  It’s not about our brand, it’s about yours.  You own the data.  You control the messaging.  You build the promotions and you don’t even have to wait for a return call from the good folks at facebook or foursquare.  Pretty neat, huh?

So for the last three weeks I have been making the rounds, preaching the gospel of location-based services to artists, venues, sponsors, sports teams, politicians and major consumer product manufacturers about the joys and opportunities that place-based promotions have to offer.  It looks like we’ll have our first major partnership announcement shortly and I couldn’t be more excited.

So that’s where I’ve been since the last blog post.  Actually getting my hands dirty with a new startup rather than pontificating about everyone else’s.  It feels good to be back.

If you have any questions about this mega-trend in the making, drop me a line or leave a comment below.  I want to know what YOUR map looks like and what you might do with a tool like ours.

Happy travels!

This dog is probably cuter than yours.

We held our lastest JumpStart Foundry meeting last night here in Nashville and I had the great fortune to win the “lead” roll with our latest company, Source Your City.  It’s similar in concept to Help A Reporter Out but will focus exclusively on local markets the size of Nashville and larger.  It should be a lot of fun to be a part-of.

On the way to our post-meeting hang, it occurred to me that my love for startups is a lot like a child’s love for puppy dogs.  They’re so dang cute you want to own them all.  The glimmer in their eyes, the innocent look on their un-jaded faces and their limitless hunger for the experiences the world has to offer is downright seductive.  If only they didn’t require so much care.  Ruined carpets and patent leather shoes, scratches and bites, sleepless nights… Sometimes you wonder why you thought it was such a good idea to get a new companion at all.  Thankfully, some of them grow up to be your best friends and proudest achievements.  Of course others may not make it at all… the victims of bad DNA or Darwin Award-worthy mistakes.

I’ve said it before, but if you ever have a chance to teach, mentor or otherwise assist someone with a dream, throw caution to the wind and give it your best shot.  Though I may at times commit more of my time than I should, the friends I have made and experiences I have had have been some of the most rewarding of my life so far.

And if YOU’ve got an idea you could use a little support for, click here to apply.  Some lucky sucker out there might just over-commit themselves for you.

Larry Pareigis doesn’t just talk about a new music business model, he lives it.  Having spent years of his career at radio stations across the country, he transitioned into the major label world, where he launched a few folks you may have heard of, like the Dixie Chicks, Miranda Lambert, Montgomery Gentry and some redneck named Gretchen Wilson, before taking the leap into the exciting world of entrepreneurship and independent business ownership.  This interview covers a lot of ground and should be a reality check for anyone that thinks major labels have a monopoly on hit songs… although it comes with a price.

Quick disclaimer – I forced Larry to do this interview through Skype so we would have video as well as audio.  The audio sucks when I’m talking, as you’ll hear.  Accordingly, I tried to keep that to a minimum.  Click here for the complete interview transcription.

Pinky: So you have the distinguished honor of being the very first video/audio interview I’m doing for the site…

Larry: Oh nice!  Thanks man.  Thanks for thinking of me.

Pinky: You bet! This all kind of started with a series I’m writing on investing in the Music Industry, which is one part “How to run a business in music,” which is really nothing new, it’s just, times change and you know, current tricks for… new tricks for old dogs… Old tricks, new dogs?  I dunno.

Larry: :laughs:  Old dogs that need to be put down.

Pinky: :laughs: But I also want to feature people like yourself that are really providing services not just for the independent musician but for the musician that’s serious about making a business out of it, and you’ve got such an incredible background, both in terms of major label and independent worlds, so I thought where we’d start with this is just for you to give us a bit of the background, which people can also find on your LinkedIn profile, which is comprehensive and has all the detail a person could ask for… but just give us a bit of your background.  How you started in the business, what your major label experience was like and what you’re up to right now.

Larry: Well, first off, thank you for the compliments.  Those are certainly returned to a consummate professional such as yourself.

I started a long time ago, man.  I was in radio for 15 years prior to being in promotions.  And in radio I was in Savannah, Georgia, Nashville, TN, Albuquerque, New Mexico, Sacramento, CA and then San Francisco.  And in ’96 I got a call from Allen Butler, who at the time was the head of Sony Nashville, and Allen asked me to leave radio, come to work with him, to revive a label called Monument, which had been dormant for a few years.  Monument, earlier, was a huge actually, independent label, before CBS at the time, bought them and they were the original home of Dolly Parton and Willie Nelson and the Gatlin Brothers and Roy Orbison… is the biggest single catalogue piece for them to this day.  So we revived it and the very first act I got to work with as the Head of Promotion, who had never done promotion in my life, was Dixie Chicks.

Pinky: :laughs:

Larry: :shakes his head: I know.

Pinky: :laughs: Good start! :laughs:

Larry: Right? So I thank Allen to this day for seeing something in me that I, frankly, didn’t see.  Um, I sort of viewed myself as more of a pure creative and not much of a “sales person” or “closer” or “entrepreneur,” and I guess he saw all these different things in me, so bless him for seeing that.  And from there I ended up running, at one time or another, each of those labels individually and then at one point, all of them, under the Sony umbrella as the Senior Vice President of Promotion.  And in that period of time we had great success launching artists like Montgomery Gentry, Gretchen Wilson, the Van Zant brothers, Buddy Jewell, the second coming of Patty Loveless, Miranda Lambert… I’m trying to think of who else, but it was a lot of different people and I had the opportunity of working with a ton of tremendously-gifted artists and tremendously-gifted smart people.  I like to say I collect smart people because they make me smarter.

So, that’s probably what I’ve been best at, is trying to be a judge of talent.  Not so much in terms of the musicians but in terms of the people I’ve had the fortune of working with.  They’ve all made me better.  So that’s a quick thumbnail.

So here I am 28 years later.  I guess radio and records combined and now we sit at the dawn of a new era.

Pinky: And now you’re the founder of 9 North Records, correct?

Larry: I am! I am.

Pinky: And how did that come about and what was your approach to the business model with that?

Larry: 9 North from the beginning… One of the things that I always had dilemmas with, and that I constantly wrestled with at a major, was what we could and couldn’t do, or sorry, what we could or couldn’t tell our artist partners that were involved in this process.  And one of the things I wanted to make sure that we did immediately off the top was be transparent.  I wanted as much transparency in the process as possible. So as a result, everybody in our camp pretty much knows everything.  There are a few things I sit on just because I have to from a business standpoint but I want to make sure that the artists and my staff and everybody are fully vested in these goals.  We really work with people that we all, as a group, want to work with.  We push agendas that we, as a group, want to push, and all of that is very exciting, and right now, knock wood, we’re in a position to say “no” to more business than “yes,” and the caliber of people that I work with and the caliber of artists I work with and the caliber of the people bringing me those artists, they’ve all increased probably a thousand-fold from the day I started.  But I will say that when I started this in April of ’07, had I not started it then, I probably would never have done it.  It was one of those deals where I had to start putting one foot in front of the other, and really what emboldened me, strangely enough, was a Country Aircheck print magazine edition that was for Lyric Street’s 10^th anniversary.

Pinky: I remember that.

Larry: Remember that issue?  The one with the big “X.”

Pinky: Yea Rascal Flatts was my big client at the time and they were hitting me up for ad dollars on it.  :laughs:

Larry: Well there ya go!  So, the article with Randy Goodman was really instructive because Randy, in the article, said that had he waited for the perfect staff or the perfect music or whatever, they wouldn’t have started either.  He goes, “Remember, we started with Lari White and Aaron Tippin and all these different acts and now they’re known for Rascal Flatts,” which has always been a truism in this business… that you end up being remembered for your hits and not your misses.

Pinky: Thank God. :laughs:

Larry: No kidding.  Babe Ruth was the all-time home-run king.  He was also the all-time strike-out king cause the two things fit-together, in a hand-and-glove.  And you miss 100% of the shots you don’t take.  So I decided I would start this business, started putting one foot in front of the other and in pretty short-order we had some success with some ‘directs’ with Walmart, with some work we did with CMT, with Joey and Rory, with Tracy Lawrence’s first #1 in a dozen years and I’m really happy to…

Pinky: That was a great tune, too.  What was it?  Paint Me a Birmingham?

Larry: No!  It was Find Out Who Your Friends Are.

Pinky: Ah!  Of course!  The duet with Kenny Chesney that was so controversial ‘cause Kenny’s camp didn’t want it as a single or whatever.

Larry: Yea, Joe [Galante] from down the street from where I am right now in the “big box,” well he’s not there now, but when he was there, he sent out this real half-assed “cease and desist” to Country Radio, and what I thought was really interesting was, it was uncharacteristically not a smart play from a guy who’s generally very smart.  What I mean by that is that he really exposed the soft underbelly of labels, period.  Because what he did, what he said was, “I’m not happy that you’re only playing 30 of the 35 things I have out there.  I also don’t want you to play this other thing that isn’t one of my 35.”

Pinky: Right.  Because Kenny had a single at the same time, right?  It wasn’t about the song it was that they had another Chesney single that they were pushing.

Larry: Well here’s what was interesting too, is that in the process of working the single, the only version of it we could work was Tracy’s solo version.  The radio guys actually went out and got copies of the album that had the other guys singing on it but we could never officially “ship” it.  And Joe insisted that we had officially shipped it, which had never occurred.  So radio not only gave us a 2-week #1, following that cease-and-desist, they blew us into #1 from like 5 to 1 with over 400 spins…

Pinky: Out of protest. :laughs:

Larry: Pinky, they took 8 “bullets” away from 10 of Joe’s songs on the chart that week and those 8 songs never recovered.  He lost every.one.of.them. after that.  So it was their way of saying, “We get it.  You’re the great and powerful Joe Galante, but guess what?  You have silver discs and digital files.  We have towers.”  It was a very instructive lesson for everybody in town.  It was the old-fashioned… You know they used to say, when the newspaper business was more flourishing and popular than it was, “Never get into a fight with a guy that can buy ink by the barrel.”

Pinky: heh heh

Larry: Ok, so what still applies is, “Never get into a fight with guys who have towers!”

Pinky: Right

Larry: You know?  I mean, all you have are silver discs and files and you’re asking them to expose this music.  Why would you fight with them?  They’re good partners.  They can be good partners!

You know, so that is what started the business.  Because when I went to Tracy’s #1 party, he introduced me as “the guy who took the record to 1!”

Pinky: Wow.

Larry: Which was really, really sweet of them.  I ran out of business cards that night.  The business didn’t even have a name.  It was me and two other guys and now it’s me and nine other people, so we’re now at 10 and I feel very responsible for every one of them every waking day, and every sleepless night, but it’s ok because it’s mine. And I don’t mind it.  It’s different when it’s yours.

It’s funny ‘cause, when I worked in corporate life, I kinda’ did resent midnight phone-calls and 6am emails, and now that I get them I don’t mind.  I know that that sounds wacky but it’s what it is.

Pinky: Not at all!  So tell us a little bit about how your model is the same or different from a traditional record deal, or management or radio promotion contract.  How does it work when you engage an artist?

Larry: Well, it’s different.  The artists generally engage us although there have been some that we have chased.  Generally artists will reach out to us.  They will usually come with the music either fully finished or mostly finished.  They ask us what we think of it.  We either choose to engage them on that level or not.  I then send them a proposal detailing what we’ll do.  At any step along the way, the artist is really in-charge of this process.  Okay?  Because either they are or some backer is funding this process for them.  So we don’t act like a bank, like a traditional label does, but, with that said, we also don’t take a receipt from a radio tour for a $5 latte and turn it into a $12.50 chargeback on a royalty statement!  Okay, the $5 latte’s five bucks.  And there again it gets back to that transparency issue.  It’s like they’re paying for exactly what they get.  What they get is access.  They get a faster onramp and they get a guarantee that their music is heard fairly.  At the end of the day the day, the audience still has to respond.  And that’s the truth whether you’re at a major label or an independent like mine.  The audience has to “pull.”  If all we do is “push” it’s gonna fail.

Pinky: Gotcha.

Larry: So in this instance, we don’t act as a bank.  The artist comes to us either with a bank or with an investor.  They are privately financed in that regard, and they choose to chase it in this fashion.  There are advantages to this.  Obviously, they don’t have to wait two-and-a-half to three years for their shot and hope that the person that signed them two-and-a-half to three years ago is still gonna be there.  Cause you and I right now could lay a couple-a-hundred dollars on the table and find people who would take the bet, but they’d be fools and you and I would walk out with more money cause those people will not be there.

We also don’t work with people and attempt to change every single thing about them, which is what most labels will try to do, and I understand the fear of it.  Everybody’s trying to hold on to their 5’ x 8’ offices.  I got it.  Ok, but that also means that everyone wants to put their thumbprint on every step of the process along the way.  That force changes, or will force changes on the act they don’t necessarily want. And so we work with people we want to work with.

Stealing Angels are a perfect example of this.  I mean Paul Worley and Wolly Wilson are were business partners is Skyline Music (and now it’s Skyville Records) had this three-person act.  Three beautiful, talented women named Stealing Angels, that came together about 3 years ago when CMT was going to do a reality show about the sons and daughters and grandsons and granddaughters of famous people.  These three girls ended up meeting one-another.  One is a pure Texan, fifth-generation lineal decendent of Daniel Boone.  Another one is Loretta Lynn’s granddaughter.  The third is John Wayne’s granddaughter.  And they resisted working with one-another for the longest time.  They were all in it as solo acts, but they ended up gravitating toward one-another and about a year-and-a-half ago all moved into this rambling condo behind Green Hills Y(MCA).  And they started writing and performing together and pretty soon they became a trio.  And about a year-and-a-half ago is when Paul and Wally came into their lives.

They shopped the deals – had 4 major label offers on the table, and every one of those labels would say “Ok we love you.  Now Change.”

Pinky: :laughs:

Larry: So they looked at one another and said, “Yea, you know, if we’re as good as they’re telling us we are, we’re just gonna go do this ourselves.  So then began the process of trying to find the right partners.  And I count my lucky stars every day that they chose us, and we’re really good partners for one-another.  That kind of business attracts even better business… I mean, Emerson Drive is part of our family now.

Pinky: Love those guys.

Larry: There’ll be a single with them in August.  We couldn’t be more pump’d and the music’s terrific, and I, on a personal level too, I really like those guys.

Pinky: Oh, they’re amazing!  Nicest guys in showbusiness.

Larry: They’re great.  And Brad Mates, who’s the lead singer and the leader of the band, Brad is probably – and I’ve met a lot of smart artists – but he’s probably the smartest artist I’ve met to-date in terms of having both hemispheres of the brain in operation at the same time.  I mean, he’s always got his eye on business and he’s always got his eye on how to perform, and how to play and sing better, and the two don’t interfere with one-another.

Pinky: So they’re a great example.  Are they currently funded by a backer – another company? A label?  How does it work with them?

Larry: They’re self-funded.

Pinky: Outstanding.  So let’s talk about that model for a second.  Let’s say you’ve got an interested investor – and I’ve heard this a lot – unfortunately it’s rare that an investor has any real music industry experience, they just love the artist and they want to help out, and so they offer an artist some support and then you try and figure out how to take it from there.  How does that model look to you today?  Would you recommend it and on what terms should an artist consider an investor?

Larry: I think the investor is a wise move.  I really don’t like it when an artist has to deal with family members, and I don’t mean that in a mean way.  I just think it exerts too much pressure on the artist because they’re trying to, not only fulfill this dream but now they’re trying to fulfill it for family members on top of that, and give their family a rate of return that may or may-not be realistic, so I try to avoid entanglements like that.  I also think that you gotta find somebody that can afford to lose half a million to a million dollars in a cab and not miss it. You know?  And there are a lot of people out there like that, but what happens is that if you use your own money, as opposed to other people’s money, you have a lot more pressure riding on you and you exert a lot more scrutiny on the whole process and that can inadvertently screw things up for you because you may find yourself saying “no” to opportunities that are actually really, really good for you.

We have conversations with people all the time about stuff they can do, and if they pass on it, it kinda’ stings because by the time we bring it to them, we’ve all talked it out internally.  So it isn’t like a “bug hunt” phone call where we’re picking up the phone and saying, “Hey, there’s this opportunity to go do the afternoon drive with the guy at Taco Bell next week.”  You know?  We don’t do that kinda’ stuff.  When we come to people it’s serious, actionable stuff that we’re brining them and when they pass it kinda hurts because then you’ve gotta find someone else who wants to do it.  And you always find somebody else on the roster that wants to do it but we really did design it for “that” person.  The only thing I ever ask of the people we work with early is to give us superior music to work with and to give us quick answers.  Cause what we really thrive on are fast “yeses” and “no’s.”  If you keep a radio dangling for 2 weeks just to tell him, “no,” that guy is gonna hate you forever.

Pinky: :laughs:

Larry: I mean, he’s gonna hate the act and you, so that’s just no good.

Pinky: How does distribution come into play?  You guys don’t actually bring CDs into stores, do you?

Larry: We’re agnostic when it comes to distributors on the 9 North side, however… we do have a “first look” agreement with The Orchard when it comes to our Secondaries division, Turnpike.  So we have run some things through The Orchand through Turnpike in terms of digital distribution, which they happen to be very good at, but in terms of physical distributors, we tend to remain agnostic because, just like the artist picked us because they like us, we don’t ever want them to ever feel like they have to pick other partners because they came along for the ride with us.  We always want them to feel good about whomever they pick.  So I’m much more comfortable in that regard.  I want the act to feel good about all the choices they’ve made because they’re the one that made the choice.  I didn’t arbitrarily make one for them.  I’m happy to counsel them.  I’m happy to tell them what may or may not work – what may or may-not fit, but you know, I’m not going to shove a particular choice up their rear-ends.  That’s not the right way to do business.

Pinky: Got it!  So what are the pieces that an artist needs to have in place – whether it’s distribution, management, you guys are handling radio promotion, they’re going to need a booking agent… can you frame out what the business model looks like for an independently funded act that you guys are representing?

Larry: I think the most important parts of the process early on are probably a good business manager [accountant/financial advisor] they can trust, ok not even a manager yet, and the reason I say that is because especially if you’re a baby act, we’re really doing most of the stuff a traditional manager would do.  We’re really booking them in shows and we’re taking them out on the road and we’re kind of helping them understand what in a radio-visit works and what doesn’t. “Take this down, take this up…”  I mean, a lot of those traditional functions we’re fulfilling so I urge people, in terms of physical distribution – certainly.  In terms of management and sometimes even in terms of a booking agent, to wait until they have some level of success under their belt because it’s a lot better when people are calling you as opposed to you having to call them.  You’re just going to get a better caliber of people with a little bit of success under your belt.  So I actually do counsel that, and it’s not because I want to cut people out of the process, but I will say, selfishly, that from my standpoint it does make our process easier when it’s cleaner and we’re only dealing with a few people in a room instead of having a conference call with a 100 people on it.  You know, I didn’t get into this business to have a hundred-person conference calls anymore.  I can’t speak for you but it doesn’t really work for me.

Pinky: :laughs: I also love 50-person boards of directors.

Larry: I can’t do it.  What I really like about this business model is we’re all generally the people who are on the phone at one given time, we’re sitting in a room at one given time, are all the people who can decide.  We don’t have to go to big brothers and big sisters in New York and L.A. and get our hands held and ask for anybody’s permission or opinion.  We just do it.  If there’s a change, we do it.  I mean, we’re not a steam ship, we’re a cigar boat. So we can whip-around in the water quick when there’s a change to be made, and that is the advantage of being smaller!  One of ‘em.

Pinky: So how about radio?  I’ve heard that if an artist doesn’t have that distribution or that major label behind them, it’s tough for a radio station to support a single without knowing if it will result in sales, which will then continue to propel an artist into that mainstream limelight that they want to be a part of.  How do you deal with the politics of radio in an independent world?

Larry: Yea, I think that that’s certainly a factor but there are other factors too and I think one of the biggest motivating factors is probably fear.  I mean, people are scared for their gigs right now at radio when you talk to them.  And not many of them are very happy.  I was on the road last week with an act and I met one happy radio person on the whole trip.  And I saw like 12 guys.  (And they were all guys.  I wasn’t using it in the generic – if there was a woman I would have mentioned it.)  So I saw 12 guys and only 1 was happy.  Not a great batting average.  And you realize that you’re talking with people for whom it is much easier to add Alan Jackson and not get in trouble, than to add one of our acts and to get in trouble.  So if there’s any advantage major labels still have it’s because they’ve established a name, but with that said, they can’t trade on those artists they way they used to be able to get their baby artists played.  If they could, they’d be getting more of them played but they’re not!  Their batting average is about the same as ours.  I mean, you have a bunch of artists take a flat-ass run into a brick-wall.  Every year.  And there are like two or three holes in that brick wall.  So two or three people or two or three groups or whatever term you want to use, get through and then the rest of them die at that wall.  I think it’s probably fair to say that this business has a 98% failure rate, because 2% of the music released last year paid for the other 98%.  And those were just the ones who were on SoundScan.  2% paid money.  98% lost and I’m not counting all the individual projects that people are selling online as one-offs or whatever else.  I mean, this is just SoundScan.  So, when you have that kind of a batting average, I’m very honest with people about that too.  I say, “You’re entering into a business that has a 98% failure rate, why do you think you’re a part of that 2%?  And why are you so special?”  And I’m not doing it to be confrontational.  I’m doing it to see the kind of person they are.  If they are the kind of person who comes back to me and says, “I’d do this whether I’m getting paid or not.  I’m going to be playing tonight.  Come out or don’t.”  And they almost hit me back with that kind of attitude, I’m like, “ahhhh – that’s a keeper!  That’s a person who could actually go out and do something.”  Because you need the tiniest bit of motivation and chip on your shoulder, almost, to go out and do this grind.  And believe me, it is a grind.  I mean, by the time we’re done with Stealing Angels we will have done in the neighborhood of 15 weeks of radio tour, maybe even 16.  And those are solid Monday to Friday night or Saturday morning runs, okay?  But, it’s also getting the job done and they’re going to have a 20+ station debut on Monday.  That’s an independent act.  That’s not a major.  That’s an independent act with independent publishing with a pure independent background.  And independent funding – everything.  Everything is independent. And they’re going to have that kind of start.  So what that’s going to do is continue to prove the legitimacy of this model.  This model can happen.

It’s one of those things where, there’s this older promotions guy, you may have met him at one time or another, he worked at RCA back-in-the-day.  His name was Galen Adams.  He’s since passed.  Galen was one of the great characters in our business, and Galen always used to say, “Don’t worry about the horses, boys, just load the wagon.”  That was his way of saying, “We’ll get the job done for you, just give us stuff to get the job done-with.”  So when we have the stuff to do the job, we’re gonna go wear it out.  And that’s what we’re gonna go do with this.  I’m very excited about what’s about to happen for this company.  I’ve been working toward this for a good long time, and I cannot express to you the feelings of joy and relief that I feel hand-in-hand that once again something has come along to prove the validity of this idea and the validity of this business and validity of this whole damn mission, you know?

Pinky: So if an artist is going to go the independent route and they’ve got somebody who is willing to finance them, how much should they realistically raise in order to have a true shot at mainstream, breakthrough success?

Larry: I think, if they want to attack the “monitored” charts as well as the “indicator” charts, which act as a feeder to the monitored charts, they should probably bank at least, or have a bank of half a million bucks through the first single.  And the reason I say that is that it’s gonna get more expensive the higher the single goes, but at that point you shouldn’t be in a position where you’re worried to paid for it because the single is succeeding.  You know what I mean?  Today’s singles are lasting anywhere from, you see it – 38, 39, 40, 43 weeks; hell, there’s a song on the charts right now that is a 50-week song! Five-Zero.

Pinky: Wow, which song is that?

Larry: Lee Brice! [Love Like Crazy]  A couple more weeks and it will have been on the charts for a YEAR!  I mean, that’s crazy.  That’s like when RCA broke the Macarena years ago.  It was a year-long single in the making.  It took a year for that to become a hit, but that was like insane back then.  Now, this looks more like the norm. It’s pretty crazy.

Pinky: Boy.  So would you say that an artist that really is going to have a shot, should probably have a bank account of a million to two to take a real run at a serious career beyond single one?

Larry: You kinda broke-up on the last question Pinky, I’m sorry.

Pinky: Sorry, this is a bit of a funky setup here.  So should an artist should raise 2 million, 3 million dollars to have a career-level foundation or what do you think the number is beyond just the single?

Larry: Especially if they want to go at this in terms of a career and multiple singles, and I work with all kinds of acts, there are some acts that want to build to the point that they sell themselves on to another label.  There are other artists that make so much money doing this that they decide, “I’m just gonna keep the money!”  Because it ended up being a really smart investment.  I mean, Tracy Lawrence and Joey and Rory are real examples of that.  When Joey and Rory signed with Vanguard, Vanguard didn’t have a country promotion team so they came to work with us, and you know, they had an unprecedented deal with Vanguard, where they basically got to cut the music they wanted to cut the way they wanted to cut it.  And that’s why we would release a song like Cheater Cheater when you and I both know, having spent time in major labels, that song would have never have been released by a major.  That thing would be sitting on a shelf somewhere today, and instead, because we put it out, it did 260,000 physical units and over 400,000 ringtones and ringbacks!  I mean, that was a really big chunk of business for Vanguard.  Listen, they’ve sold in tonnage before, but that’s real tonnage for Vanguard.  That was a Top 25 song.

Pinky: Was that an ACM Award-winner?

Larry: It sure was.  It ended up winning an ACM and a CMA and so did the Tracy Lawrence [single].  Two of the biggest successes we’ve had have been award-winners, which is kinda cool.  I’m hoping that the Stealing Angels girls will be the third.

Pinky: No kidding.  Well man, this has been incredibly enlightening.  I really appreciate you sharing your business model with us and helping us get a realistic look at things.

Larry: I just hope that I answered the questions that you needed answered.

Pinky: You did!  You’re brilliant and I’ll have links and information and all that good stuff on the site for people click through and check out on their own.

Larry: You’re the smart one.  Thanks for having me.

Pinky: Much obliged, my friend.

Larry: Be good, my brother.

Pinky: Alright, you too.  Bye bye!

Larry: Talk soon.  Bye.

How’s that grab ya? The announcement hasn’t been made but rumors are swirling that free streaming of music may soon be a thing of the past for MySpace, which would most certainly be the death nell for the website that defined the term “social network” for most people in America. While logic may therefore dictate that the service should stay, the fact is, they’re bleeding like a stuck pig and that can’t go on forever, come hell or high-water.

In this interview with Billboard from June 7th, I stated that the music industry hates itself. And it does. There are warring factions that each represent different groups of rights-holders that defend their turf to the detriment of the entire ecosystem. Publishers, the radio stations, labels and the artists themselves each have their own personal interests at heart when they fight for a bigger piece of the pie, but the result is that legitimate music startups simply cannot afford to pay the fees, and therefore go out of business (or don’t start at all). Why do you think facebook has abstained from offering a free music service for years while MySpace took in so much traffic for that very service alone? And that’s to say nothing of Imeem, Lala, SpiralFrog, and most notably, Yahoo! Music, all of which fell on their own swords and either shut down completely or sold at firesale prices to others.

The move to shut down MySpace Music may come as a result of their advertising contract with Google expiring next month.  That relationship brought in $300,000,000 a year for the company, which allowed them to spend in-excess of $10,000,000 per MONTH on streaming services.  (Look at all them zeros!)

My prediction is that the shutdown will happen in two painful phases.  First, MySpace visitors will be required to log-in to the site in order to hear streaming music.  This will reactivate a vast number of otherwise dormant accounts, but it will also eliminate all passive traffic, which they desperately need right now in order to continue selling ads at a sustainable rate.  The drop in revenue will ultimately result in the fall of MySpace itself.  It will be sold and resold until it is no longer.  Remember Napster?  It’s nothing but a brand name that changes hands from one music service to another these days; no longer even a shell of its legendary self.

So enjoy it while it lasts, folks.  MySpace Music is shutting down.  When?  Dunno yet, but watch the writing on the wall this summer as they renegotiate their network-wide advertising agreements and continue to make cuts in staff and services in a vain attempt to survive.  They lost the war and facebook didn’t even have to compete with them on their most important service to do it.

Related Posts: New MySpace Slogan: Discover and Be Discovered, Goodbye Tom.  We Hardly Knew Ye.

Today begins a new chapter in PinkyGonzales.com blog history.  I am going to start posting audio and video segments to coincide with the written format.  (Revolutionary, I know.)  Most of these will be interviews with people I love and respect, including artists, executives and entrepreneurs that split-the-gap between business and entertainment, starting with this interview of… me. (Whom I love and only somewhat respect.)

Billboard.biz filmed this segment after the Country Music Summit that took place in Nashville last month.  They asked me a few questions about current and future technology trends in the entertainment industry so I thought it was an appropriate setup to this series.  It’s also just kind of neat to be formally interviewed by Billboard, as they have been THE go-to resource for Industry professionals longer than I have been alive.  With that said, here are my current thoughts on the pros and cons of offering free content, the present and future of mobile entertainment platforms, 5 tools every artist should use and a preview of the new location-based service I will be announcing publicly within a matter of days.  You heard it here first.

Without further ado:

And for the record, I did not mean to imply that Kenny Chesney spent $100k on his brilliant mobile app, though I know others that have.

For those that may be following the series on Investing in the Music Business, stay tuned.  I’ll be back with more in the morning.

Business Partners: Benjamin Del Shreve

I hope everyone had a safe and Happy 4th.  We had a… blast?  (ouch.)

Anyhow, let’s get back to this “Investing in the Music Business” series, shall we?  Today, I want to talk about the makeup of a startup in the “real” business world.

If I come up with an idea one day, I basically have two options:

1. Do all of the work myself and keep 100% of the profits
2. Build a team and share the love

Musicians have the same choice.  It is common knowledge that a manager, agent, publicist, promoter, publisher, “web guy” and maybe even a business manager (accountant) are all part of a healthy, long-term music “business.”

Many musicians however, feel that they MUST have all of the above in order to have anything at all.  They spend their time writing songs, planning shows and dreaming up the ways to spend their money when that “big break” finally arrives.  Very few however, think about their bandmates as coworkers.  (How unromantic, I know.)

The best example I know of a band taking the reigns and assigning individual responsibility to each band member is a fantastic group out of Northwest Arkansas.  Benjamin Del Shreve is one of the top acts in the region, easily selling-out shows from Little Rock to Tulsa and beyond.  They are hard workers, incredible performers and fantastic songwriters, but most importantly, they are a team.  When it comes to booking shows, they split the list of target venues between themselves and everyone works together, at the same time, making calls.  It’s an incredibly effective strategy.  It can be very scary and intimidating to call a club to book your own band, but if you’re doing it together, even if you’re calling different clubs, you have a sense of safety and teamwork you just can’t get on your own.

If you are going to be a business selling music, it’s time you stop waiting to be “discovered” and start running your shop.  If the very notion turns your stomach – no problem.  Just don’t plan to make a living of it.  Those are your options today.  Be a business or don’t, but don’t blame someone else if you’re not.  A band of 4 is a business of four, which is 3 more than I had when I started my first serious enterprise.

Click here for parts 1, 2, 3 and 4 of this ongoing series.

One of the joys of having a moderately popular blog is getting random email from people you’ve never met.  Such as my new pal “Jon.”  Jon likes to post comments on various entries that link back to a sales pitch for an insurance company under the guise that he too has opinions about humor and branding.  I just wanted to take a moment this morning to let Jon know that I would be glad to promote State Farm if they will pay me to do so, as they are paying him.  He even says so.  Otherwise, State Farm, go away.  You’re not my neighbor, you’re an insurance company.  You’re not my “fan,” you just want my readers’ money.  And a word to all my fellow marketers out there:  Form letters are form letters, even if you throw in a reference to a particular post.  Enjoy this fail-mail from State Farm:

From: Jon <-email address removed->
Subject: Humor and the auto industry

Message Body:
Hey  I came across Pinky Gonzales the other day when I was searching for that Swagger Wagon video. Which, I might add, is absolutely hilarious. I also really enjoyed the article about whether or not Apple is doomed. I’m starting to appreciate how some industries, specifically the automobile industry, are incorporating humor into the marketing aspect. In a similar vein - State Farm has just launched their newest website: -website address removed-, with comedian -removed- bringing his flavor and spice to the table. If you and your readers are anything like me, you will have a hard time not hitting the “-removed-” button all day long.

To get a good idea, here’s one of the tag lines they are using in the campaign: “State Farm wants you to know that their agents will always have your back. Maybe not in a real life bar fight kind of way against a 400lb biker named Scooter, but still. For a list of reasons why SF agents have you covered, head to -website address removed- ”

Take a look and let me know if you want to pass it along and need more information!

Thanks,
Jon

FYI – I am helping State Farm spread the word on their site.

… ya don’t say.

The Legend, Jimmy Buffett

Welcome back to another edition of Investing in the Music Business. This blog series is about building a new music business model (for fun and profit). It is inspired by my disdain for the “sky is falling” hysteria that has gripped the music industry since the invention of the MP3 format, and my passion for business, which has grown out of being an entrepreneur in and outside of entertainment circles since 1997. Click here for parts 1, 2 and 3.

Today I want to talk about the difference between being “discovered” and being a CEO.

As I mentioned in my last post, the music business has historically been run by record labels who discover, market and fund new artists. For the last 50 years, they have simply recorded a bunch of songs, sent them off to radio stations, hoped something hit, and sold a bunch of albums.

This approach, which breaks down if no one buys the albums, is custom-made for artists with the dream of being “discovered.” They fantasize about someone else doing all the heavy lifting while they write songs, play shows and have their every need attended-to. I have even heard some (very well-respected) managers say that their job is to handle all the business so the musicians can just be “artists.”

So cute. We coddle our poor, helpless musicians and tell them how creative and wonderful they are, right up until we stop making money on them (or decide to cut our losses), and then what do these sensitive little creatures do? They get day-jobs as painters and waiters and handymen. They complain about the “evil industry” and how everyone just wanted to suck their blood until the next flavor-of-the-month hit the scene. Poor babies.

And then there’s the other camp. The one that says the only way to make a living in this business is to “build your brand” and “be a business.” If you’re not thinking like a CEO, you’re destined to get ripped-off and run-over.

The truth lies somewhere in-between. If you’re going to make a living on your art, you obviously need to be an artist, and that takes room to breathe. But if you want to make a long-term career out of it, you need to wake up and accept the fact that work is required.

Be Like Buffett

I have a bit of a man-crush on Jimmy Buffett. He took his love for sailing and turned it into a career that earns him an estimated $100 million a year, 34 years after his first tour hit the road. He owns restaurants, casinos, hotels, clothing lines, spirits, beer, frozen foods and a full-line of tailgating accessories, and still has time to write and record new tunes and tour on an annual basis. He’s a smart dude, and he’s surrounded by a bunch of other smart dudes and dudettes. I want you to think about Buffett the next time you roll your eyes at the thought of “selling out” in order to become a commercial success. There is a very big difference between cramming yourself into a generic little package vs. making the most of your passion. You may not have any ambition to sell golf bags with your name and likeness, but I know you do like something, and I’ll bet dollars-for-doughnuts that some of your fans would like those things too.

Let’s start with T-shirts. I had an epiphany last year while working with one of my clients, Richards and Southern. They design, print and sell tour merchandise for the likes of Kenny Chesney, Taylor Swift, George Lopez and just about everything in between. My job is to help them sell more stuff online, so I began with the usual approach – holiday promotions, contests, setting up their social media profiles, featuring items on the official artist websites and so-on. Those are all very effective ways to sell more stuff, but our numbers would always drop when an artist stopped touring. It was frustrating for me because web-stores don’t stop being open for business. We were still making new product and these artists still had massive fan-bases. Why weren’t they buying when the artist was off-the-road?

And then it hit me.

We sell souvenirs!

I was mistaking tour T-shirts for fashion. I was assuming that our sales were driven by a fan’s desire to dress themselves in the artist’s image, when in fact most of them just wanted a momento from the show. They often buy those souvenirs just before or just after the event itself, but once they’ve gotten one, they’re back at the Gap to buy their *real* clothes.

One of the first things you can do as a developing artist is to talk to the local clothing stores in your area, especially the privately owned boutiques, about the possibility of them selling your stuff. They might even recommend other local designers that you can partner with to create a true fashion line. People buy their “every day” clothes in clothing stores, not at concerts or artist websites. Most importantly, your name will be seen by people who weren’t expecting to find it, and that’s branding at its finest. This could be the first step toward building a well-known brand of your own, whether or not you ever top the charts.

You can take or leave this particular suggestion, but the point is, we are going to build a BUSINESS, not a talent show for other companies to make all the money on. Lesson one is to look for opportunities to extend your revenue streams, especially those that may put you in front of new fans. For every piece of the business you build on your own, you have more leverage to negotiate with later, and that is the key to getting a fair price.

Check back tomorrow for a discussion about the artist manager’s role in this new world.

Amen.