George: I get to talk to Mark Kates, which is always one of my favorite things to do. He is a brilliant manager and record executive and was kind enough to join us at the Music2020 event at Boston University a while back. And during that time, Mark, we talked about, you were almost prescient and foretelling, that some of these streaming services, Spotify and others, might begin to provide another way forward for artists. Maybe not exactly taking on the labels with maybe the power dynamic is shifting, but maybe more opportunity. So I’d like to continue that conversation, so thank you for joining today.
Mark: My pleasure and likewise, it is always a pleasure.
George: Is that the case, with Spotify, is it an alternative to labels? Rather than there being three or four or however many major labels do we now have different options for artists?
Mark: I don’t know if you can call them an alternative, but they are the the path right now. They are such a dominant force at the moment, and these things change and sometimes they’re changing and we don’t realize it. So for example, 2 years ago streaming was not ubiquitous, and whatever streaming was, I guess it was dominated by Spotify, but whatever it was wasn’t ubiquitous which made it even more of a question mark. You were reading more about their funding and things like that, than their ubiquity. And at 50 million paid subscribers…is that right?
George: That’s about right, and Apple has about the same at this point. They’re both getting huge.
Mark: Yeah, maybe. Anecdotal evidence doesn’t always support what we hear. And, I think, this is still evolving and still changing. I think you can do it without a label, I’m not sure if it’s advisable. But the bottom line is, if you can create traction with your services, particularly Spotify, that is going to be where most of the recorded music revenue is generated at this moment. If you are setup to exist as your own record label, I think marketing is still something that has to exist at some level. It’s not like you can’t hire people. I mean, if you are a kid in a garage, you’re not going to have access to that kind of thing. So, you do have the opportunity, I was going to say on a “hail mary” level but that isn’t really fair, as things have risen from nowhere through streaming that I wouldn’t quite call a hail mary. But, you don’t have the ability to coordinate a campaign with anyone else, if there isn’t anyone else.
George: I’m with you. I think it’s less, we all see Chance the Rapper, and as you said, you can do it on your own or with a small team. I think what’s interesting to us is that for so long, the majors set the precedent with respect to the type of deal structures that were out there for the type of offerings which have evolved over the time of your and my career from copyright ownership to licenses, etc. But what might get interesting is if we have more entities that are doing deals with artists you get some competition, right? Whether it is Apple, Spotify, Pandora saying, “Hey, we want to do a deal with a particular artist.” versus the traditional label structure. Hopefully, that can lead to some sort of innovation around the deal.
Mark: Yeah, and I think that is already happening. And I mean, Chance the Rapper, he might get too much credit, but he actually can’t get enough credit in a way. He’s taken it all the way. And it isn’t just recorded music. I don’t think even he thought he would sell out a festival he created from scratch at Comiskey Park a year before it happened or whenever he had the idea. There is a lot he’s doing in a lot of areas, including saying he may actually do a deal with a record label now. He may have stretched the limit of his own operation, to the point where he’s still got goals that he might need that type of help to achieve. Although, if you’re him, anything other than [needing help with] radio, I kind of wonder. I suppose having more help with licensing, I mean, he’s a really ambitious guy. I was just in a conversation about him with someone from the book publishing world about what he’s doing with the Chicago schools, and this is a guy that he found by Tweeting the publisher. So, this is a definitive artist for right now. And having been at his last show here [Boston] and seeing what it meant to that audience, the interesting thing is, he’s very big, he’s very successful, and yet he’s not so ubiquitous that I think he’s losing people. He’s still growing, and I think he’s got the attention of a lot of the other artists. And, his circle includes a lot of the other significant artists of this moment.
George: Yes, and what was so interesting at his Grammy acceptance thanking SoundCloud, and SoundCloud is not a label. SoundCloud could and does, to a bigger or lesser degree, do deals with promotional or otherwise with other artists. So, we [Music2020.org] are for more competition, more people entering the space, bringing new ideas. I don’t want it to be the byline “The new boss is the same as the old boss.”. I don’t want to replicate the label system with the streamers just acting the same way. One would think with more competition we might get some innovation around it.
Mark: I don’t think there’s much chance of that. I think the labels are more innovative and I think the people coming at it from other places aren’t capable of being the old boss. It’s almost the other extreme where a comment following the event we were both at recently at Harvard Business School where the speaker was like, “It would be great if the music business could figure out their copyright problem.”. That’s a little simplistic, and that’s not going to happen. It’s the artists, the smart ones, that have the copyright problem, really, because copyright deserves value. People who jump into the space last week can’t bring everything with them that’s gotten them to this point. But, I think it is a time of great innovation and I can just tell you on my own, having embarked on this personal, very naive dataquest, that I’m finding lots of interesting things. And the conversations that I’m having are fascinating. I always know that if there’s not a clear answer, that I’m on the right track and I have to keep going.
George: That is really interesting, and right, back to copyright another one of our key pillars, we need to do some education around the 35-Year Copyright Reversion Act. There is no way we can move forward with new technologies, blockchain or otherwise, with artists that are having their copyrights held up in perpetuity. They have the opportunity to get it back after 35 years, and unless and until that happens, how do they ever re-negotiate anything? How do they ever go forward?
Mark: Right, but how defined is that? Technically, legally, theoretically, are all artists tied to that?
George: I do know the law and it is for copyrights after 1976, it’s still somewhat formative. The challenges really are the labels playing games with remastering works and then saying it is a new copyright to extend it, etc? Obviously the labels are going to do everything in their power to hold onto these copyrights forever. And I think it is on us to get to the point of clarity and educate people about it because even if you have new artists saying, “I can do interesting things on my own or with a small team.”, the heritage artist, the older artist…what are you going to do? You’re stuck.
Mark: Yeah, that should all start to get clearer based on the era that is coming into change, because if you’re talking about the era of 1976, we’re about to hit the era where people starting releasing punk albums. That mentality doesn’t necessarily go away. And, it’s one that I come from. So, I’m thinking about a situation I could be involved with personally, and I’m not even sure how I feel about it because it’s not that simple. First of all, yes, you should get whatever rights you can. Maybe the business people you are already in business with, are the best people for you to be in business with to achieve your goals.
George: Could be.
Mark: Meaning, the deal you’re in might be better than the deal you get, even though you take control back. Does that make any sense?
George: You want to have a place where you can say I’m going to stay in this deal because it is the best deal for me at this time, but to be able to have the agency to look around and negotiate etc. And to be clear it was the 1976 copyright act and then for copyrights after 1978, with the reversion. And you’re dead right about the punk rock artists, they’re next. That was the Ramones, when did the first Ramones album come out? [April 23, 1976] But it is, all of it should come together, one hopes. You’ve got new technology coming out, you’ve got laws like this, and you’ve got more alternatives whether it is Spotify, SoundCloud, or others. My partner, Scott and I, have been talking about the tragedy that is [the band] Big Star. The fact that that band never got their due, while they were doing the thing. However many years later, with their documentaries, people love them. Man, if Big Star had come out today, and been able to do some of the things artists today? It seems impossible to think that they wouldn’t have had more success today than they had then. And, I know, it is a fun parlor game.
Mark: Maybe, I don’t know. There was a lot less competition back then. So, if you had these weird guys making pop music from Memphis now? I’m sure I’m as big a fan as you guys are. I was lucky enough to work with two original members, and then two later members, weirdly enough. But, I still think it’s hard. Here’s a great way to look at this. So, Big Star, those guys are like 17 years old, now would have the platform of The Letter, the number one song from the band. Now, that would be a little different.
George: Whether it is true? I’ve watched the documentary a lot of times. There were a lot of things, and you probably know it personally first hand, but it struck me that those records got buried because of the radio shenanigans, the label shenanigans. Maybe it’s just me, a naive hope on my part.
Mark: Ardent was eventually part of Stax, which is chronicled in Stax museum, which is hilarious cuz I just visited with Jody Stephens, from Big Star. I suppose that is an interesting point, in that the great labels were defined musically and specifically, and they were never a part of that. They were defined within themselves, and they couldn’t be, as the documentary illustrates, just how different those four guys were from each other. But, who knows, they did the WLIR live show from My Father’s Place before it got released. That is a format of marketing that does not exist, really. Sure, you could do a live show and stream it, but to have a terrestrial radio signal that was reaching the kind of people that would want to hear that band…I don’t know, it’s fascinating. I’ll put it to you this way, I’m a little scarred at the promise of being a successful indie band in this day and age, because I’ve been through it recently. The ceiling may be lower than it’s been since then, when you didn’t necessarily, well Big Star predates me in the music business by a couple of years. I was kind of raised by REM, who wouldn’t have existed if it weren’t for Big Star, but were very closely behind them and also southern. We had to invent our genre and we had to force our way onto radio, partly because our stuff was better than the tried and true 15th ELP album, or whatever, that might be coming out at the time. I should come up with a better reference than that because I actually went to see that band once. As I say, we had to kill classic rock, it’s a really simple way of putting it. Truthfully, classic rock found its own format, which opened up album rock to us, and eventually led to the alternative format. Well, Big Star didn’t have any of that. And as I’m in these conversations right now that format is closer to where it was in 1985, and more recently. But, we have this other thing that really reaches people, and if you can work it from an algorithmic standpoint in your favor, you don’t necessarily need anything else.
George: You’re talking about playlists?
Mark: Yeah. Ultimately, that’s where it gets manifested. It is a little hard for me to talk about this objectively, because I’m fortunate enough to have relationships, particularly at the two biggest services, and have ongoing dialogue with them and most excitingly, the ability to just keep asking questions and keep trying to get to what’s really going on, while, that isn’t necessarily a static thing anyway.
George: Everybody is trying to thread the needle, while I have very blunt opinions about algorithms and their lack of efficacy, and everything else. We’re all trying to figure out ways in which there can be new and different and innovative ways for people to connect more directly with their constituents. If Spotify, if Apple music, whoever Deezer, comes out and says, “Let’s make some direct deals with bands”…The whole notion of a record label has changed too. I always define a record label as having equity in copyright, ability to promote, ability to distribute, that’s all. Those three things, right? And, it doesn’t have to be perpetual equity, it can be a license to the copyright. You’ve said there have been more developments on the streaming services doing deals. Is there stuff out there that you can report back from the field on we should know about?
Mark: No, nothing that I can point to. There is the Drake situation. Drake is on a label, got seriously paid by Apple, had an exclusive with them, to the point where he really was making his music difficult for people to get to, which is crazy, considering the level he’s at. Yet, it didn’t appear to hurt his career, whatsoever. Now he releases a mixed tape everywhere, which was briefly the most streamed thing ever. That is what is most interesting. Right now, we’re in a period where the biggest artist puts something out, and if they do it right, they break every record that’s been set. It goes from Drake, to Ed Sheeran, to maybe Kendrick Lamar.
George: 2 records.
Mark: He’s hitting the stage at Coachella as we’re speaking, or later this evening. So, again, we’re in the middle of it. It may not settle. That’s the other thing. I remember having a conversation with my attorney back in the traditional era, saying, “I’m just waiting for things to settle down”, and he said, “They’re never going to”. That was a good thing for me to hear in 2000, or whatever it was. Because we had a business that appeared to still be dominated by the old forces, and the old way of operating. We now know that Napster changed everything, because the audience adopted it, and we’ve been chasing them ever since.
George: That’s exactly right. I love that, that it is never going to settle. There are a couple of pillars, obviously, that we have. The 35 year act, collusion. That’s why I think it’s so important to have more people competing so that you can get around some of the collusion. On the early adopter side, anything that we can do to get it so that more artists are getting more closely connected to their fans, whether it is, I’m so tired of saying the words blockchain, but I think that there are some possible advantages to those types of technologies, because we can track things better. We can see what songs are getting played and get the money more directly to the artist. But it’s not settled.
Mark: If everybody involved buys in.
George: And that’s never going to happen. So then it’s going to have to be early adopters doing it, and then it will be the late adopters saying, “Ok, we have to adopt some percentage of it or we’ll get left behind.”.
Mark: By the way, there are probably artist deals being done that we don’t know anything about.
George: I’m glad you brought that up.
Mark: I’m not saying I know of any, because I don’t. I can’t imagine that isn’t the case. Then you have Tidal, who come out with this big thing, they wind up with all these artists. The concept isn’t crazy, necessarily, but I don’t believe they are…yes, they are forcing fans of certain artists to get their music there. I don’t think that’s a good model.
George: I don’t think so either. That’s really the old school model.
Mark: Exactly, this is a big theme for me lately. I come from an era where business was built on control of information, scarcity of information, control of the media, and there was no internet. You had to actually make the effort to even be a fan. Which is not to say that people don’t go to efforts to be fans these days, but you know, when it’s all on your phone…I don’t know. I just think about driving in from the suburbs, going to Newbury Comics and answering the phones at BCN, and all those tangible, literal things. Though, it has made the live business, it would appear, more viable than ever. Because I’m a manager, that’s good news. I had a very nice, stable career in the old system. The system I come from, it exists but at a very small level, for very few people and I don’t think I would do that well. I’m sure I could make it work, but I was driven by a musical genre that I felt had to be put forward. I suppose, then we succeeded and now people think 21 Pilots are alternative.
George: Look at what you’ve done! [laughter]
Mark: Careful what you wish for is the ultimate truth. So, now I’m a manager, so I continue to work in things that I think fit that description if that’s what I choose to.
George: We’re lucky to have you out there trying to figure this out. We all really appreciate your guidance, your input, your reporting from the front lines. Just appreciate you and your time, Mark.
Mark: You are very welcome, and we need to put a time stamp on this, because probably what’s going to happen is we’ll look back at this and say, “Yeah, it was completely unsettled then. Streaming was established but we didn’t know where it was going to go”. I don’t know where it’s going to go, I’m just saying, this moment probably won’t define anything…very few moments do, and it’s really hard to know when you’re in the middle of something. Though, not being in a record company in New York or Los Angeles is a pretty good start for knowing what’s actually going on out there.
George: I just want to get to a place in the music industry where we have more winners and less losers, that’s all.
Mark: Let’s do it!
George: Thank you, Mark.
Mark: You’re welcome.