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Why It's A Great Time To Be A Music Industry Entrepreneur

 Bob Jamieson, former CEO of RCA Music Group, BMG North America, is a respected leader in the music industry with over 30 years of experience both in the U.S and abroad. Over the course of his career he has been intimately involved in all aspects of the music business, from finance, to retail and radio, and ultimately to the top role at a major label. He led the historic, high profile turnaround of RCA Records, taking it from its 20-year industry low to that of a top competitive player. Jamieson has a unique ability to lead and build teams within a climate of innovation and accountability that has resulted in extraordinary success. He has helped launch and establish many well-known bands including: The Dave Matthews Band, Christina Aguilera, N'Sync, and Bon Jovi.

Interview with Bob Jamieson:

Artists House: There’s been a tremendous amount of change in the record retail industry over the past few years. What effect has this had on the public and the rest of the business?

Bob Jamieson: There’s never going to be a shortage of talented people making music, especially in the U.S.. I heard recently that there are now 60,000 releases every year in the U.S. alone. If that’s true, and with retail consolidating and paying the rents they are paying, retail is no longer able to carry the slower moving niche titles that don’t necessarily reach a mass market. I’ve used this analogy before, but I don’t know that in today’s world Columbia Records would sign an artist like Bob Dylan. Some of the great artists that we all know might not have gotten their start or the support they need to give them the opportunity to make music if they were to come around today. With fewer outlets and less variety, it costs you an awful lot of money to work with these retail stores. For example, if you want to get a record into a large retail chain, that owns a number of record stores around the country, it’s going to cost you about $1.30 per unit between co-op and price and positioning, Smaller labels just can’t do it. Retail is exposing less music, radio is exposing less music, yet there is more music being recorded now than ever before because it’s more affordable for people to do it.

Artists House: You were leading RCA when the label signed Dave Matthews. He continues to be one of the most commercially successful artists out there. What’s been the key to his success?

Jamieson: Dave and the guys in his band really just wanted to make music. They would go anywhere at anytime and just play, and I don’t think they thought they’d ever be as financially successful as they are today. They’re really in it for the love of the music, which is the right attitude to have. We were able to license Dave’s first two releases Recently, and Remember Two Things. Because they had built up such a strong touring base and had a reputation as a great band, these records had already sold quite well by independent standards. So when RCA signed them as recording artists, there was already momentum and awareness as to who Dave Matthews was. The independent retailers knew who Dave was as well, so we had a base of operations to work from. We were able to take his career to much greater heights by the support from radio, which then led to the support at mass merchant retail. Retail and radio were working quite well together then, and we got a lot of support from both sides. Touring is still the lifeblood of what these artists do. If they can develop a following and tour, even if the record sales diminish, they’ll more than make it up with a live following. The problem is there are so many artists out there trying to make it touring, there simply isn’t room out there for everybody.

Artists House: You were leading RCA when Napster arrived on the scene in the late 90s. It seems like the majors could have found a way to monetize and work with Napster instead of taking them out.

Jamieson: You know, Shawn Fanning actually started Napster to trade Dave Matthews live recordings, he is one of the biggest Dave Matthews fans in the world. Dave allows people to tape and trade the band’s shows and Shawn wanted as many live recordings as possible, which is what prompted him and his programmer to develop Napster. Then the lawyers and everyone else got involved and the rest is history.

The reason that Napster had the problems they had was because of the ‘suits’ involved with Shawn Fanning. The guys that took over the operations of the company at the beginning were really grinding the industries faces in the mud. Here they were stealing the artists music, and acting like it was their right. They were so disrespectful that the industry had to slap them hard. Bertelsmann ended up owning Napster for a while and had a plan to launch an industry run legitimate service like iTunes . The vision was good but the execution was horrible. The idea was to create a universal file sharing apparatus that the industry would co-own. Everybody would put their product through Napster, we would regulate it and monetize it in a way similar to iTunes or any of the other legit services. But instead, the industry was so mad at the original people involved with Napster it never materialized. Looking back, if the industry had embraced the technology earlier and recognized what Napster was doing we all would have been in better shape. It still would have changed the industry forever, and there still would have been a lot of suffering with people losing their jobs and careers, but it might have been done in a more logical and slightly less painful way.

Artists House: Two recent artists, The Arcade Fire, and Clap Your Hands Say Yeah, gained mainstream success after first developing their fan base online. How has the traditional music model changed?

Jamieson: The Arcade Fire is a big success, a great example of an artist that started out from buzz on the Internet and then expanded out into traditional outlets. There are more and more artists every day making inroads on the Internet doing the same thing as them, and one day they’ll sneak up on everybody in the same way. What’s interesting to me is that the ability to communicate on the Internet makes everything instantaneous. You put something up there and you can have an audience in nanoseconds. It used to take a lot longer to get an audience. In the past, if you wanted to see someone like the Rolling Stones, they had to physically come to your town. That dynamic has completely changed with videos and the Internet. People can get all the music they want without waiting for the radio station to put it into rotation. How we get our music, how much of it we get - the music model has completely shifted. It also brings up an interesting dilemma: there has never been greater interest in music than now because of the various ways people can find it and listen to it, but the traditional gatekeepers are not exposing much new music, and by that I mean retail and radio. They need volume for square foot or ratings for advertisers. They aren’t in the artist development business. We know the business is viable, because there are more people listening than ever before it provides us with a real opportunity to get this business back on track.

Artists House: I definitely think it’s a great time to start something up if you have a great idea.

Jamieson: You don’t even have to have a great idea, if you’re ready to get in there and mix it up. Nobody has the right answer, and the industry is so fluid today that things are changing on a moment-to-moment basis. You just need to be creative and innovative. I’m on the board of The Artists Den which is a great entrepreneurial example of exposing people to new artists in a cool relaxed environment. What they’re doing is putting on shows at very unusual venues, like the Apple Store or Tiffany’s, with unsigned independent acts that they feel are cool and hip. You pay a small ticket price to be with your peers and you get to watch and hear a good night of music. They’re doing it in a very grassroots way; it’s logically built, and done at a low cost. They’re now considering all the ways to record and get the music distributed including traditional retail when it makes sense.

I’m also on the board at Musicane, which is helping new artists develop and host their own web sites to increase their exposure and build a following to an outlet that will eventually be able to sell artists product for them, and participate in the physical revenue stream as well. The goal is for Musicane to become more of a partner with these artists. There are a lot of young people out there that recognize that the business is still viable, and the cost of entry isn’t that high because the Internet affords you the ability to get exposure at a relatively low cost. Look at My Space, or Facebook, these companies have simple straightforward ideas, and are wildly successful.

 

Artists House: What ways do you see to successfully monetize digital music?

Jamieson: There’s the iTunes model. There is also the subscription model, which is interesting; the wind has really blown both ways on that one. Sometimes it looks like subscription is the way to go, but at other points some people feel there is not enough money there to go around. Then there’s the advertising model, which would give the music away and share the advertising revenue with the labels, the artists and the publishers. I’m a little less excited about the advertising model. Too much advertising on radio interrupts the flow and vibe that music can create, and I think it really diminishes the pleasure music can bring.

Artists House: What do you see happening with radio?

Jamieson: I hope traditional radio gets back to playing more music and exposing the listeners to more great artists, not just pop and hip-hop hits. People will continue to pick up and enjoy XM and Sirius satellite radio, as long as they can keep it operating with little or no advertising, which I hope will continue to happen. There is a lot more variety, and the public really doesn’t like all those commercials. Hopefully satellite radio will force commercial radio to open up their play lists, and perhaps some stations will begin to play what we used to call AOR radio, which is freeform radio. That’s where you used to be able to hear a lot of the new artists that you would not hear on the Top 40. What I think is going to happen in the future is that someone like Clear Channel, a company that owns 4 or 5 stations in a single market (and 1200 across the country), may take one of their smaller-rated stations and try it as a free form. I think it would win for the business and it would win for the public.

Artists House: Where do you think the industry is headed?

Jamieson: I think there are a lot of ways of exposing people to new music being developed by fledgling companies, and these companies are going to end up being the giants of tomorrow. I think that it will be awhile before physical CDs and DVDs go away, I think that people buying CDs are also going to be using the Internet, computers and phones to get their music. They may have physical CDs but they will also have an iPod. And even if the CD goes away, all the other the legitimate avenues are going to create revenue streams for the artists, publishers and record companies to survive.

I believe the industry will rebound and be stronger than ever in the future but it will suffer more pain in the short term until the model for the future is developed and implemented.

 


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Published: 07/25/2006

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