Dave Kusek: Music Business

I’d like to talk a little bit about different ways to think about business and music in particular. I’ve been through a couple of different waves of transformation in the music industry for twenty five years. In the 1970’s, I know I don’t look that old but, I was alive then, I was lucky enough to get involved in some of the early synthesizer companies. I worked for a company called Electronic Music Labs in Connecticut. And it was Arp, Moog, and Electronic Music Labs. and Bob Moog just passed away a couple of weeks ago, good buddy of mine, and those three companies created sort of, the electronic music business, or at least the seed of it that we are experiencing a huge explosion of today. We created electronic instruments that didn’t exist. You know Arp and Moog were really into keyboards and electronic music labs, we made keyboards, and we tried to make an electric guitar.
These instruments transformed the way music was made and opened up the market for people to experiment with different kinds of sounds. From electronic music labs I went with two of my friends, and we started a company called Synare, and we made electric drums. And this was a synthesizer technology applied to drumming and we did that because well you had Arp and Moog making keyboards and we didn’t want to compete with them. We tried the electric guitar to make an electronic synthesized guitar, very, very difficult problem; no one’s actually done it yet. All of the instruments that are available today in 2005 are kind of compromises. But drumming, that was easy to do. So you could create drums, you could change the knobs, you can make any kind of sound you wanted. We gave a bunch of instruments, they looked like flying saucers and we gave a bunch of instruments to Donna Summer, and a couple of other people that were sort of at the very beginning of the disco explosion. And you heard those instruments on hundreds of records. That, you know, you can argue whether disco is good or bad, but it was incredibly popular, it was a whole new genre of music that was largely created because of the new sounds that they were incorporating in their music and the style of writing, the sounds that were created, the new instruments that they had available to them, the dance, kind of early beat, that was really developed through disco, had a lot to do with the technology of the times.
So we’ve seen over a period of years electronic music becoming more a part of the main stream music and you’ve gone through sort of that era where the instruments got more and more sophisticated you got a lot more sound processing and signal processing stuff happening in the recording studio you have now, I’m talking mid eighties, late eighties, racks of gear in the recording studio that could do harmonization and equalization and time shifting and all kinds of stuff that people tried in wacky boxes and software that people wrote that made music sound different and sound more interesting. When you think about what are you going after when you’re writing a song, well, one of the great things to do is to do something new. Do something unique and different; establish your own identity from a sonic point of view. These technologies allowed lots and lots of people to do this. You know, bands like Devo, flocked to the synthesizer, Emerson, Lake and Palmer flocked to the synthesizer and created all new blends of music that didn’t exist before. You have computers in the early eighties coming about, The Apple 2 computer, the IBM PC, and I started another business called Passport Designs, in California in 1980 with a couple friends of mine, and we developed MIDI sequencers, MIDI interfaces so that you could connect a MIDI; stands for musical instrument digital interface, it’s pretty ubiquitous today, but it was very revolutionary when it was created, that you could take a keyboard instrument and plug it into a computer and record what you played. You couldn’t do that before unless you did it on tape. You could record a piano or a harpsichord or something or a B3, take it to analog tape, but MIDI lets you take it to a computer and gave you the ability to now play with that music in digital form. You could take it, you could slow it down, you could speed it up, you could change the key, you could play it backwards, you could copy and paste, and that technology along with the instruments that were created MIDI keyboards, MIDI drums MIDI guitars, you name it. Yamaha, Roland, Casio, Korg, many, many companies created instruments like that, that opened up music making to literally millions of people that didn’t have the ability to get an acoustic band together, but could take their little keyboard and their Apple 2 computer and goof around at home and do multi-track recordings and play with the music on the screen enough until it started to sound pretty good. That revolutionized music making and opened it up for many, many people who would not have been able to do it otherwise and lead us to where we are today with kind of desktop music productions. That created opportunities for companies to get into the music industry that didn’t exist before. Lots and lots of software companies like Passport Cakewalk, you know, jumped into that market Emagic, very successful company out of Germany, created a program called Logic. Eventually, Emagic was acquired not too long ago by Apple and now you see GarageBand and Logic from Apple, Soundtrack Pro from Apple, it made Apple a music-making company. And now you look at the strategy for Apple with iPods and iTunes, and Logic and GarageBand, and lots of other stuff that they’re no doubt working on. You look at the transformation of the music industry over the last, let’s say twenty years, many companies that were making instruments like Fender, and Gibson and Yamaha and Zildjian, you know they’re still making instruments and their business is growing and very healthy, but you also have a lot of new companies, software companies, hardware companies, computer companies that have entered the music industry because of technology and the way it has changed things around. You take that to the extreme and you look at Kazaa and Napster and Rhapsody, and again, Apple, with their iTunes program and Music Match and Yahoo, now you have some very, very huge players entering the music industry as a result of technology. The point I’m going to make is, you can’t stand still in a business, if you’re in a business in a fast moving technologically impacted market like music, you cannot stand still, you cannot take your eye off the ball as many record companies did. You have to keep going. You have to invest in technology, you have to invest in new uses of that technology or you are going to get completely blindsided by other very smart people who are looking at these opportunities and saying “oh man, I want to get some of that”. So, the best thing you can do is to pay attention to what’s happening with technology because the music business is going to be quite different ten years from today, than it is today and that difference is going to be primarily because of the new technologies that are being created. New ways of distributing and marketing music in particular, things like music recommendation software, ways of creating communities of people, that bands and their managers can tap into so that you can create direct relationships between the artist manager on one hand, and the fan on the other hand, you can create direct relationships where you start marketing directly to customers, rather than you know, running ads or you know, trying to get your music placed on the OC so a bunch of kids will hear it. You start direct marketing. The technology it’s going to is already enabling that kind of thing.