Andy Allen: Any store that works – yeah, any record store that opens that wants our music we'll talk to. You know, we'll probably want to know that you don't have gang connections that -

Interviewer: New Orleans is out.

Andy Allen: There's some financing, because we're gonna put, you know, a significant amount of inventory in your store, and we're gonna give you time to pay for it, and we're gonna want to make sure that the credit risk makes sense. But assuming that you're an upstanding citizens and you wanna – these days if you wanna open up a store we're gonna do whatever we can to support that effort, cause there ain't that many people opening up stores these days.

Andy Allen: Some Indies offer manufacturing, some don't. Ryko insisted that you were manufactured by somebody else.

Interviewer: That's correct. PMD -

Andy Allen: It's greater risk for the distributor, because anytime we partner with a label we take on a certain amount of risk. We increase that risk by offering manufacturing, and then also advancing on the co-op. So if you're distributed by ADA I'd pay for the manufacturing and then bill you back out of sales, and I pay for all of the upfront marketing costs – co-op, as George said, until they bill me back, so I don't bill back until Tower bills me back, if it's a Tower program, for example. So I'm out there. I'm out in the wind.

Again, the other reason that we do that is we want the label to be spending their money signing artists and marketing records. We don't want their money tied up in all this stuff. And why can I do that? Again, it's the major label thing. If I was a true indy I couldn't do it. If it was a question of me putting money in my pocket, or you putting money in your pocket, well it gets down to – you know, we don't all do this for free, so I probably would be less likely to do it. But because Warner allows me and trusts me to make decisions based on finding emerging labels and artists, and having a track record of doing so, I'm able to use that. And, of course, to be honest, I use it as an edge. I mean, I don't – you know, if there's something I want, those are the things that, you know – if you're a label that's what you're looking for. If you're not looking for those things, you're looking for the wrong things.

Andy Allen: Ten million units a year.

Andy Allen: Absolutely. We sell very small shops. Ameba is certainly not a small shop, and we sell Wal-Mart, and we sell the armed forces, we sell – we actually even sell sporting good shops, we sell gallery shops, we sell fashion, we sell DKNY, we sell anybody that will take our music, and we think we'd get paid from it. We don't do that with everything we have, but we have been very aggressive in trying to find the place where people go to find music. I'll give you an example of a place that you wouldn't normally think of.

You guys know what Hot Topic stores are? So Hot Topic's a clothing store right? I mean, it's in the mall, they sell clothes, mostly black clothes, so they – mostly black, spikey, vinyl clothes, so they felt that they had people that were coming in, and they knew who their audience was, and their audience was into music, so they introduced a rack of records – CD's, I should say. They actually have vinyl there too, so I can use records. It worked. They put in another rack. It worked. They put in another rack. What it comes down to in a mall – most of these stores are mall stores, is how much space can you devote to something that you're only gonna make a margin of 30% on, because most of that black shit that they sell, they make 2 or 300% on. So when you buy a Nine Inch Nails tee-shirt in there, they're probably making 150, 170, 180% markup. When they buy a Warped disc that's in there for me, they're making maybe 20%, so they're not gonna put that – they're not gonna make that store full of record, cause they're not gonna make enough money to keep that place going.

Warped. Everybody knows the tour, we put out the disc. There's a little label called Side One Dummy that puts out these samplers of all the artists that appear on Warped. Hot Topic sold more Warped discs last year than Tower did.

Andy Allen: We seek it out. I mean, in some cases it comes both ways. I mean, there's some labels that honestly all we do is listen. They come in, they do a presentation, they tell us where they're gonna spend money, they tell us who the audience is, they tell us where the record's gonna break. Most indies are not that sophisticated, and they're asking for a lot of help, so I would say, you know, it's a cooperative process. There are some labels that really have a very good idea of exactly who they want to sell to.

In the case of Hot Topic we knew about the store, we saw that they were experimenting with music, we approached them, we opened them up as a customer, and thankfully we've had enough material that, that relationship has been a great relationship, and now with Side One Dummy and Epitaph. Epitaph does a huge business with Hot Topic because of their – just because, again, the audience, you know – for No Effects and Pennywise, and all that stuff, is in those stores, so that's a big store for them.

Interviewer: It speaks to the evolution of music. It's not a music business, it's not just about downloading, it's finding new markets.

Andy Allen: Well, you know, one of the things that we found is – of course you've seen most of the record stores are closing. I shouldn't say most, many are. Many of the chains are having a lot of trouble trying to stay open, and as a result we have far fewer places to purchase music than we ever did before, so you have to start seek – you have to either accept that, or you have to go seek out where are kids gonna be to buy music, you know. All you have to do is go into a mall and go into a Sam Goody store and see that there's nobody but adults in the Sam Goody store, and you go into Hot Topics store and there's kids there, you know. And so if you're trying to sell music to kids, you gotta put music where they go.
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