The Titanic: The Music Business

Napster. Mergers. Lay-offs. The traditional music business is like the Titanic. There’s a beautiful orchestra playing. There is chablis. But the water is coming in slowly. There is less and less room on the boat.

The start-up lifeboats are small, spare and cold. They are full of strangers, who are not so well dressed. No one is sure who’s steering them or which way they’re going in the new music waters. But hell, everyone’s in it together and there’s no Celine Dion soundtrack to endure.

Executives are beginning to jump ship. A group of them traded anecdotes at the recent mp3 summit in San Diego. Liz Brooks, then a senior record label executive, was staying at the Four Seasons in New York with her boss, a big macher (they still speak Yiddish on the Titanic). They are in rooms 201 and 202. He decided to schedule a lunch meeting with her. So he did the simplest thing he could think of: called his secretary in LA, and had her ring Liz up to make the necessary arrangements. When you’re a macher, you don’t make your lunch dates yourself.

The old music life was full of crazy personalities and charming characters, people whose power and eccentricities were endured, or even celebrated, because of their “golden ears.” Personal contacts are key to a power base in that business. In fact, they are often the sum total of a persons value and job. Lunch can make or break you. It led former VP or A&R at Virgin Records, Danny Goodwin, to conclude that, “Some of the most successful people in the music industry have no [quantifiable] skills that you can really put your finger on.”

The Music Titanic was also full of window offices, assistants, 11:00am start times, expense accounts and limo rides. It’s a world of laughter, a world of tears and a world where the company picks up the tab at the strip bar or for the Sega Genesis if its done in the name of signing a band. “I was living a rock star life, by trying to sign rocks stars” says Ray Santamaria who worked A&R for Interscope for years and is now at

It’s cush and glamorous, but it’s also a world of ass-kissing and cutthroat office politics. It’s a mature business. Innovation comes rarely and slowly. You need to be attached to a hit to be perceived as having value. People say that maybe 5% of A&R guys ever get attached to a hit, so the posturing is intense. Goodwin observes, “you’d have better odds up at Vegas.”

It can be crazy-making. “I was tired of having companies tell me that ‘this demo sucks’ and then six months later watch the President sign [them], and cut me out of it,” admitted Santamaria, who found at 30 that he couldn’t keep up. “I’m too old. I’m tired of going out all the time.”

Angela Garcia, now at, described how she was pushed over the edge: Her mentor who once taught her “everything about artist development” and looking at the long-term later responded to a decision in her marketing plan: ‘This is not about art. This is about making money!’ “You can do it on their own then,” she replied. “Because I don’t want to be here anymore.”

Weary of bureaucracy and disconnecting with powerful label players who said things like “Moby is fucking weird and the album can’t sell it’s way out of a paper bag.” Liz Brooks, a sort of Molly Brown for the music crowd took the splash and made for the head lifeboat in the pack. Before she jumped, she asked herself: “This is going to be what you make of it. But do you want to be in the past or in the future?” She is now VP of Marketing at the infamous Napster.

Despite frustrations and shortcomings on the ship, leaving was difficult for most hitmakers those who love working with artists and who earned their herb-encrusted baguette through their contacts in the system they knew best. Santamaria admits, “it’s a frightening proposition to go to the New Economy.”

Goodbye Lunch, Hello Breakfast

“There wasn’t exactly a big support group there for us on the other side.” said Joe Fleischer, of (née HITS Magazine). “The music industry is genuinely afraid and threatened [by] what the technology industry has done. Liz and I talked about it five times a day for two months, bolstering each others’ confidence.”

Frightening as it was–they jumped. And found the waters can be cold. Liz discovered that “there’s definitely a difference in the cush factor.” At Sony Music she had an office with a view in NY and LA, and jetted between them both in high style. At Napster, she shares a room with 12 other people. But she is excited about the opportunities to deal with something other than the status quo. And most of all the self-jurisdiction that makes decision-making sweet and easy. “We don’t have to look to EMI, who looks to Time Warner, who looks to AOL. We own the company.”

Geoff Siegel, who left Giant, a Warner Brothers label for Emusic was stunned by the request to be on a conference call at 7:30am. An hour that didn’t even register on the radar screen of his previous life. “I’m just going to bed [then]. I’m just crawling in.” He has no assistant or first class travel. But he found, he says with his tongue in cheek, “I can fax now, by myself.”

Instead of Yiddish and deal-talk, they speak geek in the new boats. Danny Goodwin, now at Supertracks, carefully shows off his new vocabulary “I was given a laptop and a docking station, a port replicator.” he tells me. “Now I use this to plug into my Universal Serial Bus and away I go.” Danny spells out these words slowly, like an anglophone careful to heavily enunciate his enchilada order to a Mexican waiter.

Goodwin, whose assistant used to have to open his Word documents for him when he was at Virgin, now finds himself expected to use Powerpoint. Yes my friends, you have to row the lifeboats.

The common focus on work, rather than nothing but personality is liberating to these folks. It’s a world that forgives failure. And there’s plenty of work to be done, which makes it a sea of opportunity and stewardship.

“I’ve been talking to these guys from and everybody’s smart and their nice and they’re motivated, and I thought that’d be a nice change from the music industry.” said Fleischer. “[It’s] absolutely the best thing I ever did.”

Though a recent casualty of the Emusic lay-offs, Geoff Siegel remains a fan of the new music world: “I went from a place where all they said was no, to a place where all they said was yes.”

Santamaria is equally enthusiastic–“I’ll give up my steak-dinners and first-class flights to own a piece of the company any day.” There is universal agreement about equity participation. And Fleischer pointed out that the stock-options are the only part of the jump that the old colleagues on the Titanic understand. The new life-preserver.

Ironic Waters

These new passengers-cum-sailors will find, if they stick around in the Internet waters long enough, that they will have to navigate some icebergs of their own. They have been hired to “interface” as their new culture would put it–with the old music business. Now it is their turn to sit on the other side of the desk and persuade the people on the Titanic that the Net is a place of opportunity. It is their turn to shake their heads in frustration with people who “don’t get it.” They now have someone lower on the technological chain than they are.

In fact, the dangerous new waters may start to feel strangely familiar.

The new Internet music waters has its own versions of irrational power-brokers. Only this time they wear denim shirts and Dockers instead of Prada and ponytails.

And the personal assistant is a piece of technology rather than a young something gunning for your job, but it’s just as difficult to get it to work. Communication gets just as intermediated, but with a new twist. The Internet world is full of companies that make technology that is supposed to make the world better. They all try and use their own tools, but are often hampered by them because they don’t always work. But here in the Net waters, we have the determination to use technologies, even if they’re going to kill us. I’ve seen one-room start-ups with eight people who cannot send e-mail to each other. If the network is down, no one can do anything. You can’t even send a stupid written document from desk to desk. You have to go home and send it through a server on the opposite coast.

And in the new waters, data must be generated in the name of quantifiable skills. If it isn’t in Powerpoint, it just isn’t real. Want to make a point? Generate email. Want to do more than a good job, but be perceived as doing a good job, even when the start-up is veering from one course to the next? Make charts and timelines. Instead of face-time one must generate data.

The new sailors have also traded in one version of a hectic pace and youth culture for another. Danny Goodwin noted “It’s gone from a New York minute to a Silicon Valley second.” And while the A&R people may gotten burned out going out all the time, they may start to miss the old work life. At least they got out. The new hours are longer, and they’re generally put in inside attached to a keyboard.

And while all this data and new skills add sanity, they also belie the fact that it is something as subjective as those “golden ears” that really steers the new boat: market value. The new machers may not have an office on the 30th floor, in fact they may not even be in your building, but a company can turn 180 degrees at the whim of the next investor’s fancy. And the market can be as fickle or lemming-like as the public that eats up manufactured boy groups or decides it wants the Macarena all at once. Nurturing talent and creative Internet businesses takes can take the same tireless advocacy to support a favourite, unique band.

If they’re leaving the traditional music business because decision-makers say things like “this is not about art, this is about making money,” it will be interesting to see how they adapt to a world that, even if it wants to be about the artist, is primarily driven by rapid growth and exit opportunities.

So bon voyage and hold onto your compass. Welcome to the new music waters. It’s only a 3 hour tour.