TAXI Road Rally 2003 A&R Panel

Moderated by Michael Laskow

Panelists
Marshall Altman - Columbia Records
Cliff Audretch, Jr. - Sony Music Nashville
Michael Laskow - TAXI President
Tony Ferguson - Interscope Records
Loren Israel - Capitol Records
Steve Smith - Aware Records

TAXI: Marshall, has the current state of the industry changed the rules for what labels are looking to sign? Has it changed what type of stuff you're signing and how many acts you can sign a year?

Marshall Altman: It's definitely different than it was five years ago. It will be different this Monday than it was last Friday. Because we're faced with competing against video games and movies, the problem is, we don't get to sign as much stuff as we used to, just to put it really simply. We have to spend more money trying to break the artists that we do sign. Right now, if you want to survive in the business, and if your label wants to survive in the business, you need to be damn sure of what you're getting into before you commit the $2 million to marketing and promotion, which is what it costs to break a new act. If you're going to commit to a new artist-if this guy here in the front row gets signed tomorrow-it's not the $300,000 that you're going to spend on (making) your record that record companies are concerned about, it's the $2- to $5 million that is going to get spent marketing and promoting your record.

What we all have to do as a group right now-and of course there are always exceptions to this-is make sure we know what we're getting into. The element of risk has been beaten out of the business. There are always great development stories, but on the major label side, the element of risk is not something that people like to deal with. They like to be confident that they have a hit record on their hands before they sign it. Yes, we all have projects that we develop. Yes, you can look at Columbia Records and say well there is this band, and they only sold 25,000 records. Those are the exceptions and not the rule. It's a tough time to get a record deal, but always remember that it's easier to get a record deal than it is to be successful. That's the way we look at it. Simply put, it's expensive and it's hard right now, for us, just like it is for you guys.

TAXI: Cliff, how many acts does a country label have on its roster at any moment, and how many new acts get signed each year?

Cliff Audretch: Right now, at Sony Music Nashville we have maybe 12 active acts. Four or five months ago, we had 24. We had new leadership come in. There was downsizing. There is not as big a window anymore to sign acts, as Marshall was saying. It's not the same as it used to be. We may sign four or five acts a year, but we don't do as much development because we're downsized. We've been downsized three times in the last couple of years. Without people to actually work with a new act, there is no development. So we're looking for stuff that is real and is already a hit act. They are harder to find, so we don't sign anywhere near as many acts as we used to.

Marshall: Major labels are poaching a lot from indie labels, because indie labels will get the job started. They'll get a record to 50,000 or 100,000 copies. Then it's worth it for Columbia, or for Capitol, or for Interscope to come in and pay big money for something that is already working.

By the way, don't be scared if you've got a vision for yourself, and you want to make a record. Don't be scared to make a whole record if it's affordable to you, and you can deal with somebody saying they don't want it. It should be about what you guys want at the end of the day. That's what we like. We like artists who know what they want and know who they are.

TAXI: Tony, why is it so important for an act not to fall between the cracks stylistically? Why does an artist need to fit so squarely within a particular genre?

Tony Ferguson: It's purely from a marketing point of view. Like Marshall said, the cost of marketing records is so highly expensive now, if you have a focus with the music, and a focus with the image, you can translate that into a marketing focus. It keeps the cost down. It keeps people focused. There are so many people that work on the record-people within the company, and the champions you find outside the company to support the artist and the record. The artist needs to be focused, at least in the initial stage just to get them going. Then they can develop themselves into wherever they want to do.

TAXI: Steve, Aware seems to be, well, more aware of bands and acts that are out there building a following. What do you guys do that is different in that regard than the major players? You guys seem to know about all of these little touring bands that are building big followings. How do you figure that out?

Steve Smith: I don't think we necessarily know about them all. I wish we did. It's not so much knowing about them, it's just that we have ability to take a lot more time than a lot of people do. We're in a position where, like Marshall said, the indie labels can go out and get the records to 50,000. We have the ability to do that within our deal with Columbia. That's one of the reasons that we were brought in. We can take the time to sign a band, to let them go on the road, not spend a lot of money at first, and let them build their following. John Mayer is a perfect example. We put that record out on Aware for four months before we actually put it out on Columbia. It sold like 35- or 40,000 records. John is a very unique example in that he was doing 2- to 3,000 people in a market. We got him to that point. We just had the ability to be patient. We only sign one or two bands a year. We are very, very slow and methodical about things.

TAXI: How many acts do you have on the roster altogether?

Steve: Right now, we have eight, off the top of my head.The 2003 Road Rally A&R Panel

The 2003 Road Rally A&R Panel

TAXI: Loren, would you be more interested in signing an artist who has A minus songs, but A plus production? Or an artist whose demo was done on an 8-track, but has incredible songs?

Loren Israel: Songs. Honesty. Songs, Lyrics. Songs. I don't give a shit how bad the demo is. It's got to be about the songs and the honesty. Let me just say, we are all here just simply as conduits for the president of our companies. Even Tony, I would assume, cannot just sign something. Those days are over. Over, over, over. Whether you're a senior VP, a director, a coordinator-you cannot sign anything. I cannot say, "You. Yes." Having said that, everyone in this room, if they realistically approach their career, can find an audience. You can find people that resonate with your music. You can find people that connect with you in many different ways. Some of you are not going to be touring the country nine months out of the year. Some of you are not going to be the next U2, but you can make great records. That is in everyone's ability. Everyone. Things will change. Digital distribution will be something here to stay. People are going to be attracted to songs. Songs. We're going to be on our cell phones, and we're going to be able to pick up the new Chingy song, or the new John Mayer song, right from here. We're not going to be buying records. Probably not. (Sales) are going to be more and more driven by songs.

TAXI: Marshall, the other night we were talking about how an artist should just do what they do, and if they're good enough, the industry will find them. What if what they're doing isn't the flavor of the month or the year? What if they grow too old before the industry comes around to their style?

Marshall: Let's talk about the age myth. Every year there is an artist that defies the age myth, whether it's too young or too old. I don't think somebody's age has ever been the real reason why they didn't get signed. Granted, if you're 95 years old, and you want to be Justin Timberlake, you're probably not going to get a deal. But if you're 40 and you come out of the woodwork, and you're writing songs like Steve Earle or Bob Dylan, and you're great-I don't mean your mom tells you you're great, or your girlfriend tells you you're great, your best friend tells you you're great-I'm mean you're great. You step out and you play one show at a coffee shop, and the next time you show up, the coffee shop is overflowing. If you're that great and you're 50, somebody is going to get you a record deal. Somebody is going to sign you-whether it's Columbia Records, or Lost Highway, or Six Degrees or somebody. It's going to happen for you. The age myth is something we all tell ourselves when we don't have what it takes to get to where we want to go, unfortunately. If you have great songs, and you have a great voice, and you can communicate, it doesn't matter how old you are, within reasonable confines. It just doesn't. Every year people defy that myth. A lot of times it's easier to say, "Look you're too old," than it is to say, "Listen, your material is just not good enough." That's a hard thing for all of us to say. One of the reasons you don't get called back if we don't know you is it's hard to tell people that what they're doing isn't good enough.

Cliff: It's like telling them their children are ugly.

Marshall: At the end of the day, we all want the perfect package. Every one of us up here wants a 16-year old with an unbelievable voice, that is timeless, that can write songs that can move the world. But if those songs that can move the world come in a 45-year old...

Cliff: We'll find a 16-year old to sing them for you! (laughter)

Loren: Marshall, when was the last time you worked with or signed someone over the age of 30?

Marshall: All the time. Half our bands are over 30. Jurassic 5. The Wheat guys are over 30. The Thorns.

Cliff: We don't sign anybody under 30. (laughter) We had a 16-year old, but that basically doesn't work in country. Our latest signee was Buddy Jewell, the Nashville Star-which is basically the country equivalent of American Idol-and he was 42.

TAXI: But would Buddy Jewell have gotten signed at 42 if he had not been on that show?

Cliff: There is prejudice about stuff like that, but it's not the final answer.

TAXI: Are labels signing less acts and developing them more because they've got less on the roster and can concentrate more on them? Or are they signing less acts and still not developing them?

Tony: No, we have to develop them. If we're committing that kind of money to sign an act, we have to develop them. We made a conscious effort to cut back on our signings because of budget constraints, and also cut back on the amount of money it costs to sign some of these acts. We're trying to stop the front-loading of the money in the signings, the cost of making the records, the marketing, and the promotion. Everything has to be cut back...

TAXI: How much money do you typically spend on a new signing? Let's talk about a five-piece band that is going to get out and tour versus a pop artist.

Tony: Signing a rock band, probably anywhere between $300- to $500,000.

TAXI: Where do you spend the money after they've been signed? How much does a record cost? How much is tour support?

Tony: Typically, if you're going for the big guns-like if you're going to cross over certain formats to get to pop radio, which is the final piece of the puzzle and where you want to be-you're talking anywhere between $800,000 to $2 million to market and promote that particular artist. That's a big investment. That's on top of the signing money.

A pop artist has nowhere else to go except straight to the top-of-the-line format. It's a very expensive proposition. I have a friend of mine down in Florida who found the next boy band, I guess, a while back. He signed them and tried to do it as an independent label. He couldn't compete with the majors because the cost of doing business at the level of a pop artist is so expensive. You've got to have really deep pockets. The majors are the only people that have deep pockets. The only reason 'N Sync and those bands broke was basically because of the financing that they had independently of the label.

TAXI: I wonder why labels don't do deals like the movie business where a label might go to an outside partner and do a joint venture to bring in big money for something like that?

Tony: Sometimes we do. Sometimes an artist will come with deep pockets and match us dollar for dollar.

Marshall: Labels have already done that. That's what Sony is to Columbia Records. That's what the Bertelsmann Group is to BMG. At a certain point, all of the labels decided that they wanted to be able to make more money. Major corporate entities thought they could increase their revenues by investing. The partnerships that we do as major labels are with indie labels. We're the investors. We're the capitol finance groups to the Aware Records, Epitaphs, and Lou Pearlmans of the world. BMG went to Lou Pearlman, who had invested a million dollars of his own money, and said "Hey we'll invest $20 million in this, because you've already proven that it can work. In exchange for $20 million, we'll take 60- or 80-percent of the profits."

Cliff: I don't want to be contrary again, but it doesn't work that way in country music. An investor, more often than not, will get in the way of the partnership between the act and the management on the one hand, and the label on the other. It's a very specific, very controlled environment. A lot of times, investors will spoil the attempt that a label and an act are trying to do to make it happen.

TAXI: Because they think they know what they're doing, and they want more control, but they've got no experience, so they screw it up?

Cliff: Yes, it happens all the time.

Marshall: You have to think, all of us up here are pretty lucky. There are not a lot of A&R people left in the business. When outsiders sort of come into the business and try to revolutionize it, it rarely ever works. It's a company town for a reason.

TAXI: All of the A&R people now work at TAXI, which is exactly the way we planned it! (laughter)

Marshall: Seriously, what else is an A&R guy going to do? Thank god for TAXI. Just as a brief plug, it's an awesome thing to be able to get experience from guys that have been in the business. There are people that work at TAXI that have sold a lot of records that you all probably have in your collections at home. I know when I went to work for TAXI, I found it a really rewarding experience as an A&R person. It's nice to be able to write something down, instead of just saying no. That's all we get to do all day is say no, really.