On the final day of this year's South by Southwest music showcase, I stumbled into a convention center ballroom that promised a lively discussion on the state of the music industry in the United States. I figured no sane member of the music press would pass that up, right? There's just so much to talk about. You've got satellite radio, Internet downloads, peer-to-peer file sharing technology, the iPod, eMusic, iTunes, reggae tone, ringtones, Britney Spears ... you name it. So I went in search of enlightenment.
Among the panelists was Jay Frank, a guy with the firm opinion that major record labels, generally, are dinosaurs out of touch with reality, signing bands nobody wants to hear and consequently destroying their own industry. So I corralled him once the panel ended and discovered he was the head of label relations and programming at Yahoo Music. Unbeknownst to me, and according to Mr. Frank, his company's website (music.yahoo.com), with 24 million visitors every month, has a bigger audience than any single, terrestrial radio station in the United States, meaning Yahoo is, in fact, the biggest radio station in the country by his definition. Overall, Yahoo's music division employs more than 200 people, including 11 programmers who, according to Frank, "are looking at all the music coming in across all genres, watching consumer reaction to it, and making sure that the music people like actually gets heard."
Imagine that. Local bands and new music fans can go to the Internet and share and promote music they like without paying any attention to the mass marketed, major record label pop stars. True, if you log on to Yahoo Music, you'll find plenty of commercialization, but if you look a little further, the idea of promoting new music across all genres is catching on quickly. In Albuquerque—and here's a shameless plug—see for yourself at www.rocksquawk.com. Most importantly, if you are a band in search of an audience, or just a music lover with a disdain for the garden variety, corporate radio playlist, I suspect you'll be interested in what Frank has to say.
Explain what your company does.
Yahoo Music is the biggest radio station in the country, and we deliver established music to people, and new music. The reason we're successful is that we target the music fans. We give them the type of music that they want, so they get their favorite music, as well as new music that they are most likely going to enjoy.
How do the small, independent labels view what you're doing?
Independent artists absolutely love utilizing Yahoo Music. They can get airplay and it is targeted to such a mass scale that they're reaching audiences that they never could before. We have a beautiful system in that we can still play the top pop artists and play them extensively, but independent artists can get played because of our scale—5, 10, 20,000 times a week—which for us is getting it out to a small, targeted audience, but to an independent musician, that's more people per week than they could get anywhere else.
And how does an independent musician get access to your site?
Well, we have relationships with a lot of the significant independent record labels. They service us their material. We get the music on. For smaller independent record labels, it's very easy—we have a FAQ section—it says send the CD to this address and we'll get it on. It usually takes about two to four weeks between when we get a CD and when we get it up on our system, but we put up nearly every CD that we actually get.
So it's a place where you can go and discover new music?
That is our big mantra. We have been breaking new bands, bands like My Chemical Romance, recently. We started playing their music and their sales have jumped up tremendously. We played an Interpol video and their CD sales jumped up 100 percent just from our airplay.
So you are promoting the local DJ concept that no longer really exists on corporate radio? You know, acting like a DJ that turns people on to new music regardless of the record label promoting it.
Yeah. The difference is the local DJ is the audience. The local DJ is not myself. What happens is you get a band, any band in the world, and we'll push it out to people and we'll take all the people that said that they liked that band and find out what are the other bands that they liked. Let's say it's Band X which is a little bit like Coldplay, so then we play Band X to more Coldplay fans, and the more Coldplay fans that like it, the more the record grows. So, it's all about finding the right audience and targeting it, not because I say so, but because the audience says so.
Explain the licensing agreement?
You know, the government several years ago set up statutory licenses, so what we do is, for all the royalties for songs we play, we send royalties to Sound Exchange. Artists can collect their royalties from there.
How does the royalty system work?
We're an advertising-
What about downloads?
We've recently purchased another company called MusicMatch and you can actually do downloads for a fee there. So when someone hears a new song on Yahoo Music, they go to MusicMatch to actually download it.
There was some talk this year about a comprehensive archive of all the music ever created in the world being available on the Internet and each song could be purchased for a sliding fee. Do you see Yahoo, with what you're working on, being that actual site.
I don't really see Yahoo as being the place that has the largest collection of music. It's already taken a lot of time to have the most music possible for people to access. The music video library is larger than anything else that you can get online. We have 10,000 videos available. We have well over 800,000 tracks that people can download and stream from our MusicMatch site and that's going to be growing. Right now, there's a lot of rights issues with certain artists at certain labels that prevent every track from being up there, but we are certainly aggressively moving forward to get as many of those millions of tracks that are available into our service.
For the last five years here at SXSW, industry folks keep talking about Internet downloads, and it seems that the Recording Industry Association of America doesn't have a clue how to put together a business model to capitalize on it. Instead they file a half-million dollar lawsuit against a 12-year-old kid for copyright violation.
I think the recording industry has grasped downloads, and they are now working it into an acceptable business model. But I think it goes to the old cliché: "Something is only illegal when you get arrested for it." A message needed to be sent. I think that the message is somewhat incomplete. CD burning—you talk to kids and they think that CD burning is completely legal and while there is some fair use to CD burning, the way that kids are using it is a bit aggressive. I think what's most important though is why they're doing all this is because there isn't a convenient way to do it legally. With our acquiring of MusicMatch, we're trying to close the gap and make a convenient way for people to download music legally that is not cost prohibitive and in a way that is something that parents can be comfortable knowing that it's legal. When you get to a point—which we believe will be reached in the next three to five years—where the majority of active music consumers can get a subscription service, the idea of piracy goes away. Simply because people know that they can have convenience. Just about every business has a shady underside where you can go underground to get something cheap. You know, a lot of times people don't want to do it, because it's not convenient. It's fraught with some danger.
Do you think websites like Yahoo will make major labels obsolete? Say an Albuquerque band can get their career going, get a national or even worldwide audience without sitting around saying, "I've got to get my band signed to a label so I can become a star."
I think that's happening now. I mean, on Yahoo Music, we've had great success with Bright Eyes. Bright Eyes (Conor Oberst) is developing a tremendous audience with an independent record label. Major labels won't go away, however.
Bright Eyes has received tremendous media support.
Exactly, but it's taken him five years to do it. I think he's a great example of someone who did it through Internet marketing and touring. He's always been a successful artist for us. Meanwhile radio stations, even after he's proven himself with sales, continue to ignore him.
Because he doesn't fit into a narrow format?
I think it's because, in corporate radio, the playlist is so fine-tuned and they can't take chances. If somebody's not calling them up 100 times a week to pester them, they don't want to take the chance. On Internet radio, we take chances every single hour. I put up every single record that comes in and each record has equal footing with every other record that's out there. Good music rises to the top. It doesn't matter what label it comes on; it doesn't matter what format it's in—if it's good, it'll rise to the top. ... I think major labels have started to move away from relying on radio and are now realizing the importance of Internet promotion—that Internet exposure is something that is a viable business model. Until this point, they've been beholden to the type of music that radio would play and radio does ignore certain subsets of music, simply because it doesn't get a demographic that works for their advertising base.
Give me an example.
Emo music. I think that emo is the biggest rock genre for teenagers. We have a program called "Who's Next?," a new artist program where people get to vote on which artists are their favorite. Emo artists win most of the time and the reason why is because they have a very young fan base, who are rabid and who are hungry and love these bands—bands like My Chemical Romance and Hawthorn Heights. Radio stations, if they play too much of that music, their audience skews too young and then they can't sell certain types of advertising. For us, it's about just getting the right music out to the right people. The advertisers will follow.
But it doesn't seem the corporate radio accounting formula agrees with that. I once heard Outkast, Allman Brothers and Duran Duran played back-to-back on a station in Albuquerque.
Because I think what's happening is they're failing to realize rock music needs to be energized by teenagers, it needs to be energized by college kids, and you can't sell beer ads to an audience that's under 21. So rock radio today is having trouble and switching formats like you discussed, because the corporate radio world has alienated the youth.
That seems like a really incompetent business model.
You said it, not me.
Would you agree with that?
I think that any business always needs to identify the youth and whether it's profitable or not. Make sure the youth are interested in what you're doing. Otherwise, they won't necessarily be there for you in the future.
You made the statement in one of the panel discussions—you said major labels are signing bands that nobody wants to hear—that the music they're putting out is basically shit. Elaborate on that.
The major labels are definitively going to be EMI, Universal, Sony BMG and Warner Bros.—multi-billion dollar corporations. The reality of it is that every record that comes out on these major labels has an audience—some audience. Sometimes a small audience, sometimes a big audience. At the end of the day, when put out to the majority of U.S. music listeners, the majority of the records put up by these record labels are not liked by the majority of music consumers. Those records that have a minority following might be very successful on an independent record label, selling 10, 20, 30,000 copies. On a major record label, they can't spend the amount of money it takes to sell 10, 20, 30,000 copies. They have to spend more. So, the business model loses money because they're signing acts that—saying they're shit might be overreaching—but ...
You're saying artistically ... in your opinion?
Yes. Basically, it's shit. I think when you're running a business and you have stockholders that you have to answer to, then you have to determine what is the demand of the audience and fill that demand. If people want a certain type of music, then you need to sign that music and get that music out to people. I don't think major record labels are doing a good enough job in identifying that. They're signing acts that they believe might be able to create a demand. When you know anything about a broad music fan—again, I'm not talking about a niche music fan, but a broad music fan—you will know that these artists do not have the caliber of talent to actually reach the broad music fan. If they were on an independent record label, I probably would not be saying the same comments. But on a major record label—we're talking about running a multi-million dollar conglomerate—you have to be concerned about the bottom line.
What do you see as the future of music?
The future of music is what a lot of the users of Yahoo Music get—it's called perceived personalization. Right now, radio stations are very easy. You push a button, you listen to music. The pro is it's easy for me to find. I don't have to do any work. The con is that someone else is making the decisions for me and they play a lot of music I don't like. The other side of the fence is personalized playlists for portable music devices. The pro is I get only the music I like, because I control exactly what music goes on it. The con is it takes me a long time to put together the playlists, ripping CDs, etc. ... What Yahoo Music does is right in the middle. You achieve personalization. You give us a little bit of information about who you are and we will go ahead and put together the playlist for you and include everyone else who looks similar in musical taste to you.
You said, "Not all music is created equal." Elaborate on that.
Absolutely true. Well, people are not inherently designed to want to pay a lot of money for a band that they've never heard before. If they're going to spend money, they want to be able to feel comfortable with it. Similarly, if it's something that they really want, there is a huge demand for it, say a big pop star, then they would be willing to pay just about any amount of money to get that record: that feeling of when you hear a song and you go "Ah, that song is fantastic. I have to have it." At that particular moment, the value of how much you would pay for that song goes up.
On one hand, you say at the end of the day that the record industry—the four major labels that dominate what is played on corporate radio—that they're releasing shit and nobody wants it. Then on the other hand, you're acknowledging that people buy the big pop star music, because it's mass marketed. Seems like a contradiction.
What I'm talking about are record labels. If you are operating a business, you identify what is a need in that business and you make things to fill that need. Reggae tone music I think is an example of music that is happening on the streets and is happening in a big way, and I think it is a style of music that can be generating a lot of sales. And independent record companies are selling 50,000 to 100,000 copies of individual reggae tone compilations, but major labels do not seem to be jumping at the chance to sign a lot of reggae tone acts to make them super huge.
Meanwhile they're signing a lot of other niche genres, such as Livetronica music or British rock bands—stuff that has a market. It has a market in the U.S. that I see as nowhere near as big as reggae tone. So, yeah, my feeling is if you operate a business, you find the needs to fill that business and if you see a certain segment of the population that's not responding to the type of music, you don't find that niche. Major labels instead continue to sign acts that have absolutely no impact on certain segments of the population.
Albuquerque, like most cities, has its share of young bands putting out their own CDs with great artwork, but it's still with their own money and limited in the volume and they're playing around a lot locally, and that's about it. What advice would you give those bands on how to get their music to a broader audience?
What you can do is never tire of talking about your music to anybody. You know, just get it out to as many people as possible. Friends are the best way to do it. Community is an active part of it. ... Work your ass off. Because no one's going to do it for you. Do it yourself. Don't concentrate on the record labels. Concentrate on you and your fans. The record labels will come if you get enough fans. Do not worry. They will find you. But you can build a career and ignore the record labels. Concentrate on nothing more than adding fans everyday.
And that is the future of music on the Internet?
I think mostly it's going to be on the Internet. It used to be that, you know, if you're from Albuquerque you drove around Albuquerque or maybe you might be able to venture out into Arizona or El Paso or something to be able to tour. And maybe grow a little bit of an audience there. But, now, with the Internet, you can find people in every city, get them into your music, and if you did tour in far away places like Detroit or Chicago, you might actually have (larger numbers of) people at your show.
Because they may find—and I know bands that this has happened to—that there's a ton of people that like them in a completely different city and the band goes and moves to that city because people are more receptive in a particular city than others. A lot of musicians might live in tiny towns or in places that are larger cities that musically are just not on the same wavelength