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Independents' Day

Idealog January/February 2006, page 58. Design by Salt Design

It’s a business dominated by foreign players with multinational reach. But a revolution in technology and a grinding determination to do it by themselves has ensured the independent music labels and their talented artists are not just surviving, but flourishing in the local music business. Idealog looks for lessons in the indie renaissance

Peter Baker insists that no one should take the way he does business as an example, but  he’s clearly doing something right. Baker’s Auckland company, Rhythmethod, distributes Based on a True Story, the debut album by Fat Freddy’s Drop that went gold the day it shipped. The CD is closing in on 40,000 sales and helped the Wellington band take out most of the top prizes at the 2005 New Zealand Music Awards.

You can’t pull that off without a take-no-prisoners marketing masterplan, can you? Actually, you can. Baker—a Moby lookalike with a reputation for protecting musicians’ interests—says he “didn’t do a hell of a lot” in the way of promoting the record, preferring to let the music and the band’s live shows speak for themselves. The band did its part for the unconventional atmosphere by delivering the album eight months late.

Baker doesn’t even have a contract with the Freddys or their in-house indie label, The Drop—the band and the distributor have worked on a relationship of trust since they came together in 2002 and operate according to a set of shared principles. Even the country’s most powerful music retailer, The Warehouse, couldn’t get its own pricing deal for True Story—despite being “incredibly supportive” of the album—because Baker and the band agreed that retailers large and small should be on a level footing. “We didn’t do anything by the book really,” says Baker. “It wasn’t that we wanted to show people this is how you should do it, but just because it worked for those guys. You couldn’t emulate it.”

But the most unconventional part of the story is that Rhythmethod is an independent distributor, and independent distributors aren’t supposed to ship multi-platinum albums in New Zealand. Indeed, some don’t even try.

Rhythmethod’s success is one of many. Scribe, P Money, Savage, Mareko, Goldenhorse and SJD are all signed to locally-owned labels and have achieved critical and commercial success, working with multinationals to do so. While the major labels savagely retrench in the face of falling sales and the challenges of online distribution (both legal and illicit), the local independent sector is growing in size and confidence. It’s still not an easy road in a small market, but for businesses working out ways to prosper in a global economy, the rise of the local, independently-owned music labels offers useful lessons—some of them not in any textbook—for survival. They’re pioneering new ways of turning music into money.

More than 20 years ago, about a dozen representatives of New Zealand’s fledgling independent music sector gathered in a room at an Auckland recording studio to discuss putting up a united front to represent their interests in the industry. Not a great deal happened, in part because those present didn’t really know what they were doing. The thing they knew the least about was publishing and rights income. In fact, most barely knew what copyright was.

Times change. These days, Goldenhorse provide the backdrop for TVNZ promos, the Clean license the classic ‘Anything Could Happen’ for Labour Party campaign ads (quietly allowing everyone to forget that it’s actually a song about going to the doctor and trying to score drugs) and Chris Knox’s ‘Not Given Lightly’ helps sell Vogel’s bread. Between SJD albums, Sean Donnelly fed the family making music for Lotto ads.

This new commercial approach sits quite comfortably with the musicians. That’s mostly because the indies aren’t in it just for the money. “It does fundamentally come down to a genuine enthusiasm for music,” says Arch Hill Recordings’ Ben Howe. “When you’re a record label you feel part of the music even though you’re not making it yourself. The number two thing is just building up a community of musicians and people—that’s a really enjoyable thing to be involved in. The third thing, philosophically, is to try and sell that music to people, and that can be a fun challenge.”

“It’s important to run the business in a businesslike way, but at the end of the day I get more of a kick out of being involved in music than I do from making money out of it.â€?

Arch Hill’s roster includes David Kilgour (formerly of Flying Nun legends The Clean) and Dave Mulcahy (once of JPSE), as well as Howe’s own band, Fang. A successful release is “a few thousand” sales, says Howe. “Our culture has evolved into such an advanced stage of capitalism, where things can only be justified in terms of their economic value.

“It’s important to run the business in a businesslike way, but at the end of the day I get more of a kick out of being involved in music than I do from making money out of it.”

One label walking the line between art and commerce with particular panache is Wellington-based label Loop Recordings, a venture that emerged from the engaging, eccentric café culture magazine Loop. When the magazine folded in 2001, mercurial co-founder Michael Tucker kept the brand and focused it on the most popular element of the publication: the CD compilations of music and video that came with it.

Retail sales and licensing each make up a third of Loop’s revenue. The remainder comes from a source barely explored in the music industry: sponsorship. Loop’s latest compilation, Select 007: We Are Here, carries a Microsoft logo—and the punters don’t mind.

“One of the key things about sponsorship is the fact that you can put out a product to market that the market accepts,” says Tucker. “The Loop target market, which is a very discerning market, will accept something with a Microsoft logo on it because they know that there’s no other way a product as massive as Select 007—which is a DVD, CD and book of New Zealand culture—can actually hit the shelves and be viable without backing from corporates. So long as it’s done subtly and isn’t shoved down their throats.”

Technology has transformed all the creative professions in recent years, but the availability of cheap, high-quality digital recording equipment has been particularly important to the New Zealand success story. By legend, the story begins before computers, in the early 1980s, when Toy Love, a phenomenally talented band fronted by Knox, found itself locked in an awful recording experience in Australia under the auspices of Warner Brothers. Not only was the process expensive, but the band was excluded from key creative decisions.

“The album was crap but sold on the band’s credibility alone. It had zero impact worldwide,” Knox recalls. A year later, Toy Love had broken up but Knox and guitarist Alec Bathgate forged a very different path as the Tall Dwarfs. “We shoved one microphone in front of our pathetic gear and channelled our sounds, unfiltered, into an already-old Teac four-track reel-to-reel and released the frankly experimental results on Furtive, a shortlived but spunky little label.

“Amazingly, and especially upon this record’s subsequent re-release on the very young Flying Nun [label], it sold like hot buttered scones, not just within these shores but to the wider world. Later Tall Dwarfs releases inspired young musicians in Australia, the US, UK and Europe to try such an approach for themselves, helping kick-start the home-recording movement that is the backbone of the present-day indie scene. Spot the difference.”

Knox and his pal Doug Hood went on to make many of the early Flying Nun records the same way. Some of those recordings—most notably The Clean’s Boodle Boodle Boodle EP, made in a run-down community hall—stand as the best-sounding works of the era.

Sean Donnelly, the man behind folk-meets-techno-meets-pop band SJD, says the lights really went on when his self-recorded first album, 3, started to sell all by itself. “I’ve just always made music. It’s what I do. And I’ve been helped along a great deal by the artist’s benefit and Creative New Zealand.”

“One ad campaign can make you more than several thousand sales. It’s as simple as that—it makes a phenomenal difference.â€?

Things might have stayed the same but the quality of SJD’s music—both musically and technically, thanks to his digital recording equipment—meant it started attracting a niche audience. “Other people started to play it—bFM and Gary Steel from Beautiful Music shop really promoted me. I was so grateful because the established channels were less than interested.” Subsequent albums Lost Soul Music and Southern Lights have gone pretty much direct to his small, growing fan base, helping Southern Lights sell just short of gold status.

The final elements of Southern Lights were completed in a professional studio, but the ability for the artist to do the groundwork at home—Dave Dobbyn and Dimmer are others to work this way—allows creative control and keeps down costs.

Other recordings—the kind Bernie Griffen handles—are made entirely at home. Griffen is the head of Global Routes, a rock ‘n’ roll-oriented company that began distributing New Zealand music seven years ago under the wing of retailer Real Groovy Records, says he works on a model that lets him—and the artists, who typically take 50 percent of net receipts—make money on sales as small as 700 units.

“Basically independents start because the majors won’t sign artists,” says Griffen, a relaxed, affable bloke in his 40s. “That’s the reality. They only sign the ones they can justify the investment in, but if you want to have a diverse culture there has to be a whole breadth of music released.”

How can he justify the investment?

“We don’t have the costs,” says Griffen. “We wouldn’t have ten percent of the costs a major would have, in terms of the places they have, their offices, the way they run cars and credit cards and all that stuff. I run a company that turns over several million dollars and there are three of us. We do it pretty lean.”

In most cases, artists bring him a finished recording. Griffen will spend between $5,000 and $12,000 on a typical release, less than a tenth of what a major will spend getting an album to market. Most of that goes on promotion.

“One of the key differences for an indie is shaving the costs so that the artist is making money, and they see they’re making money, and that gives them the strength and support to go on,” says Griffen. “At a major they’d get 18 percent of the net worth, but our artists can sell 1,000 records and turn over, say, $20,000 worth of product at a net cost of $12,000, and we split $4,000 each. So they can make some money out of the records fairly quickly.”

So it’s the end of multinational music in New Zealand? Well, no. Many staff at the majors feel a real emotional attachment to New Zealand music, although the reality is that the bills actually get paid by shipping oodles of the new Usher album. But a new relationship between the indie and multinational has emerged.

Second, although some major labels here will sign artists directly (notably Sony BMG in the cases of Bic Runga and Dobbyn), a far more common model in New Zealand is for the act to be signed to an indie which does the artist development (and may actually be owned by the artist) and in turn signs a production and distribution (P&D) deal with a major. Goldenhorse? On Siren, via EMI. Scribe? Dirty Records, via Festival Mushroom Records (now Warner Music). Dawn Raid and Nesian Mystik’s label, Bounce, is distributed through Universal.

Many senior people at the major labels—such as Sony BMG advisor Malcolm Black and Adam Holt at Universal Music—were either in bands themselves or came through student radio, and the P&D deals provide an ideal way for them to stay involved with the local scene. They also have a key benefit for the indies: scale.

Simon Holloway’s Beaver Music did a P&D with Sony BMG for Misfits of Science, whose ‘Fools Love’ was a big pop hit last year. He knew he’d need around $200,000 to make and market their album properly: money he didn’t have. “That’s why you do a P&D deal,” says Holloway. “The majors are basically a big bank and media buyer for you.”

But even then, Holloway and his business partner were able to leverage their interest in Beaver’s recording studio, which normally handles film and TV work. “Although we got some advances from BMG, the studio said okay, take as much time as you like making the record and we’ll try and pick it up at the back end. Of course, that hasn’t happened yet, but after we take over Australia it will …”

Jim Pinckney (better known as DJ Stinky Jim) of the Round Trip Mars label admits to once trenchantly holding the view that if a release wasn’t fully independent it wasn’t really independent, but he realised he would need major label muscle to do justice to the SJD album Southern Lights.

He went for a P&D with Universal, who he credits with appreciating his small-label ethos. For example, he pulled together a bonus disc of remixes from the SJD album. It’s standard practice to re-release an album with such a bonus disc, reviving sales by obliging fans to buy the album again.

“We weren’t very comfortable with that because it feels like you’re penalising the people who’ve bought the album in the first place,” says Pinckney. “But we wanted to give Sean [SJD, that is] the same chance as everyone else, so we came up with a compromise where we’ll sell the bonus disc at the gigs at a cheap price. We’re concerned about treating right the people who support us. I can make those kinds of calls as Round Trip Mars and discuss it with Universal and they’ll be into it.”

Rhythmethod’s Baker says it all fits into a way of doing business. “I suppose it boils down to an ethic to me, which is actually working with people, as opposed to working against the retailers and against the bands and the labels, trying to screw each party for as much as you can. We’ve been able to build up working relationship based on trust. It all boils down to relationships.”

For the New Zealand musician, the renaissance in local ownership, powered by the mix of technology and entrepreneurship, is making the difference between a career and a calling. “I think of this as my career. It’s my job. I have a sustainable lifestyle now,” says Donnelly of SJD, who just bought a house in West Auckland. A chicken walks in as we’re talking. “Oh, I better get it out before it craps on the carpet.” Sustainable lifestyle? Worrying about the carpet? Now that’s not very rock’n’roll.

Making creativity pay

For a lesson in leveraging creativity, consider the efforts of Michael Tucker of Wellington’s Loop Recording. What began as a failed magazine has turned into a multimedia marketing machine. In 2005, Loop has two recordings pushing platinum (15,000 units): the Black Seeds’ easy-skanking On The Sun and Fly My Pretties’ Live @ Bats, a multimedia release drawn from performances by the Wellington supergroup formed by Black Seeds singer Barnaby Weir. Not many Loop releases manage fewer than 4,000 sales.

Tucker has walked both sides of the line—even as early Loop releases came packaged with counter-culture slogans, including a Green Party sponsorship for one, he was consulting for Lion Nathan on a strategy to take its Lion Pils brand to the danceparty market (the strategy was excellent; it was just the beer that sucked). Tucker has also made good use of government assistance, helping organise a delegation of more than 200 to the huge Popcom trade show in Germany, where they ran a taxpayer-funded New Zealand music stand.

Tucker’s natural inclination for marketing suffuses everything Loop does. Loopkast, his weekly podcast—audio files delivered over the Internet—introduces music to punters in a way the piracy-obsessed majors would not dare; yet they are, Tucker points out, essentially “a 15-minute radio ad” for the catalogue.

Loopkast clocks up 30,000 downloads a week, many from Europe and America. That in turn drives sales of Loop Recordings on Apple’s iTunes Music Store. Tucker got Loop onto iTunes after meeting a content aggregator (who can place tracks on iTunes) in France and later sharing a beer in London. The importance of networking, he reiterates. “It was synchronicity, really. It was our only chance to get on iTunes so it was cool.”

Loop’s latest turn, an advertising shop, is another blend of commerce and community. “We’re taking on some advertising clients and hiring account managers,” says Tucker. “We’re going to take on brand advice on a scale where we actually act as a full agency, using our pool of resources and like-minded businesses in Wellington—film companies, DVD companies and other design companies.

“I just see film and advertising as ways to access extra revenue. I’m using the fact that we are a cool brand. That’s not going to last forever, but while we are a cool brand it’s time to expand now.”

Licence to bill

The income from licensing the use of music is what keeps some local independents in business. “It makes a huge difference to us,” says Jim Pinckney. His Round Trip Mars label has sold several thousand copies of SJD’s enduring and intriguing Southern Lights album, but has made much more money from licensing—sometimes to compilations on other labels, but more often for advertising use—than from CD sales.

“One ad campaign can make you more than several thousand sales. It’s as simple as that—it makes a phenomenal difference,” says Pinckney.

Advertisers aren’t the only customers. A variety of indie artists appear on Air New Zealand’s inflight playlists, and, in one of the great coals-to-Newcastle stories, Waikato-based reggae band Katchafire this year licensed three tracks to the playlist of Jamaican Airlines.

On rare occasions, the money isn’t even the primary consideration in a licensing deal—as was the case when Wellington game developer Sidhe Interactive approached Beaver Music, the label of Misfits of Science, asking to use some of the duo’s music in its new PlayStation Portable title, GripShift.

“When it came up I went to Sony BMG and said, okay, what’s the precedent for this sort of usage?” says Beaver’s Simon Holloway. “So [Sony A&R director] Malcolm Black went and did a bit of research in Australia and found that even with big international names, it was of more benefit to actually get on a game rather than to say you’ve got worldwide rights and rollovers and so on.

“We did a deal with Sidhe that was realistic for both sides for the licence on the music from the album, and they commissioned the Misfits to write and produce the title track, which was owned by Sidhe.”

It was a nice piece of co-operation between two local creative industries—much in the vein of South Pacific Pictures’ long-term use of local music in Shortland Street and Outrageous Fortune. As a bonus, the Misfits themselves may turn up as unlockable characters in the game. It might be possible to buy that sort of profile, but it wouldn’t come cheap.

SJD, David Kilgour and Misfits of Science are among the 16 independent artists featured on Idealog’sIndependents’ Day CD, on the inside back cover of the January/February 2006 issue –Ed.

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