April 29, 2014
Kevin Liles started as an unpaid intern in 1991. Within seven years, he had flown up the ranks to become President of Def Jam Music Group, expanding the label's brand with offshoot labels and cross-marketing deals. Liles would rise to EVP of Island Def jam Music Group, and then segue to the EVP post at Warner Music Group. But as the industry changed, so did Liles, leaving WMG in 2008 for a bevy of entrepreneurial projects, only to return as a partner in Lyor Cohen's new 300 "content company." The new entity is adapting to the New World Order of music by securing investors as diverse as Google and Columbus Nova, which owns part of Rhapsody. It has pacted with Twitter to provide music discovery and marketing. Here, Liles explains how 300 - and the business in general - can prosper in the digital music climate.
You essentially grew up in the label business, starting with Def Jam over 20 years ago, rising to Pres. of Def Jam Music Group, then EVP of IDJMG, a similar post at WMG and now at 300. How has the business changed since you started?
There have been a few changes, but lot of it -- which I feel is the most important -- hasn't changed. Our #1 goal is still to find talent, nurture talent, bring it to market and build a brand. That is something I've done for the past 30-plus years in my life, since I was young street kid promoting records back in the day.
What has changed is the model. There needs to be reinvention of the business model because the new technology has turned a high-margin, low-volume business into a low-margin, high-volume business. We used to be able control the amount of singles released and sold, which enabled us to base our marketing of new artists. Now we don't have that kind of control because of the deals we have with our technology partners. We have to go back and rethink a new business model.
Think of it in terms of evolution; some artists still get the big single, some still sell albums, but the difference is that more music is being consumed than ever because there are so many distribution opportunities. Record stores close at night, but consumers now have 24/7 access to music though their mobile devices. Streaming is becoming a great resource -- and another opportunity for the consumer to access our music. We feel confident that we will be able to reinvent ourselves to monetize the new distribution opportunities, but we won't be able to change how we find talent, how we market it and bring it to marketplace. That's still the crucial job for the label, the curator, the artist manager or whomever.
Back in '92, radio was the "be all, end all" in breaking a band. Is that still true - and if not, when did it become obvious that it wasn't?
Today we look at our business in whole new light. It's not just about selling CDs or digital tracks. We're talking synch, merchandising, touring, TV shows, endorsements ... there are a lot of things that go into artist development on a label level today that in the past, people never cared about. Me, I always cared about things such as how the artist's T-shirts looked. I thought that was important in the management of our business from the beginning because of the opportunities those things provides us.
At 300, we feel we have the mindset of an indie with the muscle of a major -- based on our relationship experience in the business. We use every relationship in every corner of the earth to not just break talent, but to empower young people -- especially those who are inspired enough to take the risk themselves, such as streaming their own videos and putting out their own records. We want to reward the entrepreneurship of the kids who take their careers in their own hands.
We can create a wide array of deals for them, so they don't have to be penalized for being entrepreneurs. We don't have a big overhead with a big roster, where people can't focus on what makes artists special. At 300, we always say less is more. We have probably 30 people working with no more than 20 artists, which means every spot on 300's roster is very coveted. We prefer to work with entrepreneurs because we believe in the value proposition of working with people who try to do it themselves. That's basically what we've done for 30 years. We want to be like artists; we want to talk like them because the creative community does have something to say. If we can provide true distribution for their brand, we'll both win.
What's your take on radio these days? A recent Power Player, Jim Dungan from UMG Nashville, said radio has become "centralized" in that can break a record nationally sooner, but he misses the decline of creating regional hits that could be broken nationally. You agree or disagree?
Radio is similar to our business in that we both have a battle in redefining our position in our space. It goes without saying that a record always starts somewhere, but now it can be stated by a blogger or YouTube. It used to be just the DJ, who was the personality of the radio station. But today, with all the platforms for music out there, there are essentially a million stations that offer music instead of the hundreds of radio stations.
We now live in an on-demand system, which requires personalities and radio stations to reboot and reset. A lot of them have taken some steps in that regard. I believe their value will be determined on their music decisions. If they don't break more artists and allow consumers to join in the discovery process with them, they'll become archaic. Right now I don't think radio discovers new talent as much as they market talent. Because of that, the discovery process is coming from a lot of different places. I hope we can work with each other more as team to break new talent and bring an opportunity and value back in the partnership.
When did the 300 opportunity come up?
When I left Warner Bros. in '09, I was always thinking about what my next recording music/publishing venture should be. I thought about it long and hard. You eventually get to a point in your life where you just want to work with good people ... people you know and love. So the choice became simple. I always wanted to do something with Lyor Cohen when the timing was right, and when Lyor decided to step down as Chairman of WMG, it was the perfect time to work with him again
What does 300 do, in terms of breaking hits and artists, that can't be done at a typical major label? What separates you from the pack?
I've been asked that question a lot. That's like asking how you get artists such as DMX to sell four million records, or get Ludacris to sell three million copies of his first and second albums ... and how to take a kid off a street in Brooklyn, who had an idea about Rockafella, and take him from a local rap star to worldwide rock star ... or how we took a producer and provided him the platform to become Kanye West ... it goes on and on. It's what we've done over the past 30 years.
The special thing about 300 is accelerating the act of discovery, which we're now doing with through our partnership with Twitter. Our plans to use their metrics are ongoing and are helping us better know the consumer. Until now, we never really knew where and how consumers discover music. For a long time we had people collecting e-mails, but they were not data miners. Now, through Twitter, we can have an immediate and direct relationship with the consumer. You can call me 300's Chief Consumer Officer.
We want to know everything about our consumers, which is why we also have a partnership with Google. Our strategic relationships with Google and Twitter help us gain insight on consumers. The technology creates new metrics that enables us to turn a singles artist into a superstar artist.
How does Google's influence fit into 300?
They're the most powerful post-analytic company in the world. YouTube is becoming the best source for music discovery. It feels great to have them be strategic investors for 300.
We're seeing major growth in streaming services while digital sales are leveling off, if not outright dropping. Is that a good thing or is it a warning sign of worse things to come?
I don't think it's a warning sign. Video didn't kill the radio star, and I don't think streaming will kill the download business. But we have to think of this in terms of technology changing the world. It's like the time when hunters used to kill the food for their dinner table. Then the farmers found out that if they planted food that the animals could eat, they would come to the food to eat. Hunters didn't have to go out to kill the food; it could be fed and bred here. That's how you build an ecosystem for a community.
We've gone from horse carriages to planes to space travel. It's important that we recognize the evolution of music - and I don't think we're done growing. We're going to come up with even more great ideas; that's how I look at it now. I said in a speech one time that a lot of people think Facebook is the first wall people had to express themselves to the world. What about the graffiti wall? Graffiti was a great wall even if it didn't have an audience of millions.
Now we look at Twitter as a discovery and promotion tool similar to radio. The only difference is that Twitter allows a Kevin Liles to create his own personal network or station. It's a place where you can express who you are and what you stand for, much like Facebook ... and Instagram, which is the new MTV.
But not only can we use those platforms to allow people to find our artists as they express themselves, picture who they are and what makes them special, it also gives us the opportunity to do closed networks ... to create a 100,000-fan "fan club 2.0," where you aggregate the most loyal fans and offer them exclusive opportunities and moments that they can't share across other networks. We can promote and market to them exclusively, offering things that can touch the individual heart. Everyone can stream an album and sell it on iTunes. But we can stream something exclusive that fans can't find or get anywhere else.
As we continue to evolve, much like people wanting different kinds of cars and houses, you'll see people wanting music and finding new or different ways to access it. I said this 20 years ago and I believe now more than ever: The mobile phone will truly become the remote control to your life ... the personal soundtrack to your life that caters to you ...and is produced and controlled by you.
A lot of artists complain that music streaming inadequately compensates them for their work. Agree or disagree ... and if it's the former, what can they and you do about it?
Streaming is a new model; it's something that we have to see if it can work as a business first and once that happens, then we work on adequate monetization. Remember when iTunes came out and Apple priced every song at 99 cents? Now it offers a variety of price points. It's similar to the earlier days when CDs, cassettes and DVDs were all new businesses. This won't take as long to mature because the new technology we'll see in the next couple of years will help monetize streaming. I don't want to get angry because it's not totally right yet, and I don't want to be one of the guys who says, "This new system's broke and there's nothing we can do." There is something we can we do - and that's work on it every day until we come up with the best way to monetize it.
Clear Channel has done content deals with labels to avoid paying exorbitant digital royalties. What's your take on that concept ... and do you feel 300 will eventually commit to such deals and they'll become commonplace?
We don't have direct deals with radio companies yet, but like any deal we do at 300, we do them based on what's best for our clients and for us.
The business has certainly changed a lot since you started over 20 years ago. Do you see even more dramatic changes in the near future, or do you see things settling down a bit until you can prove you can dramatically grow the business digitally?
I truly think there's going to be a resurgence of the true artist, where artists are not just hit records but a collection of emotions and truth. When you can't speak for yourself, an artist can speak for you. New technology is going to continue to push the boundaries of music delivery and portability, to provide the access that's needed by a creator and curator to reach more music consumers around the world. More artists will be discovered, too. One thing that I'd love to see is even more entrepreneurs in this business because new technologies have helped take the gates down for them.