Richard James Burgess
February 7, 2017
The tumultuous changes in the music industry, from vinyl and CD sales to downloading and now streaming, has been a double-edged sword for the independent labels. Historically an underdog to the majors when it comes to radio play and prime retail space, the indies are finding more opportunities for success in the streaming world - yet digital remuneration is anything but substantial. Here, A2IM (American Association of Independent Music) CEO Richard James Burgess details their predicament and how they plan on improving the livelihood, not to mention cultural impact, of independent artists and the labels that support them.
You began in music playing drums in bands. Do you remember the moment when you decided to give up the skins and devote your career to the business of music?
I never completely gave it up; it's a passion. I still play; I practice on a daily basis. I still love the drums, and writing and producing, but I really started thinking more about the business side around 1996, when I moved from producing to managing. My kids had reached school age and couldn't travel with me so I wanted to be at home more. But I've always dabbled in the business as a matter of necessity. I started out in DIY bands during the 70s punk scene. My band wasn't musically punk but we embraced that ethos; we started our own label, did everything ourselves, and we used the independent distribution network that developed at that time. We were too weird for the mainstream companies and even the independents, so we had to take care of our own business. My Ph.D. dissertation was on the subject of musicians needing to know enough about the business to protect their interests and to be able to build their own careers so that they could retain creative and financial control.
Eventually you became a full-time label owner with Fowl Records....
Before that, through the '70s, in addition to being a studio musician, I signed with six major labels as an artist - HMV (NZ), Warner (UK), CBS/Epic U.K., Polydor (UK), RCA (UK), and Capitol (US). In between the Polydor and RCA deals, one of the bands I was in, Landscape, started its own label, Event Horizon Records. We sold tens of thousands of copies of our records, which, along with our large fan-base, led to RCA offering us a deal.
I started Fowl Records with Jimi of Jimmies Chicken Shack and Chris Keith, who ran my agency, Creative Booking. I did that for the same reasons: Jimi and the other local bands wanted to make records and, in the '90s alternative rock environment, aspired to major-label deals. How do you get a deal? Prove that you can sell records on your own label. That's how it often worked. Now you don't need a major label to launch and consummate a career; I like it better now.
But then you segued to Smithsonian/Folkways. What brought on that career move?
I was managing artists, had my own label, and an agency, and was doing pretty well when the Smithsonian job was offered to me. The salient factor in going there was that many records on Folkways influenced me as a kid - in particular, those by Lead Belly. One record on Folkways, that I bought when I was 15 or 16, was life changing because it contained many tracks that had influenced Lonnie Donegan. Donegan had resonated hugely with me when I was a kid and he was a lynchpin in the British skiffle movement. He also influenced The Beatles and many other British musicians of the '60s who were discovering American roots music, albeit secondhand. I thought I might never get another opportunity to work on a collection of that significance. And it was incredible; it is truly an amazing collection and I stayed there for 14 years.
But then you started another label, MARVA....
I did that in parallel to my other work; I mainly did blues and jazz but my kids were starting to make their own records in our studio. I needed a vehicle to put out those and other things I was working on, so I started MARVA. That label still exists. It's almost impossible to stifle the creative imperative.
Finally, you decided to head up A2IM. What led you to that decision?
Smithsonian Folkways had been a member of A2IM for about 10 years, and when I went to the Smithsonian, I used go to all the A2IM meetings, especially Indie Week. I considered it to be an important organization to support and the most valuable conference that I went to. This was especially true after the digital disruption with the business in transition from physical to digital and with labels trying to compete against unlimited free music. So many new things happened since Napster, and I needed to keep up.
A2IM is a phenomenal clearinghouse of information. Rich Bengloff, who was then President of A2IM, persuaded me to run for the board. I didn't get voted in at first, but he encouraged me to run again and I was successful the second time. I wound up being Chairman of the Board in my third year. When Rich stepped down in 2015, we embarked on a search for a replacement. After six months, at the end of the search, I threw my hat in the ring and to my surprise was selected. It's a really interesting challenge for me. It was essential that whoever got the job understood the multifaceted issues the industry is dealing with and the independent perspective. I've seen the music industry from almost all sides, so it seemed like a good fit.
What are the main challenges facing A2IM?
A2IM's genesis was the change from physical to digital. It was no longer business as usual where we could keep doing the same thing: put product on trucks, ship them to retail, pay for co-op advertising at retail, and work to get airplay. Suddenly it was a completely different game with unfamiliar rules. A2IM deals with this by communicating to our members what the changes are and the ways in which they will likely affect them. We also facilitate the connections between our labels and the various digital and other services that build businesses around recorded music. We aim for the relationships to be win-win, to build a bigger recorded music industry so everybody can make more money: services, labels, artists, writers and publishers.
The other challenge is in advocacy and policy. There are many different ways to discuss issues: directly with everyone from the digital services, to the multinational conglomerates, to our own labels as to why a particular issue might produce positive or negative results. We do things through advocacy on Capitol Hill to try to keep the legislative environment hospitable to independent labels and their artists. We deal with international issues via our sister organization WIN. When absolutely necessary we will defend our positions in court.
We recognize that the court of public opinion is important and we use PR and marketing so people can understand our positions. For instance, a seemingly innocuous new business model proposed by a tech company that devalues music can have a devastating effect on independent labels, their artists, writers, and publishers. It is my belief that making it harder for artists and writers to make a living and develop meaningful careers is ultimately worse for consumers, services, and American culture because it results in a diminished diversity and lowered standard of music being produced.
What's the toughest challenge?
Making sure that revenues generated by recorded music are equitably split with artists, songwriters, labels and publishers. We're all one community; we want see a level playing field. There are anomalous and inequitable conditions in our environment, legislative and otherwise, that make it difficult to survive. For instance, radio doesn't pay performance royalties even though it earns huge revenues from playing recorded music. We must get that fixed. There's the anomaly between subscription and ad-supported services. Plays on YouTube aren't worth anywhere near as much as streams on other services. We need to get all these uses of music rationalized and get to the point where creators and owners of recorded music receive fair compensation. As long as we don't fix these anomalies, we're doing unknown amounts of damage to our cultural heritage. I think it's culturally analogous to cutting down the Amazon rainforest where we don't know what creatures and potentially lifesaving plants are being lost.
Yet artists are loudly complaining that Spotify and streaming services in general don't pay nearly enough in royalties for the music.
Yes, streaming pays tiny fractions in royalties every time a song is played. But if you download a song or buy a CD, you pay for it one time but can listen to it an unlimited amount of times without paying again. That system rewards those who can frontload the marketing of the recordings. That's why the "filler track" syndrome reached a peak towards the end of the '90s; you couldn't buy the single and when you bought the album there were only two good tracks on it. If you could market a record successfully with a radio single and convince people to pay $18.99 for the album, it didn't matter (to the companies that did this) whether the consumer ever listened to it again.
The rewards are being distributed differently today. Now you can hear about an artist and go on a streaming service to listen to it. If you don't like it, you'll never listen to it again - and that artist will not receive any further streaming royalties from your plays. The meaningful rewards only go to those whose music is played again and again. I think that's a fairer system because the rewards don't go to the people capable of mounting the biggest marketing campaigns. The caveat is that we have to have streaming rates that can produce a living wage for artists, writers, labels and publishers -- and not just the most successful ones. We need a healthy middle class amongst artists, writers, labels and publishers. We know that subscription services, with the right rates, can produce such a result.
What's A2IM's view of radio?
A2IM definitely wants to see a level playing field when it comes to airplay. We need parity of access and we definitely don't have that. The way things are shaping up it's likely that radio is going to have to change its model. The algorithmic models of Spotify and Pandora (by reading skips, replays, adds to personal playlists, etc.) are 100% accurate in knowing who is listening to what and how much a track is engaging listeners or not. Radio still functions on the old model - promotion people go in and tell the radio station what their labels' priority records are, persuade the stations to play a tiny fraction of them, and then the station does a very limited sample survey of what their audience thinks of the very few records that get a shot at airplay. Additionally, records that get airplay do not have very long to prove themselves. A record that doesn't react results in listeners changing stations and that hurts advertising revenues so that track gets dropped from the playlist and that's the end of that record at radio.
Radio has been the dominion of the major labels. However, the independents massively over-index on streaming because their music has a much greater chance of being played by someone and, theoretically, 100% of the audience has some opportunity to hear it and react to it. A track can develop over a very long period of time in the streaming world and from complete obscurity. If a record starts to develop legs, it has much longer to develop familiarity and a chance to become widely popular. That has never been the case at terrestrial radio.
We're moving deeper into digital territory and online streaming radio could potentially change things. In addition, we just saw Norway move entirely away from FM and over to HD. I'm not sure it makes that much difference in terms of assessing what should be played, but more channels means more slots and potentially a wider spread of genres. In the meantime, we're lobbying hard for more airplay slots for independent artists. Remember, Adele is on the independent XL Recordings in the U.K., and Taylor Swift broke on independent label Big Machine. Those were the two biggest artists last year. Add to them the Lumineers, Alabama Shakes, and Mumford & Sons, and there's no good reason why independent recordings should have such a difficult time at radio. Undoubtedly, the multinational conglomerates are better at working radio than many independents. Some independents understand radio well but we have to work at educating our entire members about how and when to best approach radio.
Is A2IM promoting alternative revenue sources for its members outside the traditional sales and downloads, i.e.: touring, merchandise, etc.?
A2IM has more than 400 labels of all types and sizes. Some are digital-only; some are vinyl-only; some are almost solely based on touring artists; others have artists who never tour. We work with all of them and delve into all kinds of topics, to ensure that our members are well served, no matter what their business is based on and how hospitable or inhospitable their environment is. Whatever the parameters are, we want to promote best practices.
There has been talk in some quarters about the vinyl resurgence. Do you agree with that notion, or do you believe it will essentially stay as a niche phenomenon, something like classic cars?
The first time I heard a comment on vinyl resurgence was in 1994, when vinyl sales in the U.K. doubled from a very tiny number to a twice-as-big-but-still-tiny number. It has now been growing for more than two decades ... and I do love vinyl. I have a big vinyl collection, but vinyl is not the future. Streaming is the future for as far as we can currently see. Having said that, independents do extremely well with vinyl in certain genres. And some labels are known for doing it, but it's expensive to make, distribute and sell. There is no manufacturing or surplus-stock cost for streaming and downloads, and close to zero distribution and storage costs. I'm in favor of vinyl; it's a nice additional source of revenue for certain artists. Nevertheless, if we want a healthy industry, optimizing streaming is imperative.
You're also a member on the SoundExchange Board. How effective have they been for indie labels and their artists?
We're in the middle of the SDARS III rate setting hearing, and SoundExchange has been fighting for our cause. Unfortunately, the legislative and legal environment seems to be actively working against us right now. We just got through the Web IV rate setting process, which didn't go as well as we would've liked. I don't understand the CRB's thinking. Certain companies are making large fortunes from the exploitation of music and they're not willing to support the artists who make the music that enables them to make these fortunes. These corporations play our music and make money from advertising and from subscriptions. It can only be explained in terms of rampant greed. In recent years, the courts and CRBs appear to have favored tech companies over the creators of music to the point of impoverishing creators and producers.
We need to continue to be in the forefront in the fight over royalty rates at the copyright royalty board tribunals; we need to be in there fighting as hard as we can because even though some labels are signing direct deals with individual radio groups, the statutory rates influence the direct deal rates. The CRB's statutory rates effectively form the ceiling of the direct deals. If the CRB rates go lower, the direct deals will go lower.
Aside from the fundamental unfairness of these royalty rates in relation to profits, there is a problem with the inconsistent nature of royalties across the electromagnetic spectrum. All these different services are a part of the electromagnetic spectrum, yet their royalty rates are wildly divergent. It makes no sense; there should be one rate for every company that exploits the performance of recorded music to make money and the rates should be in proportion to revenues/profits. The most egregious example, of course, is terrestrial radio, an $18 billion industry, that doesn't pay a cent to recording artists and labels. Running close behind it is YouTube.
So what's your vision for the future of A2IM and its member labels?
I have a saying, "Full boost at all frequencies." It's a geek producer thing; if you boost all frequencies, you make things louder. We need to move forward on all fronts to achieve all the gains we can. We want a fairer situation for the people creating and producing recorded music. They are essential to entities like radio. A high percentage of radio stations build their businesses on recorded music, yet they don't want to share any of that with the labels who spend the money developing the artists who in turn dedicate their lives to creating this music we all love. It's analogous to a supermarket not paying for the food it sells.
There are those who say that the digital disruption ultimately diminished the value of music. I disagree. The value of music is greater than it has ever been. What's happening is that exploiters of music are appropriating its value. Value is being extracted but is not being equitably shared with creators and owners of the copyrights. That needs to change or we will have a situation like plant and animal extinction. For the most part we don't know the repercussions of human-made extinctions. If we don't take care of creators and the people who take care of the creators - the labels and publishers - we won't even know how much damage we've done. We won't know if the next Prince, Hendrix, Miles Davis or Beatles are currently realizing that they can't make enough money in music and deciding to abandon their nascent music careers or never embarking on one in order to create a startup or to go to work for a tech company.