Moses Avalon

I know, I know. I’m usually the guy who’s very Bullish on the condition of the music business, but this is one story even I cannot spin upward.

To save the beleaguered major label, EMI, its owner, Guy Hands has about a month to come up with about $150 Million to satisfy payroll and debts. In real estate terms, Hands is upside down on his house. He now owes more than he can sell the company for and his bank, Citigroup, is forcing him to foreclose rather than give him the chance to save the label that controls such classic catalogs as the Beatles.

Knowing he can not find a buyer or come up with the money, Citigroup’s unofficial but rather obvious plan is to foreclose, at which point they get their hands on the super valuable catalogs for dimes on the dollar.

Normally, when companies this size are in trouble their creditors help out by restructuring the loans. But not here. In this case Citigroup, has bitch-slapped Hands and all but said, let it burn. When your own investors want you to fail, there is little hope of survival.

Historic music in the hands of bankers.

Hands, a former bnaker himself, experienced in bond trading, wants to chop up the company now, but, under the terms of his loan, Citigroup has final say and they say “no,” unless Hands can write the $150 Million check himself.

This is what happens when bankers try to screw other bankers.  Lawsuits of “bad faith” are pending.

Some inside sources leaked to me that Hands has a fail-safe plan; that all the money he needs has already been raised through his private phone book. So far, however, there is no sign of hope. In the past several months EMI has played shuffle the cards with key executive positions, hoping to revitalize the morale at the world’s smallest “major label.”

How did this happen to such a giant? Well, let’s head over the “I told you so” department of Moses Supposes.

LISTEN TO PAPA

In March of 2007, EMI quit the music business. Giving in to tech-biased rhetoric, they yielded to the ridiculous suggestion of a computer inventor named Steve Jobs.

Steve thought it would be a great idea to remove the copy protection from songs sold on his digital store, iTunes, which was responsible for less than 5% of music sales (then). As major labels laughed, EMI would blaze a trail into the internet environment. They thought, hey, we’ll be the cool label that let’s you give away the music after you buy it. Then fans will respect us.

I wrote then that this move would be the first nail in the EMI coffin. It was. “Fans” bit-torented and ripped through EMI’s catalog like an eight-ball in a Drew Barrymore cocaine binge.

From my 2007 article, “The DRM Manifesto”:

“If EMI’s DRM-free move catches on, the other Major’s will eventually be forced to do the same. If Jobs turns out to be right and sales go up, up, up—great, I’ll personally issue a mea culpa. But if he’s wrong, the Majors will not be able to re-cork the Genie. Their catalogs will be permanently devalued and they will eventually be forced to sell out on the cheap.”

I threw out my apology card to Steve months ago.

Is this DRM-free decision in 07 the totality of why EMI will be holding memorial services before the year is out? No, there are a bevy of reasons, but the DRM-free decision was the turning point for the company. It showed that management had its head somewhere else besides making money the way a label is supposed to– selling music, not giving it away or giving in to pressure from ISPs.

ISP propaganda has been coaxing labels to remove all copy protection for years, claiming that it would lead to more “long tail” sales. EMI’s failure proves them wrong once and for all.

CDs continue to dominate music sales despite an 11% drop from 2008 to 2009 and a 30% drop over the past ten years. All rhetoric aside, it seems, even ten years into the iTunes revolution, that the scales have not yet tipped in their favor; according to all sales reports, music buyers still prefer disk-shaped albums to virtual ones and would rather own a hard copy than license metadata that contains no tangible liner notes.

EMI’s executives may have even realized that the DRM-free move was foolish within six months, as revenue dropped through the floor, staff was let go and then the artists cut from the release schedule. But it was too late. The genie had left the building.

If only EMI had listened to its heart instead of its suits.

WHAT WILL THE END LOOK LIKE

It will happen fast. It may be six to twelve months before the only remaining vestige of the once mighty label is the famous Capitol Records “tower” on Vine Street and Hollywood Blvd, where EMI executives work. This is probably the crown jewel of their non-music related portfolio and if history has its way, it will go Condo in a few years. Who wouldn’t buy an apartment where the Beatles used the toilet?

I’m guessing the publishing division will be a bidding-war bloodfest. My money is on Warner. UNI will drive the price up, but ultimately lose out. The only winner here— Citigroup who gets to eat their young with a side of relish.

Abbey Road Studios will sell to some rich dot-com ex-hippy turned Republican, and the record division… Ah yes, the record division. Well, now that’s going to be interesting.

So far there has never been a label in all of the history of the music business that survived well without a publishing arm. How will one with a massive catalog that includes Radiohead, the Beatles and others fare in this game? Will they defy history? Will history defy them?

Again, UNI and Warner will probably divvy it up like a couple of 12 year boys trading baseball cards.

Predicted survivors: EMI’s Latin division. Small. Low overhead. Good sales considering the market. They might be working out of the restaurant near the parking structure, but their jobs are safe for the time being.

I for one will miss Capitol/EMI. Their contracts were by far fairer to the artist than most labels and they once had the best A&R on the planet. But the lesson to be learned is the same the banking industry learned recently…

You’re never too big to fail.

RIP EMI.

Long live the Big Three.

Moses Avalon

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Moses Avalon

Last week the co-manager of 30 year-old Dutch artist, Alain Clark invited me to his LA recording sessions. Who was there when I arrived: Steve Gadd and Dean Parks. If you don’t know who they are and you’re into music, then you’re probably under thirty-five. They are the cats behind the tracks on albums like Steely Dan’s Aja and about 5 out of 10 of the great studio recordings made from the mid 1970s to the present.

To hear Gadd/Parks work their magic before it’s mixed and layered is pure heaven. At 65 years old, Gadd is still playing perfect and gigging all the time. Ask him if CD sales being down is relevant.

With hundreds of studios in Europe and some of the best musicians, Alain (pronounced A-lan) crossed the pond to work in Los Angeles. Why? He liked the vibe. That’s it. He wanted US cats and a sound that he felt was obtainable via the LA scene.

I was there and I think he got it. His next album will resonate with anyone who has a kink for the Dan, Marvin Gaye, Curtis Mayfield, etc.

And here’s the part that concerns you.

HEARTBREAKING

Alain’s talent is impressive. He produces and arranges his tracks, he’s young, and has the look and personality of a star. In fact he is a star– over there. Over here he still has to wait for a table at Dennys.

I saw Alain perform at the 2009 Eurosonic conference in Holland. (I was the Key Note speaker that year.) He blew me away with a great R&B song called “Father and Friend.” It’s quadruple platinum in the Netherlands but in the US the majors don’t know what to do with him. He had a deal on Warner for US marketing. It went nowhere. Why?

The fact that these label-luddites keep paying him lip service about “loving it” but not moving forward resonates with why I left the creative side of the business. It’s too heartbreaking. Anyone who has the power to do something, listens to this guy’s music and then shrugs at what to do with it, has no juice or has no soul. It’s that simple. And there are just too many people in positions of power that fit this description, unfortunately.

Why have labels decided that people’s tastes in music are somehow different in the US? Why, with the internet and social networking, will the US be deprived of Alain’s work? What has to happen before the “global economy” hits the music business and an artist that is big in Holland can come to the US for a warm welcome?

Anyone..? Anyone..?

This is why CD sales are down. It’s not P2P. It’s not the downfall of radio. It’s that labels can not pick a winner anymore.

It doesn’t matter. Alain’s now on our radar. Someone reading this will hear him, grow a pair and have the singer in every iPod, while majors are still asking themselves why he spells his name wrong.

Take a listen/look to this YouTube video and see if you can guess why Warner failed to figure out a strategy. If you have a clue, respond in the comments section below. I’d like to hear it and so would others on this list.

Mo Out

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by Moses Avalon

What has happened to my career? Ten years ago I was fighting the good fight by watch-dogging major label rip offs. But lately I find myself being a major label apologist because they refuse to stand up for themselves in the press while they (and therefore artists) are ripped off by ISPs. And now, today I am completely through the looking glass by investigating an artist’s potential malfeasance. And one that’s in mourning, no less.

I don’t know if I should be thanking Moses Supposes reader Justin L for bringing this to my attention or not, but is seems MySpace’s “most popular artist” Tila Tequila has decided she will compete with major labels. Starting this month she will be signing, developing and distributing new artists.

Stop laughing.

Tila has a plan and she’s sticking to it. She also has a few advantages over the Big Four. While majors offer guaranteed advances, infrastructure, experience, marketing leverage and legitimacy (for some) Tila Tequila is going to bypass all that dumb stuff and just get down to the music. She claims the following advantages:

1) “If you’re a new artist signed at a Major Record Label, trust that your album will never come out… I can guarantee your record will be put out, that you will be making money, and start seeing all the checks come in pretty quickly.”

2) “Major record labels would have to spend millions on [promotion] But… since I am already a known public figure, I can easily promote you and immediately.”

3) “20,000 downloads, to a major record label, that’s a huge flop… With me, if you sell 20,000 downloads, that’s 20,000 dollars in your pocket immediately.”

(So she’s going to get iTunes to waive their 30% vig somehow?)

4) “I have been in this business for so long, that I pretty much have all the resources you need.”

(I think she’s was signed in 2005, but actually that might be a long time for someone pushing 30.)

5) “I’m not some old fart who thinks he knows what ‘music’ is these days….Hell no! I am a young, hot, sexy biatch who is relentless and passionate in what she does!”

(Okay, She might have a good point here.)

6) “I am constantly getting booked for my tour/appearances, I can easily add you to my tour as opening acts.”

(Forget the Talent Agencies Act. She don’t need no stinkin’ badges.)

And finally…

7) “The word ‘fail’ does not exist in my vocabulary!”

Neither do words like conflict of interest, fraud in the inducement, false advertising, unfair practices and other common business terms.

Tila is not just whistling Dixie. She claims to have two artists in her stable already to which she has made a number of guarantees via her site.

Unfortunately, many of her promises are incompatible with each other under California Labor law. Others are likely to get the attention of an Attorney General or the Federal Trade Commission if complaints are filed. Specifically, if you sign with her she will, “Instantly, literally give you overnight fame… you will become a major superstar faster than you can say ‘superstar,’” and the clincher, “free first class trips all over the world, [where] you will get paid to perform too!”

But here’s the best part, “On top of the record deal, I will give you the option to also let me be your manager!”

Her..? As a manager..? “On top?” Now I’m excited.

All kidding aside, the most newsworthy part is that her bullet points are very on message and will resonate a great deal with emerging artists desperate for a break and too unsophisticated to understand why her pitch is probably a recipe for disaster. Who in their right mind would let their label also be their manager? The answer: a great many people.

What does a Tila Tequila Records contract look like? Who knows? If I ever see one I’ll let you know if it reads the same as the standard major label tome that is now surpassing 150 pages on average. (Up from 40 pages in 1977 and 90 pages in 2001)

Frankly, I don’t see how it can be very different. The rights an artist needs to grant so that a label can allocate the resources to achieve fame are invasive, to say the least. Unless Tila is just doing this as a publicity stunt, she will have to acquire these same exclusive rights. When she does and then realizes that she can never “guarantee” paid gigs, or stardom, she becomes just like the labels she is calling “the devil,” on her website; worse in my view, because majors promise nothing except a shot and they appeal to those with experienced representation. Something tells me Tila isn’t going to tolerate too much negotiating from lawyers on her offer of guaranteed fame.

However, in my heart, I hope that she (and her people) have found a new angle. This is one time I’d like to take my cynical, New York attitude and send it on hiatus. I wish her success in our changing industry. Tila, was once just a hottie with a dream. Now she’s selling the hot dream herself. I suppose that this could be called progress. Lord knows she will not be the first “artist” to try it.

Welcome to my side of the street, Tila. Bout time. I needed a “sexy biatch” to watch dog.

If you’re interested you can send inquires to TilaTequilaRecords@gmail.com

Mo out

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