Behind all the glitter and glam of music award shows, behind the emotional acceptance speeches and live performances, there are business deals being made. Record labels use the backdrop of award shows such as the East Coast Music Awards (ECMAs) as an opportunity to sign the next Matt Mays or Joel Plaskett. During the ’90s when everyone wanted a piece of the “east coast,” major record labels would send their Toronto A&R representatives along with their big pens and contracts. Yet something’s changed. At this weekend’s ECMAs in Sydney, you could shoot a fiddle through the crowd without hitting a single major label representative.
Lyle “Chip” Sutherland cites 1998 as the year the match was struck. “The music industry’s been a raging forest fire ever since,” he says. “It’s just going to burn itself down to the ground. And the east coast music scene is its own ecosystem—plugged into the national and global scene—that’s just trying to survive.”
Sutherland sees the forest through the trees. A Halifax-based lawyer, Sutherland spent much of the 1990s helping to shape the country’s music scene, serving as legal counsel for the East Coast Music Association (ECMA), vice-president of the Junos, co-founder of Perimeter/Tidemark Records, and manager of Sloan and The Rankin Family. Sutherland no longer keeps artists on his speed-dial, but he continues to work with the Canadian Association of Broadcasters and the CRTC to develop new programs.
One of Sutherland’s first label negotiations was in 1992, sweating it out with Sloan in Geffen Records’ Sunset Boulevard office. By 1995, champagne corks were popping across Halifax—record deals were practically being handed out free with the purchase of a plaid shirt. Harper’s Bazaar labelled Halifax “the very anatomy of a hip city” (sound familiar, Montreal?). It looked like the darlings of indie music could do no wrong. Until 1997, when North American CD sales began to plummet.
Although the Canadian Recording Industry Association (CRIA) recently announced a modest five percent increase in consumer music purchases, it was the first year-over-year increase since 1998. Simply put, more VHS tapes, DVDs, singles and CDs were sold in retail outlets in 2004 than 2003. Sutherland points out that the tiny increase doesn’t include the past six year-over-year revenue losses, which he estimates at a whopping 46 percent. It also doesn’t include the fact that value of sales was only up by one percent because both retailers and labels, initiated by Universal Music in October, significantly dropped their prices.
Two thousand four was the year of the merger; when music labels ironed out their financial statements and trimmed the fat off their staff. In March, the Bronfman Group bought Warner Music from Time Warner Inc. for $2.6 billion. After a long courtship, Sony and BMG joined hands in December, laying off an estimated 25 percent of staff before the holidays. Sutherland predicts that EMI and Warner are next to get hitched. If that happens, three companies, including market leader Universal, will control almost 80 percent of the world’s music.
The impact of all this downsizing means more than just a visible absence at the ECMAs. Where there used to be nine Artist and Repertoire (A&R) major label representatives in Nova Scotia, now there are only five left standing.
Andrew Duke thinks that the labels only have themselves to blame, but fears that layoffs of local A&R reps will hurt musicians, especially in smaller markets such as the east coast. Duke, an internationally praised electronic experimental musician, formed his Halifax-based label Cognition Audioworks in 1990. Over the years, he’s built relationships with label reps, and in his experience, losing those connections can be detrimental to an emerging artist’s career.
“It changes label relationships with artists,” he says. “It really puts a kink in the relationships you build. And if you don’t have someone rooting for you in Artist Development, and if you don’t sell X number of CDs, you face being dropped.”
However, the biggest albatross facing both labels and musicians, according to Duke and Sutherland, is illegal downloading of music.
“It’s not a myth,” Sutherland says emphatically. “People are now conditioned that it should be free. Nobody can compete with free.”
A December 30, 2004, Canadian Press article revealled that many teenagers continue to feast “at the all-you-can-eat buffet of online music,” laughing at potential lawsuits and public education campaigns. They’re not lured in by Apple’s funky iTunes commercials—it was an adult demographic that legally paid for over two million downloads last year. Combine that with increasing demands on the entertainment dollar, including DVDs, video games and the internet, and you’ve got yourself an old-fashioned financial crisis.
So how do the guys in suits respond? Panic. Fill retail chains with mainstream music such as Sarah McLachlan and U2—high sellers and therefore moneymakers—reducing shelf space for independent and local music. To test the theory, check out HMV, which Sutherland calls “the canary in the goldmine.” A quick survey of the recently renovated (i.e., shrinking) store on Spring Garden proves his point. To your left, a glossy poster of a teeth-baring Avril Lavigne; directly ahead, it’s a vanilla sky of Kelly Clarkson CDs. Aisles of DVDs take up almost half of the retail space.
As Sutherland woefully states: “You would have to crawl on your hands and knees across broken glass to find the rest of the records.”
There’s a less painful way to find new music. Crawling out from under the shadows of the big four, independent labels now contribute almost 18 percent of CD sales in North America (Rolling Stone reported their 2004 US market share at 17.37 percent). Although many lack the infrastructure to distribute their CDs in HMV or Wal-Mart, the word’s out, thanks in part to what writer Emily Zemler calls “The OC Factor,” a phenomenon where indie bands such as Rilo Kiley, Death Cab for Cutie and The Shins provide cheap, but cool, ambiance for television shows and films such as The OC, Gilmore Girls and Garden State. Closer to home, Wintersleep lent their voices to Showtime’s popular series Queer as Folk. And never underestimate the influence of hipper-than-thou music websites such as pitchforkmedia.com, who should claim partial responsibility for the mass genuflection to Broken Social Scene and The Arcade Fire.
Brian Borcherdt, a founder of local indie collective Dependent Music, says they’re happy to be recognized for producing good music. “We’ve never been part of the good ol’ boys,” he says.
Dependent—currently distributed throughout Canada by Outside Music—was founded in 1994 by Borcherdt (soon to be joined by Loel Campbell and Jud Haynes in Halifax), well before collectives became the media darlings of the indie world. Growing up in Yarmouth, the economic realities of a depressed economy lowered Borcherdt’s expectations for anything other than modest success.
The modesty remains charming, although Dependent’s lost some of its naivety and replaced it with bigger audiences and paycheques.
“We used to press a run of 500 CDs,” says Borcherdt. “Now, we’re so delighted that 500 Wintersleep albums sold the weekend it released.”
Borcherdt remains wary about taking on “the next big thing” and all the “stickers, flyers and promo CDs” big labels love to fling into the marketing abyss. “The amount of money that’s spent on promoting some bands is the total of what we spend to record, distribute and promote a release.”
Dependent songbird Jill Barber, who also has an agent and manager in Toronto, is happy with the sense of community that Dependent provides in Halifax. “An artist collective like Dependent gives like-minded independent musicians a chance to be a part of something greater that can be recognized on an industry-level,” she says. “I have really found that musicians need and want to help each other out, so it works to everyone’s benefit, in terms of building strength in numbers.”
Borcherdt admits that the next big move for labels is to make their music available online. Although Dependent posts MP3s and video clips on their website, they have no immediate plans to digitally distribute their music. Yet their low-key approach draws fans—over 1,100 users are registered on their message board.
Former Haligonian Dave Ullrich, the mastermind behind Zunior.com, uses technology to promote and run his online label. Best known as one-half of indie pop duo The Inbreds (along with Mike O’Neill), his website sells downloads of full-length albums for $8.88 and songs for 88 cents, including O’Neill’s well-received solo album The Owl. In-Flight Safety and Jill Barber just signed on. The Rheostatics are launching a live album this week. Sleep easy knowing that artists receive all but 15 percent of the sales (which cover credit-card transaction costs).
Although Zunior’s still a labour of love—Ullrich isn’t quitting his day job anytime soon—he’s learned that in order to make money, some of the old rules still apply.
“When I first started Zunior, I had this vision of doing a true ‘pure play’ online record label,” he admits. He’s expanded the concept of building a niche online market to include more traditional sales tactics. “The more I do this, the more I see that cross-format promotion is vital to getting the word out. So this means selling CDs, which we now do for a few albums, selling in stores and promoting at live shows. Once they find out, the hope is that they will use Zunior to fill their iPods on a regular basis.”
Sutherland thinks that Ullrich is on the right track. He imagines that within the next five years, CDs will face a demise similar to that of VHS tapes. It’s just a matter of redefining the economics and working out a few pesky security issues.
One idea involves the creation of a global model. “Everyone pays an extra $5 per month on their broadband connection, which goes into a non-profit pool,” Sutherland suggests. “Artists are paid download royalties, similar to SOCAN,” the Society of Composers, Authors and Music Publishers of Canada, which distributes songwriting royalties to musicians. “Music labels would turn into marketing companies and eventually the merch guy will have a hard drive and you can download the album right there at the concert.”
Andrew Duke also embraces the shift to digital, which “reduces the number of CDs propping up broken table legs” at his home. He hires a mediator, Independent Online Distribution Alliance (IODA), to distribute Cognition’s CDs to digital retail stores like iTunes and Napster. Duke sends one copy of a release to IODA—which collectively represents over 135 labels—who in exchange for some of the license royalties, takes care of negotiations, royalty reporting and the techie details.
Duke’s online presence through IODA, his own website (cognitionaudioworks.com) and the local electronic music “net label” polygonnetwork.org offers him exposure to an international network of experimental music fans.
“Last week I heard from a journalist in Turkey,” he says. “That sort of thing happens regularly.”
Small successes aside, it’s still tough for indie bands to compete against major label marketing machines. According to Globe and Mail columnist Carl Wilson, former V2 Record employee Evan Newman wrote a letter to industry types, questioning why they were ignoring rising indie stars. Newman quit V2 to start Middle Child Records, where he manages Barber siblings Jill and Matthew and the Toronto band Tangiers, whom he advised to sign abroad.
Newman told Wilson that “The majors here are looking for the Canadian equivalent of US acts. They aren’t interested in nurturing a distinctly Canadian sound. They want cash cows to slide unnoticeably between US hits on radio, corrupting the spirit of Canadian-content rules.”
Perhaps it’s time for local musicians to get their passports updated. Duke wows crowds at Euro-pean electronic festivals. France is enchanté avec Buck 65. UK music bibles Mojo and Uncut praise The Heavy Blinkers, who toured there last year.
“While the industry is burning to the ground, we need to create a culture of support through collectives, international tours and conferences. The CRTC says that we don’t want money leaking out of Canada. But the opposite is true—we have to get musicians out of Canada,” Sutherland says. “And the east coast has a benefit; we tend to send out more eclectic, original bands rather than just more cut-out Avril Lavignes.”