Former EMI Records President Rupert Perry On My Latest Inner Circle Podcast

I'm very pleased to have former EMI Records president Rupert Perry on the latest episode of my Inner Circle Podcast.

Rupert spent 30+ years at the highest levels of EMI, working as the head of A&R for Capitol Records for a time, then moving on to heading the EMI label operations of America, Europe and the UK.

He was also chairman of both BPI and IFPI label trade associations, and was awarded a CBE (one step below knighthood) by the Queen for his excellent service to the British music industry.

In the intro I'll take a look at the uproar over Apple Music's free trial period and the real truth behind Beats headphones.

Remember that you can find the podcast at BobbyOInnerCircle.com, or either on iTunes or Stitcher.

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The More Things Change, The More They Stay The Same

While we like to think that we're so highly evolved in our current Music 3.0 world, it seems hard to believe sometimes that many of the real basic issues aren't that much different than they were 50 years ago. In this excerpt from Music 3.0: A Survival Guide For Making Music In The Internet Age, Rupert Perry talks about the many similarities between the music industry of the past and the present.

One of the most beloved executives in the music business, Rupert held a variety of executive positions with EMI for 32 years. He went from vice president of A&R at Capitol to president of EMI America to managing director of EMI Australia and, later, of EMI Records U.K. to president and CEO of EMI Europe to, finally, the worldwide position of vice president of EMI Recorded Music. During his time at EMI, Rupert worked with a variety of superstar artists such as The Beatles, Blur, Duran Duran, Iron Maiden, Nigel Kennedy, Robert Palmer, Pink Floyd, Queen, Radiohead, and Cliff Richard. Such were his contributions to the British music industry that in January 1997 he was appointed CBE (Commander of the Order of the British Empire), a position of British order of chivalry that is just below knighthood. He is also coauthor of the fine book Northern Songs: The True Story of The Beatles’ Song Publishing Empire.

"You have a unique perspective of the music industry. In your eyes, how are things different today from the heyday of the record business?

One big thing was that the record labels of that time were making those things called gramophones and record players and radios, and they would also be recording content to play on these pieces, so it all fit together. But in the mid-’50s, the technology got away from the recorded-music business and got into the hands of third parties, and from that time on everything that happened technologically that effected the music business was driven from outside the business. Record labels were no longer technologists. They understood the recording process, and they understood the manufacturing and distribution process—whether it be vinyl, cassette, or CD. But that was the extent of their technology knowledge. 

The other thing is how people consumed content in those days, which was that people mostly listened to the radio. Then the Japanese came up with the transistor radio, which was portable. Suddenly [the idea of] portability meant that the consumer didn’t have to sit in their living room in front of that radio. That was the start of something else from a distribution point of few. You can look at all the things that changed, but then you look at the transistor radio and think, “Gosh, the portability was so important.”

Don’t we have the same thing today with iTunes-driven digital media?

Exactly. And then the other great moment of portability came when Sony came up with the Walkman. It’s amazing that Sony let it slip through their hands and let Apple come up with the iPod, which to me is just the next stage of the Walkman. Sony’s engineers understood the portability aspect between the cassette Walkman and the CD Walkman, but thereafter they missed out on what became the iPod.

Getting back to our little history lesson, when the reel-to-reel tape recorder was introduced, that changed things forever because it had a Record button on it. It was that Record button that really started to change things.

But what really people forget is that by the end of the ’70s, the recorded-music business was in deep, deep trouble. There was a recession and a couple of years of downward trends and a lot of people thought, “This is the end of it.” There was a lot of piracy, thanks to the cassette player and that issue of the Record button, and people just weren’t buying vinyl records anymore. The issue of people making their own copies was a pretty big issue even in those days. People were copying music for free off the radio or from another cassette or a record. We reckoned that we were losing at least 25 percent of our business to home taping. So when people talk about “free” today, there’s nothing particularly new about it—it’s just a different version of the same thing. 

The other big thing that happened was the compact disc. When it came along there was a big upsurge in the growth of the business, and a lot of large corporations began to take notice. When CBS, which was the king of the business at the time, sold their record business to Sony—that was huge! It was a momentous happening, because CBS decided they wanted to exit the music business, which they had been in for years.

I guess that people forget that there were a lot of big changes and issues in the music industry before the Internet.

Yes they do, but the arrival of the Internet was just as big. If we roll forward to the start of the Internet in 1993, people in the content industry didn’t get just how monumental the change was. To have any form of content available through a computer was a totally new form of distribution, but the difference was that the record label had no control over it. Up until that point, any of the media distributors (film, television, or music) were always able to control the distribution, and when you did that, you could decide where it went, who got it, and what people paid for it. With the Internet, that went out the window fast. That’s the big, big shift caused by this new form of distribution.

The other big issue that the Internet brought was that everything became global. You could be anywhere in the world and you could access Napster, so all the ways that companies tried to segment the market (the way the film industry did with its regional DVDs) were over.

Yet another issue that was a problem, is a problem, and will continue to be a problem going forward is that the laws that govern intellectual copyright are national, as opposed to global, laws. The U.S. has its own copyrights laws, as does Europe, as does Latin America, and so forth. But the nature of the business now is that it’s totally global, so it is going to require a more global approach to copyright law as opposed to the parochial approach.

What’s the future of the major labels? Do you think they’ll survive?

I think they’ll survive because they and a lot of smaller labels have catalogs of recorded music, and someone always wants to consume it. But they also have to consider what kind of business they’re in now. They’re not really into artist development anymore or signing lots of new artists like they used to in the past. What they’re really involved in is the business of rights management. They’re managing the rights in the same way that publishers are managing rights. The music-publishing industry and the recorded-music industry—two industries that grew up side by side—are now coming together a lot faster because it’s a business of rights.

If you’re an artist, you will decide if you can manage your rights yourself or, if you’ve become successful, need someone to manage them for you on a global basis. Then maybe you go to one of these entities. Either way, you’re going to have a much greater degree of flexibility in how you deal with those rights going forward.

Is a CD necessary these days?

It still may be. People tell me that they sell 50 or 100 CDs at a show. If you control your content, sell x number of CDs and x number of T-shirts and merch, and stay on the road, you can make a pretty good living. You may not be a household name, but you’ll have a really strong fan base, you’ll know who they are, and you’ll be able to communicate with them. The fan/consumer is the piece of the puzzle that you really need."

Read more excerpts from Music 3.0 and my other books at bobbyowsinski.com

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

When The Music Industry Changed

It's easy to think that the music industry underwent a wholesale change when digital music burst on the scene in the late 90's. While that certainly is true, the systemic change really happened in the early 80's when the suits took over. Here's an excerpt from Music 3.0: A Survival Guide For Making Music In The Internet Age that describes the era in detail, one which I call Music 1.5.
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The era of Music 1.5 produced the greatest level of business that the industry has seen or is ever likely to see.

Record companies got a boost to ever greater profits in several ways when the CD was released in 1982.  Because the technology was initially expensive, the labels increased the retail price on each CD while decreasing the royalty rate to the artist because of the “technology expense”. While the retail price never decreased even after the technology was amortized (the retail price increased, in fact), artists eventually saw this royalty charge eliminated, but never saw another contract remnant from the past terminated. Breakage, a 10% charge against royalties left over from the days when vinyl records would break in transit and now irrelevant in the new CD age, never was deleted from typical recording contracts.

Perhaps the biggest shot in the arm to record labels was the ability to resell their catalog to a public eager to switch to CDs and buy a copy of an album they already owned on vinyl. Catalog sales increased profits due to the fact that production costs were minimal (just the cost of pressing the CD) as were promotional costs. Consumers bought the new and better sounding (to some) CD to supplement their newfound CD collections, thereby providing a financial windfall for the labels deep with older product.

Record companies now had a cash cow that shot profits through the financial stratosphere, which immediately gained the attention of Wall Street. Always the poor step-child of the entertainment industry, the record business was suddenly every investment banker’s darling, with the remaining 4 of the 6 major labels still independently controlled sold to a conglomerate during this period. Columbia was bought by Sony, Warners by Time Inc. (to become Time-Warner), Universal by Matsushita (later purchased by Vivendi) and EMI by Thorn Industries. Polygram was already owned by a conglomerate (the Dutch electronics company Philips), and BMG was owned by the German giant Bertelsmann AG (although it recently merged, then de-merged, with Sony). Now all 6 major labels were under conglomerate control.

The other big thing that happened was the compact disc. When it came along there was a big upsurge in the growth of the business and a lot of large corporations began to take notice. When CBS, who was the king of the business at the time, sold their record business to Sony - that was huge! It was a momentous happening because CBS decided they wanted to exit the music business , which they had been in for years.
Rupert Perry

With conglomerate ownership came MBA’s, accountants and attorney’s running the business, a major departure from the seat-of-the-pants, street-smart music men like Mo Ostin, Ahmet Ertegan, Jac Holtzman, and Howie Stein that could feel a hit in their bones.  Where a label previously would nurture an act through 3, 4, even 5 albums until they broke through, the new corporate structure demanded instant results “this quarter.” Artist development, so crucial for the stars and superstars that we know today, died, slowly at first, then faster and faster as bottom line results became the mantra.

About this time another unexpected boost came to the music industry in a small cable television network startup called MTV. Suddenly music was on television and a new level of exposure increased sales yet again. MTV soon had the power to “make” a hit, just like radio previously could, by the simple act of placing a video in heavy rotation.

Although no one expected it at the time, the Buggles song “Video Killed The Radio Star” (the first video played on MTV) actually came to pass. Image soon became much more important than actual musical ability. If you didn’t look appealing, you weren’t getting on MTV and if you didn’t get on MTV, your chances of having a hit diminished greatly. Quickly the new-found corporate culture began to shift gears to find good looking “musicians” to fill the bill. Artistry now became just a component of a new act (instead of “the” component), as image now became foremost in the label mindset.

To a non-record industry executive, art doesn’t make sense.  Academia demands repeatable outcomes and art (remember the phrase about art and craft at the beginning of the book?) is not a part of that equation. Craft was a big part of the corporate hit-making formula though. First, find an artist similar to whomever is the most popular of the moment. Then get a songwriter to write the perfect generic (usually Pop) song, then add a producer with a proven track record and record it all in a studio where big hits have been made with musicians who have played on those hits. The actual “artist” matters little in this corporate scenario. She better look great though, because the music videos (put together by directors, choreographers and stylists with recent hits on their resumés) must project the image that Madison Avenue deems correct to sell product, because that’s ultimately who’s footing the bill.

To read more Music 3.0 excerpts, go to the excerpts section of the bobbyowsinski.com website.
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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for daily discussion of music, recording, and production tips and tricks.

Music 3.0 - The Rupert Perry Interview Excerpt

One of the most respected and beloved executives in the music industry, Rupert Perry held a variety of executive positions with EMI for 32 years, from VP of A&R at Capitol Records and president of EMI America all the way up to the worldwide position of VP, EMI Recorded Music. During his time at EMI, Rupert worked with variety of superstar artists such as The Beatles, Blur, Duran Duran, Iron Maiden, Pink Floyd, Queen, and Radiohead and is the co-author of the fine book Northern Songs: The True Story of The Beatles’ Song Publishing Empire.

Here's an excerpt from an interview I did with Rupert for my Music 3.0 Internet Music Guidebook.

What’s the future of the major labels? Do you think they’ll survive?
I think they’ll survive because they and a lot of smaller labels have catalogs of recorded music and someone always wants to consume it. But they also have to consider what kind of business they’re in now. They’re not really into artist development anymore or signing lots of new artists like they used to in the past. What they’re really involved in is the business of rights management. They’re managing the rights in the same way that publishers are managing rights. The music publishing industry and the recorded music industry, two industries that grew up side by side, are now coming together a lot faster now because it’s a business of rights.

If you’re an artist, you will decide if you can manage your rights yourself or, if you’ve become successful, need someone to manage them for you on a global basis. Then maybe you go to one of these entities. Either way, you’re going to have a much greater degree of flexibility in how you deal with those rights going forward.

What would be the best way to break an act these days?
It’s back to immediately being able to build your website first, then communicating and interacting with your fans. Even if you only have 50 email addresses when you start, if you’re any good that will increase. Create your MySpace and Facebook pages because someone will see you and want to go to your website. When they get there you want them to be one click to anywhere they need to go. If they want to buy something, it’s one click. If they want a ticket, it’s one click. If they want to read the bio or see the photos, it’s one click. But in the end, it’s your songs and your performance that’s going to drive the traffic.

What you still never get away from is that it’s still about a song and it’s still about a performance of that song. Can you play that song in front of your audience however large or small and create the "WOW Factor?“

Is a CD necessary these days?
It still may be. People tell me that they sell 50 or 100 CDs at a show. If you control your content, sell X number of CDs, X number of T-shirts and merch, and stay on the road, you can make a pretty good living. You may not be a household name but you’ll have a really strong fan base, you’ll know who they are, and you’ll be able to communicate with them. The fan/consumer is the piece of the puzzle that you really need.

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Follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Headed For Only 3 Majors

With EMI in a death spiral due to a huge debt burden that it can't possibly pay, it looks like the 4 major labels (dubbed "The 4 Ugly Sisters" by former EMI exec Rupert Perry) will soon be 3.

If you think that the other majors are right behind EMI though, think again. Sony Music just had a great sales year thanks to Michael Jackson's untimely demise and ultimate huge boost in sales. Warner Records, for all the predicted doom and gloom (including from yours truly), is actually gaining market share and their stock price is rising, and Universal Music Group is still the king of the music world in terms of sales and ancillary income streams.

The venerable EMI was a special case among the majors in the last couple of years. Private equity investment group Terra Firma bit off more than they could financially chew at the peak of the market, thinking that if nothing else, EMI's enormous catalog would see them through. With the stock market tanking last year, major talent like Paul McCartney and Radiohead leaving in droves, and with the label's decimated staff not capable of bringing in new acts with hits, this once great and well-run label became a shell of its former self.

At this point, it looks like a long shot that EMI will survive as a label, although its enormous catalog is worth a lot of money (just not enough to allow it to prosper). Still, sometime in the near future, the major label ranks will shrink to 3.

Meet The Contributors To Music 3.0

Like my other books, Music 3.0 would be nothing without the contributions of some of the most respected voices on the cutting edge of different aspects of the current music business.

Let me briefly introduce them to you:

Ted Cohen - Known throughout the technology and music industries as being "part ambassador and part evangelist," Ted Cohen has been on the cutting edge of digital music from its inception. Currently a managing partner of the industry consulting firm TAG Strategic, Ted is one of the most influential voices in digital music today and can be seen speaking on the subject worldwide.

Richard Feldman - A very successful songwriter, producer and Grammy winner with platinum and #1 records to his credit, Richard is the CEO of a music library publisher called ArtistFirst Music and the president of the Association of Independent Music Publishers. Richard comes to publishing from the point of view of a musician and songwriter, and he has a unique perspective on the changes that M30 brings.

Larry Gerbrandt - An expert on entertainment analytics, Larry Gerbrandt’s Media Valuation Partners advises its clients on the economics of media and content on traditional and emerging technology platforms. Formerly a Senior Vice-President with research giant Nielsen Analytics, Larry provides a wealth of experience in entertainment market research that we’re pleased we could tap. Get ready for some interesting and insightful facts and figures regarding sponsorships, branding and advertising - all the things necessary to monetize M30.

Bruce Houghton - Bruce Houghton started his highly influential Hypebot blog because he wanted to better understand the changes in the music business in order to help educate the clients of his Skyline Music agency. Since then, it’s become a must-read for anyone at any level of the music industry. Bruce’s keen observations come not only from being a highly prominent blogger but as a booking agent working in the industry trenches every day.

Thom Kozik - A seasoned tech industry executive for over 20 years, Thom Kozik has spent considerable time on the gaming side of the tech industry, having served as president of gaming search engines Wazap!, and All-Seeing Eye, (which he sold to Yahoo in 2004), before he became Director of Business Development for Yahoo!’s Media Group. Thom now serves as Managing Director for Bigpoint, one of the largest gaming companies out of Europe.

Gregory Markel - One of the pioneers of search engine optimization and marketing, Gregory Markel’s Infuse Creative touts major entertainment clients such as Gibson Musical Instruments, New Line Cinema, The National Geographic Channel, Led Zeppelin, the Rolling Stones, the television show 24, and many more. As a recording artist formerly signed to Warner Brothers (and a great singer too), Gregory has a deep empathy for the plight of today’s artist and provides an abundance of social media advice in his interview.

Rupert Perry - One of the most respected and beloved executives in the music industry, Rupert Perry held a variety of executive positions with EMI for 32 years, from VP of A&R at Capitol, to president of EMI America, to managing director of EMI Australia and later, EMI Records UK, to president/CEO of EMI Europe, to the worldwide position of VP, EMI Recorded Music. During his time at EMI, Rupert worked with variety of superstar artists such as The Beatles, Blur, Duran Duran, Iron Maiden, Nigel Kennedy, Robert Palmer, Pink Floyd, Queen, Radiohead, and Cliff Richard. Rupert is well up on the latest technology and trends within the music business and shares some surprising contrasts between the old business and the one we’re in right now.

Ken Rutkowski - Ken Rutkowski is widely considered to be one of the most informed and connected people in the media, entertainment and technology markets today. His daily radio and Internet show, World Tech Round-Up at kenradio.com, is a source of inside information for listeners in more than 40 countries, often scooping the major media and giving perspective to emerging trends, developments and industry maneuvers. Ken is also the creator and guiding force behind the Media Entertainment Technology Alliance (METal), a members-only group of alpha influencers.

Derek Sivers - Derek Sivers' life has certainly been interesting so far, from working as a musician/ringleader of a circus to a stint at the publishing giant Warner/Chappell to being on the road as a touring musician to creating and running CD Baby, one of the most widely used music distribution services today. After selling CD Baby in 2008, Derek now spends his time thinking of new ways to help musicians. As you’ll see, his insights are as thoughtful as they are cutting edge.

Howard Soroka - I first met Howard Soroka when he was the primary programmer for the famed GML recording console automation system some 25 years ago. Since then, Howard’s gone on to being more executive than programmer, rising to vice-president of media technologies at Universal Music Group's eLabs. Always on the cutting edge of technology, Howard had some great insights on the digital workings of the world’s largest record label as well as a look into the future of the music business.

Jacob Tell - Jacob Tell’s Oniracom is a new breed of company that provides a full line of digital media services to artists, labels and management.  Helping artists in the digital space before there was a YouTube, MySpace, and Facebook, Jacob has watched the development of Web 2.0 and learned how an artist can best take advantage of it along the way.

Michael Terpin - Michael Terpin is the founder of SocialRadius, a marketing and public relations company focusing on social media outreach and strategy. Among the projects that the firm has worked on include the outreach for recording artist Will.i.am’s Yes We Can video for the Obama campaign (which won 2008 Emmy, Global Media and Webby awards), social media event marketing for Live8, LiveEarth, the Green Inaugural Ball and the David Lynch Foundation, and the social media launch of start-ups ranging from Software.com to Shapeways.

As with my other books, the full interviews are included because they're not only insightful, but a fun read as well. As an example, here's an excerpt featuring Infuse Creative's Gregory Markel.

Thanks once again to all contributors!