Frank Gutch Jr: Why I Hate the Major Labels (and think they deserve what they’re getting) Or: Tales From the Salt Mines Part 1….

I’m not even sure if there are major labels anymore.  For all I know, there’s just one.  Universal has been gobbling up labels like a junkyard dog and for good reason.  There’s big money to be made in  those labels.  Big money.  And, surprise of surprises, it’s not in the current hits.  It’s in catalogue.

While the vast majority of people in the  music business have been living (and slowly dying) using the old business model where hits are seemingly all that  matter, Universal discovered that the return on investment for current hit artists is small potatoes.  Why?  Music doesn’t sell the way it used to.  The number of “pieces” a label  can move on a current hit has dropped so drastically that music people from the seventies laugh.  Hundreds of thousands tops the charts.  Chicken feed compared to the glory days of Fleetwood Mac and Saturday Night Fever and Nirvana.  It used to be that if you couldn’t move over a million the week of release, it was considered a failure.  Success was what mattered back then and not just success, but huge success.  And they did everything they could do to get it.

Case in point (and this makes me laugh— it really does):  There was a time when Bruce Springsteen and Michael Jackson were battling it out for #1 on the Billboard charts.  Both albums were on CBS.  I can’t even remember which albums they were, but I remember getting phone calls from the CBS rep in Seattle (the city in which I worked) begging me to report one #1 over the other, and I can’t remember which one they wanted.  Didn’t matter.  It was imperative that that album be reported #1 regardless of sales.  Now, I thought it strange that a label would care.  After all, they had #1 and #2 sewn up.  Why should it matter?  But it did.  Needless to say, I reported by the numbers and not the request (the major labels’ way of stiff-arming) and then came the shitstorm.  The owner of the store received phone calls not just from the rep but from everyone in management at the Seattle office and probably from the president of CBS Records himself.  The general consensus was that I was an ogre and a troll and unworthy of marriage to their daughter/sister and should not be allowed within a hundred yards of any self-respecting record store (for records were what mattered back then) and, boy, did I enjoy sitting in front of the owner’s desk, him explaining the realities of the business (he worried that the label would pull advertising and restrict credit) while I replayed Cargoe or Cowboy in my head for the ten thousandth time.  You know.  Blah-blah-blah.  It wasn’t long after that that the owner took reporting sales figures to the trades out of my hands.  After two other instances in which I reported Seattle’s Skyboys and Reilly & Maloney #1, based on sales.  You should have heard the major labels whine then! Did it really matter?  They claimed it did.  They needed it for some unknown (to me) reason.  Like I cared what those bastards needed.  They didn’t sign my checks.

Okay, to be fair, they weren’t all bastards and I didn’t hate the people.  I hated the system.  I hated the short-sightedness and the Nazi tactics.  But some of those people were some of the best people I have ever known.  As people.

Of course, I knew what I was getting into when I headed for L.A. to teach the labels how to sell records.  I had had a short run at the House of Records in Eugene and to my way of thinking, experience in the trenches was the best experience one could get.  Still, I was leery.  Not long before I left Eugene, I was standing around the store listening to music when a CBS rep waltzed in the door and announced to Gary Haller, one of the House of Records owners, that when he left he would be taking all of the CBS promos with him because it was illegal to sell them.  Gary looked at him with that deadpan look he was famous for and said something like, “The hell you will.”  A few nasty words later, all from the rep, and the guy exited claiming he would be back with the authority to remove said CBS product.  I looked at Gary and said what are you going to do?  He said, nothing.  They evidently tried that on a fairly regular basis and were never successful.

I would see similar tactics, though legal ones, no less than three times after that.  Each time, a major label sued to have the selling of promos outlawed.  Each time, the prosecutors asked to see the major label’s books.  Each time, the major label(s) asked that the doors to the proceedings be closed.  Each time it was granted.  Each and every time, the cases were dropped.  It always sounded to me like it was preferable to the majors to have promos sold rather than their books opened.

Why, you ask?  I’ll give you my answer and, no, I have no proof but I do have brain cells enough left to know that Reagan, though maybe not knowing the details of Iran/Contra, knew and approved of whatever tactics his underlings considered necessary to complete the administration’s goal.  Reagan equals virtually any corporate executive, as far as I can tell.  That includes those in the music biz.

Here’s something you might not know.  The major labels are responsible for the death of the record store and if not responsible, they damn well hurried it along.  How?  By stacking everything against the mom and pop stores and in effect killing their own distribution.  It started off innocently enough.  The labels got big enough to start selling large quantities of albums and singles not just regionally but nationally and, in keeping with sales practices of the times, started giving discounts.  Of course, the only stores which could take advantage were the big box music stores of the time— Tower, Peaches, The Wherehouse, etc.  At first, it didn’t impact the market much but as time passed, it completely changed the retail game.  Small stores soon found that they were paying more wholesale than the labels charged the chains.  Imagine their surprise when they woke up one morning and found Tower selling a new and hot release for less than what it cost them to purchase it.  Naturally, the music buying public, fickle as they have always been, spent more in gas than they saved on the album to drive to Tower and, eventually, the mom and pop died.  Of course it didn’t matter to the major label exec.  The numbers were there and his/her (pretty much ‘his’, truthfully) bonus was secured.  The thing that he/she hadn’t taken into account was that not all that much later they had killed the one thing which had built the dynasty— the record store.  By the time they realized their mistake, stores were dropping like flies at a DDT convention and they had their hands full with the digital onslaught.  The execs forgot the golden rule of sales:  no stores = no sales.  (Pre-Internet, of course)

It wasn’t just the discounts, either.  If you think that Tower and Peaches owned the records in their stores, think again.  Major labels made sure of retails’ subservience by giving them credit.  In the olden days, it was cash on the barrelhead.  Someone, however, realized that if you gave stores thirty days to pay, they would buy more and in larger quantities.  It soon stretched to sixty and then ninety days.  At the time of Tower’s demise, I would assume that they had bills on the books which were 180 days due— and undoubtedly a number of those bills were not paid at all (though you would need a forensics accountant to sort all of that out, I am sure).  Think about it.  I used to stop by Standard Records in Seattle to talk with the owners and people who worked there.  There was no store in town which handled classical music with more knowledge or concern.  They paid cash.  Not because they had to but because they saw the trap.  To my mind, when Standard folded it took a large part of the heart out of Seattle’s music scene.

But wait.  I started off telling you about how catalogue (meaning older releases) has become the life blood of the major label(s).  What happened was that when digital happened, change happened.  The labels went out of their way to pump up the volume on the compact disc.  It will last a lifetime, they said.  The sound is cleaner and therefore better, they said.  And they slowly started releasing older albums on CD.  At first, many were not remastered and people bought the CDs thinking that all that mattered was that the music was on CD.  Then the labels started digitally remastering them.  Then, they repackaged what they had already released.  Then, they started changing formats.  Before you knew it, there were what seemed like two hundred different versions of Floyd’s Dark Side of the Moon, each one a must for the Floyd collector, and God knows there are plenty of those.  The record company execs had to be dancing every time they made a sale of older product.  Pure profit.  You see, they owned it.  What they had no one else had unless the label wanted them to have it.  It didn’t matter if Audio Fidelity released something, they had to pay to get it.  In those instances, the majors got paid and they didn’t even have to press or market the product.  And for those of you who are asking, what are formats?  There have been plenty, from A to Z, so to speak.  Vinyl is a format.  Cassettes were a format.  Eight tracks were a format.  If you want to take the time, Wikipedia has an excellent starter page on formats.  The point is, every time a major label catalogue album is released on a different format, the majors win.  Just doesn’t seem fair somehow.

You know who takes it in the shorts whenever a new re-release is implemented?  The musician.  That’s right.  Contrary to popular opinion, not all musicians are millionaires and only a very small percentage of musicians have seen a dime beyond mechanical royalties (for songwriting) and the original signing bonus.  Let me explain how this works.  A label signs a musician.  They pay for the recording (in most instances).  They pay for promotion.  They sometimes (but not always) pay for tour support.  They pay for anything they deem fit, even if the musician does not want what the label provides.  (A case in point is that when Heartsfield played The Troubadour in Los Angeles in support of their Foolish Pleasures album, a record company exec okayed two  limousines to cart them across the street from their hotel/motel even though the band did not want it.  Who paid?  It was billed to the band.  Did the label ever make any money off of the band?  Possibly not, but things like that add up and made damn sure that if they ever did make money, it was owed to the label.)

I know you’ve heard it before, but back in those days, drugs were rampant in the biz.  Rampant, I say!  You couldn’t go into a bar or tavern restroom with seeing coke spoons stuck up people’s noses.  And a lot of the cocaine snorted by the record company people was provided by, you guessed it, the band!  No, the bands didn’t buy the cocaine nor did they hand it out to the abusers, but it came out of their pockets.  How did the record companies get away with it?  Simple.  Petty Cash.  Accounting?  We spent two thousand last night entertaining record store people.  Put it down as Petty Cash.  Sure thing, Bosco.

Flights were charged back to the artists, even if the record company demanded they fly here or there for some record company shindig.  Hotel rooms were charged back.  Food was charged back.  Equipment buys were charged back.  Tour support was charged back.  Unless you had a huge hit (or many huge hits), you were indebted for life.  How convenient.  And everyone gets their cut before the band:  publishing, manufacturing, distribution, advertizing, video people.

Makes me wonder why anyone would want to sign a major label contract, but it is still the dream in spite of the realities.  Artists salivate for the big-time in spite of the caveats.  New artists.  The older ones—- well, they learned their lessons.  Ask Bob Segarini, who signed deals with numerous labels.  Ask Michael Fennelly, who signed with his band Crabby Appleton and as a solo artist.  Ask Bill Pillmore or Tom Wynne or even Tommy Talton or Scott Boyer of Cowboy or Randy Cates, the bass player for Gypsy.  They may have gotten some connections through the labels, but money?  Very little, if any.  Musicians?  Millionaires?  Only the lucky few made money and most of the few were screwed out of most of what they should have pocketed.

My eyes roll back in my head when I think of the lack of ethics inherent in the major label system.  Not long ago, a guy popped into a thread on Steve Hoffman Forums berating us all for being against the majors.  Without them, he pointed out, we probably would not have had Pink Floyd and Led Zeppelin and The Beatles to listen to.  Without them, we probably would not have seen the packed-out arena and stadium shows.  Without them, the superstars would not have become super.  I agree.  It wouldn’t happen today, that’s for sure.  Aerosmith?  Probably a flash in the pan.  The Beatles?  Maybe they might make it today, but it would not have looked at all like it did.  The Stones?  Big but not as big.  Britney Spears?  Give me a break.

Oh, the labels would like you to think they could do it but they have no clue.  As always, they toss albums against the wall and hope some will stick.  In the meantime, they parrot their same old spiel which they have developed over the years.  Lies, basically.  In fact, when I started this column, my working title was Lies the Music Industry Has Told You.  It was going to be a simple look at the difference between what they have said and are saying and what the realities are.  Such as:

You Choose the Hits—–  That’s a joke, although the Internet has changed the playing field and it is more true today than ever.  The major labels have always chosen the hits— at least, since they implemented the manufacturing/distribution model which dominated the industry for forty or so years.  They controlled radio.  They controlled advertizing.  They controlled what music made it to television.  They controlled MTV, for chrissakes!  Their problem right now is that they are losing control.  That high-pitched whining you hear in the background isn’t jet engines, my friends.  It is the whining of control freaks who are, as stated, losing control.

What’s Popular Is What’s Good (and vice-versa)—–  Do we even have to go over this one?  It’s a chicken or the egg argument.  Thing about it is, they have us brainwashed (and they are using the Internet to keep us that way).  How many of those cool music trivia things and/or videos have been planted on the Internet by the industry, either directly or by their henchmen?  More than you will ever know.  Congratulations.  That big hit you just bought?  The decision more than likely wasn’t yours.

You Pay a Fair Market Price for Your Music—–  Boy, that’s a crock!  When the major labels went digital, they whined about the costs of switching formats, of recording in digital, of packaging.  Well, that may have been true at first but it isn’t any longer.  And yet the whining persists.  Fifteen and sixteen and even eighteen bucks a disc?  And after being made by the courts to promise to drop the price to a reasonable level.  The majors’ budget prices might be a fair price for a new release, but fifteen a disc is out of line.  (An aside:  We’re talking major labels here.  The indie artist does not have the deep pockets nor does he have the machine to promote the disc.  Fifteen a disc is a fair price, considering that they are forced to press in small quantities and more than likely are limited to a website or two and live shows to move product).

The Artist Is Fairly Compensated—–  Have you paid any attention at all?  Obviously, the vast majority of artists on any label don’t make a dime— not after the initial expense.  Meanwhile, the labels hold them in virtual serfdom.  The Copyright Act of 1976 was instituted to correct that, returning copyrights to the artists after a fair amount of time (the amount of time being debatable), but the majors are fighting that tooth and nail.  It should not apply to music, they say.  They even tried some sleight of hand to alter the wording of the Act to their benefit but were caught.  What can you say about corporations who have flat-out bought politicians to do what to me looks like criminal acts?  They say changing a law is not criminal.  I say bullshit!  Whether you change it in a congressional committee or change it on the street, it is criminal.  And for the majors to withhold rights to product that they have long since written off the books is criminal, too.  More than one artist has attempted to buy the recording masters from a label which steadfastly refused to re-release them.  With few exceptions, they were turned down flat.  Some have taken to releasing the product themselves, regardless of legal threats.  More power to them, I say.

But I have rambled on enough, and rambling it has been.  Sometimes, you start something and have to let it flow.  Such was the case here.  Anyway, I have a few notes to get through, so here they are:

Notes…..  And there are a lot of them this week, starting with a free album download from the very talented Gileah Taylor.  I happened upon Gileah through the Folk and Acoustic Music Exchange a handful of years ago and haven’t looked back— until now.  The album reviewed was her first “real” effort (The Golden Planes) and totally captivated me.  Two ensuing albums later, she has reached back into her past to offer a free download of her very first recorded effort, Songs For Late At Night.  The quality is very good though not stellar, but the songs present a songwriter with serious talent.  I have most of her recorded material in my collection.  And I listen to it.  A lot.  Download it here.  And if it captures your ears at all, I suggest trekking to her website to scope out her other albums.  They are personal favorites of mine— every one…..  This just in:  The Winterpills are using Kickstarter to hopefully fund a release of their new album All My Lovely Goners (due Feb. 14th) on vinyl.  Perhaps you have read my take on their outstanding Tuxedo of Ashes EP (I was knocked for a loop) and perhaps you have read of ensuing comments regarding same.  I have yet to hear Goners, but am anxiously awaiting a copy.  If it is half as good as Tuxedo, I might just pick up a vinyl copy myself…..  Antje Duvekot has recently released her new album, New Siberia, and has a video available for viewing on her website.  I’ve been following Antje since she released Big Dream Boulevard and cannot imagine this album being anything but stellar.  For a link to the video, click here…..  Green Monkey‘s Tom Dyer sent me a link to a new video by Green Pajamas, Dark Waters (In the Wires), and it is very cool.  It’s a great song and gives you an up-to-date look at the band members.  The track, btw, is from their latest album, Green Pajama Country!…..  Speaking of videos, A couple more have been brought to my attention:  Tom Mank (and, by proxy, Sera Jane Smolen) posted a video and it’s worth catching.  I believe it was recorded on a recent tour of Holland and Belgium, tgheir European home of sorts.  Bluesy and jazzy, it captures Mank and Smolen at their live best.  Mank and Smolen are two of the best out there and this is one hell of a lineup…..  Tulsa native Sunday Lane was just featured in an episode of One Tree Hill (well, her music was featured anyway) and released a new video as a sort of celebration.  There is something about this girl I really like— a pop sensitivity I find downright appealing.  And if you find that at all pleasing, here is the song which convinced me she was an artist worth following.  Pay special attention to the lyrics…..  Jud Norman of Research Turtles contacted me just yesterday with a heads up.  Seems like something is in the works.  If it’s not a tour which includes Portland, I gonna be pissed.  Mankiller Pt. 2 should be released sometime soon, though it sounds from the email that the exact date will be dependent upon said news….  I’ve been getting a lot of hits on my website on the Gary Duncan page (it’s an interview, my friends).  It made me contact Karl Anderson at Gary’s present label, Global Recording Artists, to make sure all was well and Karl says it is.  Karl also pointed out a new release on the label by The Dave Getz Getaway titled Can’t Be the Only One.  What I heard of it was intriguing.  Getz, by the way, was the drummer for Big Brother & the Holding Company.  This album leans toward the jazzy side and what I heard, I dug…..

Frank’s column appears every Wednesday

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Frank Gutch Jr. looks like Cary Grant, writes like Hemingway and smells like Pepe Le Pew. He has been thrown out of more hotels than Keith Moon, is only slightly less pompous than Garth Brooks and at one time got laid at least once a year (one year in a row). He has written for various publications, all of which have threatened to sue if mentioned in any of his columns, and takes pride in the fact that he has never been quoted. Read at your own peril.”

3 Responses to “Frank Gutch Jr: Why I Hate the Major Labels (and think they deserve what they’re getting) Or: Tales From the Salt Mines Part 1….”

  1. Frank,
    As addendums to your excellent post:
    1) Tower Records was paying invoices on a 364 day cycle with suppliers when they folded. I ran an indie label and that was the gap between delivering goods to them and getting paid for that same product. When they crashed they owed me 18 months worth of sold CDs. Needless to say, we lost the product and the revenue.

    2) It’s very likely that the two albums battling it out for #1 when you were reporting sales to CBS was Michael Jackson’s “Bad” and Springsteen’s “Tunnel of Love” in 1987. The demand for both actually crippled manufacturing plants around North America — I had to push back one of my artist album releases into March of 1988 before I could get my album onto the presses (this was back when a label like CBS had their own vinyl plants and often rented other plants from Capitol and RCA if they needed to and all indie labels were bumped from the schedules).

    3) There have been 11 re-issues of Pink Floyd’s “Dark Side of the Moon” in the digital era. A 40th anniversary 10 disc boxed set is due in 2013 (as part of the series that started with “Wish You Were Here” in 2011)

    4) Not only do labels handcuff bands from getting access to their old catalog masters for either buying back or re-issuing themselves, but an indie re-issue label (which mine was) would be required to pay an advance of between $250 and $500 per song to license from the major against a guarantee of 10,000 units sold over 3 years. In other words, if I paid the estimated $5000 in advance for the right to exploit those remasters, by the third year I was still on the hook for sales royalties to the label on 10,000 units regardless of whether I sold 10,000 units or not. They called this an ‘access’ fee. According to labels it costs $20k to $25k just to have their legal department walk across the office and find the original legal contract with the artist from an old filing cabinet.

    To add insult to injury it’s a non-exclusive deal. I could license an old album at the same time as another re-issue label at the same time. Ironically, since the digital MP3 revolution the labels have slammed their vaults shut under the false hope that THEY might re-issue some obscure releases sitting in their vaults. To date, Canadian singer songwriter Ian Thomas’ TEN studio albums have never been re-issued on CD. The label in question (also an indie) has given its major label distributor right of first refusal…so far that refusal remains in place thus denying anyone else the ability to re-issue them first.

    Here’s looking forward to your Part 2 of the story, Frank.

  2. Damn! I have only one Ian Thomas album in my collection and until now I was only aware of three. That sucks.

    The only instance of someone buying outright the masters to an album is in the case of Jim Terr of Blue Canyon Records who walked into Reprise’s offices back in the early seventies and and said, “Seven Bridges Road” (Steve Young). You got it. I want it.” And they sold it to him. Ten to one, the guy who okayed it didn’t have his job long after that.

    Your words are enlightening, Jaimie, and an excellent addendum to the column.

  3. Great article, thanks! I’ve been a professional indie musician for 20 years, and to be fair if a major label had ever offered me a contract I probably would have taken it. All these years down the road, I’m so glad I didn’t!

    I recently hosted a house concert for a (formerly) major-label singer-songwriter, and in the course of visiting with them I found out that 1) they’d been dropped from their label 2) the label wouldn’t return or let them buy back their titles 3) the measly couple-hundred bucks their house concert brought in was actually GREAT money and desperately needed just to get to the next gig which 4) they weren’t even sure they had nailed down since the previous dealings with that particular promoter had proven unscrupulous. By the time their van pulled out of the driveway, not only was I thankful I was indie, I was thankful that I wasn’t on tour! I could make near-equal money staying in my home town (and not a very big town, mind you) living in my own house, playing for relatively substandard wages in dim, smoky bars!

    I know now as a 46-year-old that most of us never get famous, most of us never get rich, and if you’re not playing music MOSTLY for the love of it, you should find another job. Nevertheless, I can’t help but wonder… what the hell happened, and where the hell has the slightest degree of kindness, human decency, and common sense gone in this business?

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