Breaking the Music Industry's Heart

Lately, I've been looking for a story which illustrates the problems of the music industry, and which reveals the flaws in the 'conventional wisdom' of file sharing. That's how I stumbled across the band 'Wilco', and the story of the problems they had releasing their new album "Yankee Hotel Foxtrot". It's a story about great music, record company weasels with tin ears, and the ultimate triumph of good vs. evil (well, musicians vs. The Suits. Same thing).

First, a bit of background. Wilco rose out of the alternative music scene, from the ashes of an 'alt-country' band called Uncle Tupelo. But the moment they were on their own, they began creating a whole new fusion of rock, country, punk, blues, and the occasional chainsaw. Not your typical band, and not music that is easy to pigeonhole into a particular style.

But the music is great. Phenomenal. Addictive, beautiful, poetic. Sorry, I'm gushing. But since I discovered these guys, I can't stop listening to them. And everyone else who has listened to them (at my fevered insistence) feels pretty much the same way.

So why aren't they all over the radio? Because they don't fit the marketing model. They're not country, they're not hip-hop, and they're not teen rockers. There's no easy pigeonhole to put them in, so they languish in the relative obscurity of alt-rock and college radio, much like REM did before they were 'discovered'.

Anyhow, back to Wilco. After making several wildly acclaimed albums for Reprise (a division of AOL Time-Warner), they emerged from their loft with a new album, Yankee Hotel Foxtrot. This was a brilliant album. Maybe the best album of the new millennium. But like many great albums, the whole is greater than the sum of its parts. It's an album you need to listen to carefully. You need to pay attention. Great music challenges you. Much is lost if you just look for the catchy tunes that you can dance to.

So of course, the record company shrieked in anguish and demanded 'changes'. It was too dark. It wasn't radio friendly. It wasn't 'pop' enough. The record company boneheads who evaluated the album told Wilco that it was 'career-ending'.

Now, a lesser band would have put their tails between their legs, went back to the studio, and proceeded to tear apart a great album and create some forgettable pop substitute. But Wilco has always done things their own way. So they dug into their own pockets, paid the label $50,000 for the rights to the album, and Reprise released them from their contract.

Over the next year, YHF sat on the shelf while the band went on tour. But then they did something unexpected - they put their entire album on their web site, for free. Before you could blink, the file sharing networks were loaded with copies of every song. Industry insiders opined that this was the death of Yankee Hotel Foxtrot. Who would buy it, when it had been available for free for months?

And why would the band give their album away? Founder Jeff Tweedy says,

"There was a period when our record was up on the website and we were touring, where I felt confident that a lot of the ideas and idealism of the band was being given validity. Yes, we've made a lot of records and been on a major label but I've always liked to believe we'd be a band without having a piece of plastic every year and a half to define our existence. It was being proved we could have a record out, not make any money and support ourselves the way we've always supported ourselves."

"The other bottom line is that I've never been paid a penny for any record I've ever made through royalties."

So there you have the artist's perspective - unless you're a blockbuster act, CD sales are not a way to make money. They are a way to connect with your audience. They are advertising. The real payoff comes from touring, merchandising, and from the sheer joy of making a living creating music. Artists want to make a living, but above all they want to create art. File sharing networks give artists a way to connect with an audience, without involving the compromising factors of large record labels and the demands of 'pop' radio.

But then a strange thing happened. The widespread availability of the album started a buzz. I mean, anyone but a record company executive can spot a great album when they hear it, and lots of people were hearing it. Wilco's concert attendance started to rise. When they'd play songs from the new album, the audience would go nuts. Articles started appearing in the music press about this great 'lost' album. Stellar reviews began to appear about a CD that had no record label.

Now think about this - here was an album reaching an audience. Getting national praise. The band was a hit in concert, selling out everywhere they went. And nary a record label in sight. No RIAA, no lawyers, nothing. Just great music, a new technology to let people hear it, and a band willing to take a chance and stand by their principles.

So of course, the record companies were having kittens over this. Suddenly, the record was a hot property. Bidding wars erupted. And in the end, Wilco wound up signing a contract to distribute YHF with Nonesuch records, a small alternative label. Nonesuch wound up paying more than three times what Wilco paid to get the record back from Warner in the first place. And here's the best part: AOL-Time Warner also owns Nonesuch. Which means that the parent company paid to have the record produced, took partial payment of that cost to get rid of it, then paid three times as much money to get it back again. How's that for poetic justice?

Now that Yankee Hotel Foxtrot was about to be released, the big question remained: How well would it sell? Many nay Sayers claimed that it was a dead duck - all the hardcore Wilco fans had already downloaded the album months before its release. Who would buy it?

As it turns out, lots of people. The CD debuted on the Billboard Charts at #13, by far the highest debut for any Wilco record, and much, much higher than the average for 'alternative' music. Considering that there was no single, and that the band couldn't get much radio airplay, the success of this album can be largely attributed to the exposure it received from being available for free on the Internet.

This new distribution and marketing model is a huge threat to the record companies. After all, Yankee Hotel Foxtrot only cost $85,000 to produce, and distribution was free. With low-cost production and a new distribution network that connects artists directly with their fans, there is little room for a giant plodding record label to insinuate itself into the picture and skim off the money. This is the real reason why the RIAA is spending millions of dollars to buy politicians and use the heavy hand of government to try to shut these networks down.

Peer-to-Peer file sharing networks are the 'World Wide Web' of music. They promise to provide a new, efficient way for artists to connect with their audience. They allow, and even encourage the kind of artistic experimentation and risk-taking that cannot be allowed in Top-40 radio. And they give all of us a new way to ‘browse’ the musical landscape. They are good for the culture, good for artists, and good for the audience. The big losers will be be the people who try to cling to 20th century distribution models in the 21st century. The RIAA will have to adapt or die. Or, they can continue on their current path of trying to stuff the technological genie back into the bottle through government regulation.

Don't let them.

Posted by Dan at September 2, 2002 02:25 PM