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I think MTV was the beginning of the end for the recorded music business, in that it solidified a mindset that exalted marketing over substance.

… Take me through your theory of what happened as a result of MTV. What happened to the business?

As we think back on the past 20 years and how did we get from the era 25 years ago to now -- people have been talking about the effect of digitization of music as being the most devastating event in recorded music. And clearly, the fact that music got digitized is how it can be traded for free. That is a result of the creation and development of the CD, which was started, launched by Phillips in 1983. That had an interesting side impact in that it created a cash flow for 10 years where people were replacing their vinyl with CDs and a lot of cash came into the business, which was a bit of a false prosperity.

The other event that occurred in 1983 was the launch of MTV. And I think now having the benefit of 20 years to look back on the impact of MTV … I think MTV was the beginning of the end for the recorded music business, in that it solidified a mindset that exalted marketing over substance. It made the record industry a one-trick pony. It became only about a three-minute single and a visual image, and if you didn't have the three minutes you were over.

The corner was turned at that point, I think, away from believing in the power of the music and believing in the power of the market. Once that corner was turned, we started on the path that has led us to this moment here, where kids are treating music as disposable. They're treating music as disposable because in fact they are getting disposable music. And it also brought about the end of the album artists. People are talking about right now, is the Internet the end of the album artist? Because now anybody can buy any track on the Internet.

But to me, what started with MTV and became about trying to sell a $16 CD based on three minutes of music, is what killed the album. If you think about albums -- and the only reason I'm speaking about albums is because, when we talk about career artists, and we talk about the value of catalogue, there's always been a pop business and pop songs. And those are great, and it's fine, it's a big art form and it can exist, but the career artists, the catalogue value is really album artists.

We went through a period of about 20 years where we had this slew of incredible albums. In fact, the album was in itself a response to a technological innovation, the long player. And somewhere in that, I don't know, 10 or 15 years into the long player's existence, certain artists -- Lennon-McCartney, Brian Wilson, Roger Waters, David Crosby -- started to view the opportunity to put out 40 minutes of music as an ability to put out 40 minutes of coherent, cohesive music. A body of work.

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Michael Guido is a music industry attorney, who represents Velvet Revolver and Sarah Hudson among others. In this interview, he describes what he believes these artists need to do to be successful. He also explains the "perfect storm" that has hit the music industry and in particular, how the emphasis on the hit single has led to the demise of the album. "I think MTV was the beginning of the end for the recorded music business, in that it solidified a mindset that exalted marketing over substance," he says. However, despite all of the counts against the industry, Guido feels the music will prevail. "My philosophy is that irrespective of whether or not the record companies fix themselves, or radio gets deregulated or not, music is the most resilient art form. It's like water. It will find its way through stone one way or another." This interview was conducted on Feb. 7, 2004.

What grew out of that was album radio. People that bought albums didn't just talk about the single on the album or the emphasis track, or the impact track, or it being worked at radio. The last song on side two, or the third song on side one -- you'd have these debates about which song you liked better.

And if you think about it, since about 1985, the albums don't really exist like that anymore. Yes there are albums that come out with 12, 15 songs on [them], but the environment in the record company has been, "Give me nine minutes, three songs, so I can work with radio. If you can't give me three songs give me two songs. But if you can't give me two songs, give me one song. If you don't give me one song, I can't do anything."

So the environment that has been created by the record industry around artists has been one that rewards artists that can give you one song and not artists that can give you 40 minutes of a body of work. And consequently, those artists have been told, "Go back to your day jobs. We have no place for you. If you can't give us the song that we can do our one trick with -- which is go to radio, make a video, and break that song, so we can convince somebody to buy this album for $18 dollars, because they can't get that other song, that one song, without buying the album -- then we have no use for you."

What happened? As soon as people were able to buy the one song, without having to spend the $18 dollars, they bought the one song. Because the other songs are meaningless to them. And I would submit to you that anybody that has talked to any kid that is a proponent of downloading, he'll say in the first 30 seconds of his defense, some kind of a story about how he bought a CD because he liked a song, and he paid all this money, and he took it home, and when he got home the rest of the album was junk. So why should he be forced to buy all this junk to get the one song? That's a result of creating a business that only cared about the hit single and not about an album artist, an artist that can put out a body of work.

The Internet, in fact, I believe can be the savior of the album, the concept of an album. And if we are creative, and as an industry say "You know what, we're going to put out 12 songs, one song a week, of this new artist, and we're going to price it intelligently so that if you buy one song you pay a certain price, if you buy four songs you pay less per track, if you buy all 12 you pay the least amount per track."

And then we're going to the artist and say, "Okay guys, your challenge here is to make every one of these songs count. To make everybody want to buy every one of the songs. In fact, not only to make every one of the songs count, but connect them. Make it so that if somebody doesn't buy one of the songs, it's the equivalent of not buying a movement from the Beethoven Symphony."

Here's the deal. Some other people we speak to say, "No, no, no, MTV is good, wonderful, opened the doors to lots of music that otherwise would never have gotten played." …

[I]n the beginning of MTV, when it was all music videos and a lot of the new bands were open to using this new medium, it probably did do those things. It's now with the ability to look back, not necessarily through the mist of time, but with some retrospective scrutiny, and say, "What happened? How did we get in the business of marketing, more than we're in the business of great music? How do we have an era where we go through manufactured artists, and only manufactured artists?"

Now, there have always been manufactured artists. There have always been artists that have been fronting a project for songwriters. But how did we get to the Milli Vanillis? How did we get to the boy band era at the expense of other types of music? To me that's a result of a continuum that began with MTV. It began about image over substance, marketing over substance. And I would maintain that position. …

[What happened with the invention of the CD?]

Well again, to the degree that there's a perfect storm scenario here, there were a number of elements that came together. One is the digitization of music, and what transpired by the Internet and having songs to be traded freely. Another is that scenario that the CD conversion, as we called it then, brought all this cash into the business, where catalogue, old albums were being converted into CDs.

And as the population was embracing CD players, and the convenience of CDs, they would have to go out and replace their old vinyls with the CDs. They had old, scratchy copies of the White Album. Now they could get a new digitally re-mastered copy of the White Album that is this big instead of this big, and plays in their CD player. And at that same time was in an era of a continued corporatization of the business. They looked like cash cows. Larger corporations were getting involved with them.

And the other thing that was going on at that time period, which was the same thing that was going on in all corporations, was the disparity between executive compensation packages and the rest of the company. And whether it was GE or the New York Stock Exchange, we saw the record industry also have a situation where the executives who were presiding over this prosperity getting better and better executive compensation packages, and the phenomenon that occurred in other corporations also occurred here, which was a culture about the executives believing they were the business.

I've often found myself in a situation, as an artist representative, where I'm sitting across the table from a president or chairman of a record company, and he wants to sign an artist I represent, and I'm asking for what he thinks is too much money. And he sits there and says, "You know, that's the problem with this business. The artist deals are out of control."

And I've sat there and said, "You know what, you can get fired tomorrow for sucking, and get paid more than this artist is going to get paid for three albums. So how can you sit here and tell me that the problem is the artist's contracts, the artists are getting paid too much? You want to save some money, let's walk the halls. I'll save you some money." …

My belief is that the power of this business, the reason the lights are on at Columbia Records, or Universal Records, is because of the music. So I'm a firm believer that that's what the business is all about. It's not about the executives. The executives, the lawyers, the managers -- we are facilitators. Our job is to try to get the music to the people. Because all business in the music business happens from the point of contact between the music and fan. From that point it all flows. And if you're in the business of music, your job is to make that point of contact happen. Anybody that thinks it's about them, [has] already lost the plot.

So that is another element that became part of the perfect storm, is this executive culture that occurred. And again, you know, I have a lot of friends there, I don't begrudge anybody making whatever money they can in their lives. But if you ask me as objective observer, was that good for the record business or bad, I have to say it was bad.

One of the other elements of the perfect storm that we've talked about, that we've talked to everybody about, is this consolidation of not only labels, but also radio. What's up with that?

It got consolidated. There's essentially, I don't know, two or three radio stations for all intents and purposes right now, which limits the ability of music, different music, to get out there. Program lists are being devised on an almost national basis for certain kinds of formats. The independent thinker as used to exist in the radio station is no longer allowed to exist.

In the early days of the music business, the record business, you could find a DJ in Cleveland, like Alan Fried, or in Buffalo, who would fall in love with a record, start playing it, people would react to it, and you could start a record off that way. It's much more difficult to do now with two or three conglomerates controlling all the radio formats. These problems beget their own solutions.

Satellite radio may end up being what radio is about. Pirate radio has been a result of the consolidation of radio stations. And the lack of power of radio really, in terms of affecting people's lives, is a result of its dumbing down to a bland, one-dimensional approach to music.

What's that thing you say about, "Music is like water, or--"

Well my philosophy is that irrespective of whether or not the record companies fix themselves, or radio gets deregulated or not, music is the most resilient art form. It's like water. It will find its way through stone, one way or another. And if you believe in the power of music then you know that to be true. ...

Duff and Matt [are] the genetically-engineered band. What's up with Velvet Revolver?

I wouldn't call them genetically engineered. I would call them people that found each other. Kind of destiny. That's another band I think that the sheer greatness of what they're doing is going to prevail. They're so good. …

All I can say about them is I saw the one show they have done to date. They came out and played like an 800-seat club in Los Angeles. And it was classic, there was 800 people inside and 5,000 people outside trying to get in. People were sitting there going, "Is this hype, is this a bunch of re-treads?" And they came out and they played six songs and people's jaws were dropped. It was, "Oh yeah, this is what it's about. I forgot." It's the feeling that you got when you looked up at Led Zeppelin or the Rolling Stones, or somebody, and said, "This is not the world I'm living in. This is some other parallel world that I want to run away with. I want to run away with the carnival."

That's rock stars. That's big rock songs with rock stars that are bigger than life. That are not what some of these bands are when you look up at them and say, "Oh that guy's like my next-door neighbor." This is different, and it's a reminder to us that grew up in a period of rock stars, as to what it's about. And it's going to be fresh and new for kids that have gotten manufactured bands put in front of them for the past five or six or 10 years.

It has danger attached to it, which is an important element of rock. It's what hip-hop had that rock lost, which is why kids were reacting to hip-hop, to the degree this has always been about something that scares your parents. Because there's that moment in your life, when you're 15 or 14 or 16 or 17, and you're inheriting a world you didn't create, and none of it's making sense, and your boss at the deli's busting your chops, and you're in love with this person but you're not having any sex, and you've got all this burgeoning sexuality in you. And at that moment somebody starts making some music that makes it all makes sense for you. That says, "Yes, that's what I'm about. That's what I'm feeling."

For a long time rock lost that, and hip-hop had it. Hip-hop had the danger, hip-hop scared your parents. Velvet Revolver has that. It has that feeling of danger. And it has all the elements that make it combustible which make it exciting. Great musicians, great songs. …

What's the bad thing that can happen to them?

The bad thing that can happen to them is the bad thing that can happen, has happened, to a variety of people in music. Drugs, self-destruction, trouble. That is the flipside of the coin, that's the flipside of the danger.

Hopefully, because these guys have survived as long as they have, and come out the other side, that they have within themselves the ability to not self-destruct. And I think that's the case. Including the one person that continues to have a problem. He's also kept himself alive for all these years, and I believe that he has a safety net within him that's going to keep himself alive. And plus the music he's making is so important, it's what he does. I think that's what's going to keep him alive as well.

Let's move to Sarah Hudson for a minute. How does Sarah come to you?

That's just a funny bit of kismet actually. I had been hearing about Sarah Hudson from a variety of different people that I knew. But I hadn't heard any music of hers. But I knew a songwriter that worked on her album, I knew Joanna [Ifrah], her A&R person, and I was hearing "Sarah Hudson, Sarah Hudson."

What were you hearing?

Just that she was making a great album. And I knew Mark Hudson from the past. I at one point back in the day, represented Chastity Bono who was making an album, and Mark Hudson was the producer. And I met him during that, and he was a real character. It's an era in which he was going out with Cher. ...

The bit of kismet that happened with Sarah Hudson was I hadn't seen or talked to Billy Sammeth [Cher's manager] in five or six years. About a month and a half ago I get a phone call, Billy Sammeth. I pick him up, "Michael I'm in town, I'm coming to see you." ...

We're sitting here in this office talking. And while we're sitting here in this office talking, Joanna Ifrah e-mails me about one of the producers that she knows possibly needing another lawyer. And in it, says, "And this producer worked on the Sarah Hudson album." So I turned to Billy Sammeth, I said, "Billy, you know Sarah Hudson?"

"Do I know Sarah Hudson? She's my goddaughter." I'm like, "Really, I've been hearing a lot of good things about her." He said, "I'm going to call her up right now, tell her she needs to meet you."

He calls her up, leaves a message, we finish our conversation, he leaves. About a half hour later I'm in a meeting, my assistant is buzzing me saying, "There's a Sarah Hudson on the phone saying she has to speak to you immediately, she needs you to be her lawyer." I picked it up, we started talking, and it just felt like it had to be. So, that's the way it happened.

What did Sarah need a month and a half ago?

She didn't necessarily need anything legal at that point in time. Her deals were done. I think she just felt a need to have another character in her life, you know. What ends up happening around an artist really is similar to a foxhole. The foxhole, like a chain, is only as strong as its weakest link. So if you feel you have an empty slot on one side, you want to have it covered just in case sometimes happens there. I think that's what she felt, that there was a slot there that she needed some coverage on. And she wanted to fill it. …

And who's Joanna?

Joanna's her A&R person who signed her and supervised making her album.

She's really crazy about this?

She's crazy and she's passionate, yes. You can't ask for anything more than passion from people that are working with you.

Why do you think that's so with Sarah and Joanna?

She obviously evokes something in Joanna that brings out the passion in Joanna. The reason that Joanna does what she does is to feel this way about an artist. So that connection has happened. You don't question that chemistry, you just sort of go with it. ...

When did you hear Sarah's music and how was it? Did you like it?

I like Sarah's music, I think Sarah's music is very catchy, very of her age, angst-ridden, trying to find meaning in the world. It's a reflection of the kind of childhood she had, and how she grew up. And I think it has a really legitimate chance of connecting to an audience that's going to relate to that, kids basically going through the same thing.

People tend to make music that means something to them at that point in time, if it connects, if it gets the opportunity to connect and it connects, then it all works. Sometimes it doesn't connect, that's what happens.

The first time you laid eyes on Sarah what was your impression?

That she was interesting. Quirky, pretty, a bit different. Not manufactured at all, but very individual. And I felt she had that thing. The thing is that undefined quality that artists have. Or if they don't have it, they don't usually connect. And I felt she had the thing. I thought she was also very sweet, and I want her to succeed. Just trying to put my energy behind her in that direction. …

Handicap Sarah's chances for me will you?

Sarah's got as good of a chance as one can have right now, which is probably a 20 percent chance. They're going to put her song out to radio. Now the song itself sounds like a hit. It feels like a hit. The problem again with these restricted formats is the radio stations are getting, I don't know, five or 10 new singles a week. Or over a couple of weeks they're getting five or 10 new singles, of which they're going to maybe add one to their playlist. That sounds like about a 10 to 20 percent chance there. Again, if the song is as we think it is, in that it is potentially a hit, and the gods are smiling on her and everything lines up, it can happen. And hopefully it will on her first single.

What I do hope happens for her is that if her first single does not succeed, or if her first album does not succeed, that she be allowed to continue to grow and develop and be in the game. Because you can't take this snapshot and decide someone does not have a career in this business.

... I don't know whether her first single or her first album is going to succeed. I'm going to do anything I can to help it. But my hope is that if it doesn't succeed, that she be allowed to continue to have a chance.

Does she have that kind of a deal?

No, she doesn't. It's going to be a decision made at her label, if it does not succeed, whether to continue with her or not, whether to continue to back her.

How long do you figure they'll give her before that decision?

Well, you know, the real tragedy that occurs day in and day out is that that kind of decision is made four to six weeks after a single comes out. You know the real tragedy that I see in the business, on a daily basis, is some artist works for years to get a record deal, they struggle and they fight through, over all the obstacles, and through all the battles, and they succeed in finally having somebody say, validating them, "Okay, we're going to let you in the game. Welcome to the game."

They feel great, they then spend another year to make their album, because they've got to wait for the right producer, and that producer's schedule, and go through the A&R process of choosing the songs to go on the album, then making the album, and having it mixed, and maybe re-mixed. And then people generally want three or four or five months to set up the album so that there can be some press and coordinate it with the album release.

Finally the big day comes, the album comes out, and in three weeks or four weeks it's decided that it's over because their first single is not responding at radio, immediately. That's what I mean about the one-trick pony. That happens day in and day out. Which, anybody thinking about this business, and saying, "That's not logical. How do you invest all this money in an artist that you've believed in for this entire time and then pull the plug on it after three weeks? What kind of business are you people in?"

It wouldn't make any sense to any outsider. What is concerning is that people in the record business accept that as the norm. And you find these radio promotion people saying, "Well what can I tell ya, single didn't react. The spin's are flat. I've got to put four more singles out next week, I can't work this anymore, goodbye." So there's no logic to that.

That happens everyday. I've often said about radio promotion people that, and again, some very very nice people. But their job is radio promotion. To promote the music at radio. But what they do, most of the day, is declare records dead. They have a certain amount of time in their day, a certain amount of resources to work a certain amount of singles. And singles coming up, they're back, two weeks out, four weeks out, and they're trying to decide whether or not something is happening, based on two to three to four weeks' worth of information. It's crazy. And any outsider, looking at this business, has got to think that's crazy.

Is that different than it ever was?

... Now it's just over a lot faster. You don't have that chance to connect. It can take nine months for a single to connect, and there are enough stories in this business where that has happened. Because somebody believed enough in a certain artist, that an album was going along and was apparently dead in the water, and somebody believed and kept going and going and going and then it connected and sold millions of copies.

Okay here's Sarah Hudson. She's broke. Whatever money she got advanced to her, is long gone. Will she make any money from the sale of this album, unless it sells two million?

No. She won't make any money unless she sells a million albums. When all is said and done, the structure of these deals is such that, on a major label situation, when all the advances are recouped and all the recoupable costs are recouped, you won't make any money off that album, probably until a million albums if not more.

What can happen though, is that you might be able to make money from other sources, if you do sell a million albums. But if you only sell a few hundred thousand albums, which is again, not a bad start, you're probably not going to make any money in any area.

Break down for me how a label recoups costs. What costs?

The structure of the record deal, as it has existed -- and it may change -- is one that all the money given to an artist to put in their pocket, together with any money spent on the making of an album, half the money spent on making the video, and half or 100 percent of the money spent on promoting it, depending on which area of promotion. One hundred percent of the money spent in supporting, tour support, live performances is recoupable, or is considered a pre-payment of your royalties. So, it's called an advance against your royalties

So if your royalty on an album works out to $1.25 an album, and those costs add up to a million dollars, then in order to recoup that, in other words in order to have the pre-payment reached, you're going to have to sell 800,000 -- whatever the arithmetic works out -- units before you get paid dollar one.

Because you've got to pay them back.

Because you've been pre-paid. Because the definition of these payments to you, whether or not they went in your pocket or not, is that it's a pre-payment to you of your royalties. So that is the structure of a record deal.

We sometimes refer to it as a false debt, because the record company could very easily be making money a lot sooner than that. They, on a basic profit and loss situation, if they've laid out a million dollars of recoupable money, and say another half a million dollars of non-recoupable monies, their break-even is going to happen a lot sooner than the artist is going to recoup. So the record company will be in profit before the artist is recouped, and that's the nature of this business. ...

So what happens to Sarah, how does she make a living? Between now and the potential for album two.

She struggles and she's rolling the dice completely here on her success. And she hopefully will hit that success point, and make money, and be able to keep doing this for as long as she wants to do it because she's making enough money. Probably 80 percent of the people that are in Sarah's position at any point in time in the history of the record business, never made any money and are doing other things. I don't know the actual number, but I would think it's at least 80 percent. ...

One of the great things about the making of this film that's been fabulous getting to know the artists, to find that it really is from the heart. ... The good ones mean it, and the artists mean it. And they're real, creative people. And they matter. Tell me about that.

A lot of times you have new people coming in here and saying, wanting to be successful. The common denominator that I have found with the ones that become successful, is that for them, doing this, is the equivalent of breathing air. Or eating food. There is no choice for them, they have to do this. There's nothing else they can do. There's nothing else they want to doThere is no choice. That brings about a determination and a persistence grown out of inevitability. They have no choice but to be persistent. ...

For people sitting out in their living rooms now ...what is the meaning of this, what does it matter what ever happens to [the] people in a bunch of companies in New York?

It doesn't matter what happens to them. What matters to them is what happens to the music, and do they continue to have their lives enriched because they are being exposed to music that means something to them? And that's why I say whatever happens with the industry, music is going to prevail. It's not going away. It will find its way to people. That's the beautiful thing about music. It can get to the people any way that is available.

People make music, they go play in their local bars. People go strum in Central Park. They play in subway stations. They make their own CDs and put them out there. The Internet could allow everybody to get their music heard, in some way, by somebody. They sing for their churches. They sing for their children. They do it because it's an essential part of the human condition. And it's not going away.

So what do I care about this story, about the record business?

I assume you care about it because it's interesting. And it's indicative of how our culture has evolved, or devolved, and there's lessons to be learned about what we should do in the future. And how the tension between art and commerce has always been there, and this is another interesting story of that tension.

My feeling is that they can co-exist, because people will pay for art that means something to them. Always have, always will. Whether or not this particular incarnation of commerce continues or not, really is irrelevant.

What's relevant for me is, I work with people that make music. And as long as they do that, I believe that their music is going to get out there.

And when those people complain to you about the music business, what do they say?

They're not being given the chance. They're all very confused generally. "Why was my album only given three weeks? Why didn't it work?" They tend not to think about it beyond that, "Why didn't it work? Tell me why." Or "How are we going to deal with this?" Or "How are we going to get around this?" Or "is there anything else we can do? How can we be creative on our side of life to bypass the record industry? Is there other ways that my music can get to people and manifest a living from me, so that I can keep doing it?"

And I think in this day and age, a lot of people are looking at some of the other ways of manifesting income from music as a way to keep doing it.


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posted may 27, 2004

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