Monday, March 18, 2013

The business of indie - Part 2: When indie explodes

Macklemore tweets with incredulity in Oct. 2012,
one week after the release of his album The Heist
For the last few posts I have been talking about eventually getting to estimating the dollar side of the Macklemore story, as we have the unusual case of an unsigned, independent/indie artist with a #1 hit in over a dozen countries around the world, a sold out tour, his own merchandising operation, and millions of YouTube views per day.

Without a label one might think all the money is his, or all the money minus the 30% to iTunes or the revenue split with YouTube, or whoever the other platform providers are. Well, not exactly. Keep reading, and you'll see why.

Further investigation has uncovered additional information, shedding new light on the different ways success can now be built in the first place, and then built upon. I love thinking about these new processes, but a discussion I don't particularly enjoy having is what does and doesn't constitute 'indie', as in independent, as in religiously averse to the involvement of corporate entities, middlemen, and anything but the most grassroots, DIY (do-it-yourself) approaches.  Don't get me wrong, these are valid ways of doing things, and I respect many who take that path, but the argument can quickly become saddled with holier than thou, indier than thou details...and this has come up with regard to my current interest in the case of Macklemore.

What interested me about his story in the first place was how someone without the power of the infrastructure usually needed to create a hit on that scale was able to create a hit on that scale. In my first post on the Macklemore phenomenon I laid out the basics of the case and included lots of numbers re his initial level of success, followed by growth that could only be described as explosive.

Could it really be that the sheer force of a solid fan base, built over 10 years or so in Macklemore's case, combined with a catchy song and video, and the power of a well-cultivated social networking presence could take an artist from regional stardom to millions of iTunes downloads and over 100 million YouTube views. Could what I have referred to in a previous post as the heavy industry of the entertainment industry really be circumvented to that extent?

Further digging was required, and in the immediate last post I started mapping out how Macklemore started building out from his extremely indie base of himself and his DJ/producer collaborator Ryan Lewis to include a manager and a booking agent. “We run a very small team", said Macklemore, "’s me and Ryan and Zach [manager], my fiancĂ©e Tricia and it’s the four of us as this tight knit nuclear family,  and we have a bigger family too but in terms of running our business we’re the four people that are making the decisions at the helm of this business and we act as a record label, the four of us."

"We do everything in-house", continues Macklemore.  "The marketing team is me and Ryan, my girlfriend, and my manager Ryan is doing graphics, cutting the videos, we’re both directing the videos, we’re both figuring out what our merch is going to look like. It’s been DIY ever since I first started at like 15-16 years old in graphic arts class, trying to figure out how to design an album cover at 17-18."

In fall 2012, upon the release of the album The Heist, Team Macklemore was, clockwise from Macklemore's head: Macklemore, Manager Zach Quillen, DJ/Producer Ryan Lewis, and Tricia Davis, Macklemore's girlfriend of 7 years, and soon to be wife.

The team had also been working with booking agent Peter Schwartz of The Agency Group, for a year or so. Peter was now tasked with booking the act into halls and clubs all over North America for their 2012-2013 tour. This week's show at the Jack Breslin Student Events Center in East Lansing, Michigan, next week's show at the Elliott Hall of Music in West Lafayette, Indiana, the following week's show in Anchorage at the William A. Egan Civic and Convention Center....those are all arranged by Peter and The Agency Group.  Without a booking agent with the right skills, experience, and contacts getting the shows, having them run smoothly, and of course getting paid, would probably not be possible at the scale at which Macklemore & co. are currently operating.

There has also been a distribution deal, as of mid October 2012, with ADA, the Alternative Distribution Alliance. ADA's website describes the company as "independent music, film, merchandise, and synch licensing since 1993. Among its clients are labels such as Beggar's, SubPop, Merge, Alligator, and Smithsonian Folkways.  These are all labels. Macklemore and his crew were able to secure a distribution deal with ADA, without being or having a label, based on their unexpected and impressive first week of album sales figures, which were 78,000. That they did all on their own. The result of close to ten years of work.

And yes, ADA is owned by Warner Music Group. which to some makes Macklemore ineligible to call himself 'indie', but I tend to side with Hypebot's Clyde Smith, who calls into question the usefulness, or more aptly, virtual uselessness, of the term 'indie' at a time when so many ways models and processes are in flux.  After all, Macklemore owns his own copyrights and masters, is not beholden to a label, and the way I see it ADA works for him. They're a subcontractor just as any distributor would be. Team Macklemore chose ADA over other suppliers because they decided that ADA was the best company for the job, and so far it looks like they're right.  One of the most salient quotes from Clyde Smith's blog post is: "If you thought Macklemore and Lewis were a couple of hipsters posting up on Tumblr and slinging CD-R's out of their backpacks in front of Goodwill in between tour stops reached via public transit, then you're living in a fantasy world."

Despite the power and reach of digital tools there's still only so far you can go as an indie, as a full-on do everything yourself indie. Even distribution, now largely digital, can require an intermediary. I asked a friend, himself the owner of an indie label that's been around for over 20 years, why that is, in these days of iTunes and Amazon and streaming music services, and he wrote:

"There are middlemen involved for a few reasons:

1. When you ask them to take on something (physical distribution) they don't want, and they insist therefore on getting something they do want (digital)
2. When you don't know what you're doing, as a fledgling band you do it once with the middleman, learn how to do it, then, later, should you choose, you can do it yourself."

And there's also radio airplay, which many tend to think of as irrelevant because, perhaps, you or I or the people we generally talk to may not turn to radio for music very often, but to break through to the mainstream, radio is still important. For how much longer is another story, but for now apparently it still is.

Again, by the time the promo forces came into full effect for Macklemore he had already sold over 100,000 copies of the album, racked up 4 million YouTube views in the first month, and was charting on Billboard on the strength of the Soundscan (sales) numbers.  So while there are those who may wish to view Macklemore's success as the product of the force of industry, I prefer to view it as an ingenious "indie plus" model, in which the artist is able to attain an unprecedented level of success independently, and then, with the selective addition of industry partners, can see if/what the effect is of adding the extra layers of marketing and promotion.

This January 2013 article from Billboard references the promotional 'muscle' that Macklemore received via his deal with ADA, and it turn Warner Music.

"After the clip clocked more than 4 million YouTube views in less than a month and the album's impressive Billboard 200 debut, ­Macklemore agreed to a one-off deal with ADA for at least three months to service the song in the alternative market. ADA sent the song to key tastemakers, and the response was so overwhelming that it expanded its servicing across stations within the format-an unusual approach for the company, according to ADA president David Orleans...."Our business is set up exactly how it was when we released the album, but we have access to a great radio department at a major label that we essentially pay for out of our own pocket," says [Macklemore manager] Quillen."

Note the new direction of the work....not from the label to its promo people to radio, but, instead from the artist, first to the distributor (ADA), and then to its parent company (Warner Music Group) and then the artist pays to have the single and/or album promoted to various radio formats (pop, alternative, hip hop, etc), out of their own pocket. This way the label isn't risking its capital, as the artist has proven his ability to draw a substantial audience, the artist remains in control, and the music is able to reach as wide an audience as possible, which is how we end up with videos like this one, of buskers in a shopping mall in New Zealand, performing Macklemore's hit song for passersby.

And as I sign off on March 18th, 2013, the video for Thrift Shop clocks in at 175 million YouTube views. Nicely done, Team Mackelmore.

As for where the money goes, I'm working on that puzzle. We now have a sense of the variety of players involved and my next challenge is to compare and contrast the economics of the traditional major label music business model with models such as the one being carved out by Macklemore and his crew.

See next post here.