Speaker 1: Pushkin.
Speaker 2: This is Justin Richmond here with the bonus episode of
Speaker 2: Broken Record. It's a little bit of a different episode
Speaker 2: than we typically air, but I think it's one that
Speaker 2: the musicians that listen to the show will be excited
Speaker 2: to learn from. This is one where it's like, you know,
Speaker 2: you'll get some joy out of this too, I imagine,
Speaker 2: but also put on your thinking cap and think about
Speaker 2: how some of this relates to you and how you
Speaker 2: can use some of this. It's a conversation about finding
Speaker 2: success in the music industry through non traditional means.
Speaker 1: You know. It's about artists and.
Speaker 2: Independent labels who found ways to forge their own paths
Speaker 2: to success outside of massive record.
Speaker 1: Sales, big ticket tours.
Speaker 2: Thinking the Taylor Swifts here of course, right, and how
Speaker 2: you can innovate within the music industry giving indie artists
Speaker 2: a way to thrive. This episode is sponsored by Chase
Speaker 2: for Business and I'm joined by Ben Walter, who is
Speaker 2: the CEO of Chase for Business in the host of
Speaker 2: his own brilliant podcast, The Unshakables. Ben, thanks for joining
Speaker 2: us for this episode.
Speaker 3: Justin Thanks for having me. I love all things music,
Speaker 3: so this is this is an exciting moment for me,
Speaker 3: I'm really glad to be with.
Speaker 1: You, good man.
Speaker 2: This is like a really you know, as media continues
Speaker 2: to evolve, this is something that I think is front
Speaker 2: of mine for everybody, and in this creative spaces, like
Speaker 2: like a broken record, we don't often have these kinds
Speaker 2: of conversations about business, and I think they can be
Speaker 2: really insightful for creatives and for artists and musicians. So
Speaker 2: thank you, I hope so so, Ben, I'm so for
Speaker 2: those reasons.
Speaker 1: I'm happy to have you on to talk about this.
Speaker 1: You know, I think most people think about.
Speaker 2: The artists they love, you know, we just had like
Speaker 2: a Will Smith on right, you know, even Billy Corgan
Speaker 2: on right. They're more often than not a part of
Speaker 2: a larger system like a major label, a major label group,
Speaker 2: Universal Music, or Sony. But when you learn more about
Speaker 2: the industry and smaller artists, you realize there's a lot
Speaker 2: of other ways to make money and be successful in
Speaker 2: the industry, to make money on what you're doing and
Speaker 2: provide a living for yourself. People always think about the
Speaker 2: art of business, right, but we don't spend as much
Speaker 2: time I think thinking about the business of art, you know.
Speaker 3: And I think that's a great line. Yeah, it's true,
Speaker 3: but you cannot sustainably have one without the other.
Speaker 1: Absolutely not.
Speaker 2: There's a label called Excel Recordings out of England and
Speaker 2: we had its founder, Richard Russell on the podcast in
Speaker 2: its early days. One of the problems that Richard Russell
Speaker 2: felt he was solving when he started Excel Recordings was
Speaker 2: he looked at independence and he realized, well, you know,
Speaker 2: the people running these labels, they have a lot of
Speaker 2: heart and soul and they really want to see their
Speaker 2: artists succeed and they're identifying unique talent. But where he
Speaker 2: realized major labels for succeeding was obviously having the budget,
Speaker 2: being able to drive distribution and marketing, and he thought,
Speaker 2: well those are you know, I guess there's a natural
Speaker 2: tension between those two things, but maybe there's a way
Speaker 2: to solve this. And the way he thought that if
Speaker 2: I sort an indie, the way he would solve it
Speaker 2: was just to sign less artists. That way he'd have
Speaker 2: a bigger pot of money to distribute amongst a smaller
Speaker 2: number of artists and be able to grow sustainably. Does
Speaker 2: that seem like a sound first principles for starting a
Speaker 2: business of that sort.
Speaker 3: Yeah. I think look in any business, when you think
Speaker 3: about the top line of the business, you know the
Speaker 3: revenue coming in. You always got this issue between product
Speaker 3: and distribution. In the case of music, content and distribution.
Speaker 3: But content is the product, So you pick your wording,
Speaker 3: but you know you have stuff to get to market,
Speaker 3: and then you have pipes that get it to the market.
Speaker 3: And in different industries at different times, at different points,
Speaker 3: different parts of that value chain have more and less
Speaker 3: leverage over one another. So I think you know, in
Speaker 3: the case of Excel, what they did that was smart
Speaker 3: is they realized they had great product but limited leverage
Speaker 3: on the distribution side. And so what they really did
Speaker 3: in essence by cutting it down is said, I am
Speaker 3: willing to take a bet on my product, and by
Speaker 3: limiting the product, I will maximize the number of resources
Speaker 3: I can throw my real challenge, which is distribution. And
Speaker 3: so that's a really smart way in their case. Now
Speaker 3: they were betting big, right, because if the talent wasn't
Speaker 3: as good as they thought, they wouldn't be where they
Speaker 3: are today because they basically went all in on product.
Speaker 1: Yeah.
Speaker 3: Now you can do that when you're just starting out
Speaker 3: because you have very little to lose.
Speaker 2: Yeah, and it's funny, I mean, to your point, when
Speaker 2: you're that small and just starting out, you don't have
Speaker 2: a ton to lose, but it's still risky. But you know,
Speaker 2: adjusted for adjusted for the amount of money you're kind
Speaker 2: of making, and that you know, it's that risk can
Speaker 2: feel big.
Speaker 1: And they really were niche.
Speaker 2: To start, like they were a rave and dance label
Speaker 2: right as that stuff was starting to kind of come
Speaker 2: out of clubs and maybe just touch the mainstream a bit.
Speaker 2: But one of their early artists was the group Prodigy,
Speaker 2: and you know, and then the label starts in nineteen
Speaker 2: eighty nine and by nineteen ninety four they have a
Speaker 2: you know, the Prodigy, you have a number one album
Speaker 2: in the UK. By nineteen ninety seven they have a
Speaker 2: number one album in the UK and the US, right,
Speaker 2: And so that pot of money I think starts to
Speaker 2: get bigger at the label and then they are What
Speaker 2: they did was reinvest back again, same principle, thinking let's
Speaker 2: take the money we have invested into a small number
Speaker 2: of artists. They just took that money, reinvested into the
Speaker 2: artists and eventually they grow that to you know, like
Speaker 2: until they're releasing Adell's album twenty one and Vampire Weekend
Speaker 2: Records and White Stripes Records, and Radiohead and Tyler the Creator,
Speaker 2: you know, like artists who are really shaping modern culture.
Speaker 3: Oh the White Stripes. Yes. Well, look, I think a
Speaker 3: few things. One is it's always good to know where
Speaker 3: you think you have an unfair advantage. And by unfair
Speaker 3: I don't mean a monopoly. I mean in this case,
Speaker 3: their unfair advantage is they could pick talent better. Yeah,
Speaker 3: that was like clearly they had an eye for it
Speaker 3: that the market didn't have because they could bet on
Speaker 3: a few artists who were better. But that is a
Speaker 3: concentrated risk. And so what I tell many new business
Speaker 3: owners is it's easy to forget this, but ultimately, managing
Speaker 3: a business is primarily about managing risk, even when you're
Speaker 3: in the growth phase. It's not like only big companies
Speaker 3: that have something to lose have risk, because even small companies,
Speaker 3: as you said, starting out, you know, if they only
Speaker 3: got so much money in the bank, they have risk too,
Speaker 3: And so I encourage them to think of a triangle.
Speaker 3: You know, whatever you're doing doesn't matter I'm promoting a
Speaker 3: new artist or I'm doubling down on my existing artist,
Speaker 3: or I'm launching a new label, or I'm promoting a
Speaker 3: new album. Whatever you're doing, you're trying to balance a
Speaker 3: three legged stool, because everything you do has some level
Speaker 3: of financial risk, some level of brand and reputational risk,
Speaker 3: and some level of operational risk. Right, Because even you
Speaker 3: might say, well, there's financial risk if I take this
Speaker 3: bet and it goes bad, but there might be operational
Speaker 3: risk if I take the bet and it goes really
Speaker 3: well and I don't have the resources to fulfill on
Speaker 3: what I just sold, or both of those things go
Speaker 3: really well, but then you know the way it's received
Speaker 3: taints my brand in a way that I'm on come.
Speaker 3: You're always balancing sort of those three legs of the
Speaker 3: stool and trying to manage those. So that's one is
Speaker 3: to really think of when you're running a business. You're
Speaker 3: taking bets, and you've got to manage the risk around
Speaker 3: all of those things. And I would say the second
Speaker 3: one is know when you're playing to win versus playing
Speaker 3: not to lose. You know, as a small brand, they
Speaker 3: were playing to win, right, they were going to bet
Speaker 3: on a few artists. You know, they were betting the farm,
Speaker 3: and they were playing to win when they got bigger.
Speaker 3: My guess is now often they don't put quite as
Speaker 3: many eggs in one basket because there's a few places
Speaker 3: where they think they can bet big and play to win,
Speaker 3: and some other places they'll take a smaller bet not
Speaker 3: to lose. I don't know their strategies per se, but
Speaker 3: as companies get bigger, they start to think in those terms.
Speaker 3: Because you're making resource trade offs and investment tradeoffs all
Speaker 3: the time.
Speaker 2: That's interesting, so you start to think of the certain
Speaker 2: big bets as possibly subsidizing the riskier bets.
Speaker 3: That's right, because you because one of the obligations you
Speaker 3: always have, you have to make money today and tomorrow.
Speaker 3: You can't. You can't just say well, I'll bet it
Speaker 3: all for tomorrow, because then you don't eat dinner. And
Speaker 3: you can't just you know, take all the profits today
Speaker 3: because then there'll be nothing paying you a dividend in
Speaker 3: the future. So you owe it to your business, your investors,
Speaker 3: and yourself to make money for today and for tomorrow.
Speaker 2: Speaking of unfair advantage, this next one I want to
Speaker 2: talk about beats by Dre, which of course is started
Speaker 2: by Jimmy Ivan and doctor Dre. I mean, the unique
Speaker 2: advantage is the unfair advantage here is fairly obviously.
Speaker 1: There are two guys who.
Speaker 3: He's doctor Drey, He's doctor Dre.
Speaker 2: I mean, yeah, it's like, you know, in terms of
Speaker 2: sound and audio quality and production and Jimmy Ivy and
Speaker 2: the same, you know, working on John Lennon records and
Speaker 2: the Tom Petty records and then starting Innerscope. It's like,
Speaker 2: these are two guys that know music, they know quality sound,
Speaker 2: you know, and they start in two thousand and six,
Speaker 2: so you you know, even though they're d eightying around
Speaker 2: two thousand and four, two thousand and five, not too
Speaker 2: long after Napster's kind of up. Napster up ends and
Speaker 2: peer to peer file sharing and iTunes kinds of kind.
Speaker 3: Of secord business overnight.
Speaker 1: Yeah, there it.
Speaker 2: Goes, right, And so Jimmy and Drey start to think, well,
Speaker 2: what are ways other ways we can make money still
Speaker 2: in music, and they realize, well, not only are people
Speaker 2: stealing music, but like the quality of the music they're
Speaker 2: stealing is terrible. We should give them headphones so they
Speaker 2: can actually hear what you're playing is terrible, and start
Speaker 2: to train train the audience to recognize good quality and
Speaker 2: so they start beats by Dre.
Speaker 3: I'll tell you what's really interesting about that, justin look,
Speaker 3: it's not quite a complete analogy, because no one's worried
Speaker 3: about either of those two guys. Next meal, however, we
Speaker 3: see typically in economic downturns, when there's a recession, new
Speaker 3: business formation goes up, not down. It's countercyclical. Why because
Speaker 3: people lose their jobs. And when they lose their jobs,
Speaker 3: they say, hmm, I can't seem to find a job
Speaker 3: I want. I'm going to go start a business and
Speaker 3: I'm going to do that idea that I always came
Speaker 3: up with, or I'm gonna I'm a going to take
Speaker 3: the plunge and see what I can do. And so
Speaker 3: a huge number of the entrepreneurs that we see on
Speaker 3: our show In My Business are people who you know,
Speaker 3: something went wrong, something went in a way they didn't expect,
Speaker 3: and the next thing they know, they're starting a business.
Speaker 3: That is not uncommon.
Speaker 2: Yeah, I think this is a question a lot of
Speaker 2: people find themselves running into, and especially artists too, is
Speaker 2: the idea of needing to take on a lot of
Speaker 2: roles or jobs or gigs in order to make you
Speaker 2: know the income necessary to satisfy your lifestyle. Oh yeah,
Speaker 2: when you're talking to small business owners, how do you
Speaker 2: help them navigate? Well, you know, yes, you can take
Speaker 2: these ten things and all ten things will let you
Speaker 2: x amount.
Speaker 1: But maybe that's not a good thing.
Speaker 2: Ultimately, you know, how do you know where to really
Speaker 2: reinvest your time?
Speaker 3: Yeah, I would say a few things. One is you
Speaker 3: have to take the first do no harm view, which
Speaker 3: is you know, and if I take that to a
Speaker 3: music artist, you know, if doing anything else is going
Speaker 3: to is going to degrade the quality of your music,
Speaker 3: your music, whether you're a singer songwriter, you know, you
Speaker 3: write your own material or you're just a performer of
Speaker 3: other people's material. Either way, if it's going to take
Speaker 3: away from that, then you're you're eroding your core activity
Speaker 3: for something else. And you better have awful conviction, an
Speaker 3: awful lot of conviction. And what that other thing is
Speaker 3: if you're going to undermine that, you know, So imagine
Speaker 3: you know, if you're a sports star and you start
Speaker 3: a brand, a clothing brand, and in the process of
Speaker 3: focusing on that clothing brand, you become a much worse athlete.
Speaker 3: That's probably going to have not just an impact on
Speaker 3: your athletic career. It's going to have an impact on
Speaker 3: your brand. So you might have just released a great
Speaker 3: album and you think, you know what, I can trade
Speaker 3: on this album for a year, and I've got more
Speaker 3: content in the waiting, and so I can go focus
Speaker 3: on some other things because I feel good about where
Speaker 3: the music is for a period of time, and I
Speaker 3: commit to coming back to it in this time so
Speaker 3: that I don't let an atrophy. You know, you can
Speaker 3: make decisions like that, but ultimately, if you're going to
Speaker 3: take you know you you are going to be distracted
Speaker 3: no matter what you do, and so you really need
Speaker 3: to think about, of all the activities I have, which
Speaker 3: one is gonna protect my interests and which one's going
Speaker 3: to grow my interest and how can I split my
Speaker 3: time between those things.
Speaker 1: That's that's sage advice. That's sage advice.
Speaker 3: I mean, it's easier. Look, it's easier said than done.
Speaker 3: I wish, I wish I could tell you there's a
Speaker 3: mathematical formula for it. There's not. I'm afraid even a
Speaker 3: banker will tell you. Judgment wins the day.
Speaker 1: You know, judgment wins the day.
Speaker 2: I mean, probably everyone should trust their judgment but artists
Speaker 2: are people who are who work on their judgment every day.
Speaker 2: That's what they're doing, you know, They're creating things and
Speaker 2: trusting their gut. And so hopefully we can, you know,
Speaker 2: those of us who don't have business degrees, we can
Speaker 2: still figure out how to make how to make things
Speaker 2: work for us.
Speaker 3: I agree with you justin no one ever made a
Speaker 3: great piece of music by you know, just repeating someone
Speaker 3: else's music. People make a great piece of music because
Speaker 3: they have the guts to do something original.
Speaker 1: Yeah, absolutely, well, Ben, thank you so much.
Speaker 2: This is you know again, I don't spend a lot
Speaker 2: of time thinking about the business of music, but it's
Speaker 2: it's really instructive, you know. I mean, frankly, I'm even
Speaker 2: thought I spent a ton of time thinking about it.
Speaker 2: I'm doing it every day, you know, and so it's
Speaker 2: nice to actually spend some time prioritizing the business side
Speaker 2: of things.
Speaker 3: Well, look, I appreciate you having me on. I think,
Speaker 3: you know, I don't know a single person who doesn't
Speaker 3: love music, and music makes our lives richer, and music
Speaker 3: can't thrive without a successful business model underlying it. We
Speaker 3: need sustainable business models to help great artists make great music,
Speaker 3: so the more we can encourage and support artists having
Speaker 3: really sustainable, good business models, the more we all get
Speaker 3: to enjoy the richness of that music.
Speaker 2: Well, Ben Walter, CEO of Chase for Business, thanks so
Speaker 2: much for doing this.
Speaker 1: I really really appreciate.
Speaker 3: You justin this is a lot of fun. Thanks a
Speaker 3: lot