With the advent of file-sharing, record labels have had to adapt to a new paradigm of music consumption. But by giving music away for free are they hurting their bottom line in the process? ANDREW MCMILLEN speaks to three label bosses about how they’re coping with an industry in flux.

Steve Cross, Remote Control Records

Founded in 2001, Melbourne-based label Remote Control represents a substantial roster of international artists in Australia and New Zealand – from The White Stripes to Radiohead, Vampire Weekend to Sonic Youth – as well as a line-up of independent international labels including XL, Matador, Beggars Banquet and 4AD. Remote Control’s in-house label Dot Dash also provides a home for local bands such as Snowman, Wolf & Cub, St Helens, Ned Collette & Wirewalker and Fire! Santa Rosa, Fire!

Over the past few years, however, the label has had to adapt to sweeping industry changes, most notably the way people discover new music. Co-founder and marketing director Steve Cross explains: “More and more, that's moving online, rather than being dependent on more traditional forms, like radio and print media. At Remote Control, we're certainly not abandoning those [physical] formats. We're working them into the mix, much the same way that we have in the past.”

Steve, the Remote Control Records blog is big on giving away MP3s of both Australian and international acts. Why do you do this?
I think MP3 blogs are the new radio. It's one of a variety of ways I learn about new music. Going to an array of blogs and listening to new tracks that people are putting up is a major one. It's kind of that democratisation that you don't have to be somewhere, at some point, to get that track. You can just be at home or on your phone. You can go out and find it, and there it is. Hopefully, you hear it and like it. Hopefully you buy the record as a result of it.

[But] I am a little concerned. We’ve worked with a couple of artists where I think there is so much online that people haven't bothered getting the record. That does concern me. Essentially, if we're going to be here in a few years time, we do need people to be buying the record in some format or other. On the other hand, there’s so much information about artists, and in some ways, I think that really makes people interested. I think Atlas Sound [aka Deerhunter’s Bradford Cox] is a great example of that. He’s just churning stuff out for his fans. People are so interested in him as a result.

I'm also kind of worried that at the other end, perhaps, artists have a shorter lifespan. Increasingly, people kind of gorge themselves on somebody for a short period of time, and then move on.

As you see it, what are the costs and benefits for a record label to give away MP3s?
Singles are always an absolute nightmare for a company like us, because we hardly ever sell any physical singles, with the exception of [The White Stripes’] ‘Seven Nation Army’ and a few Basement Jaxx singles. The actual cost of manufacturing a single and then putting it out there and then having them all shipped back to you - they were kind of like the cheap soft serve [ice cream] at McDonalds to get people in the door.

The singles are kind of like that, they're a loss leader, really. Now, you don't actually have to manufacture them. You can just get an MP3 and put it online. It's a lot simpler. If people can find it, enjoy it, use it, and all that kind of stuff, then that's fantastic.

Are you concerned that if people are getting so much stuff for free, then they're going to eventually be opposed to buying things?
I think that's a psychological reality. I've been concerned that there is a possibility that people will think that music is just a free service – a free product - and won't support the artists by actually paying for it. This would eventually make things impossible, but I'm optimistic about it.

It's very difficult for Australian artists who, in the past, would have just sold a few hundred records. Now, they're probably struggling to sell two or three hundred. That's a concern, but it strikes me that there is still a range out there. People want to support the artists, and they want to have the entire album.

There is also a convenience factor. I subscribe to various digital services, just because I don't have time to troll around to find track seven of a particular album. I'd rather go to eMusic and get the whole album. I think that's a fantastic way of finding new music as well, by subscribing as well, to both digital services. You can have a listen and cross-reference stuff. I'm discovering more stuff now, than I have for years, as a result of that.

Was the decision to give away MP3s easily-reached, or was it a bit of a shitfight? I can imagine that some labels that Remote Control works with wouldn't be too keen on giving away their artists’ work.
There's a limit to it, for sure. Especially on the international front, we take direction from the overseas labels. If they blog the track themselves, then we follow, pretty much immediately. It's not that we have discussion with them on a daily basis about this, but we reflect what they're doing. If the Matablog puts something out by Jay Reatard, we release the same track. As for our Australian artists, we make a call on those ourselves. If it's an Unstable Ape artist, it's obviously in discussion with them.

There are plenty of large websites that make money out of musical content, which they sell advertising off the back of, and don't want to reward the artist for providing them with the content that's drawing people to those sites in the first place. Some of those websites are not just people sitting in their bedrooms, making their own blogs. We're talking about some of the biggest companies in the world. Yet, they're reluctant to pay back the artist. It's not without its complexities, that's for sure.

Listeners’ tastes are incredibly diverse, and the more access they have to music - especially online - the more diverse they're going to be. I think that's probably incredibly confusing to the music industry. There has to be some kind of acknowledgement that fans are listening to a phenomenal range of music these days. It's a mistake to think people just want the obvious stuff that's being served up – front and centre, with huge marketing budgets – all the time.

Cameron Smith, Incremental Records

Brisbane indie label Incremental Records started a few years ago as a banner under which to group releases by its founder Cameron Smith, a member of Mt Augustus, Fickle Beasts and Buildings Melt. Smith, who has also recorded Brisbane acts No Anchor, Little Scout, John Steel Singers and DZ, says he wanted to give his releases a “bit more legitimacy”. The label was also borne out of a compilation of Brisbane music called Stranded, which Smith put together in 2008.

“The act of putting out Stranded,” he says, “gave me the idea of setting up an online store for Brisbane bands to sell their wares in one central location.”

He also wanted to help local bands release their music digitally without having to rely on big online stores such as iTunes. “By putting together something myself I can let local bands put their records up in an extremely affordable way, while giving them a lot more control on how their music is presented,” he says.

Cam, you've got a few releases available on the Incremental Records web store for free download. Why?
For some bands it's simply because they feel like those releases are best served by being made available in such a fashion, perhaps because they're early recordings from when the band was still finding its feet. Some bands feel that it's a good way to get people interested - giving away the four song EP but keeping the album available for purchase, or maybe giving away the digital version but letting people buy the CD or vinyl with the full artwork etc.

How do you measure the success of this kind of release strategy?
I suppose there are a number of measures of success, ranging from a pure measure of how many people are downloading these free records, through to how many of those people go on to buy other records, and then to whether this maybe increases the band's profile and maybe increases attendance at shows. Since we've only had the facility available for maybe a month it's still difficult to tell what effect it's having.

What effect do you think digital distribution has had on music? How has it affected your appreciation of music?
I would say that digital distribution has had a huge effect on music - people just expect to be able to have everything available at the click of a button. Personally I've found it to be a mixed blessing. Yes, it's great to be able to have a record to listen to within a few minutes of hearing about it for the first time, but I do miss the excitement and anticipation of waiting for a new release. Things are so anticlimactic now, especially when records are leaked on the internet in poor quality without artwork or any sense of being part of a complete package. Then again, a lot of people don't see music that way, and really don't care about things that are somewhat on the periphery of the actual music…

That being said, I like seeing bands taking advantage of the new technologies and playing with it. The obvious example is Radiohead, who popularised the whole internet release thing with In Rainbows, and somehow managed to create the release of that record into a massive, worldwide “event” … I guess the trick for artists and labels is to understand that the way people are consuming music is changing, and to not try to fight against the prevailing trends, but at the same time try to create value in their products. Look at someone like Phil Elverum, aka Mt Eerie/The Microphones, who runs his own record label out of his home, selling digital files but also physical products in elaborate packaging. He has created his own self-sustaining little industry with its own demand, and he hasn't sacrificed his art in doing so. If anything he has used it as an opportunity to be more prolific and more unique. He has embraced his niche-ness and used it to enrich his art. His label was and is a huge influence on why Incremental was developed.

There's a few labels around the traps who're giving away free MP3s as “loss leaders”, I suppose, to get people interested in their acts. As you see it, what are the costs/benefits of giving away mp3s?
Well, I suppose the answer to that comes down to whether you think you could have made money out of those records in the first place. If someone doesn't know about your record, or is unwilling to put down a few dollars on the off chance that they might enjoy it, then how are you planning to sell it? The idea of giving away a digital copy of a record doesn't seem like a big deal to me. I've never really been able to see digital music as being intrinsically valuable to me personally. I myself would never buy an MP3 on its own.

That's one of the reasons why Incremental has implemented an “upgrade” facility, where you can buy the MP3 and, if you like it, upgrade to the CD version at a reduced cost. That way there is some value in the MP3: you're giving people more of an incentive to try something that they otherwise might pass over in favour of something more familiar to them.

As for the costs, they’re pretty much zero. Webspace is cheap, and there are plenty of ways of making music available even if you have zero programming ability. The question is how do you get people to find out about the music in the first place? That's the idea of Incremental, to get a group of bands together to strengthen the entire system.

How do you discover new music?
In terms of “big” artists it's via the usual ways, I suppose - recommendations, trusted reviews, general research of music you already like. I find that I'm probably listening to less “new” music these days, a good percentage of the new music I've been finding is from at least a decade ago. I think everyone goes through that transformation. On the other hand, when you're listening to local music you just have to pay attention. It's not hard but most people don't seem to pay much attention, which I suppose is not surprising.

It can be difficult to convince people that local music can be worthwhile, and for good reasons at times - production values can be low, bands can be wilfully difficult, records can be hard to find. Plus, bands tend to stick around for such a short length of time, especially in Brisbane, that as soon as people start to take notice they've already broken up. Still, I find local music to be so rewarding, it can be such a wonderful thing to see a group of musicians grow and sometimes totally surprise you.

Tom Majerczak, Hobbledehoy Records

Hobbledehoy Record Co is an independent record label based out of Tom Majerczak's suburban bedroom in Ivanhoe, Melbourne. The label is home to acts such as Blueline Medic, Arrows, The City On Film, The Leap Year and Oh Messy Life. Hobbledehoy recently teamed up with US startup Gimmesound in August to offer legal, virus-free, high-quality mp3s of complete albums across their discography at no cost. Majerczak hopes that in previewing the music online, listeners will then purchase physical copies on CD and vinyl at its online store.

Tom, how did the partnership with Gimmesound come about?
Purchasing an album digitally was never really appealing to me. The records I was buying were often about the same cost for the physical CD or LP, so I didn’t really see the value. Although, I was always a sucker for nice music packaging. What I did like was the ability to listen to part or all of an album before buying a copy, kind of like when a friend would dub a tape or burn a CD for you. When Magic Bullet Records announced they had partnered with Gimmesound for an ad-supported free-download model, I decided to look into it. After about four weeks, the decision was made to go ahead with the feature, which we can choose to end at any particular time.

How did you negotiate the partnership with Gimmesound, and how does the ad revenue model operate?
Gimmesound were very supportive and keen to have Hobbledehoy on board. A few emails were exchanged and we were up and running quick. To the best of my understanding, 50 percent of all ad revenue goes to the artist/label, while the remaining 50 percent goes to Gimmesound. Then, two percent of Gimmesound’s net revenue is donated to a charitable cause of the user’s choice.

I can see how this kind of announcement could be perceived as admitting defeat to the prevalence of people acquiring music for free. But you're a boutique label, not a major. What are your goals here?
I'm not saying this is true for all labels, but for Hobbldehoy, a larger portion of people who wouldn't have downloaded the record in the first place now will. A small amount of those people will buy a record they otherwise wouldn't have. Of course there will be a very small few who would have happily bought it on a paid service like iTunes and now will get it free … It’s a little strange I know, people seem to gravitate toward their preferred digital stores, despite another offering the same product cheaper, or in higher quality bitrate, or with bonus content.

So people I believe have misread what I’m doing with Hobbledehoy, not fully understanding that the artist/label are still financially reimbursed. It essentially works in the same fashion as free-to-air television: advertising pays for shows so people can watch them for free. This is a great solution for a tiny indie like Hobbledehoy, especially since the MPs are clean of ads; only the website features banner advertising. This was very important, as I really didn’t want people downloading MP3s with voice-over advertising embedded, limits on their free-downloads, low quality files, DRM [digital rights management] etc. So it is a digital store just like iTunes, eMusic and so forth, but using a different revenue model.

I can also see how this might be a strategy to lower the cost barriers that inhibit people from parting with $10-20 to own one of Hobbledehoy's acts on CD. Was this intentional?
Definitely. The days of people buying records “just because” I think are gone, for the most part. Now it's very much a try-before-you-buy culture. The success of MySpace artist pages are a great example of this.

As a tiny independent label, it became clear very quickly that people buy our records because they want to own them, not because they want to hear them. The Gimmesound system allows us to let people listen to and download as much as they like at no cost, and our artists still get paid. I have no plans to phase out physical product either. For me it’s a very fun part of enjoying music. This strategy not only allows more people to hear more Hobbledehoy artists, but also promotes the physical records we release.

How often do you personally download music?
Not very often. Like most people, I’m guilty of “illegally” being given, downloading or sharing music at some point. As mentioned above, I love the physical product, be it a well-presented vinyl record, or a CD. So it’s usually to access buying a record or going to a show I’m unsure of. Digital music really isn’t of big interest to me. I have my turntable set up on my desk next to a computer which I listen to a lot, and I still put CDs on at home. I transfer some of those onto my portable mp3 player for when I go running or travelling.

How do you find new music?
Recently, a lot of it is word of mouth, be it Hobbledehoy artists recommending me something, or my friends doing the same. Sometimes it’s through music websites and blogs, though I don’t have a lot of time to check these resources out. Years ago, it was going to shows, as the more shows you go to, the more bands you become familiar with. That’s definitely my favorite, it’s always great being really excited about a new band you’ve just seen play live.

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