Cannibalization

Streaming is often regarded as the inevitable future of the music industry. Brian Brandt sees it differently. For the founder of the legendary New York-based label Mode Records, streaming solutions from Spotify and its competitors are the problem. Like many other independent label owners, he is against the insidious devaluation of recorded music, which has developed into an existential threat to his way of life.I caught up with Brandt recently at the Funkhaus Café, in Cologne. He was in town to promote Mode’s latest release, “Modern Lied” by Sarah Maria Sun.

VAN: How did Mode Records get started ?

Brian Brandt: I had no plans to make a record label, but I was a very enthusiastic record collector. I had a huge collection of vinyl records—eight to 10 thousand.

Which genres?

Well, I came from a rock background, then I got very much into progressive rock, and would read interviews with those musicians where they’d talk about Stravinsky, Stockhausen, or Cage. Then I started to buy records to explore those composers a little more. Some of them I liked, some of them I didn’t understand at all. But even the ones you don’t understand, they’d sit on the shelf and a couple of years later you’d say, “I’ll listen to this again,” and all of a sudden you’d enjoy it. It would start making sense. As a collector, I had to buy everything by those I followed. That was my mentality in the early 1980s.

Before the era of cdS…

Oh yes, there were no CDs yet. I lived in New York and would go to concerts every week. John Cage would go to a lot of concerts too, and I would see him there. One day at the intermission of a concert, Cage was sitting by himself and I asked him if there were any new recordings coming out. He said, “Oh, well, these musicians were playing these new works of mine very beautifully, but no one seems to want to record them.” I just said, “Maybe I can do it.” He replied, “Oh, that would be marvelous,” and gave me his phone number. A few months later I called him and said, “John, I think I can do this now.” That’s how Mode Records started in 1984.

How did you RUN the distribution?

At that time, I was running a record mail-order business on the side, mostly with import records, audiophile recordings, and special things. So I knew some distributors, which helped when I put the record out on Mode with just one release. Several months after the first record came out, Cage got in touch again with an idea for the next project. So as it turned out, I worked with him quite a lot in the beginning. He would also introduce me to musicians who he felt would be perfect for certain works of his. That’s how I met the Arditti Quartet and many other really fine musicians. Then I also started to talk with him about other composers who interested me, and he’d put me in touch with them.

So Cage was your artistic advisor, in a way.

Yes, but not officially…

In the beginning, YOU only HAD vinyl. when did the first cd come out?

In 1988, by another American composer, Janice Giteck, and it also came out as a cassette (the only one in the history of the label). The fantastic thing at that time was that anything you put out on CD would automatically sell. It was really an incredible time. Even if you put out a CD by a completely unknown person, you could sell it.

How frequent were the releases?

In the early days, we had six releases a year, and then, at our peak, we got up to 15. There seemed to be growth every year: it seemed right to really put my energy into the label’s development.

When file sharing platforms like Napster emerged around 2000, did you experience any decrease in sales?

It happened during a period of growth, so the way it probably hurt me was that there could have been more growth. It’s difficult to say, because there were so many factors at play. I was very, very surprised, as I continue to be, about how much of Mode’s repertoire is up on the web illegally. You can find some of my DVDs in their entirety on the web for illegal download. It used to be that you could get these things pulled down, but you can’t keep on top of it anymore.

The milestones for the distribution of your music were the changes from vinyl to CD, then the extension to DVD,  and then to downloads. The overall trend was stable growth over two decades. What happened after that?

Around 2008 and the global economic crisis, there was a big change in the business. Let me add that even before that there were some dips in the music industry, but you could always see the light at the end of the tunnel. You knew that if you held out and had some strong releases you’d get through the rough patch.

During the times of growth, how did you develop the label’s infrastructure?

I always kept Mode kind of lean. I was always careful to keep my expenses down so that I could put all the money into the projects, and into what I wanted to do.

You recently published the figures of Mode’s digital sales. May I ask how high the total revenue was in your best year?

I don’t mind mentioning those figures. In its strongest year pre-2008, Mode brought in a little over $200,000 before expenses. We had around 150 releases at that time. I would say that was quite a modest income. You weren’t getting rich, but it was possible to make a living, cover expenses for the warehouses, and create new projects.

You were able to take risks, and invest in your projects and new repertoire…

As a record collector, there were certain composers and works that I really wanted to have on the label. Either they were not recorded or I felt they could be recorded much better, so I would find ways to do it. In some cases I actually built it from nothing, for example “Kraanerg” by Xenakis. Projects like that could be incredibly expensive to do.

You mentioned publicly that Mode has monthly digital sales (downloads and streams combined) of about 155,000, but that this only yields around $1,200 per month on average (or $0.0077 per unit net income).

With downloads, there was a good industry standard that meant you could make pieces over 10 minutes in length available as an “album only” purchase. This helped to ensure that longer pieces were not given away for a very low price. Streaming with the big platforms like Apple, Amazon, Google, or Spotify is exactly the opposite. It doesn’t matter if you stream a cut that’s one minute long, or one hour long, you’re still getting the same amount of money per track streamed.

So Bruckner’s Symphony No. 8, which is almost AN HOUR AND A HALF LONG, is worth just four tracks.

An independent label with a Spotify deal like Mode’s wouldn’t even earn a penny from someone streaming a movement of that symphony. Less than a penny, because it’s $0.006 for a stream! In fact, it’s $0.024 for the entire symphony. But with downloads you would have to buy the entire album for a relatively fair price. The ones profiting from all this, aside from the consumers, are those who offer these platforms for accessing music for cheap. And people don’t think about that, they don’t see anything wrong with it. These huge companies get a free pass from the general public, they appear beyond reproach.

On the contrary, they get credit for saving the music industry. But why did platforms like emusic.com lower prices so much? Why did record labels allow it? Did they think to themselves that it was better to sell music cheaply than to give it away? Then the next step of this race to the bottom was streaming.

It’s so strange! Why are they happy to accept less money for what they do? Of course, the income from streaming goes up in the short run because all of a sudden the labels have released their entire catalogues on these streaming services, so there’s growth. But the total amount of money they earn will go down. They are making less money on streaming compared to real sales, which are cannibalized in the process. To me this looks like short-term thinking.

Cheap, buffet-style MODES of listening have replaced more valuable sources of income. Perhaps the industry has given up on selling releases, and sees streaming as a substitute for the radio or Youtube, but one that’s easier to control.

The problem is simple: they’ve settled on this pay-per-track amount, and they’ve settled too low!

They probably thought that this was just a transition period, something that needed to be tried out. But haven’t they damaged their income in the long term?

There’s a good example for this, the best-selling album of all time: Michael Jackson’s “Thriller.” No matter what the record companies do today or in the future, I don’t think they could ever replicate that kind of income again through streaming.

What’s the situation right now? You’re working with Naxos distribution. Can you choose freely through which channels and formats your catalogue is available?

Yes, and I’ve been thinking a lot about this. I’m really torn and I’ve never been able to make a proper decision. Our releases are available worldwide in all formats, also through streaming. We could have chosen to withdraw from streaming, but would that have been the right thing to do economically? I hope that people will use streaming services to discover the music, and then buy it properly in better quality. But how many people actually do that? At the same time, the modest amount we make from streaming is important, I can’t just do away with it. But I wonder if we would sell more records and downloads instead.

The sound quality of Spotify has become relatively good. isn’t it a perfect substitute not just for radio, but also for a vinyl collection like yours?

Exactly, most streaming users are not motivated to buy music in a physical format anymore. They just use YouTube or Spotify, which seem to be enough for them.

A while ago, you could sell a couple of hundred or even thousands of albums, which was enough to finance production. now these albums are available legally for a flat rate, and it seems like $10 is the most that people want to pay for music. well, they might also go to concerts and pay for the tickets…

The entire music business has been turned upside down. In the past, bands toured to promote records that would in turn generate income. Now it’s the opposite: no one expects to really earn any money from records, but artists use them as expensive business cards or promotional tools for touring. Which they’re doing—as well as merchandising to some extent—to earn money.

I have the impression that there isn’t so much public awareness about all of this. The global players like Apple, Amazon, Google, or Spotify are shaping the market, and consumers just do what they have always done: choose the most convenient and economical solution. What would you like music consumers to know, what’s your message?

The public needs to know that if they don’t support the independent labels—I can only speak for the independent labels—by buying real products of some sort, at least a download that brings a fair amount of money, that these labels will start to disappear. It’s already happening actually. Or these labels simply will not be able to produce as much. They won’t be able to take as many risks either, because the money won’t be there to do so. There’s also the risk that you might have to cut some corners on the quality of the recordings because you can’t afford to do it the way you want to.

You’ve always taken big risks for new music, something that’s almost impossible now. How much has your income declined so far?

Down more than 60 percent from pre-2008.

Do you feel betrayed that people are happy to save money by using Spotify to listen to your music instead of buying it at a fair price?

It’s very simple: you don’t get something for nothing. So if you want to have your music for basically free, you have to realize that eventually it’s going to dry up. Of course people will always make music. Musicians can’t help it, it’s in their blood. To some degree, it’s the same thing for me with the label. I will continue to do it as long as I can. But already I can’t release as many records as I used to because I want to make sure the quality doesn’t drop. I know a lot of labels that are really on the brink of failing. So if you have labels that you admire because they curate the kind of music that you like, and you feel that you rely on the choices they make, you appreciate what they select for you, then you have to support them in some way—buy their releases! Or forget about it, because they can’t go on forever like this. That sounds very negative, but it’s reality. It’s the choice of every individual to make use of his or her consumer power. ¶