Danny Goldberg is one of a new crop of industry vets using their experience and clout to create new businesses that could become the corporate powerhouses of the future.
In recent months, a flurry of well-recognized executives have defected for new media ventures. Ex-Disney execs Michael Ovitz and Richard Wolpert are launching CheckOut.com. Former Capitol Records CEO Gary Gersh and Gold Mountain Management head John Silva are guiding the DEN music group, a "major Internet presence." Long-time journeyman and Goldberg contemporary Al Teller is digitally distributing Public Enemy and Ice T on AtomicPop.com. Ex-NBC president and Viacom veteran Neil Braun is creating a CMGI Internet broadcast company alongside former MTV/VH1 VP Matt Farber.
While not an Internet business per se, Goldberg's newly formed Artemis Records, a New York-based independent music company, will use the Internet as a major component of its operations, according to Goldberg.
Artemis is funded and staffed like a new major. Goldberg's initial budget is more than $20 million, at least partially financed by investment banking outfit C&P Capital. The label's product will be distributed by RED Distribution, an arm of Sony Music.
Further, Daniel Glass, founder of Glassnote Records and former president of Universal Records and SBK, has come on board as executive vice president. Adrian White, former senior vice president of litigation at Universal Music Group and senior vice president of business affairs at Motown, has also been tapped as an executive vice president. Joining Glass and White as a third executive VP is Michael Krumper, previously senior VP of marketing at Mercury Records Group.
Goldberg chaired the PolyGram-owned Mercury Group until it was acquired by Universal Music last year. Prior to taking that position in 1997, Goldberg was president and CEO of Mercury Records, developing Hanson, the Cardigans and the Mighty Mighty Bosstones.
Artemis will work closely with Sheridan Square Entertainment, Goldberg's artist management company.
Before joining Mercury in 1995, Goldberg served as chairman and CEO of Warner Bros. Records. Prior to that, he was president of Atlantic Records, signing Hootie and the Blowfish, Juliana Hatfield, Stone Temple Pilots, Bad Religion and Liz Phair. During his tenure, Atlantic was the #1 ranked label in terms of U.S. market share.
Goldberg joined Atlantic in January 1992 as senior vice president, before being promoted to president in January, 1994. Before joining Atlantic, Goldberg owned Gold Mountain Entertainment, where he co-managed Nirvana, Sonic Youth, Bonnie Raitt and Hole. He began his career as a music journalist, writing for Billboard and Rolling Stone, prior to working as a publicist for Led Zeppelin.
He is also actively involved in the American Civil Liberties Union, currently as a member of both the ACLU's National Board and New York Board, and as president of the Southern California Board.
Somewhere Between Heaven and Earth, an album by pop/rocker Cindy Bullens, will be the first Artemis Records release, on September 9. Additionally, the label has struck a deal with rap label Suave House (Eightball) to market and distribute its releases, beginning with a compilation due in November.
Webnoize spoke with Goldberg about Artemis, Sheridan Square and the current climate of the music industry, a few days following his keynote address at the Plug.In Forum in New York City earlier this month. In that speech, Goldberg said, "As someone starting a new independent record company, I am always asked 'What's your Internet strategy?' and I always say the same thing: 'I don't know.'"
Webnoize: Did it take guts to stand up in front of everybody at Plug.In and say, "I don't know"?
Goldberg: Oh no. I'm very suspicious of people who say they know what's going to happen. Public tastes are so unpredictable that it's a tremendous advantage to know that you don't know, because so long as you know that, you're open to learning and adjusting to change. If you think you know, you can become rigid.
Webnoize: We felt that the discussions at Plug.In addressed most of the usual topics the industry has been wrestling with for at least a year, yet this time there seemed to be a palpable sense of urgency in the air.
Goldberg: There's a real dichotomy relevant here that poses difficulty to the music business. The financial markets are invested in the future of Internet companies, but put tremendous pressure on traditional media companies to deliver short-term results. So record companies are pressured by Wall Street, rather than by any natural tendency of their own, to deliver short-term revenues and profits with an eye on the fiscal year, not to mention a fiscal quarter.
There's a real desire emotionally on the part of the people in the music business -- certainly myself very much, and most of the ones I know, even those from the very big companies -- to really participate in building a future.
But their corporate masters want to know how the third quarter is going to be. And if you haven't been inside those buildings when someone is asking that question, you don't know what that pressure is like. It becomes the only thing you're thinking about.
The structure forces you to think short-term in a way that's not very stimulating.
Webnoize: How is Artemis different from other independent labels?
Goldberg: The only difference from other independent labels is the people and the level of funding. It would depend which other independent labels one wants to compare us to. There's only a few independent labels that have an across-the-board promotion, marketing, publicity, international and sales staff, as we've assembled. That separates us from a lot of the smaller indies. Other than that it's about the people at the company and our musical taste.
Independent labels are more proactive with respect to the Internet because none of us are encumbered by corporate policy. We can do what we think is right. The people running major record companies can't make decisions about the Internet because they have to answer to a corporate lawyer working from a macro-strategic plan for an overall corporation. An independent label may have less repertoire, but you're the boss.
Webnoize: How will Artemis use the Internet?
Goldberg: We want to make selections from our releases available as free downloads. It's a wonderful exposure vehicle.
I'll do almost anything short-term, but the one caveat on our proactivity is that I don't want to do anything that would encumber me long term because the changes in the environment are going to be so rapid that I want to remain flexible, and adjust to them.
Webnoize: How does Sheridan Square Entertainment fit into all of this?
Goldberg: Sheridan Square is a personal management company that is an adjunct of what we're doing; the first company we've partnered with is my former company, Gold Mountain Entertainment, which manages Bonnie Raitt, Tracy Chapman and Ziggy Marley. There are three or four other management companies that will come under that wing. On top of that, we'll be partnering with other management companies just for Internet projects. We're trying to create ideas for the Internet that use artists in ways more creative than selling T-shirts.
It's great to sell T-shirts, but it's also important to be entertaining. If you're really entertaining, people may want to buy more T-shirts. So far, a lot of what artists have done is marketing, whether to get fans to phone radio stations or MTV, or to sell merchandise -- perfectly valid things to do -- but there's a creative utility to the Internet that artists will want to involve themselves with, to be directly entertaining and fun. That will create more traffic because it's not strictly commercial, not an ancillary product of fame, but directly entertaining.
I'm interested in working with managers and artists to create that type of entertaining forum between artists and fans. I can't go into more detail now, but it's a major project on the Sheridan Square side that will explode to another level of impact on fans and consumers, by being more than pure merchandising.
Webnoize: It seems like someone had to become dedicated to that effort at some point, because the Internet is a free market, and the market will always bear entertaining content by popular artists.
Goldberg: Things have been a little -- boring. One of the things that made music videos successful was that they were fun. When they consisted of somebody standing in a recording studio pretending to sing a song, that was one thing, when they became dynamically creative -- Michael Jackson's "Beat It," Cyndi Lauper's "Girls Just Want to Have Fun," or more recently Wu-Tang Clan or Radiohead -- that's when videos became part of culture rather than just selling something.
Music on the Internet needs to become culturally relevant. If it accomplishes that through the creativity of artists, we'll be able to facilitate that through the business structure we'll build.
Webnoize: Management companies are more important than labels to making music on the Internet consequential.
Goldberg: Managers are closer to artists and while they don't control master recordings, as labels do, they tend to coordinate the image and likeness of artists, having to do with things like chat rights and various other sorts of access to artists. So I'm excited to put together this network of managers. I was a manager throughout the '80s; it's an important companion for labels, certainly as it relates to the Internet.
Downloadable music is very interesting and important but there are other Internet things that can go on between artists and fans that will be the X-factor in broadening this culturally. This may have exploded as a business, exploded financially, but it isn't the cutting edge of where artists interact with music. Creativity will make it a cultural force in addition to a business force. That will actually increase the business force because of the bigger impact on people.
Webnoize: Will it become increasingly common that artists own their masters, rather than their labels?
Goldberg: Some will, some won't. At what point do they need financing, and what leverage do they have with whoever is doing the investing? A brand new act without choices, who is trying to get someone to invest hundreds of thousands of dollars into their career, when they are one of hundreds of artists looking for that same opportunity, probably won't have the leverage to own the masters from their original contract.
Webnoize: Management companies could.
Goldberg: Only if they can make the investment. It's about money. It's about who is going to put up the hundreds of thousands of dollars to make a record, to support the lifestyle of an artist, to market the record and pay for music videos, for touring, for advertising, for manufacturing.
Even if manufacturing costs whither away, which they won't for many years, none of those other costs ever will. Besides, manufacturing is the smallest cost. Marketing is the biggest.
When people make an investment, they want a return. They don't do it to be patrons of the arts.
Thus, there's a negotiation. I'm sure that a major artist with a sales base will be in a position to obtain ownership of their masters, depending on how much money they want guaranteed. Artists usually get their masters when they're already huge stars, their contract expires, and they put that on the shopping list of things for the new contract.
I don't think new technologies change the fundamental risk/reward ratio between an investor in a recording career and the artist.
Webnoize: When you announced Artemis you said you were "thrilled...to be unbound by any corporate policies." What in particular had been difficult about your corporate jobs?
Goldberg: The problems I had were with the corporate structures of giant companies. One company I worked for -- Time Warner -- was not mainly a record company, the other was not based in the United States. There were policies made having to do with the Internet that, even as the CEO of record companies, I had no approval of, and was not consulted. They weren't policies that took into account the artist development process. They were created from a legal standpoint: not wanting to set the wrong precedent, wanting to protect legal theory and assets. Such policies ignored marketing concepts, artist relations concepts and rapid change.
That's a problem with all big companies. The sheer size of them requires a sort of defensive, slow-moving quality. A small company can experiment day to day.
Webnoize: Has consolidation among major labels increased the viability of indies?
Goldberg: Yes, because the whole natural growth of music has come primarily from independent labels. I don't think the current popularity of two independently-owned labels in particular, Giant and Interscope, is any accident. There's more focus on fewer artists, with an eye on the long-term. As companies get bigger they focus more on catalog and managing the bottom line, rather than focusing on developing new artists. That's why two-thirds of what we generally call majors are really a collection of companies that started, grew and blossomed independently: Virgin at EMI; in the Warner Group you have Atlantic, Elektra and Reprise; Uni has Def Jam, Interscope, Motown, Island, A&M, Geffen.
This is quite different from the book or television business. The cost of entry for music is lower, and the whole music business culture seems to reward independents. When you have all this consolidation and fewer independents, it creates a vacuum attractive to new independents.
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