Strategy

Q&A: Jeffrey Remedios, co-founder, Arts & Crafts

A Canadian indie label weighs in on Radiohead's decision to cut out the middle man and go digital for its new album.

One of the biggest bands in the world is offering its latest album as a pay-what-you-want digital download. The decision announced on Oct. 1 by Radiohead, which hasn’t been signed to a label since 2003, has a lot of people thinking twice about the record business model, which traditionally has relied heavily on retail. So far, Radiohead’s digital offering is a success, reportedly bringing in more than $10 million in its first day of release. Upfront editor Alex Mlynek spoke with Jeffrey Remedios, co-founder of Canadian indie label Arts & Crafts — which is distributed by EMI, and home to successful acts such as Feist and the Dears — about the future of the music industry.

CB: What do you think about Radiohead’s decision?
JR: These are crazy times in the record business, but if you look beyond the record business and think about the music business, the music business is exciting and alive and well. We’re on the edge of a new frontier. And it’s amazing what Radiohead’s done. But it’s not without its challenges. It’s not without sort of shaking the foundations of the status quo, but, ultimately, it really does give fans what they want. At the end of the day, this entire business is founded on the relationship between artists and their fans. And this perfectly bridges that gap. What Radiohead has done is really smart, and, given who they are, where they are, and that they’ve put so much effort into developing and nurturing their fan base, is a perfect evolution of that relationship. If I were working with Radiohead, I would fully endorse this same sort of idea, this same sort of thinking.

CB: Radiohead is acting like a new band in a way.
JR: When you’re totally unknown and trying to develop a career, the first thing you do is give away music. When artists are starting out with completely no support system, this is the kind of relationship they have with their fans. Radiohead is simply bringing it back to that, rather than forcing their fans into an antiquated model that none of them are interested in being part of anymore.

CB: Could lesser-known bands successfully follow a similar path?
JR: Well, we’re going through that a bit of that with Stars. Are you familiar with what happened with Stars?

CB: The band released its In Our Bedroom album digitally months before it came out on CD.
JR: That’s right, so that’s a good example of a mid-level band. We’ve sold 130,000 copies of Set Yourself on Fire [the band’s previous album] across North America. We’ve done that with the support of the community around us, and with the support of retail. We took a chance with the digital download. But that was something that had really come from the band, who were saying, “Look, we don’t want to have our heads in the sand. What are we going to do about our fans? What are we going to do about the fact that the day after we start promoting our album it will be available for free? And so fans will have one of two choices: wait three months or download it now for free.” And really that’s what you’re faced with. If you look at the lead times of getting publicity around an album, you’re dealing with two-to-three-month lead times where you’re sending out music. And as soon as you do that, the records are going to available for free online.

CB: Because of leaks from promo copies?
JR: Precisely.

CB: Did Stars’ digital release have digital rights management software on it?
JR: It did in so far as any service provider has DRM on its offerings. We made it available through all digital outlets, and it was available on the Stars website, and our website, DRM free. But we also made it available on iTunes, and iTunes has DRM on it.

CB: What are the implications of Radiohead’s decision for the industry?
JR: In many ways, this is a wake-up call. It definitely indicates to any person in a position of power in this business to pay attention to what’s going on, to how quickly it’s going on, and to make sure that if you’re in that value chain that you’re truly adding value. If you’re not adding value, realize that no one needs you in the middle. There was an open letter to employees and shareholders written by Radiohead’s former label that basically addresses exactly what Radiohead did and what their reaction to it is. I think that speaks to it.

CB: Do you think the label is upset, because it built this band up, and now they’re going it alone?
JR: Well, it’s a personal service contract. EMI is still going to receive revenue for the albums that they worked on. So if you look at this from an artistic perspective, and say, “Should the artist be beholden to that company for all of their work for all time?” No, contractually, you outline the amount of time. But, ultimately, no matter how big the company is — our size or another size — the relationship with the artist needs to be made with a you-can’t-make-a-caged-bird-sing approach. There needs to be value added, or why is anyone participating in the income of that artist? Not just for history’s sake. If they’re truly adding value, then they should be a part of that chain. Otherwise, they need to step aside. So what Radiohead says is, “The way we work with our fans, we want to have a direct one-to-one relationship, so we’re going to cut everyone out.” Contrast and compare that with Garth Brooks’ decision a few years ago to not work with a label, and to go, “Well, 80% of my sales are through Wal-Mart anyway, so forget all of the other retailers, and forget a record company, I’ll just do a deal with Wal-Mart.” It’s the same sort of structure.

CB: There is talk of Radiohead re-signing potentially with a major label, so does EMI have to be careful about what it says regarding the band’s decision?
JR: That’s purely cost-benefit. A label should only work with a band insofar as it can find a mutually agreeable relationship where they’re both contributing to each other’s best interests.

CB: Do you think this pay-what-you-want concept might work for any of the bands on your label?
JR: Maybe. It’s definitely something we need to consider. What we need to do is stay really close to our fan base; stay really close to what the community around our artists is saying they want. Is there a necessity for our music to be sold in every record store around the world? We still think there’s some value in that. There’s still some sense of the growth of an artist through this developmental system that includes working with partners at retail and at a major distribution level.

CB: Can you give us some examples of what’s possible?
JR: We talk about selling live versions of every show some of our bands play. If we do that, that’s the kind of thing we’d probably do by cutting everyone out and only making it available to fans from our websites. We do digital-only exclusives. For the last couple of years, we’ve run a pretty amazing, very up-to-date shop with very high-quality DRM-free music on our website, and we still find people buy incredible volumes of our music from iTunes, so why is that? It’s sort of like a convenience factor, I guess. People know what they know, and they shop where they shop. Music on some levels is an immediate must-have passion-based purchase, but it is also for many people just a casual purchase when they happen to think of it. Our role in adding value to our artists and why they work with us is to make sure our music is available where people choose to buy it.

CB: What do you think of the pay-what-you-want model?
JR: Well, it’s interesting. I definitely am going to watch it carefully. It speaks to a larger question: What is the value of music? And I guess you could answer that music is of different value to different people. It’s terrifying and exhilarating all at the same time. It allows music to be scaled, in terms of what someone’s affordability of it is.

CB: Charlatans have announced they are going to give away their next album for free, and just make money off touring. Is that a viable business model for bands?
JR: On some levels it is. It definitely means that you’re going to have to always be touring. And what we’re seeing happen in the live market is everyone, on some level is realizing this, and so the traffic and the choice in terms of what concerts you go to as a music fan are getting broader and broader. You open up the street weeklies in Toronto and the amount of concerts every night is getting limitless. Every club’s full every night. Lots of great bands coming through. So that’s what I mean about the music business being healthy, but you can only go to so many shows.

CB: It seems like a fan’s paradise.
JR: Absolutely. You have so many options. And, because you have so many options, no single band gets a large swath of the pie.

CB: How do you deal with that as a record label?
JR: Well, you’ve got to know your audience. Know your niche. Know your specialty. Work efficiently within your fan base. And work within the black at all times. Our approach is to try to take a holistic approach to our artists’ careers. Work as partners with artists in every aspect of their careers, and then work together in terms of the business model of the artist. We’ve tried to move the measuring yardstick from how many records does an artist sell, to how much money does an artist make per month. And throw it all in and figure it out as you go.