Why the Traditional A&R Process Is Failing the Industry & Musicians Alike

Why the Traditional A&R Process is Failing the Industry & Musicians Alike …and how to fix it

A position paper for music labels, music publishers, music supervisors, managers, radio program directors, producers, music bloggers, advertisers, and all musicians

By Mike McCready

New York, October 2011

It isn’t news that the past decade has brought tumultuous change to the music industry. Advances have primarily impacted the way music is accessed, distributed and paid for. But, few companies in our sector have harnessed technology to its full extent to optimize their business processes. While most music companies have incorporated data mining and social trending statistics into their discovery processes, the fundamental way the industry sources new songs and talent has remained unchanged. Isn’t it time we re- think how we conduct A&R? Mike McCready - Co-founder & CEO Music Xray We think of A&R as the process by which we find and help create great musical products. In reality, A&R’s primary business function is to reduce risk by identifying or creating highly compelling product and managing promotion efforts to reduce the likelihood of failure in the marketplace. So, in terms of risk reduction, traditional A&R was only adequate when the business climate afforded companies the luxury of having occasional successes compensate for far more frequent flops.1 In today’s new music business, narrower margins, smaller budgets and fragmented audiences require a more efficient approach than primary reliance on golden ears and talented gut instincts. Additional and supplemental tools are needed to create success more often than failure, or at the very least, improve success rates to a more manageable level.

By devising a comprehensive 21st century A&R platform which combines and harnesses all the advances in technology, data mining, and our global interconnectivity, natural talent identification abilities can be enhanced, strengthened and amplified. This will increase efficiency, hone accuracy, offset costs and reduce risk.

1 According to NPR, which polled a number of industry experts to determine the real cost behind a top-charting hit. In this case, it was Rihanna's recently-created "Man Down," a big-budget, blockbuster-style blowout that remains unproven. The breakdown: Writing Camp (Per Song): $18,000 · Songwriter: $15,000 · Producer:

Independently of how music is ultimately consumed and its creators compensated; among the many other changes our industry is adopting, in order to thrive again, we must develop a better way to conduct A&R and more efficiently pair musicians with the right business teams in a way that increases the likelihood of success and reduces the cost of failure when it occurs.

The challenges faced by A&R professionals

Under the traditional system, many A&R professionals limit their intake of new music to trusted contacts and their referrals. Even so, they must listen to large amounts of music that most of the time isn’t of interest. They have to keep track of who submitted what, deal with overflowing and sluggish email accounts and/or stacks of CDs. Often, they are relentlessly pursued, hounded, called, emailed, ambushed and otherwise hunted-down by almost everyone from whom they’ve received music for their consideration. These and other issues involving legal concerns2 are precisely what led so many companies to actually close their doors to music submissions from people with whom they don’t already have working relationships. These inefficiencies and policies of not accepting unsolicited material have shut out countless independent musicians, deprived the industry and audiences of some very worthwhile music, and created a community that operates, to a large degree, based on who you know.

Talent gets through but only after an inefficient, inconsistent and archaic filtering process that leaves behind worthy talent and often lets through over-rated product that has short life spans and damages the industry’s credibility in the long term, much like what happened to the American auto industry in which reduced-quality combined with high prices over time eventually created negative customer sentiment.

Inefficient A&R process:

Additionally, in the quest to find acts with the highest potential, A&R professionals spend valuable time trolling the Internet, jumping from site to site trying to be the first to spot the next big thing. The Shazam charts, blogs, Hype Machine charts, BDS, YouTube, and Mediabase are all consulted by A&R professionals. Some of these sites are designed for tracking the impact of promotion campaigns and weren’t even built to be used as A&R discovery tools. The data they provide is useful but not usually

2 Mostly, legal concerns involving lawsuits alleging copyright infringement. This topic is addressed later in this document.

aggregated in one place. Many of them only provide insights regarding performing acts, ignoring millions of emerging songwriters and acts from rural areas which don’t have access to wide audiences despite their quality.

Most importantly, almost all of them provide trailing-indicator data – meaning they track trends that have already occurred and therefore spot songs and acts that already have traction. There’s less business-gain to be realized when getting into the game once an act is empirically demonstrating signs of viability. Backing the act at that point is mostly a matter of money. By that time, the act has become the gatekeeper – able to choose the business team with which to surround itself. This kind of strategy gets the business teams into the game at a later stage, fosters competition among business teams and sometimes even bidding wars, driving up costs for all. Even worse, this process does not leverage business’s greatest strength; becoming a catalyst for the acts and playing a significant role in creating the difference between success and obscurity. Frankly, that strategy is more about opportunism and speculation than it is about being a good corporate citizen in our industry. Don’t get me wrong. As with any business opportunity, getting in early while taking measures to control risk enables professionals to rightfully harvest significantly higher returns. And that’s the key; having the tools that enable you to get in early with decreased risk.

By focusing on trailing-indicator data, talent investors run unfocused, expensive and hit & miss businesses. Most A&R professionals use these types of tools but it’s only because they are the best tools available – not because they are deemed to be so effective.3

The challenges faced by musicians

On the other side of the coin, for musicians and their managers who do not have pre-established relationships with the gatekeepers, it has always been a frustrating challenge to have their music considered for deals. It’s messy, resource-sucking and often unpleasant for them to spend massive amounts of time, effort, and money finding available deals and opportunities, pursuing them, following up, calling in favors, networking and building relationships just to get a song heard with only a sliver of a chance of actually securing a deal.

The digital age has only exacerbated these challenges. The cost of recording has fallen due to advances in technology and its ubiquity. Aspiring musicians have multiplied into the millions – many of whom create fantastic music but lack the business skills and contacts necessary to ever reach industry ears. This has

3 This data was collected by the author after consulting A&R professionals at EMI, Sony Music Entertainment, Warner Music Group and several large independents labels.

created an unprecedented bottleneck of artists wanting to have their music considered for commercial and exposure opportunities: the kinds that require an A&R professional to evaluate the music and make decisions. The result is millions of musicians feeling shut out and jaded.

Why have there been no good solutions?

As recorded music sales have plummeted over the past decade, the immediate need has been to stop the bleeding. If the bleeding were stopped, the inefficient A&R process was no more of a problem than it had been in the past. The few successes paid for the flops in a way that, while not ideal, worked.

Additionally, there is almost no outside pressure in our industry to explore alternatives to what have always been considered best-practices. When poor business decisions are made, livelihoods and careers fail. By contrast, take the medical profession as an example. When best practices aren’t continuously researched, studied and adopted, lives are lost and the general welfare is affected. In the music business, bad practices do not transcend the impact on the reputations of those executives involved in the bad decisions. Thus, we observe the impact of poor business execution only in the revolving doors at the music companies. What’s more, there has traditionally been more glory earned by executives who attribute their successes to instinct and craft. Not unlike the mystique surrounding a professional athlete. Many industry executives like to keep quiet about the “secrets of their success” and the tools they use to obtain it. It is, after all, a competitive business.

It’s not that new methods haven’t been tried. But rarely have they been fully tested and implemented across the board so that their impact could be measured over time. A few that have; such as call-out testing and focus-group research are no longer delivering game-changing results. It is with the use of those type of tools that the industry continues to see abysmal success rates. More and better tools are needed.

What are the costs of inefficient A&R?

The industry has come to terms with the idea that a re- examination of all aspects of the business will be necessary in order to create vibrant and robust music companies. While smaller music companies never could engage in the kind of promotion spending done by the majors, the majors also realize that expensive, failed promotions are no longer affordable because the successes are smaller and can’t compensate for as many flops. The survival of the strongest players in the industry

who are interested in continuing to break new acts is dependent upon reducing the risk of failure while at the same time insuring that failure, when it does occur, costs less. Current A&R processes are costing companies millions of dollars and in some cases make music companies completely unviable.

Do labels and the A&R process become obsolete when artists pursue ever-improving DIY strategies? Can artists achieve wide success on their own?

The short answer is no.

As long as there are commercial and exposure opportunities for music and musicians, there will be human gatekeepers making the decisions about which songs and acts are chosen for each opportunity. Those decision makers will increasingly rely on data-driven tools to enhance their natural talent identification skills but humans will make the decisions.

DIY strategies can help some artists get off the ground without having to go through a gatekeeper. Some will be able to attract and retain a core audience that may provide them with a meager living (and a very few may do a bit better but those will be the exceptions).

Labels are already redefining how they operate. Some have changed their model so much that maybe they should not even call themselves labels. Two forward thinking organizations of this type that come to mind are Jay Frank’s new DigSin singles-only label and Steven Learner’s and Jim Cooperman’s Tiny Ogre. Both are examples of new models that show promise in the new music business landscape. There are others as well.

The “labels” of the future will essentially be multi-disciplinary business teams, which will select songs and acts in which to invest their efforts and resources. These teams will serve as catalysts for the acts’ careers and will make the difference between success and obscurity. The will have expertise in generating multiple types of revenue streams and will not expect to earn more than the value they provide. Artists who are able to attract these teams at the earliest possible stage of their career will achieve success sooner and their careers will last longer.

The process by which these teams are paired with acts and the process by which independent songwriters’ tunes are chosen for acts, will be the new 21st century A&R process.

What does the 21st century A&R process look like for the industry?

A 21st century A&R platform for the industry would be the ultimate song filter, talent filter and early stage viability detection tool for industry professionals.

There are millions of available songs. At least a million new ones are created and uploaded to the web each year. Many of them are perhaps unworthy of commercial use in any capacity. 4 However, there has been no efficient and scalable way of separating the worthy tracks from the unworthy in a way that is viable from a business’ perspective. And that separation of the wheat from the chaff is only the beginning of what must be done on an on-going basis. Once worthy songs and acts are identified, there needs to be a way to determine which worthy songs and acts are appropriate for each specific commercial opportunity.

• An ideal 21st century A&R platform would be so good and such a leap from where we are today that it would provide competitive advantages to those professionals and companies who use it and a disadvantage to those who don’t. It would be that good.

• A 21st century A&R platform would identify songs and acts with early evidence of viability and be keenly aware that evidence of viability does not always mean an act or song already has traction with audiences. A 21st century A&R platform would be focused on talent identification at the earliest possible stage.

• A 21st century A&R platform would minimize the amount of unworthy songs heard by any individual A&R professional. It would reduce their workload by increasing efficiency.

• A 21st century A&R platform would call attention to/highlight tracks that may be worthy candidates for specific opportunities (a particular movie scene or a particular performer).

4 I recognize that one may argue that every available song could be deemed worthy of some opportunities. For example, someone might make a movie about a really bad band and therefore have a need for rough demos that are out of tune and otherwise lacking in quality.

Digital music retail has brought with it an increasing reliance on hit singles to drive business. As album sales have fallen, the need to efficiently and cost-effectively mine the millions of available tracks for the hidden gems becomes apparent.

• A 21st century A&R platform would provide efficient ways to process vast numbers of available tracks and would effectively and consistently identify high- potential songs – in essence, providing a steady stream of potential hit singles.

• A 21st century A&R system would also involve a simple way for industry professionals to manage their music submissions, keeping track of who submitted which songs and when. It would include a method for managing communication with submitters to keep them informed of the status of their submission. It would minimize follow-up conversations and the need to engage submitters whose music has been rejected for a specific opportunity.

• A 21st century A&R platform would aggregate available social trending data, provide ample information on each submitting artist or songwriter as well as a song’s meta data, images, lyrics, any related videos and would not require the industry professionals to hunt all over the Web to find information.

• A 21st century A&R platform would enable industry professionals to obtain leading-indicator data (as opposed to trailing indicator data) to help them get involved at the earliest possible stage with high-potential songs and acts.

• A 21st century A&R platform would enable industry professionals to obtain audience reaction data that could be used to test songs and acts against various demographics in order to test assumptions before committing their companies to spending large amounts of promotion resources.

• In short, a 21st century A&R platform should increase efficiency, offset costs and reduce risk.

What does the 21st century A&R process for musicians look like?

A 21st century A&R platform for musicians will be the ultimate path to commercial deals and exposure opportunities. It should be as close to “put in your songs and have them find their way to appropriate commercial deals and exposure opportunities” as possible.

There will always likely be far more songs and musicians /

artists / songwriters than great commercial and exposure opportunities or even audiences that can absorb all of the worthy new music. Therefore, there will likely always be competition for deals and exposure. However, a 21st century A&R platform would involve improvements to the process of being considered for deals and exposure opportunities.

• A 21st century A&R platform would provide advantages to the talented and skilled and would make the business less about who a musician knows and to whom they can gain access. With 21st century A&R, talent, skill and market appeal would rule supreme.

• A 21st century A&R platform would be relatively frictionless and musicians would easily see the advantages of using it and the disadvantages of not using it. Those slow to adopt its use would experience competitive disadvantages.

• A 21st century A&R platform would curtail the need for musicians to spend valuable time, effort and money hunting for and pursuing potential opportunities. It would save musicians time and money.

• An effective 21st century A&R platform for the industry (as described above) would put an end to companies’ policies of not accepting unsolicited material. In fact, it would make unsolicited material welcome and necessary thereby opening a direct pathway to opportunity for independent musicians everywhere.

• A 21st century A&R platform would insure that musicians could know the status of their submissions without the time-consuming work of continuously following up.

• A 21st century A&R platform would not only provide notification to a musician if their submission were rejected but would also provide them with a response and reason as to why a particular submission was rejected.

• A 21st century A&R platform would enable worthy songs and acts that have been rejected several times yet evaluated positively by industry professionals to have the attention of other industry professionals instantly drawn to them with no further action by the submitter required.

• A 21st century A&R platform would provide consistently rejected musicians with professional help to improve their submission strategy as well as their music in order to increase their chances of being selected in the future.

• A 21st century A&R platform would provide a way for musicians to obtain direct fan feedback from anonymous music lovers who could give insights and opinions.

Who will resist such solutions?

Almost no one. However, change is never easy and always encounters some resistance. Nevertheless, the pain in the ecosystem is currently so great that almost everyone is receptive to a better way. There are however, certainly a few companies, industry professionals and musicians who will be especially resistant to change of any kind. Those are the people for whom the current system is working and who would be threatened by change. They are entrenched in and have a stake in the status quo.

Conclusion:

The 21st century A&R platform described in this document is not theory. It is operational and already working in practice. In fact, nearly 1300 music industry professionals use it to conduct at least some of their A&R efforts. These include professionals at Columbia Records, Epic, Capitol Records, MTV, dozens of independent labels, radio stations, top producers, publishers and music supervisors.

Over $2.5 million has been invested into the building of this platform and new and advanced features continue to be developed and introduced.

In the past 6 months alone, over 3500 songs and acts have been selected for opportunities on Music Xray and the company receives praise daily from both industry and musician users.

While not perfect, Music Xray is the embodiment of the 21st century A&R platform described herein. It creates a fair and open system for musicians and is by far the most comprehensive set of A&R tools available anywhere.

If you are interested in learning more about how 21st century A&R is changing the music business and you are a music industry professional, I urge you to view this short video and sign yourself up to the free service: http://musicxray.com/mipvideo

If you are a musician, I encourage you to visit http://musicxray.com/video and then sign up and Music Xray’s song to opportunity matching system will match your songs to opportunities for free.

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About Mike McCready