NEAL CONAN, host:

This is TALK OF THE NATION, from NPR News. I'm Neal Conan, in Washington.

Success in the music industry once required a contract with a big record label and selling lots of smartly packaged albums. But as musicians and their fans now know well, the Internet upended that old business model. And as the big labels dwindle, corporate sponsors play bigger roles and reshape the once-taboo concept of selling out.

The Chicago-based rock band OK Go has capitalized on this new music world. You may know them for their online music video sensation, "This Too Shall Pass," which featured a warehouse-sized Rube Goldberg machine.

(Soundbite of song, "This Too Shall Pass")

Mr. DAMIAN KULASH, JR. (Lead Singer/Guitarist, OK Go): (Singing) You know, you can't keep, keep letting it get you down. And you can't keep dragging that dead weight around. Is it really all that much to lug around? Better run like hell when you hit the ground.

CONAN: OK Go's "This Too Shall Pass." I'd like to be able to describe that video. But if you haven't seen it, well, you just can't. You can see it, though, if you'd like to. Go to npr.org. Click on TALK OF THE NATION. We'd like to hear from professional musicians today. How have you changed your approach to make it in the business today? Our phone number is 800-989-8255. Email us: talk@npr.org. You can also join the conversation at our website. That's at npr.org. Click on TALK OF THE NATION.

Damian Kulash, Jr. is the lead singer and guitarist for OK Go. He wrote an article for The Wall Street Journal, "The New Rock-Star Paradigm," and joins us from our bureau in New York.

Thanks very much for being with us today.

Mr. KULASH, JR.: Thanks for having me.

CONAN: And you write in your piece the idea of making it by signing on a big label is actually an anomaly now in the history of music.

Mr. KULASH, JR.: Yeah. You know, major labels were sort of the only conduit to the public for musicians before. I mean, that's - you know, with a few very notable exceptions, the only way to get your music out across the country and across the world 10 or 15 years ago were the major labels. And so you had to play the game their way or not play it at all. And that's just not the case anymore.

CONAN: Well, the Internet has set you free, though you guys had a contract with EMI, a big record label.

Mr. KULASH, JR.: Yeah. And we were with them for nine years, I think it is. And it was, you know, basically, a pretty good relationship, as those things go. It - we just sort of wound up heading a very different direction than they did.

CONAN: You said that in one problem that you had with them was that your profit margin was a little bit lower than they might like.

Mr. KULASH, JR.: Yeah. You know, what's funny is that we actually were a profitable band for them. I mean, we were technically in the black. But the way - you know, the way the old-school record industry works is they have - they -you know, they bet on a 5 percent success ratio, basically. So, you know, they bet on 20 bands and hope that one of them is wildly successful. And those, you know, taking the lion's share of those profits will pay for the other 95 percent failures. So when a band succeeds but doesn't make, you know, 20-fold on their investment, then that's not really a success to them.

CONAN: Not - still not good enough. You left the label, though, and have enjoyed wonderful success since then by embracing the thing that would have, other people said, had completely killed the business model.

Mr. KULASH, JR.: Well, yeah. I mean, the thing is - I mean, if you really pull back from this, the way we think about music these days is all through the sort of filter of the record industry, because for 100 years, music has basically been recordings of music. But, you know, that's a short period in history. I mean, of course, music is - it's an experience. You know, it's a feeling or a means of communication or an emotional connection. It doesn't really have anything to do with plastic discs or recording technology. That's just sort of one finger of the beast, you know.

And so now, there's all these different creative ideas that can be approached and that people can pursue that might not fit into their business models. In fact, we may - you know, as creative people, we may not even know where we're headed. You know, like, I wake up in the morning wanting to chase some crazy idea, and it's about a song or an album or a video, or all of these things combined. And I don't know where that's going to lead. And so it's very hard to invest in me if you're a record label.

CONAN: For one thing, you said the record label saw videos as, well, a loss leader, you know, something that - mildly interesting, but not really something, in and of itself, that they ought to pursue. You've done very different things with your videos.

Mr. KULASH, JR.: Yeah. You know - I mean, the funny thing about videos is major labels saw them as free advertising five years ago. So when we made our treadmill video that, you know, took the Internet by storm in, I think, 2006 it was, that - they were, like, amazed. They were like, wow, you know, these kids made their own video, and it's like billions of free eyeballs, basically. Fast forward five years, when we wanted to put new videos online in exactly the same way, you know, put them up on YouTube and see how many people will watch, they saw that as giving away our product for free all of a sudden.

So you know, in that five-year period it went from being like, look, free advertising, to being any, you know, anything you make has got to be monetized, like, get us money out of that, quick.

CONAN: And the whole - another inversion was that the touring used to be something - a vehicle to promote the record. Now it's really the other way around.

Mr. KULASH, JR.: Well, I mean, basically everyone has a different model. In that Wall Street Journal article I wrote about a guy named Corey Smith who actually never sold his records, just put his songs up online for free and wound up, as of two years ago, I think he was grossing $4 million a year in touring revenue...

CONAN: Mm-hmm.

Mr. KULASH, JR.: ...which is - you know, that really does flip the old model on its head. The thing is, you know, there's not - I don't have some new model that everyone should be following. Really what's happening is that - is that there, you know, people are sort of adapting to the new environment, and all sorts of interesting things are happening.

The problem is this - you know, the problem for the big labels is that they have to know what their output is to be able to start investing in it. So as we're all sort of experimenting with different things, like how can we put out our music and what can we do with this new, you know, with this new online space, and what can we do with these new technologies, they, you know, they have to sort of already know the endpoint if they want to, you know, bank money on it.

CONAN: Money is an interesting word. New technologies give almost anybody the tools to record a fairly decent record album or fairly decent recording, the tools to distribute it at a very low cost. They don't give you venture capital.

Mr. KULASH, JR.: Yeah. That's the big thing that's missing in this sort of new world. I mean, bands my size and bigger have a fairly easy time getting corporate sponsorships because we (clears throat) - excuse me, because we already have a lot of attention, you know, or we have fan bases that want to know about what we're doing.

And so, you know, that connection to our fans is valuable to all these, you know, to the corporate marketing types. We're also able to tour fairly profitably, but - bands smaller than us, you know, they don't have, they don't have that cache already.

And touring can be very expensive because, you know, touring is a - it's a geometric growth thing. You know, in your first couple of shows you're playing for 15 people at five bucks a head. A few years later, you might be playing to 5,000 at 50 bucks a head. So it's not just more people. It's more expensive tickets.

And so that sort of exponential growth, you pass the point of profitability, you know, in your two or in your eight or in your 15. And so you never, you know, you really have to already have kind of a lot of inertia behind you before you hit that.

So what labels used to provide was that - was this sort of bank for young bands. You know, they'd send out A&R guys and they'd go pick 15, 20 young bands and say let's bet on all of them and hope one of them wins. And there really isn't that sort of aggregated risk anymore.

CONAN: We're talking with Damian Kulash, Jr., lead singer and guitarist for the rock band OK Go.

We want to hear from professional musicians in the audience today. How are you adapting to the new music model? 800-989-8255. Email: talk@npr.org. We'll start with Joseph. Joseph with us from Frewsburg in New York.

JOSEPH (Caller): Hi. How are you doing today?

CONAN: Okay. Good.

JOSEPH: I am a professional musician. I went to school - a couple of different schools. One was in Los Angeles, called Musicians Institute. The other was Five Towns University out in Long Island near New York City. And I'm about 30 years old, so over the course of my life I've actually witnessed the 8-track to the current age of what we're calling now the digital single.

Now, I own a production studio, and we produce music for many different artists, some pay-to-play clients that will come in the studio and just pay to record. But I do a lot of speculation work, speculation meaning that I create a lot of music for the industry that no one is paying me for. And if I make something that's good enough, and then I get paid on the back end.

So it's interesting how we've changed marketing the music over the last 30 years, especially in my life, because I worked in a record shop, in a CD store while I was in high school. And while I was there, the company which was actually a rather large company, I won't even mention their name, pretty much went out of business because CD sales stopped.

The Internet had taken over. And you know, even up until the last couple of years, I was trying to produce great albums. And now we have entered the age of the digital single. There's so many groups and people that are out there producing music. They can publish it themselves, throw it up on iTunes, market it themselves. And what they make from that music, they keep, rather than bringing these bigger labels that come in, own the rights, pay you how they want to pay you.

There's no longevity that way if you can't build it yourself. And I guess that's what the big labels look for. They want you to already have done the work.

CONAN: Damian Kulash, one of the differences that you write about in your piece was the difference between getting, what, 12 percent of any profits or 50 percent.

Mr. KULASH: Yeah, because what you're not paying for are the failures of the other bands around you. Of course the benefits you're not getting is that if you're one of those 19 bands who failed - you know, now you're going to go back to your job at Starbucks with a $50,000 debt from having tried to tour for a years or two.

CONAN: Have you had any experience with that, Joseph?

JOSEPH: Not necessarily. The groups - I mean, when I was young, I guess - I lived in L.A. and I was lucky enough to go to a pretty decent school where they had some job placement. And some of my teachers were cool enough to throw me down some session work, live performance, not in the studio. And so I gained from experience that way within the bigger industry per se. But I recognize the power of independence. And that longevity in the music industry means being business savvy, because there's more letters in the word business than there is music.

(Soundbite of laughter)

JOSEPH: And the only way to actually make a living at it is to, you know, thoughtfully execute the things that you do with your life. I'm actually getting ready to go teach vocal and jazz guitar lessons here in a couple of minutes, because that supplements part of my income as a musician.

CONAN: Good luck with that, Joseph. We appreciate the phone call.

JOSEPH: Thank you.

CONAN: We're talking with Damian Kulash, Jr. of OK Go. You're listening to TALK OF THE NATION from NPR News.

Next is Scott, Scott with us from Oakland.

SCOTT (Caller): Hello.

CONAN: Hi.

SCOTT: So, yeah. I've, you know, heard a lot of stories and radio segments such as this one that, you know, really encourage a lot of musicians to take advantage of everything digital and Internet. And I've actually found that it's made it so difficult because, you know, we have all these amateur promoters and marketers creating so much noise and in a lot of cases kind of ending up being annoying people. And it's really easy to get written off as obnoxious or a spam artist.

So what I actually started doing is, I started thinking about how people were making so many friends online that I figured I'd just meet people. And so I go out on random street corners, sit on an inflatable couch and give people cookies and meet a lot of people rather than even think about promoting music and following that model of marketing.

CONAN: And I guess you can always fall back on the cookie business if that music thing doesn't work out.

SCOTT: Oh no. I will never sell a cookie.

(Soundbite of laughter)

SCOTT: It's much better when they're free. And I'm actually gonna be in San Francisco this afternoon. If you wanna go to freecookies.net (technical difficulties)...

CONAN: Now I believe you're a professional musician, because you got in a plug.

(Soundbite of laughter)

Mr. KULASH: Exactly.

SCOTT: Yes. Thank you, Mr. Conan.

CONAN: Thank you. Damian Kulash, Jr., I wanted to ask you also about your use of corporate sponsors. And again, this is something that, well, 30, 40 years ago would have been just not done.

Mr. KULASH: It's true. And it sort of relates to what your last caller was talking about. There is so much noise now that the big marketing money - which has always driven the music industry, but it was filtered through labels - 10, 15, 20 years ago - that marketing money doesn't have the power it used to. In 1985 or 1995, success was largely determined by what was on MTV and what was on commercial radio. Those outlets are, of course, driven by the exact same marketing dollars that, you know, that are going into direct sponsorship of bands these days.

The thing is, back then there was there were - such bottlenecks in the distribution system, you know, MTV was one of them, the corporate radio stations, other ones - and the labels themselves, or yet another level of them, that to play the game, you, you know, basically everybody who wanted to make music was in some ways sort of like scratching their way up the totem pole hoping that some of those corporate dollars come down through the label somewhere so they get an advance and get to make a record.

Nowadays those gatekeepers have been sort of, you know, they've been completely knocked out of place by the Internet. And we have exactly what's your last caller was talking about, this sort of infinite choice. And you know, it's sort of impossible to find anything on the Internet because there is just so much of it. And it means that marketers, when they want to put their product in front of somebody, when they want to put their logo in from of somebody, when they want to connect with people in any way, they can't just rely on those few channels - MTV, corporate radio, record labels, TV stations, that kind of stuff.

So now instead of instead of those - the distribution chain having all of the power, the people who make things that attract attention and attract people, they have the power. So people, you know, sitting at home in their bedroom make - you know, somebody makes some great song, puts it online, it just happens to click in some way - you know, it gets big in YouTube, it gets big on, you know, Facebook, it gets big through some, you know, one of these sort of new technologies, and you know, when there's 100,000 people paying attention or 10 million people paying attention, suddenly the marketing money comes to them and you wind up with these really crazy deals. Like you know, for us - our band makes videos with corporate sponsors. The corporate sponsors don't get to -don't get any creative input whatsoever. You know, we pitch them the video we want to make, and we say we'll put your logo at the end. And that's it. They pay for the video. Our fans get, you know, our music videos for free. We get to make the things we want at a profit instead of a loss. And our sponsors get their logo in front of millions of eyes.

CONAN: And there is goodwill - their logo, but they're not being obnoxious about it.

Mr. KULASH JR.: Yeah. I mean, we're also media savvy now that, you know, product placement and that kind of sneaky marketing, where people are trying to slip things in front of you, we're also aware of that. But I think people really are thankful for transparency in those sorts of deals. You know, like, we - you know, we don't make we don't make advertisements for people. We make music videos. And then we thank our sponsor afterwards. It's a really kind of old school model of patronage.

CONAN: Old school in the new world. Well, good luck with that. Damian Kulash, Jr., we appreciate your time today.

Mr. KULASH JR.: Thanks for having me.

CONAN: Damian Kulash, Jr., lead singer and guitarist for the rock band OK Go. You can see a link to his recent piece in The Wall Street Journal on our website, as well their music videos. Go to npr.org. Click on TALK. And he joined us today from our bureau in New York.

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