Sex, drugs, rock and roll: The music industry is a great place to work...at least if you're in a band. But with piracy on the upswing and profits in decline -- revenues fell seven percent in 2002 -- record labels are taking it on the chin. Still, it hasn't stopped hundreds of aspiring entrepreneurs from launching independent outfits in recent years, including New York underground hip-hop collective Def Jux, Chicago-based alt-country powerhouse Bloodshot Records (home of Neko Case) and New Orleans' hip-hop outfit Cash Money Records. But the business isn't for everyone. "It's the best job in the world," says Sub Pop records co-founder Jonathan Poneman, with a laugh. "Only you'd have to be retarded to get into it."
A glib perspective for a guy who's seen groundbreaking grunge acts like Soundgarden and Nirvana pass through his company's doors. Fifteen years at the forefront of Seattle's music scene can do that to a man. If nothing else, it promotes a healthy sense of realism: "A lot of guys go into this thinking they'll make a quick buck or get laid," says the veteran. "Well, guess what? There are easier ways to meet girls, boys or whatever else you're into. Starting something from nothing is one thing and one thing alone...plain old-fashioned hard work."
Despite financial setbacks -- rapid growth led to rampant spending, and several troubled years in the mid-'90s -- Poneman's label is back on the upswing. What's more, he's not discouraged by the recent troubles plaguing the market; Poneman firmly believes the business is simply going through a period of reinvention. Upcoming releases from burgeoning bands such as the Constantines and comedian David Cross are again helping cement Sub Pop's position at the top of the indie charts.
Having seen and lived through it all, Poneman is amped to explain just how you can make it big in the biz.
Any hotshot can get the ball rolling. "Record labels aren't restaurants. There are no codes or regulations to follow," says Poneman. But consult a lawyer first; it's money well spent. Consider obtaining a business license and tax ID as well. "What constitutes a record label is ownership of the master tapes from which music is pressed," he explains. "Although anyone with money, a Macintosh [for producing artwork] and some spare time is technically cookin', being incorporated and understanding how to deal with copyrights and draw up appropriate contracts is key."
Local manufacturers present an easy solution to production concerns. For roughly $1,000 you can press up to 1,000 CDs, which can be sold out of pocket or car trunk. Those who sink significant capital into the project should tread carefully. "Look for manufacturers who'll give you a line of credit," advises Poneman. "Waiting for retailers to pay off consignment deals, which is the typical sales arrangement an unknown label operates under, can put a serious drain on your cash flow."
Dream big, but don't overextend yourself. "If you have success, the tendency is to want to expand. Don't," he says. "Keep it simple, stupid. Remember, it's about the music. I've dropped thousands just because I was feeling heat from major labels stealing my people. Breaking bands is good, but creating more overhead, that's a bitch."
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