I recently read two quotes from guitarist Rich Robinson of the Black Crowes about record labels and why the Black Crowes chose to use their own label, Siver Arrow Records, for distribution of their upcoming new album Warpaint:

From the March 2008 Paste Magazine: “… these assholes who are sitting on this sinking ship - and have caused the ship to sink - still don’t even understand why it’s sinking. Because the bankers got involved in creative decisions. Because people who could’ve gone to work for IBM or whoever are now running record companies and telling artists how to write their music. And it’s for the sole purpose of making themselves money. And that’s what happened, and that’s why the industry is where it is, and that’s why people standing up and doing what they want to do, and owning their own masters, and writing their songs for the sake of the song and the craft - instead of to make some asshole a bunch of money - is so important to us.”

And from April 2008’s Performing Songwriter: “The old way of the industry is a sinking ship. The more that ship sinks, the more those people hang on to their old, wrong beliefs - and there’s all these new ways popping up that are interesting and cool. No one has learned from anything, and no one’s taking a chance. It’s like the elections: Everyone hates what’s going on in the country right now, but they don’t want to vote for someone who’s too naive. Why? Wouldn’t you want someone who can change something for once? That’s the kind of thinking that seems to permeate the music industry now. It’s just these companies that want to hoard all the money and not pay the people who do the work. It’s fundamental issues that have been going on forever. It’s crazy. Doing it this way is cool because it’s freeing - we get to do whatever we want. We can move in any direction. We own our own masters. In the old way, Rick Rubin owned all this shit. Now we own it.”

So, with established bands clearly now opting to go without a standard record label, I began to wonder what independent labels have been doing to adjust their approach in age of digital music distribution. I spoke with Nick Peters, who runs Toothless Monkey Records, a small label in Redwood City, CA that works with five groups based in San Francisco and Los Angeles.

Nick, what what exactly is the role of an indie label, and specifically what is your sell to your clients as to what you can do for them?

Clearly there are many, many business models out there that are being tried for small independent labels, studios, and combinations thereof. There is a recognition nowadays that Do-It-Yourself models are possible for producing quality music in project studios, printing great artwork, and even distribution through online and viral marketing models. The big differences between indie and major labels is simply access - access to distribution channels, to media, and to marketing budgets. I say this especially as nowadays many smaller studios can make pro-sounding records as the digital recording medium keeps getting cheaper and better.

Many talented artists (rightly) would like to concentrate on the joy of playing music, not the many intricacies of engineering, mixing, mastering, promotion, printing, artwork, promotion, etc. Therefore they shy away from the complete Do-It-Yourself package and seek a relatively cheap studio who can help them sound like pros. That is where I come in, in that I have had a wonderful, flexible day job for years and so have been able to hone my skills at all that stuff since 1997 for 20-40 hours a week. However, in signing artists my role as an indie label has been to identify those artists who should be helped and who should be heard/advertised. Unfortunately, the Do-It-Yourself recording model has also led to a lot of crappy music diluting the market.

So, once I felt I had the chops, I chose to run a studio first and then the label concept bloomed naturally from that. My label is small enough that I run it and the studio part-time. I enjoy producing 1-3 CDs per year at a relaxed pace. I do it for love and so that I can continually upgrade my skills, sounds, and be a part of someone’s vision and they can join the label-mates in a collective community of quality music.My label(s), Toothless Monkey Music, LLC (with two partners) and my studio Bodydeep Studio (and soon to be Bodydeep Music label, run solo) negotiates studio rates with each artist in exchange for a percentage of future sales or lets the artist pay in full and retain all rights to the recordings. Artists and fans know what they’re going to get from Toothless Monkey, something produced with a lot of attention to detail, done with love, and by local Bay Area connections.

So, as I hinted, as a label I can provide everything from the studio, engineer, mixing, mastering, to artwork, printing, etc. I only operate by word-of-mouth as I don’t advertise the label services. There are plenty of talented people with projects who have enough of a budget to pay a discounted studio rate in exchange for a cut of future sales. When I offer someone a discounted rate it’s a big risk I run (on my time), because if any artists “make it” they could always re-cut the tracks for another label/studio that they sign with. However, I shoot for a fun time and magic in the studio and usually get some great stuff that could never be repeated. Because I work mostly with emerging artists, this model may someday create value for a back catalog. So that’s why I don’t advertise. Our quality speaks for itself and a motivated artist will approach me (OK, sometimes with some prodding). I seek only motivated, talented artists on my label with their heads and hearts in a positive place and it has paid off.

That being said, twice Toothless Monkey did buy the rights to albums that were already recorded (”Bobby Vega and Chris Rossbach” and Bobby Vega “Down the Road”). That was because Chris and Bobby are friends, and weren’t sure if they would release their eponymous record. I happened to think it is a masterpiece. The gamble paid off, both records have now paid themselves off and have earned steady digital sales streams as the word slowly spreads. We had great sales from Japan due to Bobby’s reputation as a bassist and this has pointed many eyes at our smaller bands, and vice-versa.

It has been fair business model for both the artists and the label in sharing the joy of production and the financial risk (future value of sales). Having a flexible open ended negotiation where everything is in black and white and put on the table before production starts has saved me many headaches. The artists we work with have been motivated, talented, and they do most of the hustle for promotion. We depend on good word of mouth and our small label that has a nice following in the folk and rock scene in the Bay Area. All of the artists we work with are within one to two degrees of separation from me (and often each other) and so the shared fanbase between all artists when people are led to our website counts for nice residual sales for everyone.So probably like many newer project/indie labels, I offer a studio first and a label second. The key is that the music has been of a high enough quality that we get a lot of folks swinging by the website, buying CDs, and downloading digital music. All of us only do it for love.

Has this changed in the last 5 years or so with this new music industry?

Yes, CDs sales are almost negligible except at live shows these days, and yes this really came home in the last five years. That is why my business model functions as a studio primarily and then banks on hitting it big with someone’s back catalog (thinking digital) someday way down the line. Despite recent innovations in cost and small runs, etc, I would never look to quit my day job selling CDs in todays market, maybe we could have 7 years ago with a minor hit, but not today. My day job is at Stanford University, and I’m telling you those kids NEVER buy CDs anymore.

Instead I hold that CDs are business cards for our bands. They are also timeless artworks that the artists themselves should cherish. So, we encourage artists to do limited printings and give them away if necessary as a way of generating a fanbase so that the artist can get nice paid gigs. From there we all make money on digital sales where the cost-of-goods-sold is essentially zero. I am preparing to do virtually straight-to-digital release of a few personal projects soon as a result of this phenomena.Meanwhile, Do-It-Yourself strikes again. I now have a printer that works on blank CDRs with which I can make a quality product for those few that do want CDs, but digital is where it is at nowadays (and that is diminishing too as kids have pirated so much they don’t need to buy music). Still, if the music is good enough, the fans will eventually cave and spring for the artwork, lyrics, and higher quality resolution that our CDs have, but I’m not banking on it. Most of our CD sales are with older folks, but its younger folks who come out to gigs so however they hear the tracks is fine, its just the reality until the DRM-resistant culture changes. In my opinion, it probably will never go back.

What in your opinion are still the benefits of a bigger label?

Distribution channels, capital, media channels (TV, radio, movies), and serious, serious studios are what the big guys have, and they earned it, I’m sure. Independent music is making a growing dent in the market, but the truth of the matter is that it sucks for everyone, because as I said, today’s kids almost NEVER buy a CD, and if they do they share it with 400 others. That being said, if you’re truly motivated and talented you can do like Anidi Franco and run it all yourself and make a living, but everyone I talk to that does make a living makes it on the road, not in sales. And remember, she did it pre-2000. Yes, a movie/TV soundtrack would be nice, and there are great services like Sonicbids and CDBaby and the creative commons (Lawrence Lessig) models that can help you get it out there, but the big labels and A&R guys still have a pretty firm hold on most talent that is widely accessible enough to make a big movie, TV, etc. All us small guys would just sign our life away for a spot on a TV show hoping (naively) that somehow that will make a difference in sales. It won’t, but it might get you on stage at a festival.

So I guess what I’m saying is that beside selling your instrument, the only real way to make money in the industry is to gig for paying audiences. The number of “recording artists” who can make a living just recording is so small you may as well try out for the NBA while you’re at it. If you’re going to make a living at this industry you have to be in it lock, stock, and barrel, (and like the NBA you’ll need rare talent). Otherwise, I suggest going part-time, let it pay for itself, and do it for love, period. That has worked for me and everyone I know that hasn’t burnt out at music and is instead working for positive and creative outlets for themselves or their communities.

Many thanks Nick!!!