"This one's a real wingdinger," he says, leaning into the speakerphone so New York, Denver, and Los Angeles won't miss a word. "Let's give away the ProTools files on MySpace. Vocals, guitars, drums, and bass. We'll let the fans make their own mixes." The room falls quiet.
A voice from LA breaks the silence: "For the single, you mean, right?" McBride's features screw up in concentration, then quickly expand into a grin. "What I'm proposing," he says, "is that we make all 29 songs available as ProTools files. In two weeks."
McBride's success will depend on what he calls "collapsed copyright." Nettwerk will represent artists like BNL, but the bands will record under their own labels and retain ownership of all their intellectual property, an anomaly in the industry. The bands, in turn, can expect to earn considerably more money - say, $5 to $6 from the sale of each CD instead of the standard dollar or two.
It's a risk McBride is willing to take. Twelve of the nearly 40 acts on Nettwerk's roster now have their own labels, and McBride says that within six years nearly all his artists will have shed their major-label partners. "The old system kept us from imagining what a music product could be," McBride says. "Now we can really start to have fun."The most recent guinea pig for Nettwerk's new music industry is Barenaked Ladies, whom Nettwerk CEO Terry McBride recently persuaded to dump their major label (Warner's Reprise imprint) and go it alone, holding all their own copyrights, and getting creative with the formats they sell in:
Between ringtones, acoustic versions, and concert recordings, those 29 songs have been multiplied into more than 200 "assets" - song versions - that can be used individually or in conjunction with others to create a product. "Because the copyrights are in one place [in BNL's hands], we can be really creative," McBride says. Hardcore fans can buy 45 of those assets on a USB drive; others can download the special Sims versions (recorded in Simlish, no less). "For decades, people in music have used the number of albums sold as a measuring stick for success," McBride says. "We're trying to get people to see beyond that. It's about revenue from music, however you make it - selling concert tickets, licensing to TV, or selling packed USB drives."Nettwerk are taking on the dinosaurs in other places too: by siding against them in peer-to-peer lawsuits:
Earlier this year, he sparked a music industry uproar when he announced he would pay the legal defense for a Texas man being sued for piracy by the Recording Industry Association of America. "The lawsuits are hurting my bands," he says. "If you could monetize the peer-to-peer networks, everyone would make more money."Though it's not all anti-corporate utopianism: McBride's vision strips away the byzantine, restrictive and vaguely corrupt structures of the traditional recording industry, replacing them not with some kind of anarchosocialist GNUtopia of information wanting to be free, but with a more streamlined form of capitalism, with the artist as entrepreneur:
But even such a radical step is just one facet of McBride's larger strategy. In May, President Bush signed into law a revision of the tax code that will make it easier to sell intellectual property as a stock, with profits being taxed at the same lower rate as other capital gains. "Once we have access to all the intellectual property, we're going to offer shares in individual artists and take in equity investments," McBride says. "Eventually, a major band could be its own public company." The key, he adds, sounding like an overzealous investment banker, is that the value of a band would be measured like a stock and would receive capitalization in expectation of future earnings. "At that point, even a band selling 100,000 units a year becomes profitable," McBride says.Of course, that is a double-edged sword. It makes it easier for bands to be profitable, but it adds a new meaning to the term "selling out". We may soon actually see bands owned by beer companies and mobile phone companies, rather than merely branded. And what will happen if a band wants to do something unusual and risky, while their majority shareholder (let's say Carling or Vodafone or someone) sues them for failing to maximise returns by doing so? Could we see corporate-invested bands being mailed dossiers of market research, telling them in no uncertain terms what they are expected to do ("memo: the grebo revival is the next big thing; get right on it")?
Not that this invalidates what Nettwerk are doing. There will always be commercial bands and indier-than-thou refuseniks; this looks like merely giving the artists more choice.