Steve Nowack decided to reinventthe music business after a chance meeting with a singer/songwriter in a Torontobookstore.
Another chance meeting – with Archbishop Desmond Tutu in Heathrowairport – led to the two of them announcing Nowack's new record label, SOS
Records (located at WeLoveFreeMusic.com) on a stage in New York on Tuesday. Tutu does not work for the company and has no financial interest in it, butpledged his support.
"I am participating because we all belong to the human family and eachhuman being has been touched by music," Tutu told press conference attendees. "Until now, thereare people who may not have been able to access music because of thebarrier of finance. Steve's project is now going to break down thatbarrier."
SOS Records will pair singers, songwriters and producers whosecontent attracts the most votes on the site with industry heavyweights likeCarlos Santana, Stevie Wonder and a former producer of Whitney Houston, MariahCarey and Aretha Franklin.
I interviewed Nowack via telephone after the festivities wounddown. He had some interesting things to say about the power of music, why itshould be free, why it should be global, and why Steve Jobs doesn't care. In fact, he claims his company will become a bigger musical force than Apple in just four short months.
Nowack was on a real roll, so rather than using thetraditional interview format, I've excerpted key quotes that explain hisvision for the service:
"I owned a hedge fund for 12 years. I met an artistsinging in a bookstore in Toronto, Canada on January 15th 2005,
named Naomi Striemer. And based on hearing her voice for 30 seconds, I decidedto change my life [and] certainly hers: to create a record company."
"In the process of building the record company, I cameto the conclusion that there was something structurally, inherently wrong withthe music business. Maybe 'wrong' is not the correct word. I would say thatthere's a structural deficiency with the music business. The artist I discovered, Naomi, for instance,
had the single largest signing in Epic Records history, and basically, shedropped through the cracks. And there are many artists who have that same thinghappen, they fall through the cracks."
"There's a number of other artists who,
despite the fact that they're signed by a major record company, still have avery substantial problem: being re-signed. And then there's an enormous groupof artists – the largest group of artists – who heretofore have never been ableto be signed because there's a significant barrier to entry in the recordedmusic business: the A&R director and the programming director. I rapidly came to the conclusion, over the pasttwo and a half years… I had a remarkable opportunity to try to change the musicbusiness in terms of disintermediating the business further, beyond that whichit has been in the digital space… what I want to do is free the world."
"I want to free music, and so I came up with theconcept of free music… Many mediacompanies are peering through the window of free, correct? But no one's able tofully embrace it, no one's able to fully capitalize on it, and the question is 'why?'
And the answer is that they're held in handcuffs , because they're all having tohave this relationship and cooperation with the record companies themselves.
MySpace, Facebook, YouTube, for instance… YouTube just having user-generatedcontent… it fascinates me that peoplelike to watch that. And I think it's because the majority of the public is veryvoyeuristic – or they're so stressed that they like to be sort of relieved,
because they like to watch this, I don't know, dog walking in the park. If YouTube ever got to the point of producingreal qualified television or media, that would be my question: 'What wouldreally happen?'"
"Archbiship Tutu, in that meeting in [Heathrow]
airport, said to me, 'that's one of the most powerful ideas I've ever heard,'
and he loved the idea. He said, 'you're going to allow people who wouldn'totherwise be able to afford music access to free music.'"
"So I looked at this and I said, 'okay, what do I wantto do?' First and foremost, I want to get my artists access to the world, whichthey heretofore have not been able to have. 'The world' does not mean North America. OrWestern Europe. "The world" means the world where 70 percent ofpeople live: Africa, China and India… One of the biggest music markets in theworld is China, for North American music."
"It doesn't matter what economic strata people comefrom – when they find out you're in the music business, they always say 'can I
have a free CD.' … [If I were to say] you know what, we have an investment enormousin this album, and this artist has worked tirelessly to produce this content.
So you know, Eliot, would you mind paying me a dollar for that CD? I think mostof the response would be shock – they can't believe I'm asking them for adollar, and most people wouldn't pull a dollar out of their pocket because they'dview it as being venal that I'd asked for a dollar. So I always just gave theCDs away… all my wife's friends wanted free CDs, and I said 'fine, I'm openingthe floodgates,' because I realized: if they like the content, they'll telleveryone else, and those people will not be asking me for CDs; they'll probablybuy them. And that's where the genesis of [this approach] came from.
"Every other music website says 'we'll give you somethingfor free, four songs, three songs' – it's bait-and-switch [because they requireyour personal information]… if I say, 'hey, you can have this for free,' that'swhat it means. It doesn't mean there's a quid pro quo
involved."
"If you're a singer, producer or songwriter… post yourcontent to our site, www.welovefreemusic.com,
today. Two months from today, we're going to begin letting the world vote. Andwhen the world chooses, by voting, the superstar artist they think should berecorded, my record company will produce those artists – not in auser-generated format, but in a produced, record company format with thegreatest collaborators in the world. It's very distinct from a user-generatedplatform... We could ultimately evolve into a marketplace, but we're not asocial utility. We are a conventional recorded music company, in the sense thatwe make great music."
"If I'm going to change everything, I'm going to changeeverything… for the first time inhistory, songwriters in our model are being compensated equally with theartist. Songwriters historically have made about five times less than the [recording]
artists. That's powerful. 25 percent of the gross revenue will go to the creativecooperators with the site, and it will be split as follows: 10 percent of therevenue generated by advertisements goes to the artist; 10 percent… to thesongwriter; and 5 percent to the producer… People who have looked at my modelin the business say you'll get a $40 CPM."
"I believe that in the course of the next month, twomonths, three months, four months, we'll become the single most powerful musicsite in the world. I mean, I do think we could easily surpass Apple – I'm nottalking about downloading music, I'm talking about unique users and page views…
Artists will flock to the site, because for the first time, they'll have theopportunity to make some real money."
" The second revenue stream is, I do not believe thatthe sale of the CD and physical products and the digital product exist in amutually exclusive universe. I believe that counterintuitively, and there havebeen some recent examples of this with Radiohead and Nine Inch Nails."
"And the third revenue source… when we aggregate aworldwide audience, we'll then take my artists on the road… that's looking 4-6
months out."
"We're pushing this all over the world, and when theChinese find out they can legally download something, with real music – this isnot user-generated content – my site will explode."
"Steve Jobs – quote me – does not give a shit aboutmusic. Because what he's done is bifurcated the music business. No longer is the test of an artist's work theembodiment of an album, what is considered as consumable are single songs, andthat's because of the Apple platform. He's a genius, the only thing he caresabout is selling his platform."
