Techno-Marketing

Andrew Webster chats with Scott Ross from Moonshine Music

09.14.2000

"There's a bottleneck as far as the media outlets where you can expose people to your roster. Especially with the mega-mergers happening, the major labels are going to need a lot higher profit margin. They're going to need platinum acts. If you're not platinum, you're going to get dropped. And that's what MTV goes for, the cookie-cutter sort of music, because that's their top demographic. So that's what the Internet's great for. I got Carl Cox placed on the front page of WinAmp -- well, they get 4 million hits a month. I couldn't afford to buy that sort of advertising. And then getting people to hear the music, that's great, because you know some of them will buy it." - Scott Ross, Moonshine Music.

Moonshine Music is the US's largest independent electronic music label. The company began as a rave promotion in L.A. in the early 90s. His first compilation, 'Techno Truth' began a string of releases focusing on the growing techno/DJ culture in America. Nearly a decade later, Moonshine can boast some impressive names: Carl Cox, DJ Dan, Keoki, Deiselboy, AK1200, John Kelley, for starters. I'm talking with Scott Ross, the Director of New Media at Moonshine.

AW: I'm going to start with a personal kind of question: are all the Moonshine people ex-rockers or do they come from hip hop? All my DC electronic crew were indie rockers in the early '90s. Used to be in indie bands and Pixies fans all, and for them, electronic music was the next thing, the direct outgrowth of indie basement spirit.

SR: It's very democratic: you can hear something, and say, "I wish it was this way." And then you can make it that way. That's one of the cool things about our genre. It's never done. A lot of the guys were really into hip hop. Because that's how mainstream kids get introduced to our music. Because hip hop actually has the same roots as our music, just different paths. A lot of the guys started just as DJs at night clubs. You know Carl Cox started off basically in disco. Although D:fuse, I know D:fuse was in an indie band down in Texas, then he switched to electronic music.

AW: I knew there had to be at least one! Tell me about new media and your online presence.

SR: We actually had the very first website for a label: 1994. It was actually built as a demo by a friend of the label, to go pitch to Capitol for a Megadeth project. He scored, and that was the first major thing to happen: a website for a Megadeth site. We were the demo project saying, "This is what you can do."

AW: What were you were trying to accomplish?

SR: Everyone was relatively young at the label -- it just made sense. And this guy was a friend of theirs from college, he wanted to build it, and they were like, "Yeah, it sounds like a good idea." They just basically had sound samples and stuff like that up there.

AW: Now there's a lot more up there. You've got a mailing list and a discography and all kinds of stuff.

SR: We launched our new site last year. We've got a database-driven site which is really nice. We've got a really deep web site. There's a lot of information--we're still adding on a lot of stuff on the back end. We've got our entire catalog up there.

AW: There's a declaration on the web site where you state very clearly that you're NOT a part of the RIAA. Why did you have to do this?

SR: We actually got listed on the RIAA website as a member, so we got a lot of those nasty little emails. Even though one of our artists was part of the boycott.

Scott finishes booting up his computer] Oh, yeah. My Napster promotion is supposed to be up today.

AW: Great.

SR: And I was also the first guy to do a deal with the Scour Exchange. When they released the initial version of the software, they had four media files bundled with it: three of them were from Moonshine.

AW: So what's your Napster deal about?

SR: I still don't know exactly how big we're going to do it. What it was, originally, was that Keoki [Moonshine's top-selling DJ/producer] wrote a song, called "Pass it On." He's very pro-Napster, and he loves the concept, so "Pass It On" is meant for the file exchange community. And Promotion decided that Napster was the place to promote it. I've been trying to get that deal to happen for a long time -- it seemed like a perfect match. So we're actually going to be promoting four of our artists in the first round of it: Keoki, Cirrus, Omar Santana, and Dave Aude. We're just going to see how that works, because the way I look at it, getting these guys exposed to 24 million people has to be a pretty good thing. We couldn't do that any other way. We're not going to get the MTV special for one of those guys. I think Carl Cox might get played on MTV at, like, 3am, but that's about all we'll get going on over there.

AW: So for you, the Internet is an alternate promotion route.

SR: Well, there's a bottleneck as far as the media outlets where you can expose people to your roster. That's what the Internet's great for. Especially with the mega-mergers happening, they're going to need a lot higher profit margin. They're going to need platinum acts. If you're not platinum, you're going to get dropped. They're going basically to tie up... I mean, that's what MTV goes for, the cookie-cutter sort of music, because that's their top demographic. So that's what the Internet's great for. I got Carl Cox placed on the front page of WinAmp -- well, they get 4 million hits a month. I couldn't afford to buy that sort of advertising. And then, getting people to hear the music, that's great, because you know some of them will buy it.

AW: Are you worried you'll lose money that way, by putting up tracks for free?

SR: No. I actually did an informal focus group, you know, just walking down Melrose St. which is where they've got six shops in this six block area that sell our genre of music, you know, little indie stores. And I asked the clerks what they thought about Napster. And they said that most of their regulars use Napster to find what they're going to buy next. And that's the way it works. CD-Rs? Basically if you have a job, you're still going to buy CDs. It's people who weren't buying CDs anyway that are going to be CD-R junkies, you know? Mostly poor college students. But CD-Rs will be like the bobos of music. It just screams "cheap." You know, a chick walks over to your house and sees a stackload of CD-Rs? She's definitely not too impressed.

AW: So you going to count on the "shame factor" to keep people from pirating everything?

SR: I'm counting on that and, because you can't stop it, I mean, that's part of the decision. Napster and Scour are much better for me than Gnutella right now, because Gnutella doesn't have the central system that you can track things on, promote on, the promotional opportunities. And so those are a lot better avenues than some of the alternatives that could arise.

AW: So you'd rather have a commercial version of file exchange up, so at least it's trackable?

SR: That works from a marketing perspective. A) Then you can get demographic information, B) I can get see if this is a popular track or not, and I can reach people that are interested in the music. Obviously, anybody with a Keoki file on their hard drive is probably interested in hearing that he has a new CD out. And things like that. Also, the exposure is great...I put MP3s up on the Internet because I want people to hear them. My Scour promotion for Keoki had 29,000 downloads in two weeks.

AW: Wow!

SR: Right, that's like numbers that Real gets. An Scour only has a fifth of the traffic.

AW: How does that compare to the numbers you'll sell on a Keoki release? Will Keoki sell that many CDs?

SR: Not in two weeks! No, Keoki is actually our best seller. Keoki sells about 100,000. Our genre is a little skewed, a lot of people don't get why the Internet is selling more for us. You're doing good if you do 10,000. Great is 20,000. Our version of gold is 50,000; our version of platinum is 100,000.

AW: Which is totally out of line with major label standards...

SR: Right. I had a big old laugh at Sony's new Club website because they've apparently passed around a press release talking about how this is the sign that Sony's getting with it. And I was like, "Whoa, they don't even have MP3 files." They've got a couple of thirty second clips, but they don't actually have anything real. It's just like, "No, you obviously DON'T get it." I had a good laugh at that.

AW: You sell both vinyl 12"s, mostly for DJs, and CDs. What's the ratio between kids who will buy the CD and those who'll buy it on vinyl? Because until there's MP3 mixers, you really have no threat to your vinyl sales. I mean, it seems like you're in a great position.

SR: Yes, but you're talking about a really small number of vinyl sales. We're America's largest indie electronic label. We don't actually do that much vinyl. When you get bigger, the profit margin for vinyl is so small that you stop... that's not our big money. Lately, we've just started putting out vinyl again, but previously, just 400 top taste-makers in the country would get a copy of the vinyl. And that was about it. Because we're in a different position, because we're very big for an electronic label.

AW: You're not putting out four tracks a year, and only on vinyl.

SR: Right. Most people lose money when it gets to the vinyl. There's not nearly as high a profit margin. So we concentrate on CDs. CDs are the bulk of our market. So, you're right about that aspect, but another thing that's unique about the genre is that it comes from piracy. You know, mix tapes -- a lot of our DJ's made their names with copyright-infringing mix tapes that they made back in the 80s. And so it's a very different situation. Now it's a very big market, as far as stuff that used to just be passed around and was illegal and is now a legitimate big market. It just took time to sort it out. And I expect the same thing will happen with the Internet. I think eventually, they'll just sort it out. Right now, I don't view the Internet as a revenue source. I view it as a way of promoting our music, because we don't get on mainstream radio, we don't get the MTV play, so the Internet's our best outlet to hit a lot of people.

AW: When will it become a revenue source, what shape will that be? What about a virtual tip jar?

SR: Actually, that [the tip jar] gets problematic, because it's all third party revenue. And that would fall under a third party clause in an artist's contract, which means the label's actually entitled to that also, which would go against the concept of why people want to do that. In reality, it's just something that wouldn't work for that concept, because it's third party and the label's entitled to it.

AW: So if I tip Keoki for every track I download, then he's in trouble with you, because his contract says that Moonshine is entitled to some of that.

SR: We're actually in a little bit different situation with that -- we wouldn't ever throw a shit fit at anybody about anything, any of our artists. But yeah, in a legal sense, hypothetically, it's a problem. It's a problem with the concept. Some of the money would have to go to the label.

AW: So how do you end up making money off the Internet?

SR: Everybody's waiting for the Napster thing to get worked out, to see what the legality of the issue's going to be. And then, I think the way that it's going to be monetized is we'll get, like, a cent per transaction. There'll have to be some kind of monitoring place, and we'll get a cent per transaction. And that'll be covered off of their end, off of Napster's and Scour's end. They'll be the ones that cover that. And then, I think there'll be a three tiered system. There'll be the subscription...

AW: Which is what?

SR: On something like Scour and Napster, the way they'll make their money, I think, is that you'll have the subscription service, which is the high end, and you can just go find what you want to find.

AW: And you'd pay per month for unlimited downloads...

SR: Right. And then I think the other way it'll be is you'll have a middle tier, which will be content-only ads.

AW: Explain that for me.

SR: You'll have an advertiser and you WILL get ads -- you'll have audio clips added to your MP3 as it passes through the central server, but content-only ads, which means if you're only looking for music, you'll only get exposed to music. If you're looking for movies, you'll only get exposed to movies.

AW: So Sony will tack on an ad for the next hit they're pushing, every time you download a Keoki song?

SR: The example I use is: when the Backstreet Boys hit, and then they came up with N'Sync? Well a great way to promote N'Sync would be to have them follow a Backstreet Boys MP3. That sort of stuff. That's actually how we sell to music retailers: "This guy is like so-and-so..."

AW: "If you loved..."

SR: Right. It'll be that sort of stuff. That's what I see as the middle tier. People don't seem to mind that. Like when you go to a movie -- I know people who get upset when you don't see trailers, which are basically just ads. Although lately I've seen a couple places trying to make me watch advertisements. I was like, "Wait a minute, I just paid nine bucks!" and I got pissed when I actually had to watch a Pepsi commercial at a movie theater.

AW: But that's the attraction of content-only advertising.

SR: Right, and that's why I think that's a good idea. And that'll be like the middle tier, where it'll be cheaper. And then the third way will just be full-on ads, and everything. And there are numerous ways: there's video and audio possibilities for that. The reason I see all three is because it is the Internet. The person can choose what they want. By giving them the freebie service first, you're likely to get the ones who'll go on and get the high end eventually. And they're going to end up incorporating journalism services in it...

AW: How would that go?

SR: Scour's a lot further advanced right now aesthetically than Napster is. Right now, if you open up Scour Exchange, the very front of it is a really nice "Scour Exchange Now" and that's where they actually do their promotions on their site. They've got a great aesthetic sense. It's one of the things I've always loved about Scour. All you would do, you'd take that, and expand on it. When you want music, you won't open up your Internet browser, you'll open up your file exchange system, and it'll all be there. The journalistic content, and the music and the ability to buy the music. One of the things I notice is that when you first get Napster, you sit down and you download like fifty or a hundred songs. "Oooh! Aaah! Let me try this one! Let me try this one!" "Ooh I haven't listened to this in a long time." Eventually you run out of ideas for what you know you want to look for. That's one of the cool things about it. It's like "Hey, try this!" So journalism services within that seem like a given, like where's it's going.

AW: Seems like Moonshine will get priced out of the second and third tiers pretty fast. Sony's not buying tags on the Keoki track to promote the Backstreet Boys. Who's going to buy...

SR: See that's the thing. That wouldn't be my money. That will be Scour's money. We'll get paid per transaction, no matter what.

AW: So Scour just charges BMG a hundred grand a month to put tags on stuff as it goes out...

SR: Yeah, that could be. That could be the way it ends up. Though I think it's going to end up being a lot more than that. That's one of the good things. I got in at Scour really early. I was the first, so that kind of will help Moonshine in the long run -- we'll have favored nation sort of prices. They'll also develop indie rates, stuff like that, to keep the underground involved, because as soon as one of the big sites goes MTV style with the cookie-cutter stuff, the other one will get everything else. That's one of the things we've learned on the Internet.

AW: Does the underground scene have that kind of power?

SR: We're usually like the fifth largest genre on the Internet, and I think we're like about 15th in actually real world sales.

AW: So you've got a good leg up online.

SR: We've got what's considered a core demographic. They've got a really high adaptability to new technology. It's even the stereotype at boring dot coms. The creative staff and tech types are always blaring techno music in the background. So I've been really fortunate that way. We've got a lot of fans that are really high up in electronic music and in the tech sector.

AW: We've got all the people on the inside.

SR: Ian at Sony is my top traffic referrer. And there are a lot of people out there like that. The guy who's leading the team for the Scour Exchange is a DJ himself. So we do pretty good from it on that aspect. Plus the fact that we're an indie label, and our largest competitor -- they're not even a competitor, since we do different things -- but the closest thing is Astralwerks. They're owned by EMI, and Frank Davis, who's my counterpart over there, he would love to do some of the things I'm doing. But he can't because they're owned by a big corporation.

AW: What kinds of things?

SR: Well. I don't think he can do the Napster deal, he can't do the Scour deal. They're not allowed to use MP3s at EMI.

AW: Wow.

SR: Yeah. Kinda scary. It's so retarded. I hate to be an ageist, but I've just got to do it: I think it has something to do with the fact that you've got 60, 65, 67 year olds running these companies, and they just don't get it. That's a truism on the Internet. You either get it or you don't; and you know five minutes into a conversation if you're wasting your time or not.

AW: Maybe they don't have a justification, but it seems like they'd have to; do they just think MP3s are just a fad, that they'll just go away?

SR: I don't know. I hear some real horror stories. And I have heard some people who used to work for the major labels who say that's what the labels thought. I don't know, it's that or there's something else going on. Of course, I tend to be a conspiracy theory buff.

AW: What about the kid in his basement, making tracks, uploading them. Doesn't he get screwed out of the deal? He can't compete on Scour with even indie labels who have staff doing promotions.

SR: I think, and I've learned this from experience, that it's basically a big misconception that labels are going to go away. Actually, labels are probably more important than ever because that's what we do. With so much content out there, we spend our time and effort to make sure that yours is the one people hear, your songs are what people listen to. It's what we're supposed to do, and we're actually really good at it. And I think we're going to have a big expansion in boutique labels. It's going to be somewhat like a renaissance in a way. Because in a city like San Francisco, there's enough people online that someone like Ubiquity Records or Om Records are able to promote all over the Internet, and then they're able to get people to go to their shows. You're able to pull the scene together right now. And pulling the scene together helps develop boutique labels, because then you've got a market for this product. And I think that'll grow up a lot. You'll see more Patron-of-the-Arts sort of thing, via corporate sponsors. A lot of people shake their heads when that gets thrown out, but you know, Shakespeare had a patron...

AW: And who are these patrons going to be?

SR: This year, our patron is Listen.com. They're --

AW: -- But they're operating on fake money, too, aren't they?

SR: Well, no, they've got a big old war chest. You're going to start seeing the unification factor happen. You're going to have uh...

AW: I'm about to lose my phone battery, which is terrifying me. I'll have to talk fast. Tell me about unification.

SR: Listen.com is one of the companies that'll be in there for the long haul. They've got a great infrastructure built up. What they did -- and this is very smart -- was they pulled together support from the labels, from the major labels, but at the same time a lot of the people running it had an indie background; people who know a lot about music. They've basically already built up a core infrastructure to expand wherever. Their war chest is there to let them acquire what they need to acquire as developments happen. And I love their tree, how they break down the different genres of music. They're going to syndicate that, just that, just the tree. Which is actually a necessary thing for this stuff -- it's like inventing the Dewey Decimal System in a way.

AW: Because you've got so many tracks to categorize...

SR: It's never been like that before. I think in the not too distant future, you're going to see music stores, traditional brick and mortar music stores, switching over to something like Borders, where you can go and listen to the music, but you'll be listening at an Internet connection from a service like Napster or Scour or Listen.com, where it's just piped right in there. And letting the community build it themselves instead of you having to go out and build. That saves so much manpower, bandwidth, and money.

AW: And you'll be able to get stuff a normal record store couldn't be bothered to carry.

SR: Yeah, that's one of the cool things about music on the Internet. Sometimes you'll hear about a lot of interference from the major labels and that's not how the musician wanted it to sound, and they made him go back in the studio and change it. It would be cool to go back and hear how they wanted it. Already, most of the time I use tracks that aren't on the CD to promote the CD. Because what I'm doing is I'm branding the artist (which is the DJ). A lot of the time, the DJ doesn't have any of his own tracks on the mix CD. So I have to use one of his production tracks that's NOT on the CD to push. That's actually what we did with Carl Cox this last time. He didn't have any of his own work on this Mixed Live CD that he did. So I used something from his production album, which is Phuture 2000.

AW: That also seems like an advantage that electronic/DJ genre stuff has...

SR: I can always put up a remix.

AW: And who wants Track 7 off the new DJ Dan mixed CD? Because it's mixing out of something at the start and into something else at the end, it gets you zero unless you get the whole mix, the whole thing as one big file.

SR: That's right. You can find that though, but you'd have to have a fat connection, which most people don't have right now. We've got more to gain, and less to lose. That would be the way I'd put that. It's all looking really good for us. Our sales have gone way up, our traffic has gone way up on our website. I think we're hitting more people than ever. Oh, I'm jumping all around, but... That boutique label concept. I think that's absolutely great for right now, especially in light of the mega-mergers. The major labels are definitely going to be doing the cookie-cutter stuff. Then new scenes will develop all around. Part of the ability to communicate is what allows people to come together, and when you go to different cities there's definitely different music vibes. I think probably since S.F. is where a lot of it is at, they'll really benefit from that, if they can stop overcharging for studio space.

AW: The small indies will build the scene, but can they really benefit financially from MP3 stuff? They don't have the marketing staff to do something with the numbers like you do.

SR: Well. They're not going to get played on the radio. This is the way people will hear you.

AW: So you might as well give it away.

SR: Yeah, it's a way for people to hear what you're doing. That's how it's going to help. You can't tell by reading, you can tell something, but you don't know until you've heard a song if you like it or not. Also, with the advent of technology, One Hit Wonders, which can be marketed down your throat and still go platinum, are pretty much gone, because I'm not going to buy a whole album unless I've heard at least three songs off it that I like. So the One Hit Wonder days are gone. We'll all actually benefit from that. You've got a sonic palette, which requires an education. The first time you hear Miles Davis or Beethoven, you don't know why they're Miles Davis and Beethoven. It takes a little -- you need to educate yourself. And that's one of the things the Internet helps facilitate. You might read a book on jazz, and you could just check out everything online as you read it. That will develop. Oooh, I'm looking forward to it. I think acid jazz is going to make a strong comeback.

AW: Really?

SR: Which I love! I love acid jazz, but I missed out on it while it actually happened. It was in one of my college Oh-I'm-Just-Going-To-Sit-In-A-Little-Room-And-Read-Books phases.

AW: Damn.

SR: So I missed out on it.

AW: I was thinking about this interactive book education thing because I was reading a history of the British rave scene -- Generation Ecstasy, I think, by Simon Reynolds -- and he was all over about the 1989 Belgian gabba scene and he could describe it all he wanted, but I wished that I could click a link or something and hear some of the old old tracks. It would be an amazing way to catch up on everything.

SR: Absolutely. That's what I was saying about the Scour/Napster thing, introducing journalistic content. I think it's going to be really amazing. There's a lot of people that don't like the mainstream, just because it's lowest common denominator stuff. But now there's a way something else can be exposed.

AW: You could take Listen.com's tree, and add a little historical context to each genre, do a little perspective on it, name some seminal tracks...

SR: Right. That's a really sharp idea. And Listen.com is definitely in The Group. Scour is in The Group. Napster, if it survives, is in The Group. It depends on who they pull in. I'm already impressed by the people they have at Scour and Listen. Napster's got a shot. They've got a such a great brand, but you can screw stuff like that up, by getting too corporate. MusicMatch has phenomenal capabilities right now, they're amazing.

AW: Human capabilities or technical capabilities?

SR: Technological things. They track every CD that's played, and it's reported to the CDDB database. They track all that stuff, and it's just like "Wow!". You just can't help yourself, from the marketing perspective, because we love charts. And to be like #2 on the charts.

AW: It just sounds good.

SR: Yeah, and when we go talk to the retail guys, we use that, because you know a lot of the retail guys, at the bottom, they don't know too much about the genre. We're still an emerging genre, not absolutely proven in all markets, and that stuff sounds really good to them. "We're big on the Internet..."

AW: Like, "We're big in Japan"?

SR: Yeah! I think one of the best things about the push I did with Carl Cox was that I worked him for over a year. Part of it is that you can afford to work somebody for a year, because you're not paying money. So you can spend the extra time spreading him out. I got him on AOL's technotronic board, and the front page of Yahoo!Music. We had a chat on Yahoo! ZDNet, Lycos, Sony, he's basically everywhere. We never could have afforded that kind of promotion. I mean, he's not going platinum, but it was his best release in the States.

AW: How did you get that access? Could a smaller label get that kind of attention in two years, or was that just a moment that you caught? Or was that just because Carl Cox is huge and historic?

SR: That's part of it. That's the way I use Carl as the bait to some of the newer guys in some places. We're just starting to get into some of the bigger places. One thing, though, because of the high correlation with our demographic and the Internet demographic, our downloads perform very very very well. Given the nature of how much we actually sell, we do a lot better than a rock artist who only sold 100,000 albums. Because most of the people who do buy our album are on the Internet. So we put up good numbers, and that impresses people, so they give our music a shot, even if they're not that into it. But at the same time, we have a number of fans who are high up in the tech sector. Like Brian Larson (sp?) over at Yahoo!, he loves our label, so that made it a lot easier.

AW: It helps to have friends.

SR: Yes, yes it does. And we're trying to treat the tech sector as friends also. I'm very supportive of them. And that's part of why our RIAA statement is up there. I've got very different interests in this than them major labels do. It's great for me. Like I said, I've got more to gain, and less to lose.

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