Q & A: Larry Rosen — music entrepreneur, producer and musician, Part I
June 18, 2009 — irom
By Fernando Gonzalez
For more than 20 years, music entrepreneur, producer and musician Larry Rosen has shown an uncanny sense to be one step ahead of the changes in the music business. In 1982, when the industry was still debating CDs, Rosen and partner Dave Grusin founded GRP, a record company predicated on a then-groundbreaking all-digital philosophy for recording and a CD-only policy for releases. In the 1990s, as new forms of music distribution were coming into view, Rosen moved on and founded the online music retailer N2K.
He has his own production company and is the co-chairman of LRSmedia, which "creates music brands and products, which it sells and markets through their own produced television, radio, Internet, and live performance events." The most notable such products are the one-hour prime time special Legends of Jazz (PBS, 2005), which was followed, in 2006, by a 13-part series of the same name. He is currently working on an eight-part television series titled, Recording: The History of Recorded Music, which is scheduled for broadcast in the fall of 2009.
Rosen, who has been living in Miami since 2,000, is also the producer of the jazz series Jazz Roots, now in its second season, at the Adrienne Arsht Center for the Performing Arts in Miami.
Our conversation took place in Miami Beach.
PART I: The Old Model
FG: It seems that every discussion about the crisis in the music industry tends to focus on the impact of the web and piracy. What is your view?
LR: The whole business model of the record industry doesn't work anymore. The old business was made of certain components: the record label was at the top of the heap because they were the ones who had the funding. They were the curators who chose the artists, made the records and then went out and made sure that records sold. In order to do that, they had to have radio — a very strong component of any strategy to sell records. Then you had to work the market with live performances, be them in clubs or concerts. And finally, you had to have the retailers where people could go buy this music. And you had to have all those parts working together to make it work.
FG: But that was then. The music, the creative core is still healthy, but none of the other components is still working.
LR: Well, there is no record retail environment anymore, there are very few radio stations that make a difference (because most have been bought up by giant conglomerates). And, of course, people are not buying physical product anymore - which was the way music was distributed through record companies and what gave them their power because they controlled the manufacturing, distribution, warehousing, sales to stores, and paying the artists. So you look at all those pieces and you see why the entire paradigm is not working. The record company is not needed anymore, the physical product is not where it's at anymore, it's diminishing every year, radio doesn't play its role anymore and the record retailers do not even exist anymore. So none of it works. It's a new ballgame.
FG: Historically, the record industry must be the only one of the major industries that does little or no Research & Development . Given those changes you mentioned, and the fact that much of the old structure that nurtured and provided the industry with it creative "workers" and its customers is now in shambles, should the industry rethink its approach?
LR: The answer is 'Yes, of course." Will it happen? The answer is "No."
When you say "the industry" primarily, in the past, it meant the record companies, because they were the ones who signed the artist and the ones who, if successful, would make money from this thing. But record companies don’t spend money on anything unless there is a direct return on their investment — right now, this quarter. And that's a big problem within the music industry. And that's why it's declining so quickly.
FG: Wasn't it always like this? There was a time when companies were owned and driven by personalities and their tastes - the Erteguns, Alfred Lion and Francis Wolff, Bob Thiele. Was it different then? How did it change?
LR: This [industry] was once run by entrepreneurs who loved the music, loved the artists, and would invest in an artist and stick with him year in and year out and build that artist. When this industry got to be bigger and bigger and bigger and was consolidated, these public corporations bought up all the other record labels and had MBAs running them. And these guys would be looking at quarterly results, the stock price and have all the pressure of the market. The last thing they were concerned about is what it's all about: the music. And if you are not really concerned about the music and all you care is the quarterly result, why would you ever educate anybody to develop an audience in the future? You might not be running that company two years from now.
FG: It's clear how that might affect artistic decisions, but was the approach so short-term across the board, even with business decisions?
LR: Let me give you another example: When CDs came in, the record industry didn’t want to spend any money on CDs. I was there. As an entrepreneur I saw a great opportunity. But the record companies said: "Look, I have all these pressing companies, all the retailers have all their shelves in 12 inch high bins, who needs to have a CD? That's 5 inches, we have to redo the stores and I have to invest millions in a new pressing plant. I don't need this thing." They were not supportive of the CD.
FG: Was there also a concern about the fact that when you are putting out CDs you are putting out masters and the potential consequences of that for your business?
LR: Yes, it's true. Technology is going to change the whole fundamentals of your business, but you are not going to stop it, that's the point, so get with it. There is no choice. Technology is going in one direction, consumers are going in that direction and you are a total ass if you are trying to stop it. But that's what they tried to do. And you can see what happened: they killed themselves. So when I think about where the opportunities are in music and what has to happen, the so-called record companies are not even in the picture.
FG: And then we went past CDs, past physical distribution and began dealing with downloads. Was the lesson learned?.
LR: Same thing when it came to the idea of buying and distributing music electronically. They were totally against it. And I started another company N2K in which the whole idea was to sell music electronically and move in the direction I felt technology was going. And they tried to actually stop that from happening. The reality is that you can't defy gravity. It's idiotic. You won't stop technology or progress. It's that simple. No matter what you think, it doesn't make any difference.
FG: So then what is the new paradigm, the new model?
LR: I'm exploring that from an entrepreneurial point of view. The performing arts centers can be part of that new model. I think NPR is part of that model. I think you have to figure out who is the consumer for this kind of product, where they aggregate, how do you get the music to them, and how do they get exposed to it. And when they are, if it's good, they'll start taking to it.