INTERVIEW: Mike Jones
From CEO of an Independent Distributor to A CD Manufacturing Company
By: Alex Steininger
Major and indie label owners alike will agree the music industry isn't in the best of shape. With majors pushing only sure things and indie labels closing down shop left and right, as well as publicists, booking agents, and others leaving the industry behind, and one-stops going bankrupt, the business of music seems to be at a very low point these days.
When it comes to the business of music, Portland, Oregon's Mike Jones has seen it all. Jones got his start with Schizophonic Records, a Northwest indie label that quickly established itself as one of the hottest and most versatile labels out there, covering everything from power-pop, punk, and roots-Americana to the Brit-pop of The Dandy Warhols.
Jones later went on to start N.A.I.L. Distribution, a leader in independent rock and punk distribution, which he recently sold off to Allegro, the largest independent classical distributor.
Jones' latest endeavor into the business of music is CD Forge, a CD manufacturing company that has pressed CDs for artists ranging from Elliott Smith to The Dandy Warhols and many, many more.
To succeed in this business, especially with the current state of affairs, independent labels and bands need to arm themselves with information. So, I thought, whom better to talk music and business than Mr. Mike Jones. Here is what he had to say...
IMWT: With the recent chapter 11 filing of Valley Media, Inc. as well as several indie labels going under, it is apparent the music industry is in "shake up" mode. Do you feel as if the industry is cleaning itself, in a way, trimming the fat and ensuring only the strong survive so a lean, stronger music industry can prosper in a few years?
Mike Jones (CEO, CD Forge): In a way, the industry is cleaning itself up, but it's also all about the fallout of the IPO/dotcom frenzy of 2 years ago that is leaving a lot of failed business in its wake. 10 years of good economic times gives big biz, like Valley and Tower to expand, borrow, and set themselves up for failure once we fall on tougher times.
IMWT: If you think the market will correct itself, how long do you think it will take and at what expense?
Mike: Look at AEC for an answer. AEC (Alliance) went bankrupt in 1997 and now they are looking to be the big survivor in the one-stop business. Go figure.. As for retail, I think that there will be a lot less chain stores by the time this recession shakes out, which is not necessarily a bad thing. The chains that succeed will be the ones that are quick on their feet, smart, and committed to presenting their music in the way that customers want it. Mom and pop stores will at least have the advantage that they already are running in more of a lean and mean mode, so hopefully they will survive by and large. I was talking to Nabil Ayers of Sonic Boom in Seattle and they've just opened their second store. Sonic Boom is a perfect example of retail doing well in a recession: know your customers, keep inventory tight, but deep, watch your overhead and make it fun. Most every city has a store or two like this, as well as one or two where they don't care about what they're doing, their customers, or the music. (Hopefully) those will be the mom and pop stores that go away. On the indie label front, I think there will always be new people coming along with a particular vision about what good music is about. Those will replace the last crop of entrepreneurs that can't find an audience, run out of money, or both. And out of each generation, a few good bands on a few good labels rise above the din and make it. On the band level, there will ALWAYS be bands....
IMWT: If you don't think it will correct itself, what do you see as the next chapter in the music industry?
Mike: The biggest change is that music fans continue to be more tech-savvy and will seek out music they can't find in stores online, whether through the big guys, or direct from labels and bands. This is the one sector of the economy that seems to be growing regardless of the recession, terrorism, and so forth.
IMWT: A few years ago people were saying digital music was the next big leap in the music industry, yet a lot of digital music companies are going bankrupt. Do you see this as a sign that digital music is premature or just sorely mismanaged so far?
Mike: More and more people are downloading, there just hasn't been much reason to pay for it since it's still out there for free. At this juncture, it's a great way to get more exposure, but nobody's getting rich selling downloads, are they?
IMWT: You originally started up N.A.I.L. Distribution to help out Northwest labels, like your label, Schizophonic Records, obtain distribution and have more of a chance on the retail end. You then started up CD manufacturing. So, you've seen projects from every end of the business, from the recording process to manufacturing it and releasing it, to trying to get it into stores, and through the actual process of creating the music CDs and packaging them. Now, through running three music businesses, you must have seen some grossly mishandled things along the way that made you go, "I can do that better". What are some of the things that you saw along your way that made you want to start up three different companies and correct the errors that were predominate in the industry?
Mike: I started Schizophonic because I had loved music, been in bands since I was a kid, and I felt that there was a lot of music that wasn't being heard beyond the clubs. At that time, early 90's, there weren't a lot of local records out there. I was really inspired by friends like the Dharma Bums who were really making a go of it. Being the idealist, I jumped right in. 5 years later, it appeared to me that distribution was the big problem (so once again I set off to make the world a better place). The Project Management (CD mfg.) piece came as a natural part of the distribution business almost from the start. Our big hitter in the first couple of years was Space Age Bachelor Pad, the Daddies label. We pressed up their CDs, sold 'em, pressed up some more. That was our best insurance that we'd have the CDs when we needed them. Call me dumb, whatever. I've always believed that good business practices coupled with a love of what you are doing is the way to go. Needless to say, I've been proven wrong more than once.
IMWT: You have since put your label on hiatus and sold your indie distributor to a larger corporation. Are there still things you see in those two sides of the business that you don't agree with, think should be fixed, or feel inclined to someday down the road try and once again mend?
Mike: Distribution really needs to be fixed, and I'm not going to be involved in that (laughter here). I have kids now, and I want a more reasonable existence so I have time with them rather than working 16 hour days trying to figure out how to keep a distributor afloat with string, glue and scissors. Plus, what's the point of trying something twice? Life's too short.
IMWT: Where do you think most distributors and labels as an industry norm either hinder themselves or hurt the industry overall?
Mike: Putting out crap music. I don't think you can truly fix an industry where great music, once it becomes popular, is shoved down peoples throats, copied, homogenized and ruined. Then, they start over and try to find the next thing that works.
IMWT: Why did you settle on CD manufacturing with CD Forge rather than the record label or distributor? What makes CD manufacturing so compelling to concentrate on over the label and indie distributor?
Mike: I didn't "settle" for manufacturing. I like dealing with labels in this mode. 6 years of running NAIL really put it in perspective, taking the following calls from labels every day:
A) Where's my money?
B) Why aren't you buying these new releases?
C) Why aren't you selling these new releases?
D) Why are you returning these CDs?
....and not always having a good answer. Not every piece of music needs/merits distribution. Not every store wants to carry every CD offered by a distributor. Not every customer pays on time. I did my best at a distributor, and we built a successful company from scratch.
Part of why CDForge was spun off of NAIL was that as we started developing the Project Management side of the business, it became clear to me that it was something that I had the knowledge and partners to provide a very high level of service, be competitive, creative, and enjoy. We're not necessarily right for everyone, and that's okay, too.
IMWT: Do you feel that there is more money to be made or a better chance of sustaining yourself in a field that is more focused around ego than actual business sense, i.e. a band or solo artist will manufacture their CD to show their friends they have a CD while at the same time the retail side of the music industry could be at an all time low and even hit makers are seeing significantly slumped sales?
Mike: Most of our customers are using CDForge because it makes good business sense. I don't see ego as the main factor, at least with our clients. We save them money, time and labor getting their releases done efficiently. Hey, it's the music business; everybody has an ego.
IMWT: While running three different businesses, you have encountered your fair share of bands and musicians. What are traits you see in musicians that succeed and traits you see in musicians and bands that are destined to play the local circuit forever?
Mike: Determination, hard work, not giving up, more hard work. Did I mention hard work? Those that have success are the artists that keep going when the others around them have taken straight jobs. Not to say that there's anything wrong with playing the local circuit, as long as you're having fun. It's the same with any venture.
IMWT: All of your businesses have earned significant accolades, whether it was owning one of the NW's hottest indie labels, running a distribution company that so many banks and labels sought out, or earning the business of several key CD manufacturing clients. Now that the first two are behind you, what makes CD Forge stand out amongst its competitors?
Mike: Accolades, schmaccolades. Really, I feel that CDForge gives a level of service that is pretty hard to achieve. We really see our company as much more that a broker; anyone can do that. It's all about doing your very best for clients, and we try very hard to have that attitude every day. We are looking beyond our current services to develop further benefits for our existing and future clients.
IMWT: Where do you see yourself in the music industry in five and ten years?
Mike: Good question. I hope that I'm making a contribution in some way, making a difference.