A Christian hip-hop act, a moderately offensive comedian and a pair of androgynous goth kids singing about sexting—these are some of the artists who are selling hundreds of thousands of records and turning a profit. You might not find these bands in your local struggling record store, but you will find them in digital stores like iTunes. And they are there because of TuneCore, the digital music distributor co-founded in 2006 by Jeff Price. TuneCore, with a current staff of 36, now has 600,000 user accounts. These artists have sold more than 300 million streams and downloads through digital outlets and made more than $130 million since the company’s founding.
Price got into the music industry more than 20 years ago. “I was in college, and I was graduating, trying to find a career, and I don’t seem to do well working for others,” Price tells CMJ. So he and his old high school friend began Spin Art Records, which Price co-owned and co-ran for more than 17 years. “That was my entrée into the music world,” he says. But as you can see from our talk with Price, that was really just his appetizer.
Did you have a light-bulb moment for creating TuneCore?
What had occurred is a couple of things. The first is Spin Art Records was going out of business after 17 years, and I was trying to figure out how the hell could I stay in the music industry and what could I do. At the same time, on a completely unrelated track, I had been approached by a number of new music distribution companies that wanted to distribute Spin Art Records’ music to digital music stores as opposed to physical music stores. And I thought the business model was just morally disgusting and wrong, and I got very angry about it.
And the back-story to that is, traditionally, if you’re an artist or a musician, you had to get signed to a record label because the record label had a relationship with the distributor. Record labels were distributors. They controlled the pipeline to get the product out onto the shelves of the retail stores where people would go to buy it. And record labels would then make artists famous, and they would monetize that fame by selling or licensing the music. And the distributor would take a percentage of the money that the retail store paid to buy the CD. … And that’s the economic food chain of the music industry.
When did the most recent shift from buying music as a physical product to a digital product occur?
iTunes really changed the way everything went. So as you move forward to 2005, what had occurred is where consumers were going to buy music was changing, and I had done a deal with my record label for physical distribution to go through Warner Bros. with an agency called Ryko. And I had carved out the digital rights. So, OK, Ryko, you can take my physical product and package it and ship it out and deal with all that like it’s been going on for the last hundred years. But digitally, I’m not going to give you the rights for digital distribution because I don’t need you for that. I can do it myself.
So what occurred is my record label got pitched by these new music distribution companies. They stepped forward and said, “Hi, we now have a contract with the store,” you know instead of Tower Records or Walmart, it’s now iTunes, “and we’ll place your music into that store, but in return for doing that, we want to take a distribution fee,” which is a percentage of the sale, just like the old-school model, “and we want to control the rights to your catalog exclusively in the digital format. And every time the music sells, we’re going to take money. There’s no limit to how much money we can make. We’re going to pay you every 90 days, even though we get paid every 30 days, and we’re only going to pay you if we’ve decided you’ve earned enough money.” And I said, “With all due respect, go fuck yourselves. You’re moving a digital file from point A, your hard drive, to point B, their hard drive. That’s it. You’re not fighting for shelf space; you’re not fronting money for advertising programs; you’re not manufacturing physical products. It’s an automated system. Why in the world should you get an unlimited amount of revenue from the sale of the music?” You know, I’m sitting here, and I’m putting forward tour support, and I’m busting, banging my head against the wall, I’m maxing out my credit cards. The bands are playing gigs, sleeping on floors, eating Ramen. There’s back catalog as well. They go, they play a gig, and you’re going to take 30 percent of the money? For doing what?
Anyway, so it really, really upset me. And I called my friend Gary that I worked with at eMusic, who’s an engineer there, and I said we should just start a website that lets anybody on this planet that creates music or sound have access to distribution. No more filter. There will be no one ever saying you’re good enough, you’re not good enough, I don’t think you have what it takes, I don’t see the commercial value in it. Fuck it. No one will be the gatekeeper anymore. Anyone can go there, they can upload their music, they can click a button and their music will be put into iTunes, and when the music sells, they get 100 percent of the revenue. It’ll be nonexclusive, they keep all of the rights. And they pay us a simple upfront, flat fee. So if they sell one record or 10 million, they still pay the same flat fee they would pay if they bought a pack of guitar strings. That was the concept behind TuneCore, and about 12 weeks after making that phone call to Gary, we launched in January 26 of 2006.
Was it hard to get people to use the service initially or did you have a big bite right away?
The first year, 2006, there were probably seven or eight thousand accounts. And it was three guys running it out of the bedroom, more or less. And the way we would market and promote ourselves was, I knew record label stuff, so I just went to record label PR outlets. We did that, we sent out press releases. And I had the opportunity to speak on panels and made a point of contacting media outlets that most business don’t go to. You know, I wasn’t focused on going to Fortune magazine and Inc. with a start-up. Rather I was trying to get Pitchfork Media and CMJ because I wanted to get the word out to artists. I wasn’t interested in trying to raise venture capital or any of that other crap. So that’s how we initially did it. It was just word of mouth, people telling people, and my biggest challenge was people within the industry wouldn’t believe me. They didn’t believe it. They were looking for the catch. I mean, honest to God, anybody who came from a traditional record label or had a lawyer or a manager thought there was something nefarious going on. “I don’t get it.” It’s like Federal Express: You pay me money to mail a package. “How do you make your money?” Because you pay me the upfront fee. “Well, what about when it sells?” You get all of that. “What do you mean I get all of that?” It’s an absolutely radical idea. But five years later, we are now the largest music distribution company on the planet.
And that is in terms of song and album distribution digitally.
Correct. I mean every day there are between 380 to 500 newly recorded releases being distributed each day. There’s more music being distributed in one day via TuneCore than on a major record label over three years. … And to those people out there, the sitting board members of the RIAA and the sitting board members of A2IM and the sitting board members of Sound Exchange who have made public comments stating that music that we release is crap—that’s their word, not mine—and that 80 percent of it is crap and it’s cluttering the space. You know with all due respect, this music already sits on a hard drive. Who cares if it’s my computer or Apple’s hard drive? It doesn’t get in the way of anything. Radiohead’s not going to stop selling because you put a song up on iTunes.
When you go to iTunes, people search for it. If they find it, they buy it. So, go fuck yourself. You know? Please. You’re no longer the gatekeeper; you don’t get to say what has access. Technology changed that, and the general population of the world can say something like Rebecca Black, for better or for worse, has value. You know, we can say it doesn’t or it does, but the general population decided it is, so it doesn’t really matter what we have to say. They get to make the decision now.