Blues entrepreneur talks indie labels, healthcare reform and how music survives while we steal MP3s.
Bruce Iglauer is the kind of guy who can say it straight. Founder of Alligator Records, a blues and roots rock record label boasting the likes of Buckwheat Zydeco and Professor Longhair in their catalogue, Bruce sat down and told me what has happened to record labels everywhere since stealing music on the internet has taken over a once booming industry….he was even kind enough to preface our interview with a few words of why he WOULDN’T be a great candidate CEO to speak to.
“Honestly, I doubt that I’d be a very interesting interview at this time, unless your readers want to slash their wrists. The recording industry has been in free fall since 1999 and all of us, whether in niche categories (as we are) or in the pop world, are suffering terribly. So nothing I could say would be either much fun to read or very helpful for aspiring business people. Right now I’d say to anyone who wants to try and make a living selling recordings in any form—”run away, run away”. So, if you’d like to have a really discouraging, sourpuss interview, I’d do it, but I honestly doubt you do.” Thanks Bruce.
Alister & Paine: Let’s get into it. What is going on with the record label industry??
Bruce Iglauer: Well, the recording industry worldwide is in a massive transition and we’re clear about what we’re transitioning from but not so clear what we’re transitioning to. Starting in 1998 with illegal Napster the public discovered that music was very easy to steal and began finding rationalizations for stealing it. Haha. It’s gotten to the point now where literally 95% of all the music that’s downloaded is downloaded illegally. It’s a very scary time and the result is that cash flow for every aspect of their record business has fallen way down. Officially the recording industry in the world is under 50% of the size it was 10 years ago.
Alister & Paine: Do you think that makes the internet to blame entirely, is it partially the economy, who’s to blame, really?
Bruce Iglauer: The shrinking of the recording industry came long before the present economic turmoil we’re going through. This year the drop in album sales in any format that is digital as well as physical is about 14 % but even before economic downturn it was over 10% per year. I think that the decks of the record industry were already awash as they say.
Alister & Paine: So you guys just aren’t having a great run right now.
Bruce Iglauer: No we aren’t! Alligator started because there was a type of music, the blues, that I love, and there were musicians that I heard that needed to be recorded and weren’t getting recorded. So I began a record label to record music that I love. I figured out early on that if I was going to continue to do what I loved and record music I love I’d better figure out how to make a viable business out of it. So I became a businessman by default.
I never thought, I know how I’ll make a lot of money-I’ll go into the music business! You know, I could’ve had a real job, instead of this. Haha. However, we have had many profitable years, even though the present climate is pretty bleak.
Alister & Paine: You guys are an independent label, you don’t have big stacks of money behind you, and you solely own Alligator, so how do you feel about the multinational conglomerates like SONY?
Bruce Iglauer: We are independently owned. The fact that I’m the captain of my ship, that I decide what gets released on this label and not some multinational corporation, that every buck or lack of buck stops here is how we distinguish the independence of the label.
Over the course of the 1970’s and over the 1980’s there emerged these giant multinational companies who began acquiring one another. They set up a sort of vertical distribution system where the majors, as we call them, had the opportunity to make a lot more money per sale than the independents did.
It’s tough for us, but it’s always been tough for us independents. We on the independent side have never thought this was going to be a cruise, or easy. We have our music to make us happy more than our bank accounts.
Alister & Paine: Which is why some great music can go unheard on an independent label, where the latest ‘hit’ might be coming from the big guys, as you say.
Bruce Iglauer: Of course the nature of commercial radio is to play the music that will keep people listening till the next commercial. It’s like a restaurant that will only serve mashed potatoes. Nobody hates mashed potatoes, everybody will eat the mashed potatoes and wait for the commercial. We tend to be the people who put in a lot of jalapeno peppers and that means we’re not going to be to everybody’s taste.
The problem we have right now is that for years companies like mine found a way to survive and sometimes thrive making a small but real profit for both us and the artist.
Now that the marketplace has shrunk the possibility of doing that is less and less. Whereas we don’t mind the good fight that we sometimes win and sometimes lose, having the fight that we don’t know if we can ever win is pretty tough.
Alister & Paine: Do you think there is enough business for everybody, small medium large, or is the market share finite?
Bruce Iglauer: You’re asking me exactly the right question and the answer is no, there isn’t enough business. I’m afraid that what we’re going to see in the very next short period of time is a lot of smaller record companies that simply cease to operate or cease to make new recordings and run much more modest businesses. I’m afraid that’s the future for a lot of labels.
Alister & Paine: Even if it’s a sort of flailing industry right now, how does it feel to own such a rockin’ record label?
Bruce Iglauer: Over the past 38 years we’ve released 250 albums of which I’m immensely proud. I’ve had a chance to work with some of the immortal artists in the blues, I’ve had them become my friends and been at thrilling live performances..
I feel like I’ve had a blessed life and a blessed career. My concern right now is that I’d like to be blessed for a while longer.
Alister & Paine: That’s all you can ask for. Looking through Alligator’s catalogue, great guitarist Roy Buchanan, urban blues guys Charles Brown, all amazing artists but I feel like their true potential in the marketplace was never fully recognized. Do you think that had something to do with being an independent label?
Bruce Iglauer: My first goal is to have the artists rise to the peak of their artistic potential when they record for me. I always tell artists I don’t want you to make a record for me unless you’re trying to make the record you will take to your grandchildren and say ‘This is me. This is my best.’ So first I want that artistic potential realized.
Blues is a music of very, very strong emotions. I always approach it as ‘What can I do to bring something out of this artist that I see is within, and that will stand the test of time?’ And then try and sell as many of it as possible.
I have an inquiring palette and I hope that my listeners want music that reaches important parts of their emotion, which reaches deep and stirs their souls. It doesn’t just taste good for a moment. Pop music believes that love conquers all, but blues music believes that while there’s great potential…..
Alister & Paine: It still never works out. A little more realistic.
Bruce Iglauer: Kind of like life, you know?
Alister & Paine: Definitely. As a small business, I’m sure you have some personal opinions on the healthcare reform especially as reflected in your insurance budget.
Bruce Iglauer: I’m very proud of the fact that over the years I’ve taken care of 100% of the health care for all of my employees. They don’t make contributions to our heath care plan-at least they don’t at this time.
I’ve watched the costs of health care go up so dramatically that they’re almost impossible for somebody at my level. Our health insurance went up 33% this year without a major client. It’s horrifying.
Believe me, I’d much rather have a government bureaucrat between me and my doctor than an insurance company who’s determined to make a profit off of my health.
Alister & Paine: There’s plenty of people out there who would disagree…
Bruce Iglauer: Well a lot of Americans are scared… I’d rather pay more in taxes so everyone has health care rather than pay to a private health insurance company so my staff has health care.
The musicians that record for us are generally self employed. I know almost no musicians who are able to afford any kind of decent health care so they just are gambling that they will keep their health. If they’re not healthy, they can’t make money. I remember an older musician that said to me ‘I hope I can play until I die, because otherwise I don’t know how I’ll survive.’
Alister & Paine: This all sort of stems back to the economy eventually, what’s your take on our financial status right now? What’s your personal solution? More taxes, bailouts, more government help or less?
Bruce Iglauer: Boy, you’re asking me some pretty non record business questions here, aren’t you? You know, I’m a child of the 1960’s therefore my politics by American standards are pretty far to the left. I never got over the 60’s and I’m proud of it. Of course, by European standards I’d be a centrist. Socialized medicine doesn’t scare me. I’m fine with having a socialized police force and socialized fire department and driving on socialized highways. The idea that the government provides more services in exchange for taxes is okay with me.
Will government be perfect? No. Absolutely not. Government support of the arts in the United States is probably less than that in any other industrialized country. In other western countries, a label like mine that is documenting traditional music would receive government support. I’d really like those tax dollars spent for me! I want your tax dollars rolling into my office now. You’ve lured me into a political conversation! You’ve misrepresented yourself…
Alister & Paine: I’m sorry! Here’s a music industry question for you-your company is typically a blues rock label. Would you, or do you have any desire to branch away from that title?
Bruce Iglauer: I want this label to always have the spirit of the blues in its recordings, but I don’t think the spirit of blues is defined by the number of bars in a song, or what the chord changes are. I think that it’s much more the emotional impact of the music and what I like the call the soul healing quality that blues brings.
Alister & Paine: Any advice you want to leave for any Presidents or CEOs in a similar situation?
Bruce Iglauer: One of the big things that anybody in an industry that is in this kind of state of shock has to accept is that you have to stop trying to make the old paradigm work. As much as you may mourn for what was, and believe me, I do, it’s not coming back. The way this industry was is not the way this industry is going to be.
Music will be here. Music is primal to what human beings are. People were creating music before people could speak. I love what I do. I want to keep doing it. I’m 62 now; I’d like to be doing this when I’m 82. And all I have to do is figure out some way that we can make enough money so this very important music can be recorded.