Tom Silverman, Tommy Boy Entertainment CEO, Visits WPU
Below are notes written while Tommy Boy Entertainment CEO Tom Silverman visiting William Paterson University on Tuesday, February 13th as part of the 2018 Music Management Seminar Series. Other guests in the 2018 series include:
- February 27 – Richard Sanders: CEO, Tidal
- March 20 – Colleen Theis: COO, The Orchard
- April 3 – Larry Mestel: CEO, Primary Wave Music
Tom was an environmental studies major, went to grad school to study more about environmental science.
He had a type setting company that didn’t work and a PR company that didn’t work, so this successful entrepreneur has taken risks and failed.
He started and had the studio in his apartment.
First successful release was in 1981. Tom borrowed $5,000 from his parents. They sold 35,000 12-inch singles of Afrika Bambatta’s second single. He was able to pay his parents back after that.
“We were the first to put New Jersey on the map with Hip Hop,” he said. Queen Latifa, Biz Markie, EPMD, and more.
He released some of the first independent EDM records, like LFO.
“We made these little sex packets for men and women. You were supposed to take this drug and your fantasy would come to life,” he said when talking about Digital Underground and Humpty Hump, a member of the band. “Tupac was actually in Digital Underground,” he said. The group was from the Bay area.
Monica Lynch was their president at first and she was the first female president of a major (indie) label, he said. Today, the president is another female, Rosie Lopez.
They signed artists who stood for something, like Rupaul.
They had successful compilations like Jock Jams. They did eight or nine of them until the NOW compilations came out, when the major labels stopped licensing to them so “they could keep it all in house.”
“We tried to add context” to artists, he said. “We put the crown on Queen Latifa.” People “buy the sizzle, not the steak.”
Tom also started Uphia, a label for authors that helped push spiritual and world music. The label didn’t do as well as Tommy Boy needed it to do “because of our size at the time.”
In 1986, Warner bought half of Tommy Boy. He wanted to take the Force MDs to a wider audience and was in debt to his manufacturer. Tommy Boy needed money to support his artists by getting them on to Top 40 radio. “The problem was, as soon as I did the deal, there was a payola investigation” and the labels didn’t need independent promoters anymore.
“The one thing I can say I would do differently is grow. You’re trying to become profitable and happy and growth doesn’t make you profitable or happy.” It’s easier to grow than it is to shrink. He’s got four full-time people now. At its peak, it was at 150 people.
“New Music Seminar precedes Tommy Boy by a year,” he said.
Record pools – DJs were members and each would have between 100-125 members. The members would pay and pick up records from the DJs. They would service around 2,000 members in total. To reach them all, Tommy and his partners thought about creating a conference around these people. It was a one-day event and around 200 people attended. By 1990, they had 8,000 people attend. “It’s the conference that gave birth to South X Southwest. It was a great entry point to get into the music business. House music broke out of there. UK Acid House came out of the New Music Seminar because people from all over the world would interact.” Nirvana played NMS twice, among other top artists.
The idea was to “break ranks with old thinking.” The current NMS is different. Rather than have it over two or three days, he now has seven or eight events during the year in the evening. Other festivals, like South X Soutwest, get funding from the local government. “It’s hard to get critical mass” these days, he says.
They stopped the festival in the early-2000s and started up again in 2009 because “the right questions weren’t being asked.” He felt an event needed to be in existence to help the world’s free and open thinkers.
He was a founding member of A2IM and Merlin.
“Artists are brainwashed into believing a major is better than an indie,” Tom said. He explained that major labels need hits. But indies have flexibility and are built to work with an artist throughout its career.
With indie labels, people would buy a record just because the record was on Tommy Boy or Def Jam. They don’t do that with major labels.
Merlin got equity in Spotify just like the majors. He said Merlin is about 14% of Spotify’s streams now, and growing. “The playlist market really helps support the independent artist diversity.”
He said major labels are like venture capitalists. One loses. The next artist wins. The next ones fail. The hits pay for the losses. He said publishers are more like banks. “Indies don’t invest as much, but they hand hold.”
Tommy felt managers and lawyers push artist toward the majors because of the percentages they get. “The advisors sell the artist down the river half the time.” He considers managers and lawyers to be people “bought off” by the majors and their advances.
27 countries have trade associations, which can’t make deals but can lobby and put events together to help try to improve “the local lot” of the indies. They can’t make deals because of anti-trust laws. Trade associations also represent indie labels distributed by majors. “More than half” of the indie label market share in the U.S. is distributed through the majors.
He’s been “a token independent” in the RIAA since 1987. “They have their own agenda and they do what they want to do.”
While he’s a member of the Rock & Roll Hall of Fame, he thinks it’s about ready for a shakeup. “The voters are very white and old fashioned and don’t consider rap and hip hop to be” legitimate forms of music.
“I was on the board of SoundExchange for ten years too,” he said. The labels have been doing direct deals with Pandora, which has taken revenue away from SoundExchange, but the company is still doing very well.
Spotify is contracted in how they pay. SoundExchange collects by government decree. “Merlin helps balance the game between the majors and the indies.” Pandora pays Merlin directly now for the labels – but the artists still get paid directly from SoundExchange.
Look up TrackLib.com (Track Liberation), Tom’s new venture. It’s a way for access to producers/artists so they can use pre-recorded music for sampling. The contract is included and the fee. This is a game-changer. “If you could use a Miles Davis track on a new record, why wouldn’t you do that?” It’s a derivative work. It’s not for remixes. And only up to 60 seconds can be used.
In one-minute you’d have access to hundreds of thousands of tracks that people can sample. Stems will be available too so you can use just the drums or bass from a song. “It’s a super way to expand the palette of the creator.”
When he cleared the sample for the 1989 De La Soul album, he had to reach out to 27 publishers and 27 majors. That’s 54 contracts he needed to work out and sign. TrackLib heps correct this problem.
The key to this, according to Silverman, is that it can help revive dormant catalogs owned by the majors, or any rights-holder. If one artist samples an old song and has a hit, it’s a way to expose the old song to a new audience. Plus, it helps with The Long Tail of music as well.
Net Neutrality & The Indies
“We’re not sure how it’s going to affect the independent level yet. I think it could affect Spotify if people are throttling bandwidth.” He thinks if there’s a speed war between Google and Apple, then there could be consumer issues.
“Considering that the speeds are getting really, really fast, I think it’s important to America that we all have” fast access. He thinks there are still competitive reasons that may keep it from being a really big deal. Moore’s Law is making tech better and faster for less, so Net Neutrality may not become the big deal that some fear.
“It takes a decade” to change minds, he says. “It takes 20 or 30 years sometimes.” One reason, he says, it was hard to sample jazz music was because jazz labels/artists thought the artists who wanted to sample should become better musicians on their own rather than take a shortcut by sampling. But, an artist like Bob James has changed his tune and now records with Hip Hop musicians.
CD sales may increase now because Best Buy is dropping the format and Target is scaling back and changing terms. The increase may come through indie retail. This happened with vinyl. Prices went up and demand grew and the format has grown.
He was asked about a format to replace the CD and referenced an op ed he wrote for Billboard back in 2007 called The Next Physical Format. Click and read that.
“As an industry we should be thinking about the after market,” he said. “We should be thinking of limited editions.” He thinks “there’s a huge demand” for a physical format that can be gifted. “It’s convenient to use Spotify to listen to music, but it’s cool to own something by someone you love.”
Rather than sell full songs, why not also sell the stems? “Deconstructing.”
CUSTOMER LIFETIME VALUE
Maybe record buyers have a 15-year active span of buying. Then it ends, pretty much. If you subscribe to Spotify, you keep it longer and longer. You’re investing your time in playlists and “collecting” music on a platform not based upon ownership. If you quit, you lose everything.
The music business today is the same as 1967. He feels we need to get to 100 million subscriptions in the United States to really change the game. He thinks a YouTube subscription service and the entry of Facebook can help drive more industry growth.
In the old days, the business was about acquisition. Now it’s about usage. Subscriptions go up with promotions like Spotify’s new two-month free subscription deal. “Pretty soon we’re going to hit critical mass,” he said.
He wishes more companies would dominate streaming rather than just three or four.
He thinks artists should release one single after the next. “Before I’m interested in a body of work, give me” some songs so that the consumer can contextualize the artist (see way up above). Also, because we’re inundated with new releases via streaming access, albums don’t last as long as they used to. Release a single. Two weeks later, put out the lyric video. Two weeks after that, put out the real video.
Understand the dynamics of the streamer.
Half of consumption on Spotify is mood playlists. They don’t care if it’s jazz or pop. They want music for dinner or to sleep. They don’t care what’s on it. They just want to sleep.
He thinks musicians should focus on being musicians and get someone else to do the entrepreneurial stuff, like social media and videos. “If you have a team of people who can help you create, expose, and monetize,” then you’re okay. Those three things are most important:
He says radio is still so important to break new songs. So you need a team of smart people who can figure out who to get people to hear the music.
“I have to say streaming services are rooting against the labels.” Spotify, Apple and YouTube are very happy to support a Chance The Rapper to show that artists don’t need a major label. But it’s hard to be a Chance The Rapper. “Certain genres are easier than others. Not country, because it’s so radio dependent.”
“If the majors weren’t there to hold out for what they got” from the streaming services, the indies wouldn’t have gotten what they’re getting in their deal. The existence of major labels cannot be denied. “If there were no major labels, we would all be fucked. We would get 10%, 20% if anything” without the major labels.
“Find yourself. Be the first of something. Be #1 in a field of one. Trying to fit in is the downfall of society itself. Your uniqueness is what makes the world great, so be as unique as possible. Don’t worry about what other people have done.”
“Do a lot of inner work and look inside yourself.”
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Professor David Philp is Assistant Professor Music & Entertainment Industries and Popular Music Studies at William Paterson University. He is the co-host of the only FREE advice college radio-based music & entertainment industry talk show in America, Music Biz 101 & More, which airs live most Wednesday nights and is available as a podcast HERE every night (days too). Your favorite professor is also co-author (with Dr. Steve Marcone) of Managing Your Band – 6th Edition. Reach him at PhilpD@wpunj.edu or find him on LinkedIn HERE.