"Music is communication. When it is a copy of everything else, it loses its power as a form of expression and its relevance to music consumers."

Ok you have my attention. What’s your solution?

Some people may disagree with my opinion that the music industry being in decline since the 70s. What they’re forgetting is that there have been couple of things that helped it out; artificial, superficial influences on record sales. One was Michael Jackson in 1984. He saved CBS Records. "Thriller" was such a massive seller that it literally changed the perception of how well the record industry was doing. Just one album. And it did that because every single track on that album is great. Everything about it was beautiful and elegant.

The other thing that helped out the music industry was the compact disc. When the CD became available, people of a certain generation started replacing all of their vinyl albums and cassettes with CDs. The industry's upward trend wasn't because of investment and development in new music, but because people were replacing what they already owned.

For any industry, if you’re going to solve a problem or grow a business, you always have to have new offerings. When I thought, “What kind of model can I build?” I began appreciating two things. First, there’s historic inequity as between artists, their managers, and their label, and it’s an inequity that’s rooted in exploitation. Artists don’t own the rights to what they’ve created, the creative asset that is the driver of revenues. Instead, the artist is put into debt in the form of an advance. The artist can’t generate profit until they’ve paid that advance back out of royalties. The royalty rate is very, very low, and is not sufficient to enable an artist to recoup very quickly if they ever recoup at all. It’s the only industry that I can think of where the the creator of the product is immediately put into debt, loses all of their rights in the asset they have created, absorbs all costs, and can’t make any money on their own creation unless they reach sufficient scale where they’re selling in massive volume, which is unlikely.

Second, in understanding other businesses that have successfully changed the status quo in their industries, I noted the importance of an exchange, of removing costly intermediaries, and completely aligning the interests between the parties to a contract. I thought we might be able to create a platform that aligns artists' interests with their financing source and removes bloated intermediaries who are also attempting to finance significant legacy costs of their large, less nimble businesses.

So my model asks, “What if we restructure the relationship?” I’ve been in this start-up world for a while, and I started thinking—what if we treated an artist the same way an entrepreneur would want to be treated? By that I mean, what if we equitize the artist so that they’re keeping and maintaining the rights in the thing they’ve created? What if we invested in them—offered them the same recording budgets that they could get from a major? What if we follow through with a commitment to market so that they can actually make money? And what if we split costs? We started thinking about it the way angel investors and venture capitalists think about making investments, and that’s really how we’ve built our model.

I’m 100% on board with you! For writers it’s even worse, if you can believe it. Still, I’ve heard the equity idea, but I have yet to see it work in an artistic field. Why do you think it hasn’t worked before?

I think that it hasn’t been done before because the record industry—like many other incumbent industries—makes a lot of money by what it’s doing, even if it’s not making as much money as it used to. The industry is very large, and a lot of times it’s subject to the desires of public shareholders. There are a variety of different constraints.

“The consequence of risk aversion is that things stay broken. Even if you’re one of the lucky ones who benefits from the brokenness, things are staying broken.”

Why did you call it Big Mouth Records?

For us, there’s this sense of defiance, a loud rejection of the status quo. We are independent, and big mouths have a tendency to be independent voices, calling attention to a problem and offering a solution. Big mouths are often rebellious, and we’re unequivocally rebellious. Unafraid. Unafraid of doing things differently when we believe it is the right way, unafraid of expressing our perspective, and making the music we want to make.

In terms of independence, what do you think about what people like Macklemore have done? Where they’ve rejected corporate record deals and owned their own IP...

Macklemore and Chance the Rapper are very similar to us conceptually in that they have a similar philosophy about artists' rights and independence.

Is Chance totally independent? I didn’t know that…

Yeah, he’s totally independent. He’s not signed to a major or independent label. He’s signed to himself. If you look at the copyright information, it says “P. Chance the Rapper.” He makes his own music, he gets together all the different musicians and artists that he wants to work with, and then he puts it out! He’s got a fantastic manager, publicist, and booking agent. And he gets partners who help ensure the music is heard. Like Apple was his partner—but he’s not signed to a label. He thinks very differently, and as a result, he’s maintaining all his rights.

Macklemore is perhaps more similar to the model we are building because while he has maintained all of his rights, he also relied on Warner Music’s ADA for distribution. But as we understand it, that distribution deal didn’t come with Macklemore giving up any of his rights.

I’m not opposed to doing distribution deals where an artist maintains her rights. In fact, I would welcome doing a deal with a major label, because it is more likely we’ll succeed at getting our music out to wider and broader audiences. We still believe in the power of radio, and major labels tend to have very good radio teams. That's strategically important to us. If we find a relationship where we can truly and collaborate to efficiently deliver what we've created to music consumers, then I think it would be foolish to turn the opportunity down.