The death of record labels?

LA Times story

By Todd Martens
April 16, 2009
For its first album in four years, electronic-tinged rock act Metric opted to go without the backing of a music label, a move that in the past would have been daring.

But the Canadian quartet’s new release, “Fantasies,” popped up in the middle of the U.S. pop chart last week. Metric accomplished that thanks in large measure to iTunes and a nonprofit Canadian arts funding entity.

The 10-track “Fantasies,” which took the band in a more pop direction, has sold 9,000 digital downloads in the U.S. since its release March 31, according to Nielsen SoundScan. In the music industry, which counts success in the hundreds of thousands, Metric’s sales figures may not seem like much. Nonetheless, taking into account an additional 15,000 downloads the band’s co-manager said it sold internationally, Metric is seeing a higher financial return than under a major record deal.

With direct access to iTunes, as well as sales via the band’s website, Metric has already brought in more gross revenue than it did on 2005’s “Live It Out,” which sold more than 45,000 copies. The latter was released in Canada via Last Gang Records and handled in the U.S. by Universal Music Group’s independent distributor Fontana.

“Talking gross numbers that come directly to the band, we have made more money already than we have on the last record in four years,” said Mathieu Drouin, the band’s co-manager. “Without any intermediary, we’re making 77 cents on the dollar for every record we sell” on iTunes. Under a label deal, based on Drouin’s estimate, Metric would have earned closer to 22 cents.

Metric also took a page from album rollouts employed by much bigger artists such as Radiohead and Nine Inch Nails. In addition, fans could purchase the album directly from Metric’s own site (www.ilovemetric.com), which sold “Fantasies” at five price points, ranging from an $8.99 album download — with an extra track not available on iTunes — to a $64.99 “deluxe” package that included autographs, artwork and invitations to exclusive performances.

Metric sold out of an initial allotment of 500 deluxe packages in 48 hours, said Drouin, who estimated a profit of $13 to $15 per unit. “We can never offer a fan that much value at that price if we had to go through a record company, distributor and a retailer. We cut out three rungs.”

The website’s back-office operations are handled by Santa Monica-based Topspin, which is also overseeing online marketing.

Topspin founder Ian Rogers said the company was working with about 50 clients and had recently helped employ similar tiered-release models with the Beastie Boys and the pop band the Rentals. Rogers credits Nine Inch Nails’ Trent Reznor as defining the model last year, when he offered multiple packages for his “Ghost I-IV.”

The CD release of “Fantasies” on Tuesday was handled by Redeye Distribution. The firm’s director of marketing, Josh Wittman, said the band sold about 3,000 physical CDs in the U.S. that day. He noted that Metric’s digital-first strategy worked because the band had a partnership with iTunes — although it was not without risk.

“If you release early and you don’t have a strong showing, the physical retailers may all of a sudden get cold feet. You can do a lot of damage that way. You better be sure you come out of the gate really strongly,” he said.

Without the upfront marketing dollars of a label, Metric took additional chances. The band made “Fantasies” available for streaming a month before its release, allowing fans to embed the entire album on their own websites. The plan was to fuel pre-orders, but it also could have undercut digital downloads or CD sales. But that turned out not to be the case. Drouin believes the free streaming led to fans’ wanting to buy the album.

“The band was unsure about it,” Drouin said. “They didn’t want to minimize the impact of the record. But my belief is that without the marketing dollars of the label, we could not engineer a huge impact. We had to give it more time for the world to have a chance to hear the music and get excited about it.”

Metric’s decision to work without a label was made easier because it tapped a nonprofit funding entity available to Canadian artists and some government aid. With a little help from the Foundation to Assist Canadian Talent on Recordings, Metric was able to receive a loan of about $50,000 to help cover recording costs. Drouin said the band also received a smaller federal grant.

“Everything is a grant, except the money for the album, which is a loan,” Drouin said. “Metric will pay back 100% of the loan, by virtue of the sales we already have.”