This Musical Trio Has Put a New Spin on the Record Business

Artist Direct bills itself as a “triple-faceted music entertainment company,” combining a booking agency, record label and online marketing venture. The company founders believe it also signals vast changes coming in the record business.

The Encino firm--founded earlier this month by former music agents Don Muller, Marc Geiger and Bill Elson--already has an impressive roster of alternative-leaning acts for its booking business. Pearl Jam, the Beastie Boys and Beck are among the three dozen or so acts that Artist Direct represents.

Muller and Geiger met most of the bands through their roles as agents at the former Triad Artists (bought by the William Morris agency in 1992) and as co-founders of the 6-year-old Lollapalooza tour, along with then-Jane’s Addiction front man Perry Farrell. Elson, an 11-year veteran of agency ICM, was brought in to help with the booking operation and the overall business plan.

Collectively, Muller says, the three men have “about 60 years’ experience in the booking business.” They’ve financed the new venture mostly from their own savings.

Muller and Geiger speak animatedly about the new frontiers offered by the convergence of new musical styles and technology.

“We’re on the brink of a major change in the way people discover, listen to and buy their music,” says Geiger, at 34 the youngest and chattiest of the partners.

“People have always wanted a direct connection with the artist, and now there’s a way to deliver that. Plus, when the Beastie Boys or Beck tour, we want to have a whole store there at the tour site for people to access everything associated with them. The idea is to create a Beastie Boys store, in effect, like the Warner Bros. or Disney studio stores.”

Their Web site, the Ultimate Band List (https://www.ubl.com), also offers opportunities to build a database of consumers who then can be marketed to as in more established industries, where “continuity marketing” increases sales and loyalty by creating repeat buyers. The promotional/transactional site (about 200,000 CDs are offered, at an average price of about $14) was originally launched by a Caltech student; Geiger bought it about a year ago while working with producer and American Recordings owner Rick Rubin. Artist Direct now runs the site as a co-venture with Rubin.

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Geiger concedes the site isn’t yet generating a profit, although it claims to receive more than 4 million hits a week. But he has confidence in the concept, to the tune of translating the site into six languages in preparation for what he expects to be a booming and boundary-less future for the music business.

“It’s like a combination TV Guide and Yellow Pages for music on the Web,” says Geiger, who also sees potential in the site becoming supported by advertising from the labels.

But it’s Artist Direct’s record label, just now taking shape and looking to sign bands, that holds the greatest potential, according to the founders. The label, Kneeling Elephant, has traditional distribution in place via RCA Records and its parent, BMG. It’s committed to signing three acts a year.

Muller, Geiger and Elson stress that theirs will be a label in the traditional sense for the time being. But they see a change coming soon for the music industry in general, which they think Artist Direct will be well-positioned to deal with.

Labels traditionally pay for the production of a record in exchange for ownership of the master tape and the majority of profit from the recording. Bands typically have to reimburse the label for expenses incurred to make and market the record before they start earning anything.

A handful of bands, including R.E.M., has been able to negotiate deals whereby ownership of the master reverts to them after a period of several years. Geiger points to young singer Ani DiFranco and established rocker Todd Rundgren as examples of artists working outside major labels through innovative, self-controlled arrangements.

Muller says that more musicians are becoming savvy about this type of arrangement and soon will force a change in the way labels do business. When that happens, Artist Direct will already have the know-how to stay profitable. Kneeling Elephant is supposedly named for an ancient proverb that says “when an elephant kneels, the world is at peace”; think of the music business as a pachyderm.

Will Artist Direct work? The verdict is out.

“These are very creative, savvy guys. The fact is that you can’t find all your consumers in any particular place anymore in this very fragmented marketplace, so this kind of a strategy makes sense,” says Ticketmaster Chief Executive Fred Rosen.

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Jay Cooper, a longtime partner in the music practice at Manatt, Phelps & Philips, is more cautious. “Traditionally, the companies that have succeeded in the music business have specialized. It’s dangerous to try to be all things to all people,” Cooper says.

Muller himself says, “Time will tell whether our business succeeds.” But he stresses that what Artist Direct is selling is mainly “ideas and experience.” Elson stresses that taste and style will set the firm apart: “The same thing that sets an Armani suit apart.”

The desire for autonomy is a philosophy the Artist Direct partners share with their own clients.

“When Don and I started talking about forming this company, we wanted something we could call our own,” Geiger says. “We wanted a better style of life. We knew that if we kept working within a big corporation, we wouldn’t have ownership, and we’d have to live in Los Angeles or New York.”

Muller says: “The plan is to develop our business here [in L.A.] for a couple of years, then have the freedom to move ourselves and our operation outside of L.A., but probably still within California. Somewhere livable,” he adds with a laugh.