You miss 100% of the moonshots you don’t take.
Peer through the ViewMaster time machine, back to the Y2K days, back when the 2000s were still fresh, and set course for Irvine, California. You might just catch a glimpse of young Greg Katz. And there he is, herding unmanned shopping carts in a big-box store parking lot while looking after peak-hours bathroom clean-up, casually defying time itself. Did you know Greg inspired Dash Parr of Incredibles fame? Probably not. But you do know that you can’t knock the hustle. Greg has always had tons of that, even in high school, and it shows.
Since 2005, the big-hearted marching band alum has tirelessly learned the ins and outs of the music business, jumping from college radio and terrestrial broadcasting to labels, publishers, and management. Less than a year ago, Greg left his Head of A&R post at Defend Music, where he worked on songs for the likes of Death Cab for Cutie and Kanye West, to build his own business, Slowdance. It’s home to both emerging artists and power player producers like Roget Chahayed, the gifted musician behind mega-hits for acts like Travis Scott (“Sicko Mode”) and Halsey (“Bad at Love”), and he’s built it from the ground up, sans outside investment. You can’t do any of these things without a strong grasp of music freakonomics. To make music a little less freaky for you, we talked with him about all kinds of fun stuff, like failure, ugly money trees, and why A&R is really M&A (sometimes). Enjoy the read.
AWAL: So you started this wild music industry journey at Target.
Greg: Well, my first real job was at a Target in Irvine, California for about four months in high school, while I was in the marching band. Store #336 if I remember correctly. And I did everything. I pushed the carts back into the store from the parking lot. I stocked the shelves. I cleaned the bathrooms. I rang up and bagged stuff for the customers, which resulted in a terrible repetitive stress injury [Laughs]. When I worked there, the cart attendant also had to clean the bathroom. You’d be out in the parking lot and get an automated alert that the bathroom needs cleaning. You have to run into the bathroom to push a button, or the alarm would continue every five minutes: “Cart attendant! Check the bathroom!” Then while you’re cleaning the bathroom, the manager-on-duty starts calling you on the walkie talkie, like, “Hey, cart attendant, there’s no carts in the store!” It’s truly a circle of hell. If you want to do one nice thing, push your Target shopping cart back into Target when you’re done shopping. Are you getting what you needed from this interview so far?
Yeah, let’s just end this now. Perfect. Great metaphor for the music business. We hope you enjoyed this talk, brought to you by our sponsors at Target.
[Laughs] Pushing music is a lot more fun than pushing carts around. But, pushing carts around is a simple problem, whereas developing and helping some of the most talented musicians on earth is a complex challenge. Still, it’s a total blessing to do what I get to do 24/7/365. 366 during leap years. I’ve always loved music, and being around it was always a foregone conclusion. The first time I got paid to do music stuff was running the college radio station at UCLA. Then there were some paid gigs as a musician and as a DJ.
Would it be safe to say that your musical background still helps you do your job now?
I think that my ability to speak that language helps me a little. Knowing how a Pro Tools session works, knowing what the attack and cutoff knobs on a synthesizer do, knowing what a minor-9 chord is, that stuff comes in handy sometimes. That said, I’m often humbled by the songs that do succeed and the songs that don’t. No one can predict the future. If anyone could, it’d be the people at the major labels, who have 100 years of data and experience, and yet most of the singles they put out don’t become hits, and most of the artists they sign don’t become household names. So why should I think I’m great at predicting what’s going to work?
One of my clients produced what ended up becoming a humongous hit song. Originally, though, when the label reached out about a producer agreement, they said it wouldn’t be a single. But you can’t ignore the data when fans gravitate to one song and play it over and over and over again. Soon after the song came out, it became one of the artist’s most popular songs. From there it was off to the races.
A year ago you left a job at Defend to fully focus on your own management business full time, but you’ve been running independent hustles for a minute. What has getting your hands dirty taught you?
Around 2012, I had just started my own record label and I put some money into making a two-song single with a group that broke up after they finished recording, but before it was released. At the time, I felt like I had gotten stiffed, left holding the bag for a record no one would promote. But I put it out anyway, and it actually became pretty successful and continues to earn royalties now, thanks to licensing. It was one of those humbling experiences where I was wrong by 180 degrees. All things considered, though, like most labels, my failure rate with releases has been high. A lot of records don’t break even. But I’ve gotten a bit better at handicapping that kind of stuff, so most of the projects I’m involved in now do recoup, which is crucial when you’re self-employed.
In some cases – and this happens all the time for publishers – you can try to work with clients who you already know will earn, because they already are earning. Then it’s not as much a question of will they ever earn, but how long will it take to recoup if everything were to go poorly. A friend at a label once told me it’s easy to do a million-dollar deal, and it’s hard to do a $30,000 deal, because in most cases an artist capable of getting a seven-figure deal is already very successful, whereas if all that’s doable is $30,000, it means the artist hasn’t proven anything.
Lots of deals are going out just because the at-a-glance monthly listeners check out.
As the joke goes, it’s less about A&R today and more about M&A, mergers and acquisitions – meaning it’s less about artist development and more about acquiring catalogs that have a value. I’m old enough to remember the way the industry used to do that, which was to look at regional radio playlists and see what songs were popping, or to buy or license a successful release from an indie label, stuff like that. The publicly available streaming information we have just makes that process a bit different, more transparent. I do think people have become more sensitive to whether a track is popping because an audience loves it, or if it’s popping just because it’s on a bunch of playlists and it’s on a bunch of playlists because it doesn’t bother anyone. Needless to say though, some things do still happen just because someone believes in an artist, without any numbers to back it up.
The back-of-napkin math for an artist’s earnings per million streams is known. What do the streaming margins look like for producers?
For producers working with independent artists, or self-releasing artists with a distributor, they’ll often receive a percentage of the artist’s net income from the track they made. It usually shakes out to be 50-50 on the master when the artist can’t afford to pay the producer an advance fee for their work, but if there’s a ton of producers and some features, any particular producer might end up with a much smaller share. Say a million streams earns about $4200, and there’s a 10% distributor fee, so the artist receives about $3800, and there’s a 50-50 split so it’s $1900 both ways. That’s pretty common. It might be 25% to someone with a co-production credit, or 10% to someone who played a smaller role. Then there’s the publishing split, of course, which is often 50-50 between the artists and the producers, or even splits among everyone who contributed, but not always.
When you’re working on a major label project, it’s a different situation. The producer will get points, or a percentage of the retail sales of a record, but it sort of boils down to the same thing, and an advance fee on those points. To be a little reductive, one point on a song streamed a million times is 1% of $4200. Three to four points is standard. It might be a little more or a little less depending on the producer’s status, or how much of an advance the producer is paid up front — a higher fee might drive the points down and vice versa. At a glance it might feel like a ripoff for the producer compared to the 50-50 indie scenario, but on the flipside, the label is sometimes paying an advance in excess of what the producer is likely to earn in royalties, so the label and artist are absorbing the risk of the record failing and at the same time paying the producer’s bills. If a popular song becomes a global phenomenon, those points become really valuable. Look at the top-end — like an Ed Sheeran song with a billion streams — and you’ll calculate that there’s a six-figure payout for a producer with four points. As self-releasing artists become more and more popular, and they’re seen by producers as better for business than label artists, there might be some pressure for producers to get a higher royalty. Possibly.
Can you speak on how the fee range evolves over time?
A couple years ago, 9th Wonder tweeted something to the effect that he went from getting $100 a beat to $25,000 a beat in like a year. That’s basically how it goes. People see producer work as a dime a dozen because the market is so swamped with beats, but it’s really rare to be the talented person who artists enjoy spending time with, someone who’s easy to work with, who brings in amazing collaborators, who delivers world-class tracks and handles business professionally. All of that pushes the fees up pretty quickly. Way back when, producers only got a day rate, or a staff salary, and no royalties. I think it wasn’t until the 60s that producers started to get the leverage to demand one point, and it wasn’t standard, it was just something you could fight for. Now you see super-producers commanding five or even six points, or attempting to anyway. In the major label system, where the artist is getting squeezed on royalties, naturally the producer will too.
Say you get paid $10,000 to produce a track and you have two points on it, that means the track would need to generate around 119 million streams (at $4200 per million streams) to recoup that amount against your two points and start paying you royalties – again, this math is a little reductive, but it’s just to give you the general picture. Anyway, tracks almost never get that many streams, so in this scenario you’re probably getting “overpaid” in some sense against your royalties. Meanwhile, the songs that get a billion streams keep the label’s lights on and pay off the producer fees for tracks that didn’t recoup. But as you can see, the money hits every branch on its way down the ugly tree before it finally hits the producer.
Your company Slowdance Management would be an ugly branch below that. How did you balance all the risks, unknowns, probably income sources, etc. before launching?
I started my management business before I started at Defend, and it reached a point where I could have gone out on my own earlier than I actually did. I stayed at Defend because I just really enjoyed the job. I had a boss I liked and respected. I had brilliant clients. I had coworkers I loved to hang out with and work with. Plus, my boss was supportive of what I was doing as a manager, which was unique. Because my management roster was small, I was able to balance the needs of everyone. Until eventually I couldn’t and had to put my full-time focus on management.
Beyond a basic understanding of how big my management business was — publishing income, master royalty income, producer fees — and a general idea of how it might grow year over year, I didn’t do too much with projections. I can predict that there will be more big records, but I can’t predict how big, or how often. You have to be humble in front of the unknown. When I did leave Defend, I learned what I needed for the business on the fly. For the first six months, I just worked from home, from coffee shops, coworking with people. Eventually, I couldn’t ignore that I needed my own office, so I got one. I wasn’t sure I needed a day-to-day manager, then I realized I needed some help, then I realized I needed full-time help to make sure all the details of sessions and deals and payments were handled right, and that all the clients had constant attention. But I take a pretty conservative stance towards spending: Slowdance doesn’t have outside partners or outside financing. This is a company that runs on the income that it generates based on the service it provides to clients. Anything we spend has to go toward doing better work for our clients.