Month: September 2007

Pontiak: It’s the end of the label as we know it (but don’t worry)!

No news is good news. At least that’s what it feels like in a musical climate where every press release and blog write-up is about some way that major labels, major bands, independent labels and independent bands are losing money.
But in this sea of pessimism, there are optimists. The three brothers of Pontiak (Jennings, Lain and Van) are in the minority of people who have an upbeat take on the status of the music world.
“People still want music,” Jennings says. “It’s the face of music that is changing.”
The brothers feel that this lack of attention to the changing face of music is why big record labels have suffered so greatly.
“Record labels are crumbling, really,” Jennings said. “I talked to the Director of Marketing at Sony/BMG, and he said he’s already looking at what he’s going to do next.”
But what will take the place of the large record labels when they’re gone?
“Niches for everything, that’s what’s happening,” says Lain. And the reason that niches are possible, they explained, is an economic theory entitled The Long Tail.
When heavily simplified, The Long Tail theory describes a scenario in which a large number of things selling at a small volume will eventually bring in more money than a few things selling in large volumes.
“The old model of the label is 1-2% of the catalog making up 90% of the profit,” Jennings explained. The new model is exactly backwards of the old, with 90% of the catalog bringing in 1-2% of the profit each – if not less. Thus, mass markets are not as necessary.
“If 100,000 people in the world know about us, that’s only one tenth of a percent of the population. But it’s enough to make it profitable,” Jennings said.
“Take Will Oldham. He’s a millionaire. Bright Eyes, he’s a millionaire. Most of America doesn’t know who Bright Eyes is,” Jennings said. “He’s got a family, a motorcycle and people who know about him. He’s not going for the top.”
“It’s no longer the Rolling Stones,” said Lain.
Jennings referred it back to Pontiak’s own experience of starting their own record label Fireproof Records.
“All we need is 20,000 people. If you consider all the cost of making a CD lost, then selling a CD for $10 makes you a lot of money,” Jennings said.
The Long Tail has been especially effective considering the proliferation of the internet, as consumers all over the globe are no longer subject to mass marketing to find their music. They can cut out the middle man and buy music straight from those who make it – thus, the viability of starting your own “record label,” and yet another nail in the coffin of the large record label idea.
That optimistic theory of world access is proved in mail that Pontiak gets.
“There’s a girl in Rangoon who told us that “Eyes” is her favorite song. We’re on in some bar in Rangoon and we don’t even know it,” Jennings said. “And there’s 14 or 15 year olds in Norway who play us on their Ipods.”
Even with the amount of money to be made from the vast amount of new consumers, they’re not trying to get rich. Just like the future of music is not in large record labels, it’s not in the rockstar mentality either.
“If I were able to make money off this, I wouldn’t even know what it’s like,” Van said. Jennings agrees.
“It would be a huge shift in the way I think, cause right now 20% of the stuff I do is the stuff that pays the bills,” Jennings said.
That’s just one of the huge shifts that will be taking place in people’s minds if Pontiak is correct in their assumptions about the future of music.
“People still want to see music,” Lain said. “It’s just that the interaction is changing.”

-Stephen Carradini
Stephen@independentclauses.com

Anderson, Chris. The Long Tail: Why the Future of Business is Selling Less of More. 1st. United States: Hyperion, 2006.