A Conversation with Allen Kovac – HuffPost 4.11.14

Mike Ragogna: Hi Allen. How you doing?

Allen Kovac: I’m good, how are you?

MR: I’m pretty well, thank you. Thanks for the interview, this should be very interesting.

AK: Oh, well, you don’t know that yet.

MR: [laughs] Oh, I’m pretty sure. So I met you years ago. You represented the Bee Gees at one point, am I right?

AK: Yes.

MR: Anyway, how have you been all these years?

AK: I’ve been great! You know, I have a lot of fun because I’ve always been independent. I’ve never had a job.

MR: Well, one would say independent, yes, but you’ve never had a job? Really?

AK: I’ve always owned my own company since college.

MR: You’ve put a lot of your life into the music business.

AK: It’s a lot of fun to make records, and we get to put them out around the world simultaneously in a world where that doesn’t happen much. It’s usually “prove it in your market and then we’ll see if we can get it out internationally.”

MR: So your approach with Eleven Seven is to look at it globally, right from the beginning, right?

AK: Yes.

MR: So how does Eleven Seven function as a unit?

AK: I guess I’ll give you an example. Some bands on the label we manage, some bands we don’t. So, if we find an act, we want to make sure that that manager understands that it’s a global platform and that it’s a different model than they’re used to. If you’re a successful manager in the United States or Europe or Australia, you have been conditioned over at least 20 years, if not 30, on quarterly billing, proving your market and charts. Now, it’s a global new media world. It’s digital, and it’s about analytics. I started seeing over the last 24 months that the majors are starting to get into that. We’ve been operating that way since the mid 90s. I had a joint venture with DDB Needham and Strategic Research, and the way we always operated – way back when you knew me with the Bee Gees – was to figure out through data who their audience was and how to communicate with them. And that’s how we came up with the One Night Only campaigns globally.

I’ll give you an example; we manage Papa Roach and Five Finger Death Punch. Five Finger was on Prospect Park, an indie, and they had three gold records in a row but only sold around 30,000 ex-North America. Not a very good ratio. And Papa Roach was on Interscope and Universal. In the case of both those artists, we explained to them that if we go simultaneous and global and we do the appropriate setup, we could easily do the business we’re doing in the United States. Both bands are now selling as many tickets in Europe as they can sell here, if not more. I was out to dinner last night with the guy who owns Prospect Park, Jeff Kwatinetz, and he was shocked that Five Finger is going to do 6,500 people in London, when they can only do that in a handful of places here in the United States. They were selling only 500 to 1,000 seats before we started this process that I’ve described.

Another example is an unknown band, like our new signing called Nothing More. Danny Wimmer is one of their managers. He’s a festival promoter and has been a manager over the years. I say to him, “I’ll sign your band and release it simultaneously around the world, and I’ll give you three singles. I’ll do exactly what I did with Papa Roach and Five Finger. We’ll do a promo tour, festivals, put tickets up for your own tour and then we’ll drop the album. And I can work with people around the world that I have a credit card with who know that if I say we’re going to do a promo tour, it happens. If I say we’re going to play festivals, the festivals happen. If I say we’re going to put tickets up – between my tour marketing department, my touring department, and the people here who work at the label – we’re able to use the data of the ticket sellers and Spotifys or Pandoras and be able to find and communicate with the audience on a global basis. So, one thing I’ll do is I’ll send you the 4 pages of quotes on Nothing More, and you’ll see that they’re from around the world.

Major labels – and even for that matter the independent labels, other than a few, like Epitaph, Martin Mills’ Beggar’s Group – don’t release globally, and if they do, they don’t release with any kind of campaign. So there aren’t promo tours; they don’t have people in the field. They just put the bands on tour and distribute the records behind the tour. That’s the model. The major labels will put out Beyoncé globally and simultaneously, or a band like fun. for Atlantic, or the Foo Fighters for RCA. But they would not take an unknown band or bands that aren’t the top 15 percent of what they’re doing and go global and simultaneous. So, what we’ve done is we’ve created a label where we can do that, and we can do it with our management clients or with others.

What caused us to move in that direction was the inability to work globally with our artists as managers, and I made a decision about six years ago that we would control our own destiny. We’re not going to rely on major labels’ politics by different territories, quarterly billing and charts. We were going to develop careers, and now we’ve got eOne, who has a band called Pop Evil that’s had a couple of number one rock singles, and they’re on our label internationally. Prospect Park released Five Finger with us internationally, and now they want to do more. So we’re starting to get a reputation for making deals that allow an artist to have a global footprint, as opposed to a deal that just gets the records out here in the United States and Canada.

MR: Right. This is something that’s not far away from your prior philosophy of your management of acts and your bigger plans, like rebooting the acts that you had. You knew that there was a global market that you had to pay attention to. So this has tied into your philosophy and your work ethic for the longest time, hasn’t it?

AK: Yeah. The first act that I ever broke globally was Richard Marx, and I had to do that around the international A&R of EMI. They had rejected the first album even though we sold six million records in the U.S. On the second record, I just did the promo with a guy named Bob Zimmerman who was still head of Capitol at the time, but Jim Fifield agreed with me that it’s a global marketplace and that music should transcend borders, so he sent me on a promo tour with Zimmerman – without the artist – to play the album and set it up internationally. I met everyone internationally through that record, and that was 1989.

MR: I guess this is a good time to ask this. What advice do you have for new artists?

AK: My advice for any artist, including a new artist, is that if you want to cut through the clutter, it’s all about quality of content. It’s not just whether or not you have a hit song; you have to have a hit album. And it’s not just whether or not you have a hit album. You have to have a creative eye and an image, and it’s not just having that image but telling that story through a video. And then it’s not just the video and the image and the music, but it’s also about your performance live. And you’ve got to compete. Especially in today’s world you have to compete, because anyone can make a CD. Anyone can make content, and the only thing that cuts through the clutter is quality. I was on a panel recently with a bunch of very successful managers, and they said you can’t sell records anymore, and I said, well, let’s say there’s this lady who made an album called Jagged Little Pill and it sold 25 million, and now here we are, a couple of decades later, and some other lady named Adele has sold 25 million records. So, it’s quality of content. Her voice is great. The other one’s voice was great. The lyrics are great, the structure was great, the melody was great. They performed it. It worked. That’s called patronage. It’s been going on since classical music. So I really believe that, and that’s what we tell our artists. If they’re willing to do all those things and compete, they can sell records. You know, Buckcherry made a great record for us. We sold a million and a half. They got rid of the producer. They never worked with him again, and the last record sold only 50,000. It’s just a function of what’s your standard, and are you able to compete objectively with whatever else is out there?

MR: What does Eleven Seven put into helping to foster the personal connection between the artist and the fan/listener?

AK: I think it cuts both ways. I think it’s too general to say that the personal relationship over social media is what creates that bond. We have some artists that don’t do very much in that area. We have a digital department that’s much bigger than most record companies’. Everything from creating the content (we have people on the West and East coasts doing this) to dealing with the social side and all the way back again to dealing with the whole global digital/social side. Essentially, if you’ve got an artist that created such an experience with their music that it moves the dial, then it means less what they say online. They don’t have to say much because the imagination takes over. Other artists need to say a lot because they’re not saying enough on their albums. The lifestyle may have to take over. I guess what I’m saying is that not every artist has that same turnkey engagement tool. Some do it in much different ways than others, but you’re right. Ultimately, it takes that personal engagement with the consumer or fan, and that can be done in many different ways. That can be done with a song or artwork or t-shirt or a live performance. Sometimes, if an artist knows how to play on a stage that isn’t a club, they’re not always looking down at the first 12 rows of an audience. They’re looking up to the rafters, left and right, and looking in the center and back and making everyone feel like they’ve engaged with them. Some artists don’t know how to do any more than play a club. So it’s all a function of trying to learn. I’ve found that artists that are always learning and competing tend to do much better than artists that know everything.

MR: You know I’ve never heard it articulated like that. Thank you for that, sir. But you mentioned something before that leads to another question about assets. There are traditional assets that record companies have always been interested in, which are the recorded music, publishing to whatever degree, and exclusivity when it comes to television performances, etcetera. They own the rights to whatever during the term of and according to the specifics of the contract. But now we’re a few years where 360 deals are offered as sort of like, “So, you want a record deal? You’re gonna have to do this 360, kid.” As a successful manager for so many years, I’m imagining you also had to protect the assets of an artist beyond what the record label desired.

AK: I don’t understand how a lawyer, business manager and a manager make 360 deals with a record company. That is probably one of the most ridiculous models I’ve ever seen in my career. I don’t think that Mötley Crüe or The Eagles or any act that had success would have been very happy with all the work they did, and then having to share that revenue with some guy who’s getting eight figures in an executive office. It’s a very hard job being an artist and touring and doing publicity and sound checks and doing a great job for the fans, and then trying to get sleep just so you can get to the next gig and do it all over again. To have to share that revenue with a company that owns the copyright is just abysmal, and I hold the lawyers accountable more than anyone else. They’re all on the plantation of the labels, and most managers are, too. They still believe that the labels make it all work, when it’s really the artists and the songs. I’ve never believed that it was the label. I always believed that it was my artists and their ability to compete, and the label was lucky enough to have them. And I think behind closed doors, any of the top executives realize that. So, how the industry, accountants, lawyers and managers allow this stuff is one of the most mind-boggling things I’ve encountered in the music business.

MR: My last music business job was when the 360 deal began to get popular. I was like, “Oh my God, what are we doing?” To me, it’s got all the respect of a carhood signing.

AK: Let’s think about this for a second. Music’s not selling what it used to. People still have offices on Madison Avenue and in Rockefeller Center. Music’s not selling what it used to, but people are making eight figure salaries. We’re really back in a time and place where a hit record is gold, not double platinum or 20 million or 15 million. There were only 13 records that sold over a million records last year. Why haven’t they changed their model so that they can hire more people? Why do they keep giving themselves salaries and real estate? They’re putting all the money in the wrong places. And that’s why the independent market share has grown so big.

MR: Nice. May I then ask, having talked about it like this, what does Eleven Seven offer? What’s your model?

AK: We offer artists deals on publishing and records. We don’t get engaged in merchandising and touring. We guarantee them three singles and a simultaneous global release. We make our deals a lot cheaper than the majors, but we take that money that we’re not spending on advances and acquiring 360 rights, and we spend it on three singles guaranteed, not one and out. We spend it on international marketing and promos, and we end up with artists that have 30-40 buckets as opposed to one or two. So our artists tend to be in much better shape touring live, merchandising-wise and album-wise.

MR: Well, would it be too candid to ask you, or for you to answer, actually, what acts have you been associated with that you saw grow tremendously because of your interacting with them?

AK: I can make this really simple for you. We’ve never had an act do better after us. In over 35 years, there’s never been an act at one of my companies that was able to replicate what we did for them.

MR: Beautiful. What is your goal for Eleven Seven?

AK: My goal was initially to have a really solid North American label. My goal last year was to have a solid global label. And next year, it’s to work with other labels to give them a global footprint. That’s what we’re doing with EOne and Prospect Park and several other labels we’re talking to right now. Look, you’ve known about me long enough that you know I don’t have to do this. It’s the moving of the industry to the right model that creates an ecosystem for musicians and artists, as opposed to the charts and bonuses.

MR: Allen, you feel like you’re still a pioneer after all these years, huh?

AK: Well, listen, the artists changed the way artists got paid, instead of getting paid their advances with pipelines. I showed artists that they could get paid by liquidating the pipelines and getting a real advance. I mean, look at what labels are doing today. It’s a joke! I have constantly challenged labels to change their models and constantly challenged promoters to promote again, and they are. Promoters are starting to realize that the artists that bring in most of their billing aren’t going away. So, to sit down and be able to manage a band like Mötley Crüe and say, “Let’s do a final tour and a contract” so that we are not a part of this ridiculous flogging of farewell tours and selling out 72 shows with Live Nation; it’s a lot of fun. It’s just as much fun as getting masters back for artists when someone isn’t upholding their end of a contract. So, for me, the business has always been about, you know, what the other guys’ shoes look like. And what shoes I’m in, and how I show that to an artist so that they can sit down and make a decision that’s best for them. So, really, as a manager or as a label owner, I’ve just always been the CEO of some corporation that I had no shares in. I could get fired anytime if they didn’t feel that I wasn’t bringing in enough revenue. But only in the music business are you not judged on what you’re building, revenue-wise or globally. You’re judged on how close of a buddy you are. So I’ve never really been friends with my artists. I’ve been their CEO, and they hire me and fire me at their whim, and that keeps you on your toes. And sometimes you do a great job and they don’t even care. They’d prefer to be in this thing called the music business, which is “we’re all friends until we are trying to get more business or until you stop being the gravy train.”

MR: Where do you think the music business is heading? I’m not asking for a crystal ball prediction so much as a common-sense projection. Where do you think it’s heading?

AK: I think it’s clear that the momentum is with digital and streaming and live. And I think we’re back to where we were in the ’60s when there was a new technology called FM. The major labels had pretty much exhausted doo-wop and country, and they just weren’t doing as well as they could have , and what happened was that FM brought about that whole 60s rock thing that caused independent promoters and independent labels to work together. We’re pretty much like-minded and we’re of the same age. They built great companies like Island, A&M , Motown, Bill Graham Presents, Delsener and Zuckerman, and all these guys got together and developed acts. There’s that global independence again for record companies and promoters, where they’re developing acts together like they did in the 60s and 70s. That’s been gone for a while with consolidation of record companies and promoters. I think the future is going to be scaling down to a number that works for the streamers, and working not to get the buck this minute but to build careers with promoters. And if that happens, which it has with my company, and is duplicated by multiple other companies, I think we’re going to see a very healthy music business. And everyone’s sort of forced into it now. The Stones are 70. Mötley’s going away. I don’t know if Tina Turner will do another round. I don’t know if Cher will. But they’re sooner or later not going to be here. So, you know, time usually helps create change, and I think it’s time for the major labels to realize that digital means you can’t hold the indies at bay, and I think it’s time for promoters to see very clearly that they need to develop new global brands that can fill their venues. That seems to be happening, and it’s great to see promoters willing to say, “Let us go out there and develop this band with you.” It used to be, “Go have a hit and we’ll give you a lot of money.” Really, really fresh change. It’s fresh change to be working with companies like Pandora and Spotify who are sharing their analytics. I wish Google and Apple did. They’ll probably have to sooner or later. But, you know, the bottom line is that there are a lot of companies that have taken the power of where the revenues are and understand that either it’s a healthy music ecosystem or they’re going to be relying on porn. I think people like music too much to just rely on porn to keep their engines going.

MR: What’s great is that you used to come to label meetings with reams of giant printouts – it was like you had every penny in front of you.

AK: Ultimately, isn’t that what record companies are supposed to do? You know, I had an artist’s career, and like I said, they wanted me to be their CEO. I needed to know that stuff, and I really take my job into consideration every day. I’m very grateful that I have that job, so I try to do it with a very, very high standard.