Small Business
Promoting music online
March 1, 2000: 9:47 a.m. ET

Internet makes marketing and distribution more cost-efficient
By The Applegate Group
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NEW YORK (CNNfn) - A funky tenement on Orchard Street on Manhattan's lower east side is home to The, a new Web company devoted to helping independent musicians distribute and promote their CDs worldwide.
    "We want to take the system and turn it upside down," said Richard Gottehrer, co-founder of The "This is a revolution."
    With his close-cropped hair and easy smile, Gottehrer doesn't look like a revolutionary. He is a respected music-industry veteran who co-founded Sire Records, produced hits for Blondie and the Go-Go's, and penned pop hits including "My Boyfriend's Back."
    He and co-founder Scott Cohen, a veteran artist manager for major-label acts, believe the Internet has created new opportunities for musicians who can't get regular record deals. Online distribution also gives consumers access to quirky music not sold in conventional music stores.
    "We open up a world of possibility for people who appreciate music to experience things they never would have experienced before we came along," said Gottehrer, who admits to being evangelical about his year-old, self-funded venture.
Marketing the members

    Many of The Orchard's 25-member staff are devoted to providing public relations and marketing assistance for members. Musicians pay a basic $40 annual membership fee, which covers the design of a Web page promoting one CD. For additional modest fees, they can add audio clips, press releases and links to other Web sites.
    The charges artists a 30 percent sales commission based on the wholesale price of the CD. The commission may be a bit more than ordinary distributors, but the founders believe the artists they serve get more than just a place to sell CDs.
    "We take these individual artists that have no exposure and make their music available," Gottehrer said. "But it's still up to the artist to market themselves."
    On a recent night, singer-songwriter Carmin Turco performed an impromptu concert in The Orchard's basement warehouse. "They're real music lovers here," said Turco, who has been writing and performing his own songs for the past 10 years. "They have been great in helping me get gigs and speaking engagements. They are great people." Turco, who owns an Internet marketing business, said his "Angel" CD has received positive reviews. He recently performed at the Mercury Lounge, a popular venue for live music in Manhattan.
    The also is promoting jazz vocalist and songwriter Lauren Kinhan, who moved to New York City in 1988 to pursue a career in music. After years of waiting tables, telemarketing and singing at weddings, she now makes a comfortable living from her music.
'Conversation with your public'

    "As an artist, the conversation you have with your public is about the most precious thing that you have," said Kinhan, who performs around the world with a group called New York Voices, as well as on her own. Her new CD, "Hardly Blinking," is a showcase for her versatile voice and inspired songs.
    Kinhan, who has written music for a program on the new Oxygen Network, said having a Web page on The is "a way for me to get my music out there."
    "The Internet and The puts you in contact with so many people," Kinhan said. "It's a great resource for people like me and people who are just beginning."
    The is signing up 400 to 500 new artists every month and now represents more than 5,000 musicians. The company is capitalizing on a booming market for CDs. Despite strong competition for entertainment dollars, shipments of full-length CDs in 1999 grew nearly 11 percent over the previous year, according to the Recording Industry Association of America. (Total recorded music sales hit $15 billion in 1999).
    "Music has an intrinsic value that touches Americans -- they love their music, and want more," Hilary Rosen, president and CEO of RIAA, said last month when the sales figures were released.
    The, which has sales offices in Stockholm, Munich, Berlin and Rome, and warehouses in Louisville, Ky., Woodland, Calif., and other locations, operates in an unconventional way. Employees are cross-trained to do each other's jobs, according to Gottehrer, who works across from Cohen at adjacent desks in a colorful, cramped office decorated with framed gold records.
    Visitors have to climb up three flights of stairs to get to the executive suite, which has a huge soundproofed door to keep out the noise from a drummer who rehearses non-stop across the hall.
Supporting the obscure

    Gottehrer and Cohen say unlike traditional record companies, which expect their artists to sell millions of records, The supports musicians no matter how obscure their music may be. (Many of The's members rely on to manufacture their CDs.) membership provides musicians with access to both traditional and major online record distributors like CDNow and (Although it's a Web site, The operates like a mail-order company, shipping CDs to customers around the world). Gottehrer said the privately held company is profitable, but declined to discuss revenue. He did say all the profits are put back into the company to fuel its growth.
    Cohen said The is on the cutting edge when it comes to promoting music in all forms.
    "Your new stereo, your mobile phone and your PalmPilot will all be connected to the Internet," Cohen said. "People will soon have all the music in the world available to them all the time, no matter where they are."
    Rather than fighting to keep digital music at bay, Cohen said The is embracing it.
    "We are encoding all our music in all kinds of digital formats," he said. "We'll provide music any way people want it."
    This approach makes sense, especially since more musicians are moving toward Internet distribution. This week, it was announced that The Black Crowes and Led Zeppelin founder Jimmy Page plan to release songs recorded at a joint concert in Los Angeles last fall exclusively via the Internet. Through, fans will be able to buy tracks for $1 each to be burned on a CD, or they can download all 19 songs in the Windows audio format for about $12
    -- Reporting: Jason Dibler
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