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Independent Label Go-Kart Records Embraces MP3s

by Derrick Story
09/25/2003

Go-Kart Records first appeared on my radar when I received a press release from Melissa Mamatos with this opening paragraph:

Instead of suing little girls and filing ridiculous lawsuits, we here at Go-Kart have decided to embrace this new MP3 technology, and have unleashed the first commercially sold MP3 CD. It contains 150 bands, 300 rare/new/previously unreleased songs, and even an interactive interface for those who decide to put it in their computers. And get this ... we even include directions on how to burn these MP3s! We feel that this format is the perfect way to promote bands, rather than take away from them.

After reading the entire release, I went over to the Go-Kart site to see what they were all about. I browsed the bands they featured and noticed that the CDs were reasonably priced -- usually $11, with lots of songs, sometimes as many as 20 per disc. I listened to a few sample MP3s they offered for download, including an excellent tune by the Buzzcocks titled "Soul on a Rock" that was ripped at 128kbps at 44.100kHz and sounded great.

The thing that struck me about Go-Kart was that they seemed interested in employing new technology as a way to survive in the highly competitive music market, not fighting against it. For example, their Go-Kart MP300 Raceway CD set coming out on Nov. 4, 2003 will feature 300 songs from 150 bands for $9.99. Not only will they offer this product on their site, but it will be available in record stores and other mainstream outlets.

Go-Kart logo

I asked for an interview with the Go-Kart CEO, Greg Ross, and we went back and forth with questions and answers over the course of a week. Here's what Greg has to say about being an independent label in an industry dominated by the majors, file sharing, the RIAA, and why Go-Kart believes they deserve your attention.

Talking with Greg Ross at Go-Kart Records in New York City

Derrick Story: Some of our readers might not be familiar with Go-Kart Records. But your independent label has been described as one "twelve most important forces in underground music" by Guitar World magazine. That's pretty cool. Tell me a little bit about this endeavor and how you built it.

Greg Ross: The label has been around about 10 years. I had always wanted to run a record company, but thought you had to either be rich, famous, or work your way up the ladder for years. When I realized that anyone could run a label, I cashed in my bar mitzvah bonds and started the fun of working seven days a week!

Derrick: For a lot of the majors, there doesn't seem to be a lot of passion for the actual music. Instead, it appears to be mostly "bottom-line" thinking. Go-Kart feels different. What's going on there?

Greg: We put out music we love and believe in. We don't believe in the cookie-cutter approach of releasing the same records over and over and we don't jump on the latest trend. We put out what we like and try to only work with people who understand our philosophy and have a similar mindset. It makes those seven-day work weeks a lot easier to deal with.

Derrick: That sounds great. So what about the bottom line? What happens when it comes time to pay the bills? Is this a business model that can survive in this industry?

Greg: The music industry, as it stands today, is in a lot of trouble. To be honest, I don't know if any of the current business models can survive. There are too many labels out there competing for a shrinking pool of consumers, and there are new forms of entertainment competing for those limited dollars. So far, we have been very lucky and we work very hard. That's the only way we survive.

O'Reilly Emerging Technology Conference.

Derrick: OK, let's switch gears for a minute. I want to talk about some of the stuff we've been reading about with file sharing and its related issues. You've mentioned to me that you don't think illegal downloads are the entire problem. But that's certainly not the news we see in the press. Could you shed some light on your opinion?

Greg: The fact is that downloading, using services such as Limewire, Kazaa and the late Napster, does not work very well. These services are frustrating and mediocre at best. Downloading is time-consuming, often has iffy results (songs skip or are incomplete), and sometimes the downloads are not even what they claim to be.

Steve Jobs, Apple's CEO, who recently launched the popular iTunes Music store, said the same thing. "It's not hard to do a better job than Kazaa." In less than six months, people have downloaded over 10,000,000 songs from iTunes, which is still only available on Macs. The success of this service proves that people will pay for music if it is delivered in an intelligent way at a fair price. If the major labels would stop wasting time suing people and spend their time building a model that is as usable as iTunes, or add more product to the iTunes catalog, they would make more money and would certainly stem the tide of people illegally downloading songs.

But I think the real problem is burning CDs. Anyone with a minimal amount of computer knowledge can burn a copy of a CD. They may not be able to download a song, and can barely check their email, but burning CDs is simple. And that's what is killing sales. Why would someone buy a CD for $18.99 (or even $12.98 at Universal's recently announced lower price) when they can burn a CD that costs them less than a quarter (and loses no quality, which is why this argument is different than the old cassette debate)?

It's as simple as this -- I know many people who have never downloaded a song, but I don't know anyone who does not have a burned copy of a CD.

So why is the RIAA going after downloaders? Well one reason is because they know they can't stop people from copying CDs. And secondly, because the major labels don't want to lose their tight-fisted control of the music industry. Since they can't control downloading, they want to eliminate it.

In the past, if a new label took off, or a new sound or group became big, the majors would simply buy it. But you can't "buy" downloading. And that's what scares the people in power. While they all admit the pie is shrinking, it's their pie, and they want all of it. Also, it's much easier to sue individuals and scare people then go after the mega-corporations who are manufacturing the burnable CDs and players. For instance, why would Sony sue themselves?

Derrick: But CD burning was going on long before file sharing. So if your assessment is correct, maybe it's the way the recording industry is conducting its business that's hurting sales. What do you think?

Greg: Initially, CD burners were very expensive, as were blank CDs. Like every new technology, the prices eventually dropped, and when every new computers that were manufactured came with a CD burner as a standard piece of equipment, and the price of a blank became less than a quarter, is when the problem really kicked in.

While I am not positive, it seems to me the those developments started at the same time as when the downloads started to gain popularity. I'll give you an anecdotal example of what I'm talking about. In 1997, we opened a record store in New York City called Soapbox Records; our offices were in the back. When the store opened, I never heard any customer talk about burning a copy of a CD for anyone or saying they downloaded a song etc. By the last year of the store, 2001, we heard it all the time, and we saw the impact every day. Instead of selling multiple copies of a new CD to a group of friends, one would buy and burn it for everyone.

Of course, the fact that the majors are releasing more mediocre music than ever before, and originality is seen as a negative, it should come as no shock that sales are down.

Also keep in mind that they are many more entertainment options now than ever before, and a lot of them are more attractive than a CD. For instance, the Tony Hawk games come with a soundtrack you can listen to when not playing the game. It's innovative ideas like that are helping drive sales away from the "music industry" and towards other forms of entertainment. That's why I feel the only way the "music industry" can survive is by embracing the new technologies.

Derrick: Let's shift the conversation a little bit again. I want to talk about things from the musician's point of view. I've heard you mention that you believe the majors control almost all of the outlets to expose the artist. What do you mean by that?

Greg: As it is now, this is true. And how can you sell records without exposure? Radio is controlled through payola (or its modern form, consultants), the print media is controlled through quid-pro-quo agreements of ads for coverage and vice versa, retail is controlled by co-op dollars (which also includes in-store play for videos), and they even buy their artists' way onto opening slots on tours. So, with few exceptions (MTV being one, but I could be wrong), the access to fans is controlled by the five major labels. But they can't control what people download. All they can try to do is control people's access to downloads, or scare them so they won't.

Derrick: So if you're a talented artist, and you don't want to deal with the majors, what are your options?

Greg: You have the independents, like Go-Kart, or you can do it yourself. Thanks to the net, doing it yourself is a lot more viable of an option than ever before. Anyone can sell their record through Amazon, and have music played on any of the many Internet radio sites. People like Ani DiFranco have had amazing success releasing their own records. You can also find enormous amount of information on the net on how to release your own records, places to promote, etc.

Derrick: Do you think Internet radio can help with this? I'm thinking back to the early days of FM radio and how it helped usher in a whole new generation of great artists. Could Internet radio turn into something like that?

Greg: I hope so, but I think there is an important difference here. Originally, FM stations were owned by someone local and programmed by someone in-house. They were not huge money makers (think WKRP for example) and were seen as tax write-offs in a lot of cases. Because of that, there was a ton of freedom at those stations, and that is why FM was able to usher in a new generation of artists.

Today, huge conglomerates own stations all over the country, and all of the programming is done centrally and influenced by consultants, who are essentially on the payrolls of the majors. It's legalized payola and has been well documented. Stations need to make money and so they play what they know will keep people listening, and not anything risky.

An Internet radio station is easy to set up, and so it should have a ton of potential. The question is how do you get people to listen to one station over another? Hopefully, Internet radio stations will be like college radio was in the 80s -- cool and challenging, before it became another tool in the major label arsenal.

I haven't seen a huge impact on sales from Internet radio, but I know iTunes has a radio tuner, so that should help. Of course, once Internet radio starts to have an impact, the majors will come running with money to buy the playlists. Some Internet radio stations are starting to ask for labels to by banner ads in return for spins, so in essence this has already begun.

Derrick: Speaking of innovative approaches, Go-Kart has come up with what I consider a breakthrough product: a commercially sold and professionally packaged MP3 CD with some great bands. Tell me how this idea came about.

MP300

Greg: Appropriately enough, the idea came about during an online conversation with David, our tech guru and marketing guy. We were discussing compilations when he suggested that we release an MP3-only compilation. I was concerned about quality, because like most people I had heard terrible-sounding MP3s. He assured me that if we did that at 192kpbs the sound would be as good as a CD. I knew that there would be some resistance from people if we didn't make this amazing. So we did the math and figured that would could fit about 150 MP3s on a disc. I decided to make it a two-CD set so we could have 300 songs form 150 bands. I wanted to make sure that even the people who would have usually been resistant to something like this (especially the people at retail) would have no choice but to go along.

Derrick: And now that you're close to release date, does it look like they're going to go along?

Greg: Overall the response has been very favorable, but we have had to educate everyone and that takes time. Some chains aren't sure whether to put in with the music or software section, which is absurd. We have had to continually explain that it will not play on a traditional CD player, but that the kids today will know how to use MP3s, etc. We definitely have a generation gap here between those who know how to use MP3s and those who don't get it.

I think the people at retail are excited for anything that will bring people in to the stores.

Derrick: What kind of feedback have you received from the bands who are participating?

Greg: Most everyone has been really excited and thinks it's a great idea. One person emailed us and said we should win a Nobel Prize for this. He may be pushing it, slightly.

Derrick: So how do you envision people using this format? I mean, the first thing I'm going to do is put it on my iPod, my laptop, and back up a copy to a FireWire hard drive. As the head of the label, how do you feel about that?

Greg: Well I hope the first thing you do is check out the neat interface we designed for the MP300. You can use your web browser to play all of the songs, and when you do you can see the band's bio, links to the band's or label's web site, and a picture of their latest record cover. After that, I am thrilled you care enough to back it up and put it on your iPod. My hope is of course you hear some bands you really like and then go and buy their albums or go see them live.

Derrick: I know this is a little "what if" kind of exercise, but could you give me your optimistic scenario, and a more gloomy one, for the next five years of the music business?

Greg: Optimistically, after we win the Nobel Prize and collect the million dollars that go with it, Go-Kart will continue to release records we believe in and continue to push the envelope both artistically and technologically. A more gloomy prediction is that I will be in the same terrible office I am now and still struggling.

As for the industry -- there has to be a paradigm shift as to how the music industry works. The problems with downloading and copying masters are going to grow, and soon other industries will suffer. The music industry is only the first place that this fight is being waged, but it won't be the last.

As the compression software gets better and bandwidth increases, the movie industry will have a battle on their hands, as well. Right now, only the biggest tech geeks are downloading movies. But in a short time that will be the next big thing. It's the same problem -- why pay money to watch dreck like Gigli when you can download it for free? If the movie companies would stop releasing mindless, plotless movies, then people will go and see them. But just like the music industry, they continue to fight back by raising prices to keep their profits growing, and the public suffers for their lack of foresight and vision.

Hopefully, other industries that have taken their customers for granted (sports teams beware) will learn their lesson now and change before it's too late. For the RIAA and the rest of the "music industry" it's do-or-die time.

Hopefully, the massive technological growth we have seen in the past few years will help to level the playing field as had been thought years back when the net was still young.

My gloomy (and unfortunate more realistic prediction) is that little will change.

Derrick: Well, it seems to me that we're seeing some real change like from labels such as Go-Kart. So I'm going to take the last word here and say that this interview and your label has been a breath of fresh air. Best of luck to you.

Greg: My pleasure, and thanks.

Derrick Story is the author of The Photoshop CS4 Companion for Photographers, The Digital Photography Companion, and Digital Photography Hacks, and coauthor of iPhoto: The Missing Manual, with David Pogue. You can follow him on Twitter or visit www.thedigitalstory.com.


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