Steve Knopper’s writing career started at age 13 when he wrote a piece for his high school paper about his fellow students’ taste in music. Since then, Knopper has written or edited several books and been featured in countless publications across the country, eventually becoming a contributing editor at Rolling Stone magazine. He also served as the on-air tech correspondent for Fox News Chicago and appeared as an expert source on several other TV and radio shows. Knopper’s most recent book “Appetite for Self Destruction: The Spectacular Crash of the Record Industry in the Digital Age,” recounts the epic story of the precipitous rise and fall of the recording industry over the past three decades.
I recently caught up with Steve to discuss his new book, current industry news and some of the past and present players in the music business.
R&G: Can you give me a synopsis of “Appetite for Self-Destruction?”
Steve: It is a narrative that begins with the adoption of the CD in the early ‘80s and tells the story of digital music in the record industry. It has the whole arc from the CD boom of the ‘80s and ‘90s, when everybody was replacing their record collections, all the way up to Napster, iTunes, the crash, the shrinking of the major record labels in recent years and, finally, a chapter on the future.
R&G: You interviewed over 230 people. Who were the most fascinating interviews?
Steve: Off the top of my head, one really fascinating guy that many people have reacted positively to is James T. Russell. He is the physicist who in the ‘60s first patented the technology that lead to the CD, the digital, optical and mechanical aspects of it. He did not invent the CD, but he was the one who discovered it and was later found in court to be the primary owner of the royalties. Unfortunately, by the early ‘90s when the courts made that decision, his lab, which owned the patents, had long since sold them to two or three other people and they were the ones that ended up profiting. Russell never saw a dime from them. He was definitely a fascinating guy.
R&G: Who on the digital side did you find interesting?
Steve: Al Smith was a senior vice president at Sony. He was an old-school guy who had a reputation from the Napster era of completely stonewalling all new technology. They weren’t so much his decisions, but more the way Tommy Mottola, Don Ienner and Michele Anthony ran the label. I wound up doing three or four different interviews with him. He was a really funny, intense, bigger-than-life, bemused kind of character, one of those old-school, humorous record guys that would just go, ‘Ay ay ay ay’ and yell at people. A lot of people talked about him, and I really enjoyed hearing the stories. I was nervous about using them, but I called him back and said, ‘You know Al, people are saying this, this and this, that you did all these things.’ He’d say, ‘Yeah, I guess that’s pretty much true.’ He was great.
R&G: When you were doing your research for the Napster and iTunes chapters of the book, I imagine a lot of people who are still with the labels wouldn’t go on record.
Steve: Yeah, absolutely. There were a lot of people who wouldn’t talk to me. There were some key figures from the Napster and iTunes era that I really would love to have talked to, like Alain Levy, David Munns and some of the current people from Universal like Zach Horowitz. Even though I interviewed some of them over the years at Rolling Stone and was able to quote them from those interviews, for the purposes of this book, I wasn’t able to get a lot of people like that.
R&G: One of the things I found interesting was former Warner vice president Jeff Gold and Marc Geiger discovering music chat rooms in ’93. We’re talking 16 years ago that those guys were aware of social networking in the music space. That blew me away. Gold’s boss, Mo Ostin told him, ‘Don’t forget your real job.’
Steve: Yeah. That’s what Ostin said. 1993 was an interesting period because the Internet was just popping up for most people in the world. Obviously, hi-tech people, military people and scientists already knew about it, but for most of us, it was this weird new novelty.
R&G: That’s something you point out so well, that the labels had some smart minds in place. I assumed that there were no technology players at the labels, but there were, in fact, many people who understood technology.
Steve: That was one of the great revelations of this book. Each label had a high-tech staff working on these very issues. Doug Morris in that Wired interview said, ‘We didn’t have any technologists.’ That turned out to be untrue. He had lots of technologists on his staff. It’s just that the top executives at Universal weren’t really paying attention to them. I think to an extent that was true at all the labels. There would be marketing meetings where radio, retail and MTV Video would take up 90% of the time and then the last ten minutes some executive would say, ‘Hey, how about this crazy new Internet thing?’ Then they’d give their five or ten minute spiel about it and say, ‘Hey, we’re going to do some MP3 stuff or some AOL chat-room stuff, OK? Alright!’ They’d pat them on the head and go away. That continued all the way up until 2004 or 2005. It is pretty extraordinary how long that sort of attitude continued at the labels.
R&G: You painted a vivid picture of Frank Creighton showing Napster to Hilary Rosen for the first time. I couldn’t imagine the feeling she felt, the end of control of music as a product. She freaked out.
Steve: Absolutely. That struck me, too. I interviewed Frank and Hilary and got that from them. First, I skipped the credit here. The first person to record that anecdote, or a similar anecdote, was Joseph Menn in “All the Rave,” which is a great book about Napster. That whole scene, with the sort of, ‘Oh my God,’ jaws dropping open, that was very, very compelling to me. That moment encapsulates everything that happened in the ten years afterwards.
R&G: When Napster was done in 2000, the labels had the opportunity to make a deal for Napster’s user base, which was 20 million plus. If the labels did agree to get in there – and we’re talking hindsight – what makes you think they wouldn’t have messed up that situation? Some people definitely would have left Napster once the labels got involved. I’m not confident the labels would have been able to do a good job managing it.
Steve: That’s a very fair point, and you’re probably right, but they should have tried. It makes more sense to try something like that than to completely stonewall it and not see the writing on the wall or what every single person in the media and within the industry was saying. They should have listened to their staffs. They had people on their staffs saying, ‘We should work with Napster.’ The challenge the labels had was that not all of the Napster people were easy to deal with. Some were and some weren’t.
R&G: John Fanning was very difficult to work with, right?
Steve: Yeah, John Fanning, Shawn Fanning’s uncle, was a real difficult guy from all accounts, from everyone I spoke to. John Hummer, from the venture capitalist firm Hummer Winblad, was an active negotiator, but he was also saying things in the cracks like, ‘We’re going to take down the labels and we’re going to attack the labels.’ I talk about some famous examples of that. These were not all nice cuddly guys who wanted to make a deal. Of course, on the other side you had some labels saying, ‘This is piracy! We can’t make a deal with pirates!’ Because of stubbornness on both sides, a deal wasn’t possible. In 20/20 hindsight, what you do is you take the Erin Yasgar on your staff and send them into the meeting along with your best negotiators, with Edgar Bronfman or Doug Morris or whoever it happened to be, and you really pay attention to them. You listen to them. You don’t sort of listen to them, pat them on the head and then go into this negotiation and say, ‘Forget about it. I’m not doing it.’
R&G: I don’t see the Live Nation and Ticketmaster merger as a good thing. What’s your opinion?
Steve: I can’t give you an objective opinion because I’m an unbiased reporter writing that story right now. Having said that, it does seem like further evidence that the concert industry is taking the balance of power away from the record industry. The opportunities Michael Rapino and Irving Azoff talk about right now have to do with things like the future of the business, secondary market revenue or what most people call scalping. If you look at the tens of millions of dollars that are being used for resold tickets on StubHub and eBay, that is an untapped source of revenue for these concert industry companies. It also brings up a lot of really interesting moral issues. Do we plunge into the ticket scalping world and if so are we going to piss off the Pearl Jams, Bruce Springsteens, Radioheads, Tom Pettys, and people who have traditionally been very opposed to scalping? How do we make both sides happy? How can we make money off this and not let just the scalpers make money off it without pissing off the artists who are 100% anti-scalping? It’s a tightrope that they’re trying to walk, and it’s difficult. Also, they’re racing against the clock a little bit because both Live Nation and Ticketmaster have really taken a beating in the stock market the last couple of months. There are signs that the business has some trouble in its future. The Pollstar data has shown – as you can see I’ve been into this lately – that the gross revenue has gone up and up and up consistently over the past 20 years. It’s doubled. It’s now a $4.9 billion business. But the actual unit sales of tickets have consistently gone down, so those numbers indicate that the concert business is attracting high-end customers. What happens when The Rolling Stones retire? What happens when Paul McCartney or Madonna retires? Suddenly you lose that high-end customer. Where’s the future of your business? There are a lot of important issues they have to hash out right now. Azoff and Rapino seem to feel that putting those two companies together will be the future of it. There will be a lot more power and ability to create these elaborate online stores and downloads with the concert tickets and stuff.
R&G: What’s your take on Irving Azoff?
Steve: Azoff fascinates me right now. He’s like a bobble-head doll. He’s been in every episode. He just gets knocked down and then pops right back up again. He tied himself to Don Henley and the Eagles early on, and he’s been incredibly shrewd. You look at all those other old-school guys from the record business, like Walter Yetnikoff, who I mention in my book, or concert promoters like Bill Graham or Barry Fay – well, Bill Graham’s dead – all the old powers of the industry like David Geffen, Clive Calder, they’re all out. All of them. They have either retired, fallen on their faces or maybe like Doug Morris are sort of riding the model down. But wherever the money is, Irving Azoff keeps popping up, and so are some of these interesting, legendary, behind-the-scenes, backroom-dealing attorneys like Allen Grubman and John Branca. They seem to pop up wherever the money is, too. So if you follow these guys, you can sort of smell where the money’s going in the record business.
To purchase a copy of “Appetite for Self Destruction: The Spectacular Crash of the Record Industry in the Digital Age” (Click Here)
ROLLO & GRADY INTERVIEW WITH BOB LEFSETZ (CLICK HERE)
ROLLO & GRADY INTERVIEW WITH CHRIS ANDERSON (CLICK HERE)
ROLLO & GRADY INTERVIEW WITH SETH GODIN (CLICK HERE)
ROLLO & GRADY INTERVIEW WITH NIC HARCOURT (CLICK HERE)
ROLLO & GRADY INTERVIEW WITH PETER ROJAS (CLICK HERE)
ROLLO & GRADY INTERVIEW WITH GERD LEONHARD (CLICK HERE)
ROLLO & GRADY INTERVIEW WITH ANTHONY VOLODKIN (CLICK HERE)
ROLLO & GRADY INTERVIEW WITH DAVE KUSEK (CLICK HERE)