How to make it in the new music industry: The long slow ascent of electronic

When Scott Hansen finally quit his day job to pursue music full-time, he wasn't some 20-something bartender in LA or New York. Nor was he some young shit-kicker living couch-to-couch, waiting for his "big break."
No, Hansen's life was far more... responsible.
He was a software developer and designer in his early thirties living in the Bay Area, quietly honing his craft for the better part of ten years. And while little about Hansen's ascent to stardom is traditional, and none of it


would make for a very interesting rock movie, his career path might be the template for the next generation of aspiring musicians looking to scrape together a living from the wreckage of the new music economy.
Recording under the name Tycho, Hansen crafts intricate, slow-building electronic epics with no lyrics, freeform structures, and downtempo speeds -- not exactly the cornerstones of popular music at any point in the past century. Nor does he have the calculated charisma or ostentatious persona of the world's biggest pop stars. Though tall and still youthfully handsome in his late thirties, the stage presence of Hansen and the rest of his touring band is sometimes so subdued they look like they're fixing dishwashers, not making music.
And yet Hansen regularly plays to sold out crowds around the world and sells or streams enough of his music to make a decent living. This runs counter to the narrative that unless you're one of the hallowed few who write disposable pop hits that play well to Middle American Clear Channel listeners, music is no way to pay the bills. His career arc is not the story of a man who profited by sacrificing his art to the trends of the day. It's the story of how an artist, with enough time, pressure, patience, and business acumen, can build a sustainable career while staying true to a vision. It's still almost impossibly difficult to accomplish and requires a massive amount of serendipity. Then again, you could say the same thing about building a successful startup.

"A risky small business."

“Obviously we’re surviving. Some of us have health insurance, some of us don’t, we basically all live in the same places, no one’s renting private jets. Come to your own conclusions.” - Ed Droste, singer of indie rock band Grizzly Bear When you think of the lifestyle of famous rock and roll bands, you might picture something out of the movie "Almost Famous" -- Expensive hotel rooms stocked with writhing half-naked women and drugs that cover the entire pharmaceutical spectrum.
But being in a rock band today, even one as critically adored and beloved by fans as Grizzly Bear, is more like starting a "risky small business," as Nitsuh Abebe put it in his essential New York Magazine story, "Grizzly Bear Members Are Indie-Rock Royalty, But What Does That Buy Them in 2012?"
But unlike the startup world, where a kid who looks like Mark Zuckerberg and talks a good game can raise millions in one meeting, record labels have never been that generous with their cash advances -- and are even less generous today. As for the rare advances bands do receive, the artists are often expected to pay them back in full, in some cases regardless of whether they made enough money to recoup the loan. Techdirt has a frightening tale of how a band that sold 1 million albums could still owe a record label $500,000. By comparison, starting a venture-backed tech company is a cake walk.
Not that this is anything new. While there was less handwringing over low royalty payments in the 90s than in today's streaming culture, which pays artists one fraction of a penny at a time, musicians like ex-Smashing Pumpkins drummer Jimmy Chamberlin say that creators have always come out short. The only difference between now and then is that the music industry of the 90s was artificially boosted by exorbitant CD prices. There was simply more money to go around.
“I just think when money’s swollen like that, there’s this ‘high tide rises all boats’ type of mentality,” Chamberlin says.
What will never change is that artists produce something of value that consumers want. Yes, there's less revenue creation than we've seen in past decades but there's still money coming in, through advertisements, paid subscriptions, and digital downloads. So why is it so hard to get that cash into the hands of the people actually creating the thing of value?
This is where the story of Hansen, workmanlike and unassuming, gets interesting.

The rise of the artist middle class

Born in Sacramento in the mid-1970s, Hansen's journey to music stardom didn't start by picking up a guitar in a music shop or plinking around on his parents' piano -- It began because he liked to fix things.

"[My friend] came across a broken drum machine and a sequencer," Hansen said. "He knew I messed with soldering and stuff like that, and he gave it to me and I couldn't get it to work. So I took it to this music store, traded it in, and got some new stuff."

The "new stuff" turned out include a Roland MC303 sequencer, a machine that allows real-time improvisation of repeating electronic sounds or "loops." Hansen's background was in software development and design, but he found that his approach toward writing code was not so different from his approach toward making music. Both music and programming are "a series of technical hurdles punctuated by moments of creative inspiration," Hansen says. "It's about solving a series of problems. And one of those problems is creating compelling content."

Over the next decade while living in the Bay Area, Hansen worked a variety of technical gigs: Making user interfaces for Adobe, doing time at an Enterprise Risk Management startup, and even helping get some of the first mobile applications off the ground in the early 2000s. But in his free time, he continued to pursue his two great passions: graphic design and music.

"I was always working toward the point that I could merge the two things. It just took a while before I became comfortable and disciplined enough where they were both reaching the same level."

That moment came in 2011, when Hansen signed a deal with the independent electronic label Ghostly International. Up until then, Hansen was satisfied treating music as just another freelance gig.

"Hey what do I need this label for?" he thought. "We're up and running and self-sufficient."

This calls to mind what Pomplamoose singer Jack Conte describes as "the emerging creative class."

"We’re moving out of the dichotomy of ‘rich and famous’ and ‘starving artists,'" says Conte, who is also the founder of Patreon, a marketplace with $17 million in venture funding that allows musicians, comic book artists, and other creators to sell their work directly to fans. "[The dichotomy] still exists, but there’s this whole new middle class — sustainable, successful, small business artists.”

And with the rise of direct distribution channels like Patreon, Bandcamp, and Gumroad, why should this middle class rely on vampiric record labels?

"One of the stupidest things I've done in my career."

Despite the rise of alternative distribution and payment platforms, the music industry isn't yet at a point where labels are obsolete. With a surplus of content at their disposal, they have the leverage to strike attractive deals with YouTube or Spotify that most lone artists cannot. (Multi-channel networks like INDMUSIC often offer similar advantages to artists, but it's still early days in that market).

And so in 2011 Hansen leaped into the unknown, striking a deal with Ghostly to release Tycho's third album. Titled "Dive," it's a collection of airy, ambient electronic sounds that drew comparisons to Boards of Canada's landmark masterpiece "Geogaddi." It reached number 22 on Billboard's Dance/Electronic charts and was named the 3rd best electronic album of the year by Popmatters. Not to take anything away from the quality of the album, but aligning with a respected label in the independent electronic community that could offer marketing and distribution assistance undoubtedly helped raise "Dive"'s profile.

But how does an artist know when it's time to seek out a record deal, as opposed to trudging along in that middle class -- completely independent but limited in resources?

"It's always hard to figure out," Hansen says. "You get to a point where you feel like you have this momentum, and therefore you have this power where you can dictate things." In other words, the perfect time to sign with a label is the moment you no longer need one. That strategy has borne out with higher-profile acts like Macklemore and Ryan Lewis who, after building a huge audience organically on YouTube, signed a distribution deal with Warner Music Group. Crucially, the duo retained the rights to their music. As I've written before, it was a triumph of business savvy as much as digital democracy.
By the time the Tycho team joined Ghostly, they may not have had the viral success of Macklemore, but they had something just as important: self-sufficiency. Hansen, as accomplished a graphic designer as he is a musician, handled the video production and artwork associated with live shows himself. He's also a seasoned technician who understands the nuts and bolts of his equipment and is savvy at promoting his work on social media.
"Understanding and mastering your tools is a big part of getting anywhere with any kind of creative thing you want to do," Hansen says. The days of lackadaisical rock stars, sitting around in a haze of smoke and whiskey vapors while a team of roadies tunes and sets up their instruments, is a luxury modern musicians can no longer afford.
The one area where Hansen felt he was lacking, however, was business acumen. And that, he says, led to some of the biggest mistakes of his career.

"I didn't act on the business side of things accordingly," Hansen says. "I thought of it as a side project -- make a few bucks, always have a day job. That came back to bite me."

Because Hansen wasn't making considerable profits on his music yet, he didn't understand that with the wrong record deal he might potentially miss out on financial windfalls.

"When there's no money involved, a deal sounds great," Hansen says. "Who cares what 50 percent of a thousand bucks is?"

But the biggest thing he regrets, and this has become a recurring theme in talking to musicians on the other side of a record deal, is giving up the rights to the master recordings -- meaning the first recording of a song and all copies made thereafter.

"I gave up the masters because I didn't understand what I was doing," Hansen says. "I didn't even know what publishing was. I didn't know what masters were. I blindly signed on the dotted line. It was the one of the stupidest things I've done in my career."

"Nothing against Ghostly," he's quick to add. It's very common in record deals for the label to retain rights to the masters. Hansen also admits that had he known more about mastering he may have still signed the same deal. That said, it still eats at him. "It feels weird not to own your music."
So to be a successful artist free of regrets in the modern music economy, does it require learning how to take apart instruments? Putting together compelling visual material? And getting an MBA for good measure? Not necessarily. But Hansen advises that if there's a component of your art or business that you don't understand, you need to find someone you trust who does.

"If you're not technically-inclined, you're at the mercy of other people," Hansen says. "Find friends. Come to a label deal with some kind of leverage."

Again, Hansen feels no ill will toward Ghostly -- he's simply learned that this is a business, and the only way to have control over one's financial destiny is to demand it. Early on in the partnership, he noticed that his management team, without whom Hansen would suffocate in an avalanche of confusing contracts, were not being fairly compensated in his mind for their work.

"You have to say, 'Wait a second: Who's doing what now, and who's actually putting the time in here, and who's being compensated justly?"

Fortunately, and to Ghostly's credit, Hansen and his management team were able to "modify some things" to better accommodate everybody's interests. But not every label is as small and flexible as Ghostly. And particularly with major labels offering artists less and less, despite demanding the same onerous guarantees from artists, musicians can't afford to assume they won't be screwed over.

Getting paid

Even in 2014, a label deal can still give an artist a huge boost in exposure through relationships with radio stations, tech platforms like YouTube, and concert venues.

But with so few people paying actual money for music anymore, and revenue from streaming services trickling in by fractions of pennies, can even significantly popular bands make a living wage? Is the exposure offered by a label even worth it?

At $0.006 a play on Spotify, the difference between a thousand plays and a million plays is under $6,000. The artist is only likely to see about half of that, which is then divided by how many bandmates there are. And pity the poor souls who accepted a cash advance from the label to cover recording and touring costs -- otherwise they may not see a dime of royalties until everything borrowed is paid back.

I'm sure Tycho's label deal is not as burdensome as some of the agreements struck by majors in the 1990s, cheating artists like R&B star Toni Braxton out of millions. But as we know from countless blog posts written by musicians griping about royalties, the revenue picture can still be pretty bleak -- particularly for artists like Tycho who are not household names.

Again, this held true even before iTunes and streaming turned the music industry on its head. The Dismemberment Plan's Travis Morrison, who fronted one of the most critically-acclaimed bands of indie rock's first wave, told me that during his most lucrative year with the band he only made $23,000. He was 30 years old.

"I was broke," Morrison says. "I was mad broke when we broke up."

Hansen won't reveal specific revenue numbers, though it's worth noting that he hasn't gone back to a day job since 2011. Instead, he give me a rough breakdown of how he and his band make money.

The largest chunk, unsurprisingly, comes from touring.

"A lot of bands think of [touring] as a promotional tool," he says. "That's an old way to look at it." Why tour to promote an album when nobody buys albums anymore? Instead, he says, bands should focus on making a profit on the road -- forget about the "Almost Famous"-style drug parties in lavish hotels. "That's how everyone gets paid these days," Hansen says, though being on the road with enough frequency to turn a significant profit can be slog. "With wheels on the ground 200 days a year? You can't do that every year."

The second biggest revenue source for Tycho -- and this is unlikely to hold true for most bands -- are the sales of physical objects like vinyl records, T-shirts, and prints.

"We're an anomaly because we have the built-in graphic design and collector audience. So we still have people who want the physical object, something attached to the ideas."

Running closely behind physical sales is digital revenue from downloads or streaming.

"For all the controversy lately [surrounding streaming royalties], we at least have done great," Hansen says. He attributes part of this to the fact that Team Tycho, filled with jacks-of-all-trades, can run a relatively lean operation with fewer mouths to feed.

The final and, for now, least significant revenue stream comes from publishing and synchronization rights. This is a departure from earlier days of indie rock, when a band like Modest Mouse or Postal Service could pull in big sums of cash by allowing their songs in commercials. Hansen says that gold rush is a thing of the past.

"The days are over when it was like a quarter million dollar Hummer ad." Instead, a car company that wants to use a Tycho song is more likely to commission a cheaper artist to capture that "Tycho vibe," Hansen says. (It's also possible the commercial market is worse for a band like Tycho because they lack instantly recognizable lyrical hooks).

In any case, the Tycho sound machine, propped up by the sale of unique physical goods, a live show where careful attention is paid to video and imagery, and -- let's be real -- the fact that many people adore their music, has become a profitable and sustainable endeavor. It may still be a "risky small business," but the risks are finally paying off.

Is the model repeatable?

Tycho isn't the only artist that's found a way to squeeze a few stray dollars from the flatlining modern music industry, and not every band can or should follow Tycho's precise path. Most of us are lucky enough to find one thing we're both good at and passionate about. In music, graphic design, and technology, Hansen has found three.

Still, there are some broad lessons musicians can take away from Tycho's success:

Do as much as you can yourself. Or, delegate tasks to people you trust in your inner circle. Whether it's recording, artwork, promotion, or lighting, self-sufficiency gives artists more control over their destiny while lowering the number of stakeholders expecting to get paid. Most of all, this "one-stop-shop" mentality puts artists in a strong negotiating position when it comes time to sign a label deal.

"You can say, 'I'm already doing this,'" Hansen says. "'I'm already building this brand. And I want to have a lot of control over this thing.' So it's more of a partnership [with the label]."

Give people something of value other than your music. Vinyl collector's items, posters, and T-shirts that are cool enough to show off regardless of their association with your music not only drive sales -- they make fans feel like part of an experience encompassing more than just music. The digital age has brought with it an overabundance of media, stored in the cloud and thus at a distance from our hard drives and CD racks. That's turned music into more and more of a commodity, and so giving people a way to express their fandom beyond hitting "play" on Spotify is crucial.

Make the live show memorable. This has always been true, but the Internet offers so many rich media experiences that can be consumed at home that it's more important than ever to make the live show a unique event. This can be accomplished through multimedia and visual accoutrements that are interesting enough to stand on their own (like at Tycho shows) and by building a sense of community within your fanbase by talking to listeners on social media or in emails.

Understand the business. Or if you don't, find someone you trust who does. Even record labels with the best intentions have a business to run and are not going to give artists anything unless they demand it. Every case is different, but don't be so ready to sign away rights to your art just because a label asks for it.

"A label deal that made sense five years ago probably doesn't make sense now," Hansen says. "The roles have shifted so much that you're not getting the same thing that you were for having traded your intellectual property away."

But don't get too greedy with fans. It's okay and even advisable to behave like a cutthroat capitalist with labels, but not with fans. If someone uploads one of your videos to YouTube without permission, it's usually not in the fan's nor the artist's best interest to have it taken down. Out of all of Hansen's attempts to build momentum on social media, the most effective promotion is carried out by fans' themselves.

"The big thing that works best is out of our control -- YouTube videos, people just posting songs that got a lot of plays."

Finally, be patient. "The arc of how this all came together is 14 years," Hansen says. "I can look back, and look at all these points and say, 'That went well and that was a good move,' but it was just slowly trying things that didn't work and trying things that did."

That may not be the most reassuring advice. But like in so many other industries, from media to technology, there's no longer a clear playbook for success. Making in it music has always been hard, but at least there used to be a career path -- learn your instruments, write great songs, tour constantly, and, if you're a lucky, a label comes knocking with a big advance for recording and the opportunity to get on the radio. Now the work of a musician is closer to that of an entrepreneur. Try something. Fail. Iterate. Get lucky. And of course, be a little nuts.

"You gotta keep this vision in your head of what you want this future to look like, but not to have any logical reason to believe it's going to come true."