Don't Bet Against Yourself

Lessons from the long tail of 90s alternative rock

The Basics

I did something yesterday that I've done most Memorial Day Sundays for the past decade: I played in a cover band. I won’t dwell on the particulars; if you want to read more about my Memorial Day band, I wrote about it in Talkhouse 9 years ago.

As my huge suburban neighborhood outside Nashville grows and shapeshifts, people come and go from the band, things evolve. Vic, a masterful keyboard player and finance professional, is the acknowledged leader. In his free time, Vic leads the most popular Journey tribute band in the Southeast. When I started playing the Memorial Day show (and occasional club sets) with Vic’s band, the set heavily favored 70s and 80s AOR classics, with a funk closer with a fantastic Michael Jackson tribute singer. Recently, Vic has gotten more and more into 90s alternative (mostly by way of his early 20s son). I used to be the Heartland Rock guy, now I’m becoming a 90s alt rock specialist. Fitting, though I happen to dislike most 90s alternative. Some of it I dig - including all this year’s selections. I played guitar and sang lead on 1979 by Smashing Pumpkins, and I contributed guitar slide guitar to One Headlight, sparkly ambience and lead guitar to High and Dry, and meat n’ potatoes rock rhythm to Interstate Love Song, in addition to all the usual 70s and 80s staples.

It was fun to go deep into 1979, learn the cryptic words and truly appreciate the beauty of the production by heroes Alan Moulder and Flood. I’ve always felt like 1979 is the song I tried for years to write, then along comes Billy Corgan with a perfect marriage of shoegaze and Daydream Nation, telling a coming of age story that could’ve been my own. I’ve never met Corgan, but we were born less than a week apart. He, Evan Dando, and I were all born the same month, March 1967 - spring of the Summer of Love - peak GenX. I hated the idea of Stone Temple Pilots and most of their music, but I had to give them Interstate Love Song. The chorus is among the best choruses R.E.M. never wrote. High and Dry is my favorite Radiohead song, full stop.¹

The Memorial Day band (Vic & the Spoils) is a true cover band in that it plays songs lots of people know. Real cover bands play popular songs. I once had a fill-in drummer complain about my feature that year, Lawyers Guns & Money, because it wasn’t popular enough for anyone to care about. I strongly disagree, but that’s the mindset. None of the 90s songs I mentioned was a literal hit record in its time (assuming a hit is a Billboard Hot 100 chart-topper); but they’re all hits now. They’re what the industry refers to as “evergreens” - gifts that keep giving. They’re songs that have out-performed most if not all of the other songs in the respective artist’s repertoire. Some numbers for reference:

1979. Spotify Streams: 752,687,273. Highest Hot 100 chart position: 12
Interstate Love Song. Spotify Streams: 478,679,070. Highest chart position: N/A
One Headlight. Spotify Streams: 362,399,530. Highest chart position: 5
High and Dry. Spotify Streams: 530,865,560. Highest chart position: 78

Point is, the top 90s alt rock tracks - the ones that have been elevated by algorithms to become the best performing tracks by 90s artists - perform very well and very consistently on streaming services. People know those songs across generations, as I witnessed last night with multiple generations singing along. 90s alt rock canon is very good business in the 2020s. I see examples of this all the time in my work as a music attorney with 90s alt rock clients. I see it, but I can’t tell you about it with any details because my work is confidential. Fortunately, I came across a great summary of the finances of a 90s alt rock hit (that actually streams) on The Bob Lefsetz Podcast in his recent interview with Dave Dederer. It’s long, but it’s worth your time if you want to understand how the money flows in the modern music business.

Dederer is the guitarist in The Presidents of the United States of America. Not the bald guy that sings lead, the other guy who isn’t the drummer. He’s a super smart, analytical guy who happens to have been a a big alternative rock band with a couple huge hits. He was deep enough into a Masters in Urban Planning that he spent his time between takes in the studio recording the debut to do classwork. He was thirty when the band hit with college degrees and professional experience. It’s clear had he not become an alternative rock star, he would have had a successful career doing something. Which he more or less did - he reinvented himself as a music tech executive, including a long stretch at Amazon developing and launching Prime Music.

He’s like me, a total geek about music rights and revenue. He loves to talk about this stuff, and he has an inspiring story to tell.

It’s a fascinating interview start to finish, detailing the band’s chaotic rise and Dederer’s post-Presidents career in digital music. The band started in 1993 as the two guitarists, Dederer and Chris Ballew, in a drummerless duo playing Seattle clubs. Love Battery drummer Jason Finn offered his services behind the kit, and the trio quickly built enough of a local following to attract the ever-present industry presence in a city that had recently become the center of the alt-rock universe. They recorded an album with Conrad Uno and released it on Uno’s independent label Pop Llama Records, whose roster included Young Fresh Fellows, The Posies, and Fastbacks. They are an authentic product of Seattle’s ultra-cred underground pop scene, its biggest commercial breakout.

A bidding war quickly broke out around the young act as the indie act’s buzz grew. They hired legendary music lawyer David Codikow and eventually concentrated on Columbia, under Don Ienner’s leadership. Ienner clearly made unusual concessions to close the deal, such as licensing the previously-released debut album for five years after the exclusive term - which ended up being just a few years long. The band has fully owned their debut album, released in 1995, since 2003. Columbia held the rights for just eight years.

It’s rare to find a successful 90s alternative rock act that owns their most popular music outright. Dederer cops to being a student of the industry, saying he read every book he could find. For example, he understood music publishing well enough to lead a conversation with his bandmates about rights and ownership. He and his bandmates negotiated a 40/30/30 split in acknowledgement that Ballew deserved a larger share because he wrote most of the material.

I’ve participated in so many conversations with clients about publishing participation among band members. The issue is that technically, whoever wrote the song owns and controls the publishing and its earnings, net of a publisher or administrator’s cut. For most collaborative groups, it feels wrong for the writer to get everything, but it also feels wrong for everyone to have equal shares. Dederer explains that in the face of resistance, he made a compelling argument. They worked it out.

Dederer explains the history of the debut album, from indie to major to self-release in 2003, a year before the launch of Apple Music. He had the sophistication to network his way into a rare direct deal with Apple, netting the band a full 70% of download revenue. The album - the two popular tracks in particular - bring in enough money to provide a sustainable income for all three band members.

Lump. Spotify Streams: 232,710,326. Highest Hot 100 Chart Position: 21 (airplay).

Like those other 90s tracks, Lump wasn’t a “hit” in the same way, say, Somebody That I Used To Know was a hit. (2 billion streams, #1 for 8 weeks). Regardless of the era, a song didn’t have to be a hit at the time to be a huge streamer. Blitzkrieg Bop has almost half a billion streams. Lump is an evergreen track that will eventually reach a billion. It’s a revenue stream that attracts a steady stream of investors looking to buy a relatively stable asset.

Lefsetz asked Dederer if there was a price they’d accept to sell their debut album.

The purchase price for a music catalogue is based on a multiple of annual revenue by a certain number of years. The Presidents are not motivated sellers; they enjoy ownership for a variety of reasons, including that streaming revenue is relatively recession-proof. Dederer describes his as a wonderful annuity, essentially a gift that keeps on giving. They’re not willing to consider a multiple under 20X, which is an aggressive valuation.

To date, the debut album has well over 500 million streams on Spotify, which would gross around $2 million on the master side (and according to Dederer’s 80/20 estimated proportion of masters over publishing, around $400,000 in publishing, which they also own and mostly control, with the exception of the drummer’s pre-existing Universal publishing deal). The album has multiple revenue streams, but primarily it comes from streaming. The only risk in holding the copyright is a major disruption in the streaming market, which seems unlikely. Any number of music funds would take that risk. In the streaming era, evergreen music copyrights such as the Lump and Peaches masters attract conservative investors without any intention to make efforts to grow the value.

The Presidents have a rare perspective on their own economics, having held their rights since the beginning of the iTunes era, through the growth of streaming. As the streaming market grows, so do their revenue streams. Dederer credits Steve Jobs as the savior of the music business for figuring out the way forward for the industry, and he similarly credits Daniel Ek for figuring out streaming. Their digital business requires relatively little investment or effort. Had they owned their record during the CD era, they’d have needed to partner with a company with the infrastructure to distribute physical products around the world. Not that the physical business is dead; but it’s small enough to be a manageable, primarily direct-to-consumer business.

The lessons of The Presidents’ lucrative cottage industry are so important for artists from the era who haven’t enjoyed ownership or transparency from their label partners. The incentives for recapturing copyrights are enormous for acts whose works generate large and consistent revenue streams. Even as labels forgive unrecouped balances and improve royalty shares, it’s always going to be better to own and control the works. In today’s business, a couple novelty songs that didn’t even crack the Top Ten can generate enough passive income to support all three members of the band.

The Presidents’ success isn’t uncommon. The only thing that’s extraordinary is an act from the era owning and controlling their work. I believe 30 years from now, artist ownership will be the norm. The most important lesson new artists navigating the business should extrapolate is you shouldn’t bet against yourself. If someone is willing to pay a bunch of money for music you haven’t yet recorded, they believe it will make enough money to show a profit. Unless their bet is laughably aggressive, bet on yourself. License for a term of years so that your reversion is assured.

I love these stories. It’s why I’m such an optimist - it can happen to just about anyone in this crazy consumption business. Build it, own it, and ride it into the sunset.

1. If you judge me for loving The Bends, I suggest taking a step back and examining your own values. How did you get like this? There are treatments for insufferable music snobbery - call me to discuss.