Industry 101: Travis O'Guin
While last week's sales marked Lynch's highest charting album since 1997's Loaded, not all was sweet. Strange's CEO Travis O'Guin reached out to HipHopDX to explain why retailers' reluctance to order appropriate amounts of CDs held back the comeback story. The Missouri native also reveals his business model, not only in terms of selling lots of albums, but making enduring music and tours that still involve Rap fans on a personal level. To those who remember the glory years of Rap sales, Strange Music isn't all that strange. However, this rare conversation with a man who was never formally trained for the music industry shows why every emcee would benefit from a label and executive like this in their corner - and why putting out too much product hurts your chances.
HipHopDX: I understand that you feel as though Brotha Lynch Hung's Dinner and a Movie was under-shipped, and retail buyers held back the album's first-week success?
Travis O'Guin: There is a lot of behind-the-scenes stuff when it comes to getting the right amount of records shipped. I really think that there's three different areas where there's a bit of false [information], or a little bit of blame, if you would. Retail continues to shrink the floor-space [in stores]. We all know that. In addition to that, retail is super skeptical of everybody that's coming towards them. Because the return-rate [of CDs] that larger retailers have with distributors is excessive, man. They truly are. I have a problem with what happened with [Brotha Lynch Hung's Dinner and a Movie] because of the fact that it should've been a much higher [Soundscan] number.
The reality is, the [invoice order] on that record...I could only get 12,120 pieces shipped. If you do the math, and you look at my first week scans, my full-length in digital was only 659 pieces, which was only 8% of [approximately 7,900 units sold]. So I sold an unusually high percentage of the product that got shipped. Now, when I signed Brotha Lynch Hung, and me and [Strange Music VP] Dave Weiner and all of us were discussing what the initial order should've been, we were in the area of 35,000-40,000 [units]. That's what it truly should have shipped - 35,000, minimum. With that 35,000, I would've been able to sell anywhere between 15,000 and 17,000 [units] on the first week. So imagine if I would have been able to report that 15,000-piece number or that 17,000-piece number? Fuck, the chart positions would be a lot higher and the record would be more successful, which is really what I give a shit about. Sometimes, I give a fuck about charts - matter of fact, I don't even look at Soundscan every week. It pisses me off though, because of the battles that went on between us, our distributor [Universal Fontana] and retail was uncomfortable. They wanted me to do some crazy fuckin' deals to get records shipped, which would have made it completely unprofitable. Retail doesn't want to believe that you have a genuine-and-real story or a genuine-and-real buzz. They don't want to bring in the right amount of records. I'm pissed at retail, you can tell. I'm fuckin' livid.
But, in retail's defense, I gotta say two other things: all of these record labels, especially the majors, who are putting out bullshit product, and think they’ve got a fuckin’ buzz because they sold a bunch of ringtones or whatever the case may be. I ran across one – I won’t number any names, but there’s a record, within the last nine months, that shipped 700,000 and did less than 75,000 units its first week. All of these record executives that are pounding on the doors of retail, “the buzz is big, this is the next phenom.” They push all of these records out at retail, and really, the street presence isn’t there, there’s no touring to back it up, there’s no real buzz besides the one they’ve created in their own fucking mind, while they go to their lil’ parties and shit. That’s what happens, man. You don’t sell-through, retail gets burned, and you’ve got a 40% or 60% return rate on the record. So imagine that you were a major buyer at retail, and you’ve got everybody tellin’ you why you should order X amount of records on every fuckin’ artist under the sun, whether it be major or independent, pretty soon you’re not gonna be able to pay attention to them. The only thing you can do is just go back to basic numbers.
That’s the third category that’s fucked me up on [Dinner and a Movie]. Artists who happen to use their name – or actually misuse their name, they get bench-marked. Let’s say you have a gold [certified] artist like Brotha Lynch Hung. This guy sold gold back in the day when he had Season of da Siccness and Loaded, and all these other albums that did really well. But then you go through a seven-year period where you put out records that weren’t well-promoted, or you put out “Brotha Lynch Hung Presents…” or "Brotha Lynch Hung & C-Bo," or "Brotha Lynch Hung and ABC rapper"…I look at a lot artists that have been doing this to themselves, a lot of artists I really admire and enjoy, such as Lynch, I don’t think that he realized that this was negatively affect what he would try to do on a larger scale later on, but it definitely did. You’ve got the pen-pusher dudes at the big fuckin’ retail, and they just look, “Well, his last record did 4,000 copies in the last two years, and it sold 380 copies in the first week,” – and I’m using fictitious numbers here. “I, as a retailer, will order 26% of what this record should do, so I’ll order 100 copies of the album.”
DX: It messes up the artist's batting average, so-to-speak.
Travis O’Guin: It’s all based on a mathematical-fuckin’-equation. They don’t take into account that [Brotha Lynch Hung] is getting the biggest push of his [19-year career]. They don’t take into account that we’ve done three dope-ass conceptual videos on behalf of the artist, which’ll ultimately become nine videos, which’ll be edited together to create this short film piece. They don’t understand that I had 21 pallets of [posters and flyers] in the back warehouse, where I’m killin’ the streets all over the country. I’ve got posters in the hood, posters in the suburbs – flats, flyers, displays being built, everything for retail stores that’ll let me in the door. At Strange Music we go the extra mile to create a real buzz and multiple impressions. They don’t know that I put dude on 250,000 [CD] samplers. But the thing is, how many fuckin’ times have they been lied to? That’s the problem. When [most most major labels] have a 30% return rate with [retailers], fuck that, set that aside, my return rate is less than 5%. Therefore, the reality is retail doesn’t have enough product on their shelves, because in my world, the perfect return ratio should be between 12 and 15%. Five percent means that I don’t even have enough product on shelves. We still sell CDs. Good music sells, period. It’ll only sell if you put the fuckin’ music on shelves.
DX: When I first heard about the under-shipment, I assumed the relunctance to order more units on Lynch had to do with his history for violent subject-matter, or the cover-art? Does content mean anything to retail buyers?
Travis O’Guin: I really don’t think so. These buyers aren’t listening to every album. There’s not enough time in the day – with the exception of maybe one person, who’s a buyer out there, and a dear friend of mine as well: a lady named Violet Brown [of Wherehouse Records and Transworld Entertainment]. She may very well listen to damn-near everything she buys, ‘cause that’s her. She’s not just a buyer, she’s a life-long music person. Then again, Violet isn’t going to be the type of person to censor anybody either. I think that if I delivered an album with a cover that had somebody gettin’ their head blown off, then, “Oh shit.” Put on the brakes. Outside of that, no. The [Dinner and a Movie] cover being a mask, dude, that’s nothing to half the movies they’ve been putting on these shelves.
DX: This is interesting. So given these return-rates being so instrumental to artists’ likelihood of getting product on shelves in the future, how imperative is it that fans buy at retail instead of iTunes or even mail-order like Amazon?
Travis O’Guin: I think it’s very important that we continue to sell hard, physical goods, period. There’s still demand out there.
I have a lengthy answer to that though, that really explains my point. Retail always comes to us with [statistics about] the sharp declines [in record sales]. They did it last year to new record-levels of bullshit. “CDs are too expensive. Kids aren’t doing this anymore, they’re all going digital.” You can’t blame sharp declines on strictly us, as the labels. Circuit City went out of business last year. You lost 550 stores that used to sell CDs. There’s places where people went to Circuit City to buy music, and Circuit City sold a substantial amount of music, and now they’re all gone ‘cause Circuit City went bankrupt. They didn’t go bankrupt because their CD business wasn’t strong, they went bankrupt because they were in a shitty business and Best Buy kicked their ass. CDs were no more than six aisles in a Circuit City store. You take 550 stores away that used to sell music, guess what, you’re gonna have a “sharp decline” in sales.
Another example is Tower Records. [Because Tower Records] went out of business, there’s thousands-upon-thousands of sales that will no longer happen. Tower Records didn’t even necessarily go out of business because of “we, the record labels” either. [They went out of business because they] went into the most high-rent districts, like Times Square, Sherman Oaks Galleria. What kind of a business plan is it to go into the highest-rate district possible to sell to our really low-margin product? That just doesn’t make sense. That is a recipe for disaster. You’ve got a lot of mom n’ pop stores that went away as well.
I’m a fan of music, man. I’m a 38 year-old white guy. I remember as a kid, I would go out and I would shovel snow and I would mow yards in the summertime, so I could go out and buy the newest Rap shit. I was buyin’ MC Shan and Roxanne [Shante] and Kool Keith and N.W.A. Even throughout the Master P era, I was buyin’ every neon case with a [No Limit] tank on it, feel me? But I remember putting’ some of those CDs in and being like, “Damn, there’s only one or two good songs on this entire fuckin’ album!” I remember feelin’ a lil' ripped off. Mowin’ that yard was not easy, shovelin’ a foot-and-a-half of snow here in the Midwest, that wasn’t no punk. What’s happened nowadays, as all the technology began to increase, [consumers] had a listening session in their fuckin’ bedrooms. No longer could a record label base all their sales on a single at radio, with a bunch of filler-music on the album. Now you’re busted, motherfuckers. Every kid can sample an entire album before they buy it. If there’s not good music on there, they don’t have to waste their time or their money.
Me, I took a totally different approach back in 2002. I did a whole campaign called “Fuck The Industry” or “F.T.I.” Instead of doing a second video, I went out and I took all the budget for the second video, and we shot these really crazy commercials that said,”Free The Industry. Go to www.TheRealTechN9ne.com and download Tech N9ne’s new album, Absolute Power, for free. If you like it, please go out and support the artist and buy a copy.” Dude, everybody said I was crazy. My margins went through the roof; I had 400% increases in my sales. Good music is going to sell. Eminem’s The Eminem Show is one of the most downloaded albums prior to its release in history. I haven’t looked at Soundscan in a while, but if I’m not mistaken, [it’s] up in the multi-millions of copies [sold]. The industry knew about MP3 technology, because they used it. But they still decided to give away digital masters for 15 [dollars in the form of a CD], and now they’re cryin’ about it. But they’re puttin’ out a shitty music. At the same time, iTunes was my second-largest account last year. There is definitely that trend. Are we going more towards a digital age? Sure we are. Am I little sad about it? Yeah, ‘cause I collected albums, cassettes and CDs. To see that physical piece go away, it saddens me, but I need to accept that. That’s a really long fuckin’ answer, right?
DX: Okay, so retail now sees that you sold nearly everything you shipped last week with Dinner and a Movie. Do you they respond accordingly and order proper amounts now? Or does the first week come and go?
Travis O’Guin: They are responding, and they’re responding well. Unfortunately in our business, especially Hip Hop, is all surrounding that first week. That’s what the history tells me. I could give a shit. What it gives me is, first week [sales] give me a little bit of a story and something to service the people with to give the project a little bit more buzz. Universal [the distributor] scheduled me for 3,400 pieces, first week. We did 7,900. We by their expectations by 113%. That can either make me really happy or piss me the-fuck-off. Imagine if [they] would’ve shipped the 30,000 I told you to ship. Distributors are at the mercy of retail though. Just because we put out albums doesn’t mean they have to be put in stores. I think the first week really helps, and retailers respond to that. I was at 12,120 [units shipped to retail] and now I’m sitting at just under 21,000 pieces a week later. They see, “Oh shit, this record really will perform. Oh shit, this record is doing really well.” It probably would have been hard to find [Dinner and a Movie] in one of your stores in Philadelphia.
DX: That brings me to my last question. From your Strange label staff to RBC Marketing to Juggernaut Sound, your publicity firm, you guys enlist a lot of industry veterans with wisdom and strategy. Meanwhile, a lot of the industry seems emphatic about new blood. Can you speak to that, as well as the fact that even Strange's artist roster is compromised of underdogs and artists often avoided in traditional media?
Travis O’Guin: [Tech N9ne] was an artist signed to Jimmy Jam and Terry Lewis back in 1993, and they didn’t know what to do with him. He ultimately got out of the deal. He then went over to Qwest Records with QDIII and Quincy [Jones], which was through Warner Brothers. Again, everybody didn’t know what to do with him. I met Tech back in ’99. I met a really depressed dude who was involved in a bunch of deals that never made any sense, and more importantly, never got his music out there. I asked, “What do you want to do, bro? What is it you’re really trying to do?” I wasn’t looking at it from the standpoint of trying to get into the music business, I had three other very successful businesses. One was a clothing business, which is how I met Tech. We had all the celebrities in the area wearing our clothing. I wanted to give him some business advice ‘cause I felt dude was an extraordinary talent, it took more than that. It took a lot of money to get him out of all the bullshit deals that he got himself into.
Here at Strange, we look at shit differently. We look for individuals artists who have a story to tell and interesting content. It isn’t all driven by the idea of a dumbed-down song that we’re gonna put on radio. When I got into the business, we were gonna go out and sell 50-100,000 records and then go get a big-ass deal. That was the goal. Master P did it, Cash Money [Records] did it. That’s what our mentality was. But after going and doing a couple joint ventures in order to get distribution, after that second venture we looked back like, “Oh fuck. We sold a half-million records in three-short years. Now I bet you a distributor will talk to us.” Indeed, Fontana and Universal did. That allowed us to go out there and do what we want to do. Universal sends me my check every month, you know what I’m saying? They do a great job. I don’t have to have any middle-men involved. I don’t have to play the radio game. I tried to play it, Jake. I spent $1.6 million pushing four singles off of the Absolute Power album. If I had to do it all over again, I would take every dime of that money back, tell all those dudes who took my money to fuck off, and do something totally different with the money. I would’ve been in the streets giving away samplers, I would have done a variety of different promotional ideas, and I would’ve spent the money touring. You know we tour like nobody else. I want to get with individual artists who get what it is we’ve done to build the success, who are deep, intellectual, intelligent, and have more content than “Aw man, I just slang drugs, fuck bitches and do this or do that.” I want to hear about your life.
I’ve signed nine artists in 10 years. I’ve released albums on all of them except one – because [Cognito’s Automatic] is just getting ready to come out. We’ve only released one group. Skatterman & Snug Brim is the only group that we’ve released from the label. That’s because they had this idea that they could do it a little bit better, and hey, I’m not gonna hold you up. If you’re not 100% in-tune with what we’re doing, I’ll see you later. If you’ve got a better idea, go with it. I truly wish them the best. I still run into ‘em all the time. You know how it’s normally bitter? That’s not the way it is around here.
If you ever hear a Strange Music album, and it only has one or two good songs, we fucked up. If you ever run a poll online and you ask “What’s your favorite song off of the album Everready?” and everybody picks one song, I fucked up. I want them to pick 10 different songs. That’s what happens with our albums.