Studios Fight Back

May 1, 2003 12:00 PM, BY MAUREEN DRONEY

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The music industry is founded on dreams, magic and, sometimes, a hefty dose of illusion. For artists, engineers, producers — and studios — the maxim “You're only as good as your latest hit” often holds true. Because of that, in the competitive and image-conscious world of recording studios, it's difficult to get people to talk honestly, on the record, about the realities of their business. For this story, however, several of them did.

Many — maybe most — studios weren't founded on traditional business principles and they have never been hugely profitable. From the rise of independent studios in the 1960s and '70s, through the downturn of 1979, the go-go '80s, an early 1990s recession and the boom years of late '90s hip hop and pop, studios have had their ups and downs. It's often remarked that rates charged by top recording facilities hit their peak sometime in the '70s, while the expense of salaries, real estate and, above all, equipment have increased — along with inflation — exponentially. So, no, a recording studio has never been a great place to make a lot of money, and after the grim economics of the past two years, there are few who aren't aware of that fact. With budgets slashed and home studios the norm, there's less business to go around. Many facilities have closed their doors and many more are for sale — with few takers.

Still, the question, “Is it the end for commercial recording studios?” brought an emphatic “No!” from a surprising number of veteran players. They're cutting costs, making deals, taking salary cuts, working harder and making tough decisions.

KEEPING PERSPECTIVE

Larrabee Studios, with seven rooms in three locations, is Los Angeles' largest recording operation, as well as one of its most successful. Owner Kevin Mills has maintained for some time that, examined in the context of the economy as a whole, the recent deluge of press about the music industry downturn is somewhat exaggerated. Citing a February 10 article from Business Week, Mills comments, “It's [got] a fascinating statistic chart of retail music sales. In 2002, there was a downturn of 8.5 percent from 2001. But book sales were also down, as well as theme park attendance, advertising revenues, baseball — we could go on and on. Even at 2002's declined level, 20 percent more CDs were sold than in 1998, back before CD burning, downloading, MP3 and all the woes of the labels.

“What that means to me,” he continues, “is perspective. The late 1990s were boom years for the economy in general. Now we're in a recession, with unemployment at a nine-year high. Retail sales are down overall, and there's a giant restructuring going on. The music industry is essentially owned by five companies. At least two of the companies — AOL Time Warner and Vivendi Universal — are in financial difficulty, not because of their music divisions but because of the rest of their companies. And Sony is affected by the terrible Japanese economy, where the stock market just hit a 20-year low.”

Mills points to the massive sales of rapper 50 Cent's debut release, along with Eminem's recent multi-Platinum CD, as examples that music retailing is far from dead. “The demographic most likely to download music for free is males 16 to 20,” he notes. “That's also the demographic that's bought 12 million Eminem CDs, a good measure in any year! There's a plethora of fresh, young talent selling multi-Platinum, whether it be Avril Lavigne, Pink, Michelle Branch or Norah Jones. And look at how the older generation is selling: Santana, O Brother, Elvis, The Beatles and Paul McCartney.”

While Mills sees promise in the music industry, he admits that the recording side of it is in for a rough ride. “Certainly, the studio business was overbuilt,” he contends. “In recent times, money was cheap; it was boom times, like the stock market. A lot of people thought all they had to do was buy an SSL and some speakers and it would be, ‘Roll up the Brink's truck.’ There were a lot of new operations that were not all that well-thought-out in terms of a business plan.

“The reality is, if you run a large-format-console studio, you've got to be able to offer more at a better value every year. It's no different from Macy's! The competition is constant, and you have to constantly refine your business and the price.”

LOCATION, LOCATION, LOCATION

Prime location — in musician-rich Marin County, Calif. — has helped keep The Plant in Sausalito going for almost 30 years. But a great location, and even a star-studded clientele with chart-topping albums, doesn't guarantee that a studio will make money. “A lot of people have called me in the last year to ask if it's true that The Plant is closing,” admits owner Arne Frager. “I suppose the reason is that we've had three lousy years. It's been very difficult, but we've just completed a new financial arrangement that allows us to strengthen and expand the business. So we're very much alive.”

Although Frager acknowledges the benefits of his unique location, he stresses other reasons for The Plant's endurance. “One of the things I think has helped,” he offers, “is that for the whole 30 years of the studio's existence, it's focused on one niche: making pop music. We don't do audio for commercials or voice-overs or mixing for films. Albums are all that we do.”

Given that, Frager has still followed a diversity route by adding a surround mix studio and a 24/96 mastering suite. In addition, courting independent label work, Frager has begun offering recording packages. “I just put together, for a band,” he says, “the studio, three houseboats in Sausalito and a caterer. We made it so economical that they were able to fly here from Boulder [Colo.] to do the album.

“Another important thing we've done is reduced our overhead by nearly half in the last four years,” he adds, “basically by raising funds to pay off our debt and lower our monthly nut. And finally, there's the factor that we've consistently turned out major albums by major artists. We make sure everyone is aware of that. I travel to L.A. frequently to meet managers and people at record companies to look for projects. We have a 30-year reputation, the improvements, the reduction of debt and the fact that I'm aggressively out there publicizing us.”

MAKING IT WORK

Another top-tier facility that's endured recent rocky times is Nashville's Emerald Entertainment, which has emerged from several turbulent years of expansion followed by a Chapter 11 reorganization. “Obviously, it was a huge event for us,” says Emerald studio division VP Scott Phillips. “But we've come out of it revitalized, with an SSL 9K in our marquee mix room, something that every one of our clients was asking for. Since it's gone in, we're booked in there 25 to 28 days a month.”

Owner Andrew Kautz is candid about Emerald's tribulations. “Our primary customers were going through consolidation,” he states. “Looking ahead, we realized that we needed to have price strata for our services. The only way to do that was to expand. We didn't have room to do that, so we had to purchase other facilities.”

Ironically, one of the opportunities for expansion was the Chapter 11 filing of the venerable Masterfonics. During negotiations, the studio leasing business was rocked by the Terminal Marketing scandal. Financing dried up, and with a deal based on the assumption of credit terms no longer available, Emerald was forced into Chapter 11. There, under the protection of the court, it was able to obtain more favorable financing.

Kautz is proud that Emerald emerged “paying everyone 100 cents on the dollar. Our goal was not to use the court system to get out of our debt, but to organize it so that we could afford to pay for it. It was a very tough time for us, but it forced us to figure out better ways to do things.

“A big part of our culture was having the newest, latest gadget,” Kautz adds. “But when you stop and ask how the purchases translate into revenue, you unfortunately don't get to buy a whole lot of gadgets. You have to really put a value on positioning and on the public relations that you can get out of a purchase. In the music industry, business and finance have been bad words. We like to think of it all as creative, but it is a business.”

Business in Nashville may have been difficult lately, but it's been even more so in New York. In recent years, many studios have closed, and since 9/11, things have been tougher still. Yet several facilities have hung on and even upgraded, including the five-room Sound on Sound Recording.

“It's not really a secret,” comments owner David Amlen, who is also president of SPARS (Society of Professional Audio Recording Services). “If your clients are busy and they're loyal to you, you're going to have work. The trick is, how do you find those clients and how do you keep them happy? That's an individual thing — different for everyone. But you also have to be smart about your costs and about having the right people working for you.”

One tack Amlen has taken is to make Sound on Sound's rooms more mix-friendly. “We already have something that few New York studios do,” he relates. “An 800-square-foot recording space, with three booths, for tracking. We observed that mixing budgets are more stable, so we invested a lot into that area, especially with our custom monitors. We wanted to provide the kind of listening environment that people can't get at home.”

Amlen remains optimistic about the overall future of the music industry: “Bad news sells; we all know that. But are we really any different than any other business? Revenues are down everywhere. They've been going up for 20 years in the music business. Now we're living in a reality where everyone has to work harder.

“Thanks largely to the motion picture association lobbies, Congress has started to go to bat to help on piracy issues. The MPAA and the RIAA are starting to work together, which can only help the music industry recover. If you look for them, there are things happening that are going to bear fruit.”

DIVERSIFY OR DIE

Old-timers remember that back in the day, studios often worked 24/7, taking whatever business came in the door: everything from big bands and rock 'n' roll, to jingles, song demos, the cantor from the local synagogue and, what in Nashville were politely called, “custom records.” The modern, more sophisticated equivalent is a facility that generates income from multiple media sources.

Although the “Diversify or die” slogan is a familiar one, past attempts to implement the concept have often failed. Sometimes, rock 'n' roll and jingle-making just don't cohabitate peacefully. But in recent years, the record, film and advertising industries have developed much more symbiotic relationships. The diversity model is one that many studios are now successfully embracing, including, in Dallas, the three-room Luminous Sound Studios.

Owned by composer/producer Paul Loomis, Luminous has just installed the first SSL 9000 J Series console between Los Angeles and Nashville. The facility is a commercial recording studio open to a wide variety of clients; it also serves as home base for Loomis' music production company. “As a composer,” he says, “I do work for advertising, feature films and television, as well as the recording industry. Our studios also do outside sessions — often long-term album projects — for recording artists.”

The plan from the beginning was to encompass a variety of clients, working in various stages of a project, on either analog or digital media. The overall design, created by studio bau:ton, was intended to appeal to both corporate customers and local musicians. The large, two-story Studio A, which has developed a rep as a good drum room, also holds up to 35 musicians, facilitating scoring work. Studio B has a control room and monitoring that mirrors Studio A's, making it easy for clients to switch between rooms; Studio C is a Pro Tools suite.

Besides multitasking rooms, Luminous has a multitasking staff: Chief engineer Hal Fitzgerald is also a musician, producer and sound designer. “We cover everything,” he comments. “We're experienced in mix-to-picture and sound design; we've even done ADR looping sessions when actors are here in town.”

One of the few opportunities provided by the current down economy has been rock-bottom interest rates, a factor that influenced Loomis' console investment. “We were able to make a very sound purchase, a very good deal,” he reasons. “The price we negotiated and the interest rate we got from our banker lowered our payment to half of what it would have been a year previously.

“It may seem like a contrarian point of view in this economy, but to ensure our survival, we've continued to invest in the company. We're competitive with facilities in the major recording centers, and everything else, like food and lodging, is less expensive here. Also, Texas has a music producers' tax exemption. Any music product produced in the state is 100 percent sales tax-exempt.”

FOCUS ON THE BASICS

In a niche marketing world, finding your slot is key. Dusty Wakeman, owner of Mad Dog Studios in Burbank, Calif., also caters to a broad clientele. “We have a new motto: ‘World-class recording at working-class rates.’ We don't offer gold faucets and marble countertops, but if you want to get work done in a comfortable and efficient environment, then we're your place.”

Wakeman, a producer and bassist himself, often keeps Mad Dog's smaller analog/digital Studio B busy with his own projects. Being in the game also puts Wakeman in regular touch with other producers and engineers. Many of them find their way to Mad Dog, where they work on Studio A's vintage Neve, or in the third room, a soundstage popular for “everyone-in-the-same-room” style of recording, which, to gain flexibility, has recently added an iso booth.

“One of the things that helps us a lot,” Wakeman comments, “is that we've been doing more with the production company side of the business: signing lots of acts to production deals, developing and shopping them or putting them out as indie records. That's my main focus these days. For example, I've got a record doing well called Feel. It's on Curb Records, but it started out as a production deal.”

In a concession to the economy, when his most recent studio manager left, Wakeman chose not to replace him, instead taking over the day-to-day operations himself. “I actually like doing it,” he remarks with some surprise. “Being a producer, engineer and musician, I'm in a good position to know what clients need. With rates down, it makes more sense to the bottom line. I'm working hard and putting in a lot of hours. But we've got great clients, and I've discovered that I really enjoy taking care of people.”

On the other side of the hill, in Hollywood, the now 40-year-old Sunset Sound keeps attracting a hip, Grammy-winning clientele.

For Sunset, repeat business is the name of the game. The complex, with its custom vintage Neve and API desks, numbers among its clients many of its own alumni: engineers and producers who started as Sunset staffers. General manager Craig Hubler cites maintenance overseen by chief techs Mick Higgins and Wren Rider, as one major reason for that. “Between Sunset Sound and [sister facility] Sunset Sound Factory, we have three full-time maintenance people. The people who started here, and also other clients, sometimes go to other places — trying the less-expensive route. Often, they come back and tell me they're astonished at the lack of maintenance they find out there.”

Hubler also points out that, although most clients use Pro Tools, Sunset's analog machines remain busy. “We're one of the few studios in town with 2-inch analog machines that are still real workhorses. That's because we do so much tracking. They'll run the 24-track simultaneously to have a choice, or they'll record analog, then dump to Pro Tools. Or, they'll archive on analog.

“Of course,” he continues, “maintenance is the highest overhead cost — for salaries, and for the spare parts, especially for the older equipment. It's a big expense running a studio. A lot of folks are trying to run operations with a $30-grand-a-month console payment. How can they do that? Here, it's always been the owner's mantra that we grow based on income. We don't have console payments and we own the property. That makes us able to offer reasonable rates and to be fair. When our regular clients need consideration because of budget limitations, we work with them. You can't just take; you have to give back also.”

Larry Cummins, owner of CanAm Studios in Tarzana, Calif., also mentions the importance of developing long-term relationships by accommodating budgets. “You have to do the extra things,” he states. “For a few clients who live close to the studio, I charge a 12-hour lockout but give them a 14-hour day, so they can go home, have dinner with their families and come back to work. I'm also finding it works to give someone an overall package price, without being so concerned with the number of days. The key to that is having both main rooms and Pro Tools suites so people can move between rooms. I'm also doing things like a budget price for an EP, hoping it will turn into a better-paying album, or a reduced rate for a friend who owns a label, because I know he'll come back when he can and help me out.

“The main thing is rate consideration, being budget-conscious. It also helps to make the studio work harmoniously for both hip hop clients and pop and rock. Another thing I'm seeing is some engineers and producers who have been around for a while saying, ‘Pro Tools in a house is fine for overdubs, but let's track and mix in a real studio.’ They want to track real analog instruments, and they also want the extra accoutrements they don't have at home: a runner, someone to answer the phone, an FTP site so we can send out their mixes full-format .AIFF.

“Some of my rates are what they should be, and some of them aren't. Some labels are willing to jump through hoops for you and get you payment in advance, and some of them aren't. Obviously, I'm wheeling and dealing.”

AND IN CONCLUSION

We've got no magic wands, no knights in shining armor, no hard and fast solutions, just some insights, ideas and, hopefully, inspirations, along with a parting thought from Larrabee's Mills: “There are changes in our industry and there are always going to be new challenges, new threats, new competition. But what other business doesn't have the same issues? There is no industry today that's immune to economic and technological changes. It's Darwinian evolution: You have to adapt.”


Maureen Droney is Mix's Los Angeles editor.

Author Maureen Droney shares more ways studios are flourishing in today's economy.






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