Alumni Pioneers Advancing In Cyberspace

As the e-commerce landscape becomes increasingly littered with "dot-bomb" debris, it's easy to conclude that the early promise of the Internet for glowing music business success was nothing more than a fairy tale. 

CDNOW, E-Music, Riffage, Music Boulevard, Musicbank, ARTISTdirect, and Harmony Central all have felt the sting of a contracting investor field and some have even gone the way of the dinosaurs. If you believe reports from the mainstream media, the bubble has burst and all those venture capitalists and Internet pioneers have drifted back to earth, chastened and reticent to consider a single new Internet business plan.

Ask Berklee alums Gerd Leonhard '87, Derek Sivers '90, and Panos Panay '94, however, and a different picture emerges. All three have carved out niches for themselves in cyberspace. At least two are wildly successful and the other just may be by the time you finish reading this.

LicenseMusic.com(Opens in a new window)

Gerd Leonhard's experience and accomplishments in the music industry are as extensive in scope as his vision for the digital music economy. Born in 1961 in Bonn, Germany, Leonhard began his professional life as a guitarist at the early age of 12. While completing coursework in theology and the social sciences at the University of Bonn, the future entrepreneur first began exploring business perspectives involving technology and the arts. 

Upon relocating to the San Francisco Bay Area in 1985 to pursue a career in music, Leonhard won the acclaimed Quincy Jones Award, which qualified him for a full scholarship to Berklee College of Music. He was drawn to Berklee because it offered a complete immersion in music and mentoring by great teachers. After receiving his diploma with magna cum laude honors in Jazz Performance in 1987, he returned to his adopted hometown of San Francisco. 

Over the next few years, Leonhard performed across the U.S. and abroad sharing the bill with internationally acclaimed artists such as Miles Davis, the Yellowjackets, Pat Metheny and Pete Escovedo. He also founded Guitar Concepts, a video-based music instruction business, organized international music workshops, and ran both his own talent booking agency and several small recording and production companies. That was just the beginning.

Upon his return to Europe in 1992, Leonhard served as codirector of Jazz and Rock Schule located in Freiburg, Germany. He also developed and produced EuroPop Days, an ambitious, pan-European music industry event.

But it was the potential power of the ascendant Internet that kept piquing his interest. In 1997 Leonhard started his own Internet music company, Online Music Library, whose business model was the precursor of his latest venture, LicenseMusic.com, which emerged in 1999.

While most media attention has been on the consumer side of the online music revolution, the professional, business-to-business (B2B) side has been quietly thriving. The B2B focus of Licensemusic.com is not so much on buying CDs as it is on "renting" or licensing music for a variety of uses. His customers range from filmmakers and ad agencies to video game producers and corporate trainers.

"The digital music sites targeting consumers seem to have more hurdles than they have customers," says Leonhard. In contast, sites like LicenseMusic.com have fewer piracy concerns because they focus on legitimate licensing to business professionals. Agreements are signed, copyrights are protected, and music usages are paid for.

"Our customers are actually trying to avoid the inefficiencies of discs and jewel cases, not build a CD collection," says Leonhard. "We're selling to professionals who won't ever e-mail the music around a dorm floor." The company offers any professional working in the creative industries access to a huge library of high-quality and authentic music for a fraction of the cost, without any of the headaches, distribution hurdles, and budget uncertainties of CDs. LicenseMusic.com even offers an unsigned artist program where the online broker can make the music of little-known artists available to film, television, and advertising clients.

Judging from customer accolades posted on the company's web site, Leonhard has discovered an important niche in meeting business needs for high-quality music far and wide. "It's a painless experience to find good music," says one client; "user-friendly" exclaims another; and "best music selection on the net," cheers a third. 

Of LicenseMusic.com's six employees, four are musicians, including Berklee alumnus Steven Corn '84. "I think it helps greatly," says Leonhard, "to understand the music business from the inside--meaning that you actually are aware of what the creative process entails. Also, musicians tend to be more intuitive and receptive to working in this kind of environment." Thus far, Leonhard has attracted the talents of famed producer Phil Ramone and several other high-profile personalities to serve on his board of advisers. 

When asked which Berklee-acquired skills he's found most useful in his work as CEO and Net pioneer, Leonhard listed three: the compulsion to work hard at something, tenacity, and the ability to be competitive but fair. This skill set, combined with a love of music and creative instincts, is keeping LicenseMusic.com at the forefront of commercial music licensing today.

CDBaby.com(Opens in a new window)

Known by his friends as "the robot" when he attended Berklee, Derek Sivers would spend all his waking hours practicing guitar, piano, and voice. "You can say I was obsessed; I only slept four hours a night." Having had the benefit of studying with former Berklee faculty member Kimo Williams in Chicago, Sivers managed to test out of all his Harmony and Arranging classes his first semester and then graduate from the four-year Professional Music program in two and a half years. 

With his core music requirements out of the way, Sivers packed his schedule full of classes and even bought the textbooks for classes he wasn't enrolled in. He later took the final exams and tested out of those courses too. Sivers spent most of his time in the studios ("on the performer side of the glass") and in the Career Resource Center "listening to every single tape, lecture and transcript on file." He reflects, "When I arrived, my instrument was guitar. When I left, my instrument was the studio. That was one of my favorite things about Berklee. I came in a guitarist, I came out a musician."

With the help of a contact he made at BMI, Sivers landed a job straight out of Berklee in 1990 at New York's Warner Chappell Music. Towards the end of that stint he got picked up to play guitar for Ryuichi Sakamoto and toured Europe and Japan, along with Victor Bailey '80 on bass and Manu Katché (who has performed with Sting and Peter Gabriel) on drums. "I was 22, playing to 15,000-seat auditoriums, being flown around the world first class. It was amazing. I was blown away."

But despite his high-profile gig, Sivers came to realize the "sideman thing" was too constrictive for his creative instincts and outgoing personality. "I found it more exciting to be the frontman playing for 20 people than the sideman playing for 15,000." So with a few bucks in his pocket, he pulled together an act called Hit Me (described as "a cross between James Brown and the Beatles") and took the guerrilla approach to booking and promoting the band.

He learned the ropes for playing the college circuit through trial and error and eventually got the band hired by 400 schools around the country. Sivers was able to to do music full time and buy a house with profits from performances. Things were looking great; and then he hit an obstacle.

Though managing to sell a respectable 3,000 units of his CD at shows, Sivers found it difficult to break into the new online music stores that were springing up in 1995. He remembers, "I'd call up CDNOW and Music Boulevard and ask if they'd sell my disc. They'd say, 'Sure! Who's your distributor?'" It was a sobering lesson in modern music distribution. Online retailers wouldn't touch the Hit Me CD without distribution. And distributors wouldn't take it on unless sales were in the many thousands and big-radio promotion was behind it.

So Sivers decided to employ his instincts and sell his CD himself on his web site. "I got a credit card merchant account and started a little place on my web site where fans could buy my CD with a credit card online. After a year or two when sales of my CD dried up, I told some other musician friends I knew that I could sell their CDs, too." That's when CDBaby.com was born. Though intended as a "hobby" when he wasn't on tour, word spread quickly through the independent music community. Today, CDBaby membership has swelled to over 8,000 musicians with about 30 new ones signing up daily. Sivers pays out over $20,000 to musicians for CDs sold each week. So much for his hobby.

What's the appeal? Sivers answers with his own question: "If there was a CD store in town that had 150,000 people a day walking through its doors, credit card in hand, and that store sold only independent musicians' CDs--no major-label stuff--wouldn't you want to make sure your CD was there?" CDBaby does all the warehousing, fulfillment, credit card processing, and customer service. "You can just lose yourself in the studio or disappear on the road, and we take care of everything."

But CDBaby has another appeal that goes beyond its retail services. Along with its sister site CDBaby.net, Sivers's web site has become a portal into a rich, supportive community for independent musicians. Ever willing to share his hard-won wisdom with young artists, Sivers encourages his members to do the same on message boards and through member meetings around the country. This has galvanized a strong, dynamic group of mutual supporters that enriches itself as it grows.

"You can't just strap on your instrument and have the world fall into place for you," Sivers advises. "It's up to you to make everything happen. If you're not in the mood, that's okay. Just get used to saying, 'Do you want fries with that?'"

Sonicbids.com(Opens in a new window)

"There is simply no better marriage than the one between music and the Internet," says Panos Panay '94. "The possibilities this creates are enormous for musicians, consumers, and the overall industry." Panay is the Cyprus-born CEO and founder of Sonicbids.com, a newly launched service seeking to create "the world's largest online marketplace and information service for the live music industry."

I remember Panay coming to see me during my first year at Berklee to review a business proposal he was presenting to the college. He was one of the first Music Business/Management majors at the time, and he struck me as smart, soulful, and ambitious. His proposal was eventually accepted, and he organized one of the best-produced international tours for a Berklee artist that I had ever seen. That was clearly a straw blowing in the wind for the young industry careerist.

After that, he became an intern at Ted Kurland Associates, a prominent Boston-based talent agency, and soon rose to the role of agent and eventually vice president of Kurland's international division. Panay represented names such as Pat Metheny, Chick Corea, Branford Marsalis, Gary Burton, and Sonny Rollins to various international concert impresarios.

But the innovator in Panay was looking for a new outlet, and the idea for Sonicbids began to take shape. "I started Sonicbids because I felt that the Internet tidal wave was about to sweep the music industry and that the particular segment of the industry that I was involved in [being a talent agent] was about to undergo significant changes." 

Panay felt that the booking agency model was particularly ripe for change. "Let's face it," he said, "there is not much difference in what it takes to book the average club act today and what it took to book a vaudeville act in the late 1800s. I thought that the emergence of the online marketplace model [i.e. eBay] presented some interesting and fascinating opportunities in an industry like live music. Of the nearly $15 billion in annual transactions, only about 11 percent of that figure is generated by large talent agencies booking established entertainers. The other $13 billion comes from over four million musical acts that you probably never read about in Rolling Stone or saw on MTV."

Panay launched Sonicbids.com in late February 2001 and already has over 500 musicians and 70 prominent live music venues registered with its service. He also recently signed former Police guitarist Andy Summers onto his advisory board. "Six weeks ago, there was no way for these people to communicate and transact business with one another, other than the same old 'call-me-a-hundred-times, mail-me-your-press-kit, and I-may-call-back' method. We are already giving these buyers a whole new way of scouting, screening, and transacting with talent and giving these musicians new ways to make money."

Panay remains bullish on the potential of the Internet. "It presents the average musician, whether jazz, pop, classical, or anything else, with unprecedented opportunities as regards both art and commerce. For those who use it well, there is hardly a better tool out there."

Peter Spellman is the Director of the Career Development Center at Berklee and the author of The Self-Promoting Musician: Strategies for Independent Music Success (Berklee Press). More of his writings can be found at www.mbsolutions.com(Opens in a new window).