Rumor Mill: Music site stuck in the garage

Garageband Records, which scouts for new music using the Internet, could be kicked into the doghouse if it doesn't come up with $10 million.

4 min read
Occasionally, the Rumor Mill is accused of harboring a journalistic strain of schadenfreude with regard to the unfortunate people and companies we cover.

Close readers of the column claim to discern a whiff of glee in the telling of grim tales. They admonish us that the layoffs, bankruptcies, betrayals, barroom brawls and tedious drama we cover are grave matters not to be snickered at.

With this in mind, we are delighted to have stumbled upon corporate misfortune we can feel genuinely sorry about: Garageband Records, formerly known as Garageband.com. The San Francisco start-up, which scouts for new music using the Internet, distinguishes itself by being one of the few ex-dot-coms whose mission Skintelligent observers routinely describe as "noble"--despite its handlers' penchant for chasing marketing concepts du jour.

The enterprise, backed by VC firm New Enterprise Associates, claims a Who's Who of music industry bigwigs, including Talking Heads' Jerry Harrison, who co-founded the company; Beatles signer Sir George Martin; and famed ambient composer Brian Eno, who sit on its advisory board. Other notables include former Netscape tech whiz Amanda Lathroum Welsh and former Washington Post rock critic Tom Zito, now the start-up's CEO.

Even as it shakes off its dot-com heritage, the company is proving that start-ups and rock bands have a lot in common when it comes to breaking an unproven act. Last week, it laid off half its staff to conserve cash and is hanging on by its fingernails as it tries to scare up new funding.

Word is that the company has commitments for $10 million in new funding, but contingent on raising another $10 million. The trouble is, you just can't get that kind of money for a song like you used to.

"The company, yes, has had a round of layoffs, but it's not closing its doors," a Garageband representative said. "It's actively pursuing financing."

Considering the recent post-apocalyptic condition of the digital music industry's morale, things could be worse for Garageband. Despite having to cut about 15 of its 30-odd workers, Skinsiders say the company has been comparatively frugal, forgoing Aeron chairs and the like, and as a result may survive the funding drought.

"NEA totally believes in the future of Garageband Records," NEA's Stewart Alsop wrote in an e-mail interview. The "company's model pays artists more, delivers customers more music that they say they want, and produces a more profitable record company. Why wouldn't you believe in the future of that! NEA is committed to its pro rata share of the financing."

Like other Internet concepts, Garageband was formed with the idea of cutting out middlemen--in this case, the circle of lawyers and accountants commonly known as the recording industry. Rather than anoint stars based on the marketing perceptions of bean counters, Garageband Records would give voice to the pent-up desires of consumers, signing recording contracts based on the popularity of musicians featured on the company's Web site.

The company distinguished itself from its "Audio Alley" neighbors south of Market Street by focusing not so much on the technology--Welsh's software algorithm for determining bands' popularity--but on the bands themselves.

The company has signed eight groups so far and is close to releasing two CDs. But Garageband Records has run into trouble thanks to distribution quagmires that characterize the established music industry, Skinformants say.

"The record business is like the mob--you have to sign deals and pay up front so you can feed the monster, and that gets you into Tower and Virgin and all those places," said one Skinformed source. "How do they get their bands into bricks-and-mortar distribution when they're running on a shoestring? Plus, sometimes when you sign with one distributor, you wind up pissing off another.

"The record biz makes the tech biz look squeaky clean."

Zito offers a different reason for the company's distribution problems:

"Fundamentally, Sept. 11 has taken a big toll on a lot of things including the record industry," Zito told the Rumor Mill. "A lot of records that were scheduled to come out in the third and fourth quarter of this year were pushed back. As a result of that, we're not going to be putting out our first record until the second quarter of next year."

Comdex 2001's space oddity
We're not going to lie and tell you we went to Comdex, because like most of the rest of the world we just plain skipped it this year. But Skinformants who did go said EDS' "2001" parody and live video cameo by visionary author and lowland gorilla savior Sir Arthur C. Clarke was worth the price of admission.

After the parody, with the Las Vegas Philharmonic playing familiar tunes from the Stanley Kubrick movie, and a video showing apes smashing PCs and sending computer keyboards heavenward, Sir Arthur commenced his remarks by admonishing EDS CEO Dick Brown, "Time Warner's going to sue you for that little ditty."

So impressive was the presentation that one of Bill Gates' minions was heard requesting a copy of the videotape for the boss. With our luck, we'll see a game of one-upsmanship in Comdex keynotes, and Gates will speak next year accompanied by fireworks, can-can dancers and a brass band. Then let's see you get a cab at Comdex. The only way I can keep doing this song and dance every week is with your rumors.