The Suburbs, the Replacements, Soul Asylum--Twin/Tone Records

As the founder and operator of Twin/Tone records, Paul Stark has been party to most of the vital local music business history, and so it comes as something of a surprise whenever he hears news of his company's demise. "It's not news," he says, sitting at his desk surrounded by computers, laser printers, Web servers, and modem pools. "For more than 18 months, I've been fairly open about the fact that I don't expect to be pressing any records by the end of the year."

On the contrary: To any self-respecting Minneapolis music buff, this sounds like news, indeed. Twin/Tone's story is now the stuff of alt-rock legend, how Stark, Chris Osgood, and Charlie Hallman launched the label 20 years ago, to "give ourselves a job, and support our friends who were musicians." The fact that those friends turned out to be some of the most influential artists in alt-rock is now a point of pride for anyone whose understanding of the genre extends beyond Third Eye Blind or Better than Ezra. So it ought to be a blow to hear that Twin/Tone Records Group will no longer be making records. Until you hear the rest of the story, which isn't long in coming. For Paul Stark has made his reputation by seeing the future of music in the Suicide Commandos, the Replacements, and Soul Asylum, and he's rarely stopped to look back for fear of losing sight of what's next on the horizon.

Minneapolis has long been an important wayside on the music-industry map. While the Twin/Tone nexus--including all those seminal post-punk bands that paved the way for Nirvana--is one of our proudest institutions, a big share of the retail music industry is headquartered here, as well. Together, Best Buy and Musicland represent the largest retailers of pre-recorded music on the planet, and K-Tel has been a serious behind-the-scenes mover for decades; all three companies are headquartered within two miles of each other, in the western suburbs. Oh, and a funny little man with a symbol for a name lives right down the road in Eden Prairie.

But because Twin/Tone stands in the doorway between an active local rock scene and the world of major labels that eventually feed them to the global retailers, its story embodies what's wrong with the music industry today, and what's potentially right about its future. If Paul Stark is reading his tea leaves correctly, no one will be pressing CDs in the not-too-distant future. "My vision of the future is this," he says. "We won't have physical CDs. We'll have pay-for-play."

And that explains why you can't swing a Stratocaster in Paul Stark's office without hitting a Twin/Tone monitor, server, or modem. Actually, make that a monitor, server, or modem.

If there's anything more tired than the conversation about what "alternative" means, it's the conversation about what ails the music industry. Ever since the heady days of Cobain and his apostles, people who make money by playing, recording, distributing, and selling music have been asking themselves where the party went.

From an independent label's point of view, it's a matter of simple math. "The major labels are releasing over 20,000 records a year now," says Stark. "It was only 3,000 just 5 years ago." Not only does that mean the majors are losing money hand over fist in trying to develop the Next Big Thing; they're flooding the indies out of the distribution network. According to Stark, any 7-inch record he printed in the early '80s would easily sell, because "stores were clamoring for the stuff. There wasn't enough product to fill them. Now stores have to reject 80 percent of what they're offered every month."

And most of what they're offered comes from the major labels, along with a nice little perk called "cooperative advertising." In its simplest form, that's when mega-labels like DGC and Virgin give retailers a wad of cash, ostensibly to advertise the titles they'll carry. But the money goes straight into the retailers' pockets with few strings attached. This creates an extremely inequitable system of distribution. "It's like this," says Stark. "The distributor goes to the retailer and says, 'We've got 80 records, we know you're only going to buy 20. And by the way, these 15 major-label titles come with all this advertising money, yours for free. Now, you've got five more records to choose.' Out of 60, what are our chances of getting in there?"

The most insidious aspect of this new music marketplace, as far as Stark can tell, is that this form of payola is exacerbated by a serious absence of "tastemakers"--knowledgeable, passionate, and influential people working in stores and at radio stations for the love of music, in spite of the crass greed that surrounds them. To the mercenary kids who now work this beat, one record is the same as any other, so a solid brand like Twin/Tone has no cachet with them.  

"Take Peter Jesperson as an example," says Stark, citing the name of a familiar and celebrated local tastemaker (and Twin/Tone co-conspirator) who, at one point, rose to the dubious position of manager for the 'Mats. "Coming out of high school, I don't think he had any question he was going to do something with music, and he was the manager at Oar Folk by the time he was 20. And he was a DJ at the Longhorn," the now-legendary Minneapolis bar. In other words, he was at ground zero of what turned out to be an exploding scene.

Stark points out that there were dozens of people like Jesperson in cities across the country, helping drive the early indie underground, and giving Twin/Tone entrée into record stores everywhere. "We used to deal with a 100 people like him all over the country. But that situation has changed drastically," he quickly adds. "I couldn't name 10 people like that right now." Stark thinks today's media market, overwhelmed as it is by countless other distractions, has broken down the system of credibility in the record business that was ensured by the presence of old-style audiophiles. Without good people in the marketplace (who, in this age of info-overload, we like to call "quality filters"), even an extraordinary product doesn't stand much of a chance if there isn't marketing money pushing it through.

Most important, says Stark, this shriveling of the distribution network unduly hurts indie bands, who now often stand a better chance through self-releasing their recordings. "They sell more records off the stage at their gigs than we can through our distributors," he asserts. Today, the cost of printing a CD is about $2000 for 1000 units. At that price, Twin/Tone will encourage bands to do it themselves. "With the price cut we take out of the CDs [to cover the cost of distribution, among other things], the royalty for the band is about two bucks a CD. If the band makes it themselves, they can make about six bucks a CD."

Meanwhile, on the macro-economic end of the spectrum, the biggest story has been the arrival of online CD sales among music retailers. Even as Stark and other visionaries argue that the CD (and its cousin, the DVD) is a transitional technology, the real action today is with retailing CDs at high-volume, virtual record stores. Web sites like CDnow, Music Boulevard, and Amazon are in the process of taking a huge bite out of the retail CD business, and it's no secret that brick-and-mortar competitors like Tower, Best Buy, and Musicland are taking notice. (I am the editor and producer of Request Line, an online magazine whose parent company is Musicland.)

A conservative estimate is that online CD sales will top $2 billion within 2 years, which would constitute almost 20 percent of all CD sales nationally. Just in the past month, K-Tel's stock has risen sharply thanks to a relaunched Web site that sells CDs. But even with all the hype, online retailers may quickly find themselves outdated and obsolete. What might be at stake here is nothing less than the end of the CD as we know it, as vinyl's kid brother begins his own quiet slide into the collectors' bin of history.

There's not much to look at when it comes to the physical hardware and connectivity that make up a Web site. Twin/Tone's computer room is a dark, noisy, cluttered space the size of a large office, with a couple of servers and monitors, blinking LEDs and whirring fans stacked on an iron floor-to-ceiling rack in the middle of the room. Nondescript gray cords run around the floor in orderly little bundles, not unlike what you'd see around the soundboard at a rock concert. Unlike the retail outlet, there are no life-size cardboard cut-outs of Gwen Stefani here, no face-out display racks stacked with Sting CDs.

Yet Stark has confidence in his arsenal of equipment, and he believes Twin/Tone is the first major independent label with its own Web site poised to sell music directly to fans. That confidence is borne on the back of his T-1 connection. In the language of sys-ops and Web masters, that's the equivalent of having a Ferrari in the garage, with a payload the size of a Peterbilt. The bandwidth will come in handy: Stark says he'll start selling music directly on the Web within the next six weeks.

For the immediate future, Stark plans to charge about $1.50 per song, and $10 per CD, for the highest quality download. The music, which is CD-quality, will then reside on the buyer's hard drive; the consumer can then burn the tracks onto her own, writable CD, enabling the creation of a digital mix tape. A typical download, using Liquid Audio software with a 28.8 modem, will take about 20 minutes for a 3-minute song. (A handy feature of Liquid Audio is that the song is "watermarked" with the original transaction--coded to reflect the source and the buyer--which can then be tracked wherever the song travels, "keeping honest people honest," says Stark. This mollifies artists' and publishers' concerns about digital bootlegging.)  

Eventually the marketplace might work like this: You want to listen to Hootenanny in its entirety, so you go to and start the music, paying a few pennies per song. If you don't mind commercials, you can hear it for free. This is more of a jukebox model, using the long-range "micro-cash" transaction system for music you want to hear but don't need to own.

In this set-up, Twin/Tone is once again a bit of a pioneer. The music industry as a whole has held the Internet at arm's length ever since the World Wide Web became a reality back in 1994. This $40 billion-a-year industry maintains that prerecorded music, which has already been digitally reduced to its binary equivalent thanks to the CD, is information dying to be free. As in "costs nothing." As in "click here to download."

Needless to say, the faster these technologies become a reality, the more nervous real-world retailers and distributors get about their job security. Paul Stark is an unapologetic early adopter. He's convinced that music and entertainment are headed for a strict, pay-per-play economy where there will be no need for a physical disk or cassette. It's only a matter of time, he believes, before the economy catches up to the technology. While bandwidth is a temporary concern, it might only be a few months before real-time downloads of CD-quality music become commonplace.

Many observers believe that digital downloads will replace CDs even faster than CDs replaced vinyl. But Rob Levine, music editor at Details magazine and formerly an editor at HotWired and Rolling Stone Online, remains unconvinced. "Look, you're talking about a change in format versus a change in paradigm," he says. "That's an important distinction. The latter could take a long, long time." Levine argues that digital delivery of music will never result in the extinction of the CD, for the simple reason that "people like to own stuff. It's commodity fetishism and it's so inbred in our society." He suggests that the medium, in this case, really is the message. You can't have music without the compact disc; they are inseparable and indistinct. People are no more likely to give up CDs in the age of digital delivery than they are to abandon novels in the age of interactivity.

It's this logic that gives traditional retailers a glimmer of hope against the inevitable onslaught of digital delivery. Ryan Cameron, owner of Let It Be Records, isn't too worried. "I think some of the big chain operations could get burned," he says. But Cameron says the small "mom and pops" like Let It Be will continue to do what they've always done best: respond to their customers in a personalized way that has not been (and, he believes, cannot be) effectively simulated for consumption on the Internet. "People love to come to their local record store. That just won't change." Even so, he's hedging his bets by investing in large record and CD collections and developing his own new-media strategy: online auctions for rare and collectible recordings.

To this extent, last month Let It Be began selling off vinyl from the "Pyramid Collection," consisting of some 40,000 rare rock LPs from the '60s through the '80s, many still sealed. (Currently on sale are vintage albums by Amon Duul, Tim Buckley, Captain Beefheart, Holy Modal Rounders, Iggy Pop and the Stooges, Richard Thompson, Jonathan Richman and the Modern Lovers, and dozens of others.) In alternate months, Let It Be will offer items from the "Hart's Collection," 250,000 78s from the 1930s through the 1950s, with selections ranging from Charlie Parker to Bob Wills to Tchaikovsky. Buyers examine the offerings (, register for an ID number, and submit bids over the course of a month.

This is unquestionably a niche market. Still, the real business of creating and selling new music for the masses is headed for a major revolution. And Paul Stark is poised to take advantage of it for himself and his bands. His interest is more than some abstract excitement about the possibilities of new media. It's about coupling global distribution with virtual inventory.

"We're cutting out 70 percent of our cost," he says. "Eliminating a distributor from the picture is about 40 percent. Pressing CDs, and mailing promos and all that stuff, is another 20 or 30 percent. So there's 70 percent of our cost going out the window." But will there be enough virtual business to cover the rest? "I look at it this way: I only need to do 30 percent as much business as I'm doing with CDs to make the same amount I'm making. I'll easily do that. Twin/Tone is pretty much into a U.S. market; we don't do the world market. With the Internet, we have access to the whole world." And without the financial liability of manufacturing, storing, and shipping physical inventory, the proposition seems like a no-brainer.  

So what will a diskless record label look like? Stark says he sees Twin/Tone as "a farm team" or perhaps "a college or graduate school for bands." In this way, he sees his current endeavor as a continuation of the mission he started 20 years ago: helping bands do whatever it is they want to do. And if you insist on pressing a CD, Stark says, "We'll hook you up with someone who presses CDs. If you don't know how to do it, we can certainly send you through the process. We'll help you get organized so you can sell off the stage, and get some management so you can go home with a little cash instead of spending it on beer."

Through Twin/Tone's new incarnation as a digital record label, though, Stark hopes to greatly expand his traditional role as a service provider for the indie music scene. Twin/Tone is affiliated with about 200 bands, a number that includes everyone from back-catalog artists to current Web-only clients. Right now, he's working with an active roster of about 50 groups.

And while he doesn't expect to print any new CDs himself, Stark does expect the new financial freedom will allow him to cast his net more widely, and on some level help just about any band that approaches him. "I expect to be working with 1000 bands by the end of the year, as far as the Web site goes," he says, without a note of irony. Of these, Stark says he expects to be carrying "10 or 20 bands" that will be nationally promoted by Twin/Tone, with the others receiving different listings and levels of support on the site.

One might argue that the World Wide Web makes it possible for anyone to make music and sell it directly to anyone else on the planet, without any middleman running interference. This is theoretically true in a medium where you can simultaneously connect with 3 million potential fans for the cost of a local phone call. But even in an ideal world of many-to-many publishing, this is hardly desirable.

"A world where every band had its own Web site selling directly to every music fan?" says Details' Levine. "That's not utopia, that's dystopia. We're no longer in an information economy. We're in an attention economy, where there's just too much stuff, and people want to be told what they like. And the music labels are exactly where people will go, looking for the next big thing." That's because the labels, especially small, personality-driven indies like Twin/Tone, will be doing what they've always done, plowing through demo tapes, separating the wheat from the chaff. This is the real service they perform: steering our attention for us, working as the trusted arbiters of our taste.

The coming years will be interesting, to say the least, as music becomes the newest test site for whether new technologies automatically trump old economies. And as annoying as it may be to fans who simply want access to their favorite music, regardless of how it's distributed, there exists a whole corporate complex that has always created the conditions for that to happen--and profited handsomely doing it. It's this entire economic infrastructure that's on the threshold of some very unsettled times indeed, and it remains to be seen whether the vanguard of the new age, as embodied in bold operations like Twin/Tone, will survive long enough to capitalize on new circumstances and economies.

Paul Stark takes the longest possible view, while never losing sight of the bottom line. "With the Internet, we can hit a world market for a lot less money than two or three dollars a disk," he says, repeating the cost of a raw CD like a mantra. "We're just bypassing the record stores." He pauses to consider the ramifications of what he's just said. "I feel sorry for the stores."

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