Craig Kallman of Atlantic Records: Listen Closely Page 2

Like all record heads, Kallman remembers the musicians who made the first records he ever bought—in 1978, at the Musical Maze in Midtown Manhattan. Led Zeppelin, Parliament/Funkadelic, and Fleetwood Mac were among the choices. He became "the music guy" of his class at Trinity High School, at 91st Street and Columbus Avenue, and deejayed school dances. By the tender age of 17, Kallman had talked and spun his way into deejaying in New York clubs, beginning with the Mansion and working his way up to Friday and Saturday nights at the most infamous of all New York dance scenes, Danceteria. In no time, this kid with a lot of records, and the considerable advantage of growing up in New York City, had become a player. But while he rubbed shoulders with the Smiths, Depeche Mode, Africa Bambaataa, Bauhaus, and Madonna, Kallman was always therefore for the music as much as the scene.

While attending Brown University, Kallman commuted back to New York to deejay in dance rooms like Area, the Palladium, and the Tunnel. He was also a student rep for CBS Records, for $45 a week. He had originally planned to attend Harvard Business School after Brown, but the music world kept calling. Short-term employments at Factory Records and Billboard followed. Then he took a house-music demo, hired a singer, wrote lyrics in his bathroom, and created a rhythm-heavy, beat-centric single, "Join Hands," which he called an example of the "New York House Sound"—a different flavor from the Chicago House style that was then exploding across the upper Midwest. It was the first record released on his Big Beat label. After selling 5000 copies of "Join Hands" by taking it to the streets in a shopping cart, with a receipt book bought in a Duane Reade drugstore, Kallman was finally in the record business.

Kallman's second stab at making music, as producer of Craze's "The Party," was far more successful, selling more than 300,000 copies worldwide. By then, his ears and his label had come to the attention of Doug Morris, then head of Atlantic Records. Morris bought half of Kallman's fledgling company and made it part of Atlantic. A few months later, Morris bought the other half, and Kallman was on a career track at Atlantic that, by 2005, had led to his being made chairman and CEO.

Besides his development of the careers of Sean Paul, Death Cab for Cutie, James Blunt, and Gnarls Barkley, Kallman's time at Atlantic will always be remembered for the time he spent working alongside Ahmet Ertegun, the label's cofounder. Ertegun's death, following a fall backstage at New York's Beacon Theatre during a Rolling Stones concert on October 29, 2006, was a shock for all the music business, though it hit Atlantic the hardest.

"An unreal blow. I spoke to him the day he fell. On a Sunday, I just called to check in, give him an update. We've also been developing Ahmet's story for TV as a series. It was crushing because, even at 83, he was so keen, so animated, so alive, could out-party any of us. Musically, he was still on top of his game. I brought him Gnarls Barkley's "Crazy" and, after the first chorus, he said 'Smash! This is one of the biggest records Atlantic has ever signed. I'm so thrilled. Congrats.'"

"[Ahmet Ertegun was] the most wonderful. The most generous. I started 16 years ago with him, and I think he just saw a little bit of him in me, as a crazy record collector and big, big music fan. He borrowed $10,000 from his dentist, and I took my deejay money, $6000, and started a label. He had this big record collection and started a label. I had this big record collection and started a label. I don't know...we clicked, and I think he saw an opportunity to groom and teach and mentor. I took advantage, to try to glean as much as I could."

One thing fans of less disposable music hope that Kallman gleaned from Ertegun is in the area of artist development. After substandard sound and "If CDs didn't cost so much we wouldn't steal music," the most frequent complaint about today's record business concerns the lack of artist development: If you don't have a hit immediately, chances are good you'll be dropped. In other words, you get only one chance. Time was when artists were given time to grow into hits, to make mistakes, and often to become stars, both musically and in terms of selling records. Today, with labels owned by publicly traded companies, the hit-or-perish credo is scripture. The situation isn't helped by the fact that most major labels today are staffed with people who know anything about what they sell. With a collection of albums numbering over 250,000 (many in storage), Kallman is a welcome exception.

"So much of the criticism of modern music is that it sounds the same, because you're very much going to the same preset factory sounds, and the same group of mixers, the same group of engineers who have perfected the art of what sounds great on modern-day radio: understanding compression, understanding what makes a record pop. It's not necessarily crafted for simply the greatest originality and singular point of view.

"We talked about that—WMG Chairman-CEO Edgar [Bronfman], myself, and Atlantic Music Group President Julie [Greenwald]—when the company was first bought back from AOL Time Warner. We were like, 'We have to be in the artist-development business going forward.' It really had to be based on being able to take a long-term view of artist development, and not just try and fix the immediate needs of billing for a quarter.

"For me, the education has been, okay, how much of that roster can I continue to develop—hopefully, the next Randy Newman, Grateful Dead, and Pink Floyd. Let them take their time, and also have that body [of artists] on the roster that's going to be a little more immediate in their commercial appeal.

"There's also that middle ground. I'd say half-and-half, but it's almost like thirds: a third that you think, 'Maybe we gotta be in this for a longer run'; a third we think are real artist developments that are going to have long-term value; and then there's a third that's a little more about what's instant in the pop marketplace or the urban landscape and has a certain lifespan. Maybe [the last third] are not going to have a 20-year career if they're purely in the Top 40 business, unless they can keep writing huge pop smashes for 20 years. I don't know how many people...ABBA—I picked the biggest of all time—they all only had so long where they could keep coming up with pure pop records."

The issue of lifespan, that of the CD in particular, is at the core of the predicament the music business finds itself in these days. In January 2007, when Kallman and I spoke, CD sales were 15% lower than in January 2006. Piracy, or people illegally downloading music from the Internet, or buying CDs and ripping tracks for groups of friends, has become a stake poised over the heart of the business. While Atlantic's marketing and publicity muscle has so far enabled it to stave off disaster, it's clear that changes must be made, or record labels as we know them will soon no longer exist.

Kallman's answer is to replace the CD with a mix of higher-resolution DVDs and legal downloads. In the minds of those working on the higher levels of the business, finding a new format (or formats) could slay the piracy beast. Everyone in the record biz remembers, with increasingly fond nostalgia, the money shot provided by the rush to replace LPs with CDs. But in some ways, that cash stream lulled the business to sleep and allowed digital piracy to gain a foothold.

In addition, big labels are trying to think of new ways to exploit their remaining ace card: content. Kallman mentions that the Genesis catalog is about to get the full-on treatment: remastering, then reissue with a number of previously unreleased goodies. However, it's clear from talking with Kallman and others that the answers to all this have yet to fully emerge from the fog. Like everyone else at the "legacy" labels—the old main-line majors and their branches—Atlantic is trying to figure out ways to survive and even prosper in this new multiplatform, mobile, virtual digital landscape. For Kallman and his counterparts at other labels, CDs are a wildcard, in their plans one minute and out the next.

"For [CDs] to survive in any meaningful way, [there have to be improvements in] the output of the sound, the artwork, the packaging. It has to become a collector's item, the same way you bought that gatefold album because you wanted that experience. I think packaging today has to again embody that same tactile experience that you got when you bought something that was organic and paper. That physical, plastic CD—that's completely disposable and has, to me, no real place in the new world. I think that's gonna vanish and be very marginalized. The only way physical product is going to retain any semblance of value is if you make it worthwhile owning.

"There is an opportunity for that physical piece to have lots and lots of value. Buying [a CD can] unlock an online experience with an artist that you only get from buying it: extra tracks, extra video, extra interviews. So on one level, that's what I believe will allow that physical format to sustain itself. Where it bottoms out is vs people having a digital locker in the sky where they've bought everything—or they go the way of subscription, where they've got all you can eat for $4.99 a month, or $9.99, or whatever the price point is, to feel like they have the world's music library at their disposal, and portable at the same time."

A committed music lover and vinyl loyalist, Kallman shakes his head and smiles when I mention the problem of making music more important, particularly to kids. Unlike older music fans, kids, teenagers, and college students no longer stand in lines in front of record stores the day an album is released. Liner notes and cover artwork have also all gone virtual.

"I remember, when I bought that new album by Led Zeppelin or whoever it was, I had a lot of time on my hands to sit and put the record on, listen to it, look at the album, and really not do much else but read the credits and just absorb it and experience it. Maybe I read a book while I put a record on, maybe a magazine.

"Everyone is multitasking to such a degree now—the information overload, the media overload, and the noise that comes at you. Think of that same person who is a fan today. They go buy a CD and put it in, and they've got their Blackberry, their cell phone, they're at a computer, they're instant-messaging, they've got a video game screen that they can also do—all while the record is playing. They're lucky if it's getting played in their stereo. More than likely they raced out to buy that, threw it in their computer, and are listening to it through their computer speakers. They probably took the jewel case and threw it out. You're lucky if the booklet survived; probably did not survive. I do not see many people putting the booklet in a notebook. No one's doing that. There's no kid doing that. So the bottom line is, they're now experiencing it, but they also have 900 other things going on.

"I think it's conditioning. We all talk about kids growing up faster, how everything is faster. Everything is just that much more high-decibel, and there are way too many distractions that are not allowing the luxurious experience of putting you at one with the music—allowing you to be isolated in your own world. You really have to have unreal discipline to be able to close the door and shut out all the other noise to have that experience resonate in the same way. The multitasking world has made the experience less impactful for everyone, including me."

Laughing, Kallman admits that being head of a storied and, once again, prospering label brings with it the paradox of being so busy that he rarely has time to listen on his high-end gear to music he loves and wants to hear, as opposed to what he has to judge.

"I have 9000 CDs piling up. I have a whole A&R staff that's bringing me the next, newest, hottest, incredible thing. [Listening to what I want to is] a guilty pleasure. I wonder, 'Do I actually have 20 minutes to do something? Is anyone watching? Is anyone going to stop me?' Because I'm not sure if I'm allowed to do that."