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  Industry Profile

Industry Profile: Richard Gottehrer

— By Larry LeBlanc

This week In The Hot Seat with Larry LeBlanc: Richard Gottehrer

Richard Gottehrer is the co-founder & chief creative officer of the digital distributor, The Orchard.

Gottehrer is also a prominent Bronx songwriter, record producer and the co-founder of Sire Records.

Gottehrer never planned on a music career. In 1962, after becoming the first in his family to receive a college degree (in history, from Adelphi University in Long Island), Gottehrer enrolled at the Brooklyn Law School.

However, a career in law didn’t follow.

In 1961, while at Adelphi, Gottehrer had co-founded his first record production company, and had recorded as Troy & the T-Birds.

In 1963 an impromptu writing session with Bob Feldman and Jerry Goldstein, led to the trio co-writing and co-producing the Angels’ #1 Billboard hit "My Boyfriend’s Back."

It was followed two years later by their production of the McCoys’ “Hang On Sloopy” which also reached #1 on Billboard.

As the Strangeloves, Gottehrer, Bob Feldman and Jerry Goldstein had their own string of hits, including the 1965 single "I Want Candy." The song has since charted with Bow Wow Wow in 1982, and Aaron Carter in 2000.

In 1966, Gottehrer and Seymour Stein co-founded Sire Records. Gottehrer left Sire in 1976, and produced Blondie, the Go-Go's, Joan Armatrading, the Fleshtones, Mental As Anything, Dr. Feelgood and many others.

in 1997, Gottehrer and Scott Cohen co-founded The Orchard. In 2003, The Orchard was acquired by Dimensional Associates, and it merged with the Digital Music Group in 2007.

Headquartered in New York and London, and with offices in 29 countries around the world, The Orchard licenses and globally distributes more than 1.3 million songs and 4,000 video titles through hundreds of digital stores and mobile carriers.

The Orchard has continued to outpace the digital industry substantially through key acquisitions (including TVT last year,) leading distribution alliances (including those with Vice, and Nokia) and its strategy as a value-added media services company.

Under its buyout of TVT, The Orchard assumed control of the company’s catalogue of recorded masters, artist contracts and physical record distribution infrastructure.

The addition of physical distribution from TVT may be seen as making The Orchard a more competitive company, one that can better address the needs of select record label partners in the U.S. marketplace.

In February, The Orchard negotiated a secured, revolving credit line with Palo Alto's Peninsula Bank Funding which could provide both the opportunity to continue its acquisition of assets and as a hedge against tough economic times.

On March 26th, The Orchard reported financial results for the fourth quarter and year ending Dec. 31, 2008.

Revenues were $16.2 million compared to $9.9 million for the same quarter in 2007, an increase of 64%. Net loss for the quarter was $0.3 million compared to a loss of $2.4 million in the same quarter of 2007.

For 2008 overall, revenues doubled to $57.4 million from $28.5 million in 2007. Net loss for 2008 was $2.3 million, compared with a loss of $7.6 million in 2007.

In addition to managing the digital retail relationship on the labels' behalf, The Orchard has incorporated features like online sales reporting, synch licensing databases and other analytical tools to help their clients take advantage of opportunities traditionally left to bigger companies.

In addition, The Orchard drives sales of music through its marketing and promotional campaigns; brand entertainment programs; and film, advertising, gaming and television licensing.

The Orchard also tries to place their clients on the widest possible selection of services.

For example, last year, Merlin, A2IM, Koch and others in the independent music community lambasted the indie digital deal offered by MySpace Music, arguing that it didn’t give them the same equity stake as the major labels. So they balked at the MySpace Music terms.

However, The Orchard jumped in, and signed up.

You don’t believe in the death of the music industry?

I don’t believe in the death of the industry at all. The future is a lot brighter (than what others think). What has happened is that we have seen an absolute change in the industry.

The Orchard had a very strong fourth quarter in 2008.

I am very happy about the growth of The Orchard when you think it is something that Scott Cohen (VP Europe) and I started in a basement on Orchard Street (in New York) in1997. To see it growing like this and see it in the hands of great leadership now [is great]. The day to day is run by our Greg Scholl (president & CEO) with some great people. Greg is not only a great business person but he’s a music lover.

The Orchard has no debt load. Is this a reflection of the tough economic times we are now in?

We have been fortunate in growing the way we have and to be able to have the continuity and cash flow to function and operate. We’ll continue to grow.

You launched The Orchard during a time that American investors were throwing money at dotcoms. Most of them disappeared.

We never got the money. That was both good and bad. It was bad because we didn’t enrich ourselves but if we had (outside investor financing) the company would have been gone. It wouldn’t have been able to survive the dotcom crash. The demand by investors to repay the money would have probably been overwhelming. A lot of great ideas went awry in that period because of that.

The Orchard grew organically for a few years.

It grew organically until 2003 when it was taken on by Dimensional Associates (a private equity firm and a subsidiary of JDS Capital Management) and Greg was put in as CEO. From there, it continued to grow partially organically but also through sound management. Scott and I are great entrepreneurs. Having people who understand the business of true business and who can take a company that is a great idea and build and grow it as the (music) industry continues to contract, is absolutely the most positive thing.

The Orchard’s merger with the Digital Music Group in 2007 gave the company further market clout.

It changed the impression of The Orchard because they were a public company and, as we merged into them and were the surviving party, the name changed to The Orchard. We are now publicly listed.

The merger with DMGI gave us over 4,000 hours of video and a starting point to expand further into video. It made us a full service company. Not only can we create great opportunities but we are capable of doing business at the level of any company, including the major labels.

Video isn’t formed as a sales medium in the digital marketplace yet.

We are still in the early stages. People aren’t buying a lot of videos digital or what we have, a lot of independent stuff. What the merger did was that it showed The Orchard to be serious on becoming an even bigger leader in an emerging industry. Then you add on TVT with another catalog and with a physical (distribution) component that allows us to get involved with a company like Vice.

The company seems to be searching for assets it can own.

Obviously, we look at other ways of growing. As we expand our marketing capabilities, and our ability to feed this expensive global system, we’ll look for others way to grow. That includes finding catalogs that bring more value to the company.

The TVT acquisition brought us some great catalog music. We also moved down to the space that they occupied in Soho from uptown (New York). Now we are in an environment that is more conducive to the music that we release.

The TVT acquisition gives you the ability to now offer physical distribution. Was there a demand by labels to have both a digital and a physical distribution presence?

Labels we might be interested in might not look at us in the same way if we can’t offer them physical as well. When we took on TVT, there was a physical team in place which we have expanded by bringing in some top people.

Some indie labels do more business with digital.

The physical business is not a growing business. It’s a value add-on (component of our business). We are a digital company, and our future is in developing more and more outlets for digital distribution

We have our global reach and an ability to function in all of the different aspects of the music spectrum—marketing, sync/advertising placement and brand awareness. The word “360” is silly but music today is a total picture. in order to succeed today, the musician should succeed on multiple levels. Not necessarily an, “Is anyone going to buy their record?” type of thing.

Of all the businesses in the music industry affected by the evolution of digital distribution, no area has benefited more than the indie label community. The majors were slow in adapting to digital distribution but they’ve recently jumped in with both feet.

At this point, the writing is on the wall and things have changed for the industry. I think they missed the boat. They didn’t move quickly enough. But in fairness, there is an obligation attached to being the owner or creator of a copyright of music. You just can’t give it away, even if people want it or free.

What should the majors have done in the early days of music on the internet?

I don’t know what the answer is. They probably should have embraced the change. They should have worked as an industry instead of suing people for not doing what they wanted them to do. They should have tried to find ways of monetizing the music. Maybe they should have tried to license music to the ISPs or mobile (phone) operators.

I can’t say anything negative about anyone running a big company. But, in the end, that spirit of originality and entrepreneurship and the ability to go beyond quarterly operations escaped them. There was nobody who stood up and said, “I am the head of this company. We are going to license Napster. This is what the future is.” Nobody did that because it wasn’t in their purview. There was nobody strong enough to stand up at a corporate meeting and say, “If we don’t do this, our business will begin to deteriorate.”

Do we need to own music today?

It depends on how peoples’ concepts develop. We needed to own (albums and CDs)) because they were rare things packaged and created for us. We associate the ownership of a record or a CD with personal use.

Today, there are people who just want to go to iTunes, buy music and own it. There are others who don’t care about owning music as long as they know it is available on subscription or whatever They might as well stream (their music). As society changes from having the desperate need to own things, and music becomes less rare, streaming will become a bigger part of the future.

The Orchard made a controversial deal with MySpace Music last year. Was the motivation to just get into that market?

Absolutely. If you are not in the game, you have no chance of winning. If Universal, Sony and EMI own a piece of (MySpace Music), so what? They have music that more people want. If they can enforce that kind of leverage, that’s fine.

As The Orchard, we have an obligation to the people that have licensed us their music to not only monetize the music but to introduce them to new ways to (distribute music) while the music is paid for. We are not talking about giving it away for free. Other independent people that don’t participate aren’t going to be paid.

It is the same with telephone use coming with music. What’s wrong with that? Buy a phone, you get the music. Part of the revenue stream then goes back to the rights owners.

[The Orchard is now offering it member labels and artists access to an iPhone application development program called Mobile Roadie, provided by partner Fluidesign. The company has added the Mobile Roadie program to its Artist/Label Workstation program, an online management tool that aggregates sales, assets and other information for Orchard users.]

The entry point into the music industry today for an artist is similar to when you entered it in the ‘50s

Right. You know what? It was never about anything but luck back then. You went out on the road, and you played. If you did well maybe you got a chance to make a record. If it was great, what were the chances of it being heard? If it was heard, what were the chances of someone buying it? How could you predict that? Back then, you could make a lot of music but you had to be lucky at the same time. It is the same today.

You entered an industry that, like today, only had a few major labels, Decca, EMI and Columbia. It was a world of independent labels back then.

That’s true. There might have been major labels but they weren’t corporate controlled. It was still the business of music. However, the majors were not necessarily interested in what we called the new music--which was R&B or black music. But there was a group of young people then discovering and experiencing music from a different perspective--be it socially or racially different, then turning that into something of their own (rock and roll).

Columbia Records didn’t get into rock and roll until Mitch Miller [the powerful head of the company’s popular division] left in 1961. He passed on both Elvis Presley and Buddy Holly.

Mitch Miller thought rock and roll was useless. At Columbia, he was still alive and vital into the ‘60s. But there was also (producer) John Hammond who supported Bob Dylan and a lot of other great things. He was able to recognize a true talent that deserved to be recorded.

For years, ASCAP wouldn’t sign R&B or country songwriters because they weren’t considered legitimate songwriters.

I am still a member of BMI. When I entered the business, it was during the early days or rock and roll. That’s where all the new songwriters went. You were frowned upon at ASCAP.

You played in several bands in high school. Were they rock and roll bands?

We played YMCA and YMHA dances. We would play all of the pop standards from the “fake” book, four-chord ballads like (the Penguin’s) “Earth Angel” or songs by (crooner) Rusty Draper. We’d also insert a boogie woogie or a rock and roll song into sets. We found a guitar player who had country roots and could play rockabilly.

You studied history at Adelphi University, and later law but you were too interested in songwriting to graduate.

Early on, I would write for my own sake. I was a piano player and I learned to write songs by experimenting. It seemed easy to me.

At Adelphi, I met a couple of guys and one of them introduced me to Allan Chesler. His father was Lou Chesler the head of (the film company Seven Arts Productions which had a record label (Seven Arts). Allan wanted to do something in the (music) business as well. So we formed a production company. He introduced me to Morty Kraft who was running the label. [A producer and also owner of Melba Records] Morty is a legendary music industry figure. He was always telling me, “Kid you should go back to law school. What are you doing here?” Of course, I didn’t. I made a couple of records. One of them Morty gave me recently. It’s called “Twistle” and came out under the name Troy & the T-Birds on Seven Arts.

[Lou Chesler has been described as a front or associate of underworld crime bosses Vito Genovese and Meyer Lansky through the Florida real estate company General Development Corp. which he owned with another Lasky associate, Wallace Groves]. In 1967 his company, now called Seven Arts, acquired Jack Warner's controlling interest in Warner Bros. Pictures and other interests, including Warner Bros. Records and Reprise Records for $84 million. The company was renamed Warner Bros-Seven Arts.] You starting hanging around The Brill Building?

I was walking around with my songs. I met a couple of publishers and I had a few songs recorded. On one occasion I was waiting outside a publisher’s office with two other guys. We got stood up by the publisher so we left. One of them had a room somewhere and we sat down and started writing songs. That was with Bob Feldman and Jerry Goldstein.

That led to co-writing and co-producing “My Boyfriend’s Back” by the Angels that reached #1 on Billboard in 1963.

Yes, that led to “My Boyfriend’s Back.” But we wrote other songs before that were recorded. We were beginning to get a bit of a reputation. We learned how to (produce) records by making the demos. We were making demos of our songs to show to artists. In those days, (pop) artists didn’t write their own material. They look to publishers who had the new generation of young songwriters under contract to write songs that fit their style.

(For the Angel sessions), we used studio musicians and worked out the arrangement with the arranger, Leroy Glover. He wrote the arrangements out so we were able to record four songs in three hours.

In 1965, you, Bob Feldman and Jerry Goldstein produced a #1 hit with “Hang On Sloopy” by the McCoys. As well, “I Want Candy” which you three recorded under the name the Strangeloves reached #11 on Billboard. Both were on Bang Records.

We became friends with (Bang Record owner, producer/songwriter) Bert Berns and we sat around and wrote “I Want Candy” with him. Then we recorded the song as the Strangeloves and put it out on Bang Records, the record label Bert started with Ahmet and Nesuhi Ertegun and Jerry Wexler from Atlantic Records.

Didn’t the Strangeloves also record as the Beach-Nuts?

We were the Beach-Nuts and we continued working with the Angels. The Strangeloves had three hit singles very quickly. “I Want Candy,” “Cara-Lin” and “Night Time,” a great song I sang that has been recorded by the J. Geils Band and George Thorogood. Our songs have been recorded by many others over the years.

Do you have a favorite version of “I Want Candy?”

Bow Wow Wow’s version became the definitive version.

[“I Want Candy” was also covered by Melanie C for the 2007 film of the same name and Good Charlotte covered the song in the film “Not Another Teen Movie.”]

Though you three were basically a production team, you also toured as the Strangeloves?

We weren’t very good performers but we went out anyway. We could sing a few songs. We could do “I Want Candy,” “Time is On My Side,” and “Hang On Sloopy” (recorded by the Vibrations in 1964 as “My Girl Sloopy” on Atlantic Records). And a Chuck Berry song. That was our show.

You didn’t really have to tour then. You could go on television. We did NBC’s “Hulabaloo” that was hosted by Sammy Davis Jr. with guests the Supremes, the Lovin’ Spoonful, and Sonny & Cher. And there we were…the Strangeloves. And because we were passing ourselves off as Australians, they put us in a thatched roof hut wearing skin vests to do our hit. It was a bit of spectacle.

How did the production team come to produce the McCoys’ “Hang On Sloopy” on Bang Records?

When we would go out and perform, there would be a backup band. In a show near Columbus, Ohio, Rick and the Raiders were the backup band. They got as big a reaction from the fans as we did as national stars. Being producers, we took them right off the stage, met their parents the next day and suggested we could make records with them. The band, including their parents, followed us back to New York in a caravan of cars. We already had the track for “Hang On Sloopy.” It is the same version as on the Strangelove’s album (“I Want Candy” in 1965).

Hang On Sloopy” is pure American pop recorded in a very organized, calculated way by people who were at the top of their game of making American pop records. It’s pretty perfect for a pop record.

Sire Records started as Sire Productions in 1966, co-founded by you and Seymour Stein.

I met Seymour when he was hired by Bang to promote the Strangelove’s version of “Hang On Sloopy.” Seymour was a great promotion man. He learned his trade through working at Billboard in the chart department and from working with (King Records owner) Syd Nathan. Seymour and I became friends and the production company seemed like a good idea at the time.

Did you have a concept for the company?

Not at first. It was only a production company at first. We had no money but we got an advance from Epic Records, and we produced some good R&B records for them but nothing sold. Seymour had a relationship with a one-stop distributor (known as a rack jobber) in Fall River, Massachusetts named Danny Gittelman. He put up some financing and we got a distribution deal with London Records, the American arm of British Decca. We produced a couple of folk type records with David Santo and Allan Thomas.

Then you and Seymour started going to Europe and picking up acts?

We got the Climax Blues Band, Barclay James Harvest, Renaissance, the Social Deviants, and Focus by going to Europe. We would work with the export departments of record companies who had American affiliates. They were making great records but if they weren’t hits in the UK, labels like Capitol or London, wouldn’t want to put them out in the U.S. So we would license them.

We would go over there with cheesecakes from Turf Cheesecake Company (in Harrison, New York). We’d bring about 20 cheesecakes over and give them to people, and they would give us records.

By this time Danny wanted out of the partnership. I think we found some money and bought him out. We continued going to Europe.

Sire was developing with these European bands as radio was shifting in North America from AM Top 40 to free-form rock formats on FM.

We had the music when this shift happened. While we were smart enough to get the music, we didn’t necessarily anticipate the shift. But the shift certainly happened, and it benefited us.

Sire itself never became a real stand alone record label. It was always under the auspices of a larger entity. First with London Records, then at Polydor where we didn’t do that well, and then at Famous/ABC where we brought Focus. That is where we really became a record label. They provided (promotion and marketing services) for a small fee.

Did you leave Sire in 1976 to get back into producing?

I guess. I was dissatisfied with my role. It was probably time for a change.

Have you and Seymour remained close?

We’re friends. We are probably better friends now than in ages. It’s like having family. You have a brother and you may not talk to him for whatever reason but he’s still your brother.

Any misgivings about leaving Sire given what a powerhouse label it grew into?

No. I did alright. I don’t think I was cut out to run a record company. With Sire, it’s fine that it went onto the successes of Madonna, Depeche Mode, the Pretenders and so. That’s brilliant. Seymour’s ability to recognize that uniqueness in people is what makes him a great A&R person.

You have produced an astonishing number of contemporary acts-- everything from Blondie to Beat Rodeo to Aerosmith, and including the Go-Go’s, Joan Armatrading, Robert Gordon, and Richard Hell.

What do you look for in deciding to produce an act?

I always look for songs and some degree of personality. But the thing that separates artists that makes one great as opposed to being good, are the songs. After awhile, you will burn out on the image of someone

When I first went to see Blondie, for example, I obviously noticed that Debbie (Harry) has a very commercial voice and she had a great image and was beautiful. But what really made the difference for me were their songs. On their first two albums, which were the only two I did with them [“Blondie,” and “Plastic Letters”], you can’t forget those great songs. And that was before “Heart of Glass” (in 1979)

It was the same with the Go-Go’s. It was the songs that made the difference. The fact that they were all girls playing their instruments, fine. But without the songs…

You still do some production work today.

I do go into the studio occasionally with the Ravonettes. They are real special and, if I can help, I will try to. Outside of that I don’t spend much time recording

Despite the wide range of your production work, you seem to have a pop music heart.

That’s essentially true. I even look at music that way today. I see great bands and I think, “Wow, if they just had that one magic song.”

Larry LeBlanc is widely recognized as one of the leading music industry journalists in the world. Before joining CelebrityAccess in 2008, Larry was the Canadian bureau chief of Billboard from 1991-2007 and Canadian editor of Record World from 1970-89. He was also a co-founder of the late Canadian music trade, The Record. He has been quoted on music industry issues in hundreds of publications including Time, Forbes, the London Times and the New York Times.

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