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TheStreet Open House

#DigitalSkeptic: This Pro Music Marketer Just Wants a 10% Cut

NEW YORK (TheStreet) -- David Macias has no problem being the Sam Walton of the recording industry.

"As the music business has shrunk, it has gotten harder and harder for artists to make the livings they need to make," explained the president of Thirty Tigers, a Nashville music marketing and distribution company. "So my thought was, be like Walton and build a music entity with low enough margins so the artist keeps more, and we make it up in the volume."

So after a decade and a half in the mainline record label biz, dealing with artists such as Whitney Houston, Kenny G and Alan Jackson, Macias set himself up in his guest bedroom 13 years ago to make a lean, mean, music-making machine.

And wouldn't you know it: His 21-person shop is showing some real teeth here in the Digital Age jungle. Macias has built a fascinating roster of mostly Americana acts such as Lucinda Williams, Patty Griffin, The Avett Brothers and many others. And besides making -- at least to my ears -- some dang nice records, unlike the rest of the domestic American music industry, Thirty Tigers' sales are up. Big time.

In 2009, Macias says he sold $3.3 million full-year; by year-end 2013, he posted $8.9 million in sales -- a 169% jump that would make Sony BMG, Universal Music Group or Warner Music Group drool with envy.

The secret? Macias focuses on the emerging fat end of the modern music biz: mid-market artists poorly served by major labels. "When I started off, it was not unheard of for a major artist to sell 20 million records," he explained. "Those days are gone." Instead, he said, the music industry has been replaced by a vast sea of middle-level artists who sell reasonable amounts of records but struggle to capture the attention of a major label.

"I have gone the entire other direction and tried to ring as much excess out of the major record label model as I can," he said.

"We are frugal @#$%^&*ckers."

The un-music label
The glory of Macias' approach is its simplicity: He kills the most sacred of music industry cows -- that is, he does not try to control the master recording rights of the music he sells. Rather, he hands the artist a healthy advance and takes a flat 10% cut of the gross receipts of the wholesale price of the CD or download.

As Chris Castle, partner of Christian Castle Associates, a music law firm based in Austin, Texas, explained, Thirty Tigers' flat rate model is a modern riff of standard distribution music deals that have existed for some time. Instead of a major label retaining full control of recordings essentially forever and around the world, artists make their own records out of their own pockets against the advance they get, then keep much more of what they sell.

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