Billboard Extended Q&A, Part 2: Don Ienner

Don Ienner, IMO president/owner and the former Sony Music chief, recently sat down with Billboard for his first extensive, on-the-record talk in more than a decade.

In this second part of the two-part interview (first part is here), Ienner and business partner Drew Stein are pleased to discuss their new businesses, finding synergies in working with the advertising production company the Lodge, the Station and the Diner and a new management company called IMO, as well as getting a new distribution platform/widget off the ground.

Billboard - Tell me about your new company? What is it and where did the idea for it come from?

Don Ienner - There are many prongs to our company, which in this day and age, there has to be. I don't think you can have an entertainment company without having a technology part in it as well.

One leg of it is where you're sitting right now, which is Lodge, Station and Diner. It's a company that was started by Drew Stein and Andy Hong and I'm a partner in. Basically, what it is, is the fastest growing production company, probably in the states.

We are involved with over 500 commercials a year. We have many composers that are writing the commercials and over the last couple of years, we've have amassed over 12,000 songs in our catalog. We also have a visual production side that produced over 70 spots last year. We have 11,000 square feet in this building, upstairs there are six studios, down here are editing and animation bays, and this is where a lot of the stuff gets filmed. It's a very creative venture. We have offices in Tokyo, New York, L.A. and London.

And what is the name of the production company?

It started as the Lodge and there's two other pieces: the Station and the Diner. It's three separate ideas, one company. LSD for short (laughs).

The Lodge is the music production arm. The Station is the visual production side and the Diner is a 12,000 song catalog - like Pump Audio - that we license out to television, film and advertising clients. And in an age of contraction, we're building and we're building beautifully.

From a top-line perspective, what's your business model? If you're going to be very successful with this company, where's the revenue going to come from?

Well, the revenue now already comes from our advertising.

That's from the production house.

Yes. It's also going to come from the production company we have called IMO - "in my opinion" - which we have signed artists to, and then decide if we'll sign them or license them to other labels around the world or eventually do it all ourselves. Revenue comes from the management of our artists; it comes from our publishing company, which is now 12,000 strong on the LSD model...

And that's mostly production.

Yes. We are going after other publishing houses to be able to purchase and partner with them. We will put artists on the road. We'll have different stages for them, and then at some point, we'll most likely make an international deal for these artists. Some of the artists will sign directly to recorded music labels here or we'll put it out ourselves and make a deal down the road.

The good news is we can spend all the time we need to nurture and develop artists and not have to rush any releases out due to any or financial pressure. It's a total creative process.

When and how did you get together with Drew and Andy?

I've known Drew Stein for a long time, since he was in college. When he was at Northwestern he would call me to help him get artists to play and we just stayed friendly. His dad has been my business manager for 20 years. And his partner is Andy. I didn't know Andy but I knew of Andy. We got together in April to form all these different companies under one big umbrella.

So, another part of IMO is the widget that sits on top of social networks. It's a player and it's an incredibly brilliant idea and it's all based on analytics, sharing music virally and sharing all content virally. And, again, I'll let Drew explain a little more about that.

One of the first deals - we have many brewing - but one of the first deals is a band we signed called Hot Chelle Rae as part of our production company. I'm the co-manager, along with my partner John Hamlin, and we just signed a wonderful new deal with Jive/Zomba.

A little about John. I've known John for many years. He has been the soul music producer for "60 Minutes" and he is the senior VP of production for CMT [Country Music Television]. We nurtured the band over the course of a year.

A little history on the band. The band is from Nashville. A little more than a year ago, John called me to get involved with the band. I listened to it and was totally taken by the songwriting, the vocals and the musicianship of this young, terrific band. Digging a little deeper, I found that the pedigree of this band is pretty incredible. They're a rock band from Nashville.

There's a decent local rock scene in Nashville.

It's a very good rock scene. And two of their dads - Ryan Follese (lead vocals, guitar) his dad is Keith Follese. And Nash Overstreet (lead vocals, guitar), his dad is Paul Overstreet. They're two of the great songwriters in the history of Nashville. And Ryan's younger brother is now in the band - Jamie Follese (drums). And the bass player is Ian Keaggy.

And this is a true story: Many years ago, Jimi Hendrix was being interviewed and a writer asked him how it felt to be the greatest living guitar player. And he said, "I wouldn't know, you'd have to ask Phil Keaggy." And that's Ian's dad. So, the pedigree of the kids is just incredible.

And John and I could have done a bunch of different things. We could have done YouTube thing, MySpace, Facebook - all this other stuff - but we decided to really lock in on really helping them write and getting them to the point where we thought they were ready to go out and sign a record deal.

We thought about putting it ourselves. I didn't think we were ready to do that yet, in the formation of this new company. So, we went out, spoke to a few companies. Barry Weiss and I have worked together since the early 80s, with Billy Ocean and Flock of Seagulls, when Jive was distributed through Arista, when I was at Arista. And Peter Thea I've known for a long time. Jeff Fentster I've known for a long time. And obviously I worked side by side with them after the Sony BMG merger. There were never any political issues between us and we always had a mutual respect for each other. I really respect the Jive people. It was a natural home; I was thrilled they loved it as much as they did. It was a deal that was consummated in a week's time, between Barry hearing it on a Thursday, Micheal Tedesco going to see them two days later, that Saturday, Jeff Fenster going down the following Friday. So it happened very quickly.

But the idea here is not to do it in the traditional way - of doing blowouts and getting hits on MySpace and all of that, but do the one thing that is always needed and always be needed: Write great songs. Work on your vocals. Work on your musicianship. And then go. So, right now they're on the road. They're booked through Little Big Man - Marty Diamond and Jonathan Adelman - and then we're recording this month [January]. We have a ton of great songs. Actually, Eric Valentine produced one. It's called "Bleed" and it's an absolutely great song and a great record now that Eric did it. And we're working on that, and that's sort of the kick-off of our production company and our management company.

Eric started recording January 7 and Butch Walker starts February 1 to complete the album. So, these are spectacular producers.

The Lodge is music, the Station is visual and the Diner is a music catalog...

Drew Stein - The Lodge is an original music production company that does original scoring, for television, film and for advertising - TV commercials. They also do sound design, and audio post as well.

Ok. Taking that as one entity - the sound design, the music you're doing for that - that is owned by the Lodge? Licensed by the Lodge on behalf of artists? How does that work?

We have a great team. LSD together has about 40 people at the company. And we have about 15 people who are full-time writing. So, we have on staff composers. Very similar to the way it used to be when...

Tin Pan Alley.

Exactly. When production companies had a large composing staff. So we have composers in New York, composers in Los Angeles, composers in London and also in Asia as well.

They're composing this music primarily for commercials?.

We do over 500 commercials a year.

Are your clients generally brands or are they generally like the people the middle-men who set up the commercials?

They're ad agencies and primarily advertising agencies that...

So, you work with people like Josh Rabinowitz at Grey.

Sure, absolutely. Josh is a music supervisor and he's someone we've worked with before. But, exactly.

Your core clients for the Lodge are ad agencies.

Agencies, correct. Same for the Station. By leveraging the projects that we had, and the relationships, we started the Station. So, Last year we did ...

To expand the visual?

Exactly. We do live action production, animation, editorial, and motion graphics.

Are there some big clients and/or commercials that I would know that you could point to?

It's a very broad client base. When you're working on that many commercials a year, it's pretty rare that you turn on your television then something doesn't come up that we've either scored or provided a track for or actually shot. The visual side alone shot over 70 visual production projects in our first year of business.

This past year?

Yes, now we're in our second year now and growing. And what we're able to do, is very unusual. For the first time, you have a production company that's able to really deliver across a very broad spectrum of services. And during these times, where budgets are challenged, it's really ideal for the clients because they can maximize the creative control across from pre-production, through production, and all the way through post. In one place instead of running around town, which has been a terrific business model. So our clients have loved it and everyone who has used us once seems to come back for new projects.

Who are some of your clients?

Every major ad agency. There are people who we work with on a direct basis as well, but, you name it. Out here, we're in the middle of the third Wal-Mart shoot we've done in three months. MTV - I think we did over 30 individual spots for MTV in the past year here.

These are some of the spots that are actually on MTV?

Yes, we've done the brand package for MTV3. We also just finished a great shoot for National Geographic. We've worked for everyone from WGN to MSG. In the upstairs, it's a who's-who of the advertising business.

I understand the visual music. Tell me a little about the Diner. Basically your aggregating the songs you're composing and holding on to those rights?

We have over 12,500 tracks that we've aggregated over the years; some of it we keep in our library in the Lodge and some of it we're beginning to release in a company called the Diner, which is a license library. So, the Lodge, we're actually selling music. And that's original scoring, highly customized versus...

And they own the rights to that?

Exactly. And in the Diner, what we're doing is just giving them a license. Now the nice thing about the Diner, it's really one of the first libraries which is kind of hybrid. Its not quite stock music, so to say that it's Killer Tracks or Extreme or Getty, it's not exactly that, because it's one of the first libraries created by composers for the composers that are part of it. We have all of our splits and it's truly customizable.

So we've created a hybrid product that's not quite original music scoring, but its also a lot more customizable and flexible than traditional music libraries so we can offer those licenses. But, again, in a time when budgets are pretty challenged and people don't have the money, to do original music, sometimes they don't have the time, we're able to step in and offer them a terrific solution at the end of the day, most people don't like to use stock music libraries.

Don Ienner - What is important about this is when you do your spots - I was just on the phone with the guys and they're doing a Ferrari commercial, a Mattel commercial, and an ANA Japanese airline commercial - and what ends up happening is you, typically, submit between 12 - 13 tracks, and the client chooses from them. So you have 10 - 12 left, each time. You have an album's worth of material. And that's what goes in the Diner. And those tracks get sold on a less expensive basis, because they've been pre-written.

Drew Stein - It's a very intensive creative process. We might start off writing 20 tracks. From there we might narrow it down to 10 tracks and only submit eight to the company and the client only picks one.

Don Ienner - And you still have all of the others. And it's not always the case that the client picks the best song. He'll pick the best song that fits for his client. But, that might not be the best musical track. So, there are gems in this music library. Thousands of them.

Who are your competitors in that field?

Drew Stein - In original music?

In the Diner.

Well, there's Extreme, Pump (now Getty) and Killer Tracks, but none of those libraries are really composer libraries like we are. They can't offer the customization, they don't have on staff composers who sit and work with the agencies or the music supervisors, extending cues, rearranging cues, editing cues. They don't have that capability. They're kind of "take it or leave it." We are fully customizable, if that's the path they'd like to take.

I understand the Lodge, the Station and the Diner - it's pretty clear how all those parts work together. Tell me a little more about IMO.

Don Ienner - I started speaking to these guys about analytics and research along with the recorded music business, because I felt like there was a lack thereof. But I knew of some situations - like Nielsen - that were able to back up your gut with some real analytics. As I was explaining that aspect to Drew and Andy, what came of it is something that started as an anthill and grew to the size of Mount Everest. And I'll let Drew take if from there.

You're trying to tap into people's behavior online, right?

Drew Stein - Something is going to replace CPM in the advertising world. It's broken. Most people are talking about CPTM - targeted advertising. Reaching the right person at the right time in their sales cycle and you can increase your conversion ratio. I think what we said was 'maybe it's a little different.' Maybe if you found the right incentives, the right way to connect with someone, the right way to speak to someone and you found them at the right time, you may increase your conversion even more.

What IMO stands for is 'In My Opinion' and what we're trying to do is tap into the opinions of the end users. We believe one of the most powerful ways to connect with them is through entertainment content. One of the reason's this whole thing started was - how do we create stronger bridges between the advertising community and the entertainment community?

And what we're doing is putting the full force - LSD is a creative platform - we're putting the full force of that behind all of the artists. We're involved with everything from the music, to the visual to the Web, to mobile. We have a very broad definition of what it means to be a creative production company. So, LSD is a content engine for the artists we are in business with.

Don Ienner - And exposure is sort of broken, right?

Right. That's the IMO part.

Yes, but it's also the LSD part. The interesting thing is, if in fact exposure is such a problem, and everything is peer-to-peer, and when SoundScan has 70 - 100,000 skus this year, that's never the way it was supposed to be. They all sell 2000 copies. So exposure is a problem. In a general sense, with all entertainment content, but particularly with peer-to-peer sharing with the Internet stuff. So, I was always looking for a way to find how we can expose these artists.

So, if you have someone signed to IMO, you can leverage the LSD side?

Yes. Which we're doing. And that's not different from when we got the Fray on Gray's Anatomy or Shakira through Verizon.

Are you working with television series or is it just commercials right now.

We're working the television series in that we do solicit songs for them that we own and we're also doing trailer promotions for them. We'll write songs for trailers. So, we're in there. But, even with radio being as tough as it is, with MTV really not playing many videos any more, exposure is difficult. Distribution is pretty beat up. That's a lot of what the IMO player is.

How does it feel after all this time to have a fresh start?

Don Ienner- It feels free. I feel that people are entrusting their lives to us in the recorded-music side, and I'm very proud of that. This is my choice, and no one else's, that I'm going to dedicate myself to the artistic side of the music business. With the artists that we're working on now and being so engaged with them and new producers, I feel like I've come full circle in my 36 years of experience. And the more I can get back to working with the artists, which was the majority of my life, the happier I am.

You're enjoying the challenge?

I love the challenge, I love the challenge. And the best part is that I get to see twenty-somethings all day long and get their perspective on it, without any political nature to their conversation. It's all completely transparent. And that's why we can create these contracts now: they're incredibly transparent for the artists.

So, are there any topics that you wanted to speak about that I didn't give you the opportunity to?

One, obviously, that the music business is facing challenges overall.

Do you think that the music business on any level can be a very successful business again? Do you think the major labels can continue to be the major labels? And not necessarily by staying as they are now. Is there perhaps a forward-moving model that will enable those four major companies to continue to be those four major companies?

Obviously, Doug Morris and Universal proved that if you do it right and if you have enough hits, you can succeed. I'm sure they're going to continue to go through their own adjustments as everything continues to shift. But signing and building great artists is the key formula. It has been since the beginning - it will be forever.

It's almost like [asking] can a major film company survive when you have all of these other independent film companies around. But if the film companies have proved one thing [it's that] there were a lot of redundancies and that they had to cut a tremendous amount of overhead. They also couldn't pay their stars $20 million a picture before they even knew if it was successful. So, I think a lot of those costs are going to be driven out of the music business as you continue to run it. Forgetting the publishing catalogs for a minute [which] will continue to grow and thrive, I believe recorded music catalogs [also] will, whether physical or digital, if handled properly. I don't know if any major record company needs 6,000 people anymore. And I think the advance game to a large degree has changed.

Which means the deals have to change, right?

The deals are changing.

I mean, the reason an artist goes with a major company as opposed to an indie company, is because they want to see more of a financial upside.

Well, yes and no. When we made the deal with Prince, there was no advance, but there was a huge upside because we split the profits. Completely different than the Madonna and Jay-Z deals with Live Nation.

Why did he do it?

Because he trusted us. And I worked with him on and off for many years. He said he wasn't going to go to a major record company again. He came and we did "Musicology" together, which launched one of the biggest tours of that year. We made a deal, literally, on a napkin. There was no advance for the U.S. He paid for the record, he paid for the artwork, and he paid for the music videos.

So did he keep more of it on the backside?

Yes, it was a profit split. Well, it's not different [from] George Clooney going from Columbia Pictures to Paramount to Miramax to Universal Pictures. That might happen in the future, depending on what kind of a record an artist wants to put out.

So I can go to a major label and have a different kind of deal now than once upon a time, and it is not going to be ownership...

Well, it was ownership. He owned it. That was a reversion, but we sold 3 million records and made a lot of money. [It] was frowned upon [by] the Sony/BMG business affairs department when Michelle and I brought it in. But we did the Grammy's with him and Beyonce, he went into the Rock & Roll Hall of Fame, we put out the album, and then he went on tour. It was a perfect deal.

This was before 360 deals. I mean, you weren't getting a piece of the tour...

No, no. I wish we did. But it was better than a P&D deal, quite frankly, because it was everything. Not everything in terms of the 360, but we shared in all of the profits. It wasn't just a fee.

So you're basically saying that, yeah, I think the major labels can continue to do this.

Yes, they can. I think it only has to do with the people that are at the major labels. Not all major labels are going to be able to do it, but the music people will continue to do it. And we hope to be building into the Miramax, if you will, the pre-Disney Miramax, of the music business. And that's what we think we're going to do as we continue to grow. I'll hire more people, we'll be able to do more things, and we'll be able to service more people as we go.

Any regrets? Any big regrets?

I actually have no regrets. I've had the greatest time in 36 years. I would have never, ever thought that when I started out as a mail boy at Capitol that I would achieve what I've achieved and kept the energy and the love for this that I still have. I've had many choices to do many things [with] my life, and it just kept getting pushed back to this. This is what I know, this is what I'm great at, and this is what I love, more than anything except my family. I'm excited by the prospect of every single day, because you never know what's going to happen [or] whoever's going to walk into your door.

Any small, fun regrets like musically? Oh, I didn't sign this guy, or I can't believe, you know, whatever it is...

I think one regret I have is that we didn't get Green Day. It was interesting. We had just moved into 550 Madison Avenue and Elliot Kahn, the manager at the time, said to me, "Oh, you have nothing to worry about, but they have to go to Warner Bros. I have a group here; they have to go to Warner Bros." And we were pretty far along [by then] and doing our thing, and I just thought they were absolutely incredible. And when they went to Burbank and saw the stick buildings...

This is when they were still on Lookout?

Yes. I think Elliot owned Lookout. They saw this big monolithic piece of granite that Philip Johnson sits in the middle of and then they went out and saw these little bungalows in Burbank that was sort of when it shifted. And they said, "You know what? We like all those guys at Columbia, but we're going to sign here." It was just interesting to see what a building does. And the Sony Company already had Pearl Jam, we had Alice in Chains, we had Soul Asylum, and we had Screaming Trees. It's not like we didn't have all of these great acts. But there was something about that building that AT&T couldn't afford and Sony somehow ended up in.

I don't know if I have any other questions. There are so many different periods of the music business that we touched on. I'm fascinated by all of them. I was just starting to cover the music business at this time...

And you got a promotion, so be careful.

Yeah, that's right. I just started to cover it around the time of Napster and all of these things going down in the music business. Everyone always tells me, "Oh, you got in at just the wrong time."

Well, it's true, it's true.

And my first job at CMJ was in '98, so it was like, a couple years of feast and then...

You know we made so many mistakes that were hidden by the hits. We still should have had a better batting average as a business. We still have a dismal average. Looking back, I think a lot of money was wasted. The industry probably didn't take enough chances in terms of really sticking with artists, but I believe that we did [at Sony]. And then, again, that whole phenomenon of putting 17, 18, 19 songs on a CD, would rack my brain. I would hate it. I would go through many discussions fights with the artists and their management, but in the end it was their record. At some point, they have the final decision.

Did you ever lose the sense that this was going to be okay? 2000 was the first year the music business started to slide in terms of overall sales, and then it just [kept going] down...

I'll give you a personal story of why I knew it was never going to recover. In 2003, my youngest son went to NYU. I was moving him into his dorm, and he was packing up his [his stuff at home], and I looked on his shelves and there were literally hundreds and hundreds of CD's. And I said, "Garrett, we better get boxing up these CD's." He said, "No Dad, it's all on my computer. I never have to take another CD in with me again." At that particular point, I knew it. Talk about the moonstruck moment of 'snap out of it!' It was like, holy God... this is it. And I will never forget it. First of all, I was distraught. My second and last child was moving out of the house, and we were [left] childless, although they were [only] 20 miles away in Manhattan. And then he says, "I don't have to take any CD's with me." It was shocking. I said, "What do you mean?" He said, "Well, I have 15,000 songs on my laptop." It was frightening.

It's one thing to see it in theory or read about it, but it's another thing to see these CD's...

By the way, the CD's are still on the shelves. The only thing he did take was my vinyl records... but to me that was the most stunning piece of it. Stunning, just stunning.

Anything we didn't touch on that you feel we should delve into a little more?

No. I just think the idea of me going back and working with the artists to the degree that I've always in my life is something that I'm very interested in. [I'm still interested in] working with them as a production company, working as a manager, and partnering with other managers. [I'm particularly interested in working with the] younger ones to give them a broader perspective of everything that they're going to go through, to help them really realign how they're going to be able to move forward if they were the quote-unquote fanager. [Then] they have to become the real manager.

I've spoken probably for the last ten or twelve years at NYU - sometimes two or three times a year, sometimes once a year - to [students in] the music business courses. I love seeing these fresh-eyed people who want to get involved in the music business but literally have no practical knowledge of how to do it, or actually how to, once they're in, be able to fend for themselves. [It] takes a unique personality to be able to do it. Most of the people who have come into our business without any practical application of the music business have failed, and certainly the ones that have come in to run the companies have all failed. I don't say that lightly, but they have all failed, and taken down companies with them. So there's the idea of partnering with younger managers, and to partner with managers in general is something that I'm very open to. It's something that we're doing right now, so I'm excited by that.

I've just partnered with veteran manager Gary Stamler on a very unique artist named Lionel Neykov. Lionel is signed to our production company as well. Lionel now has close to 800,000 hits on YouTube and a No. 10 song from a commercial in Spain. But getting back to the artists, it does not matter [whether] it's sold on a cylinder, on a 33, on a 45, on a cassette, on a tape, or on a CD. It's all about making the best music.

We're self-sufficient financially and we don't have to put pressure on artists to be able to deliver instantly. We can help them grow within their own time frame, not somebody [else's] false time frame of a stock price or [from] a Board of Directors meeting. And that to me is the most glorious part of doing what I'm doing right now.

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