Earlier this year, Downtown Music -- which comprises Downtown Records, Downtown Publishing and other businesses -- announced that it was selling its records division to founders Josh Deutsch and Terence Lam, who would run the business independently. Billboard.biz caught up with Deutsch at South by Southwest in Austin to talk about the new arrangement, why he’s “doubling down” on the record business and what he’s learned from “Harlem Shake.”
 
Let’s start with the big news, which is the sale of Downtown Records earlier this year. What led to that decision and what does it means for Downtown?
It’s really exciting. Terence and I founded Downtown in 2006 and we’ve built out a number of different businesses -- including publishing, licensing and digital -- and all of that’s been amazing for us. But we really decided that the most effective way to grow the businesses by way of investment was to sort of silo them out, even though that may seem counterintuitive. I think this really allows both platforms to grow to a larger scale.
 
On the Downtown Records side, it’s really exciting because we think we’re at the beginning of a significant shift in consumer culture that’s going to result in a lot of revenue coming back to the master. I think anyone who doesn’t see the contributions that Spotify, Daisy, SoundExchange and the increased investment in synch are making to the master side of things is sort of near-sighted. I’m excited to be early on the curve of returning value to the master itself.
 
Would you ever consider spinning out Downtown to another label?
No. I feel like we’re competitive with every label. I’m doubling down on the record business.
 
Downtown is unique because it has strong partnerships in sister labels Fool’s Gold, Mad Decent and Dim Mak. Has the new arrangement affected your outlook on those relationships at all? Will you grow them, forge new ones?
The new arrangement won’t affect joint ventures that we’ve had in the past, or ones that we do in the future. We’ll continue to look for the most compelling repertoire sources, whether or not they’re a DJ imprint, or what have you. We’re actually going to announce a new joint venture pretty soon that’s a collaboration with another label. I’d much rather have other labels as repertoire sources than carry a large A&R staff.
 
Mad Decent has the hottest record in the world right now with “Harlem Shake,” which I don’t think anyone saw coming. What have you learned from watching this take place?
We love those guys and have a lot of respect for them. I think the lesson is you make your own luck. Diplo, Kevin, Jasper and the team have great taste. If you sign the right artists then you position yourself to receive the luck when it comes. It’s hard to plan for that kind of lightning in a bottle experience, but it wouldn’t be possible if Baauer wasn’t amazing and if they didn’t know that a year before anyone else.
 
Our Gnarls Barkley moment was kind of similar. If I could manufacture more of those, I would. It’s certainly what I’m trying to do every day. And it’s a great example of the master value I was talking about earlier. YouTube and digital performance -- these are revenue streams that didn’t exist four or five years ago. I think this whole phenomenon suggests a lot of optimism.
 
What do you hope to get out of SXSW this year?
I just hope to see great music and meet with a lot of my friends and a bunch of new folks that I haven’t met before. As always, it’s one of the best networking experiences around. This year in particular there’s so much amazing music, both from artists on my label and not yet on my label.