Jason Schmitt

Karmin Holds the Music Business Hostage

Jason Schmitt — Thu, 03 May 2012 20:22:03 +0000

Photo Credit: Farah Joan Fard/LaParadiddle.com

The music that you make as an art form isn't in trouble at all; it's in great shape. It is the music industry and the music business that is in trouble. - Seth Godin

Internet music sensation Karmin floated into the room engulfed with a mod 1950s demeanor, suicide rolled hair, and an on-top-of-the-world aura. It seemed that at any second they might lose their composure and shout out, "we did it, we did it!" And that wouldn't be far from the truth, as they have accumulated upward of 300 million Internet views on their own accord and, subsequently, found themselves fielding nearly every major label groveling to be their partner in crime. They are legitimate stars now and they are one of the many current trendsetters informing the Rethink Music conference held by Berklee College of Music and the Berkman Center for Internet and Society at Harvard University on the chutes and ladders associated with the current music business.

Just a few short months ago, prior to the upheaval of stardom, Amy Heidemann and Nick Noonan of Karmin were figuring out their plan to break into the music industry. Nick was working at a boxing club and Amy was answering phone calls for Berklee College of Music, the same college where they met, and where I am talking to them today. But their life has been significantly altered. Their massive Internet success allowed them to obtain appearances on Saturday Night Live and Ellen, as well as develop a devoted fan base relationship that continues to catapult them into the future. Although the story of Karmin's rise is positive, and inspiring, it perhaps more importantly exemplifies the changing of the musical guard. Karmin built their future holistically, by themselves, one skill set at a time. Amy talks of their defining skills,

We were the most self sufficient band. Anything we wanted to do, we would learn. Instead of paying someone else to do it -- not as well as we would like it to be -- we learned it ourselves: hair tutorials on Youtube, our web design. Everything was DIY.

Not only did Karmin learn the tangible skill sets for a 2012 musical existence, they also quickly uncovered where to plot their musical course to garner a significant fan base. Nick speaks of Karmin's move toward employing cover songs and a strong YouTube grounding by saying,

We were uploading originals first and no one was watching it. So Nils Gums, our manager, said 'you guys should do covers because you have the personality and sound to twist it up and make it unique,' and he started recommending stuff that was on top of the iTunes and Billboard charts. He taught us how to tag the videos so they came up on searches. Thirty some videos later, we had a viral hit.

Roger Brown, President of Berklee College of Music, says that it important to note that, "a lot of people think Karmin just got lucky by doing one video and it went wild. In reality, they already worked hard and diligent to obtain a fan base of hundreds of thousands of people so when they did that video [Look At Me Now] their fans were willing to tell the world about it."

Allen Bargfrede, Executive Director of Rethink Music, believes there is something important in the merging of music and online video and says,

This combination of video and music has become incredibly important. There was the pre-music video days, then video came along and it was really important, then MTV decided they were just going to show reality TV, and so that fell into the background, and now because it is so easy to make a video you need to have some kind of promotional tool in addition to the music. It is about a whole package of building the intersection of video and music. That is going to be a really important thing going forward.

Author Seth Godin also highlighted the use of creativity to gain video viewership, fans, and musical clout. Godin referenced a recent viral video cover sensation which helped define the band Walk Off the Earth as they covered Gotye's "Somebody I Used To Know." Godin asks, "Why can't it be you who gets 96 million YouTube visits because you come up with the idea of having five people play one guitar at the same time?" The crowd was silent to the rhetorical question--because as everyone understands, it is obtainable.

But critiques to this new method of propelling yourself up toward the top of YouTube searches by employing cover songs are beginning to ringing louder. Karmin had to field questions on their artistic merit for their heavy use of cover songs but veteran musician Amanda Palmer, who recently received accolades for her recent cover of Polly by Nirvana, goes to bat for Karmin and told me,

If I am not mistaken, the Beatles did it. If you can transmit a great song and touch somebody, that is fundamentally fantastic. If you can generate a song that you can perform and touch somebody you are more fantastic. That doesn't mean that if you are performing covers you are not bringing something to the table. Music is fundamentally like that. Music started like that. It wasn't about generating new material and impressing everyone every fucking second.

The Music Business Stalls

The ability for bands like Karmin to create, promote, and reap the awards of good artistry prior to a major label contract helps to illuminate just how far and fast the music business game has changed. There are no gatekeepers. Godin emphasizes that the labels are still clinging to a scarcity model of monetizing their collection in a world that has embraced the free flowing abundance of digital commodities. And he further says that this label mentality of slowly wading into the digital world is similar to timid trapeze artists: you can't be timid or you will wind up dead on the floor. Geoff Cottrill, CMO of Converse, follows Godin's sentiments and tells me:

Between the artist, the brand, some of the technology companies, and the labels, there needs to be innovation from all of those places but we have not seen as much innovation coming out of the label system as we need. What is dangerous is there is so much innovation coming from the technology companies these days, the labels could find themselves in a very tough place.

Music trend blogger Bob Lefsetz sent out his Lefsetz Letters "mailbag" to his gazillion subscribers on May 1, 2012. The letter Lefsetz included was from Amanda Palmer specifically prancing to the fact that she feels so free and happy after she broke free from Roadrunner Records in 2009. Palmer wrote to Lefsetz to point out the fact that on April 30 she created a kickstarter.com page for her new album "Amanda Palmer & The Grand Theft Orchestra." In the first day she received $360,000 which is $160,000 more than her scheduled recording budget had she stayed on Roadrunner Records.

Technologically savvy Palmer says to Lefsetz, "They [Roadrunner Records] seriously didn't think the Internet was necessary unless you had a record to push. They didn't understand the value in staying connected all the time, every day, from the road, from the spaces between. They didn't get it at all." She concludes her correspondence with, "Seriously: I can't imagine why I'd do this any other way."

Apparently "her way," is working. Palmer allows the Internet and its tools to connect her fans and their funding directly to her life and her music. And more importantly, she weaves this intricate relationship using the tools of the information society. Twitter is her tool of choice and she connects with her fans, shares with her fans, and occasionally asks for things (like to borrow a fretless bass in Australia) which miraculously was produced in less than 15 minutes. And this is the give and take that induces creativity and loyalty. Since she is so accustomed to the digital connection with her fans, she told me, "I now cannot fucking imagine going on tour without Twitter."

Brands Kick it Up a Notch

Although the music industry may be sluggish, there is a large subsection of the industry staying progressive and forward thinking and that is the brands and advertisers who are creating partnerships with musicians. Over the last several decades there has been a certain stigma associated with artists merging with advertising initiatives, but the brick wall of reluctance seems to be crumbling. Roger Brown speaks to this by saying:

Lets face it, radio was always a tool for advertisers to reach an audience. And musicians had this notion that they shouldn't sell out by doing a commercial. Well they were doing a commercial, they just didn't know it. They licensed their music to a record label who gave it to a radio station that then used it to attract a market. Now the artists have got over that. In a way we have disintermediated the radio, the journalist, the television, and we are just working with the people who want to use our music to promote our product.

Rob Stone, president of Fader Media, is one of the foremost experts of the branding and music relationship and speaks to the opposite side of the brand equation: the consumer. Stone says, "there is a progression of the consumer who is now more accepting of artists working with brands. When it is done right you get something like Converse's Rubber Tracks Studio's Three Artists One Song." The latest Three Artists One Song endeavor found Mark Foster (Foster the People), A-Trak, and Kimbra creating their original song "Warrior" recorded at Rubber Tracks Studio and available for everyone for free download.

Mark Foster commented on the process of working under Converse's wing on the Nike website by saying, "I had such a good time diving into the creative process working with two incredible artists to create a sound that is uniquely our own. This project has given me a new found appreciation for the power of collaboration which is something that Converse really understands."

Rob Stone says there is definitely a growing interest from all sides in partnering with brands. Stone has worked closely with the Green Label Sound project by Mountain Dew and told me, "From year one the bands say I am not doing anything with a carbonated drink, by year two they are coming to us, by year three we are telling artists that we don't have the capacity to put it all out."

The record label executives of previous eras might have been the 'hit makers,' but the popular music trend setters of this era may be more aptly defined as the 'business class.' Regardless, the kingpin of the situation is the musician with a $700 laptop. With laptop in hand, the world of opportunity awaits. But, like anywhere, it comes down to the most important commodity known to mankind: creativity.

Jack White partnered with American Express for his Unstaged performance

Karmin 2011 NBA FINALS

OK GO partnered with Chevy Sonic

photos: Phil Farnsworth

Rock Music’s Political Thump Turns to Thud

Jason Schmitt — Sat, 19 Nov 2011 01:50:37 +0000

Maybe Van Halen killed it. Axl Rose's diva personality disorder certainly didn't help. Or, to get 99 percent of the readers on my side, maybe it was Nickelback that threw in the towel. The culprit is hard to pinpoint but the damage is done. Rock music as a genre is significantly less poignant in 2011 than it was decades prior -- and the real catalyst of the demise might relate more to capitalism and the digital revolution than the outrage any spandex outfit could instill.

Rocker Tom Morello and his acoustic guitar have done as much to spur this Fall's social critique as anyone. Morello's folksy twang, urging on the Occupy movement, is reminiscent of Dylan, and is eons away from his Marshall JCM 800 guitar tones of Rage Against the Machine. But he is tearing it up. His voice seems to ring louder without the amps -- and maybe that is the point. As Morello says "mic check" to a group of around 1,000 Occupy protesters in NYC, they engage in a collective recitation of his sentences that takes on a Pledge of Allegiance sort of tenor. Regardless of the lack of amplification and the cold conditions, the NYC corridor rumbles with the united human voice; that message doesn't run on 87 octane -- it burns rocket fuel.

The vibrancy of social critique was nearly synonymous with the 1960s counter-culture music. That was what frightened the parents -- the prominence of pot and LSD in a birth-controlled world didn't help -- but the main attention was on the rebellious musical messages toward the status quo. From venues like The Fillmore in San Francisco and The Grande Ballroom in Detroit, the rebel rousing statements often came sandwiched between distorted guitars. And people listened. And demonstrated.

John Sinclair, the well known manager of Detroit's MC5 and recipient of John Lennon's active demonstration to free him from a "10 years for two joints" sentencing, knows more about rock music and its inherent ability to incite activism than anyone on the planet. He also knows where the train line ends. Sinclair told me,

My interest in rock music kind of ends in the 1970s. I liked it when it was part of the fabric of life in the 1960s, something that came out of the way people lived. But then it just became a product. Woodstock was the signal that something else was going to happen that hadn't happened before. Over the next couple years the record companies just bought everything up and changed the concept of alternative expression, and [rock music] became commercialism.

Wayne Kramer, guitarist for the MC5, implied that perhaps modern rock is not as poignant because it has to compete, directly, with all the great bands of the past decades. Kramer told me, "All the music that ever existed exists right now. The Beatles to a 15-year-old on the Internet are a band right now; The Who is a band right now; The Sex Pistols is a band right now; The Clash is a band right now. It is an unforeseen side effect of the digital age."

Kramer continues to unpack the reasons that the MC5 have been such an enduring icon from rock music's golden era by saying,

The MC5 was caught in a moment in time. What you are always trying to capture in art is the instance of original joy -- when the muse visits, where the effort is caught. It is not that you achieved [artistic success], but you are trying for it. The Kick Out the Jams era of the MC5 was young, passionate and committed, and wholehearted about everything. We were convinced, we were certain and it was captured and caught and it remains frozen in amber so that anyone can tap into it at anytime. A reason that the MC5 is enduring may be that we never went on to be rich and famous. Kind of like we will never know James Dean as an old overweight balding fat man. He is always going to be that beautiful young man. Marilyn Monroe will always be that luscious, slightly damaged blond. And in a way the MC5 is kind of locked into that.

The MC5 undoubtedly were relevant and at the apex of rock music, addressing social problems such as racial inequalities or the war in Vietnam, and in a way that is an unfair playing field for a current band to have to compete against. But it doesn't have to be a direct competition; more up-and-coming rock bands need to draw inspiration from the era when the critique rang true. Tom Morello, with his Harvard degree and collection of Grammys is on point: he knows where good inspiration is. Morello speaks of his admiration toward the MC5 by telling Tony D'Annunzio, producer of Louder Than Love: The Grande Ballroom Story, "The MC5's music has been a huge influence on me. They were the original political punk band with an awesome stage show and a tremendous amount of energy." Morello continues and says, "It was in part [Wayne Kramer's] influence to make Nightwatchmen music and play and write and sing my own songs."

Stephan Jenkins, frontman of Third Eye Blind, also became one of a small handful of rock-based acts assessing the political climate. Two days ago Jenkins released "If There Ever Was A Time," a song spurring on the Occupy movement. Jenkins, the UC Berkeley valedictorian, over the two last days has had 21,000 plays and 3,000 downloads of the song off his Facebook page. Do you need prestigious accolades to realize the relevance of directing rock music to the people in 2011?

Hamada Ben Amor didn't have much to show for his 20 years on the planet in 2010. A shared bedroom with his brother, a few hundred dollars computer and a condenser microphone. But in a modern view, Amor may have had the biggest impact of any musician in the 21st century. Amor was a typical college student steeped in a Tupac and Biggie Smalls regime of honesty and 808 bass drums. Amor took the name El General and recorded tracks in his bedroom, drawing upon his idols. He uploaded tracks to Facebook with minimal pomp and circumstance. But on November 7, 2010, it changed. He hit on a nerve. He recorded, "Rais Lebled" which translates to "President of the Country." Tunisia had banned music with nearly any questionable critique of the status quo. A song critiquing the president was a guarantee for safety concerns. Regardless, El General hit "upload" and "Rais Lebled" went viral. Within weeks El General had risen as a leader in the Jasmine Revolution and the Tahrir Square protests in Cairo. His song and message was at the nexus for changing Tunisia and Egypt towards more democratic states. No million dollar tour busses, adorning fans or career trajectory visions: Just music becoming the soundtrack to revolutions.

Watching 1,000 Occupy camps on the planet dig their heels into the ground, and seeing 200 Patriotic Millionaires who want the government to tax them more march through Washington; it is hard not to draw parallels between 2011 and 1968. The apathy of the last decade seems to have lifted. And truth will emerge, the way it always has, through the murky waters of social critique. We need more leaders. We need more anthems. We need more people with the gumption to Kick Out The Jams.

Down But Never Out

Jason Schmitt — Mon, 07 Nov 2011 05:19:30 +0000

Pick up this month’s edition of Elmore Magazine to read my cover article, “Down But Never Out”!

Back Track

Jason Schmitt — Wed, 13 Jul 2011 18:17:19 +0000

Below is an article I wrote in this month’s issue of DBusiness Magazine.

DBusiness

Detroit Shakes Up the Music Industry

Jason Schmitt — Thu, 07 Jul 2011 22:28:00 +0000

An avalanche may be starting here in Detroit, a big one. Quite possibly, billions of dollars may be shifting from record labels' pockets into the artists' hands. Mega stars and one-hit wonders all may have a shot at a piece of the lucrative pie. Welcome to the wonderful world of digital. If you are a musician who in fact gets a check, you can address your thank-you letter to Eminem.

The core idea that brought this game changer to fruition was spurred in the Motor City. Eminem's bulldog lawyers, possessing the eagle eyes that they do, saw a discrepancy in 2006 as to how his digitally downloaded songs, and the associated payment structures, were being handled by Universal Music Group. They went toe to toe with Universal Music about the discrepancy. Our well-oiled legal system finally spit out the conclusive verdict about a month ago, after the case trickled all the way up to the U.S. Supreme Court. The top court in the land let the lower court's (Ninth Circuit Court of Appeals) ruling stand that entitled Eminem's empire to a much larger piece of the digital download pie.

Joel Martin, manager of F.B.T. Production in Detroit, talks about first seeing the initial discrepancy that stemmed into the high-profile case by saying, "We had an audit that was conducted in 2006. It went back three years. So starting in 2006, it potentially covered the first time that digital royalties appeared on any kind of statement. When we got the audit royalty report, it was obvious that they were paying us under the records-sold provision as opposed to the license provision. We made a claim -- to Universal Music -- that we had an issue with it."

What ultimately was in question with Martin's claim was whether a digital download off a service like iTunes more resembles a music license or a record sold. There is quite a bit at stake regarding the classification. Adam Parness, Director of Music Licensing at Rhapsody.com, described to me the monetary difference between the delineation of a record sale and license by saying, "If it is records sold, the artist usually gets between 12 to 15 percent or higher, depending on the artist's clout, versus if it is licensed master, which has traditionally meant licensed for a soundtrack or TV show, that has been a 50/50 split."

A License Or A Sale? A Primer

As Parness said, a music license has been thought of historically as one master copy handed over, often for incorporation into a movie soundtrack or television show. Because it is "handed over," the percentage yield of royalties is usually higher for the artist due to the lack of other manufacturing and distribution cost: hence the 50/50 split. Susan Brown, music attorney and Executive Editor and Publisher for Musical Confidential, talks of the longstanding tradition of the music license split by saying, "For as far back as I can remember, this is pre-digital distribution, that for licenses there would be a 50/50 split." In contrast, a sale is more like selling a CD or vinyl record, which usually has other fees associated for manufacturing and distribution, hence the artist usually receiving in the ballpark of 12-percent royalties.

The big shake-up occurred when trying to define the digital download classification. If the label sends a master recording over to iTunes, who then, off of their servers, duplicates that digital file to thousands of fans for a $0.99 download fee, how are the payments divided? As the money has historically been sorted out, iTunes keeps about 29 cents and the labels get 70 cents. Until recently, the labels have kept roughly 88 percent of that 70-cent figure -- and sent the remaining 12 percent to the artist. Then along came Detroit's F.B.T., who, upon more detailed inspection, discovered that the master copy given to iTunes looked pretty darn similar to a master copy given to an entity like a movie soundtrack.

Martin of F.B.T. speaks of the miscalibration of digital sales by saying, "Who in their right mind would say you could apply packaging deductions to digital downloads? There are no packaging deductions. But this is part of the formula. Breakages, container charges, all these crazy things... there was no justification for taking all these deductions when they truly had no costs as it related to manufacturing -- there were none."

Although the case seems fairly clear-cut and it seems that anyone would agree with Martin's sentiments of it being ludicrous to have packaging deductions for digital downloads, F.B.T.'s lawyers had their hands full in trying to bring a layman jury up to speed about the delineation between a license and a sale. Martin says, "[Universal] constructed this scenario where the iTunes store is just that: it's a store. Just like you go into a regular store and you want to buy something. You pay for it, you get it, you listen to it. You can do whatever you want with it. Our position was, it is not exactly like a store where you can physically go buy something that you can resell."

Martin continues to enunciate the fact that fans couldn't resell the items bought, so F.B.T. questioned whether fans, in fact, really owned the song. Because the concept and idea of a license hinged heavily on verbiage, Martin says, "It became really apparent to us that they were doing their best to avoid using the term 'license' in any of their agreements with people like Apple. They would call them 'agreements.' Typically it would be a license -- but they kept referring to it as a wholesale price or a resale agreement -- anything other than using the word 'license.'"

Mary Beth Peters, former Register of Copyrights, commends F.B.T.'s strategic direction for making their case by saying, "The people who argued [the case] were clever enough to not just look at the end product, but look at the relationship. Because typically in a sale, it is an outright sale of the product. I saw that the judge looked at the relationship. When he looked at license relationships and when he looked at sales, this looked more like a licensing relationship." Although Peters agrees with the judge's and jury's decision due to the direction it was in fact argued, she also offers her more copyright-directed assessment by saying, "When I read the case as a pure copyright lawyer, I say a download is a sale." So Peters herself, with all her musical copyright knowledge, is really on the fence about the verdict.

Long story short, the highest court in the land found that iTunes "used" the masters, which directly translated to the license 50/50-split realm. Good for Team Eminem. Martin continues to identify the monetary worth of the verdict for Eminem by saying, "Up to this point it is easily between $15 and $20 million. On a future going basis you could be talking $50 to $60 million in the life of the catalog -- and this is just one catalog."

David Kusek, Vice President of Berklee College of Music, helps to identify the possible severity of the F.B.T. ruling. He set off to figure out the potential difference between what royalty was paid to artists from digital downloads, and what might still be owed to artists. The discrepancy he calculates comes in at $2.15 billion. When millions increase to billions, the stakes are increasingly raised. The labels, online music providers and artists are all watching with bated breath as the ramifications of this ruling play out to the full extent.

Right Time, Right Place

Peters talks about how this digital licensing fervor came to be by saying, "Older contracts never really thought about electronic rights. You are not quite sure how they are going to interpret them." Brown follows Peters' reasoning by saying, "Recording contracts are often very personalized, and a part of often intense negotiations. When I was a music attorney I would go through paragraph by paragraph, line by line, and propose different changes to the contract -- and that is what most music lawyers do. So to look at any particular contract and say that it is going to be the same interpretation as this one had been at the trial is hard to do. It is going to depend on the timing, when that contract was written, who negotiated it. If there is a contract that is very similar in language -- it will just come down to negotiations." Parness agrees with these sentiments by saying, "Just because Eminem was successful doesn't necessarily mean that every artist, future or retroactive, is going to automatically wind up being paid on the license mastered provision."

All the connected industry personnel assured me that in the future, labels are going to write contracts with more clarity and obviously more concern for the digitally changing world. They also collectively assured me they do not foresee checks amounting to anywhere near the estimated $2.15 billion that Kusek estimated.

Martin contradicts the above industry view by saying, "Everyone is going to look at their contracts now. The big problem has been removed by the courts when they said that these are really licenses. They held that it is what they would call 'black letter law'; you can now go into court relying on that. It doesn't automatically change things, but if there are class actions and people contest the accounting provisions, that is exactly what they are going to do. And they will have, to a great degree, law on their side that says these things are licenses. Nobody can argue that now -- which was our hurdle. We had to argue that they were, in fact, licenses -- and get a court to acknowledge that. Luckily, it went all the way up to the Supreme Court, and I don't think anyone is going to undo this act. They are licenses in the eyes of the court at this point."

Rick James Riles The Troops

So Eminem and F.B.T. may have stirred the pot. But now it is the estate of Motown's own Rick James that is setting the stage for larger-scale implications of this movement to play out -- and it didn't take long.

Regardless of how many times Universal Music Group stated that the Eminem ruling did not set a precedent, those reverberations didn't seep deep into the ear drums of the possibly-thousands of musicians who are not nearly as well compensated as Eminem. They now have a path.

David M. Given, a partner at Phillips, Erlewine & Given LLP, represents the newly formed Rick James Class Action Lawsuit. Given breaks down the context of the class action by saying, "Anyone who is a royalty participant on the legacy catalog at Universal may have an interest in our lawsuit." Jeff Jampol, manager of the Rick James estate, said of the suit, "There are thousands of artists who have been paid on iTunes as a sale and not as a license... Some of these estates are talking about thousands, or tens of thousands, or possibly hundreds of thousands of dollars, but to some of these artists and legends, that is everything to them." Jampol continues and says, "How can an artist possibly go up against a huge, monolithic label, especially over $10,000 when the label will just lawyer them to death?"

Jampol felt from both a strategic and a legal point of view that this was an opportunity to take a stand for the less privileged artists. And that is what Jampol, along with Given's firm, has done. Jampol specifically directs the importance of being aware of this case filing by saying, "Some of our treasures, like some of the Motown artists, never had the ability to do royalty audits. So sometimes, for decades, they have been cashing these checks from the labels and never auditing them. And now that fact has put them into the position to join this lawsuit and have their cause fought by a premier litigation firm on their behalf." Given offers praise and admiration for F.B.T. and Joel Martin and says that they laid the ground work for the coming class action suit, and did so "against a very determined legal opposition, which was neither justified or reasonable under the circumstances."

So as this current music business issue unfolds, it looks like the Detroit region plays an important role in both starting, and quite possibly spreading, a larger financial stake between musicians and downloads. Let's hope that a large array of musicians is represented and compensated not just for financial gain, but for respect. And don't forget to send Eminem a thank-you letter.

This article first appeared in DBusiness.

Detroit Shakes Up the Music Industry

Jason Schmitt — Thu, 07 Jul 2011 22:28:00 +0000

Rethinking the Music Business

Jason Schmitt — Thu, 05 May 2011 15:56:08 +0000

As the record industry started to dry up and die and the major labels were sort of crippled and starving -- it was a land grab. It was, "I just fired a third of my staff, and I am going to offer you half the money I would have last year. But I am going to give you a shittier deal on records, plus I want a piece of touring, merchandising, and publishing for which I have no infrastructure, I don't really know what I am doing, and I am probably just going to get in the way. But I deserve it because my business sucks." -- Matt Drouin, Manager of the band Metric

Music may be between a musician, her guitar, and her fans: but when you introduce licensing, streaming audio, online campaigns, social media, the Cloud and many artists gravitating toward becoming their own label, you may need a four-wheel drive to plow through the congestion of left brain thought required to take the music to the end user.

Luckily, Berklee College of Music and Harvard's Berkman Center are among the best positioned entities to understand the musical ecosystem paradox as of late and they collectively stuck their neck out to create the first iteration of the Rethink Music Conference. Attendees, who were mostly leaders in the field, flocked in from record labels, copyright offices, tour buses, congressional offices, recording studios, venture capital firms, streaming content providers, and Cloud management firms. They listened and deliberated with the concept of actually coming up with viable ideas for the future of music -- and were urged not to pontificate for pontification's sake.

This conference went well beyond the woe-is-me-our-intellectual-property-rights-have-been-illegally-taken model -- that is so 2001 -- it is 2011. Ben Folds told me he learned a decade ago that it is counterintuitive to be angry at his fanbase, so he did what so many artists have subsequently done -- he relinquished caring how his fans got his music and just concerned himself with good, sound musicianship. Following Folds' sentiments, Emily Haines of the band Metric said she also stopped concerning herself with how fans obtained her music -- but she noticed an unusual juxtaposition: as Metric increasingly gave songs away for "free" they saw an increase in ticket sales, merchandise sales, specialty record sales, and tour bookings. Metric quickly learned that "giving" across the digital divide can also correlate with "increasing" earnings and ultimately empowering the artist. If you buy what that last sentence was selling, we may be looking at the most empowered generation of musicians this planet has ever seen.

Not everyone thinks the new digital "isn't life rosy" free concept is the best power plant for a viable career path. Most notably a good portion of the older, more established artists who experienced the "golden age" of music royalties speak out on the new system of "free." Mike Mills of R.E.M. is one such artist and told me, "I believe in intellectual property rights -- but it is like trying to hold the air -- you can't do it. I think if you want to give your music away for free that is fine -- however I do think if that is how you have chosen to make a living, then you should be paid for the work that you do. It just annoys me on principle that so many people take artists' labor for free when they would never think of working for free in what they do as a profession."

Regardless of the turbulence with the digital content, the tenure for this Boston-based meeting embodied optimism for how creativity can be better accentuated through digital means. Damian Kulash of the band OK Go spoke of the new digital space and the relation to the artist and said, "It is seeing these new digital spaces as valid creative spaces. People tend to look at the Internet as something that can help realize efficiencies of commercialisms. To me, digital is a huge annex to our lives -- to the space in which we all live -- making art in that space is different than it was ten or twenty years ago."

Amanda Palmer, of Dresden Dolls fame, furthers the new digital frontier talk and directly relates to creativity by saying:

There is a pretty wild west non-monetized artistic community of call and response with these Internet memes and songs. Optimistically it takes things back to the basics. And hopefully younger artists have a better understanding that your stuff just needs to be good. Number one: write good music. Number two: play it well -- make people want to hear it. And get your priorities and thinking away from: find a label, get famous. Get in front of people, actually work on your shit. Make something that people will really want and then you are actually empowered. It used to be that even if your material was great, that didn't empower you. Now your material does literally empower you to bring money, fans and success.

The concept of "empowered artists" was a main theme for this specific meeting of the minds. Perhaps some industry players saw the empowering ability of digital coming -- but most industry personnel were blindsided. Neil Jacobsen, Senior VP of A&R, Interscope, said, "If you would have told me ten years ago that a site like Youtube, that was going to pop up and flip the content delivery ideal on its head, I couldn't have even conceived it." Joe Kennedy, CEO of Pandora, talks of how digital media weeded through the players in the music industry by saying, "Digital music is tough turf -- the digital roadside is littered with casualties."

Jacobsen continued, talking about one of the buzzes of the meet up, the Cloud concept, and said, "I know things like this Cloud computing that are going to be a game changer again -- but it comes back to the same thing. If you have great music the Cloud will work for you, if you are a borderline musician the Cloud will crush you." Adam Parness, Director of Music Licensing for Rhapsody, thinks the concept of the Cloud as more of a buzz word, and not necessarily a new, game-changing concept. Parness feels his firm, Rhapsody, has proven this service for the last decade and says, "it's not like it is coming, it has been here for quite a while. Rhapsody has 11 million songs. I think the industry is starting to really get the value of the access model. Digital downloads are starting to go out -- you are not seeing the year-over-year growth you were seeing in previous years. I think with the technology, this access thing has really become a reality."

Another game-changer reality readily addressed at this conference is what happens when music truly goes social. Up to this point a lot of the services selecting music for listeners have utilized algorithms in a similar vein as the Amazon model "if you like this, you will like this." When friends can curate musical content for friends, a whole new concept of musical exchange comes to fruition. This concept is coming down the pipe pretty quickly. The industry is placing bets and filling the sandbags as we speak for the flood that will ensue. The common sentiment of this social media direction of music is that the access model seems well positioned for the battle.

TO LABEL OR NOT TO LABEL

Amanda Palmer spoke of her relationship with the record labels by saying, "In 2003, our record label really did give us a strong launch and gave us really important promotion we would not have been able to create ourselves. But that would not be the case for artists in 2011." Listening to all the conversations transpire regarding musicians being empowered by their own means and having it all about the songwriting, it is easy to interject that the labels are an unneeded ancillary. But regardless of the direct digital imperatives, the labels have massive clout and a definitive purpose.

Interscope's Jacobsen says he understands the self-funded campaigns bands are undertaking. He says, "if you are already a superstar, and want to put out your own record, I get it." Jacobsen continues and talks of the power he feels his company can still offer by saying:

There is a value that comes with [Interscope's] ability to focus an international worldwide global marketing campaign. Just in Europe you have five countries that speak five different languages, that have five totally different media bases and you have 28 radio stations, completely independent of each other. Just because you are on the play list on NRJ France doesn't mean you are going to be on Heinz Live in Germany or Radio 1 in the U.K. You need people on the ground to actually work it. You need a central organization.

Ben Folds, talking of labels, says, "I do like record companies. They still play an important role and they will always and should always exist. But they were ripping a lot of people off. You can ask the Dixie Chicks how much money they made for selling 13 million albums. And they will tell you the answer and you won't believe it." Emily Haines continues the conversation and says that had Metric wanted to be the Rolling Stone two-page-spread glossy sort of band they would have had to seek out a major label deal, which they received and turned down. But instead they knew their fanbase were always going to be looking away from Billboard's charts and they wanted to take their message there. Haines also knew that by putting their eggs in their own basket they could sell half the albums and post a substantially higher profit.

Jimmy Shaw, lead guitarist of Metric, continues, and says, "playing David Letterman is a key thing to do, but it doesn't actually sell you any records and I think there is a lot of that going on in the old school. It is something -- but it doesn't actually do anything. The important thing for us was we were always way more interested in the actual fan."

The complete picture of the music industry, with Berklee College of Music and Harvard's help, is optimistic. It is empowering. It is a little more honest. It is back to the songwriting basics. It is using digital to cut some of the baggage and using the available media for the most important thing of all --connecting the musician to the fan. Emily Haines speaks of the modern multi-tasking, digitally-integrated musician and says:

I think it is so important that musicians can empower themselves to not be children in the process. I think sometimes it is counterintuitive -- because to be creative is not to sit around and think about numbers and deal structures all day. My thinking is you are going to have to deal with it eventually -- when you wind up having to sue your record company or sit around with lawyers. If you can develop the skill to separate your work, that is key. We take care of a lot of this stuff, then we go in the studio, turn off our phones, and just forget about it. But the oblivious musician is a very sad story to me and is in a position of being exploited.

As I concluded my interview with Metric, I thanked them for turning me on to their musical abilities. I told them that I would go home and download their full music catalog and that they probably would not get a dime in royalties so I put $10 on the table and said that this would help me to feel better about the downloading I planned to conduct. They smiled, left the money on the table and said they knew they would get the revenue from me in another stream, on another day.

I put them on my Facebook.

I tweeted their concert footage.

I bought a t-shirt.

I can't wait to see them live.

PHOTO CREDIT: Phil Farnsworth

What New Technology Firms Can Learn from Detroit Rock and Roll

Jason Schmitt — Tue, 22 Mar 2011 18:37:16 +0000

Detroit is one of those mother pools of true rock and roll. When you look at what came out of Detroit musically it may lead the listener to say what's going on in Detroit? What was in the water? Why wasn't it New York? Why wasn't it LA?
-- Henry Rollins (2010 interview with Jason Schmitt)

It is an unusual juxtaposition. I'll give you that. But yes, I am in fact having the gumption to suggest the most modern of new tech startups, and iconic behemoths like Google and Microsoft, might want to peruse other creative ecosystems, like Detroit rock music -- and to investigate these sites with the hope of better understanding their continued market relevance. If we can dissect how the creative process plays out more clearly for a region like Detroit, who has had more than its fair share of creative success, we are getting somewhere in an information age where creativity is seemingly the king pin commodity.

Most new tech firms are hardly a blip on the longitudinal timeline of creative success. Inversely, Detroit rock music has employed and cultivated a solid stream of creative talent and cultural relevancy for six decades and running. In other words, the talent and creativity of this region continually replicates and maintains its inertia. Sure, other music regions have had 'flash in the pan' success and lots of correlating hits: a la Seattle. But the Detroit case is different. More complex. Continually creating without drying up -- and allowing creativity to flourish in opposition to the regional economic imperatives.

Is it OK that Google's gut is getting too big for its pants or that Facebook is being represented by Goldman Sachs? Let's be clear, I am not a media analytical guru -- and don't know the legitimate outcome for tech startups growing like Walmarts on steroids. But I do know that Keith Woolcock, a well-known technology analyst, said in a February 5, 2011 TIME article: "To me, Google has become the Microsoft of its generation: big, bad and quickly becoming irrelevant." I also know no one has ever said the word "irrelevant" about Detroit music.

I spent the last decade researching the unique Detroit musical ecosystem. I worked at Atlantic Records, owned a recording studio and became well-versed in the Detroit creative scene. I conducted my Ph.D. dissertation on understanding Detroit rock music success. My graduate work was in Media Studies. The correlations and similarities I see between new technology inventiveness and the music creation process are numerous. The following graphs show the similarity of Richard Florida's creative class (read as new tech workforce) "heat" and the spatial dynamics of the U.S. rock music scenes from 1971.

This graph was created by Kevin Stolarick, Ph.D. for Richard Florida's CreativeClass.com

Music geographer Larry Ford helps to identify the spatial dynamics of the US music scene in the 1971 article, "Geographic Factors in the Origin, Evolution and Diffusion of Rock and Roll Music"

Taking in the above graphs, it is fairly clear that creativity has relatively stayed put in terms of geographical distribution. If you are wielding around a Les Paul, or an iPad 2, that doesn't seem to matter much. The regions that are best at using tools for creative activities have remained fairly constant in doing so. This broad appeal helped me to justify blending together rock music cultivation and new technology success. It's not the industry: it is the people and it is the mentality.

The Creative Mental Picture

The pursuit of elusive creativity has been thoroughly dissected to the point of oblivion. We know creativity thrives in less homogenized, more diverse areas (Gordon Torr, Managing Creative People). We know creative synergy happens when lots of different people and ideas and heritages, and work ethics, come together and are motivated by personal desire (Teresa Amabile, Edsel Bryant Ford Professor at Harvard Business School). We understand that creativity is not taught well in school (Sir Ken Robinson, The Element). And we realize money and other reward structures have a way of inhibiting big creative ideas instead of spurring them into fruition (Dan Pink, Drive).

So where does this leave our conversation on Detroit's usefulness to new tech bottom lines? Here is my play-by-play on what the Detroit environment is doing right to stay creatively relevant:

(1) Detroit has pocketed communities. This concept seems negative at first glance as it is representative of white flight, racial unrest and the core problem that attacked Detroit as a viable urban core.

A theme that continually came up in my research is that Detroiters, especially in the 1960s and 1970s, could tell what suburb you were from based on the style of the music you listened to and the way you dressed. Specifically, suburbs such as Taylor and Flat Rock (20 minutes south of Detroit) have Southern-inspired blues music roots. Ann Arbor (40 minutes west of Detroit) has a prominent San Francisco/ Berkley psychedelic music, hippy-inspired texture. Communities such as Royal Oak and Birmingham (20 minutes to the north) possess British-inspired music and fashion. And Grosse Pointe and St. Clair Shores (15 minutes to the east) have a very East Coast conservative, nautical-inspired ethos.

Detroit had, and continues to have, a lot of distinct areas that don't commingle daily. The catalyst of this fact being a lack of a viable mass transit system, and an often readily misconstrued view of not driving through Detroit in the evening for safety concerns. This separation kept creatives in their respective suburbs. But the separation wasn't 100% exclusive. Detroit's downtown possesses the main music clubs and venues which eventually mingled the various ethnocentricies --but it was pivotal that the garages, practice spaces, studios, workshops and living rooms were far enough removed to inhibit daily homogenization.

(2) Detroit has family-owned radio. Detroit has always been a family-owned radio empire. Even today. CHUM Group Radio and Greater Media are family-owned companies that own a significant portion of radio stations on the Detroit dial. With independent radio ownership on decline, Detroit radio is unique as it is not constrained by the same Clear Channel dictates as the majority of radio markets are in 2011. This allows the programming to be representative of what Detroiters want to hear and not national dictates. Michael Stevens, a former senior promotion manager at Atlantic Records in Detroit who now runs a recording studio out of Houston told me, "...coming back to Detroit for a quick trip and listening to the radio--there is nothing like it left, especially today with radio being homogenized the way it has. The talent on the radio in Detroit is staggering." Ted Nugent agrees with Stevens and told me: "all the radio in the country is controlled by a few people except WRIF, Detroit won't allow such an outside influence."

(3) Detroit audiences are second to none. DTE, Detroit's outdoor amphitheater, has been the most attended amphitheater in the world for 17 consecutive years according to Adam Graham of The Detroit News. I interviewed Alice Cooper and he elaborated on the uncommon artistic support in Detroit by saying, "We were playing with Steppenwolf -- Alice Cooper and Steppenwolf and across town was Savoy Brown and Fleetwood Mac, the other part of town was Elton John, and there was two other concerts going on the same night with big name acts and every place was packed--so that shows you what Detroit is."

Interviewing Slash brought out another unique avenue of Detroit artistic support. Slash told me: "It has been my experience since I started with Guns N Roses that Detroit was a great gig. From the first show on it became a known fact that every time you come through Detroit it is going to kick ass. When you have a supportive, energized, responsive crowd, like you do in Detroit, you don't have to work as hard to make the energy."

(4) Detroit has maintained the same direction. As a region, Detroit isn't easily homogenized. If you listen to a 1968 MC5 album or a 2008 White Stripes album, the song crafting, the musicianship and what is sonically appreciated, is all extremely similar. Eddie Vedder of the band Pearl Jam sings a famous line, "I change by not changing at all." And in theory this has become the unbeknounst mantra to Detroit music. To not get overly caught up in the fads and fashions. To hold true to the mission. To not change for change's sake. And in doing so, the Detroit market always looks a bit unique due to it not being 100% relevant to national trends.

Unpacking Detroit's Secret Sauce

If you are interested in corporate creativity, my first finding of pocketed communities takes the form of a "no duh." Nearly every creative-inspired leadership book I have read mentions the importance of keeping the creatives away from the nitty gritty. The importance of not micro-managing is brought up to allow the big ideas a culture in which to flourish. The interesting notion is to think of these ideas on a larger scope than the brick and mortar office. To zoom out and look at this as a more city culture than corporate philosophy. And to look at the ramifications that working from home can have on this process. Metro Detroit has enough room to allow distinct lifestyles to play out in separate Petri dishes. In a Second Life, 2.0, global access world, the dictates of "neighborhood" are changeable, scuptable, and extremely important.

Family-owned radio in Detroit is an interesting second ingredient to the homogenization kryptonite this region seems to possess. Plain and simple, Detroit is not as quick to pick up on national music trends. By not basking in the newest ideas, this region has maintained a more focused creative demeanor. Media that reflects the region's view and not national dictates, is extremely important. This finding makes reassessing your RSS feed content, and choosing what streams of information you want to seep into you, or your workforces' brain, more important.

The third finding is Detroiters make great audience members. This statement is two-fold and epitomizes the "chicken or the egg" philosophy. Is it because there are so many artists that play Detroit that Detroiters make extremely energized and supportive crowds? Or is it due to the energy and support of the region that so many artists flock to Detroit as a preferred tour stop? Regardless of the justification, Detroit audience support is massively important to cultivating this region's strong creative presence and allowing a more refined taste to develop and to continue.

Furthermore, it isn't as if Detroiters have a lot of expendable cash to spend frivolously on artist support. Detroit, with its dismal economy, still finds funds to support the tours that come to the region. And by support we mean hooting and hollering and general energized behavior more so than nearly any other region. New technology firms need to keep their workforce energized and excited (by other means than salary). By changing tasks and keeping fresh ideas constantly in the workplace, this component can be achieved. Attend web conferences, hire speakers, keep everyone in your organization questioning which way is "up."

Finally, Detroit has waded through the decades without majorly altering its course. Detroit has been able to keep its compass aimed in the same direction: making good, truthful, gritty rock music. To continually do this, Detroit acknowledges the most recent fads and fashions with a grain of salt.

What does all this mean? From February 2010 to February 2011, according to data from dice.com, Detroit is in fact leading the new technology job openings on a national scale. The above Detroit creativity variables have crossed disciplines -- and succeeded. But this piece isn't about how Detroit's foray into new tech has been successful -- it is about how Detroit's ingredients can help new technology firms grow and be relevant. By keeping your work force separated, (both physically and mentally), keeping information that is unique (and tailored to you) infiltrating your inbox, becoming excruciatingly supportive, and holding true to your mission. By doing these things your firm will become more relevant, hardworking, long lasting and more like Detroit rock music. In the infamous words of the legendary MC5, your workforce will finally "Kick Out the Jams."

Quicken Loans Turns Success into a Philosophy

Jason Schmitt — Fri, 21 Jan 2011 22:25:21 +0000

Dan Gilbert has figured a few things out for us. It is possible to be from Detroit and be successful. It is possible to create a workforce that is positive in this economic climate. It is possible to revitalize Detroit's downtown. And it is possible to go against the dominant statistics of an industry. But it is not easy -- it takes strategy and a philosophy that is understood by the full organization.

Top lenders in the mortgage industry currently have the lowest referral rating of any business sector: 11%. That means 89% of mortgage customers are dissatisfied. Put me in that group. But Quicken Loans is doing something obviously different. Quicken Loans sits today with a 94% referral rating. They, and Detroiters by association, seem to have hands on something powerful enough to overcome the dominant themes of an industry that imploded.

I research Detroit creativity and had an opportunity to be included as an "outsider" to Quicken Loan's new employee orientation called "ISMs in Action." I brought a pair of fresh eyes with me to this session just like these 240 new employees -- since we collectively had not been around the Quicken Loans culture. We were like new friends coming to Gilbert's apartment for the first-time. We could see things that he couldn't: little changes that might need to be made. Gilbert knows this phenomenon and tries to harness its energy.

Gilbert and Bill Emerson (CEO of Quicken Loans) lead this all day session and make a perfect duo. They are smart, but not too textbook smart for their own good. They know success, but both question if excel spreadsheets and pie charts are required to detect what works in an organization. This duo is pumped. And unique. And not afraid of putting some serious cash on the line for innovation's sake. They say if you chase pennies, you will find pennies. If you invest in big ideas, skills, innovation, talent, design, marketing, technology: your return will be more than pennies.

These two executives aren't penny pinching. Together, these leaders spoke for ten hours straight and utilized a staff of over 20 to keep things streamlined -- showing the priority and high expectations that are bestowed upon these new recruits. What other company has top executives that are willing to wipe a day off their calendar for the newbies--and also, what other companies have top executives who have that type of energy to command an audience on the edge of their chairs for that length of time? This isn't normal--but neither is having net revenue exceed net expenditures in 2011. The difference is working.

Although 98% of the new 240 Quicken Loans recruits wear black shoes, that seems to be the only similarity. People of all races, sizes, and ages filled the elevator with black loafers, pumps, and high heels as they are beamed up to the 15th floor of the Compuware Building. These 240 new employees are becoming orientated to organizational philosophies that are miles away from mortgages and lending. Quicken Loans team members work in a diverse array of industries from online realty to sports posters to fashion trending to biotechnology. But the beauty is that good core fundamentals don't change from job to job--and leadership traits are the same in all industries.

Taking in Gilbert's and Emerson's presentation, I was sitting by the founder of Xenith concussion resisting helmets, Vincent Ferrara, MD. Ferrara was a former quarterback at Harvard who, after becoming a doctor, had an idea on making a better, more protective helmet which drastically reduces concussions. Quicken Loans likes big ideas and, in turn, Xenith likes Quicken Loans. One more winning relationship pioneered from these fundamental philosophies.

Over the course of a very full day, 18 separate ISMs were covered. The ideas all focused on their biggest commodity--people. Quicken Loans people aren't riveting metal together producing bombers at Willow Run airport--instead their people, over 4,000 of them, are using their heads, becoming leaders, and, in turn, producing success. Quicken Loan's special sauce is their people--and their special ingredients are creativity and innovation.

That is the exact same creativity and innovation that China, Japan, and India wholeheartedly acknowledge that they lack. This trifecta of mass producing mite might be good at streamlining existing processes and selling for 1/10th the American equivalent--but they are a long way away from harnessing this sort of energy. Quicken Loans seizes on the last American virtue: our brain. Thank goodness someone is thinking.

Detroit 2.0: Is It Enough To Get Them To Stay?

Jason Schmitt — Wed, 22 Dec 2010 20:48:04 +0000

For the first time, Detroiters are starting to figure out what the hell is going on. We know our future is in a smaller, more nimble model of Detroit. We know our future isn't exclusively guided by the Big Three. We know our 139 square miles of Detroit city proper commands more media attention than many countries. We know Woodward Avenue is being re-branded to WEBward Avenue, just in case anyone thought this region was holding onto our manufacturing nostalgia. We know GM and Chrysler are set to role out 2,000 high-tech engineering jobs the beginning of 2011. We know companies like New Jersey's GalaxE Solutions find the Detroit infrastructure so appealing, they bring 500 more high-tech jobs into the city. We know Texas movie production houses are complaining they are losing talent to Detroit.

So if all the prior is true, why does my inferiority complex still exist for Chicago, Pittsburgh, and Atlanta?

Better Education:

By and large, our education system sort of sucks. We are not educating the majority of Michiganders to be able to compete in the infrastructure that our new Michigan businesses demand. Detroit philanthropist Alfred Taubman told me in an October 2010 interview that at the very core Michigan's public educational systems are extremely inefficient. Taubman said that there are currently 550 public school districts in the state. He said that perhaps having just five or six could serve the populace more adequately. This comes from someone who knows his way around a good business decision.

Taubman's view seems inline with what I see in my life. Consolidation makes things cheaper and leaner. I know from a sheerly capitalistic model that consolidated resources save a bundle. Why not take a significant savings (in the face of so many school systems on the brink of collapse) and use that bulk buying power to reduce the costs of a good education? The saving can help purchase more equipment, software, and relevant technology for Michigan's future residents -- and perhaps give students across the board a better shot at mastering the tools to succeed in this newly developing economy.

The prior relates to the K-12 system. It is a sore point. People hold their public school systems close to their heart. Talking consolidation ruffles feathers -- and gets union boosters strutting their stuff. Talk to someone in Grosse Pointe and you will see what I mean. It seems the best school systems (who have outspoken parents) tend to believe they bear the most change in consolidation. Maybe we need to Google map zoom out from K-12 and see the full educational ecosystem. Tracking down this broader education line of reasoning, I stumbled upon a study conducted by Illinois State University's "Grapevine Project" which enunciates that Michigan holds the last spot in its investment toward higher education in 2009. Specifically the leading state (Nevada) had a 73 percent increase of funding toward higher education. The average state exhibited a 20 percent increase to higher education funding. Last but not least, (the only decrease in state funding to higher education in the country) Michigan ranked as -5.1 percent toward its higher education funding.

Not coincidentally, the prior wasn't the only study that ranked Michigan dead last. On August 23, 2010, The Chronicle of Higher Education referenced an independent study conducted by The Education Trust which illuminated the fact that, from 2006-2008, 9.5 percent of African American students at Wayne State University who started a program graduated (lowest percent in the country). In contrast, but still not a glowing statistic of merit, 43.5 percent of white students who began a field of study at Wayne State graduated.

So let's recap before I lose you: Michigan has a over-burdened, way too segmented public school system, which leads to a less prepared college student, who then enters a Michigan college (which are the least supported in the country) to become disillusioned with the system, and, eventually, a very significant percentage (up to 90.5 percent of African American students) drop out. Quitting their higher education quest leaves them, without any speakable education, in the worst unemployment market in the country, and in significant debt. Did I follow that right?

So, unfortunately, the conclusion to the prior is that it appears that Michigan is doing a large portion of residents in the state a disadvantage. And, by association, shooting itself in the foot for many decades to come.

So what about the good ones? The students who beat the odds, go through school, get good grades, don't become disillusioned, and eventually land a good job. Most of the time it appears that they leave.

Let's do an informal survey of my childhood possÃ© growing up. We were all pretty on the ball. All now nearing our mid-30s:

Marek Krzyzowski, Ann Arbor Schools, UofM, Attorney, New York, NY.
Mike Lockwood, Dearborn Schools, UofM, Director of Programing, Boston, MA.
Jason Schmitt, Dearborn Schools, UofM, Professor--Oakland University, Rochester, MI.
Troy Thompson, Dearborn Schools, UofM, Engineer--BMW, Spartanburg, SC.
Jeff Viscomi, Dearborn Schools, UofM, Assistant United States Attorney, Atlanta, GA.
Kevin Watts, Dearborn Schools, UofM, Attorney, Farmington Hills, MI.

Of my childhood group, it appears that the state, which educated all six of us, has been able to retain 33 percent. Not a very good average.

Retention:

In November 2010, I had an opportunity to sit down with Dan Gilbert of Quicken Loans to talk about Michigan's future. Gilbert is aware of the concept of young people seeking thriving urban environments. Gilbert states:

The twenty- to thirty-something generation coming out of school traditionally wants a live, work, play urban environment. I think that has been proven by the fact that so many of our bright graduates have left. The great universities and great education that we have all paid for, for our students to have, has gone to Chicago, or Boston or New York. If we want to be competitive we need the urban core -- which is what the brains, who are going to build the next generation of wealth, want.

Gilbert has put his money where his mouth is, and along with Quicken Loans, Peter Karmanos's Compuware, Quizzle, Fathead, GalaxE Solutions and several yet to be disclosed companies, they have communitively agreed to spur the concept of Detroit's urban core: using the term WEBward Avenue. This corridor, which is attached to the entertainment district, is a start which will retain entrepreneurial, new technology, new wave, brain-based companies that are cutting edge and excited to grow. This core is already selling many new lofts to this new workforce/brainforce as the myths of Detroit living are dispelled.

Gilbert, speaking of the new development and recent successes states, "I think you can have an incredible area here that starts to be known nationally, and it doesn't have to take many years. I think within 18-24 months time this particular corridor is going to be very special."

Although I am putting my poker chips "all in" on this concept as I have physically seen the quick changes and the passion and excitement of many of the aforementioned companies -- that doesn't change the status quo of losing way too much talent just yet.

In Atlanta, there is a bar called the Firkin Lindbergh. Viscomi describes it as, "everything I miss about being in Ann Arbor." There are 200 Michigan football fans -- most of which were educated in Michigan, but could never find a job in their home state -- so the hooting and hollering maize and blue support has to take place in their Georgia-based satellite location. Digging deeper into this unique outpost of Michigan residents I learn that this phenomenon isn't a unique occurrence to Atlanta. They are in nearly all major cities. In New York City, a bar called Park Avenue Country Club had well over 1,000 Michigan football fans come out to support every game.

The moral of the story is that Michigan has, and continues to produce some great innovative minds perfectly suited to this new iPhone, Chevy Volt, 2.0 world, but most of these new leaders were educated and minted during a very different Michigan financial period. If we are going to continue to produce the brightest innovative thinkers, the idle for our educational engine needs to be adjusted -- it was set to run on 93 octane, but all we have is 87. It is also unfortunate that someone is benefiting from our Michigan educated students -- that is not us. Time will tell where the future lies and how we rank at our newest attempts to retain our thinkers, but Gilbert sums up his optimism by saying: "you may want to keep an eye on Detroit, because you would hate to miss it in your own backyard."