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Presidential Briefing: Christian Music Leaders Speak Out

  • Thom Granger CCM Magazine
  • 2005 5 May
  • COMMENTS
Presidential Briefing:  Christian Music Leaders Speak Out

In the business of selling Christian music, there has been — almost since the beginning — the trinity:  three major companies and their respectively owned and distributed labels that have shared this market for many years. Though now wholly owned by major music and entertainment conglomerates, each is still managed by veterans of this business whose careers began with independently owned and operated labels.

Bill Hearn was formerly the president of Sparrow Records prior to being named president and CEO of EMI Christian Music Group, a division of EMI Recorded Music North America. His father, Billy Ray Hearn, who founded Sparrow, continues to function as chairman of the group. A 27-year industry veteran, Bill oversees management of EMI CMG Label Group, EMI CMG Distribution and EMI CMG Publishing. He also serves on the board of The Sparrow Foundation and TJ Martell Foundation.

Jim Van Hook is currently CEO at Word Entertainment, the industry’s oldest label that was started in 1951 as Word Records. Van Hook was a music professor at Nashville’s Trevecca Nazarene University for six years before starting his own company, Brentwood Music, with $500 in 1981. The company was sold to Zomba Music Group in 1994 and had become an $85 million business when he officially retired in 2003. In a unique arrangement with Word (owned by the Warner Music Group), Van Hook concurrently maintains his role as dean of the Mike Curb College of Entertainment & Music Business at Belmont University in Nashville.

Terry Hemmings, who spent a decade with Reunion Records, now serves as president and CEO of the Provident Music Group, which includes labels as diverse as the benchmark Benson, Brentwood, Reunion and Essential and recently acquired distribution rights to Integrity Music. Provident is now a division of Sony BMG Music Entertainment, operating under the umbrella of RCA Label Group Nashville.

These are the men who steer the present and shape the future of the Christian music business on a day-to-day basis. We believe you will find it fascinating to get a deeper insight into their world, hear their reflections on the buying trends of 2004 and catch a glimpse of their future goals and plans.

CCM:  It was an interesting year for Christian music, wasn’t it? Though overall sales of Christian and gospel music were almost identical to 2003 (43.4 million units in ’04 compared to 43.7 million in ’03), sales of rock titles more than doubled. Is rock selling better because of general market exposure and availability, or has the church finally just gotten comfortable with more aggressive musical styles?

Jim Van Hook:  I think it’s both. I think praise & worship has sort of loosened up the church a bit to accept a wider variety of styles than in years past. Look at an artist like BarlowGirl whose debut album has sold more than 200,000 units and is what we would have always classified a rock record but is now really in the center of the market.

Terry Hemmings:  There has always been an audience for rock, and the roots of this business were in rock; but we kind of got away from it in the ‘80s and early ‘90s. Over the last decade, people like Brandon [Ebel, founder of Tooth & Nail], in particular, have really done an incredible job of developing a market again for rock. Once that happens, and tools like Internet sites and the like develop around that, expectation develops in the consumer; and they start looking for it. Combine that with a greater access to the products, and you have a formula to reach those people who were always there for rock music.

Bill Hearn:  I think a lot of those sales came from labels like Tooth & Nail, which sell a lot of product in the general marketplace. In the case of Jeremy Camp, in particular, almost 50 percent of his sales are coming from the general market.

TH:  We exceeded our general market sales last year by 35 percent, and that was without any support at mainstream radio for any of our records. It’s really just due to a focused effort on retail, in general, as 50 to 60 percent of our sales now are coming from mainstream retail outlets like Target, Wal-mart, etc. We actually consider those to be Christian retail outlets for us in that they are sold as clearly Christian records racked in the Christian or gospel music section of their music departments.

This is not the same situation as Switchfoot, for example, that is being marketed as a pop act and racked that way in the mainstream. We really try to define these things by the artist’s intent. Casting Crowns has no desire to be anything but a Christian band, yet its records sold very well in those outlets. We went platinum on that record in 15 months. It’s extraordinary.

BH:  What’s happening is that mainstream retailers are finally realizing that Christians are shopping in their stores, too, and that it’s OK to put Christian artists on their samplers, end-cap displays or promotional items because a large part of their consumer profile is made up of faith-based individuals.

The real story about 2004 is that, since 2000, Christian music sales have been flat because in that same four-year period, sales of all music in the United States were down 15 percent. So during a very difficult economic period in the music business, Christian music held its own. So, in reality, we gained market share during that period because we went from about 5.5 percent of the overall music market to about 6.5 percent by maintaining flat sales.

The question is what do we do to grow sales? That’s where I think you will see the industry becoming more creative, addressing the needs of the church more with worship music — which I’ve kind of termed the Christian pop music of the new millennium — and with the new stream of artists who are choosing to position themselves as mainstream artists as opposed to a crossover Christian music artist.

CCM:  Speaking of new artists, another trend seems to be that the AC/pop that defined contemporary Christian music for so long appears to be falling out of favor with the fans. Several historically top-selling AC/pop artists who released projects in 2004 sold far less than each did just a few years ago. Is this also a result of rock’s increasing popularity, or are Christian music fans just ready for some new faces?

TH:  I think it’s a function of a couple of things. I think the market turns over every so often, and there will always be a hunger for new artists in pop music. I think our opportunity with “new” is greater than it has been at any time that I can remember because radio is responding to newer artists much quicker than they have in the past and responding to a hotter AC sound more than in the past as well. We will probably release more records from new artists this year than ever before.

JVH:  I think it all gets back to the songs. So many records try to cover up an average song with great production, and it just never works. A great song has to have heart and meaning, be reflective of its culture, expressed by a poet and recorded by musicians who adequately carry that expression through the art of music to a listener who hears it and responds, “Yes! That’s how I feel.” Other things have value but none are as important as the core, which is the song. Make great songs and chances are, money and product are going to tend to change hands.

CCM:  Money and product continue to change hands for Christian music but in new and different ways all the time, of course. Have any of these “new wineskins” caused you to rethink how much CDs cost and what buyers pay for them?

JVH:  Pricing pressure is tremendous now, as the perception today (because of downloads) is that a song is worth 99 cents. Multiply that times 10 or 12, and you have a price point far below the 17 or 18 dollars that has been the standard for years. We’re going to hold up the price point as much as we can but not more than the market will allow. Frankly, the relationship between the record company and the artist has to change now as well. We can’t spend the kind of money on masters that we used to, or marketing, for that matter.

TH:  We have a 60-day introductory price on new artists, which has been fairly effective, but after 60 days we move to full price with little downside. Casting Crowns has been at full price for a year now and is still selling well.

JVH:  I fully believe CDs are going away as the primary delivery system of content. I don’t know when, but I believe it will happen; and therefore, there have to be multiple revenue streams at a company like Word, and the relationship with the artist has to be redefined. I still think there is a place for this type of company because most artists cannot become totally viable by themselves. But the way to help them succeed is changing.

CCM:  Let’s talk about digital media, downloads and the like. What are your thoughts about that area of the business currently, and what are you doing at your companies to take advantage of these new markets?

BH:  We have come to see that Christian music consumers are just as wired as any other music consumer and are consuming digital music at or slightly above the rate of mainstream music consumers.

We have been very aggressive in providing content to the digital service providers. As of this spring, we have over 1,000 full albums available on the DSPs, which means over 10,000 songs, all of our new releases and about 80 percent of our back catalog available digitally. Individual songs are running at about 80 percent of our total digital downloads and full albums the other 20 percent. We have about 60 ringtones available now and will have over 300 available by June. The prediction is that, while digital music will continue to grow exponentially, mobile music — ringtones, voice tones and images to cell phones — could surpass digital downloads in the next few years.

TH:  We have increased our alternative marketing staff to four, and those people communicate with their parent company counterparts on a daily basis about new opportunities and the like. Sony/BMG is the worldwide leader in the digital realm right now, and that includes ring tones, wallpaper, ringbacks as well as downloads. Ring tones for Casting Crowns are running about equal to their business in downloads right now, for example. Now we’re finding a demand for artists recording personalized messages for personal voice mail, and I think that fits well with the Christian music lifestyle.

JVH:  This is a huge priority for me. We know now that more than 10 million iPods have been sold; five million of those were sold just last quarter. And that does not include the new iPod Shuffles. I haven’t yet talked to a single individual who owns an iPod and doesn’t completely love it.

But the majority of sales in downloads is in individual songs, and we have to look at that very closely and come up with a new strategy to better accommodate a new type of buyer. Instead of looking for 10 to 12 songs to take into the studio with an artist, maybe we just record the two or three that really knocked our socks off and sell those when they’re ready, as opposed to an entire album. I don’t think we’re at that point today, but I think we have to be open to new approaches like that.

BH:  The bottom line is, while digital music is an important part of the future of the music industry, it is still only two percent of our total music sales, though our sales through digital increased five times from ‘03 to ’04. So even though we expect to see exponential growth in digital music, we don’t anticipate it being more than 20 percent of our business in the next 5 to 8 years.

What is wonderful about all of this is that consumption of music is at an all-time high. If you combine sales of physical CDs and digital downloads, music surpassed 800 million units in 2004, which is the first time it has been that high since 2000.

CCM:  What is your greatest challenge now, and what motivates you to face it on a daily basis?

JVH:  As a survivor of leukemia [Van Hook was on interferon treatments for over three years and has been declared cured for more than 2 1/2 years now], every day is a blessing and a gift for me.

As far as challenges go, obviously, Word knew it was losing Integrity Music months before its contract officially expired at the end of 2000. And as of Jan. 1, Word’s market share dropped from 28 percent to 14.8 percent, so I came in with a full crisis in effect. The four things that I am focusing on are getting the right people in key leadership roles, managing the managers, changing the business model to address the changing landscape in the music business and changing the corporate culture.

BH:  The greatest challenge for us at the labels is to make the paradigm shift from thinking that the consumer relationship is the responsibility of the retailer, to one that desires to understand their needs and wants to better guide our marketing and A&R to provide music that is more relevant to them, making it available in ways that are more in line with their lifestyle.

I love change; I love a challenge, and this has been a tremendous challenge, to think of us as a music company as opposed to a record company that only produces plastic discs. There are no rules anymore, and that makes it exciting for people like me to be a part of changing things at this time. I’m just glad it happened at a time when I was young enough to cope with it!

TH:  I absolutely love music; and when I get up in the morning, I can’t wait to listen to it. If one is not motivated by that love, I would imagine it would be a pretty dry experience.

We have the opportunities to do incredible things with our parent companies, but that also requires us to think in new ways; and the businessman in me loves that as well. We’ve got the biggest platform to take the gospel to people through music that we’ve ever had, and our challenge is to find the very best talent and make the very best music we can so that we have something to offer. Trying to break new artists is a daunting task; but when you find something that you can’t stand the thought of people not knowing about, it’s very motivating to go the extra mile to try and make it happen.

Pop Quiz
Gentlemen, take out a sheet of paper and number from 1 to 11 ...

1. If you could sign any artist in the world to your label, which one would it be?
Jim Van Hook: The Beatles
Bill Hearn:  U2
Terry Hemmings:  Sarah McLachlan

2. Of all the recent infiltrations of Christians/Christianity into mainstream culture, which one (outside of music!) is most intriguing to you?
Van Hook:  George W. Bush
Hearn:  Ministries focused on professional athletes and sports celebrities.  Their ability to  have an impact on the culture as role models is significant, and I am seeing more of that in the last few years.
Hemmings:  There are some television programs that have a positive impact and remain viable programming. “Seventh Heaven” is a good example.

3. Which one in music?
Van Hook:  U2/Bono
Hearn:  Great music created by Christians.  Music from Christians is having more of an impact on mainstream culture than ever.
Hemmings:  I am watching The Afters.

4. Name your top three “Desert Island” discs.
Van Hook:  The Carpenters, Henry Mancini, Collection of Hits of The Bee Gees, Louis Armstrong. (However, I would prefer an iPod with my favorites included.)
Hearn:  My iPod with a long-lasting battery.
Hemmings:  Pink Floyd’s Dark Side of the Moon, Dire Straits’ Love Over Gold and Rich Mullins’ A Liturgy, A Legacy and a Ragamuffin Band

5. Who do you think is today’s most over-hyped mainstream artist?
Van Hook:  Britney Spears
Hearn:  Any finalist from “American Idol”

6. What’s your usual at Starbucks?
Van Hook:  A latte
Hearn:  I try not to drink coffee.
Hemmings:  I prefer Peet’s. I order it online.
 
7. What do you consider your greatest accomplishment in this industry?
Van Hook:  Starting with $500 and building the company [Provident] into one of the “big three”
Hearn:  Supporting great artists in achieving their vision
Hemmings: I consider the most important thing to be the number of people who have worked for us that are in leadership positions in this or other industries and companies. I believe one of the most important aspects of this job is to provide a platform for others to grow and succeed.

8. What is your most embarrassing industry moment?
Van Hook:  Passing on Sandi Patty in 1979
Hearn:  Why would I tell you that? I’d have to relive it all over again.
Hemmings:  Ironically, it just happened yesterday.  I was meeting with a new band and asked one of the guys if he was related to another.  They were sitting at opposite ends of the table, and I had not taken a hard look. Turns out they are identical twins.
 
9. What word or phrase do you most overuse?
Hearn:  “I was listening to you, honey!”
Hemmings: “Did we sell any records?”  Sometimes good news is just good news, even if it does not produce an immediate result.

10. a. Hard music or southern gospel?
Van Hook:  Neither
Hearn:  I am a pop music fan. Give me a great song any day!
Hemmings:  Hard music

b. Napoleon Dynamite or Ferris Bueller?
Van Hook:  Neither, but my friends tell me it would be Ferris Bueller.
Hearn:  Ferris Bueller
Hemmings:  Ferris Bueller, my life story

c. Simon, Paula, or Randy?
Van Hook:  Randy
Hearn:  I don’t watch “American Idol.”
Hemmings:  Peter, Paul and Mary (Actually, I have the most respect for Simon. He is direct, but most often correct.)

11.  Presidential Picks: Who would you like to see face off in the 2008 election?
Van Hook:  Rudy Giuliani vs. [Tennessee’s] Governor Bredeson
Hearn:  The two or three people who believe in God, with the greatest character and integrity and who have the best interests of this country and our way of life as their platform.
Hemmings:  Arnie and Hillary — too bad it can’t happen.


© 2005 CCM Magazine.  All rights reserved.  Used with permission.  Click here to subscribe.