Fanfare Magazine
July/Aug 2007

ArkivMusic Offers Archival Music on Demand, Just for You!

Feature Article by James Reel

Remember the Y2K scare? Supposedly, because of a glitch in the way computers read the date, at the stroke of midnight on Jan. 1, 2000, computer systems around the world would crash. Consequently, financial systems would be vulnerable to electronic banditry, prison gates would fall, and tombs would crack open to unleash demons upon the earth. Remember that? And remember how on New Year’s Day nobody had anything worse to deal with than a champagne hangover?

The next doomsday upon us is the death of the compact disc. Pimply teenagers around the world have forsaken CDs and instead blithely download individual tracks to their computers and iPods. Tower Records, that brick-and-mortar dinosaur of a retailer, has disintegrated, leaving not even a noble ruin to gaze upon. Writer Norman Lebrecht has been in Cassandra mode for at least a decade, ululating over the rotting corpse of the classical recording industry.

Except—wait a minute—Fanfare still prints a fat magazine of CD reviews every two months. The major labels have imploded, but smaller companies are issuing a huge number of bolder, better-recorded classical CDs than we generally got from the majors in the past decade. Sure, the Tower Records bins have been lugged to the dump to make way for Pilates machines and the other necessities of the new tenants, but we can go online and browse a greater inventory of classical titles than was ever available in any Tower store.

And—what’s this?—thousands of deleted classical titles, presumed dead and gone forever, are suddenly for sale once more. It’s Y2K all over again. Somebody forgot to make the disaster happen.

Part of our good fortune is the work of Eric Feidner, president of the online classical retailer ArkivMusic. Its database lists more than 87,000 classical CDs for sale on 1,200 labels. At this writing, the company offers more than 2,300 previously out-of-print recordings now available as production-on-demand CDs. You order a title; ArkivMusic burns a copy for you with the original cover art. It doesn’t exist physically until you place your order. This isn’t piracy; ArkivMusic has spent years negotiating agreements with such companies as Sony BMG, Universal, Deutsche Harmonia Mundi, Marco Polo, Naxos, Preiser, Vanguard, and Vox. By the time you read this, ArkivMusic should also be offering hundreds of EMI titles as well, with much more to come.

Feidner lives in Connecticut; the other employees work mainly from home, wherever that may be, or from the company’s 20 warehouses across the country. The retail Web site celebrated its fifth anniversary in February, shortly after having launched its on-demand service. Despite its recent start, that service had been part of the company’s plan from the very beginning, when Feidner and colleagues—who had helped start one of the first big online music stores in the mid 1990s—realized that the classical market needed to be served well by a specialty outlet. “For larger companies,” says Feidner, “classical music tends to be a fringe category that doesn’t make much money but requires a lot more effort than other genres of music, especially the database structure and the Web site interface—how you find recordings. We felt you could provide a wonderful service for this core group of consumers who were interested in the genre by, first, putting it all online and making recordings easy to find. That was half the battle. But the bigger issue was creating an efficient distribution system for the deep catalog, which people of late are calling the ‘long tail,’ a broad catalog of titles for which there may be a limited demand at the furthest fringes, yet the titles continue to sell over a long period of time.” So the first job of Feidner and company was to create, in Feidner’s managerial language, “the infrastructure that allows us to source classical recordings from a distribution network so we can make more titles available and have more titles in stock than anybody else.

“The large number of out-of-print recordings of classical music is a manifestation of the inefficient old distribution system for selling classical music. With a deep catalog, and limited demand at the fringes of the catalog, it’s hard for larger companies to keep those recordings in print because of the cost structure of the traditional distribution system. Our original business plan was to build an efficient distribution system not just for recordings currently in print, but for an even larger selection of recordings that are out of print. If you can only sell 100 copies of some title in the United States in a given year, that’s too small a number for the major labels to keep the title active in the current catalog. The only way to sell it and distribute it efficiently is: never produce the CDs in the first place, but store them digitally, make them available online, and when one of these 100 consumers wants to purchase the title, that’s when you actually produce the CD and the packaging, and ship it out through the mail. This was part of our original business plan. The trick was to actually get to the point where we could license the recordings, particularly from major labels. That’s where we get into the large treasure trove of recordings that are no longer available. But the licensing and manufacturing deals did not really get completed until late last year. So the last few months have been a tremendous burst of activity.”

When I spoke to Feidner in March, ArkivMusic had 2,300 on-demand titles in its sales database, with another 700 being set up for production, and agreements in place for at least another 5,000 titles still to be made available, not counting new deals that were in the works. “Every deal is subtly different,” he says. “Basically, the spirit of the agreement is we have either a license or manufacturing right to the recordings from a given label or distribution company for titles that they currently do not have in print in the United States and Canada, although since we sell so many imports, we usually put out only things that are truly out of print in most territories. Because recordings are constantly going into print and out of print, anything we put out is subject to approval by the companies we deal with, taking into account their re-release schedules. Most companies prefer us to put out more or less the same package that constituted the original release. Minor issues of trademarks and logos and packaging may differ, but we don’t re-master these recordings, so whatever that original release was, it’s going to be a literal disc-to-disc transfer. Recently we’ve started using the original liner notes. That’s a bigger project, more expensive that what we started with, and the trick with the liner notes is figuring out which titles really require the further effort. I originally had a theory that for this kind of a project, the liner notes would be less important simply because, frequently, somebody’s trying to find a specific recording for some reason, because they loved it from their childhood or it had some special meaning for them, so the music would be the overriding concern. But over time we’ve gotten enough feedback that enough consumers value the liner notes.

“This also has to do with some research we’ve done in terms of what classical consumers are looking for when it comes to digital downloads as well. We sent a survey by e-mail to about 50,000 ArkivMusic customers, and asked 13 questions about their digital music preferences. We wanted to find out how much effort we needed to put into a platform for digital delivery to the classical consumer.” Feidner is talking about the sort of thing iTunes does. “The overwhelming preference for our customers is that they still want to buy physical CDs, which seems kind of crazy in terms of what’s going on in the overall music business; they say the digital future is here. But this survey told us what’s important at least in terms of what we sell to our customers—the core classical consumer more than a crossover kind of consumer, which is what’s happening on iTunes, where more pop-music buyers are crossing over to buy classical music, which is a great thing—but for the people we’re selling to, there’s a much longer possible life span for the physical disc than in popular genres of music. The big reasons are liner notes, and the inferior sound quality of compressed or encrypted download files. What our customers would want in terms of digital downloads are downloads with liner notes and no compression. But they also want the physical discs to sit on their shelves as well, because there’s not a lot of trust that what’s sitting on an iPod or hard dive will always be there. So I came to the conclusion that we could eventually go to a lot of effort to build a download platform, but we already sell what they really want: it’s a physical CD, and we ship it through the mail.

“When there’s more demand for classical downloads we’ll put more effort into it. Right now we’re just providing a gateway to iTunes. One of the big issues with iTunes is that the interface for finding a classical recording is just not adequate, so at least we can provide that service. If you’re iTunes and you’re selling all genres of music and movies and TV shows, it’s hard to get down to the fine-tuning of the interface for this one genre that just happens to be different from all these other genres because it’s got weird fields in the database, like a composer field but not necessarily an album title field. Classical music is a drop in the bucket for them, so we’ve provided a better classical interface for iTunes through our own site.”

But back to that on-demand service for out-of-print discs. If you scroll through the listings, you may wonder just how much demand there can be for some of this material: Adrian Leaper’s Sibelius cycle on Naxos, dueling deleted Bruckner cycles from Decca. Feidner points out that although the ArkivMusic logo goes onto the packaging, the company isn’t trying to craft its own label and create an individual catalog; it’s just trying to keep everything available, or at least every title that a couple of hundred consumers would want to buy over the next few years. Part of the process of getting titles up involves research into what’s completely out of print, and what discs have been partially reissued but still have enough unavailable material to make an on-demand version worthwhile.

Another way of setting priorities is tying in with the playlists of classical radio stations. ArkivMusic has built a sophisticated linking system for classical radio station playlists (provided to stations for free) that enables click-through purchasing for listeners searching for pieces they’ve heard. Because radio stations draw from CD libraries they’ve been building for some 20 years, a lot of the recordings heard on the air every day are out of print. Those playlists tell ArkivMusic which discs need to be made available for purchase immediately. (If the company doesn’t have rights to the item, it will offer shoppers alternative recordings.) Says Feidner, “It’s one of those things that nobody else has bothered to do, because to do it right you have to put a lot of effort into the technology to make these links work correctly.”

Feidner would like the program to become more customer-driven, too. If I sent him a message saying that I really wanted a copy of Jean-Baptiste Mari’s long-gone EMI recording of Pierné’s Cydalise et le chèvre-pied suites, that request, Feidner promises, would get the title moved toward the top of the processing list. “Certainly that’s information we would love to get,” he says, “because with the vast amount of recordings that are out of print, it is a challenge to say, ‘Where do you begin?’ ”

ArkivMusic couldn’t begin at all until, around the middle of last year and after several years of negotiation, the company persuaded Sony BMG and Universal to go along with the on-demand idea. “For this business to work, you really need to get the major labels involved,” Feidner says. He means no disrespect to independent labels. “Clearly, the large majority of new releases every month are coming from the independent labels, and our business over the last five years is heavily weighted toward selling BIS and Naxos and Harmonia Mundi and Hyperion, and much less toward what is coming out on the major labels. But if you’re selling on-demand out-of-print titles, the independents don’t delete very much, and what they do delete tends to be the furthest fringes of the catalog, so there’s going to be less demand for what’s out of print on an independent label. But the major labels are the treasure trove, because they have so much out of print. I’m a former French horn-player, and one of my favorite horn-players is Hermann Baumann. But basically every solo Hermann Baumann record is out of print. Here’s this great artist who’s recorded so much of the great repertoire for French horn, but you can’t buy any of it. Well, now we can resuscitate entire artists’ discographies.” But labels do sometimes like to mine their old catalogs for reissues; what then? “If Philips issued the Hermann Baumann Edition, we’d be happy to take ours down, and it would be a wonderful thing,” says Feidner. “The recordings we sell large numbers of ideally would be a signal to the label that it’s time to put some of these back out into general release. We just want to sell the record one way or another; if it’s a CD we can stock in the warehouse, that’s fine too.”

If your own experience ripping and burning CDs cheaply leads you to expect ArkivMusic’s on-demand discs to be available at super-budget prices, you’ll be disappointed. Explains Feidner, “We have to pay back to the label, which is not insignificant, and we have our production costs, fulfillment costs, packaging costs, and raw materials. Most of what we’re selling winds up around $15; the ones with liner notes cost a little more, because it costs us more to make them. I’d hoped to sell them for a lower price, but the cost structure hasn’t allowed us to do that.”

So, what are ArkivMusic’s hottest on-demand sellers? A lot of that depends on what’s being driven by radio airplay, but not entirely. “Along the way, there have been all sorts of titles that, who knew something would suddenly be in greater demand than something else? There’s a series on Vanguard of German university songs; those had the biggest sales numbers not too long ago, and they still sell surprisingly well.” How many copies constitute a good seller? “It’s hard to say, because the first big push for these recordings really came at the end of last year, so the big sellers so far have been holiday titles, and those aren’t great examples—anywhere from 500 to 600 units. Ordinarily, in our main catalog, 500 to 1,000 units in a year would be a good seller, but that’s a higher number than I would expect for what we’re selling on-demand. For those, a more typical number would be 100 units in a year for a given title; 300, 400, 500 units in a year would be very good sellers. And I’m sure we will see sales activity on over 2,000 of those titles, which basically means that everything sells.”

Which is good news to Feidner, because his mission is to find ways to sell classical recordings that make good business sense. “ArkivMusic was a bootstrap startup, meaning we had no funding from anyone else,” he says. “That seemed like a reactionary build-a-business process after a number of us had worked for very well-financed Internet startups, but we decided that you build a business differently if you’re taking money out of your own pocket. So everything we’ve done to build and grow this business has revolved around doing things that are cost-effective, not spending money unless we can predict a return on our investment.”

When a businessman speaks with that kind of confidence about making money, you know that the classical CD can’t possibly be dead.

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