Trad Two-Step - May 2006

Earle Hitchner at the Celtic Cafe

Green Linnet Records Sold to DMGI

Compass Gets License for Physical Album Production

CEOL

By Earle Hitchner

Published on May 17, 2006, in the IRISH ECHO newspaper, New York City.
Copyright (c) Earle Hitchner. All rights reserved. Reprinted by permission of author.


One of the world's premier labels for Irish and other Celtic traditional music over the past three decades, Danbury, Conn.-based Green Linnet Records was acquired on May 10 by Digital Music Group Inc. (DMGI). Founded in 2005 and based in Sacramento, Calif., DMGI is a content owner and distributor of digital music recordings for such online music stores as Apple iTunes, MSN Music, RealNetworks, Napster, Wal-Mart Music, and Yahoo! Music.

Specializing in independent label, past-hits, out-of-print, and back catalog recordings, DMGI plans to digitize more than 2,400 tracks from the Green Linnet master recordings it acquired and make them available to those global online digital music outlets. Also, DMGI expects to sell Green Linnet catalog music to ringtone, mastertone, and over-the-air download sales channels that include mobile technologies, digital downloads to a PC, and streaming music over the Internet.

In addition, DMGI has licensed to Compass Records in Nashville, Tenn., the rights to physical album production (hard-copy CD's) from the Green Linnet catalog for brick-and-mortar, direct-to-consumer, and conventional web outlets.

"We've had a relationship with Green Linnet Records to distribute its music to online music stores, like Apple iTunes, for the last year or so," said Anders Brown, DMGI's chief operating officer, by phone from Sacramento. "After our IPO, we ended up discussing how we might acquire the master recordings outright from Green Linnet."

On Feb. 2, 2006, DMGI completed its initial public offering (IPO) of 3.9 million shares of common stock at $9.75 per share, raising about $33.3 million in net proceeds. "The majority of our IPO proceeds have been earmarked for content acquisitions," said DMGI President and CEO Mitchell Koulouris in a press release dated May 10. The same day it bought the assets of Green Linnet Records, DMGI also entered an exclusive, five-year digital distribution deal with Lobster Records, an indie label in California.

Because of a confidentiality clause, the purchase price for Green Linnet Records was not disclosed, nor would executives from DMGI and Green Linnet or artists formerly signed to Green Linnet who were contacted by this writer last week discuss the acquisition cost.

Tracking DMGI quarterly reports over the past year or so, however, suggests the marketplace potential for digitized music sold online. During the first quarter ending March 31, 2006, DMGI reported 1,107,000 paid downloads of its music recordings--a jump of 25 percent over the fourth quarter of 2005 and a seven-fold increase over the first quarter of 2005. About 65,000 DMGI music tracks were available for sale by March 31, 2006, compared to 5,100 by March 31, 2005. DMGI revenue in the first quarter of 2006 was $721,000, compared to $41,000 in the first quarter of 2005.

In our phone interview, DMGI's Anders Brown gave these replies to questions I posed about Green Linnet brand retention, out-of-print recordings, and artist royalties. "We want to keep the imprint of Green Linnet because there's such a value to it," he said. "In the digital world, there really isn't an out of-print recording. We purchased the master recordings from Green Linnet, and when that music sells, there are royalties to artists, and, yes, we will step into the shoes of the 'original Green Linnet company.'"

In our phone interview about Compass Records' new licensing deal with DMGI for Green Linnet physical album production, Garry West, who founded Compass in 1995 with his wife, Alison Brown, said: "We're maintaining the Green Linnet imprint. It's the most valuable imprint in Irish music. It's a trust for us. We look at a catalog like Green Linnet's and we want to be the caretakers for it."

REACTIONS
Green Linnet Records began in 1973 as Innisfree Records by Lisa Null in New Canaan, Conn. Wendy Newton, an activist director from 1970 to 1975 for the World Affairs Center of which Null was a supporter, joined Innisfree/Green Linnet in late 1975 and became sole owner in 1978 of what became just Green Linnet Records.

"I love the music down to my deepest gut," Newton said by phone from Danbury. "We brought out a great catalog and had a great time. I am an analog person, and I knew the inevitability of the world becoming digital. I think the deal with DMGI is just a win-win situation all around, and that's because DMGI is smart, aggressive, businesslike, and literally way ahead of the game on all counts."

Digital Music Group Inc.'s purchase of Green Linnet master recordings also met with the approval of some former Green Linnet artists, including musicians from the so-called Green Linnet Five (Eileen Ivers, Joanie Madden, Cherish the Ladies, Altan, and Mick Moloney) and Lúnasa, whose royalty and other contractual disputes with the label spilled over into a public forum during 2003. In several cases, the musicians I contacted were bound by confidentiality and thus circumspect in their remarks.

"The agreement we came to was satisfactory, and I'm delighted that the matter is resolved," Mick Moloney said by phone from Limerick. His most recent solo CD, "McNally's Row of Flats," was issued by Compass.

"We're happy that everything has come to closure and we can move on," Altan fiddler Ciaran Tourish said by phone from Dublin. His solo debut, "Down the Line," came out on Compass last year.

"We look forward to developing a mutually respectful and beneficial relationship with DMGI," Lúnasa flutist Kevin Crawford said by phone from Ennis, County Clare. Lúnasa now has three albums available on Compass.

In its Danbury, Conn., office Green Linnet Records employs five full-time workers and one part-time worker, ranging in service from six to 13 years. Neither Wendy Newton nor Garry West was willing to discuss the employment future of current Green Linnet personnel.

EVOLUTION OF A DEAL
Speculation and rumors about the sale of Green Linnet Records or about likely suitors have popped up at various stages throughout the years. "One of the problems we've had in bringing deals to a close was that people who were the most enthusiastic and most appropriate were unable to get the money," Wendy Newton explained. "We've been inches away from closing deals."

It was Richard Rees, vice president of business development at DMGI and former president of Rio Bravo Entertainment, who essentially initiated and clinched DMGI's acquisition of Green Linnet Records.

"I got a call from Richard about a year and a half ago to be the portal for our digital downloading," Newton said. "At first he wanted to sample an Inti-Illimani track. Then he came back and said he wanted to be my portal to iTunes. The chemistry was fantastic. About six months ago, Richard called me and said Rio Bravo was being acquired by Digital Music Group. He wanted to acquire our catalog."

Regarding DMGI's licensing of physical album production to Compass, Newton said, "I feel only positive about Compass's role in the scene."

Garry West affirmed Compass Records' commitment to Celtic music, its single largest genre even before the DMGI licensing agreement.

"We've never been a build-it-to-flip-it sort of organization," he said. "We're acoustic music fans, and we have felt for a long time that some of the more exciting movement within acoustic music was happening in the realm of Celtic music, which we love. We're worker bees, not world-conquering strategists. We're very happy to play this part and take on this music and continue to do the best job we can. Our model is to put out the highest-quality music that fits with our aesthetic."

THE FUTURE
Its new licensing agreement with DMGI now makes Compass Records one of the world's largest labels for Irish and other Celtic traditional music, but Garry West also expressed some concerns.

"The inflated bubble created during the Riverdance boom and subsequent major-label involvement in selling Irish music ultimately led to a backlash in the genre," he said. "Retail space has shrunk for Irish music, as it has for a lot of things. We notice the absence of individual bin cards for artists in retail stores and chains. The consumers who love this music have a responsibility to help keep it viable and healthy."

In regard to DMGI specifically and musical digitization generally, musicians seem sanguine.

"This is where the business is going," said Ciaran Tourish, "so why not be a part of it?"

"Most of my friends have ringtones with trad tunes on them," said Kevin Crawford.

Mick Moloney also expressed relief that hard-copy CD's will still be available through Compass. "There's something about having a physical CD with the liner notes and full package that enhance the enjoyment of the music," he said.

A mainstay of Green Linnet Records for the past 31 years and its owner for most of them, Wendy Newton has reimmersed herself in the political activism that occupied her life before Green Linnet Records.

"I thought it was time to return to my origins, and I'm going to be as active as I possibly can in the various struggles that I believe in," she said. As for the legacy of Green Linnet Records, she said succinctly, "We really meant it."

Author: Earle Hitchner

Continuing Story