Enjoying music, beer, environment and history in Ireland


I have always wanted to visit Ireland but had never found a reason to go. So, I was excited when Dr. Mary Ryan, from the Agriculture and Food Authority in Ireland, invited me to give a talk at the European Association of Agricultural Economists’ meeting in Galway in western Ireland. I had a fascinating week that included an introduction to Galway and western Ireland, the conference and two days in Dublin.


I expected Galway to be fun, but the place exceeded my expectations. I stayed in the Jury Hotel, which is at the start of Quay Street, the main pedestrian street of Galway. The street is a tourist’s dream; neat shops of Irish wool goods, elegant restaurants of all cuisines except Mexican (maybe we should open a Gordo’s). I was surprised by the quality of the food. Great mixtures of seafood and local meats and greens, and of course an extensive selection of drinks served in exotic bars.

But for me the main charm is the music, much of it played in the street. It’s a New Orleans-like atmosphere, with wonderful bands and an interesting combination of instruments (one group had a saxophone, clarinet, banjo, drums and accordion) creating wonderful sounds. From “Irish Klezmer” to rock. Of course, there are many bluegrass-type acts, reminding me that it all started here. The bars compete with their decor, offerings and shows. Róisín Dubh gets the best performers and has been the go-to music venue in Galway for years. It has multiple gigs, from classy Celtic Music to noisy rock and stand up – and of course good beers and friendly crowds.

It seems that tourism is the main industry of western Ireland. The vistas are beautiful with green fields and huge rocks. But the land is not very fertile, it is “rock farming.”  Hardly any crops are grown, and while the green fields are beautiful, apparently the yield is not very high. Livestock graze on the patches of grass between the rock and the majority of products are sheep, beef and milk.

Western Ireland used to export a lot of immigrants to America and other countries, but it’s taken a turn and now the economy is more diverse with tourism, the knowledge sector around the university and some agriculture. Ireland as a whole seems to do well economically. It recovered from the financial debacle of 2009-2012, and now you can see new buildings, an excellent train service, and roads that are in good shape.

The conference

The conference aimed to investigate how policies and extension activities can make agriculture more sustainable, in terms of environment, economics and the community. An interesting discussion on the evolution of agricultural policies in Europe suggested that for most of the second half of the 20th century, the main emphasis was on protecting farm prices. But this strategy backfired because it has led to increased supply, which required even more price support. Towards the turn of the millennium, the emphasis shifted to “decoupled” policies that aimed to protect farmers’ income without affecting supply. That led to revised policies that reduced volatility of incomes and supported activities that enhanced environmental quality. Now, EU policies tend to emphasize decentralization, giving individual members more flexibility to develop policies that address their specific situations — aiming to protect farmers’ income, environmental quality, and rural well-being in the different regions.

Professor David Pannel from the University of Western Australia spoke about the challenge of designing environmental policies — in particular, payment for ecological services (PES). Such programs pay farmers to adopt practices that improve environmental quality. They may include payment to stop the use of chemicals, adopting tillage practices that reduce greenhouse gas emissions, etc.  There have been studies that found that tens of millions of dollars were spent on PES program without significant impact, because of the design. The challenge is to reduce environmental behavior that wouldn’t happen otherwise. It is crucial to quantify the outcomes at the micro level and encourage the payment for activities that maximize environmental benefit obtained with a given amount of money. The selection of farmers will be done using a reverse auction. Namely, farmers will ask for a payment for activities that improve environmental quality and the agency will choose the activities with the highest ratios of environmental benefit per dollar.

In my talk, I spoke about the changing role of extension in pursuing sustainable development. Agricultural modernization resulted mostly from the adoption of new technologies and practices by farmers. In the past, many of the innovations were outcomes of public research and the extension system that includes specialists on universities and farm advisers in the field. They have adapted the technologies to farmers needs and have provided the knowledge that has led to the adoption of innovations.

Over time the role of the private sector increased, both in developing new technologies and introducing them to farmers through private dealerships. The agri-food system is constantly evolving. As farmers become more educated, they rely on specialized consultants to improve management of water and pests, and large buyers of agricultural output have private extension services guiding farmers and overseeing farmers production activities. In this new reality, the public extension agent is less important as a source of information to the individual growers. But public extension services have emphasized training the trainers.

Public extension agents are becoming wholesalers of knowledge, training the private consultants, and professionals who are the retailers of knowledge and work with farmers. We found that for a sample of US farmers, it is estimated that 40 percent of their information is derived from public sector and the rest from private sector. But if we take into account that the private knowledge suppliers rely on public sources as well, the share of public knowledge is 70 percent.

Professor Brendan Dunford presented a fascinating case study of the Burren for Conservation Program, which he directs, (BFCP), which is introducing sustainable agricultural practices to the Burren region of southwest Ireland, not far from Galway. This is a region with a distinctive limestone landscape and is a refuge for many unique plants and animals. The farming mostly consists on grazing of grasslands by livestock. The BFCP have been supported by EU funding.

The research effort of the program identified sustainable practices for various conditions with interaction with researchers and the community. Public extension agents are training private consultants who are guiding the farmers in adopting more sustainable practices. A key element to induce adoption is PES. The program introduced new scrub control and water quality management activities, improved feeding systems and habitat restoration methods. The PES is results based payment system that relies on scoring the various aspects of farmers performance in the field. The program enhanced agricultural productivity and profitability and improved environmental outcomes. The practices require collective action and interaction and the program serves to enhance strengthen the community. The program is part of a regional development effort to development more viable and sustainable agriculture, combined with ecotourism to strengthen the overall value to the community.



It’s a train ride from Galway to Dublin. The train was fast and modern, and every time I take a train in Europe I realize that there are ways to make America greater. When I arrived to Dublin I took a Hop On Hop Off Dublin Bus Tour, and on this tour I learned a lot about Irish history of the last 200 years. The peak of the Irish industrial might in the past was the Guinness Beer company, which covers a large lot of land and has one of the tallest buildings in town. The Guinness family played an important role in Ireland when it was poor. The family financed public goods including beautiful public parks.

But now Dublin seems like a city that recently had a facelift with many modern buildings, some being European headquarters of American companies. These companies were attracted to Ireland being part of the EU and its low tax rates. I visited the  wonderful The Little Museum of Dublin and the fascinating Glasnevin Cemetery to augment my education on Ireland’s history. This history has several themes that also appear in the histories of other countries such as Israel and India. The terrible famine of 1845-1852, which killed more than a million people, was to large extent a result of cruelty and indifference of a foreign power and it intensified the desire for independence. The 1916 Irish Rebellion against the British failed, and its leaders were hanged, but the fight for independence continued under the leadership of Michael Collins. Unfortunately, a terrible civil war erupted in 1923 when Michael Collins died. But at the end, the cause of independence won and Ireland became a democratic state.

Now Dublin is a wonderful city, with great parks, many pubs, singing and bands and a lot of pride in the great Irish writers. I am looking forward to come back with my wife! This was another trip that combined teaching, learning and exploring.

A North American road to the middle class


Sketch of worker walking by NAFTA graffiti

In Buenos Aires, a man in Nikes walks in front of “NAFTA” graffiti. (Photo by Woody Wood.)

Co-authored by Representative Sander Levin (D-Michigan) 

Now that Canada has joined a revised North American Free Trade Agreement (NAFTA), renamed the US-Mexico-Canada Agreement (USMCA), we must not lose sight of the central problem that any new accord must address: the outsourcing of U.S. industrial jobs to Mexico’s system of suppressed wages. There have been efforts by some to dismiss or downgrade this issue and by others to focus on less central concerns relating to trade with Mexico. Any new agreement that fails to directly and forcefully address this issue of labor rights will only lock-in the status quo for many more years to come.

For proof, you need look no further than San Luis Potosí, an emerging hub of industrial production in central Mexico. Eight hundred workers there make tires at a state-of-the-art Goodyear plant. But here’s where the promise for prosperity takes a detour around most Mexicans. These workers have a compliant union and a so-called “protection agreement.” They earn about $1.50 an hour for a 9-hour shift with anemic benefits, hardly a route to the middle class.

On April 24, they walked off the job because of dangerous conditions and a promised raise that wound up being only 50 cents a day. That’s right, 50 cents a day! Fifty-seven leaders were promptly fired. One of us (Rep. Levin) met with fired leaders last month in San Luis Potosí and heard their disturbing grievances.

Down the road, 1,500 workers at a Continental Tire plant have an all-too-rare independent democratic union. They earn almost five times the Goodyear wage—$6 an hour—for an 8-hour shift, with far more generous benefits.

Mexican workers today can’t make a free choice between these two alternatives. They risk being fired and blacklisted or far worse. The overwhelming majority of the tens of thousands of labor agreements in Mexico are “protection agreements”, which are signed by an organization controlled by the ruling party of the government and which workers have never seen, signed or voted on. The result isn’t simply low wages, but an entrenched industrial policy of suppressed wages.

Let’s not forget the flip side of suppressed wages is low purchasing power, which not only harms workers and their families, but throttles economic growth. Moreover, in a highly integrated economy, suppressed wages in San Luis Potosí push down on wages in Akron, Indianapolis and Long Beach, and provide a magnetic attraction for new investment.

abandoned factory in Indianapolis

An abandoned factory in Indianapolis. (Photo by Chris Ley)

NAFTA was supposed to change all this when it went into effect in 1994, but instead it supercharged the problem. Trade has soared since then, but labor rights promises evaporated before the ink on the agreement was dry. Instead, NAFTA locked in a dysfunctional labor system for the next quarter century that’s led to an $80 billion trade deficit with Mexico in the auto sector.

Mexican workers have produced more and earned less under NAFTA. Manufacturing productivity rose by 60 percent between 1994 and 2011—an impressive achievement—while real wages dropped 20 percent and continue to slide. This was not necessary to compete in this key sector with China, but rather to lure industry from the U.S. to Mexico.

Mexicans overwhelmingly elected a reform-minded government this July that offers the promise of restoring rights for Mexican workers, thereby helping to protect conditions for workers in the U.S. and Canada. The new president, Andrés Manuel López Obrador, doesn’t take office until Dec. 1 but a new Mexican Senate, which his party dominates, has already been seated. On Sept. 20, the new Mexican Senate unanimously ratified ILO Convention 98 on the “Right to Organize and Collective Bargaining”, which the International Trade Union Congress (ITUC) has hailed as a “major victory for Mexican Workers.”

Although this move is a positive sign, much remains to be done. Mexico passed a constitutional amendment last year outlining important new rights for workers but the critical implementing legislation went backwards in the previous Senate. New legislation has yet to be drafted in the new Senate and what will happen once this takes place is unknown. While intentions are clearly good, absent clear benchmarks and effective enforcement, large elements of the status quo once again could be locked in for decades, especially given the buzz saw of opposition to real change from entrenched interests.

It is therefore imperative that any new NAFTA agreement provide clearly for the prompt termination of the tens of thousands of protection contracts now in place in Mexico starting with the critical auto sector, ensure that all workers can have real representation at the bargaining table, and provide a transparent, enforceable process for carrying out these vital objectives.

The new agreement needs to lay the basis for a growing continental middle class with independent unions vital for vibrant democratic societies across North America. History has shown that an important way to protect U.S. workers is to protect Mexican workers and the other way around. We need a North American road to the middle class, not expanded exit ramps.

This article originally appeared as an op-ed in The Hill on September 28, 2018.

How big a problem is the zero lower bound on interest rates?


If inflation is too low or unemployment too high, the Fed normally responds by pushing down short-term interest rates to boost spending. However, the scope for rate cuts is  limited by the fact that interest rates cannot fall (much) below zero, as people always have the option of holding cash, which pays zero interest, rather than negative-yielding assets. [1] When short-term interest rates reach zero, further monetary easing becomes difficult and may require unconventional monetary policy, such as large-scale asset purchases (quantitative easing).

Before 2008, most economists viewed this zero lower bound (ZLB) on short-term interest rates as unlikely to be relevant very often and thus not a serious constraint on monetary policy. (Japan had been dealing with the ZLB for several decades but was seen as a special case.) However, in 2008 the Fed responded to the worsening economic crisis by cutting its policy rate nearly to zero, where it remained until late 2015. Although the Fed was able to further ease monetary policy after 2008 through unconventional methods, the ZLB constraint greatly complicated the Fed’s task.

How big a problem is the ZLB likely to be in the future? A paper at the recent Brookings Papers on Economic Activity conference, by Federal Reserve Board economists Michael Kiley and John Roberts—of which I was a formal discussant—attempted to answer this question by simulating econometric models of the U.S. economy, including the model that serves as the basis for most Fed forecasting and policy analysis. Kiley and Roberts (KR) concluded that, under some assumptions about the economic environment and the conduct of monetary policy, short-term interest rates could be at or very close to zero (that is, the ZLB could be binding) as much as 30-40 percent of the time—a much higher proportion than found in most earlier studies. If correct, their result reinforces the need for fresh thinking about how to maintain the effectiveness of monetary policy in the future, a point recently emphasized by San Francisco Fed president John Williams and others (and with which, I should emphasize, I very much agree).

In this post I discuss the KR result but also point out a puzzle. If in the future the ZLB will often prevent the Fed from providing sufficient stimulus, then, on average, inflation should be expected to fall short of the Fed’s 2 percent target—a point shown clearly by KR’s simulations. The puzzle is that neither market participants nor professional forecasters appear to expect such an inflation shortfall. Why not? There are various possibilities, but it could be that markets and forecasters simply have confidence that the Fed will develop policy approaches to overcome the ZLB problem. It will be up to the Fed to prove worthy of that confidence.

The frequency and severity of ZLB episodes

As I’ve noted, KR’s research suggests that periods during which the short-term interest rate is at or close to zero may be frequent in the future. They also find that these episodes would typically last several years on average and (because monetary policy is hobbled during such periods) result in poor economic performance. Two key assumptions underlie these conclusions.

First is the presumption that the current, historically low level of interest rates will persist, even when the economy is once again operating at normal levels and monetary policy has returned to a more-neutral setting. As another paper at the Brookings conference examined in some detail, real (inflation-adjusted) interest rates have been declining for decades, for reasons including slower economic growth; an excess of global savings relative to attractive investment opportunities; an increased demand for safe, liquid assets; and other factors largely out of the control of monetary policy. If the normal real interest rate is currently about 1 percent—a reasonable guess—and if inflation is expected on average to be close to the Fed’s target of 2 percent, then the nominal interest rate will be around 3 percent when the economy is at full employment with price stability. Naturally, if interest rates are typically about 3 percent, then the Fed has much less room to cut than when rates are 6 percent or more, as they were during much of the 1990s, for example. Indeed, the KR simulations show that the expected frequency of ZLB episodes rises quite sharply when normal interest rates fall from 5 or 6 percent to 3 percent.

The second factor determining the frequency and severity of ZLB episodes in the KR simulations is the Fed’s choice of monetary policies. This important point is worth repeating: The frequency and severity of ZLB episodes is not given, but depends on how the Fed manages monetary policy. In particular, KR’s baseline results assume that the Fed follows one of two simple policy rules: one estimated from the Fed’s past behavior, and the second determined by a standard Taylor rule, which relates the Fed’s short-term interest rate target to the deviation of inflation from the Fed’s 2 percent target and on how far the economy is from full employment. Using the Fed’s principal forecasting model, KR find that in the future the U.S. economy will be at the ZLB 32 percent of the time under the estimated monetary policy rule, and 38 percent of the time under the Taylor-rule policy. Because of the frequent encounters with the ZLB, the simulated economic outcomes are not very good: Under either policy rule, on average inflation is about 1.2 percent (well below the Fed’s 2 percent target) and output is more than 1 percent below its potential.

What do markets and professional forecasters think?

Are these results plausible? A specific prediction of the KR analysis, that in the future frequent contact with the ZLB will keep inflation well below the Fed’s 2 percent target, can be compared to the expectations of market participants and of professional forecasters.

These comparisons do not generally support KR’s worst-case scenarios. For example, measures of inflation expectations based on comparing returns to inflation-adjusted and ordinary Treasury securities, suggest that market participants see inflation remaining close to the Fed’s 2 percent target in the long run.[2] The prices of derivatives that depend on long-run inflation outcomes also imply that market expectations of inflation are close to 2 percent. To illustrate the latter point, Figure 1 shows inflation expectations as derived from zero-coupon inflation swaps. (See here for an explanation of these instruments and a discussion of their properties.)


Figure 1 suggests that market participants expect inflation to average about 2-1/4 percent over long horizons, up to thirty years. These expectations relate to inflation as measured by the consumer price index, which tends to be a bit higher than inflation measured by the index for personal consumption expenditures, the inflation rate targeted by the Fed. So Figure 1 seems quite consistent with a market expectation of 2 percent for the Fed’s targeted inflation rate over very long horizons.

Professional forecasters also see long-run inflation close to the Fed’s target. For example, the Survey of Professional Forecasters projects that the inflation rate targeted by the Fed will average 2.00 percent over the period 2016-2025, precisely equal to target. Similarly, primary dealers surveyed by the Federal Reserve Bank of New York see the inflation rate targeted by the Fed equaling 2.00 percent in the “longer run.” The same group also sees CPI inflation close to 2-1/4 percent over the next five years and during the five years after that, consistent with the inflation swaps data (Figure 1) and with the Fed’s preferred inflation measure remaining close to 2 percent. Interestingly, these respondents do not see the ZLB as irrelevant to policy; at the median, they see a 20 percent chance that the United States will be back at the ZLB by 2019.

Why have inflation expectations held up?

That longer-term inflation expectations appear relatively well-anchored at 2 percent appears inconsistent with the prediction that interest rates will be at the ZLB as much as 30 to 40 percent of the time in the future, preventing the Fed from reaching its inflation target during those times.[3]

How to resolve this contradiction? I don’t think there’s anything wrong with how KR conducted their analyses. Remember, though, their conclusion assumes that the Fed will continue to manage monetary policy using pre-crisis approaches, essentially ignoring the challenges of the zero lower bound. That’s unrealistic. Indeed, following the crisis the Fed addressed the ZLB constraint with a number of alternative strategies, including large-scale asset purchases (quantitative easing) and forward guidance to markets about the future path of interest rates. These policy innovations did not fully overcome the ZLB problem. Nevertheless, they may help explain why the unemployment rate and other measures of cyclical slack fell about as quickly in the recent recovery as in earlier postwar recoveries—a finding of another paper at the Brookings conference, by Fernald, Hall, Stock, and Watson—and also why core PCE inflation fell by less than expected given the severity of the recession.

Looking forward, it appears that market participants and professional forecasters believe that the Fed, perhaps in conjunction with fiscal policymakers, will “do what it takes” to mitigate the adverse effects of future encounters with the ZLB. That confidence is encouraging, but it should not be taken as license for policymakers to rest on their laurels. To the contrary, Fed and fiscal policymakers should think carefully about how best to adapt their frameworks and policy tools to reduce the frequency and severity of future ZLB episodes. In tomorrow’s post I’ll discuss some possible approaches.

Temporary price-level targeting: An alternative framework for monetary policy


Low nominal interest rates, low inflation, and slow economic growth pose challenges to central bankers. In particular, with estimates of the long-run equilibrium level of the real interest rate quite low, the next recession may occur at a time when the Fed has little room to cut short-term rates. As I have written previously and recent research has explored, problems associated with the zero-lower bound (ZLB) on interest rates could be severe and enduring. While the Fed has other useful policies in its toolkit such as quantitative easing and forward guidance, I am not confident that the current monetary toolbox would prove sufficient to address a sharp downturn. I am therefore sympathetic to the view of San Francisco Fed President John Williams and others that we should be thinking now about adjusting the framework in which monetary policy is conducted, to provide more policy “space” in the future. In a paper presented at the Peterson Institute for International Economics, I propose an option for an alternative monetary framework that I call a temporary price-level target—temporary, because it would apply only at times when short-term interest rates are at or very near zero.

To explain my proposal, I’ll begin by briefly discussing two other ideas for changing the monetary framework:  raising the Fed’s inflation target above the current 2 percent level, and instituting a price-level target that would operate at all times.  (See my paper for more details.)

A Higher Inflation Target

One way to increase the scope for monetary policy is to retain the Fed’s current focus on hitting a targeted value of inflation, but to raise the target to, say, 3 or 4 percent.  If credible, this change should lead to a corresponding increase in the average level of nominal interest rates, which in turn would give the Fed more space to cut rates in a downturn. This approach has the advantage of being straightforward, relatively easy to communicate and explain; and it would allow the Fed to stay within its established, inflation-targeting framework.  However, the approach also has a number of notable shortcomings (as I have discussed here and here).

One obvious problem is that a permanent increase in inflation would be highly unpopular with the public.  The unpopularity of inflation may be due to reasons that economists find unpersuasive, such as the tendency of people to focus on inflation’s effects on the prices of things they buy but not on the things they sell, including their own labor.  But there are also real (if hard to quantify) problems associated with higher inflation, such as the greater difficulty of long-term economic planning or of interpreting price signals in markets.  In any case, it’s not a coincidence that the promotion of price stability is a key part of the mandate of the Fed and most other central banks. A higher inflation target would therefore invite a political backlash, perhaps even a legal challenge.

More subtle, but equally important, we know from the insightful theoretical work of Paul Krugman, Michael Woodford and Gauti Eggertsson, and others that raising the inflation target is an inefficient approach to dealing with the ZLB. Under the theoretically optimal approach, inflation should rise temporarily following a severe downturn in which monetary policy is constrained by the ZLB.  The reason for the temporary increase is that, in the optimal framework, policymakers promise to hold rates “lower for longer” when the ZLB is binding, in order to make up for the fact that the ZLB is preventing current short-term rates from falling as far as would be ideal.  The promise of “lower for longer,” if credible, should ease financial conditions before and during the ZLB period, reducing the adverse effects on output and employment but subsequently resulting in a temporary increase in inflation. As Woodford has pointed out (pp. 64-73), raising the inflation target is a suboptimal response to the ZLB problem in that it forces society to bear the costs of higher inflation at all times, instead of only transitorily after periods at the ZLB. Moreover, a once-and-for-all increase in the inflation target does not take into account that, under the theoretically optimal policy, the vigor of the policy response (and thus the magnitude of the temporary increase in inflation) should be calibrated to the duration of the ZLB episode and the severity of the economic downturn.

Price-level Targeting

An alternative monetary framework, discussed favorably by President Williams and by a number of others (see here and here) is price-level targeting.  A price-level-targeting central bank tries to keep the level of prices on a steady growth path, rising by (say) 2 percent per year; in other words, a price-level-targeter tries to keep the very-long-run average inflation rate at 2 percent.

The principal difference between price-level targeting and conventional inflation targeting is the treatment of “bygones.”  An inflation-targeter can “look through” a temporary change in the inflation rate so long as inflation returns to target after a time.  By ignoring past misses of the target, an inflation targeter lets “bygones be bygones.”  A price-level targeter, by contrast, commits to reversing temporary deviations of inflation from target, by following a temporary surge in inflation with a period of inflation below target; and an episode of low inflation with a period of inflation above target.  Both inflation targeters and price-level targeters can be “flexible,” in that they can take output and employment considerations into account in determining the speed at which they return to the inflation or price-level target.  Throughout this post I am considering only “flexible” variants of policy frameworks. These variants are both closer to the optimal strategies derived in economic models and most consistent with the Fed’s dual mandate, which instructs it to pursue maximum employment as well as price stability.

A price-level target has at least two advantages over raising the inflation target.  The first is that price-level targeting is consistent with low average inflation (say, 2 percent) over time and thus with the price stability mandate. The second advantage is that price-level targeting has the desirable “lower for longer” or “make-up” feature of the theoretically optimal monetary policy.  Under price-level targeting, there is automatic compensation by policymakers for periods in which the ZLB prevents monetary policy from providing adequate stimulus. Specifically, periods in which inflation is below target (as is likely to happen when interest rates are stuck at the ZLB) must be followed by periods in which the central bank shoots for inflation above target, with the overshoot depending (as it optimally should) on the severity of the episode and the cumulative shortfall in monetary easing. If the public understands and expects the central bank to follow the “lower-for-longer” rate-setting strategy, then the expectation of easier policy and more-rapid growth in the future should mitigate declines in output and inflation during the period in which the ZLB is binding, and indeed reduce the frequency with which the ZLB binds at all.

For these reasons, adopting a price-level target seems preferable to raising the inflation target. However, this strategy is not without its own drawbacks.  For one, it would amount to a significant change in the Fed’s policy framework and reaction function, and it is hard to judge how difficult it would be to get the public and markets to understand the new approach. In particular, switching from the inflation concept to the price-level concept might require considerable education and explanation by policymakers. Another drawback is that the “bygones are not bygones” aspect of this approach is a two-edged sword.  Under price-level targeting, the central bank cannot “look through” supply shocks that temporarily drive up inflation, but must commit to tightening to reverse the effects of the shock on the price level.[1] Given that such a process could be painful and have adverse effects on employment and output, the Fed’s commitment to this policy might not be fully credible.

Temporary Price-Level Targeting

Is there a compromise approach? One possibility is to apply a price-level target and the associated “lower-for-longer” principle only to periods around ZLB episodes, retaining the inflation-targeting framework and the current 2 percent target at other times.  As with the ordinary price-level target, this approach would implement the lower-for-longer or “make-up” strategy at the ZLB, which—if understood and anticipated by the public—should serve to make encounters with the ZLB shorter, less severe, and less frequent.  In this respect, a temporary price-level target would be similar to an ordinary price-level target, which applies at all times.  However, a temporary price-level target has two potential advantages.

First, a temporary price-level target would not require a major shift away from the existing policy framework:  When interest rates are away from the ZLB, the current inflation-targeting framework would remain in place.  And at the ZLB, what I am calling here temporary price-level targeting could be explained and communicated as part of an overall inflation-targeting strategy, as it amounts to targeting the average inflation rate over the period in which the ZLB is binding.  Thus, communication could remain entirely in terms of inflation goals, a concept with which the public and market participants are already familiar.

Second, a temporary price-level target, unlike an ordinary price-level target, would not require the Fed to tighten policy to reverse shocks that temporarily drive up inflation when rates are away from the ZLB.  Instead, following the inflation-targeter’s approach, the Fed would simply guide inflation back to target over time.  Moreover, because the Fed would be targeting 2 percent inflation in both ZLB and non-ZLB periods, inflation over long periods should average around 2 percent.

To be more concrete on how the temporary price-level target would be communicated, suppose that, at some moment when the economy is away from the ZLB, the Fed were to make an announcement something like the following:

  • The Federal Open Market Committee (FOMC) has determined that it will retain its symmetric inflation target of 2 percent. The FOMC will also continue to pursue its balanced approach to price stability and maximum employment.  In particular, the speed at which the FOMC aims to return inflation to target will depend on the state of the labor market and the outlook for the economy.
  • However, the FOMC recognizes that, at times, the zero lower bound on the federal funds rate may prevent it from reaching its inflation and employment goals, even with the use of unconventional monetary tools. The Committee therefore agrees that, in future situations in which the funds rate is at or near zero, a necessary condition for raising the funds rate will be that average inflation since the date at which the federal funds rate first hit zero be at least 2 percent.  Beyond this necessary condition, in deciding whether to raise the funds rate from zero, the Committee will consider the outlook for the labor market and whether the return of inflation to target appears sustainable.

The charts below serve to illustrate this policy as might have been applied to the most recent ZLB episode if, hypothetically, temporary price-level targeting had been in effect. To be clear, nothing in this blog post or my paper should be taken as a commentary on current Fed policy.  I am considering instead a counterfactual world in which the announcement above had been made, and internalized by markets, prior to when the short-term rate hit zero in 2008.

Figure 1 shows the behavior of (core PCE) inflation since 2008 Q4, the quarter in which the federal funds rate effectively reached zero and thus marked the beginning of the ZLB episode. Since 2008, inflation has been below the 2 percent inflation target most of the time.


The effect of this persistent undershoot of inflation relative to the 2 percent target has been a persistent undershoot of the overall level of prices, relative to trend. Figure 2 shows recent values of the (core PCE) price level relative to a 2 percent trend starting in 2008 Q4. As the figure shows, the price level is lower than it would have been had inflation been at the Fed’s 2% inflation target over the entire period.


If a temporary price-level target had been in place, the Fed would have sought to “make up” for this cumulative shortfall in inflation. The necessary condition outlined in paragraph (2) of the framework, that average inflation over the ZLB period be at least 2 percent, is equivalent to the price level (light blue line) returning to its trend (dark blue line).  A period of inflation exceeding 2 percent would be necessary to satisfy that criterion, thereby compensating for the previous shortfall in inflation during the ZLB period (i.e. the slope of the light blue line would need to increase in order to converge with the dark blue line).  The result would be a lower-for-longer rates policy, which would be communicated and internalized by markets in advance.  The easier financial conditions that would have resulted could have hastened the desired outcomes of economic recovery and the return of inflation to target.  Notably, this framework would obviate the need for (and be superior to) the use of ad hoc forward guidance about rate policy.

Importantly, under my proposal and as suggested by the mock FOMC statement above, meeting the average-inflation criterion is a necessary but not sufficient condition to raise rates from the ZLB.  First, monetary policymakers would want to be sure that the average inflation condition is being met on a sustainable basis and not as the result of a transitory shock or measurement error. Expressing the condition in terms of core rather than headline inflation, as in the figures above, would help on that score. Second, consistent with the concept of “flexible” targeting, policymakers would also want to factor in real economic conditions such as employment and output in deciding whether it was time to raise rates.

In sum, a temporary price-level target, invoked only during ZLB episodes, appears to have many of the benefits of ordinary price-level targeting. It would preserve the commitment to price stability.  Importantly, it would create the expectation among market participants that ZLB episodes will lead to “lower-for-longer” or “make-up” rate policies, which would ease financial conditions and help mitigate the frequency and severity of such episodes.  Unlike an ordinary price-level target, however, the temporary variant could be folded into existing inflation-targeting regimes in a straightforward way, minimizing the need to change longstanding policy frameworks and communications practices.  In particular, central bank communication could remain focused on inflation goals. Finally, in contrast to an ordinary price-level target, the proposed approach would allow policymakers to continue to “look through” temporary inflation shocks that occur when rates are away from the ZLB.

[1] This problem would be mitigated but not eliminated if the price-level target were defined in terms of core inflation, excluding volatile food and energy prices.

The housing bubble, the credit crunch, and the Great Recession: A reply to Paul Krugman


Why was the Great Recession so deep? Certainly, the collapse of the housing bubble was the key precipitating event; falling house prices depressed consumer wealth and spending while leading to sharp reductions in residential construction. However, as I argue in a new paper and blog post, the most damaging aspect of the unwinding bubble was that it ultimately touched off a broad-based financial panic, including runs on wholesale funding and indiscriminate fire sales of even non-mortgage credit. The panic in turn choked off credit supply, pushing the economy into a much more severe decline than otherwise would have occurred. My evidence for this claim is that indicators of panic, including the sharp increases in funding costs for financial institutions and the spiking yields on securitized non-mortgage assets, are strikingly better predictors of the timing and depth of the recession than are housing-related variables such as house prices, market pricing of subprime mortgages, or mortgage delinquency rates.

In a recent post, Paul Krugman gave his take on the causes of the Great Recession. His inclination, contrary to my findings, is to emphasize the effects of the housing bust on aggregate demand rather than the financial panic as the source of the downturn. In a follow-up response to my paper, Krugman asks for evidence on the transmission mechanism. Specifically, if the financial disruption was the major cause of the recession, how were its effects reflected in the major components of GDP, such as consumption and investment? In this post I’ll offer a few thoughts on Paul’s questions.

I’ll start with some observations on the transmission mechanism. Certainly, a reduction in credit supply will affect normally credit-sensitive components of spending, like capital investment, as Krugman notes. But a broad-based and violent financial panic, like the one that gripped the country a decade ago, will also affect the behavior of even firms and households not currently seeking new loans. For example, in a panic, any firm that relies on credit to finance its ongoing operations (such as major corporations that rely on commercial paper) or that might need credit in the near future will face strong incentives to conserve cash and increase precautionary savings. For many firms, the fastest way to cut costs is to lay off workers, rather than to hoard labor and build inventories in the face of slowing demand, as they might normally do. That appears to be what happened: Job losses, which averaged 120,000 per month from the beginning of the recession in December 2007 through August 2008, accelerated to 670,000 per month from September 2008 through March 2009, the period of most intense panic. The unemployment rate, which—despite the fact that house prices had been falling for more than two years — was still around 6 percent in September 2008, shot up almost 4 percentage points over the next year. These are not small effects. Workers, in turn, having been laid off or knowing that they might be, and expecting a lack of access to credit, would likewise have had every incentive to reduce spending and to try to build up cash buffers. Indeed, research has found significant increases in precautionary savings during the financial crisis for both households and firms. In Krugman’s preferred IS-LM terminology, the panic induced a large downward shift in the IS curve.

Although isolating the effects of the credit shock on individual spending components is difficult, it’s nevertheless interesting to follow Krugman and examine how key components of GDP behaved during the recession. The chart below shows real residential investment and real GDP (all data below are quarterly, at annualized growth rates) for the period 2006-2009. As Krugman points out, there were large declines in residential investment in 2006-2007, prior to the major disruptions in financial markets. That’s consistent with his “housing bust” theory of the recession. However, note two points.  First, despite the decline in residential investment in 2006-07, real GDP growth remained positive until the first quarter of 2008 and declined only very slightly over the first three quarters of that year, giving little hint of what was to come. However, after the crisis intensified in August/September 2008, GDP fell at annual rates of 8.4 percent in the fourth quarter of 2008 and 4.4 percent in the first quarter of 2009. That precipitous decline ended and began to reverse only as the panic was controlled in the spring of 2009.

Second, the pattern of residential investment was itself evidently affected by the panic, accelerating its pace of decline to a remarkable -34 percent at an annual rate in the fourth quarter of 2008 and -33 percent in the first quarter of 2009, before stabilizing in the second half of 2009 as the panic subsided. That the panic would affect the pace of homebuilding makes intuitive sense, given the reliance on credit of both construction companies and homebuyers. Indeed, my research finds that housing-related indicators like house prices and subprime mortgage valuations predict housing starts reasonably well through 2007, but that after that, indicators of financial panic, including the yields on non-mortgage credit, are actually better predictors of housing activity. In short, absent the panic, the pace and extent of the decline in the housing sector might itself not have been as severe.

Housing and Output

The next chart shows the growth of nonresidential fixed business investment, whose behavior Krugman also cites in favor of the housing bust view. But here again, the timing is key to the interpretation. Unlike residential investment, which began contracting early in 2006, business investment did not start to decline until well after the bursting of the housing bubble. From the start of 2006 through the third quarter of 2007, as house prices fell, nonresidential fixed investment growth averaged almost 8 percent, in line with or even above pre-crisis norms. From the beginning of the recession in the fourth quarter of 2007 to the third quarter of 2008, average investment growth was slow but positive. However, from the fourth quarter of 2008, when the panic became intense, through the end of the recession in mid-2009, the rate of business investment growth fell precipitously, to an average annualized rate of -20 percent. Essentially all the decline of business investment took place during the period of most intense panic.

Real nonresidential fixed investment

The next two charts show the growth of (1) real personal consumption expenditures for durable goods and (2) the components of the US trade balance. As with business investment, the worst declines in these series took place during the period of extreme panic.  In particular, consumer durables spending remained healthy throughout 2006 and 2007, despite declining house prices and home construction. However, in the fourth quarter of 2008, durables spending declined at a 26 percent annual rate, recovering in early 2009 as the panic ended. Likewise, over the fourth quarter of 2008 and the first quarter of 2009, real exports and real imports both fell at average annualized rates of close to 24 percent, as global trade contracted sharply.

Because both exports and imports fell, the net contribution of trade to U.S. aggregate demand was modest. The behavior of the components of trade shown in the figure is nevertheless interesting for this discussion. Trade is particularly credit-sensitive, because importers and exporters rely on trade finance and because a significant portion of trade is in durables, a credit-sensitive category. The collapse of trade in late 2008 and early 2009 is therefore a reasonably good signal of disruptions in credit supply. Likewise, improvements in trade in 2009 likely reflected policies that ended the panic. Expanding on the international theme, note also that the global financial crisis can explain, in a way that the U.S. housing bubble cannot, the depth and synchronization of the worldwide recession of 2008-2009. (See for example, recent analysis by the Bank of England.)

Real personal consumption expenditure (durables)


To be clear, none of this disputes that the housing bubble and its unwinding was an essential cause of the recession. Besides their direct effects on demand, the problems in housing and mortgage markets provided the spark that ignited the panic; and the slow recovery from the initial downturn likely was due in part to deleveraging by households and firms exposed to the housing sector.[1] Indeed, my own past research argues that factors related to balance sheet deleveraging and the so-called financial accelerator can have important effects on the pace of economic growth. I do claim, though, that if the financial system had been strong enough to absorb the collapse of the housing bubble without falling into panic, the Great Recession would have been significantly less great. By the same token, if the panic had not been contained by a forceful government response, the economic costs would have been much greater.

One more piece of evidence on this point comes from contemporaneous macroeconomic forecasts. Forecasts made in 2008, by both government agencies and private forecasters, typically incorporated severe declines in house prices and construction among their assumptions but still did not anticipate the severity of the downturn. For example, as discussed in a recent paper by Don Kohn and Brian Sack, the Fed staff’s August 2008 Greenbook report included economic forecasts under a “severe financial stress scenario.” Among the assumptions of this conditional forecast were that house prices would decline by an additional 10 percent relative to baseline forecasts (which had already incorporated significant declines). As a result, the assumed declines in house prices in this projection were close to those that actually would occur. However, even with these assumptions, Fed economists predicted that the unemployment rate would peak at only 6.7 percent, compared to its actual peak of around 10 percent in the fall of 2009. This conditional forecast would have taken full account of a sharp expected decline in housing construction and the wealth effects of falling house prices. The fact that forecasts still badly underestimated the rise in unemployment and the depth of the downturn suggests that some other factors—the financial panic, in my view — would play an important role in the contraction.

The failure of conventional economic models to forecast the effects of the financial panic relates to another point made by Krugman in a more recent post, in which he argues that the experience of the crisis and the Great Recession validates traditional macroeconomics. On many counts—such as the prediction that the Fed’s monetary policies would not be inflationary — I did and still do agree with him. However, as I discuss in my paper, current macro models still do not adequately account for the effects of credit-market conditions or financial instability on real activity. It’s an area where much more work is needed.

*Sage Belz and Michael Ng contributed to this post.

Spotify ‘doing a Netflix’: is Daniel Ek’s platform already too big for the labels to stop it?


The following article comes from Midia Research founder and respected industry analyst, Mark Mulligan. After witnessing an increasing encroachment from Spotify into the traditional territory of major and independent labels of late, Mulligan (pictured inset) ponders whether those rights-holders now need Spotify so much, their power to prevent the service from becoming a ‘label’ is diminishing. UK-based Midia, which offers research, data tools and subscriptions to a wide range of influential music industry players, has been following the Spotify story from day one.

Spotify’s Daniel Ek is betting big on developing a ‘two-sided marketplace’ for music.

With the company’s market cap on a downward trend despite strong growth metrics, Ek might find himself having to play up the disruption narrative more boldly and more quickly than he’d planned.

Investors are betting on a Netflix-like disruptor for the music industry, rather than a junior distribution partner for the labels. And this is where things gets messy.

Whereas Netflix can play individual TV networks off each other and can even afford to lose Disney and Fox, each major record label currently owns enough market share on Spotify to have the equivalent of a UN Security Council Veto.

So when Spotify announced it was going to let artists upload music directly and then added distribution to other streaming services via DistroKid, the labels understandably smelled a rat. To the extent they’ve even threatened to block access to India.

Spotify’s balancing act may be reaching a tipping point (mixed metaphor pun intended), but it may already be too late for the labels to act.

Here’s why…

Part 1: In search of market share

If Spotify is able to become more competitive (and therefore threatening) to labels while keeping hold of their licenses, it will all be down to market share. The less market share the big labels have on Spotify, the more negotiating power Spotify has. It is a classic case of divide and rule.

If Spotify really wants to play the role of market disruptor – and so far we have strong hints rather than outright statements – it will need to whittle down the power of the majors before they call it and pull their content.

Here’s a scenario for how Spotify could achieve that:

1 – Direct indie label deals

Spotify’s first step would be to detangle the embedded market share from major labels which is based on the indie labels that Universal/Sony/Warner currently distribute. At present, the ‘Big Three’ can wield this indie market share alongside their own during licensing negotiations.

There are two ways to measure market share:

  1. By distribution (this sees those indie labels distributed via major labels being included in the share of the bigger labels);
  2. By ownership (this measures market power based on the original label, so does not count any indie labels as part of major labels).

By the first measure, the major labels had an 82% market share in 2016 and 79% market share in 2017.

By the second measure, according to the WINTel report, major label market share was 62% in 2016 (the 2017 WINTel number is not yet out but will be shortly).

So, if Spotify did direct deals with the larger indies currently distributed by majors or major-owned distributors (or persuaded them to join Merlin), it would unpack anywhere up to more than a fifth of today’s major label market share.

2 – More artists direct

DIY artists uploading directly to Spotify is a long-term play, aimed at harnessing the potential of tomorrow’s stars. In the near term, these artists will generate a smallish amount of streams, even with a helping hand from Spotify’s algorithms and curators.

There are about 300 of these artists right now; let’s say Spotify gets to 2,500 next year – these independent artists could potentially deliver around a third of a percent of share of Spotify streams.

3 – Library music

Fake artist-gate saw a lot of people getting very hot under the collar about Spotify, but nothing that was done broke any rules.

Instead, library music companies like Epidemic Sounds were – and still are – serving tracks into mood-based playlists. The inference is that Spotify is paying less for Epidemic Sounds tracks than to labels.

Whether it is or isn’t, this still eats away at label market share on Spotify. With a bit more support from Spotify’s playlist engine, these tracks could account for around 0.7% of total streams.

Coupled with direct artist deals, that makes up a single point of share. Not exactly industry-changing, but a pointer to the future – and a point of share is a point of share.

4 – Top 20 artists

Where Spotify could really move the needle is doing direct deals with top tier, frontline artists. These would probably be ‘label services’ deals, as Spotify doesn’t appear to want to become a copyright owner – not yet at least.

Netflix is funding its original content investments with around $1.5 billion of debt every two years, which it raises against its subscriber growth forecasts. There’s no reason why Spotify couldn’t do the same, paying advances that other labels couldn’t compete with.

The top 20 artists on Spotify currently account for around 22% of all Spotify streams (across their catalogs). If Spotify could do direct deals with each of them and promote the hell of out of their latest releases, they could contribute up to 15% of all streams on the platform.

Of that top 20, Taylor Swift is on the lookout for a new label, and Drake is putting out ‘albums’ so frequently that he must be pushing close to the end of his deal.

When we add all these components together we end up in a situation where the major labels’ share of total Spotify streams would be just 47% (see above).

Spotify would have the second highest individual market share, while regional repertoire variations mean that SME and WMG could drop towards 10-11% in a couple of markets.

Of course, this is a hypothetical scenario, and one on steroids: the odds of Spotify signing up all the world’s top 20 artists in the next 12 months is slim, to put it lightly, but it is useful for illustrating the opportunity.

Part 2 – The Prisoner’s Dilemma

At this stage we move on to a prisoners’ dilemma scenario for the majors:

  • All of the majors help Spotify’s case by over prioritising Spotify as a promotional tool in light of its share of total listening compared to radio, YouTube, other streaming services etc;
  • WMG and SME probably couldn’t afford to remove their content from Spotify but would be watching UMG, the only one that probably feel confident enough to do so;
  • However, UMG would be thinking if it jumps first and removes its content, each of the other two majors would benefit from it not being there (and would probably be secretly hoping for that outcome);
  • Each other major would be thinking the same, and regulatory restrictions prevent the majors from discussing strategy to formulate a combined response;
  • But even if UMG did pull its content, this would hurt Spotify but would not kill it (Amazon Prime Music launched without UMG and spent 15 months growing just fine until UMG came on board);
  • Spotify could easily tweak its curation algorithms to minimise the perceived impact of the missing catalogue, making it ‘feel’ more like 10%;
  • So, the likely scenario would be each major paralysed by FOMO and so none of them act.

Thus, maybe Spotify is already nearly big enough to do this, and could do so next year. And the more that Spotify’s stock price struggles, the more that Spotify needs to talk up its disruption to investors.

History shows that when Spotify makes disruptive announcements, its stock price does better than when it delivers quarterly results. Maybe, just maybe, the labels have already missed their chance to prevent Spotify from becoming their fiercest competitor.

The TV networks left it too late with Netflix… history may be about to repeat itself.Music Business Worldwide

Johnny Hallyday album shatters records, selling more week-one units in France than Drake’s Scorpion did in the USA


Make no mistake: in terms of the global recorded music business, this is the sales story of the year so far.

In a fast-declining albums market, French superstar Johnny Hallyday’s last album – Mon Pays C’est L’Amour (My Country Is Love) – has officially smashed records to hit No.1 in his home country’s chart.

As noted by MBW yesterday, the album – the first, and likely last, posthumous LP release by Hallyday – has become a national event in France.

The numbers are astonishing. After its release last Friday (October 19), Mon Pays C’est L’Amour sold 780,177 copies in the French market in its opening seven days.

That is the biggest week-one sales tally in the history of the French charts, and equivalent to one in every 86 people in the market purchasing a copy.

The biggest debut album sales week in the United States this year, if you didn’t know, is Drake’s record-breaking Scorpion.

According to Billboard/Nielsen, Scorpion sold 732,000 equivalent albums in its opening seven days in the USA.

Of these equivalent albums, just 160,000 were actual album purchases by fans. The rest (572,000 ‘sales’) were all converted from streaming plays of tracks.

Hallyday’s Mon Pays C’est L’Amour just sold a bigger number (780k vs. 732k), in a country whose population is about five times smaller than that of the United States (67m vs. 326m).

“The reaction from his fans has been overwhelming and I know he’d be delighted that so many of them are listening to and enjoying his last work.”

Thierry Chassagne, Warner Music France

What’s more, MBW is told that 97.2% of Mon Pays C’est L’Amour sales were physical, 1.8% were downloaded and just 1% were ‘streaming equivalents’.

If you’re interested in such things: this means approximately 757,000 sales of Hallyday’s album were on CD or vinyl. Considering the CD of Mon Pays C’est L’Amour has a current retail price (via Amazon) of €15.99 ($18), this must mean that, in one week, the albums physical sales will have generated over €12m (approx $13.8m).

Add in downloads and streaming, and we can’t see a way that Mon Pays C’est L’Amour didn’t just generate more than $14m at retail.

In a week.

In France.

Hallyday, who died aged 74 in December last year, breaks the record he set in 2002 when his album À la vie, à la mort! sold 305,634 copies in its first week.

Following Hallyday’s death, a national tribute in Paris was attended by dignitaries including President Macron, with one million fans lining the streets and 18 million more watching on TV.

Warner Music France ran a major promotional campaign for Mon Pays C’est L’Amour, which included a simultaneous ‘listening session’ on Deezer.

Interestingly, Warner did not release any tracks to media or digital partners ahead of the album’s launch on October 19 at 00.01am.

Thierry Chassagne, President of Warner Music France, said: “This is an exceptional album and Johnny was fully involved in its creation. The reaction from his fans has been overwhelming and I know he’d be delighted that so many of them are listening to and enjoying his last work.

“His voice on the album is incredibly strong and the songs are excellent. During the recording, he imagined playing this album in his future stadium tour. Johnny was always worried about his fans’ reactions and he would have been proud to see this success.”

In the lead up to release, Warner built a unique structure in Paris that let 200 people at a time listen to the album over three days.

Another partnership with broadcaster RTL and cinema chain CGR saw selected fans across France preview the album in movie theaters.

Music Business Worldwide

Columbia Records ups Jay Schumer to Senior Vice President of Marketing


Sony-owned Columbia Records has appointed Jay Schumer as Senior Vice President of Marketing.

Schumer will head up Columbia’s East Coast Marketing operations from New York and reports to Jenifer Mallory, General Manager for Columbia Records.

Most recently, Schumer was Vice President of Marketing for Columbia.

In 2013, Schumer was appointed Vice President of Marketing and has since spearheaded campaigns for artists including Tyler, The Creator, Russ, HAIM, LCD Soundsystem, N*E*R*D, Lil Peep, The Internet, Bring Me The Horizon, Foster The People, and others

During his tenure at Sony/Columbia, Schumer has held a variety of positions within the Sales and Marketing departments.

He started as an assistant on the Columbia Sales team and quickly moved up within the department, specializing in breaking new and developing artists on the roster.

“I’m certain Jay will thrive in his new role continuing to drive strategy and lead the wider team to develop cutting edge campaigns for our artists.”

Jenifer Mallory, Columbia Records

“Jay is an incredibly creative marketing executive with a very intuitive understanding of the business,” stated Jenifer Mallory, General Manager for Columbia Records.

“His deep knowledge and passion for music as well as his years of experience make him a powerful marketing force at Columbia.

“I’m certain he will thrive in his new role continuing to drive strategy and lead the wider team to develop cutting edge campaigns for our artists.”

“I look forward to building breakthrough marketing initiatives that directly impact music fans and continue to achieve new heights for our artists.”

Jay Schumer

Schumer added: “I’m very grateful to Jenifer Mallory and Ron Perry for this opportunity.

“I’ve been able to grow from the ground up at Columbia while working with an incredible array of artists alongside the most inspiring team in the business.

“I look forward to building breakthrough marketing initiatives that directly impact music fans and continue to achieve new heights for our artists.”Music Business Worldwide

‘Never in my wildest dreams did I think I would ever make a living out of music.’


MBW’s World’s Greatest Managers series profiles the best artist managers in the global business. This time, we speak to Clarence Spalding, a partner in Maverick and the founder of Spalding Entertainment – home to country megastars like Jason Aldean, Rascal Flatts, Kix Brooks, Brooks & Dunn and many more. The World’s Greatest Managers is supported by Centtrip Music, the FX and banking solutions provider – which helps artists, managers and music businesses obtain an optimum currency exchange deal.

At one point, MBW asks Clarence Spalding if he was always destined to work specifically in country music.

His reply, delivered in a suitably southern drawl: “Have you paid any attention to this fucking accent?”

He laughs as he says it, and goes on to admit that it’s not as dumb a question as it sounds. “To be honest with you, I listened to no country growing up. My father, every Saturday afternoon, would watch The Porter Wagoner Show. Me and my brothers would walk into the room: Holy shit, that’s on again, no thanks – and just turn around and walk right out.

“We were listening to rock music, the Stones, the Beatles. But I was also listening to Al Green, to Ike and Tina; and then later on I was listening to Electric Light Orchestra and things like that.”

His interest in country was finally awakened by the genre’s ‘outlaw’ movement of the late ‘70s and early ‘80s. You can see why.

Spalding’s a hugely successful music business exec, managing, amongst others, one of the biggest mainstream country acts in the world, Jason Aldean. But he’s far from conventional or cautious. No outlaw, perhaps, but no sheriff either. And a hell of a straight shooter.

Here, Spalding talks honestly about his life, his shortcomings, his breakthrough moments, about the music business in general and country music in particular.

Having (literally) made his name with Spalding Entertainment, he is now part of the worldwide Maverick management team and, as anyone who has spent any time with him will testify, is definitely not the outfit’s country cousin.

There’s no denying his roots, though, or that accent, both of which go back to the State of Kentucky, and a town with a licence for liquor…

How did you get your first break in the business?

Well, I’m from a small town in Kentucky. And that town happened to be dead in the middle of a wet county, surrounded by dry counties. Because of that, we had four nightclubs, which all did live music.

I was a paperboy and I delivered papers to this club, the Club Cherry. One day, there was a band sound checking, and the guy who ran the place said, ‘Sit up here for a second and listen to this; you’ll remember this for the rest of your life.’

“I thought I was going to be in corporate America.”

So I sat on the bar and listened to this woman singing with this band. I got home, told my parents about it, and they asked me who the act was. I said I thought they were called something like Ike and Tina Turner…

I continued to fall in love with music and then, when I went away to college, I started booking bands. I had a little agency to book bands that weren’t worth a shit, but I thought they were great. Never in my wildest dreams did I think I would ever make a living out of music.

I got a degree in communications and I thought I was going to be in corporate America. But, one thing led to another and I ended up managing a nightclub.

Was that in Kentucky?

In Lexington, Kentucky, yeah. There was a group based there called Exile who had had a big hit in 1978 with Kiss You All Over [a US No. 1, written by Chinn and Chapman].

Their pop days were over – they were playing country and they went on to have 10 [US country] No.1s – and they were managed by a gentleman by the name of Jim Morey.

Jim and his partner, Sandy Gallin, managed Cher, Neil Diamond and Dolly Parton and the Pointer Sisters; they were probably one of the largest management companies in the world at the time.

“If this guy from Nebraska can make a living at this, then maybe some dumb ass from Kentucky can too!”

Jim was from somewhere in Nebraska and that’s when it started dawning on me: if this guy from Nebraska can make a living at this, then maybe some dumb ass from Kentucky can too!

Jim really took me under his wing and I ended up going on the road with Exile. I was their tour manager, and Jim would invite me to Los Angeles, let me sit in on various things, and I just fell in love with the whole business.

Eventually, I met a guy by the name of Stan Moress. Stan was a Los Angeles manager, but he also managed country acts – including K.T. Oslin and Eddie Rabbitt – so he decided that he was going to move to Nashville. I begged Stan for a job, but he simply didn’t have one. And then, one day, out of the blue, he calls me and goes, ‘You know that job you want? You’ve got it.’

I went from Kentucky to Nashville the next day and lived with Stan for a month, until I got my family down to Nashville. That was really the start of me truly being a manager. Stan and allowed me to come in and do day-to-day on, Eddie Rabbitt and K.T. Oslin.

I basically got a PhD from Stan.

What did he teach you?

He was just a great mentor. He taught us about the business and about artist management, and I learned that most of it is about personalities.

I remember telling somebody that I felt like everybody I was dealing with in the business who was successful, they must be so fucking smart. I always thought, Where did they go to school?

“I understand people are afraid, they’re concerned about their career, which is a very tentative thing.”

And as you move up you go, Eh, not so much. It’s more about the people and the personalities. I don’t consider myself brilliant by any stretch, but I know people, and I feel like I can bypass a couple of steps in talking to them because I’ve sat on the bus with people who have been in the same position. And I understand people are afraid, they’re concerned about their career, which is a very tentative thing.

It’s all great when you’re that 22-year-old artist who’s written three songs, and all three of them hit at same time and it feels like fucking magic dust has been sprinkled on you. Only now, [the industry] wants three more, and those next three are so much harder, because it took you 22 years to write the first three and now you’ve got four months to write the next three.

So you ended up in Nashville. What’s your next big break?

I got a phone call from a guy name of Bob Titley. Bob had signed this duo named Brooks & Dunn (pictured inset), and he felt like he needed some help.

Eventually, I went to see him and he explained they wanted me. I told Bob, I’ll come to work for you for three years, and at the end of three years, if you don’t feel I’m a partner, I’m going to leave.

After three years, Brooks & Dunn blew up, it became bigger and bigger, we were both having a great time and Bob brought me in as a partner. Then, after year 10, he decided he didn’t want to do it anymore.

What was that like for you?

I was comfortable. I mean, I was sad because Bob Titley, and I mean this, he was probably 10 times smarter than I will ever be.

I’m emotional and I cuss like a sailor at any opportunity, and then he would walk into the room and say, ‘What are you so upset about?’ I’d go, ‘This, this and this… and this!’ And Bob would say, ‘Well, have you ever thought about looking at it like this?’

At which point I’d I’d go, ‘Fuck no! I’m too fucking pissed off to look at it like that!’ But then, of course, I’d realize he was right.

When he quit, I started my own thing. And that’s when we went from Titley Spalding to Spalding Entertainment, in 2003.

Who was on the roster at that point, when you were finally flying solo?

It was probably Brooks & Dunn, Terri Clark and maybe Chely Wright was still on the roster at that time.

What becomes Spalding’s big break, as a standalone company?

Irving Azoff called me; he and Howard [Kaufman] were putting Front Line back together. I didn’t know Irving; I had met him, but I didn’t know him. And when Irving Azoff calls, it’s heady stuff. Irving Azoff knows my fucking name? I’m already three steps up from I was yesterday, I promise you that.

But I wasn’t sure that I wanted to be in another thing. I can’t remember how long it had been, but I hadn’t had my company that long, and I was doing was doing pretty well on my own.

But Irving was persistent, and I entered into an agreement with he and Howard – and we were Front Line. I had a blast.

“Irving Azoff knows my fucking name? I’m already three steps up from I was yesterday, I promise you that.”

I made a comment to Irving right at the beginning, I said, ‘I don’t know if I need you, Irving. I feel like that if there’s something I want to sign in Nashville, I can do that; I can go up against you here.’

And he goes, ‘You can, you can. I can hear you now, talking [to artists] about how busy Irving Azoff is. But here’s the thing, when I come to Nashville, everybody knows who I am, and when you come to Los Angeles, not a fucking soul knows who you are.’ [laughs]

There was this side of me that really wanted to be upset, but I couldn’t be, because it was so fucking true. You’re this fish in a small pond in Nashville, people know who you are; but still you’re not even the biggest fish in this small pond!

And that really kind of pushed me over the edge of going, Okay, I want to play with the big boys; I want to see how I stack up against everybody else, and it was a great move for me.

What did you learn from Irving?

I took a certain type of tenacity from Irving. He’s incredibly smart, but he’s also incredibly tenacious. Everybody’s heard all the stories about Irving, but I never experienced anything negative with him.

“Everybody’s heard all the stories about Irving, but I never experienced anything negative with him.”

He was just a great mentor. He was very helpful with anything that I needed. All of a sudden the world became open to me in regard to having Irving picking up the phone, and making an introduction to attorneys in New York, in Los Angeles… you know, ‘This is my guy in Nashville; he wants to try to do this; I would like you to help me.’

There’s no one in the music business – and not many outside the music business – who doesn’t know the name Irving Azoff. He’s still an incredible friend of mine and I still love seeing him.

And then the next step takes you to Live Nation…

That’s right, Irving sold to Live Nation. He and Michael Rapino became the head honchos and I was a part of Live Nation for I forget how many years.

Then one day Michael calls me and starts talking about… Oh, in that time, by the way, I had signed Jason Aldean, I had signed Rascal Flatts, I signed Darius Rucker; my roster had grown and grown. But Michael called me one night and said Guy Oseary wants to talk to you; I’m going to let him explain it to you, but there’s no pressure, it’s more of an introduction.

The next day, Guy calls me, he made it clear knew all about me, and we started talking. He was managing Madonna and U2 and whatever else at the time, but he was spending a lot of time in Silicon Valley and he was talking about his experiences in the tech world.

“Michael called me one night and said Guy Oseary wants to talk to you; I’m going to let him explain it to you, but there’s no pressure, it’s more of an introduction.”

He said, ‘In tech, you bring your friends in; you have a great idea and it’s like, Do you want to get in on this with me? And I want to apply the same principles to the management world. We all feel like we’re at odds with each other all the time, but I would like to put together a group of like-minded people, whose only thing is to help each other.’

So I flew to Los Angeles, I met with him and I was very intrigued by the idea. At the time I had Randy Goodman, who now runs Sony Nashville, working with me. I’m walking him through my meeting with Guy and I could see he was intrigued as well.

So we went back out there, we talked it all through again with Guy, I got in the van with Randy and I said, ‘Okay, tell me what’s wrong with this?’ He looked at me and said, ‘Nothing; there’s nothing wrong with this. This is a great opportunity.’

And so we started Maverick and it’s been the best time of my management career.

Why is that?

I have partners all over the world that I can call on – and that I do call on. If I’m touring Darius in Europe, which I am, I call [Paul McCartney’s manager] Scott Rodger (pictured inset). I can use his office in London and get people to help me on the ground there. And it’s the same with Adam Leber and Larry Rudolph – and the same the other way round; if they have Miley or Steven Tyler coming to town [Nashville], and they need help, we’re here to help them.

Larry had Britney in Las Vegas, he actually lives there, and I was trying to structure a deal for Brooks & Dunn at Caesar’s, so I called him. And he just gave me so much insight into that world and that kind of deal.

“It’s like going to a great university, having your pick of the best professors on campus.”

As a one off, could I do it? Sure. But trying to look down the road three years and to figure out how to make this a very successful run, both financially and in terms of it being an enjoyable experience for the principals, he was able to sit me down and go, ‘This is what I did with Britney.’ And things just click and you go, Okay, that makes a lot of sense – and by the way I would have never thought of that on my own.

I have all these very, very successful managers and I get to glean all this information from them. It’s like going to a great university, having your pick of the best professors on campus, getting to spend as much time with them as you want and asking them any questions you want.

How do you read the health of country music in general at the moment and its journey to becoming a more global phenomenon?

I think that country music is as healthy as it’s been. We’re catching up in streaming, we were late adopters, but we’re catching up.

For a long time it was still Wal-Mart and Target and Kmart where they [country music fans] were getting their music. Then it was SiriusXM, and now we’re very quickly catching up. So that’s great news for us, it’s great news for our labels, it’s great news for our younger artists and I think it’s great news in terms of spreading country music worldwide.

I do think that there are going to be acts that are going to lend themselves to the world and there are going to be other acts that are going to have a limit. And I think part of that limit is what [you] write about. If you’re writing about a rural lifestyle and, you know, a dog sitting in the front seat of your pickup truck, there are areas of the world that just don’t understand what that is. They didn’t grow up in South Georgia living that lifestyle.

Do you think that country gets a fair crack of the whip from streaming services today, or do hip-hop and pop tend to dominate in those areas, not just in terms of the listeners, but in terms of the levels of priority or otherwise that you get from inside those companies?

I think they have dominated, but we’re starting to get a fair crack at it. As always, you follow the money, and when this format starts really catching up, you’re going to see further change. Whether you call it ‘fair’ or ‘not fair’, it’s a business. And when the business of country is good, then country on Spotify and Apple and Pandora and all these places is going to be huge.

“Whether you call it ‘fair’ or ‘not fair’, it’s a business. And when the business of country is good, then country on Spotify and Apple and Pandora and all these places is going to be huge.”

I look at Pandora and that seems to be a place that registers early and registers big for country; Jason Aldean is the top streaming country act on Pandora, over a billion streams.

Once the country music fans get more and more comfortable with streaming and with getting their music on their phones… the kids growing up are already there. Plus, they’re going to go to a Jason Aldean show one night and a Drake show the next; I don’t think it matters to them.

That little bit older demo, who historically we have depended on, they haven’t yet gotten into [streaming] fully, but every day it gets bigger and bigger. I see the numbers and I hear the label heads talk about the increased consumption. There’s nobody in Nashville whining about this; we all see it growing.

Do you think that sometimes the rest of the industry sees country as its own independent, walled state? Less open to collaboration and crossover – and almost happy with that situation?

Maybe there have been walls around country more than other genres, but I think that’s changing every day.

Country music is a broad church: it’s Jason Aldean, it’s Alan Jackson, it’s Eric Church, it’s Florida Georgia Line (pictured), it’s Miranda Lambert; you’re going to find something here that you like.

If you love urban music, or you love soul music, there are artists in [the country] format that you’re going to fall in love with if you give them three minutes. Just give them three minutes – and I think that’s easier now we have streaming.

The labels in Los Angeles and New York, they know what’s going on down here; the artists that are really paying attention understand what’s going on down here; and the managers who are looking for some really creative pairings, they know what’s going on down here.

There’s a CMT Crossroads coming up with Zac Brown and Shawn Mendes. Now, let me tell you, not even in my biggest drug days would I have thought of that, but I guarantee you, when you watch it you’re going to go, Holy Shit, that makes a lot of sense.

Along those lines, you mentioned that the Big Loud guys have got a very outward-looking mentality. Can you talk about that deal, how it came about and how it’s working out? [Maverick acquired Florida Georgia Line’s managers, Big Loud, last year, for an undisclosed sum.]

Well, Seth [England] and ‘Chief’ [Kevin Zaruk] they’re young guys, they’re aggressive, they have FGL [Florida Georgia Line] and they’re making a commitment to spending time in Los Angeles and to co-writing with pop writers – and sometimes that’s what it takes.

I love both of them; they’re incredibly smart. So, when the opportunity came for them to come into Maverick … I’m a 110% supporter of bringing in people like that.

“When you’re sitting at the Maverick table, I want you to deserve that seat, not get it because your fucking brother’s a big act or whatever.”

When you’re sitting at the Maverick table, I want you to deserve that seat, not get it because your fucking brother’s a big act or whatever. You should get a seat because everybody else around that table thinks you’re a great manager.

You need to bring something to the party and Seth and Chief bring an incredible amount to Maverick.

In your experience, how has the line of demarcation changed between labels and management, both in terms of the shift of power, but also the shift in responsibility and workload?

I certainly hear people going, ‘I’m doing everything that the label used to do’ – and I think there is some of that. But I look at every label we work with – we work with four different labels here in town – and I feel like I just have an incredible partnership with all of them.

There’s no team on earth that doesn’t have some links that could be strengthened. I hope we bring to each label the ability to strengthen certain areas, but I think that works vice versa.

“People say every day, ‘I don’t need a label.’ Well I don’t recognise that term; I need them and I want to be in business with them.”

There are incredibly smart and aggressive people at these labels, people that make us think. I tell my staff all the time that we’re blessed here because every morning we wake up and we get to play in a major league ballpark. We have very big acts, and with that comes an incredible amount of responsibility – to be aggressive and to be forward-thinking and to really be paying attention, every day, to their careers.

To do that, you need to surround yourself with incredibly smart people. And that way I get to hear a take on Jason Aldean’s career that might be different than mine, and that’s great.

People say every day, ‘I don’t need a label.’ Well I don’t recognise that term; I need them and I want to be in business with them.

Let’s talk about Jason for a minute; how did that relationship start?

I think it was 11 or 12 years ago. I didn’t know Jason. I’d heard his music some, and I liked what I’d heard. And then one day I get a phone call from a friend of mine named Kevin Neal, who was at Buddy Lee Attractions at the time [Neal is now a partner at WME].

He told me Jason had let go his manager and would I be interested? Oh yeah, I’d be interested… He was on tour and was playing Jacksonville, Florida, the next night, so I booked a flight and headed down.

“Jason took some other meetings, but he decided to come here, which we were very excited about.”

At the time, Chris Parr was working at CMT [Country Music Television] here in Nashville. He and I had been talking about doing something together, but I kept telling him, Chris, I got to sign an act for you to work on; I just can’t hire people for the sake of hiring them!

About an hour before my flight took off, Chris calls and he says to me, I heard the Jason Aldean fired his manager, and man would I love to work on that. I said, ‘Well, wish me luck because I’m flying to Jacksonville to meet him and I’m going to make you part of the pitch.’

Jason took some other meetings, but he decided to come here, which we were very excited about, and I brought Chris in. And you don’t know, you never really know for sure how things are going to work out. If I did know, I’d be sitting on an island somewhere. But I thought there was definitely something there.

He was still on his first [eponymous] album [2005] cycle at that point, right?

Yep, and getting ready to go into his second album [Relentless, 2007]. It’s an interesting thing, because he was on Broken Bow, who had an office here, but Benny Brown, who owned it, lived in Redding, California. And he was the biggest car dealer in Northern California.

He just loved music, he wanted a record label, so he started Broken Bow.

“All of a sudden I’m dealing with a guy who didn’t know nor give a shit about corporate America.”

It was interesting for me because everybody I dealt with was raised in a record label. They started off as an intern and rose up through the corporate ranks, and all of a sudden I’m dealing with a guy who didn’t know nor give a shit about corporate America.

He’s Benny Brown, the car dealer! But, you know what, it worked.

A lot of people would have thought that the new manager comes in and one of the things that you want to do is get a bigger, better record contract with a bigger, better record company. But that hasn’t happened. You’re clearly very happy with Broken Bow. You must have had other options…

Yeah, of course. Everybody in town wants Jason Aldean! And there was this thought of mine: how do I get a more traditional label, I guess, and a better deal?

But Jason was, I think, three days away from going back to Macon, Georgia and start driving a Pepsi cola truck for a living when Benny Brown made him an offer.
So we were in that contract when we took over management, and the more that Chris and I dealt with Broken Bow, what we saw was a very passionate team. When they signed Jason, they didn’t really have any gas in the engine, they just had one act, and that was Jason Aldean. So they became the Little Label That Could.

We then find ourselves working hand in hand with these people, saying to each other, ‘You know what, they’re really, really good at what they do. They just happen to be independent and be owned by the biggest car dealer in Northern California.’

When you say that out loud, it doesn’t make sense, but it did for us.

When it first came time to renegotiate, I went to Jason, we had a conversation, and he said, I really want to stay with Benny, I want to stay with Broken Bow; I want to be loyal to the guys that gave me a chance. There was a ‘but’ somewhere in there, of course. As in, But if they don’t… etc. etc. then we’ll have to go.

So I went to Benny and I said, ‘Look, I’m not going to shop this round town. I want to talk to you first and let’s see if we can work out a deal.’ And we did. And, much to the chagrin of three or four label heads in this town who had felt for sure that it would fall apart, it didn’t and we’re still there and still very happy there.

Then, of course, not very much later Benny sells to BMG in a nine-figure deal. Has that made much difference?

I think it’s made a difference. We love Zach [Katz, president, repertoire & marketing, BMG US].

Zach is a corporate guy in the music business, but he’s passionate, he used to be a manager. It’s good. Benny was ready to leave, he was ready to sell – and he could have sold to somebody that we hated, but thankfully he didn’t.

What did you make of Jason as a person when you first sat across the table from him?

Well, when I first take a meeting with somebody, I pray that there’s some part of us that’s cut out of the same cloth, some type of common ground. But, also, for me, I want to fall in love with the music first; if I fall in love with the artist [before the music], it’s always terrible, it’s fucked up.

I’ve had artists that I love [making] music that I hate. So, now, I hope that I love the music and can then like the artist. In this instance, I loved what Jason was doing, because Chris and I really felt like that there was a Jason Aldean lane that nobody else was in.

“Jason Aldean knew who he was and knew the direction he wanted to go. I think for an artist, you can ask no more, right?”

And also, to realise, Hey, you’re a good person and you’re going to work your ass off for us; that’s really important. I always say if I’m working harder than you [the artist], there’s something wrong with this project. I just really believed that Jason was that kid that was going to step up and work his ass off.

I always really had a true sense that Jason Aldean knew who he was and knew the direction he wanted to go. I think for an artist, you can ask no more, right?

I used to bring him songs, and I’d have convinced myself that this song or that song is fucking Bridge Over Troubled Water and Let it be, blended together. I take it to Jason and he goes, ‘Yeah, that’s a good song.’ I go, ‘A good song?!’ He goes, ‘Hey, it’s a good song Clarence, I just don’t hear myself singing it.’

What a great thing to say; it’s like, Okay, somebody else might sing this song, but I’m not going to sing this son of a bitch, I don’t care how many times you play it for me [laughs], because it’s not me right now.

Do you think that’s key to the consistency of his success? Because it’s been 10 years now and the last four albums have all gone to No.1…

Oh that’s nothing but pure fucking management right there [laughs]. I’m kidding, don’t quote me on that!

No, you’re right, it’s not that I can sit here or Jason would sit here, and tell you that every album is the greatest record ever made. But what we can say is that every album represents who Jason Aldean was at that particular time.

I think that’s a real ability: to find and record songs that the consumer thinks he must have written, because it’s from the heart. And yet he doesn’t write. He will hear a song that could well be a hit, but he will say, ‘That’s not me, that’s not where I am at this time.’ And I love that about him.

Can you talk a little bit about the success Jason has had over the past year?

It’s been a fantastic year, and everything goes back to that album [Rearview Town]. You go into launch and you book a tour and you have a great plan. But you need great music to go with it, and with this record a great warmth comes over everybody who listens to it; it has so many different layers and colors and flavors to it.

Everyone knows, there was this terrible tragedy [Aldean was on stage in Las Vegas when a gunman murdered 58 people at the Route 91 Festival], and that will always be part of who we are now. So this record and this tour was a new beginning in a way.

What happened will never be forgotten, and nor will the victims, not by Jason or by any of our crew who were there that night. But it won’t define him either, and that’s why this record was such an important one, and why he really appreciates how much people love it, and that he gets to play it for his fans.

Does this round of success feel different because of what happened?

I think you find yourself feeling more grown up; does that make sense? You go through things in your life and they peel away different layers of your personality to reveal the truth. In this case there were 40-odd people in the Jason Aldean camp that went through this together.

And then Jason allowed himself to go back out there. He and I and his wife flew out, a week to the day of it happening, and we visited three hospitals. He was dreading it, I was dreading it, and it was everything that you would think it would be and more. It was just heartbreaking and beyond.

We both walked out of there and he looked at me and said, ‘That was the hardest thing I’ve ever done in my life, but I’m so glad I did it.’

We didn’t announce we were coming, the hospital staff just said someone would like to come say hi to you, if it’s okay. And so when he walked into the room, it was just such an emotional thing; lots of tears, lots of tears.

“I saw a very, very compassionate man, not an artist, a very compassionate man coming in and struggling, because he couldn’t fix anything.”

I tell this story because the whole thing affected me, but also because I saw a different Jason Aldean in that room. I saw a very, very compassionate man, not an artist, a very compassionate man coming in and struggling, because he couldn’t fix anything: I can’t bring you back to life, I can’t heal that wound. All I can do is tell you how, sorry I am, and by the way, I was there with you, with my wife and with my unborn child.

There was a lady on one of the floors who was in a coma and her family asked Jason to come up. So Jason went into the room and he did a video for her: Hey, I shared your room today, and when you wake up I want you to come out and see me on the road and we’re going to have a beer together.

Honestly, we didn’t know if she would live or die. Thankfully, she comes out of the coma, and six months later, she lives in Phoenix, Jason was doing a show there and he went over to see her. He didn’t tell anybody, he just went over to tell her, ‘Hey, you don’t remember me, but I was in your room, I visited you and now here we are.’ And then he invited her to the Academy of Country Music Awards, where it was a pleasure to have us as our guest.

So I just think… it’s not that I didn’t know he was a compassionate man, but as a manager, sometimes you don’t get to see that side of your artist. I have a lot more respect for him as a man, forget everything else, just as a man, than I did even before going through all that.

Final question: what advice would you give to young managers today?

You can’t be afraid to sit down and tell your artists the truth. And sometimes that’s really, really hard.

When, I’m signing acts now, I tell them – and sometimes they think it’s a joke, but it’s really not – that I’m an acquired taste. Because I’m going to tell you the truth. I’m never going to be mean-spirited, but I’m going to tell you the truth, because you are going to pay me an incredible amount of money, and for that money, you should want the truth.

I go, Look, we can drop the commission and I’ll blow smoke up your ass all day because I won’t care! In fact, for 5% you can go out and get somebody to pick up your fucking laundry. But you came here because you were looking for something different.

“Each of my acts is the CEO of their own company. I don’t run the company; I’m here to advise.”

You also learn along the way about the balance between you and the artist, and how to work together. With me, each of my acts is the CEO of their own company. I don’t run the company; I’m here to advise.

But I should always, always have a vote. You can override my vote, but the day that you don’t want to know what I think about it, is probably the day you should find yourself a new manager. Because believe me, I’m not in the business of sitting around making the same mistakes that I made 25 years ago, just because you want to give it a try.

Centtrip Music already works with many of the world’s largest artists and is recognised as a leading provider of FX support and banking solutions to the music industry. The Centtrip Music account specialises in providing transparent foreign exchange (FX) rates, payments and expense management to global artists, managers, labels, promoters, collection societies and music industry accountants. It comes with a Centtrip-prepaid Mastercard which holds 14 currencies simultaneously and is accepted worldwide.Music Business Worldwide

Columbia Records ups Jay Schumer to Senior Vice President of Marketing


Sony-owned Columbia Records has appointed Jay Schumer as Senior Vice President of Marketing.

Schumer will head up Columbia’s East Coast Marketing operations from New York and reports to Jenifer Mallory, General Manager for Columbia Records.

Most recently, Schumer was Vice President of Marketing for Columbia.

In 2013, Schumer was appointed Vice President of Marketing and has since spearheaded campaigns for artists including Tyler, The Creator, Russ, HAIM, LCD Soundsystem, N*E*R*D, Lil Peep, The Internet, Bring Me The Horizon, Foster The People, and others

During his tenure at Sony/Columbia, Schumer has held a variety of positions within the Sales and Marketing departments.

He started as an assistant on the Columbia Sales team and quickly moved up within the department, specializing in breaking new and developing artists on the roster.

“I’m certain Jay will thrive in his new role continuing to drive strategy and lead the wider team to develop cutting edge campaigns for our artists.”

Jenifer Mallory, Columbia Records

“Jay is an incredibly creative marketing executive with a very intuitive understanding of the business,” stated Jenifer Mallory, General Manager for Columbia Records.

“His deep knowledge and passion for music as well as his years of experience make him a powerful marketing force at Columbia.

“I’m certain he will thrive in his new role continuing to drive strategy and lead the wider team to develop cutting edge campaigns for our artists.”

“I look forward to building breakthrough marketing initiatives that directly impact music fans and continue to achieve new heights for our artists.”

Jay Schumer

Schumer added: “I’m very grateful to Jenifer Mallory and Ron Perry for this opportunity.

“I’ve been able to grow from the ground up at Columbia while working with an incredible array of artists alongside the most inspiring team in the business.

“I look forward to building breakthrough marketing initiatives that directly impact music fans and continue to achieve new heights for our artists.”Music Business Worldwide