OK Go's latest tune - label owners

Recorded music sales--both physical and digital--fell 12% last year, to $7.7 billion, according to the Recording Industry Association of America. That's down from $14.6 billion in 1999, the year that Napster (NAPS), a music file sharing service, launched. In order to compensate for shrinking album sales, major record labels have moved to grab pieces of other revenue streams, like touring and licensing. Yet despite the sea change in economics, Kulash says, many in the industry still define success as a platinum record--a view he sees as misguided.

"Everybody wants to keep the music industry alive, but they want to keep the same basic ideas alive," says the Brown University-educated musician. "For us, being in the major label world, where what they wanted to do was keep figuring out new ways to make money off of one particular part of music...just didn't make much sense."

0:00/3:30OK Go's latest tune - label owners

While OK Go has achieved notoriety through its wildly creative music videos, internet fame hasn't translated into massive record sales. Its biggest album, Oh No, sold 271,000 copies, according to Nielsen Soundscan -- a good performance by today's standards, but not a mega hit. That frustrated industry executives, says Kulash. "[People] were always telling us that our videos weren't generating record sales, and that that's a big problem. It's like wondering why the Internet isn't boosting telegraph sales," he says wryly.

Trading in a record deal for charting your own course

While Kulash won't comment on the reasons behind OK Go's split from Capitol Records, he wrote an op-ed in the New York Times in February criticizing the label's decision to stop people from embedding the band's videos on websites other than YouTube.

What many in the industry are missing, he says, is that the internet isn't a "separate digital space that you use to promote your real products" -- it's the primary venue for bands to create and distribute art and cultivate a fan base, which can then be monetized through a multitude of outlets. "When we look at our videos or the various things we do online, it's rarely from a single input, single output financial model," he says.

Rather, OK Go will make a big financial and creative bet on a video, then pay for that with wide-ranging sources of income: playing concerts in Korea, selling costumes online, or inking advertising deals with corporations like State Farm, which backed the band's latest video in exchange for a brief logo shot (it was a smart investment: the video for "This Too Shall Pass" has 12 million views and counting).

According to Kulash, corporations are actually less likely to interfere with the creative process. "There was no pressure from them, no competing agenda," he says. "It's almost like a 16th century patronage of the arts model."

In a way, it makes sense that bands like OK Go -- and Radiohead and Nine Inch Nails, both of whom left their labels in recent years -- are at the vanguard of experimenting with new business models. Because musicians have long been cut out of record sales, says Kulash, they're used to scrambling for varied sources of income. "It doesn't particularly matter in the end to us where our rent money comes from," he says.

The singer isn't fearful for the industry's future: "There's no saving it -- it's going just fine," he says. "It will just be monetized differently." 

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