Ken: Hello, everybody! Welcome back to the Producer’s Perspective Podcast. I’m Ken Davenport. Today’s guest has done a lot of things in this business, which is a theme for a lot of our guests actually, but this guy has been an actor on Broadway in shows like A Few Good Men, which I’m still angling to bring back. He has directed, he is a producer as well, having just produced The Last Five Years movie, but he’s most well known for being the founder of one of the leading cast album companies on Broadway, Sh-K-Boom Records. Welcome, Grammy Award winner Kurt Deutsch!

Kurt: Hello!

Ken: So let me tell you a little bit about the story of how I met Kurt. It was 2005, I think, and I got an e-mail saying, “Hey, Ken, I hear you’re doing a show called Altar Boyz. I want to talk to you about it.” So we met at the Cafe Luxembourg, which is right across the street from my house. We had a burger and he said my favourite words, which are, “Hey, Ken, we’re doing something completely different over at Sh-K-Boom.” And he had a great idea, a new model for doing cast albums, and we did Altar Boyz, of course, and the album is great . . . go and pick it up on Sh-K-Boom . . . and since then Kurt has gone on through Sh-K-Boom and Ghostlight Records, his other label, and done everything from Book of Mormon, Newsies, In the Heights, Next to Normal, Elf, my production of Godspell and many, many more, including a ton of solo albums for Broadway artists, including Sutton Foster, Alice Ripley, Adam Pascal. It’s a lot of albums, Kurt. How many albums have you done, do you think, now?

Kurt: I think in our catalogue there’s over 150 albums.

Ken: 150.

Kurt: Yeah.

Ken: That’s a lot.

Kurt: Yeah.

Ken: So tell me what the impetus was for starting Sh-K-Boom . . . how it all started for a guy who was an actor and a producer.

Kurt: Originally we started in 1999, 2000, and Sherie Rene Scott, who co-founded the label with me, and Adam Pascal were doing Aida. And cast albums were not even part of the picture, initially. It was really after Rent, there was this new generation of Broadway fan, because of the internet, and a new generation of Broadway artist who didn’t necessarily want to grow up and just do show tune records. So we had this idea to start a label for artists who were bridging the gap between rock and roll and theater, and so that’s how Sh-K-Boom really started. It started as kind of a United Artists for Broadway actors to do their own thing. So Adam Pascal wrote his own music. Alice Ripley wrote her own music. And Sherie had this idea for an album called Men I’ve Had featuring songs by the composers she worked with, who happened to be Elton John and Pete Townshend, and so covers of those albums, and so that’s really how it all started. We felt like, because they were doing eight shows a week on Broadway, we would be able to have a built-in audience for these artists. We put their websites in their bios and basically said, “I have a solo album. Go to SherieReneScott.com and buy it.” And Disney was able to sell the solo records in the theater. So basically that’s the genesis of how it all started. And then we started doing cast albums a few years later as I learned more about the music industry.

Ken: What was the first cast album you did?

Kurt: The first cast album we did was The Last Five Years, the Off-Broadway production of The Last Five Years. I read this book called something like Everything You Ever Wanted to Know About the Music Business, kind of like one of those How to Succeed in Business books. It was buy a guy named Donald Passman, I think was his name. Anyway, it was how to start your own record label. And we were in my second bedroom, just working . . . but basically what I found out was the recording contracts were so unfair to the artists. Really artists make their money not necessarily from the sale of the records. They make their money from touring or from the publishing of the songs, and so the royalty is very, very small. And, historically, Broadway cast albums . . . major labels would do them and the producer or the show wouldn’t necessarily make a lot of money off of the cast album. And I couldn’t believe that a producer would give one of their most major assets away, and so we created a profit-sharing structure and an ability for producers to co-own or own the master recordings and share in the profits much, much earlier, so that’s really how it all started. With The Last Five Years, Arielle Tepper and Marty Bell were the producers and I basically went to them and said, “Hey, I love the show. I think it’s a masterpiece. Why don’t we just put the money up, pay for it, and hopefully we’ll make some money off of this record?” And so that was really the first cast album we did that way and that was when we kind of invented the model. And since then that album has made a lot of money. We made a movie of it. And because of the album it’s had hundreds and hundreds of productions around the world, and it’s been great.

Ken: So before that you were literally in your bedroom reading. You don’t have a music recording background? You didn’t go to school for any of this stuff?

Kurt: No, I was an actor pretty much all my life, and then I went to college for directing. And I always did musicals in the summer. I knew musical theater, I cared deeply about musical theater. I wanted to produce, I wanted to direct, I wanted to do all of those things, and acting was just how I made money, doing television. But then, when Sherie and I married . . . we met doing Randy Newman’s musical Faust and I was living in Los Angeles at the time, and then moved back to New York, and I did my Sex and the City and I did my Law and Order, the things that filmed here at the time. And I wanted more. And so we had this idea to start this company, and that’s kind of how it all happened.

Ken: Was it hard to convince Marty and Arielle to take a stab at this?

Kurt: The album was not the most expensive record to make so it wasn’t hard, actually. It was very natural. I think what’s hard is when a lot of producers are so used to the old way, but when I showed them if we sold this amount of units what you could make . . . it’s not like a hit record that’s going to sell a lot of units, and then not ever sell. The Last Five Years sells a hundred records every week, and it’s been that way since 2002. Every week it will just continually sell, because people are discovering these things. There’s a revival, or Jason has a new musical, or Sherie or Norbert are in a new show. It constantly regenerates because there are always musical theater students who are wanting to discover. Now that the movie is out, it’s having a whole new rebirth. So cast albums I look at as annuities. They’re not flash-in-the-pans. They’re things that have a very, very long shelf life. That’s basically the way I look at it.

Ken: That was one of the things I was most excited about, doing the Godspell album, because I knew there would probably not be another major Godspell production. There had only been the original, in terms of a first class recording, and that show, which is done all over the place all the time, will live on for decades and decades. How much did that The Last Five Years album cost to make back then?

Kurt: I think that that album cost around $90,000. Something like that.

Ken: For me, I remember when you made the pitch to me, one of the comparisons I thought of was that the big “studio” cast albums seemed to never make money in a way that people described. Like Hollywood, there were all of these bullshit different accounting lines and it seemed that they never made money, which . . . of course the Cats recording made money!

Kurt: Yeah, the way that the royalty structure works in the old, traditional way, is very, very weighted for the record label. The artist . . . and in the case of cast albums the artist is the Broadway show . . . has a very small royalty. I remember drawing diagrams for you and explaining it to you like in a pie. The simplest way I could say it is let’s say you get $10 in the door and it costs $100,000 to make a record, and you have a 10% royalty. $1 goes to the artist in a little piggybank and $9 goes to the record label, essentially, and when that $1 reaches $100,000, that’s when the royalty for the show would kick in. Meanwhile, the label would have made $900,000. That’s the simplest way I can describe it, but it seemed very, very unfair to me. So basically what I said was, “Why don’t we just all do it together? And when it pays its money back, then we all share in it.” That just seems fair.

Ken: We often talk about the recoupment rate of Broadway shows being one out of five. On average, what do you think the recoupment rate is for albums these days?

Kurt: Music has changed so drastically. When I first started making these records we were still doing it on tape. Now it’s all digital, Amazon and iTunes. Amazon was just starting, iTunes was not existent, and streaming, of course, was completely out of the picture. There was no YouTube or anything like that. So things have changed drastically, even over the last two years. But a show that has a limited run that is being preserved, not necessarily to make money, doesn’t make its money back. Let’s just say it was a show like Giant, for example, which was Michael John LaChiusa’s beautiful musical at the Public Theater. To me, his score is a masterpiece. And the album was paid for by a foundation, the Public Theater and the Ted Shen Family Foundation. And he’s there to support Michael John and the Public, and we never thought that it would make its money back. Without a cast album, it’s as if the musical doesn’t exist. So that’s there for licensing purposes, it’s there for a lot of other things. But a show like Book of Mormon . . . or name a hit Broadway musical that runs for years and years and has multiple companies and just continues to run. Those will make their money back. So I think of things very differently in terms of, “Okay, what is their purpose?” And I’m pretty honest with the producers, and I say, “You know, I don’t think that this is going to make its money back, but I know how important it is for you to have a record for marketing purposes, for future licensing, for all of those things. So you need to record it and we’ll figure out the most economical way that you can record it.” But for a show that I think will make money, I’ll say, “I think we should do this. I think this is a really good investment, and you’re going to make money on this thing.”

Ken: It seems like the recording of albums has become a lot easier in the past 10-20 years, just the physical recording of it.

Kurt: It has and it hasn’t. Now you can mix a record anywhere but, especially for cast albums, you still need a big recording studio to bring a giant cast, however big the cast is, and the band and everything like that. And, unfortunately, the recording studios in New York are dwindling. We used to have some amazing recording studios, the Hit Factory and lots of great places, but space is hard to come by now, and so we have to just figure out how to record it in the best way. It’s easier to record, but it’s harder to figure out where to record now.

Ken: When do you think a producer should start thinking about doing an album? Where in the process? It seems to me that every musical has an album when it gets to a certain place . . . Off-Broadway or Broadway. When should a producer start planning that?

Kurt: There’s a two-fold answer. I think that when you’re raising money for the show you should put the cast album in your capitalization budget, no matter what. You should put the budget for the cast album in your capitalization budget, and you should actually negotiate the mechanical rights. You should negotiate all of the stuff with the authors from the get-go. Secondly, you should record the album when the show is frozen, when the show is not going to have any more changes. When it’s done and you’re ready to launch. I think that it makes sense to maybe lay down a few tracks as demo recordings or, for marketing purposes, maybe one or two or three songs, as your marketing campaign goes. But for the most part I wouldn’t release an original cast album . . . a revival is different . . . until the show is actually complete, and that’s what you want to put out into the world.

Ken: Let’s just go back to building it into the budget, because this is a trend that I’ve been seeing some producers do. Some like to keep it separate and raise money for it separately, but by putting it into the original budget, then the show owns that album so all of the investors in that show are getting the benefit of that album for years and years, whether or not the show is a hit. So that’s what you recommend?

Kurt: I would recommend doing it that way because you don’t have to worry about it. I even tell not-for-profit theaters, if you’re going to produce a new musical, whether it’s at the Public or Playwrights Horizons or the Roundabout or wherever it is . . . I know money is hard to come by, and you’re putting all of the money into the production and everything, but you know you’re going to need the record. And so you’re scrambling around, trying to find a label to put the money in or trying to find this person to do it. Just know that you’re going to make the record, know that it’s going to happen, and just earmark that and know that it’s going to be there. I don’t care where you put it. Put it in the marketing budget. You need that music to sell a musical. If you can offset it, maybe, down the road and somebody wants to come in like me, or a guy says, “Hey, I’d like a piece of the record,” or whatever it is, then you don’t necessarily have to put all of it in, but just know that it’s there. It’s like a safety net so that you don’t have to worry about it.

Ken: It’s such a smart idea. I traditionally have built them separately . . . I put my albums separate . . . but, now that I think about it, our initial reaction, as producers, is, “Ugh, don’t give me another couple hundred thousand dollars to raise. I don’t want to do that.” But the fact is, it is such a safety net, partly because if the show isn’t received well in the first couple of months, you’re still going to want to do the album, and then you’re really going to be in trouble in terms of raising that money because every investor is going to say, “Well how long is it going to run on Broadway?” Because I’m sure you’ll tell us that shows sell the most albums when you’re doing eight shows a week and 2,000 people a night are seeing it.

Kurt: Exactly, they do. You can guarantee that you’re going to sell a few hundred records a week as long as the show is running on Broadway and it’s a hit. I just think that it makes a lot of sense to just not worry. It’s the same thing that I said when I initially came up with the model when I would talk to producers and they said exactly what you’re saying. “I don’t want to have to worry about raising the money, because these albums never make money,” and I’m like, “Yes, they do make money. It’s just that you’re not seeing it.” There are a lot of producers who feel that the traditional way is the right way, but things have changed now. Distribution is so easy. You just put it out there and they sell. The thing that’s hard now is really the economics, because of the streaming services and how we’re getting paid, whether it’s Spotify or Apple Music. People don’t feel like they should be paying for music anymore, so that’s the hard challenge for any label, I think. How are people going to buy or how are people consuming? CDs are going to be gone. They don’t even put CD players in computers anymore, so those are going to be gone. So really, how are we going to monetize music in the long term? I think that the union contracts have to change. I think that a lot of things have to change, given what’s going on for the future.

Ken: What do you think the future looks like? if you could take a look, 10 years, 20 years, into the future, in terms of music.

Kurt: I think it’s going to be subscription-based. Artists are not going to stop creating, so music is always going to exist. But I think that we’re going to have to adapt with the cost of how things are being made, and I think that what’s going to end up happening is like with Apple . . . if it’s Apple or whatever . . . it’s all going to be subscription-based. So you’re going to see millions and millions of people subscribing to Apple Music. That’s why Spotify doesn’t really exist, because it’s ad-generated right now. There’s not enough subscribers to really pay, but once there’s one company, whether it’s Apple or whoever it is, and there are 80 million people or 100 million people subscribing to that service, then you’re going to see, I think, a more equitable distribution of the money. It may not be the same as buying a record, but you’re going to see a more equitable distribution and people are going to be getting paid more, or the artist is going to be getting paid more. So I think that’s probably what’s going to end up happening.

Ken: If the CD disappears, what the hell are we going to sell in the theaters? Anything?

Kurt: It’s interesting because I’ve thought what you’re going to end up selling is a poster with a little code that says, “Here’s the record,” or a t-shirt that has a little code. And I also feel like you go to the theater, you buy a ticket . . . for me, what my dream would be is everybody who buys a ticket gets an e-mail, and the record is given to them. And you take a few dollars off the ticket price that goes towards paying back the record, and everybody makes money because you’re, number one, spreading the word of the music for everybody who goes to see the show. They have that to listen to, “Hey, I saw this great show, listen to this music.” Then they’re going to buy a ticket and they’re going to get the record, so I just feel like that’s the way to do it, and if you did it that way and you gave $4 or whatever and they feel like they got it for free but you gave $4 back to the record or the capitalization, then you will have paid back your record in three months, basically, because all of those people will have seen it. I think that would be a great thing to do, if you could do that. You’d probably have to say something to the theater owners and everybody else who gets a piece of that, but you know what? Sometimes, if you own the thing, you can do whatever you want to do with it.

Ken: A very cool idea. You’ve worked with a lot of producers. You’re a producer yourself. What are some of the characteristics of your favorite producers working today? What does it take to be a successful producer on Broadway today, do you think?

Kurt: Flexibility, imagination, collaboration, obviously brains, because you’ve got to be smart and understand how it works. But I think that the people that I’ve worked with who are forward thinking, who really think about what the future of the theater is, who their audience is, who they’re trying to attract, what’s happening in social media and the digital age . . . I think you have to be on top of all of that stuff. But then you also have to be able to communicate to the artists and the composers and the creators and their collaborators the message that you’re trying to get across in order to build the best show that you possibly can. That would be my take away from it.

Ken: You’ve been observing Broadway both as a fan, I’m sure, but also as a professional. What do you think the current state of the music is on Broadway right now, as someone who has recorded all of these great albums?

Kurt: It’s amazing because you look at a show like Hamilton, and you see how Lin has his roots in traditional musical theater, so deeply, but he also has his roots in the popular culture, and it’s very exciting how he’s blended that. And I think that a lot of the young composers that are coming up, whether it’s Joe Iconis or Jason Robert Brown or Tom Kitt . . . all of these guys are rooted in traditional theater. They love it. But Joe . . . you hear Ben Folds in his music. Or Jason Robert Brown’s love of Joni Mitchell. The thing that’s amazing about these guys, and it’s what I said when I started the label with even the performers, is they are able to create a vocabulary, the best composers, and storytelling, using all of the influences of today, whatever that demands, and then they put their own spin on it. Like Jeanine Tesori, the same thing. It’s like she has her own style but you can hear all of her roots in other music, whether it’s Sondheim, whether it’s pop music. It’s amazing how these young composers are just drawing from all of their influences to create this new sound, I think.

Ken: What I love about those three guys that you mentioned . . . Tom and Joe and Jason . . . and how they have roots in traditional music theater but also pop, is that all three of those guys have their own bands which they play in, which I think is very, very interesting. What would be your advice to people with a show that they’re developing right now? Something new they’ve written, they’re trying to get it onto Off-Broadway or Broadway. Do they record something, do they hire a label, do they do something simple? What’s the best way?

Kurt: It’s an interesting thing, because I was on the board of the Weston Theatre up in Vermont, and we created an award for new musicals. And the award is basically you go up to Weston and you work for a week, developing a musical. You don’t get money, you don’t get anything, but what you get is these actors and a piano player rehearsing a 30 minute concert, and then they come down to New York and I produce a demo for them. And so what they get out of it is a professionally produced demo that they can then submit to the O’Neill, or for grants, or for whatever to create a very spare demo recording where you can give it to some investors that might be interested, but it’s not just a composer sitting in his living room with a tape recorder because that’s just never going to sound good. I don’t think you need to have a lot of instruments on it. I think having other actors, real actors, sing on it is valuable and the quality, even if it’s just a piano or a guitar . . . just simple so that you hear the lyrics, you hear the basic melody and you hear good performances. I think that’s key.

Ken: Okay, Kurt, we’re up to my last question now, which has been affectionately referred to as my genie question, which I ask all of my guests. I want you to imagine that the genie from Aladdin knocks on your door and says, “Kurt Deutsch, you’ve done such an amazing job at preserving so many great shows, some that may have disappeared if it wasn’t for you. I want to thank you for that by granting you one wish.” What is the one thing that drives you so crazy about Broadway, keeps you up at night, makes you so angry? What’s the one thing that you wish could just disappear or change in the snap of a finger?

Kurt: It’s a hard one, but I guess when it comes to my business, or my core business, which is the preserving of original cast recordings, it’s that we somehow, collectively . . . the musicians’ union, the actors’ union and the producers of the shows . . . we figure out a way to understand that these albums are marketing tools for the future of the shows, and historical documents. And that we don’t think of them as giant paychecks so these records actually don’t have to cost $400,000 to make. They cost a lot less to make and are there for history. And, if they do make money, then everybody shares in the making of the money. But, unfortunately, all of the contracts were negotiated at a time when Broadway was kind of the pop music of the day, and they were selling hundreds of thousands or millions of units and they haven’t really adapted to what’s going on now. You think of these actors . . . the actors want the record because they want to say, “Hey, this was me in the show and this is my cast album that I’m on,” and the fans want it, and musicians do too. “Hey, I’m proud of my work, and this was my work.” I think everybody wants that but, unfortunately, it’s very hard to get unions to understand that times are changing and this is really all for posterity. So I really wish that we could all just get in a room and figure out how to make these records a lot more cheaply so that we can preserve all of these things.

Ken: The theater is known as an industry that doesn’t change very rapidly yet, at the same time, you’re working in an industry, the music industry, that’s changing at the speed of light.

Kurt: Yeah, and pop records and indie records cost basically nothing in terms of production. You’ve got a guy who’s creating electronic sounds in his room and they don’t even necessarily even use real musicians. It’s a whole different world. And I respect Broadway, and I respect theaters, I respect the actors and all of the musicians, but I just feel like the original cast album is something that needs to be preserved, and we need to figure out a way to make it cost effectively, because without the record, nobody will be able to listen to these things in the long term.

Ken: You’re 100% right about that. If they can’t listen to it they won’t want to do it. On top of that, we’ll have less productions, so making sure we keep these cast albums going and produced for every musical that comes out is essential, I think. Kurt, thank you so much for being with us. Cast albums are, indeed, an endangered species these days. You’ve dedicated so much time to making sure that so many shows, again, that may not have been preserved are preserved for current generations and future generations, and we thank you for that. Thanks to all of you for listening. Coming up on next week’s episode we’re going out on the road again with one of the leading presenters of Broadway entertainment in the country. Tune in and don’t forget to subscribe!