Some CFOs may play a musical instrument, but how many have won a Grammy? Alison Brown has. She’s a critically acclaimed banjo virtuoso whose distinctive style blends bluegrass with jazz and other musical genres. She’s also finance chief of Compass Records, an independent, artist-run “roots music” label that produces albums ranging from bluegrass, folk, and Celtic music to adult pop and jazz. Brown launched Nashville-based Compass in 1995 with husband Garry West, who plays bass in her quartet. You may not hear Compass artists like Paul Brady or Beth Nielsen Chapman on mainstream radio, but they have nevertheless attracted devoted followings.
Along with her musical prowess Brown brings serious business chops to the CFO job. In the 1980s, after earning an MBA, she spent two years as an investment banker with Smith Barney before leaving to follow her lifelong passion for music. That led to a three-year stint with bluegrass star Alison Krauss and her band, Union Station. Later, Brown recalls, during a European tour with folk rocker Michelle Shocked, she and West “were sitting in a café in Stockholm one morning, and we started to think about what the aspects of a good life would be. We came up with this idea for a record label and a recording studio and a publishing company and live touring.”
Today they are living that good life — but it’s a busy one, requiring them to balance the demands of making music, running a business, and raising two young children. In June, two months after the release of her latest CD, The Company You Keep, Brown, 46, talked about the challenges of keeping Compass on a profitable course.
Many executives have noncompete clauses, but in your case it affected your musical career — you couldn’t record for Compass at first.
I was still under contract with Vanguard; I had signed a four-record deal with them when I was playing with Alison Krauss. But that wasn’t a problem, because when we started our company it was just the beginning of the artist-run-label boom, and it was important to us that people not think of Compass as a label that we started for our own music. I’ve done 6 records for Compass out of the 600 that we have.
Many aspects of the music-industry business model have changed in the past decade, in ways that many CFOs can relate to.
When we started Compass, independent labels went through regional distribution. It was common to have eight distributors that would cover the United States. Also, distributors paid on invoice back then. You shipped some records off and 30 days later you’d get a check from the distributor, whether they had sold the records or not, or even whether they had shipped them out of their warehouse or not. Then retailers and distributors got more savvy about their inventory and everything became computerized, and they switched to a consignment model.
Meaning distributors pay only for what they ship out?
Exactly, and it’s very challenging. Anything can come back from retailers at any time. We’ll see records come back that maybe shipped 10 years ago. And when they come back the distributor charges a restocking and refurbishment fee. So you never know exactly what your exposure is.