It’s More than Music for Hopeless Records

In 1993, Louis Posen was working out of his garage in L.A., directing music videos for independent punk bands. By 1995, he started one of the most well-known independent record labels in the world, basically on a dare.

Legendary punk band, Guttermouth, was in between labels and looking to put out a 7” album. They liked Posen’s video work and suggested that he work with them to create the record. Posen took the challenge after reading a book called How To Run An Independent Record Label. By December, 1993, he and Guttermouth put out the album using funding from friends and family and sold copies around the country and on mail order. Posen continued to sign more bands and by 1995, had created his own independent record label and called it Hopeless.

With his business vision growing, Louis’ sight began to deteriorate due to a condition called retinitis pigmentosa. He put music videos on hold and stuck to managing the label until around 1998.

That’s when Al Person came in.

Al Person is the CFO of Hopeless Records, which is headquartered in the Los Angeles area of California. He met Louis in 1998 while attending Cal State Northridge. Person enrolled in Music Industry Studies, designed for people who are musically inclined.

 

By December, 1993, he and Guttermouth put out the album using funding from friends and family and sold copies around the country and on mail order. Posen continued to sign more bands and by 1995, had created his own independent record label and called it Hopeless.

“You actually had to do an audition and show a proficiency in an instrument to get in. The goal being to have musicians studying the careers available in the music industry and behind the scenes so that music doesn’t become a commodity, like toothpaste.”

Entering school, Al answered a random ad for a room for rent. It happened to be in Louis’ place. “So I ended up moving in with the owner of a music label while studying the music industry. By the time I was finishing college, it just made sense for me to start working for the company.”

Al considers Louis “the most capable president imaginable. He’s a very effective leader, making all of our deals, signing all of our artists, making sure our company culture is maintained.”

“First Crawl, Then Walk, Then Run”

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Bayside performance (Megan Thompson / @meganpicturetaker, 2017

When it comes to success, Hopeless recognizes the importance of knowing their bands, the fans, themselves, and their communities.

In the early 2000s, the Hopeless team did some soul searching, which involved reading professional philosophy books “to look at companies that had grown, plateaued, and dropped off versus ones that were able to consistently grow, the things they had done, and the philosophies they employed.”

For Hopeless, their initial booms were in the Hopelessly Devoted To You series of punk rock parodies, and their first record to hit the top 200.

 

Our philosophy has always been first crawl, then walk, then run. We work with artists that we can smartly promote and get to the next level and only grow when we can justify the investment in the growth of any particular project or our company as a whole.

 

“Some companies, when they had initial success or an artist that breaks out, will take 100% or more of those gains and try to roll it into even a bigger signing, or hire more people to do more business. If something doesn’t hit again or isn’t sustainable, those companies either get bought out or have cut back and lay people off.”

“Our philosophy has always been first crawl, then walk, then run. We work with artists that we can smartly promote and get to the next level and only grow when we can justify the investment in the growth of any particular project or our company as a whole.”

Hopeless recognizes the importance of understanding a band’s intended direction and how to relate to their core fan base. They base their business philosophy on the importance of not biting off more than they can chew.

“Avenged Sevenfold wanted that high level promo and radio status which is a very large investment for a label. For an independent label like us, that could put us out of business. To take the buyout on Avenged Sevenfold made more sense for us because we weren’t ready to take it to that next level.”

“That worked out well because they went in a direct that was much more mainstream than we were living in and they were offered opportunities that we weren’t ready to give. We were very happy about the buyout. We’re not complaining.”

All Time Low also started out with Hopeless and then went to a major label. “They were interested in a more mainstream direction. It’s bittersweet to see an artist leave that you helped build from the time that they were out of high school. But it didn’t really work out, so they came back when we were in a position to continue growing their brand and appealing to their core audience. They believed in our ability to appeal to their fans to a much wider level than we were five years earlier. So we weren’t willing to take the risks until we knew we could.”

A Shifting Industry

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The Wonder Years (Megan Thompson / @meganpicturetaker)

The music industry has changed a lot in short time, from physical to digital. Hopeless saw this coming. With the rise of streaming sites like Spotify and Apple Music, Hopeless developed with the shift in how people access and purchase music, while still maintaining the interests of their core audience.

“Streaming is now number one for income generation. The best thing about it is we’re making the most money off of things we’re not spending time promoting. It’s just in the ecosystem. We own the rights and those revenues come to us and our artists.”

Despite this shift, Person claims Hopeless still does a lot of business with physical product. “Having that piece in their hands that represent that artist. With the resurgence of Vinyl, it’s much better as a collectable. And we still have a heavy CD business.”

The ability to adapt has been the key to Hopeless’ success, especially in such a quickly changing industry.

In the mid 90s, Hopeless’ main income course was mail order. Every album included a mail order catalogue. They realized very quickly that it was not a business that could sustain them, despite it being at the company’s core.

 

We believe in going where the fans are and communicating with them the way they want. We’re dealing with punk rock kids. The last thing our fans are going to listen to is someone telling them what to do. It’s punk rock.

 

“We outsourced it to a company that does pick, pack, and ship for us and other labels. That business has come back quite a bit, which is good for us. We can do special products in small runs catering to core fans with merchandising without investing in a lot of product that sits waiting to sell. We outsourced a lot of that because we saw it going digital, first downloads and then streaming. The infrastructure was the same for downloads and streaming in terms of skills sets, accounting challenging, having someone deliver our metadata and content quickly and accurately.”

Hopeless has been ahead of the curve for digital music, including downloads streaming. They offered free downloads on new releases back in 2002.

“We saw that’s where our fans were, whether they were file sharing or what. We built the business based on word of mouth. We believe in going where the fans are and communicating with them the way they want. We’re dealing with punk rock kids. The last thing our fans are going to listen to is someone telling them what to do. It’s punk rock.”

“Literally, Streaming Income”

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The Wonder Years (Megan Thompson / @meganpicturetaker)

Hopeless Records has to consider what will continue to stream over the next five-ten years. The company gauges their overall profitability by looking at their position within 18-months of a typical album cycle.

“We expect to see x amount of streams per month, and a certain stream of income. After that initial push is over, when all that spending and marketing is done, and most of the physical product is pushed out, we’ll see a little bit of income streaming in. Literally, streaming income. That, we can count on and base our business around.”

“Someone who wants to hear an 88 fingers Louie tune is not going to pay 99 cents a track on iTunes to hear it. It’s available for them for free, in a way. They weren’t going to do it if they had to buy it as a track download or an album. So that’s a little bit of revenue coming to those artists.”

Streaming income is divided across all the tracks played that month. Ad accounts go into a pool. “We’re getting about .005% per stream for all our artists on a given month.”

In the future, Hopeless will continue to go to where the fans are, and connect where the fans want to be connected. They recognize their fans aren’t necessarily tuning into the radio for the next band.

 

We’re a team, not a corporate structure. If you want to climb a ladder then you need to find a place that has a ladder to climb.

 

“Radio is extremely expensive, with no guarantee for a hit. You have to spend hundreds of thousands to see if there’s a hit. Our fans are mostly on social media, online, using blog posts, going to Warped Tour. That’s not the stuff you have to put hundreds of thousands of dollars into, but you have to organize the effort and make the messaging is genuine. It has to come from the artist, and go directly to their fans and potential new fans. This is what we do best and where we’ve chosen to put our resources.”

In terms of business success, Person suggests looking deep into oneself and considering the kind of people you want to work with, the environment you want to be in 20 years from now, and the company’s mission and approach.

“We’re a team, not a corporate structure. If you want to climb a ladder then you need to find a place that has a ladder to climb.”

Person understands the importance of putting people first, especially when it comes to managing money and customer satisfaction. For the sake of the bands, the listeners, and the company, Person chooses Veem.

Veem Makes Payments “Seamless, Faster, & Easier”

Person’s started dealing with Veem after searching for an alternative to wire transfers. When banks proved unreliable and costly, Person turned to Veem.

“When I was first considering Veem, we had a meeting with our bank people. They told us they wanted to start charging for outgoing wire transfers and ACHs. They never charged before. That didn’t make sense. It was great timing.”

Now, Hopeless Records uses Veem for vendor payments, both international and domestic. “It’s been seamless. International is where it’s been the most helpful. Over 50% of our payments go through Veem.”

Person discovered a “warm and fuzzy experience,” that he couldn’t find at other companies. He claims that “Veem makes the process of sending out royalties faster and easier.”

“It’s been beneficial across all of our vender logistics. By and large, anything I would have done a wire or ACH transfer through the bank on, I go through Veem. Mostly everyone gets it. It’s not so different from what our clients are used to, other than the fees.”

Thanks to Veem, Louis, Al, and the team at Hopeless Records can continue the important work they began all those years ago, with new ventures still on the horizon.

Passion in the Music and the Message

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Neckdeep crowd (Megan Thompson / @meganpicturetaker)

In 1999, Person and Posen brainstormed how they could bring meaning into what they do everyday.

Hopeless is about more than just the music. They’re committed to helping people “live happier, healthier lives.” In 1999, they started a nonprofit imprint label called Sub City, which has since raised over 3 million for charity.

Hopeless recognized an opportunity to reach fans through passionate artists in order to promote awareness about issues and deliver resources, and to help organizations fighting for causes.

It’s about reach, voice, and resources. An artist puts an album out with the Sub City imprint to raise awareness about a particular charity or issue that they are passionate about, such as suicide prevention or homelessness.

Sub City’s importance arises from its delivery. “It’s coming from someone that fans respect and want to listen to, like the lead singer of their favourite band, rather than some label executive telling them they should care about suicide prevention.”

 

Person is celebrating 20 years with Hopeless Records in August 2018, and Hopeless itself passes its 25-year milestone in 2019.

 

Half of the donation comes from the band’s royalties and half from Hopeless’ bottom line. And the company guarantees a donation, regardless of profit. “With any album that sells and is not returned, that charity is getting something.” Same with tours. A percentage off the top of every ticket that is sold goes to a charity. The company makes charity a foundational part of the function of their business.

“We put the money where our mouths are.” Thrice is very much into the Sub City concept. A Place Called Home, a kids drop in centre, started a music program that was largely funded through their album Illusion of Safety.”

Person is celebrating 20 years with Hopeless Records in August 2018, and Hopeless itself passes its 25-year milestone in 2019.

To this day Hopeless is thriving, profitable, and still making a positive impact.

Featured image: Bayside performance (Megan Thompson / @meganpicturetaker, 2017