Comedy Central Records: Serious Lessons from a Label That Means Business

TRIBECA, MANHATTAN: Quick quiz! Which NYC record label

See CCR for the powerhouse that it is.

• Has won three GRAMMY awards and been nominated for five more in the last five years,
• Has had 11 albums by five different artists certified RIAA Platinum or Gold since 2002,
• Signs its artists based on their talent, not the size of their YouTube following?

If you guessed Epic Records, well, you may be right — frankly, we haven’t done that much research for this article. What we’re actually talking about here is Comedy Central Records (CCR), the label arm of the Viacom/MTV Networks channel of the same name. And it turns out that by studying the evolution of this indie within a mega-major communications company, you can get a serious tutorial on record business success.

Before CCR’s Founder/Vice President in Charge Jack Vaughn, became a magnate responsible for signing elite funnypeeps like Mitch Hedberg, Daniel Tosh, Jim Gaffigan, Dane Cook, Lewis Black, Demetri Martin, Bo Burnham, Aziz Ansari, and Nick Swardson, he was overseeing another indie-label-on-the-rise story – one that quickly fell flat as a pancake. But he was blessed with resiliency, drive, and a genuine talent for niche marketing, and he would need all three to bring CCR into existence, and then deliver on the big promises he made to Viacom.

Run – don’t walk – to the sharp insights available as Vaughn deconstructs CCR’s rise, its adaptation from a physical to a digital market, what they really look for in an artist recording, the shockingly simply A&R philosophy employed by him and CCR Label Manager Ian Stearns, why specializing is a dual-edge sword, and more.

Comedy Central Records has an interesting story of how it came into being. How did you get the idea to start the label in the first place?

In the mid-to-late 1990s, I was running a label called Slimstyle that was the independent label of the modern swing movement.  In many respects, swing at the time was a reaction to grunge and the tired alternative rock scene.  It was a cool underground movement, with a distinct dance style and dress code and great music, and it happened to be so good that it was irresistible to the press.

The media got ahold of it and it exploded, then went supernova, and burned out in under three years.  In fact, by the time it went mainstream, the burnout took less than 18 months.  In mid-1999, the phone stopped ringing and we couldn’t sell another swing record.  For the next couple of years I was at loose ends and couldn’t figure out what to do next.

I had been a huge fan of comedy for years, and as I was growing up, amassed a large collection of comedy albums that I played over and over.  I had also been a fan of Comedy Central and had watched it basically since its inception.  The clincher, though, was around 1998 when I saw a clip of Mitch Hedberg doing a few minutes on television.  I was blown away and tracked down his self-released CD, Strategic Grill Locations.

After memorizing it, it hit me that it was crazy that something this good wasn’t being properly released and marketed.  That was when the idea crystallized that it was time to start a comedy label, and instead of trying to raise funding for it, the obvious home would be Comedy Central.

That is what we call an A HA moment! So how did you get Comedy Central on board to back it from there?

It may seem like a no-brainer, but back at the time — 2001 — it was a little out there.  Every so often you’d see a comedy album released by a big star, but there were almost no small-to-mid-level comics releasing CDs, there was no comedy section in record stores, and comedy albums really hadn’t sold since the late seventies or early eighties.

The CCR team, L-R: Ian Stearns, Miro Terrell, and Jack Vaughn

I had a friend who knew how to get in touch with the head of Comedy Central and I flew out and pitched them the idea for the label.  They had already been in talks to license the Comedy Central brand to majors, but my take on it was to do it all internally- signing artists, producing the albums and handling all aspects of the label in-house.  It was a tenuous uphill battle, and I flew to New York with improvements to the plan for about nine months until it was to a point where they decided to give it a shot.

The nice part about having so little competition was that the list of possible comics to sign was almost limitless.  In the first year I signed Dave Attell, Jim Breuer, Lewis Black, Dane Cook, Bobcat Goldthawait, and Mitch Hedberg.  We also released the audio from a new show on the network called “Crank Yankers”.

The downside was convincing artists that doing a comedy record was a good idea, convincing record stores to take them, and reintroducing the public to the idea of buying comedy records.  To this day most people don’t walk into record stores looking for comedy albums.  In fairness, most people don’t walk into record stores anymore period, but you get the point.

That sounds like a good way to start. As the label opened for business, what parts of your original business plan were confirmed? And on the flipside, what were the surprises that you discovered in the first few years?

I recently took a look back at the old plan I first pitched to Comedy Central and shockingly, it was about 80% on target, from the artists signed to the profit margins.  The sales projections that I had which were largely blind guesswork and in my mind even a little ambitious, but they turned out to be way below where we netted out.

As far as surprises, there weren’t too many.  Some artists I thought would do better didn’t and some I thought would take a very long time to develop turned into stars in relatively short order.

The really interesting part was how the industry as a whole changed from the start until now. For example, we did exactly zero digital sales in the beginning (2002), and today, I’d estimate we’re 85% digital.  There’s a good chance we won’t be manufacturing physical CDs two years from now.

On that note, wow would you describe Comedy Central Records today? It is it an indie label? A major label? Or is it a hybrid of both? What are the advantages and disadvantages of having that mixed status?

It really defies description, because it’s not set up as a traditional label.  In many ways it’s a perfect hybrid  — backed by the marketing and financing, not to mention prestige, of Comedy Central, and the top-notch distribution of ADA, but still small enough to have a personal touch and everyone here is doing it for the love of comedy.

CCR artist Dane Cook's "Retaliation" debuted at #4 on the Billboard charts, and has sold 650,000 copies since 2005.

For example, unlike majors there is no constantly shifting bureaucracy and executive team- no one gets orphaned by a fired regime.  And if any artist, manager, or agent has a problem that needs resolving or has an idea or a need, they can get me right on the phone and it gets taken care of if there’s a viable solution.

The artists get advertising on the network and robust off-network marketing, we use the best royalty accounting firm in the business to make sure artist royalties are paid accurately, and hopefully there is none of the same terror and frustration having to deal with the machinations of a major.

Plus, our catalog generates a good amount of revenue so we don’t have to desperately try to grasp for the next immediate hit and can focus on development and what we think is funny — even if the artist hasn’t built up a big fan base yet.  And in the Internet age, quality tends to get found.

It seems like there are many interesting comparisons of running a comedy label, as opposed to a music label. What are the most striking ways in which a comedy label operates differently from a music label? In what ways are they the same?

One of the major drawbacks is that we can’t license our audio to TV, film, commercials, video games, etc… because it’s by and large spoken word standup as opposed to music.  Another is that our sales are limited to English speakers.

But there are some big positives.  With spoken word standup, people tend to buy the whole album as opposed to just singles, which is a big problem with music.  Of course there are those out there who just want Jim Gaffigan’s “Hot Pockets” joke, but for the most part, the comedy album is a piece of whole cloth.

Another plus is that, as opposed to musical acts who tend to be comprised of numerous players and prone to breaking up, comedy is almost always just one person with no equipment who just tends to get more famous.  With Slimstyle, the costs and logistics of getting an eight-to-ten piece swing band on a bus and touring were almost insurmountable.

For those who just want Jim Gaffigan’s “Hot Pockets” joke — instant gratification:

Who makes it on to CCR? When it comes to your A&R process, how do you discover talent?

We have an absolutely amazing talent department at Comedy Central who identify talent for the network early on.  The normal process is that comics with a strong ten minutes of material perform on our TV shows like “Live At Gotham” which will showcase a few up-and-coming acts every episode.

Then, comics who have at least a strong half hour of material are invited to perform on their own “Comedy Central Presents” special.  This is the point where the label typically becomes interested for two reasons- one, because the comics are close to or at the point at which they have an album’s worth of material, and two, because we can now advertise the comedian’s CD every time their “CC Presents” airs on the network.

This is how we deal with a lot of emerging talent, but there are also other ways we work.  For example, I often sign established acts who want to work more closely with the label or network, or are leaving another label.  CCR also brings talent to the network- Bo Burnham is a good example of this.  He got his start producing and starring in web videos that became a sensation, we released those videos commercially in a DVD accompanying his debut album and he ended up doing a “CC Presents” and hour special (that also ended up as a DVD) with Comedy Central.

Ultimately, there are basically two criteria for who we sign to the label:

1. You have to be really funny.
2. You have to have a distinctive voice or point of view.

That’s it.  Things like having a strong following or being on TV or in movies is great, but those two criteria are the main things we look for.

Now that you’ve been doing this for a while, what comedians have you found are a good fit for CCR, and on the other hand, who isn’t?

Again, really funny people with distinctive voices or points of view are the best fit.  I realize that sounds glib, but that’s the real answer.  This is what we look for. Ideally, we try to deal with talent who have or want to have a relationship with the network as a whole.

"Stark Raving Black" netted CCR its latest award, the 2011 GRAMMY for "Best Comedy Album".

Are there things that CCR can do for your artists careers that a typical music label can’t? What kind of comedians stand to most benefit from working with CCR?

I could go on for a while on this one, and a lot of it was outlined earlier, but one of the major factors is that we can advertise the records at little to no cost on the network- typically running lower third ads contextually during the comedian’s programming- and promoting the releases on comedycentral.com.

This is, of course, the perfect audience to be in front of, and also represents tens of thousands of dollars worth of promotion that no one else can come close to duplicating.  That’s in addition to the significant off-network campaigns we do.

The bottom line is that we make, sell, and promote nothing but comedy records 24/7/365 which gives us and our artists significant obvious advantages.

When it comes to production and distribution of the records, how do you work? Do you record only live shows? Record in studios? And are your costs for production high or low?

The vast majority of our records are spoken word standup, which necessitates recording in a live setting.  We will typically send out a mobile recording engineer to the venue (typically a comedy club), and record a weekend’s worth of shows.  Usually there is one standout show of the bunch that we will use as the body of the album, then cut in additional material or jokes that worked better in the other sets.

One of the quirks of this genre is that the audience tends to be the most important part of the recording, and how the audience reacts can drastically change how the jokes are perceived by the listener.  Jokes seem funnier the harder people are laughing at them — this is the reason sitcoms customarily use laugh tracks — which may seem obvious, but you’d be surprised just how important it is.

By the time of the album recording, the comic has gotten so good at doing the material that the differences in delivery among the sets are usually minimal.  But the difference between an intelligent, raucous audience in a packed room, and a sober one in a half-empty club is staggering.  We’ll re-record shows if the audience isn’t good enough.

Our costs of recording, as one might imagine, aren’t high.  We can spend a lot in editing and post, making sure everything is just right, and we put a lot into the artwork.  But in the end, we like keeping the production costs low, because those costs are recoupable, and as such the artists start seeing royalties sooner.  It also allows us to put more money into marketing which benefits everyone.

Also on the business tip, how is your sector changing, and how do you expect it to continue to evolve? As record company executives how do you keep pace with the changing business environment?

The biggest change is the switch to digital — both from a distribution and marketing perspective.  There are always new platforms cropping up that sell or stream audio, and it’s a challenge to keep up with it all, but it’s exciting to find these new ways to get our albums out, and we’re always up to experiment.

Mitch Hedberg -- the man who inspired it all.

On the marketing side, we now have to reevaluate the ways we market every three or four months as the different outlets change and get more sophisticated.  A lot of the time we have to make money on smaller numbers of units, so marketing effectiveness is key.

I expect to see a complete shift to digital albums very shortly with its requisite benefits and pitfalls.  On the one hand, we will no longer have to manufacture, warehouse, ship, take returns on, and destroy physical product, but the downside is that piracy is becoming more prevalent and increasingly difficult to stop.  Luckily, people are still willing to support comedy and pay for good content.

Let us peer inside your head: Are there music business mentors that have been particularly inspirational to you?

I grew up with the Washington, DC punk rock scene of the late eighties and early nineties, and Dischord Records and its bands were hugely inspirational to how I do business in terms of ethics and production value.

And Sub Pop, Moon Records, and all of the other genre-focused labels highlighted the need to specialize in one type of music or audio.  There are a number of benefits to specialization in that you can really connect with your audience, and it makes marketing easier and more effective when you don’t have to reinvent the wheel every time you put out an album of a different genre by figuring out how best to get to the target listeners.  Ideally, we want someone who will buy every album on the label, just by nature of it being a CCR release- because they know it will be good.

There are cautionary tales in these labels as well, though, because if you are the main label of a popular genre, the tendency is to want to put out records by everyone in that genre, focusing on quantity over quality, which inevitably leads to a burnout and dropoff in interest by the audience.

I see CCR as, among other things, a comedy filter. Recording and distributing comedy albums is relatively inexpensive and easy — they’re released and disappear all the time — but great records with strong marketing campaigns behind them are much fewer and farther between.  We are acutely aware of this, and as such sign and release a limited number of artists and albums every year in order to try to maintain that quality.

It looks like you’re really in a groove. Lastly we ask, what makes NYC a seriously good place for Comedy Central Records to run its business?

For the most part, the comedy industry is in New York City and Los Angeles.  We love the city and its amazing comedy scene – from Upright Citizens Brigade  and the small alternative rooms to Saturday Night Live.  The comedy heart beats strongly here.

– David Weiss