You may not know the name Peter Gotcher, but if you are involved in any aspect of the music creation process, you have most definitely been touched by his leadership and creativity. As the founder of Digidesign, Gotcher led the company to create Pro Tools, one of the single greatest technological advances in music production to date. That alone would constitute Gotcher a place in the history books, but that milestone hasn’t slowed him down one bit. He continues to advise for organizations like Topspin, Berklee College of Music, Pandora, Dolby, Line 6, and others. Moreover, Gotcher also provides insight into how musicians can begin to make real money again in an industry that has all but abandoned them. Based on his track record, we listened very closely. Check out how Gotcher changed the industry and continues to utilize his creativity and prowess in the business today.
You have literally crafted the industry for both music and technology throughout your career. How did you go from seeing a need and opportunity in your own life to creating a solution for those issues that you saw?
The truth is that I was what I call an accidental entrepreneur. I was in a band and I went out and bought one of the first digital drum machines —E-mu’s Drumulator. I had a collection of percussion instruments, and with my band I wanted to be able to play some of this percussion live, but I needed something to hold down the groove. So I bought this drum machine and brought it to a rehearsal, but after 15-minutes everybody told me to turn the thing off. It was cool from a programmable standpoint, but the sounds were pretty sterile and terrible.
To make a long story short, the co-founder [of Digidesign] was the keyboard player in the band with me and he was a computer hardware guy. So we hacked this drum machine and changed the sounds. We were able to program sounds onto chips that you could interchange in and out of the drum machine. We programmed a lot of sounds and categorized them into Latin percussion, African percussion, synth drums, and so on. We just did it for ourselves as a hack, but we went down to E-mu met with them. Basically the VP of Sales got on the phone to Sam Ash and Manny’s Music and before we knew it, we had a bunch of orders for these things. It’s one of those classic adages — a product doesn’t exist that you want and that’s often the best window of opportunity to go off and create something.
I had a great job and hadn’t intended to start the company, but the opportunity was there so we jumped on it. We had very little money, so it was a real bootstrapping exercise to accomplish it. We’d take some money, buy some of these chips, program them, and send them COD to music dealers on the west coast because that way we got the money back faster than the east coast. We ended up selling several millions of dollars worth of these drum chips and that really funded everything else.
We had a very kludge system for editing the drum sounds; you couldn’t see waveforms or anything. So we wanted to make a better system for editing and creating these drum chips. It turned out that right around that time, the drum chip business dried up completely, but digital sampling keyboards were coming out. So we interfaced the software to some of these early digital keyboards and it was just a much better tool for editing your sound. That became our hot product and it was one of the first music software programs sold for the Mac. We sold many, many copies and then that funded us getting into hardware and then we evolved from two-channel editing to multi-channel editing to control surfaces and ultimately Pro Tools.
Probably the most important strategic decision we made along the way was that we opened Pro Tools up to third-party development. We created a framework so that other people could create things like plug-ins and virtual instruments and even use all of our hardware and our engine to run a whole different application like a midi sequencer with the audio on top of it. That ended up really, I think, ultimately making Pro Tools the durable success that it’s been. So many third parties developed so many different plug-ins and different add-ons for the system that no other company could compete with its breadth of functionality. That was the critical strategic decision we made really in the history of the company and it was very controversial at the time because it took a lot of resources to do that and didn’t add any immediate features. A lot of things have come out of that too. I guess I didn’t anticipate Auto-Tune, but Auto-Tune came into the world as a Pro Tools plug-in and now it’s sadly everywhere [laughs].
As far as opposition went, who was against the idea?
It was controversial inside of the company. Pro Tools and actually the predecessor Sound Tools at the time still needed a lot of features. The product was evolving and users were asking for all kinds of stuff. So the decision to support third-party development meant we had to put a lot of our developers and resources on developing these APIs so that other people could create plug-ins. It was a lot of development work and people in the company, like the VP of Sales for one, said, “So we’re going to spend all of these resources and it’s not going to add a single feature to the program. And we’re just going to bet that other people are going to add cool features to the program through this. That’s a crazy bet.”
But I had seen it happen in other industries. We kind of came up with the plug-in stuff right around the same time Photoshop did over at Adobe, so I was looking at what they were doing. It was an investment for the long run. Digidesign ultimately became a public company and if we had been a public company at the time, we probably wouldn’t have made that decision because it would have been just too expensive with too long a time horizon. But we weren’t; we were a private company with freedom to make long-term decisions. I guess I was lucky to be CEO and jam it through. There were other people who believed in it too, but it was generally controversial.
How long did it take for you to see the payoff from that?
Well, the other interesting debate was that there were some developers who were taking up our resources to support them and doing things that were totally non-commercial or would clearly sell very few systems. The fella who developed Auto-Tune actually originally did the SP algorithms for locating oil deposits with some sort of ground sonar. I think he bought one of our signal processing cards just to accelerate the code he was writing to do that.
The really interesting one is Gallaudet University, a school for the deaf in DC. They were developers of ours and created a platform that deaf individuals could stand on that would shake via a speaker element. They used our software to pronounce a word and the deaf person would feel it through the platform and see the waveform on a screen. Then the deaf person would speak and see the waveform when they spoke as well. They could iterate on that and it actually had some pretty amazing results teaching deaf people to annunciate.
There were all kinds of wacky ones too though. We sold a few systems to Lay’s for potato chip quality control. They would smash the chips and look at the waveforms. That told them something, but I’m not sure that I ever really understood it [laughs]. So there were some wacky ones, but then who knows how many Pro Tools systems Auto-Tune has sold?
The recording studio was always a multiple-supplier environment. You might like Lexicon’s reverb or Eventide’s reverb; there were eight different kinds on the market you could pick from. I think we realized early on that we weren’t going to make every flavor of every effect or process. We weren’t going to have every good idea, so opening up the platform allowed all of these other folks to get into the digital world for something that used to be a big metal box on a rack in a traditional studio.
That was an incredible decision from a business standpoint. What skills did you develop that allowed you to thrive in the business world after coming in originally as a musician and technology enthusiast?
I was really learning on the job. I think a lot of business is common sense. The fact that the very first product was a success and we had a string of very successful products meant that we never went through a really trying time though. There were obviously some more trying times after the IPO and actually even after I had left, but in general I guess I was there for 13 years as the CEO and we just had a good run. Companies didn’t blow up like they can with today’s Internet startups for example, so I had time to learn on the job and I had some good mentors.
Nowadays you advise a lot of other companies. Did that just develop from your experience?
A couple of years after Digidesign went public, we were acquired by a company that did the video editing equivalent of us, which was Avid. About a year-and-a-half after we put the companies together, I was ready to just pass the baton and move on to the next opportunity. You know, it’s not as much fun not running your company fully independently. I was 37 at the time, and I even thought about retiring, but I was going a little stir crazy. I got recruited for another CEO job, but I decided I didn’t want to be an 80-hour-a-week Silicon Valley CEO. So I ended up turning it down, but there were some VCs who recruited me who said, “Alright, if you don’t want to do a CEO job, why don’t you come and look at companies with us?” So I basically became a VC at first with a group called IVP and then a group called Redpoint that was funded out of IVP.
About six or seven years ago I decided that I just wanted to focus on companies where I really had a passion for the product and the people. All of them are fairly different — I’m Chairman of the Board at Dolby, a Board member for Pandora, and some others. I basically function as an advisor to the company, trying my best to be helpful to the CEO based on past experiences. My criteria is that I want to be involved in companies I think can be a business success. I want it to be people I like and respect, and I want the product to be something that I can get excited about.
You’re also on the Board of Trustees for Berklee College of Music. Their vision states that they want to be “the world’s leading institute of contemporary music.” As a member of the board, how do you help them achieve that goal?
First of all I’ll say that Roger Brown, who is the President of the school, is the reason I’m on the board. He’s a fabulous leader and has a great vision for the school. In my opinion, Berklee is the world leader in contemporary music. They’re not competing with the classical curriculum of Juilliard, but for contemporary music broadly defined, I think it is the preeminent school in the world. Roger asked me about a year ago to become the Trustee chair of the committee on Continuing Education, which is Berklee’s online school.
Berklee was actually a really early pioneer in online education. It started over ten years ago. It’s really quite impressive what they’ve done with that program. We’re now entering into another phase where we have launched a number of free courses on Coursera. We’re one of the top institutions on there — 0ver 100,000 people have signed up for our courses on there. It’s going to be fascinating to see how that goes, because you can be anywhere in the world and take one of these free classes. I’m not sure that it’s clear what the business model is yet for people doing free, online education, but in the case of Berklee, we’re really just trying to spread the good will and the value of music education. That’s the development I’m really excited about.
Having had such a strong presence in the industry thus far, where do you see the next level of innovation happening for musicians?
An issue I’ve been thinking about a lot lately is the continued demise of recorded music as a revenue source for musicians. The positive is that engagement with streaming services is growing very quickly. When most people think of streaming they’re thinking about Pandora or Spotify, but the number one place people go for on-demand streaming music is Youtube. Soundcloud is growing like crazy too.
So there’s more exposure to more music and more fan engagement than ever happening. Yet, there are fewer fans that are deciding that they need to own music in a physical and tangible form, or even in a download form. So I think the trend is subscription streaming services like Spotify and Rhapsody will continue to grow. Streaming payments are going up, but for artists that are second-tier artists in terms of their fan size, it’s pretty tough for the streaming revenues to make up what they used to make in selling a $15 CD.
What all artists have to think about these days is, “How do I create other revenue streams?” Whether it’s tickets and touring, merchandise, or whatever. A real emerging area is just experiences and connecting with fans through any number of highly personal special products or experiences. Patronage is coming back with Kickstarter and IndieGoGo. People are voluntarily supporting artists they like. But as an artist, you’ve got to be smart about what your fan population looks like and what they’re going to respond to.
I think the next step is giving the artist real estate next to where their music is being consumed to let them make offers to fans directly or just to connect. The amount of listening that is happening is so huge that if you can offer tickets or merchandise or experiences in the context of those impressions, even if you have a microscopic conversion rate, that’s a way to really generate income as an artist. I think that’s the trend of how artists are going to transition into having viable revenue generation in a streaming world. Hopefully we’ll see more and more of the big music services integrate purchase opportunities. I think you’ve just got to be clever and willing to hustle and consider alternatives and really engage with and understand your fan base these days to make it in music.
For someone who has done so much and still has so many ideas for innovation, you keep a relatively low profile. What lasting impact do you want to leave on this industry?
You know, that is an interesting question. I am a really publicity-shy person in general. When Digidesign went public in 1993, I got a lot of publicity and I really didn’t like it [laughs]. I would far prefer to have a situation where I’m behind the scenes as an advisor and investor. My preference is to kind of be out of the limelight. I’ll still go give a talk from time to time or do stuff here and there, but it’s really just a personal thing. I shy away form the limelight a bit.
As far as my legacy, I spend no time at all thinking about that. Frankly I look back on something like Pro Tools and I think that the impact on music creation has been a real mixed bag. On the one hand it’s a very powerful tool and a lot of people have made amazing art with it. On the other hand, it’s kind of been used to suck the humanity out of a lot of recordings. I sometimes find myself listening to a classic record — mistakes and all — and thinking, “God, if Pro Tools was around at the time, would somebody have been unable to resist sucking all the life out of this?” In terms of legacy, the thing that I’m most proud of is that coming out of Digidesign there are so many great people who did amazing things to impact the music industry or other industries in a positive way. I will probably be most remembered by my team as someone who helped everyone grow and do cool stuff. It’s really the connections with people that I come back to.