Ben Paynter Business Week 11/08/12
There are people out there who love Nickelback. And if they pay enough and get close enough to the stage at a concert, Chad Kroeger, the band’s lead singer, rewards them by throwing beers at them, which is what’s happening on a Saturday night at the Klipsch Music Center in Noblesville, Ind. Kroeger is yelling, “Who’s thirsty?” The crowd is roaring in appreciation. Behind him, roadies are chucking dozens of cups into the audience of 16,000. For several women in the front rows, at least, there is no risk of wardrobe damage; they have removed their shirts.
The band is touring for its Here and Now album, which, like their other records, celebrates rowdiness and lust and a general uncorking of appetites. Halfway through the set things appear to be reaching maximum Nickelbackness. Kroeger has been taking theatrical shots of Jägermeister all night. After one song, aptly called Rockstar, he takes a bra that’s been thrown onstage and hangs it from the head of his guitar like a large Christmas ornament. Then he breaks into the power chords to start Someday, his ode to bad boyfriends begging for forgiveness. Their mode onstage is regulation rock: Kroeger, bassist Mike Kroeger (his half-brother), lead guitarist Ryan Peake, and drummer Daniel Adair are all wearing black shirts, dark pants, and heavy work boots or Chuck Taylors. They play their guitars with their feet wide apart, looking like they’re going to eat the microphones.
Kroeger finishes a song, hoists a cup, and offers a toast to the similarly hard-drinking Peake. “Together we will prevail, or we will fall down and throw up in front of all these people,” he says. Before the duo chugs, Peake jokes that this all might wind up online. Kroeger leans into his microphone to endorse that point. “It would make a great video for YouTube, absolutely. Cheers!”
For many music fans, all that would be torture. Hating Nickelback is a lifestyle choice. It’s like being against Crocs (CROX), Microsoft (MSFT), or the French. And yet Nickelback is one of the best-selling active rock bands in America, thriving as the recording industry has declined. How it does so has less to do with the band’s artistry than with the commercial genius of its Jäger-swilling frontman.
Since their first breakout single, How You Remind Me, in 2001, Nickelback has released five albums with at least 19 Billboard Hot 100 singles, selling more than 50 million records worldwide. Some songs have been hits for two years straight. In 2009 the crew was named Billboard’s top group of the decade. Nickelback isn’t even a pure rock band—it’s a sort of rock-pop hybrid, churning out songs varied enough to dominate multiple charts at the same time.
Kroeger & Co. have built a mini-empire on the standard rock setup of two guitars, bass, and drumsPhotographs by Getty ImagesKroeger & Co. have built a mini-empire on the standard rock setup of two guitars, bass, and drums
In addition to masterminding Nickelback’s ascent, Kroeger, 37, has found ways for his band to make money onstage and off, through licensing, merchandising, and product-placement agreements. He’s also helped groom many other acts, including some that the haters might even like. He co-owns the record company that released Carly Rae Jepsen’s ubiquitous summer smash, Call Me Maybe. He co-writes songs for other major artists and helps to promote them. As of May 2011, the rock-star-cum-business-mogul was earning $9.7 million a year from his various ventures, according to court records filed with the Supreme Court of British Columbia. He has a vacation home with friends in Cabo San Lucas, Mexico, a 20-acre farm with stables in British Columbia, and his own home recording studio. Chad Kroeger is not just a drunken rock god: He’s a kingmaker.
Backstage a few hours before showtime in Indiana, Kroeger and his bandmates have roused themselves from their private buses and met up in a communal dressing room inside the dimly lit bowels of the pavilion. The place is sparsely decorated with thin carpeting, a couple of couches, and lots of guitars on stands.
Kroeger, who is tall and lean, had long, curly blond hair for years, but he’s started keeping it short and spiky. For a guy who’s spent months on tour he looks surprisingly refreshed. “Look how tired we are. Look how many cases we’ve pushed today,” he says, making fun of the notion that life on the road is tough. Outside, an army of workers does all the case-pushing as they hustle back and forth to get things ready.
Kroeger attributes his rise to simple hard work. “I always thought it was strange when these artists like Kurt Cobain or whoever would get really famous and say, ‘I don’t understand why this is happening to me. I don’t understand! Oh, the fame, the fame, the fame!’ ” he says. Nearby, there is a table covered with band photos that they have already signed. Kroeger looks around the room for a moment and then says, “There is a mathematical formula to why you got famous. It isn’t some magical thing that just started happening. And it’s going to move exponentially throughout your career as you grow, or can decline exponentially if you start to fail as an artist.”
The formula for fame includes inviting radio station personnel to hang out backstage to make sure he gets airplay before and after events. And there is always a preshow photo op with radio contest and fan club ticket winners.
Kroeger tends to the band’s image in even the smallest moments. When asked to take pictures with fans, Kroeger will don aviators and strike the same pose nearly every time: one arm around the subject, the other half-raised in a fist with devil horns. There was no chance, either, of a magazine photographing them at smaller venues on their fall tour of more out-of-the-way places like Minsk, Belarus, and Boondall, Australia.
Kroeger’s manufactured approach to music and stardom may be one reason Nickelback is so widely disliked. “Right now it’s become trendy to hate Nickelback, and no one even knows why,” tour manager Kevin Zaruk says. In 2010 skeptics set up a Facebook (FB) group that purposely misspelled the band’s name: “Can This Pickle Get More Fans Than Nickleback?” The pickle rallied about 1.5 million people in the single month it was live. Last Thanksgiving, an online petition to prevent the band from playing during halftime at a Detroit Lions game drew 50,000 signatures. In the fall, when Chicago’s teachers went on strike, a pro-union protester attacked the mayor with what was meant to be a devastating sign: “Rahm Emanuel likes Nickelback.” The mayor quickly denied the charge.
Before he could annoy Americans, Kroeger had to get popular in Canada first. He grew up in the rural town of Hanna, Alberta. As a teenager he, Peake, and Mike Kroeger started a cover band called The Village Idiots, playing mostly Metallica songs in local bars. When they got tired of that, they formed Nickelback, naming the band after Mike’s job at Starbucks (SBUX)—he often gave a nickel back while making change for customers. Their first two albums, Hesher and Curb, contained all new material written by Kroeger.
By the late ’90s, the band had found a drummer, Ryan Vikedal (he was replaced by Adair in 2005), and moved to Vancouver. After a short stint with a local manager, they decided to represent themselves and began to put together the Nickelback machine. They figured out how to press CDs, get radio airplay, and book gigs. They bought a Ford Econoline and started touring. “We had zero business plan or experience, but it’s amazing what desperation will do for you,” Peake says. The venture was funded primarily by Peake, who took out $30,000 on a credit line established at a local bank branch in Hanna. It was the same place his father, a farmer, used to finance cattle purchases.
Getting famous in Canada is different from getting famous in the U.S. For one thing, the country mandates all commercial stations to devote 35 percent of their programming to Canadian acts. When Nickelback released their third album, The State, in 2000, they attracted the attention of record executives at Universal, Warner, and Roadrunner records. Kroeger was concerned early with control. He says the band signed with Roadrunner, an independent label, because they thought executives there would work harder. Plus, they seemed to be actual fans. “They wanted it more than anyone else, and that was a good feeling,” as Peake says. “[Other places] felt like a sausage maker.”
They released their first U.S. album, Silver Side Up, on Roadrunner on Sept. 11, 2001. The lead single, How You Remind Me, was originally intended as a breakup song, but timing and vague lyrics turned it into an angry memorial anthem. The song reached Billboard’s No. 1 spot in 2002. Although it was released before iTunes was selling songs for 99¢, the record has since racked up 2 million downloads. In 2002, Kroeger wrote and recorded Hero, which became the best-selling title track for the Tobey Maguire Spider-Man. From the start, Kroeger and the band recognized that the structure of any record deal alone wouldn’t make them rich. “We didn’t really like our record deal when we signed it,” adds Mike Kroeger at one point backstage. To emphasize that, Peake furrows his brow and does his own impression of a slick-talking music executive. “ ‘This has got to come off the top though, guys,’” he says. “ ‘Trust me on this one.’ ”
Smart decisions have built Nickelback into a production conglomerate, with concerns that stretch across industries and genres. One of Nickelback’s two openers in Noblesville, for example, is the band My Darkest Days. Kroeger owns royalty rights to their songs because he helped write some of them and produced their current album on his own music label.
Kroeger writes far more songs than Nickelback can release. Since 2001 he’s penned more than 150 songs for both his band and major artists in completely different categories, including classic rock (Why Don’t You & I for Carlos Santana), country (It’s a Business Doing Pleasure With You for Tim McGraw), and hip-hop (Tomorrow in a Bottle for Timbaland).
“I’ve always called him a song scientist. He’s got it down, and I respect that,” says Chris Daughtry, the American Idol runner-up who played No Surprise, a song the two co-wrote together, during a 2009 victory lap on the TV show. “People want to hear songs they can remember after just one listen. That’s what I love about Chad’s songwriting.” In August, Kroeger announced his engagement to pop star Avril Lavigne. The two got close this year after Lavigne, who’s also Canadian, asked him to work on her upcoming album.
Kroeger doesn’t always accompany the artists, but he still gets paid. Every time a song gets carried over the airwaves—on the radio or the Web—the songwriter gets performance royalties. According to Songtrust, a royalty management company, a top five pop hit typically grosses about $2.5 million for the songwriter and publisher; that doubles if the song becomes popular worldwide. For a hit songwriter, the payout is substantial. Kroeger, however, says none of his work is about making money. “When you are writing a song for something else, if you are doing something for money, I always think that’s bad luck.”
Whether for love or money, he also runs a record label. Kroeger co-founded 604 Records in Vancouver in 2002, and the label has since worked with dozens of successful acts. Over the past decade, 604 and an offshoot for alternative music called Light Organ Records have used the Nickelback formula—first Canada, then the world—to break top artists ranging from mainstream rockers Theory of a Deadman to, most recently, pop darling Jepsen, currently on tour with Justin Bieber. Her Call Me Maybe has sold more than 9.1 million copies and was crowned Billboard’s Song of the Summer. Kroeger didn’t write that tune, but as the record label owner he pushed the song out into the world. Every time it sells, he gets a share of the profits. According to 604 co-founder Jonathan Simkin, Nickelback’s legal adviser, the label splits net profits from music sales and other placement revenue 50-50 with their artists.
Simkin says Kroeger has succeeded with 604 Records for two reasons. “He has balls,” he says. In other words, Kroeger’s willing to gamble on new talent. He’s also, says Simkin, a workaholic. “That’s his idea of vacation, non-Nickelback work.”
My Darkest Days, Nickelback’s tour opener, owes much of its success to Kroeger. “We first met Nickelback through Chad,” says Matt Walst, lead singer of My Darkest Days. “We shot our demo to him, and he dug it. And then he co-wrote a bunch of songs on our first recording and pretty much produced our first record, and we’ve been friends since.”
Not only does their breakout hit, Porn Star Dancing, have that Kroeger-inspired explicitness (“She wraps those hands around that pole; she licks those lips and off we go”), but when it came out in 2010, the song also used cross-channel marketing tactics: Both Kroeger and rapper Ludacris sang on the single, giving it exposure to the alt-rock, mainstream, and hip-hop categories. Lest fans of ancient heavy metal feel left out, Zakk Wylde, a legendary member of Ozzy Osbourne’s band, also added a guitar solo.
For My Darkest Days, that’s meant a quick transition from playing small Canadian clubs to headlining their own shows at high-profile clubs in the U.S., way ahead of the traditional touring grind. Says guitarist and keyboard player Reid Henry: “They have applied 100 percent corporate efficiency to rock ’n’ roll. It’s so cool to see.”
In 2008, Nickelback signed an exclusive “360 deal” with promoter and ticket sales company Live Nation (LYV). The company reportedly paid an estimated $50 million to $70 million for a stake in all revenue streams except publishing—that’s merchandising, endorsements, and concert ticket sales—over three touring cycles, or roughly six years. That makes Live Nation the exclusive promoter of a show that fills venues worldwide, many, such as the one in Noblesville, owned by Live Nation. Only Jay-Z, Madonna, and Shakira have similar deals.
Executives at the band’s management company, Union Entertainment Group (UEG), also note that Kroeger tours on the cheap. Rather than use expensive special effects or stage tricks, a Nickelback show consists largely of the band playing in front of a big screen that projects lyrics and slides (plump lips, sexy silhouettes). A few gizmos such as flamethrowers and concussion mortars simulate bomb blasts with bright flashes and deafening ka-booms during some songs. For bigger arenas, a circular “flying stage” rises up to 20 feet in the air.
For superstars, all that’s minimal; Lady Gaga, by contrast, requires a multilevel castle, a platoon of backup dancers, and an aerial high-wire system. Forgoing such theatrics reduces set-up time and transport costs. “Typically when you have a band that has so many hits, you can produce a show that is still entertaining but you don’t have to go overboard with special effects to fill the night,” says Live Nation President and Chief Executive Officer Michael Rapino. “The No. 1 thing that the band is worried about isn’t the shiny balls, it’s what is the ticket price going to be this summer and how do I make sure I have a fairly affordable show.”
A Nickelback show costs around $230,000 to produce, according to UEG, about average for a touring group. A seat goes for about $61, a fraction of Gaga’s prices. At that price, venues usually sell out. The group averages about 11,000 fans a stop: That’s $671,000 a show. According to UEG, ticket sales for about 80 shows in North America and Europe should gross about $53 million in 2012.
In Noblesville, two sales tents are packed throughout the night. Stand operator Brittany Baker, 22, says some of Nickelback’s logo-adorned offerings, such as $10 beer cozies and $40 T-shirts, are standard for most groups that roll through. They’ve also got $4 collectible cups, a $30 set of drum sticks, and $20 red panties with “Rockstar” on them. UEG confirms that one stand alone can take in about $100,000 for the night. That could add up to as much as $200,000 per venue or an additional $16 million over the course of the tour.
Raking in so much money makes it a little easier to be loathed. In January the band’s Twitter handle @Nickelback began answering negative comments sarcastically. When a critic asked the band to please just die, they joked that this would be impossible. “We’re Immortals, sent here to torment you …,” the return message said. Black Keys drummer Patrick Carney told Rolling Stone rock ’n’ roll was dying because people had become OK with Nickelback being the biggest band in the world, prompting Kroeger & Co. to thank him for calling them the biggest band in the world.
In response to the protest of their planned concert in Detroit, they launched their own Funny or Die comedy sketch. It included several tongue-in-cheek moments such as Kroeger dressing up as RoboCop to win back that city’s fans. The spoof not only defused the situation, it seems to have won people over. In the end, they played Detroit to adoring crowds. Kroeger has even collaborated with a mock heavy metal band to make fun of his own lyrics, performing a song called It Won’t Suck Itself.
“They have realized they are polarizing; usually polarizing equals success. They are not going to change what they do,” manager Bryan Coleman says about the group. Kroeger just wants people to know that he doesn’t take himself that seriously either.
Meanwhile, back in Noblesville, Kroeger continues playing the wild showman. Between songs he stumbles around and has trouble getting his guitar to work. Peake suggests the volume might just be turned down. Maybe, or maybe there’s another issue, but Kroeger can’t seem to focus on how to fix it.
A roadie hustles onstage with a perfectly tuned replacement (Kroeger keeps about 12 on hand backstage, all adjusted in various ways). “That’s how we deal with technical difficulties,” Kroeger says. “Let’s get this place jumping up and down!” He is just as intense, however, about getting out of Noblesville. When the show ends, he jumps straight into his bus to blaze out of the parking lot before the groupies get backstage.