Beasties’ Own Label May Go in High-Tech Direction

The Beastie Boys are staying with Capitol Records, having just renegotiated their deal with the company into what is said to be one of the largest and most innovative in the industry.

But a lot of people in the music business wondered why the announcement made no mention of the trio’s Grand Royal label--which had been a high-profile joint venture with Capitol.

There’s a good reason: Grand Royal is headed away from Capitol--and maybe out of the conventional record business world entirely.

The Beasties and their Grand Royal team are reportedly in negotiations with several major technology companies about setting up the company on the World Wide Web in a deal that could go well beyond just music to also include video programming and product marketing. Much speculation centers on the Digital Entertainment Network, the Santa Monica company in which Beasties managers John Silva and Gary Gersh (who also used to be Capitol’s president) are now based.

Neither Grand Royal President Mark Kates nor the Beasties’ management would discuss the situation, but many music executives say such a move makes sense, especially with the current climate in the music business.

It used to be that having a label like Grand Royal could benefit a record company simply in its “cool� factor--as Atlantic used alliances with Matador and Mammoth in the early ‘90s to give itself credibility in the alternative-rock world.

That’s not the case in the music business so much today, where corporate pressures demand instant sales results over a cool image. Many music executives, in fact, say the primary attraction of Grand Royal had been the prospect of a relationship with the Beasties that might lead to a recording deal with them as well. With the group sticking with Capitol, that’s no longer the case.

“Having the Beastie Boys label has value if you have the Beastie Boys,� says one top executive at a rival company.

And Grand Royal, apart from the Beasties and Luscious Jackson, who also stays at Capitol, has not had any hits. The top sellers on the rest of the roster: German techno-punk act Atari Teenage Riot’s 1997 “Burn Berlin Burn!� at 75,000 in the U.S. and Sean Lennon’s 1998 debut album “Into the Sun,� with just 56,000 copies in the U.S. despite considerable press.

Even with the Beasties’ reputation for being ahead of the curve and connected to the heart of youth culture, as well as the great respect Kates (a former Geffen artists and repertoire executive who worked with Nirvana and Hole) has for savvy and innovation, those sales are not enough to tempt many major labels.

But in the emerging cyber-markets, cool can still play.

“Though they haven’t had acts that have had instant success, you’ve got a credible label with credible people,� says another major-label executive. “They’re perfect to break away from the majors and go to a tech company or something.�