TuneCore Fires Last Remaining Founder, Gets Into Ridiculously Petty Fight With Jeff Price

from the destroying-its-credibility dept

Last summer, we wrote about some of the bizarre happenings at TuneCore, a very cool and useful service that has helped more musicians actually make money than probably any other service out there, ever. It basically became the de facto standard for musicians who wanted to get their music into the various top digital music stores. TuneCore was founded by Jeff Price — who is known for being opinionated and not afraid to share his opinion. This rubs some people the wrong way, but even when I’ve disagreed with Jeff, I’ve always found him to be completely genuine in his singular belief that the most important thing to him was to help artists as much as possible. Many people who have dealt with TuneCore over the years quickly realized that Jeff was the driving vision and heart behind the company. However, last summer, he was pushed out under questionable circumstances with no explanation from the company or its board (who has maintained a pretty uniform wall of silence).

Over the last few days, it seems that more has developed, which raises some serious questions about the priorities of TuneCore management and its board. What has become clear (and confirmed from multiple sources) is that TuneCore’s lawyer from the law firm of O’Melveny & Myers, contacted Price to say that it was “investigating” whether or not he had “faked” a $500 invoice from a trip. Apparently, the invoice came from a bed and breakfast that Price stayed at because it was cheaper than a hotel, and where he paid cash, because the operator of the BnB offered a discount that way. TuneCore’s lawyer is arguing that no legitimate lodging would send a Microsoft Word document as an invoice — and thus, he must be faking it. One wonders just how much TuneCore is spending on its lawyers to “investigate” a single invoice for a $500 reimbursement.

The situation led TuneCore co-founder Peter Wells to send every shareholder at the company an email arguing that this was a ridiculous move, a waste of time and money and clearly just an attempt to embarrass or intimidate Jeff. It also raises serious questions about TuneCore’s priorities at the moment. Is it about serving artists, or about attacking their founder and fired CEO Jeff Price? The full letter Peter sent is included at the bottom of this post, but this key line is the important one: “We at TuneCore ask artists to trust us with their music, their money and their relationships with iTunes and Amazon and more. How can we ask them to trust us if we act like this towards our own?”

As I was trying to learn more about the details behind all of this, the other shoe dropped. The third co-founder of the company, and the only remaining co-founder still employed by TuneCore was fired earlier today, with some believing it was some sort of retaliation for Peter’s email to the shareholders, and as the company continues to try to maintain a wall of silence.

Jeff Price, too, is upset about this whole situation. He told me that his main concern is that this whole thing is a distraction for the company, and that he feels he has “an obligation to the artists to have TuneCore reach its potential.” He also noted that the fact that the company is focusing on this is “heartbreaking” before going on to note:

The idiocy here is beyond me. It just makes me so sad. I get called out for being on a company business trip where I saved the company money. It’s just so strange. I don’t get it. Why is the company spending its money this way? What’s the end game? How does this benefit the company? If they’re capable of doing this to me, what are they doing for artists?

As for the supposed “faked” invoice, I’ve got an email from the woman who runs the bed and breakfast, explaining that she rents out her place via AirBnB, and that for “return guests” that they liked, they would often just deal in cash with invoices (which they report as income) and charge a slightly lower rate (I assume to save on the AirBnB fees). She confirms Jeff stayed and that while a Word doc is not very “formal” — it is legitimate. Thus, it appears that this was, indeed, a case of Jeff saving TuneCore money.

Others — including shareholders and customers of TuneCore — are speaking out, and many are quite concerned about the direction of the company. Gian Caterine, who for years was TuneCore’s CFO was incredulous about the accusations against Jeff and quite worried about the future of the company itself. Regarding the idea that Jeff might fudge a $500 bed and breakfast invoice, Gian found that to be “ridiculous.”

Jeff is the “king of coach.” He’s such a frugal guy. Of all the criticisms you could have about Jeff, stealing $500 is not on that list. It’s ridiculous.

But his much larger concern was what all of this meant for the company.

It looks like the company has lost its path. There’s no one left at TuneCore that has any meaningful background in music. Jeff was always the spokesperson for musicians’ values. There’s no evidence that the company has any vision, and I can only see this leading to a loss of credibility among artists…. There’s a big, big issue with vision and leadership now. They have not articulated a vision and there’s no one with the necessary experience left to help…. I don’t know if it’s ignorance or arrogance, but the damage is pretty severe.

Rather than pointing fingers at Jeff, they need to get on with it. The whole situation leads me to believe that there’s something really wrong that has nothing to do with Jeff.

Another shareholder, Joel Morowitz, who helped co-found Jeff’s previous company, the indie label SpinArt, was similarly angry about the attack on Jeff and what it meant for TuneCore.

Personally, and as a shareholder, I am absolutely disgusted by these allegations against Jeff. It reeks of desperation and diversion. I have known Jeff for over 30 years, and while no person is perfect, I can personally attest to his high ethical standards, especially with regard to his tenure at Tunecore. More than anyone, you know how much time and effort he put into it. And now, after building Tunecore into the undisputed leader in the field, and quite literally, changing the model of the music industry, they now shout “lack of confidence” and “mismanagement”!? It just doesn’t wash…and they know it. They have never been forthcoming about Jeff’s termination.

He further pointed out that having a law firm investigate a $500 reimbursement is nothing more than “wasting valuable time and resources,” questioning just how much the law firm was charging for such an investigation: “the sum of the bill is most likely far greater than the amount being disputed.” Again, he is at a loss as to why there’s this focus on attacking Jeff:

I am so saddened that this situation has devolved into a stalemate. Instead of focusing on the continued growth and diversification of Tunecore, they have chosen to turn this into a battle against Jeff. It is abundantly clear that whatever the real reasons are for Jeff’s termination, Tunecore has been on the decline since his departure. Jeff was certainly not without controversy in the public eye, but no visionary CEO ever is. He was the clearly best person for the job. What do we have now?….a company with no vision, no direction, low morale, and most importantly, no effective leadership.

I’ve also been speaking to a few TuneCore’s customers, who have expressed similar concerns. Andy Richards, who notes that he was TuneCore’s 23rd customer way back in the beginning after randomly finding them online, notes that Jeff always struck him as “an extremely driven and passionate entrepreneur, but above all, a music fan who truly respected the artists with whom he worked.” Furthermore, he notes that he’s still on TuneCore, and hasn’t seen any direct changes yet, but he’s “definitely keeping an eye on things and will jump ship if I don’t like what I see.”

Disputes between startup management and investors is nothing new. We see it in the startup world all the time. Sometimes it does just make sense to bring in new management, but for companies built around driven and visionary CEOs, such changes can be quite problematic, especially when they leave a complete void where the vision used to be. The fact that TuneCore now seems focused on simplistic and petty disputes about a $500 reimbursement — even to the point of accusing Jeff of having faked the invoice seems to raise serious questions about just what the company is focused on these days.

Over the past few days, I’ve reached out to every single board member at TuneCore, along with key remaining members of the management team. I’ve heard nothing from the board. However, just as I was about to go to press with this story, I heard from a PR person (he apparently leads the “crisis communications” team at his PR firm) who told me that he didn’t think this was a matter that the press should be concerned with as it’s a “private” issue. He then issued a further statement:

Tunecore focuses on its core business of helping artists reach their fans and consumers. It is expanding into Japan, Canada and on campuses, and has several exciting initiatives on the horizon which will increase its value to its artists/customers. The matter of the dispute is one more appropriately handled behind closed doors with the parties’ attorneys, and if necessary, in a courtroom. It is not for public consumption, nor does it have any bearing on its work toward its core mission.

The company offered no comment at all on Gary Burke being fired, saying there was nothing to say on the matter.

Again, disputes between management and investors are a common plotline in the startup world. But this one seems particularly messy, and unfortunate, given the large role that Price and his cofounders played in turning TuneCore into such a large player in the space.

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Peter Wells' original email to all shareholders:

From: Peter Wells
Date: January 27, 2013 12:56:29 PM EST
Subject: Bed and Breakfast invoice fiasco

Everyone,

Jeff told me that he's been accused by Eric Amdursky of the law firm O'Melveny & Myers, working on behalf of TuneCore, that he's being "investigated." Supposedly, Jeff "fabricated" an invoice for something like $500 to TuneCore. He allegedly made up a receipt and submitted it to TuneCore, presumably just to get some cash. Jeff allegedly drafted an MS Word document receipt out of whole cloth, claiming he stayed in a bed & breakfast, and having TC reimburse him, all fraudulently.

This is beyond absurd. Any of you who know Jeff know he'd never do anything like that. Jeff tells me he paid in cash to save TC money, and I believe him. He tells me the receipt he got came directly from the owner of the B&B, and I believe him. He even told me he's in contact with her and she's backing him up. Fine, that's exactly what I expected.

It's completely absurd. Jeff Price creating a fraudulent invoice to bilk $500 out of TuneCore? The same Jeff Price who wouldn't even buy office chairs the whole first three years of the company, scavenging them instead, just to save the company money? Jeff, famous as the "fly coach" and "eat sandwiches" CEO? The whole idea he would "fabricate" a receipt is ludicrous.

It's galling to think anyone would accuse him of something like that. You don't treat people this way, not for any reason--not to mention someone who built the very company that's now abusing him.

I sincerely hope most of you are unaware of this. I hope I'm the first person to bring it to light. I hope those of you who work with OMM will take swift action to get this "investigation" closed, move to a more ethical law firm, and consider even taking action against OMM. It can't be legal to make things up like this.

If this "investigation" was known about and blessed by any member of the Board, any officer or employee of TuneCore, then I can only say I'm beyond disappointed. We at TuneCore ask artists to trust us with their music, their money and their relationships with iTunes and Amazon and more. How can we ask them to trust us if we act like this towards our own?

I'm expecting swift action. First and foremost, I want this fiasco of an "investigation" terminated. I also want OMM to draft an apology to Jeff and to TuneCore, and if they billed hours for this, that money ought to come back. Since OMM was acting for TuneCore, I think it would be appropriate for the Board to apologize to Jeff as well, for the actions of a company they hired and for whom they must take ultimate responsibility.

I strongly urge all of you who are shareholders in TuneCore to write everyone cc'd on this email supporting Jeff against these baseless allegations. I urge you to let the Board know they have to be more careful with the lawyers they hire and keep a sharper eye out for the tactics they're using. And of course, if the Board actually meant to go forward with this nonsense, then I urge the shareholders to bring all possible pressure against the Board, who are acting against the interests of TuneCore. Tactics like this will harm the value of our shares, damage the good name of the company and erode the trust between officers, executives, employees and the artists who trust us.

To those of you who alleged Jeff "fabricated" a receipt to squeeze money out of TuneCore: for shame. I will take any action within my power to remove you from your post, wherever you work. The only thing stopping me from bringing this to the public is my concern that the unethical actions of a few might tarnish the name of TuneCore. Please give me a reason not to go public, because if sunlight is what it takes to dry up these lies, then so be it.

--Peter

Filed Under: boards, disputes, gary burke, gian caterine, jeff price, joel morowitz, peter wells
Companies: tunecore