Called Waking Dream, the label will be distributed by Electronic Arts, which intends to get the recordings into record retail and mass merchandise stores as well as computer software outlets.
Releases are expected to come in a variety of formats such as CD-I, CD-ROM and 3DO. In addition, Rundgren and Gardner plan an online service via Time Warner's interactive TV unit that they hope will soon contain thousands of records in giant databases.
Gardner said he has been in extensive negotiations with the six major label groups. "We needed their cooperation with respect to licensing their catalog items. That's why we went with Electronic Arts for distribution -- it's not in competition with any of the labels."
The only label group that declined to participate, Gardner said, was the Warner Music Group, which itself has an aggressive interactive unit.
Unlike CD-ROM releases from artists such as Peter Gabriel and David Bowie, Rundgren's own albums and those on his label will be truly interactive audio product.
The former releases feature video clips, pictures and a few songs. Rundgren's material lets users steer through thousands of possible variations of each song, making them faster or slower, adding horns or lyrics, etc. He has a proprietary computer operating system he created for use on his "No World Order" interactive album, and would apply it to Waking Dreams' releases. "No World Order" has been available both as a CD-I disc and as a traditional disc on Forward Records.
Five CD-ROM/CD-I releases are planned between now and Christmas. Rundgren says they will also be available on Time Warner's interactive TV system, Full Service Network, in Orlando. That online system could contain a nearly infinite number of recordings, according to the artist. "We are hoping to release several hundred a year, and after a while, many thousands a year. By 2005 the entire history of recorded music can be available online," Rundgren said.
That much downloadable music available on a computer database would likely make retailers quite nervous -- or angry. But Rundgren is not worried about a backlash.
"It's a moot point. This may drive them crazy, but people are going to be marketing music directly to the public if it's possible, which it will be in an interactive TV system," he said.
Artists get the advantage of having a superstar producer such as Rundgren working on their material, whether newly recorded or interactive versions catalog titles.
"Todd can get involved in the preproduction and songwriting process," Gardner explained, "and work with the artist and producer so that when they record, there is sufficient material for the interactive version. It's not conflicting to release them together. We released regular and interactive versions of 'No World Order' and the relevant marketing departments cross-promoted nicely."
Gardner likened the process to a feature film pre-selling its game rights. "The interactive team piggybacks on production and shoots a little additional footage," he said.
The key to the interactive music from the catalogs lies in access to the outtakes and alternate takes that artists invariably record and that labels customarily keep.
"The record company gives us the original multi-tracks and Todd goes into studio and takes the different versions and alternate takes to provide interactive records with depth of music database," Gardner said. "Todd puts it through his operating system so consumers can reconfigure and reconstruct an infinite number of versions of the song, using the thousands of modules that his program breaks it down to."
However, many artists are quite "picky" about the versions they release, and may not want them tampered with. "Some will continue to be picky," Rundgren said. "We don't want the artist to be uncomfortable. Some may be comfortable with dropping in or out at the chorus, maybe fewer will be comfortable with alternative mixes. But anyone who doesn't subscribe will essentially be a Luddite."
Rundgren added, "We want everyone to feel good about this experience. It's not supposed to be a simple exploitation, but a revitalization of content. It allows artists to revisit material that they might have been anal retentive about, but eight LPs later, they might want to."
Gardner noted that artists would be consulted on each release, even if their recording contract allowed the producer to sell off this sort of ancillary right without artist permission.
Compensation is paid through labels and the artists' publishing company. Gardner said labels would get 50 percent of the royalties by Electronic Arts, after studio costs, which would not exceed $ 100,000. Mechanical royalties paid to publishers and hence to artists, would be paid at a higher rate than usual "as an acknowledgment that there are various versions potentially available on the disc," Gardner said.
Gardner added that labels liked the program as "it creates a passive income and a new ancillary market. They don't have to lift a finger or invest a penny, and it immediately catapults music divisions into the fast lane of the information highway without having to go to the trouble of creating their own operating system and staffing. We believe that interactive music will be an extremely successful and lucrative subset of the music industry."
Titles on CD-ROM will run between $ 29.95 and $ 34.95 while the online charges per minute have yet to be decided.