So, you think. Spotify must be pretty bad.
But is it?
Do you think of your music as a product or as a service? Examples of a product would be a CD or a download, or any physical package that contains your music. Examples of a service would be a radio play or a performance, or any act that conveys your music. Which matters more to you — the package your music comes in or the performance of it? Are you delivering your actual music to the world — the essence of who you are as an artist — or just knock-offs of it?
Unlike Amazon and iTunes, Spotify is not selling a product. It is selling a service — i.e., elegantly designed access to a massive and diverse library of music. It is not a retailer selling “units,” but a facilitator of the spread of creative works. It more closely resembles the original Napster than it does Amazon or iTunes. But unlike Napster, it recognizes the validity of copyright and conducts its business accordingly. It tracks and pays artists for every exposure of their work, no matter how small.
Spotify is providing access to this platform not just to the major labels (who used to control the distribution of music to Tower Records and every other retail chain), but to legions of aspiring, unknown songwriters tracking demos in their garages and bedrooms. More importantly, it is allowing those unknowns — most of whom are not yet commercially viable — to maintain a searchable presence on its garishly financed, cutting-edge platform, and to benefit from that presence.
Spotify doesn’t charge artists for that exposure. No, it pays a modest royalty, which is more than Megaupload or Napster or mixtape makers ever did.
The Power of “Hear-Like-Buy”
Make no mistake: You can stock the shelves of Best Buy or Walmart to the ceilings with your music, but if people can’t listen to it, they will not buy it. They won’t know it from a gaping hole in the ground. If they can actually hear it, though, it’s a quick hop to liking it. And if they like it enough, they can — and will — buy it.
Just like they’ll buy anything they value.
All you need to do is make your music readily available — through social-media marketing, through live performances, through music-sharing sites like Spotify, and via whatever recorded-media retail you choose. You are not selling widgets, you are not “moving product.” You are providing a service. You are conveying your brand, your identity as an artist, to an audience.
If people like what you’re offering, the rest will take care of itself.
This thinking goes back a long way (to at least the Sermon on the Mount): Don’t hide your light under a bushel. Shine it so everyone can see.
Mark Doyon is founder and creative director of Wampus Multimedia, a music label, ebook publisher, and an identity & branding group in the Washington, D.C. area.
As I sat and planned the program for the June 2012 New Music Seminar, it occurred to me that we are approaching the first anniversary of the music business resurrection. After ten years of decline, the music business hit bottom in the second week of February 2010 and began to rise the week of February 14th.
There have been many reports of the music business comeback and many have tried to figure out what was responsible for this upturn. Some have credited Adele, others the shuttering of Limewire, still others the Walmart $5 dump bins.
Let's look at the good news.
click on image to enlarge
In 2003, there were virtually no single sales as the labels stopped manufacturing them to drive buyers to higher priced albums to get the song they wanted. In 2004, iTunes changed all that and for the first time music lovers could buy not only the radio single, but also every track on the album separately for only 99 cents. Digital singles exploded, soon surpassing total album sales, physical and digital combined.
In 2010, digital single sales increased only 1.1% leading people to believe that tracks had peaked and might begin to decline. 2011 proved them wrong as singles grew 8.5%. Although this seems like a small number, due to the huge denominator, this represents growth of over 100 million singles in 2011.
click on image to enlarge
Most of the 1.27 billion tracks that sold in 2011 were at the higher $1.29 price point showing the inelasticity of demand for digital singles even in the face of free illegal downloads and a half a year of Spotify plus Rhapsody, Mog and Rdio offering streaming competition. It is important to note that this growth did not come from current hits like Adele, Katy Perry or LMFAO but across the board especially from catalog.
click on image to enlarge
More good news came from digital album sales where the growth rate increased from 13.3% in 2010 to 19.5% in 2011.
In unit sales, digital albums took the biggest jump since 2007 and the second biggest jump ever.
16.8 million more digital albums sold in 2011 than in 2010. 2011 was the first year that the increase in digital album sales exceeded the fall in CD sales. This is a significant benchmark that few seem to have noticed.
click on image to enlarge
Physical CD sales on the internet were actually up 17.7% in 2011 indicating an increasing desire for CDs at least online. With CD sales still running almost 69% of all album sales seven years into the iTunes era, it is clear that people still want physical CDs.
click on image to enlarge
If it were easier for record buyers to find the CDs they want in stores, there is no doubt that CD sales would be selling in far greater quantity.
More good news in the 60 year old 33 rpm vinyl LP album format where we saw a huge 37% increase in vinyl sales last year. The total sales are still under 4 million units (compared to 1.27 billion singles).
click on image to enlarge
If the good news in music sales is not enough of an indication of the returning health of the music business, add to that the new revenue centers of music streaming. In digital broadcasting where SoundExchange collects and distributes to artists and labels statutory fees, the industry has seen an enormous growth in new revenues.
click on image to enlarge
In 2011, $95 million more dollars were collected by SoundExchange than in 2010 and conservative projections for 2012 show growth into the mid $400 billion mark. In 2011, SoundExchange collected almost the same amount from digital broadcasters as the traditional performing rights societies collected from all of the AM and FM radio stations for the songwriters and music publishers.
Other licensed streaming services with subscription models like Spotify, Mog, Rhapsody, Rdio and other subscription services added even more new revenue to the music business.
click on image to enlarge
The music business has clearly hit bottom and the resurrection is here. After a decade of the "music web" expanding its reach, becoming easier, faster and more social, new music discovery channels are showing their impact in more music sales and more paid music access. To be fair, all the news was not positive in 2010. The continued shrinkage of CD shelf space, the decline in mobile phone ringtone/ringback revenues and the failure of Beyond Oblivion, a promising idea tying connected devices to "feels like free" music access, were lowlights in an otherwise stellar year for the business of music. The powerful launch of iHeartRadio, the long-awaited U.S. launch and explosive growth of Spotify, the public offering of Pandora and their achievement of 120 million registered users, Sirius/XM reaching 21.9 million subscribers. Mog, Rhapsody, Rdio, Cricket/Muve all grew their music subscriber base, all not only driving more revenue to the business, but more engagement and discovery of music and spending especially in the over-30 demographic that had historically spends far less money on music than younger demographics.
YouTube and Vevo are beginning to generate significant revenues to the music business and also driving discovery and sales as well. Mac Miller and Tyler the Creator were just two of the breakthrough YouTube driven hits proving YouTube's ability to drive exposure as well as sales.
Smartphones reached 50% of all mobile phones in the U.S. and the recent CES Convention showed hundreds of new connected devices, and the rollout of connected automobiles all of which will drive more music access.
The 50's saw the transition from 78's to 33 rpm albums and 45 rpm singles that fueled a 30-growth period for music. The cassette made music portable and stimulated additional growth. The CD increased the perceived value of an album by 80% and ignited the biggest growth era in the history of the music business. A decade of adjustment is over and it is now clear that we are on the brink of the next big growth era of the music business.
On June 17-19, the New Music Seminar will explore the exciting future of the music business with the SoundExchange Digital Broadcasting Summit and the BMI Creative Conclave. The creative community and their label partners will meet the digital broadcasters, music bloggers, music technologists and all of the new music exposure and monetization players. Clear Channel CEO, Bob Pittman and Sean Parker will share their vision for the future as keynotes, as every sector of the evolving new music business convenes to discuss their perspectives for the exciting new future for the music business.
For most of us in the music business, this is probably the first time in a decade where we are feeling a new sense of optimism. Although unauthorized on-line music usage and distribution has not gone away, it is now time that the music industry begins to focus on expansion and positivity rather than fear and protectionism. Welcome to the resurrection. Have a nice day.
The Music Business Welcomes the Future, a Decade Behind Schedule
It took more than a decade. But the music industry's sales numbers are finally starting to make sense to the kind of people who are reading this story right now: For the first time ever, the labels' digital sales have surpassed CDs and vinyl.
But just barely: Digital sales accounted for 50.3 percent of all U.S. music purchases last year, according to Nielsen SoundScan.
And if you want to caveat that number, that’s easy to do: For starters, the Nielsen number refers to unit sales, not revenue. So the music company’s books might still show that analog sales make more money for them. And recall stunts like Amazon’s Lady Gaga almost-giveaway last spring, when it sold nearly half a million albums at 99 cents a pop.
Still, the big picture finally resembles the one we’ve been hearing about since Napster showed up in 1999, or at least since Apple started selling music via iTunes in 2003: One day, files would beat discs.
The milestone happens to have occurred in the same year that music sales finally ticked up again. You can pick a couple different metrics to illustrate the rise, but they’re all single-digit increases. The important point is they’re not decreases.
That could simply be a one-off, and perhaps the result of lots of people buying Adele songs — Sony’s new star sold more albums than anyone has done since 2004 — or there could be a larger change afoot. Won’t know about that for a while.
But an industry that hasn’t had good news since the Backstreet Boys were big can afford to be patient.
Digital music revenues are on track to rise about 7% globally to $6.3 billion according to a new study be respected research firm Gartner. But revenues from declining CD sales are not expected to make up for the rise in digital revenue led by iTunes and the growing momentum of digital streaming services like Spotify and Pandora.
By 2015, Gartner forecasts digital music sales to hit $7.7 billion from $5.9 billion in 2010. In the same period, consumer spending on CDs and other physical music is predicted to drop to $10 billion from $15 billion.
"The music industry was the first media sector to feel the full impact of two major forces -- the Internet and technology-empowered consumers" Gartner analyst Mark McGuire said in the report. "It has staggered through the first decade of the 21st century and entered the second bedraggled financially and facing a powerful set of intermediaries, which are creating borderless global ecosystems that defy the industry's previous notions of control and monetisation."
Lessons from the Industry Formerly Known as "The Record Business"
by James Barton and Brian Message
A record company's value used to be measured by the acquisition, protection, and exploitation of copyrights. Exploiting those copyrights by selling songs is an easy business model to understand and used to be the foundation of a very healthy global industry. Historically, the record business was the heart of the music industry. Sell a lot of records and you were a successful business. And artists also succeeded through record sales: they became household names when they had sold a lot of records.
From the business perspective, artists and songs could be viewed as interchangeable commodities. If any given artist failed to deliver hits, another waited in the wings to take their place. This impersonal approach allowed the music industry to grow extremely profitable by simply selling "product."
But the sale of recorded music has taken a battering over the last decade, and it's no longer smart to judge an artist's commercial viability on record sales alone — not least when there is a new generation who questions the need to pay for recorded music at all. For many artists and their managers, record sales are now just one of many revenue streams and one of a number of factors with which to judge success.
Despite this dramatic change in the marketplace, many struggle with the concept of uncoupling success from record sales. It doesn't help that most measures — the charts by which many fans learn about new music — are still based on this notion. For emerging artists this is particularly precarious, since careers are too often ended early if a first set of recordings fail to sell.
So how should a "content producer" behave in this new environment? And what lessons can we learn from this new model of value? Here are the two keys:
- Do not treat artists as commodities
- Value the artist-fan relationship as highly as traditional rights
Smart managers realize every artist is a standalone business that generates income from multiple revenue streams. A manager's job is to create those businesses and run them well. This requires thinking globally and being agnostic about which revenue stream or territory is the most important. As long as those channels can deliver the aesthetic the artist wants and make a profit, the business is a success.
But the business of relationship building is not a quick one. Artists have to earn the respect of fans, convert that respect into trust, and, eventually, convert that trust into faith. Building communities takes time, and it can only be achieved over the long-term. In this model, artists can no longer be treated as interchangeable hit makers.
The key to artist-management success is identifying talent early and developing it cost-effectively over a long period of time. Artists — and their art — are the only real assets. The systems and structures that surround them should be treated as a means to maximize the commercial value of each artist. As such, the traditional music industry — be that companies that make and distribute records, publishers who collect performance royalties and create sync opportunities, concert promoters, or merchandisers — should be regarded primarily as service providers to artists.
As the digital age gathers pace, managers must engage in the shaping of the music landscape. That landscape is still plagued by a mindset that regards copyright as an instrument of control (which further limits commercial exploitation to traditional models) rather than as a remuneration right that can generate revenue wherever a market may be. The future is about accepting consumer behavior and looking for as many ways as possible to monetize it.
In addition, managers must also simplify the complex structures of the industry and create healthy businesses based on monetizing the behavior of consumers and those businesses that wish to use creators' works for their own profit. Without a simpler, better structured digital market, the direct artist-to-fan business will struggle to grow. Moreover, it will undermine the modern-day manager's opportunities to improve their artists' business.
Managers must also figure out alternative investment for artist businesses. Traditionally, it was the record business that invested in new talent. Restricting investment to direct rights exploitation keeps the emphasis on making money from record sales, which keeps the "investment risk" for would-be investors high. A viable alternative would be a market for investors to put their money into artists' whole businesses, where artists retain rights and investors participate in all the profits.
The music industry was the first of the creative industries to be affected by the disruptive nature of the internet. But it's not all bad news. Disintermediation has forced a focus on talented individuals who produce great art. One of the jobs of their managers is to create an environment that allows them to do so. Ways of collecting fans and connecting them to artists are ever changing, but by embracing new technology opportunities, creative businesses will flourish. Other content producers take note.
Consumers Prefer Mix Of Music Ownership & Free Streaming
by Clyde Smith
eMarketer compares two reports on studies of consumer music preferences to reveal that not only do listeners prefer music ownership over subscription streaming but that they tend towards a mix of ownership and free listening. Given that the most recent survey reporting stats on streaming music would have been conducted before Facebook's F8 Conference, it remains to be seen what the Facebook effect will be though Spotify's membership increased over 50% in the week following the conference announcements.
eMarketer recently brought together two studies to gain a sense of music listeners' relationship to music in the cloud.
The first of the two studies was a survey conduced by Insight Research Group on behalf of eMusic that revealed the widely noted insight that 91% of those polled preferred to own music rather than subscribing to it. However, as noted by eMarketer and illustrated in the chart above, ownership was split relatively evenly between digital and physical copies. In addition, free listening was nearly as popular followed by free downloads. All four options strongly outweighed subscription services.
The second study cited, a survey of U.S. Internet radio listeners conducted by Parks Associates for TargetSpot, revealed that "nearly seven in 10 US internet radio listeners said they preferred to purchase music after hearing a song on an online radio station." Purchase preferences split between such retailers as iTunes or Amazon and purchase via the Internet radio website.
As eMarketer notes, a strong dynamic exists for free streaming as a way to preview music leading to outright purchase but that dynamic is combined with a variety of purchase choices.
While it's not surprising that Facebook's recent embrace of music services is increasing their uptake, how much of that is also contingent on the recent decision by most major music services to offer free versions remains to be seen. It's quite likely that we'll see more free preview streaming by listeners with increased purchasing via such services that will potentially have a negative impact on retailers such as iTunes and Amazon rather than an uptake in premium cloud-based subscription services.
After spending all day at the S.F. MusicTech Summit, I'm sitting at my laptop, listening to an MP3 -- and not posting about it on any of a handful of social networks.
Already I'm showing myself to be so behind the times, apparently.
Cloud-based streaming issues were Monday's buzz topics -- and that means something at a tech conference like this, where there's more buzz in the conversations than in the free coffee.
How can we monetize streaming services? How can we make apps that pull from the cloud without facing heady royalty fees? How can we make the music listening process more interactive, less interactive, with more sharing, less sharing? Who even has space on one's hard drive for old-fashioned MP3s anymore?
And what about that elusive quality: disruption?
New music technology doesn't have anything new, prompted one panel moderator -- tech thinker and Gang of Four bassist Dave Allen -- whose prelude to his panel argued that new companies should solve something -- and that often they don't.
"Jethro Tull used the flute," Allen said. "That was disruptive."
But Allen's panel touched on another central idea of the conference: That in moving forward with technology, music consumption and its culture may be rolling backward in history to a simpler time.
When an audience member said his work as an indie band manager made all this music technology overwhelming, panelist Jesse Von Doom of Cash Music was quick to agree.
"I truly believe simplicity is a big idea," Von Doom said.
That yearning was lost among those debuting new gadgets and apps at the summit, where ideas like Rexly (goal: "to make Apple music social"), and Bopler Games by MXP4 (goal: "game-ify artist pages on Facebook") announced new ways of interacting with music.
Simple listening is so passé. Even TuneWiki, which crowdsources its lyrics creation and whose wide feature set allows for ample sharing of lyrics, was quickly asked in a Q&A session when it would allow for streaming songs.
But at an artist-centric panel, "Using Social Networks Effectively," creators suggested coyly that all these technological advances may force a return to a centuries-old payment system: patronage.
Panelists -- Jack Conte of Pomplamoose, Lincoln Parish of Cage the Elephant, and cellist Zoe Keating -- discussed ideas like tiered payments, "superfans" willing to pay more, and even a subscription-based (or corporate?) "sponsorship" system of paying artists, where a fan could pledge $5 a month to guarantee a living for an artist in exchange for a steady stream of output.
Another way to gain a living, the artists agreed, was to expand a fanbase -- and find that sliver of a fanbase that's willing to pay.
But the answers to a large fanbase aren't always clear. For Conte, Pomplamoose's cover of Beyoncé's "Single Ladies" threw the group into the spotlight. For Keating, her sales may come from another relic of the medium.
"There's tons of music out there for free," she said. "The things that lead to the most sales are not social media, they're NPR. I was on All Things Considered last week, then I was No. 1 on iTunes classical."
Even though fan ranks can swell through social media, most fans are happy to stream for free and not much else, Conte said.
"I highly doubt people will be paying for music in five years -- 99 cents for an MP3 or AAC," Conte said. "What's the value of an artist then?"
People will always need art, he continued, and it will be monetized -- somehow.
And for those still looking for the way to make that happen, there's always the next S.F. MusicTech Summit.
Spotify may have found an American friend in Facebook.
Facebook founder Mark Zuckerberg yesterday set off a wave of speculation by telling reporters that the social network has plans to "launch something awesome" next week.
Some have speculated whether Zuckerberg might roll out the kind of music service GigaOm outlined in a story on June 19. The blog reported that Facebook was working on some kind of music feature that incorporated multiple music services, including Spotify, Europe's top streaming-music service.
Facebook and Spotify have indeed held discussions recently about integrating the music service into Facebook in a significant way once Spotify launches in the United States, multiple sources in the music industry told CNET. One source said that it appears the parties have reached an agreement but that could not be confirmed.
Angela Watts, a Spotify spokeswoman, told CNET: "We don't have any further comment on this since the last round of rumors." What Spotify said at the time GigaOm's story appeared was that the company doesn't comment on rumor and speculation but did include this bit: "we have a good relationship with Facebook in that we have an integration on Facebook Platform [in Europe] that has been valuable in terms of driving engagement with the Spotify service."
Spotify has stormed the European market and now wants a try at the U.S. The company will likely launch here within the next two weeks, according to numerous published reports and music industry sources.
A big presence on Facebook could mean a nice boost out of the gate for Spotify. But just how big a profile Spotify will have on the social network is unclear. According to music industry sources, Spotify would be able to offer quite a few features on Facebook, including an embeddable player, without having to seek new licenses from the music labels.
That might not have been the case before Spotify began limiting the amount of free music it offered. When Spotify first hit the scene in 2008, it laid waste to the European competition by combining nifty technology and user experience with an offer of unlimited and on-demand free music. The free music was supported by ad sales, and an additional revenue stream was the company's premium subscription offer of ad-free music for a monthly fee. Spotify had always promised the record companies that it could entice users of the ad-supported service over to the paying offer but the company couldn't get it done to the satisfaction of the labels.
Not only did that contribute to the delay in Spotify's U.S. launch, but Spotify this year reduced the amount of free music it offered in Europe.
In April, CNET broke the news that Spotify would cut back on free music in Europe. The new ad-supported offered boiled down to this: new users would get songs free of charge for their first six months and then after that they would receive 10 hours of free play per month. The message was clear. To use Spotify without interruption, users would have to sign up for the premium service.
What kind of requirements the labels have in mind for Spotify USA hasn't been disclosed, but it likely will be similar to the European offering. How that will play with U.S. audiences is anyone's guess. There are already plenty of subscription music services that offer unlimited, on-demand songs. The big winner here could be Facebook. Without spending a cent on licensing songs or building a service, Facebook could make an important foray into digital music.
But adding a music service to a social network doesn't automatically equal success. Released to much fanfare in 2008, MySpace Music barely made a peep in the market. Just this week, MySpace was dumped by News Corp. for the fire-sale price of $35 million.
Download Sales: Will Money Stay With Labels Or Go To Musicians?
by Joel Rose for NPR
A recent move by the Supreme Court could mean millions of dollars in additional royalty payments for older musicians who signed contracts before the digital era.
Like Rick James. The funk musician died in 2004. But that hasn't stopped James' estate from suing his record label, Universal Music Group, for unpaid royalties from digital downloads.
The case boils down to a very specific legal distinction: the difference between a sale and a license. If you're an artist, you generally get around 15% of the proceeds from the sale of a CD, while your record label keeps the rest. But if you license a song –- say to a TV commercial or a movie –- you're entitled to a 50/50 split with your label.
"I believe the artists are being unfairly short-changed," says Jeff Jampol, manager of the James estate. To understand his lawsuit, it helps to start with a similar case filed against the same record label. The plaintiff was FBT Productions, the producers who discovered Eminem before the rapper went on to sell more than 5 million digital downloads, the most ever.
Five years ago, Eminem's former producers sued Universal for unpaid royalties. Eminem's producers argued that a digital download is more like a license than a sale. Their lawyer, Richard Busch, explains why.
"Where a label is selling a record, they have incremental costs. They have a cost for each CD, for the packaging, for the distribution," Busch says. "Those incremental costs just simply are not present when they just send a master to a third party."
So when a third party like iTunes sells a digital download, it's selling a copy of the track that the record label licensed it to make. Busch argued that FBT and Eminem should get a 50/50 split on royalties from downloads. And a federal appeals court agreed. In March, the U.S. Supreme Court denied Universal's appeal. A spokesman for Universal declined to be interviewed for this story. But in a statement, he says the case is only about one agreement with one artist, and "does not create any legal precedent."
Jampol calls that "balderdash" (his word). The manager for Rick James' estate thinks the Eminem ruling has wide implications.
"It's very clear to me that downloads are a license," Jampol says. "And a download calls for a payment that's much more than a sale."
Jampol's lawsuit is seeking class action status for James and other artists — something Universal says in another statement it will oppose "vigorously." Recording contracts are rarely made public, so it's hard to say exactly how many artists might have a similar case. And many record labels changed their contracts in the mid- to late-1990s precisely to avoid this issue. But that still leaves plenty of music recorded before the age of digital downloads.
"It's the older artists who are at the heart of this issue," according to Glenn Peoples, an editorial analyst at Billboard. "It's about interpreting old contracts. And I imagine there are a lot of artists who might want to try that in the court, and see how the court interprets these contracts."
This could be a big problem for record labels. Catalogue sales are one of the healthier parts of an ailing music business. Last year they accounted for nearly half of all digital sales. In some cases, record labels have renegotiated old contracts with their biggest sellers. But others, like the Allman Brothers Band, have sued for unpaid digital royalties.
So let's take a $0.99 iTunes transaction. Deals vary, but let's just say a label gets half of that after iTunes, Paypal and whoever else gets a cut. Let's call that $0.50 to be split between an artist and the label. Using the 15/85% vs. 50/50% formula, the difference to the artist between calling the transaction a "sale" or the result of a "license" is a difference between 7.5 cents and 25 cents, per download.
So even smaller sellers may find there's a lot of money at stake.
"That's not a couple of hundred dollars. It's not even a couple of thousand dollars. It's thousands of dollars. It's easily well more than chump change," says Joyce Moore, the wife and manager of Sam Moore, of the soul duo Sam and Dave.
Today Sam Moore is 75 years old and lives in Arizona. Joyce Moore says his union pension does not pay all the bills. "For somebody that's on a fixed income, that's in his 70s, that's never had good royalties — it's life-changing money."
Hold on, it may be coming. And that's exactly what Universal and the other major record labels seem to be worried about.
In ‘Chaos We Can Stand: Attitudes Toward Technology and Their Impact on the New Digital Ecology’, a recent post on Music Think Tank, Kyle Bylin discusses the collapse of the record industry, with reference to Clay Shirky’s ideas about a new digital ecology and “cognitive surplus”.
Fundamentally, this is a transition from a situation of controlled scarcity of creative ‘product’ from a few major players to a flood of creative material as the previous barriers to entry have been demolished. As internet use replaces television watching, and freely available online tools enable learning, creativity, sharing and collaboration, people are shifting from being passive consumers to active participants and creators.
Suddenly there is a surplus of ideas, an abundance of creative content. One of the overwhelming problems faced by musicians today is the difficulty of ‘standing out’ and being heard above the noise, not drowned out by the herd.
Scene and not herd
Prior to the digital revolution, the established record companies - in conjunction with associated broadcast media - effectively prevented anyone but their own artists from gaining exposure. Now that these ‘gatekeeping’ powers have been eroded by the new digital ecology, some people have mourned the demise of the record companies as ‘filters’ for music.
Filters are an obvious solution to the problem of an over-abundance of music. The corporate model is that two or three massive companies achieve ‘dominance’ in the market, becoming ‘The’ filters. This business model is all about competition and control.
At grassroots level though, music naturally gets divided into genres or attached to specific locations - different music scenes, each creating and demanding their own filters. Collaboration, fan participation and cooperation between music-related businesses are all key to the creation of a vibrant music scene.
There have always been music scenes - for example, the ‘classical scene’ of 18th Century Vienna, the trip hop scene of Bristol. the Seattle grunge scene or the genre-based scenes of punk, metal, trance, dubstep, witch-house, etc.
And each of these scenes serves as a filter in its own way, by shining the spotlight onto the best artists of that particular scene.
The most influential individuals in a music scene tend to be the most passionately involved in it. Eventually, certain individuals achieve a word-of-mouth reputation through being active participants in the scene’s development. Hence each scene evolves its own tastemakers and leading characters quite naturally, and also generates its own media outlets. There will be several prominent tastemakers in any one scene, and their combined selections eventually become the commonly accepted filter for that scene.
In the offline world, music scenes usually consist of an interlaced ecosystem of artists, writers, film-makers, DJs, independent labels, promoters, local radio stations, magazines and record shops, and locally may include clubs and pubs, fringe theatres, indie cinemas, art schools and colleges, coffee shops, bookshops, head shops, cool clothes shops, happening hairdressers, hip cafes and groovy galleries. Festivals are of major importance, and many of these bring multiple small scenes together.
The ‘longtail’ and ‘mass of niches’ nature of the online world is a natural fit for the complex interconnectedness of multiple music scenes and independent music. However, the corporate music ‘industry’ finds that this new digital ecology has undermined its ability to herd music fans into its channels of mass consumption.
For the record
It has to be recognized, when speaking of independent music, that we are referring to a network of independent music professionals covering many different facets of the music production process, not just music artists.
A lot goes into making a good record, which requires professionalism in many different areas - each of which is a career in its own right. Sound engineering, for example, mixing, mastering, songwriting, artwork, graphic design, music promotion, web design, photography, filming, video production - all support the creation of a high quality music release. Every music artist needs access to these professional services, whether filling that role for themselves, or sourcing some outside work.
As Kyle Bylin points out, the artists themselves must also learn to embrace the chaos of the new digital ecology as their own roles are changing. They now have to take on many of the duties previously undertaken by the record companies, and they also have to engage more directly with fans.
Inherent chaos
There does seem to be a mismatch then between the monolithic music ‘industry’ and the innately fragmented and diverse music scenes around the world. Music is not particularly industrial, and does not lend itself readily to a production-line approach. One could say that its tendency to get fragmented into scenes indicates that music is inherently chaotic.
If it is to be considered an ‘industry’ at all it is surely a much better fit for a predominantly ‘cottage industry’ model. With an ecosystem of large numbers of music-related cottage industries widely distributed internationally, and taking modest profits, music artists could find plenty of ‘self-employment opportunities’….. arguably more than they would under the old ‘major label’ system.
This would allow musicians to operate as respected self-employed professionals within society, instead of being expected to have a ‘day job’.
This is not to say that there would be any ‘entitlement’ to a career as a professional independent musician. As in any freelance profession, income would depend on reputation and recommendation, with recognition dependent on the accumulated successes of multiple individual projects. Also, as in any performance art profession, the success of a project would involve the degree to which it ‘engaged’ or ‘clicked with’ the audience. Artists unable to establish this connection would, quite naturally, be unable to make a living this way.
As Kyle Bylin says; “We do know that the next music business is not album-centric, and that it is a much leaner industry, one that is rife with creative opportunities for artists to pursue new revenue streams. Above all, it is about acquiring fans and the creation of a middle class of artists who are going to have higher margins and smaller profits, but longer, more sustainable careers.”
He concludes his article by saying: “The record industry is collapsing, and ultimately, this may be a good thing. If it dies, it will make room for a new ecology to rise up in its place.”
Yet maybe this “new ecology” has more in common with the innately diverse and fragmented nature of music than the corporate dominance of ‘Big Music’ ever had. Perhaps the record ‘industry’ needs to embrace the chaos which has always been at the heart of music. Because maybe this new digital ecology is simply enabling music to return to its roots.
Streaming May Topple Music Industry Iceberg
from hypebot by Kyle Bylin
The IFPI reports that digital sale grew a meager 5.1% last year and that in the U.S., growth was almost flat at 1.2%. These numbers and chart that accompanies them aren't that shocking, but they do illustrate why the major labels are both excited for Google and Spotify to come to the market, yet terrified about what may happen if they really succeed. If and when Spotify does launch in the U.S. and becomes very popular, Peter Kafka writes, "then CD sales – which still make up the majority of the industry's sales – could plummet even faster."
And what happens if CDs plummet and digital downloads go stagnant?
Music royalties will continue to decline too. Yesterday, Hypebot revealed that for the first time, PRS for Music reported a 1% annual fall in total music royalties.
Now, PRS suspects that digital piracy and a fall in high street sales are to blame for this decline, but in the humble opinion of industry thinker George Howard, they are making a glaring omission with respect to why the royalties might be down: "lack of royalties due to streaming." The way Howard sees it, we're seeing a rapid acceleration of streaming. While consumers don't care whether they get a download or stream, it makes a big difference for an artist, as the payouts are greatly reduced. "Thus," he concludes, "streaming – not 'piracy' or 'street sales' – is what's causing the decline in royalties." The 1% decline is only the beginning of what could be a much larger trend: the toppling of the music industry iceberg.
As icebergs, no matter how large, drift towards warmer latitudes, they inexorably dissolve. "The progression is barely visible but, at some point, as the exposed part liquefies under the sun, the iceberg's center of gravity moves upward and it suddenly capsizes without warning," Frédéric Filloux writes. In other words, if streaming does boom in popularity, and artists and labels aren't prepared for "the days when their margins from downloads are obliterated," Howard says, the iceberg, i.e. industry profits, could become unstable and topple over suddenly.
In fear of this future, the major labels are backing plans from Apple and Google to create music lockers that add value to digital downloads. However, this business model is still based on the notion of fans buying music, "a track at a time," Kafka explains further. "I'm not sure how that pushes the digital sales curve up again."
Howard concludes with this question: Are artists and content holders bracing themselves for the days when they are only getting revenue from streams? "I hope so," he says, trying to maintain his usual optimism about the future of music. "But," he forewarns, "I wouldn't be building on the iceberg right now."
It's a catastrophe waiting to happen. Sometimes, when an iceberg melts, the resulting change in shape causes it to list slowly, like the record industry right now. However, icebergs can also become unstable and topple over suddenly.
It appears that the recorded musc industry may be preparing to shoot itself in the foot yet again. Even as record labels, publishers and pundits debate the pros and cons of music streaming, the consumer has already decided. The popularity of streaming in France, Scandinavia and elsewhere is clear, and the music industry is fond of “blaming” Spotify for the trend.
But now Americans – even though denied access to Spotify and almost always without writing a check to any rightsholder – are also streaming as much music as they are downloading, according to a new NPD Group survey. Read more my post "Sans Spotify, The U.S. Embraces Music Streams" on the Midem blog.
from hypebot by Kyle Bylin
That's a big question. One that I promise that I don't have the answer to. It's provoked by the fact that ten years ago this week, Shawn Fanning graced the cover of Time Magazine. The cover raised the question, "What's Next For Napster?" Indeed, by now, most of us know that story all too well. Both Steve Knopper and Greg Kot wrote at great length about the changes that Napster brought forth and how it reshaped our culture and industry. This got me thinking, in ten more years—twenty years after the rise of Napster and social epidemic of file-sharing that proceeded it—what will we all be talking about?
Will Spotify have made a tremendous impact on the US market and shifted the ranges of social behavior among the next generation? Or, will the Copyright Wars still be going on strong? Will the sky fall and prove that maybe the record industry—this story's Chicken Little—was right? Or, will the future of music be fine, just very different? Will we have created a more sustainable social ecology of music culture online and nurtured a middle-class of musicians that the listening public can support? How many things that we could've never grasped in the present will transform the future? What is the next iPod? Is there even one?
And by iPod, I don't necessary mean a digital technology as much as I mean the thing that causes another generation to fall in love with music all over again.
These are important questions—that none of us knows the answer to. In my last interview with Greg, he argued that this next ten years should be to be as eventful and climatic as the last. That while his book Ripped told an important story, there's another one waiting to be written about the things to come because the fireworks have just begun. I think that's a fascinating takeaway and would be curious to hear your opinions about what story a book like that should tell.
What stories are missing from our current books? Which stories have yet to be told? Above all, what will the next decade in music hold for us?
At present there are 105.4m paid users of digital music in North America. A new forecast predicts that number will grow to 227.2m by 2014. As well, it argues that the number of paid download users in the US and Canada—from the period of 2010 to 2014—will increase from 105.4m to 227.2m.
However, they expect that the greatest growth will happen through online and mobile subscription users; an increase from 1.9m in 2009 to 9.1m in 2014. In accordance, they forecast that digital music retail revenues in the US and Canada will increase from $4bn in 2009 to $11.86bn in 2014.
Why Are The Record Labels Demanding Money To Let People Stream Legally Purchased Music?
Lately, I've been playing around with various music locker services, just to get a better understanding of how they work and to be able to access my (legally purchased) music collection on various machines and devices. So far, they're all a bit limited, but it shouldn't be long until they get better. However, the industry has always hated music locker services, and insisted that they somehow violate their copyright, even when the lockers simply allow individuals to place shift their own legal music. There's an ongoing lawsuit over Michael Robertson's MP3Tunes for which a decision is expected shortly. At the same time, Apple has been trying to quietly enter the market without disturbing the record labels.
Why? Because the labels have this bizarre theory of copyright that says that even if you have a music locker with entirely legal and authorized music, you still need to pay license fees to stream the music from the locker. It's difficult to understand how that makes any sense at all, either from a common sense or legal standpoint, and the labels may have a difficult time getting such a concept to stand up in court. But I'm reminded of the issue again as reports are leaking of Google's proposed music service, which would include a music locker component. Apparently a big stumbling block, however, is that Google wants to charge $25/year for it, and do a 50/50 split with the labels.
The labels, of course, are quite upset at such a proposal, claiming it's ridiculous, both in terms of the total amount and the revenue share. But I'm wondering what their complaint is here. If the music is legally purchased (or is given away in an authorized manner for free), then how can they possibly demand such exorbitant rates for streaming that very same music? This is going to backfire on the labels in a big way. Their constant refrain of "pay us every time you use," is looking more and more desperate.
from hypebot by Bruce Houghton
Discontent and controversies are continuing to grow regarding iTunes' new social network Ping just two days after its launch. A hands on tour of Ping by ars technica showed promise, but some features are confusing and leave much to be desired. The biggest battle is the Apple-Facebook friction that erupted (NY Times) and lead to Facebook shutting off connections to Ping just minutes after it launched.
If you're an indie artist, you've got even more to complain about.
Apple tells Hypebot that, for now at least, artist profiles are by invitation only. Are there workarounds? We'd love to hear from bands who have found them like creating a new user profile to build a band presence.
"This is ridiculous," one indie musican wrote to Hypebot. "Amazon have an artist claim process... It only takes a few days and then you can take over your profile on the Amazon store, add videos, a banner etc.. Why can't Apple do that?"
Legal scholar Mark Lemley has published an insightful draft paper titled, "Is the Sky Falling on the Content Industries?" In it, he documents the history of content industries crying foul every time a new technology disrupts their current business model. His quote, as it turns out, juxtaposes rather nicely with one of Greg Kot's:
Greg Kot:
"The invention of the phonograph was going to discourage people fro m going out to see live music. The introduction of music radio was a surefire way of killing record sales. "Home taping is killing music" screamed the magazine ads when the cassette tape was introduced to the marketplace. Of course, each of those sky-is-falling alerts from the music industry over the last century was a false alarm. With each technological innovation, music became more accessible and more lucrative than ever."
Mark Lemley:
"The content industry, it seems, has a Chicken Little problem. It may, in fact, be the case that the sky is falling. But, if you claim that the sky is falling whenever a new technology threatens an existing business model, the rest of the world can be forgiven for not believing you when you claim that this time around it's going to be different than all of the other times. Now, let's be clear, each one of these technologies changed the business model of the industry. They caused certain revenue streams to decline. But they also opened up new ones."
The Rise And Fall Of The RIAA
We recently had a post questioning whether the RIAA's legal campaign was a success or not. It seemed like there was plenty of evidence that it has been an incredible failure. Separately, we had a post about Radiohead's Thom Yorke, suggesting that the major record labels were going out of business in a matter of months. While we felt that was a bit of an exaggeration, one of our commenters, Ccomp5950 compiled data on RIAA label sales, along with some helpful notes about what other factors were going on at the time:
Year: $ in Millions
1992: 9,024
1993: 10,046 (CD players started to get more affordable towards mid-year)
1994: 12,068
1995: 12,320
1996: 12,533
1997: 12,236
1998: 13,723
1999: 14,651 (Work made for hire controversy)
2000: 14,404 (Napster sued into bankruptcy)
2001: 13,700 (Ipod came out October 2001)
2002: 12,614 (Price Fixing lawsuit hits RIAA)
2003: 11,854 (Grokster lawsuit, "induced infringement" introduced) (Mass lawsuits by RIAA start(AKA: The education campaign))
2004: 12,345 [Revenue Physical / Digital] (BMG gets out of the music business, sold to Sony later on: Big 5 becomes Big 4 for RIAA)
2005: 12,296 [91%/9%]
2006: 11,758 [83.9%/16.1%]
2007: 10,370 [77%/23%]
2008: 8,768 [66%/34%] (RIAA declares it's going to stop mass lawsuits with member money problems and EMI almost bankrupt)
2009: 7,690 [59%/41%] (Massive layoffs hit RIAA around Febuary: Blames piracy)
Sources:
http://www.azoz.com/music/features/0008.html (statistics from 90's to 2001)
http://76.74.24.142/81128FFD-028F-282E-1CE5-FDBF16A46388.pdf (Statistics for 97 to 2007)
http://76.74.24.142/A200B8A7-6BBF-EF15-3038-582014919F78.pdf (2008-2009)
It's a great list, but I felt it could be even more powerful as a graph, so I just threw the following together, based on the info above:
And, that, right there, does a nice job painting a picture on the decline and fall of the RIAA and the major record labels. A few points are worth highlighting:
- If you're not familiar with the "works for hire" scandal, you can read the full background here. Basically, a Congressional staffer by the name of Mitch Glazier snuck a tiny unnoticed amendment into a much larger bill in the middle of the night -- supposedly at the request of the RIAA -- without telling anyone. It effectively changed the definition of music recordings into "works made for hire," which was really important, because it meant the RIAA labels could hang onto musicians' copyrights for much longer, avoiding termination rights that let musicians reclaim their copyrights. Just a few months later, Glazier left his low-paying Congressional staffer job for a $500,000 job with the RIAA, which I believe he still holds ten years later. Thankfully, people quickly recognized what he had done and Congress had to go back and fix Glazier's sneaky wording. However, it is worth noting that the peak of this chart is right when Glazier inserted his infamous four words.
- As we discussed last fall, now that musicians do have termination rights, they're lining up to use them and take their copyrights back from the labels. They can start getting the copyrights back in 2013. If you're looking for a date when the bottom totally falls out for the RIAA labels, that may be it. When the rights to their back catalog starts to drop out, this chart looks even worse. The RIAA won't give up easily, of course. The latest stunt they're trying to pull is to "re-record" albums, claiming that it creates a brand new copyright, that gives them another 35 years before termination rights are applicable. That is, of course, ridiculous, but the RIAA will likely try to fight it out in court for many years to extend that 2013 deadline by a few more years. Of course, all that money on legal fees could have gone to innovating, but that's just not the RIAA way.
- Note that digital music sales is not even close to being a savior. The total is still dropping rapidly.
- Of course, many have argued that the rise and fall may have a lot more to do with CD replacements of previous formats -- and this chart certainly suggests that could be an explanation. The big jump happened right when CDs became affordable, and people needed to go out and replace their vinyl and cassette (and 8-track!) collections. After a few years of that, it makes sense that the market should drop anyway.
- Once again, it's important to point out that the chart above is not the entire music industry, but a limited segment of it: the RIAA record labels, mainly comprised of the big four record labels. It doesn't take into account all of the other aspects of the music business -- nearly every single one of which has been growing during this same period. It also doesn't take into account the vast success stories of independent artists and labels doing creative business models and routing around the legacy gatekeepers.
This guest post is by
Max Willens, editor of
We All Make Music, a website dedicated to helping musicians thrive in a post-label world.
"If I charged more for what I do, then everybody would start nickel and diming one another, and the whole thing would just fall apart." Black Lips' Joe Bradley, on why he doesn't take extra money for his role as the band's tour manager.
"On average, fans pay 50% more than the minimum amount set by artists." Bandcamp's Ethan Diamond on his site's pay what you want option.
"When you sign with a record label, you'd better have your team together, because there's no money for artist development anymore. All you can hope for is some marketing and ad money." Jayson Jackson, former VP Marketing & Promo, Bad Boy Entertainment.
"People talk about selling out, they're hailing artists like Bob Dylan or the Stones or the Beatles, but they were aligned with a social movement. I don't know anyone who's a part of a social movement in America today." - Naeem Juwan, a.k.a. Spank Rock, on selling out
"If Camel or whoever wants me to play, what fan is going to be pissed that they got to see me for free." -Tommie Sunshine, on the question of selling out
"If you were on welfare, you got an extra $100 per month if you worked in publishing. And me and my friends thought that sounded like a pretty good scam." -Suroosh Alvi, founder of Vice, on his company's humble beginnings
Editor: Jesse VonDoom of Cash Music also presented and explained the non-profit music tech company's unique mission.
press release
Rdio, pronounced r-dee-o, the new social music service founded by Janus Friis with Niklas Zennström and Atomico, a leading technology investment group, today unveiled its plans to change the way people access, discover and pay for music. Designed as a highly social experience, Rdio (www.rdio.com) improves the discovery and sharing of music and the way music can be accessed through a Web browser and on smartphones. Rdio will offer unlimited, on-demand access to five million songs for a monthly subscription allowing users to listen to as many songs as they want, anytime and anywhere. Rdio’s invitation-only paid preview program starts today.
“Many digital music services have tried to address specific challenges, but no one has managed to elegantly integrate discovery and a high-quality music streaming experience, under one roof”
“Many digital music services have tried to address specific challenges, but no one has managed to elegantly integrate discovery and a high-quality music streaming experience, under one roof,” said Janus Friis. “We think people are ready for the next evolution in music. Rdio gives you unlimited access to all the music, anytime, for the equivalent price of one album download per month.”
Rdio takes the manual effort out of discovering new music and building a digital collection by connecting you to other people and their music. This constant stream of new, relevant music is accessible via any Web browser or your phone, and unlike other music services, there is always new music to try every time you launch Rdio.
“We see a big opportunity to fix the mobile music experience,” said Drew Larner, CEO, Rdio. “People want the music on their desktop and mobile to be connected without having to pull out a cable. That’s what we’ve built – a seamless way to access your music no matter where you are.”
Rdio offers applications for BlackBerry and iPhone with Android to come. Rdio’s apps know what album or playlist you were listening to on your desktop when you connect via your mobile, and they show you what your friends are listening to. You can also sync music to your phone to enjoy when you’re offline.
Rdio offers music from the world’s largest music labels: EMI Music, Sony Music Entertainment, Universal Music Group and Warner Music Group, along with a number of the leading indie aggregators of digital music. Rdio offers many different ways to easily discover music including personalized recommendations for new music based on your specific tastes and listening behavior, and on-demand artist-based radio stations for those who prefer to stumble upon new, related music. A matching tool allows you to replicate your iTunes or Windows Media Player libraries by scanning your account and immediately adding it to your Rdio collection. Another benefit of Rdio’s service is that users can collaborate on shared playlists. Links and information about favorite songs can be shared with friends on Facebook and Twitter or directly in email.
“The music industry’s transition to online distribution has been dominated by à la carte sales,” said Mike McGuire, vice president, research, Gartner’s Media Industry Advisory Services. “But, there’s a big opportunity for companies to create paid music services that are based in the cloud – especially as more and more consumers own smartphones allowing them to access their entire online music library via phone. The industry needs to continue to invest in these models to expand the market for revenue-generating opportunities and provide compelling alternatives to free content.”
Based in San Francisco, Rdio is led by CEO Drew Larner and COO Carter Adamson. Rdio’s product team includes Malthe Sigurdsson, who is responsible for Rdio’s user experience and design, and Todd Berman, who leads engineering.
Starting today, Rdio’s small group of existing beta testers will be given a handful of invitations to share with friends and family. Rdio will also start providing paid access to the preview program to those who have requested an invitation through its website. Web and mobile access (including syncing music) will cost subscribers $9.99 per month, and Web-only access will cost $4.99 per month. Rdio is launching its preview program in the US, and expects to launch to the general public later this year.
About Rdio:
Rdio brings music alive with its social music service where you can discover music through friends and tastemakers. Rdio takes the work out of the deciding what to play next and connects the music in your Web browser with your mobile phone. You can play as many songs you want, anytime, anywhere. Rdio was founded by Janus Friis with Niklas Zennström and Atomico, a leading technology investment group.
Notes on the digital-music business: Things could be worse
by Rob Pegoraro
SAN FRANCISCO -- The last panel discussion at Monday's SF MusicTech conference here might lead you to think there's something rotten in the state of digital music.
Tim Quirk, a vice president at the Rhapsody music service, lit into the major record labels for their self-defeating greed. "They charge more than we can possibly make," he griped, summarizing their approach as "before you make $10 million, I'm going to charge you $15 million."
Quirk, whom some of you may remember from the band Too Much Joy, defined his company's core strategy as "wait" -- that is, hang on and wait for the labels to grow a little more reasonable every year.
A fellow panelist, MP3.com founder Michael Robertson, concurred, saying, "It's an impossible landscape if you're an entrepreneur."
And yet to judge from the rest of the conference -- a one-day event I'm attending for the second year in a row, thanks in part to the convenient scheduling of a Google conference here on Wednesday and Thursday -- things aren't all that bleak for the music business.
At the day's first panel, a discussion on Webcasting, Pandora founder and chief strategy officer Tim Westergren painted an optimistic picture for the Web-radio service. Although it has to pay higher royalties to the musicians whose work it broadcasts than Sirius XM's satellite-radio service -- infinitely higher than FM and AM stations that don't have to cough up any "performance royalties" -- the rates fixed in an overdue settlement last year are "survivable," Westergren said.
Meanwhile, Pandora is working on other ways to connect its listeners to new music. Westergren suggested that a future version of Pandora's software could notify you when the band you're listening to is playing in your neighborhood and ask if you'd like to buy a ticket. (I think I've seen other sites already offer that sort of function.) He compared that favorably to his experience in a band years ago: "Our idea of cost-effective marketing was to drive 2,000 miles to play before 12 people."
In other panel discussions, musicians, entrepreneurs and developers compared notes on such topics as new sorts of Web interactivity (Ben Folds discussed how he played improvised songs to users of the thoroughly weird ChatRoulette site during a concert) and what kinds of musical instruments could be crafted using computers and electronics (as seen in a mind-bending demonstration of a synthesizer controlled by a touch-sensitive screen that responded not just to taps and gestures but also to varying degrees of pressure).
My own contribution to the debate was leading a panel discussion about music on mobile devices. Warren Wan, vice president for music at Dada Entertainment, said his company shipped its software for Google's Android operating system first because he didn't want its debut to get hung up in Apple's App Store approval process and had since appreciated the ability to push out updates without a one- or two-week wait to have Apple okay each bug-fix. But SoundHound vice president Kathleen McMahon said she'd found that Apple's approval requirements made users more comfortable with the idea of paying for applications. (SoundHound's app attempts to identify a song by a sample or even a hummed or sung verse).
I was pleasantly surprised not to hear anybody fret about the market power of Apple's iTunes music store, which suggests that Amazon's MP3 store is doing well enough to keep the market honest. Nor did I hear as much venting about the banality of commercial FM as in prior music-business events. It's possible I just went to the wrong panel; it's a risk of any conference with three discussions going on in separate rooms at the same time.
But even Quirk, an especially cranky and profane critic of the music business, predicted a brighter future: "There is a forthcoming 50 years of recorded music that won't be tied down under these constraints."
Now compare things with the movie industry, in which "progress" too often counts as finding some new way to Balkanize the market a little further -- in the process, disabling features in people's homes.
Then again, the Motion Picture Association of America says things are going great, so maybe they just don't feel the same competitive pressure as the recording industry. How long will that last?
(5/19, 7:58 a.m. PST: For an overview of the musical-instruments demo, see Mashable's YouTube clip. And for another read on the conference, see Mike Masnick's wrap-up on Techdirt: "The Increasing Irrelevance Of The Major Record Labels.")
by Mark Hopkins - berkleemusic
There is a fine art to becoming a successful working musician. Here’s the good news: you don’t have to be Picasso to do it (however, no finger painting, please). Half the battle is as simple as believing in your product. That’s right. I said your “product.” When you are a professional musician, you are in the sales industry. Don’t sweat it, though. You’re selling something you absolutely love: music!
Here’s a proof positive way to get ahead in your town’s music scene:
1) Fine tune your act. Whether it’s acoustic or a 7 piece funk/fusion band, you need to have a professional sounding product to turn some heads.
2) Explore Open Mic Nights. Where and when are they happening? What time do you need to be there to sign up? Grab the local city paper, scout it out online or in person. Be there early, shake a few hands, and get to know the other musicians. Most importantly, always be on time and make sure people know you are a reliable artist. That’s a rare commodity in the industry and you will shine amongst the group. Open Mics are a great resource to get your career started. Not only for the exposure, but also for the networking possibilities. I can’t tell you how many Open Mics I’ve done that have led to amazing opportunities.
3) Start thinking about how to market your product. You first and foremost need a Demo to start the grassroots campaign that will lead you to stardom. Don’t be afraid of rockin’ a Garageband demo. No need to be snobby about production quality—the most important thing is to have a solid song you can put in a future fan’s hand (we don’t notice how many hand claps are in your tune, and how they are mixed in perfectly with the snare drum).
4) Start handing out that Demo (with a flyer of your upcoming gigs) to every music lover you can find. “If you build it, they will come.” Sooner than later you’re gonna see some familiar faces at your shows. Sell your CD’s when you can, but don’t be afraid to hand them out in the beginning; consider it an investment in future merchandise sales.
5) Lastly, don’t forget to start an email list. Social networking is great, but Facebook and MySpace aren’t the alpha and omega. Fans still like getting personal emails from their favorite artists. On that note, give your fans a place to go besides typical social networking sites. Get an official website running where they can chat about how the new version, of that one tune, where you substituted a #9 chord for a regular old dominant seven, was mind blowing.
It’s a simple process, but it by no means takes minimal effort. Music is a business—the quicker you come to grips with that, the quicker you will see significant results. Most of all, as cheesy as it sounds, believe in what you’re doing. It will show through to your audience and the influential booking agents around you. Believe in what you do. It will take your career a long way.
Until next time, happy gigging!
blog.tunecore.com
George Eliot (the English novelist) once wrote, “I think I should have no other mortal wants, if I could always have plenty of music.” Hmmm, dare we take this literally when relating it to the superfluous availability of music nowadays? It seems everywhere you look in recent years, there are countless amounts of digital services popping up that allow you to seek and release new music. Spotify, a popular music provider, states that with their service, “there are no limits to the amount of music you can listen to. Just help yourself to whatever you want, whenever you want it.” Eek! Sounds a bit overwhelming. So, are our eardrums just about ready to combust in music overload?
But does too much music mean not enough quality? Stephen Garrett, Chief Executive of Kudos (a film and television production company based in the UK) stated, “We are in danger of creating a world where nothing appears to have any value at all, and the things that we make…will become scarce or disappearing commodities.” The digital availability may make our connection with music more disengaging, since we have to sift through more sounds. So the bits of quality that are heard could become tainted by worn out ears. With so much music out there, A&R scouts might become desensitized to new talented musicians. Maybe they’ve heard it all before.
In turn, nowadays you can hear about new “good” music easily on the web, as any music fan bookmarks their favorite music sites or blogs on their computer. Or you might choose to take a long weekend from work to check out a music festival like Coachella, SXSW or Bonnarroo, where you can hear bands you love as well as check out the smaller tents to hear other less-known artists. Pandora innovatively created a way for you to find new music simply by entering one song you dig, which prompts their service to make a station revolving around that song’s style of music. They do all the work for you!
The abundance of networks that keep popping up to make new music available leaves us simply wanting more. More could mean a good thing for the artist. Perhaps we can look at the abundant availability as something positive, since nowadays any musician is allowed the opportunity to let their musical creations reach the masses. Musicians now have many digital outlets that can facilitate their exposure. So they do not have to conform to the mainstream record label masses. They have a fair chance to become the next big thing, even if a major record label doesn’t think so. And, maybe because there is so much music, it will allow fans alone to be tougher critics and rate music on a more relatable level.
So friends, the colossal sea of music could be somewhat frightening for the consumer. But at last, this could mean more for the artist to get a fair shot at success. You don’t even need to do an intense hunt for music if you don’t feel like it. You can allow various digital services to seek and grab for you. Don’t mind if I do!
Music Strategy For Brands: When Brands And Bands Collide
My latest report - Music Strategy For Brands: When Brands And Bands Collide - has just been published. This report is a bit of a departure, looking very specifically at the burgeoning trend of non-music companies using music to help sell their core products and services. Of course Apple set the trend with the iTunes music store, but nowadays we’re seeing many non-tech brands picking up the baton.
The report contains exclusive executive survey data that shows how brands and consumer product companies are working with music now, and how what they plan to do in 2010.
As the effects of the music industry meltdown bite, record labels and artists alike are turning to brands and product companies for new revenue opportunities. 2009 saw music tapped more heavily than ever before as a tool for differentiating products and brands and this trend will accelerate in 2010: 65% of brands and product companies interviewed by Forrester stated that they will spend more on their digital music strategies in 2010 than they did in 2009.
The overriding thesis of the report is that marketing professionals must subjugate their job titles in favour of their role as media product professionals when working on music strategy. If they don’t, the resulting poor execution will damage the brand as much as the band, which is exactly what happened with the Vasserettes:
The Vassarettes (when brands, bands – and bras - collide). When Vanity Fair bra brand Vassarette created a girl band performing in bras and carrying the name of the brand they thought they’d hit the brand synergy jackpot. Perhaps they had, but in terms of creative execution for music strategy, the failure was absolute. Lacking good songs and appealing more to blokes who should know better rather than resonating a ‘girl power’ message, the band fell flat. The Vassarettes were a gimmick that became an industry laughing stock. Making the brand into a band requires content expertise more than it does marketing expertise: what works for a brand doesn’t always work for a band.
Don’t misuse the opportunity
Music represents massive opportunity for brands, but the current momentum easily become a retrograde move if mistakes are made and fans feel alienated by intrusive marketing messages. If brands are to shake off the ‘suit in the mosh pit dancing like a dad’ image, they must seek to add to the artist-fan relationship and differentiate in an increasingly crowded marketplace.
If you are a brand with a music strategy or intend to implement one, this report provides you with the framework for how to. It also introduces Forrester’s proprietary methodology the Content Strategy Review for Brands: a quantitative assessment and of a brand’s content strategy and benchmarking against competitors and relevant content destinations.
Are you brand working with music? If so I’d love to hear about your experiences and whether you think you’re getting a good return on your investment.
Illegal downloads mean bands can't pay rent: Doves
Doves say new bands can’t “pay the rent” because of illegal downloading.
The Manchester-based indie band said they wouldn’t like to be starting out today as there is a real lack of funds from record labels to allow new artists to tour.
Guitarist Jez Williams told BCC 6 Music: “It’s going to be quite hard for you to pay the rent because there’s no money, there’s no tour support, very little in the way of advances
“I really feel for up and coming bands. But I guess the only thing that hasn’t changed is that if you’ve got the hunger and the determination then you’ll do it.
“It costs a lot of money to take a band on the road to do 10 UK dates. Some people say their liberties are being taken away. But I wouldn’t go into a baker’s and just take a piece of bread. We need to get paid, really.”
Jez also said the process of picking their favourite tracks for their just released best of album, ‘The Places Between’ was a difficult process.
He added: “Your memory can play tricks sometimes and it sounded very different to how I remembered it. So it was actually really good listening to it, I was quite pleased that we got most of it right.
“Because all three of us are very passionate. It’s kind of a democracy, Doves, so everyone’s got a valid opinion. But we got there in the end.”
Jez also recently denied rumours the band are to split after their UK tour which starts later this month, saying he was misquoted when he said it would “probably” be the band’s last.
hypebot.com
Growth in digital music sales in 2009 offset the continuing decline in CD sales for the first time according to UK collection society PRS For Music.
Digital revenues grew 73% (£12.8m) to £30.4m in 2009 as platforms such as Spotify, MySpace Music, Amazon and iTunes expanded. That compared to an £8.7m drop in physical revenues through the year. Total revenues grew 2.6%.
“Last year was the first in which the growth in revenues from the legal digital market compensated for the decline in revenues from traditional CDs and DVDs, although we remain cautious as to whether this represents a true turning point. said Robert Ashcroft, CEO of PRS. "The next decade does, however, promise further growth in earnings from the legal digital market as well as the use of British music overseas."
@SXSW: Pirate Bay Founder On Piracy, Record Labels and More
By Glenn Peoples, Austin, Texas
Joining a SXSW panel via webconference from Sweden, Pirate Bay co-founder Peter Sunde downplayed the damages of piracy and called for people to consider drastically different business models and smaller music companies. “The rock star dream is gone,” he told a crowd of about 100 people.
The hour-long panel, “The Trials and Tribulations of the Pirate Bay,” covered a wide range of topics, from the technical aspects of the Pirate Bay to anti-copyright politics. Sunde frequently displayed both a sense of humor and a defiant streak. When asked why he was appearing at SXSW by way of a large video screen and a broadband connection, Sunde framed his absence in legal terms. “If I go to the U.S. I will get so sued I will not get out of the U.S. for a while,” he said.
In April 2009, Sunde and the other two co-founders of the Pirate Bay were found guilty by a Swedish court of making copyright content available. But Sunde expects the case to drag on for years. “There’s no question we’re going to win the appeal,” he boasted. “And if we don’t win the appeal, there’s another appeal and another appeal.”
Nor does Sunde intend to pay his share of the $3.6 million penalty. “Nobody’s going to pay anything,” he said. “There’s no money to pay. Nobody’s interested in giving money to big corporations that are just greedy and stupid.”
March 12, 2010 -
xmlrss.com
The RIAA would like you to believe that you are participating in the Recording Industry. Be advised, you are not. You are in the Touring (Gig) Industry, make no mistake.
Your mission, should you choose to accept it, is to get as many bodies through the doors of your show as possible. Then, get them on the list. Then, give them things. Then, sell them things. Then get their friends on the list…
Friends? Yup.
What do you do if you want to see a movie? Most people will read a review or ask a friend’s advice. Most people want an endorsement of some kind before they can get into it. Even if they’ve never heard of the movie, chances are they’ll go based on the buzz generated by someone else’s opinion.
You have your list – your targeted group of consumers. Lets use these people as marketing “hubs”. Think of them as the center of a bicycle wheel and their friends as the spokes. It will be a good idea to incentivize your list to get their friends in the fold as well.
Now that we got the lingo down…
The best way to incentivize your hubs will be to either a.) bring them closer or b.) give them things.
Try offering a free t-shirt for each fan that gives you the mailing address of 5 friends. You can then send these 5 each a free CD. From there, the process will continue with these people as well as you continue to incentivize THEM in turn.
So, how long do your keep doing this? Let’s stop the giving at 1000 and get into marketing a solid product for purchase – which I’ll get into later.
If you’re wondering if the cost of 1000 CDs and 200 T-shirts are worth 1000 fans, the answer is YES!
What I do is consider the LIFETIME VALUE of each fan. If you treat them right, their investment in your music won’t end with just 1 CD or show, or t-shirt. It will be helpful to think of Lifetime Value in order to draft your long-term marketing plan. And NO, it’s not as dry as it sounds – it just makes good sense to do a little thinking, if not planning.
A Little Math
1000 promo CDs, copied and printed at home: $1000
200 T-shirts @ $3.50 per: $700
Total fan investment: $1700 / 1000 fans = $1.7 per fan.
You can call this your Aquisition Cost. We’ll now have to do a bit of estimating in order to figure out each fan’s Lifetime Value:
Let’s say you play 1 show every 2 months in your town. It’s safe to think that if you communicate with your fans effectively, 7-10% may show up at each show.
6 shows per year, 70 fans per show, $5 cover charge: $2100
$2100 / 1000 fans = $2.10 per fan.
That’s without merchandise sales, without marketing A SINGLE ITEM to your fans. You’ve turned a profit – albeit a small one.
Hell, your break even point is only $1.70 – that’s only 57 bodies a show. ONLY 5.7% OF YOUR MAILING LIST!!!
Meanwhile you’re building goodwill and loyalty which will last alot longer than you realize.
Fan Incentive Idea
Make sure this gets out to as many non-fans as possible. Hopefully before each show, you’ve hung posters in as many places as you can, advertising the gig. Hold a contest where you give away (free is good!) something cool to the person that takes a photo of themselves doing something crazy in front of your poster. (Pick a few winners) Let them know that they can email the photos to you, or send them via postal mail. Either way, you now have a form of return addresss in which to contact these people again because you’ll need to now where to send their prize. More fans, more marketing hubs, more goodwill, more loyalty, more people at your shows, more fans, more LIFETIME VALUE per fan.
Folks, that’s not how you build a band, that’s how you build an enterprise.
That’s how you make a LIFE in the New Music Business!
Performers See Tiny Revenue From Streaming... But How Much Do They Make From Radio?
March 08, 2010 - by Mike Masnick
Copycense points us to a Billboard/Reuters article over the fact that music performers are not making very much money from online streaming services. The article is designed to be "shocking," but seems to leave out some rather important facts. For example, in the US, if Billboard did the same calculation, it would find that performers make even less from radio. That's because performers make nothing from radio in the US, because Congress realized a while back that radio is advertising for musicians, and it seems ridiculous to force radio stations to pay musicians to advertise for them. In fact, the repeated stories of record labels illegally paying radio stations via payola showed that the market actually valued things in the other direction.
It seems quite odd that Billboard would leave this out of its analysis, instead, trying to position the streaming revenue as being so low as to be problematic. Yes, the numbers are low, but streaming radio acts as advertising for musicians that let's them make money in lots of other ways.
This is the same discussion we had last week when some people got too focused on the question of whether or not Spotify was making people buy more music. That's not the point. The point is whether or not streaming services make people buy more of anything that helps fund those musicians. Narrowly looking at just whether or not those streaming services pay musicians is really missing the point. It's like asking how much NBC paid BMW to air BMW commercials. The answer is nothing. The money went in the other direction, because that's where the real value was.
March 04, 2010 -
by Glenn Peoples
As Billboard previously reported, Blake Shelton’s new release, "Hillbilly Bone," a six-song mini-album, hits stores today. USA Today is
taking note of the uptick in country mini-albums (or EPs, or collections that generally have fewer than ten songs). Luke Bryan, the newspaper points out, released his second “Spring Break” digital EP today. And "country's Josh Thompson and American Idol's Jason Castro have released digital EPs in anticipation of full albums."
Shelton’s six-song CD, which Warner Nashville will put in physical retailers, represents a far greater leap of faith and a bigger shift in strategy than a digital-only release. Not all albums will be shortened to six songs, but expect to see more mini-albums on store shelves as labels and retailers try to find ways to offer music at lower prices.
This mini-album experiment could help fix two problems. First, it could help keep record labels on the store shelves on retailers wary of falling CD sales. Second, cheaper albums will probably do more to lure buyers who would have otherwise bought a single track. The current gap between track and album is about $7.70 – a $9.99 digital album price minus $1.29 track price. At iTunes, Shelton’s Hillybilly Bone costs $5.99 while each track costs $1.29. That’s a difference of $4.70. If the price gap is reduced to the $4 to $5 range, labels may be better able to convert track buyers to album buyers.
A look at the numbers show the mini-album idea has potential. If Shelton released two $5.99 mini-albums instead of one $9.99 album, Warner Nashville will have to sell 167 combined units of the two mini-albums for every 100 units of full album sales to break even. (Wholesale costs for digital product, not physical, were used in those quick calculations.) That’s very doable, especially if the lower price point causes the track-to-album conversion rate to improve. On the expense side, however, labels will experience greater expense in putting out two releases instead of one. But even considering the higher expenses, and even if the 167/100 ratio is not reached, mini-albums could help labels achieve the incalculable benefit of keeping the Walmarts of the world interested in their music.
Going into 2010, musicians will see and experience the reoccurring gravity of competition that will weigh down on them from all the other musicians who are trying to make a name for themselves or from the musicians who are continuing to flourish. In all reality, the music industry is becoming oversaturated, and yet, the musical juices keep flowing into the music industry which has continued to create a diverse melting pot of music.
Though this may be the case, it is not necessarily a bad thing; it’s but a hick-up for those who can evolve – adapt and outlast. This concept of adapting and outlasting leave musicians with some constructive ideas that they should consider if they want to emerge.
A thriving musician in 2010 should be able to:
- define their talents and capabilities
- creatively apply and improve their talents towards what they want to achieve
In the music world, an array of possibilities can be at a musician’s finger tips as long as they are willing to reach out and find what they want to grasp. For a musician to open up their possibilities they must be able to define- to put into working ideas- what they want to do with their musical talents; and what will make them feel successful in their musical pursuits.
Define Yourself As A Musician
If a musician is not able to define their talents and capacity for becoming a better artist, then they will, more than likely, not be able to promote why the music industry would want to invest in their musicianship. This means they would have failed to adapt to what consumers request which means they will not be able to outlast the new generations of the music industry.
If a musician is able to define (or market) their positive attributes and apply them then they are more likely able to promote why their demographic of the music industry would want to invest in their creativity and potential achievements. This concept means that they would have succeeded in adapting to the request of listening consumers which means they will have opened up their possibilities and taken one step closer to achieving their goals.
Musicians should have an edifying message that they want to achieve for themselves and also achieve for the bigger picture.
The Kanye’s and the Gaga’s
In most cases, musical audiences do not want to be able to see through the pretentious message of an artist. Authenticity should be a first and lasting impression.
Some exceptions to this case maybe Kanye’s arrogance and Lady Gaga’s outlandish style which would seem to be unattractive, but actually seem to work for them and their audiences are compelled by it. From Kanye’s freshman record, College Dropout, to his senior record, 808 & Heartbreak, he has been spitin’ out crucial beats and rhymes that the public can relate to. Kanye was able to understand and define his ability to put emotions and ideas into catchy hooks and rhymes, in which the music industry recognized and rewarded him for that- of course he did have nice connection as a producer for Rock-a-Fella Records- but he still had a considerable amount of make-shifting to do.
When all is said and done, musicians just have to do their thing. They are going to have to find their place in the music industry because the music industry is not going to go out of its way to come find a place for them. The industry knows that music listeners are looking for exciting creativity and something original and compelling that listeners can share with others. Those of us who appreciate music appreciate the artist that create the music.
So, from a musician to a musician, we should try and define ourselves and our music with qualities that would be appreciated by other musical zealots and appreciators alike.
December 21, 2009
from the the-innovator's-dilemma dept
A few weeks back, I shared my video on the innovator's dilemma (based on Clayton Christensen's work). The key point could be summarized as noting that legacy industries are fine with incremental improvements, but they run into a huge roadblock when it comes to transformative changes -- such as disruptive innovations that change the very way that business is done. It's just really really difficult for legacy businesses to comprehend, let alone adapt, to true transformative (or disruptive) innovation. Musician Steve Lawson recently had a fantastic writeup discussing the difference between transformative and incremental change in the music industry, and why it's been so difficult for many of the "old guard" to understand what's happening. He discusses how previous innovations that the record labels are used to were incremental changes:
The invention of cassettes, and 8-track cartridges was an incremental change - suddenly there were more ways of selling hard copies of recorded music. More places to play them, new machines needed, new possibilities for the length of music that could be issued in a single entity (90 minute cassettes were pretty standard, and some enterprising labels took to reissuing 2 albums as one on cassette, thus breathing new life into back catalogue.)
The same happened again with CDs - more incremental change - the chance to pretend it was higher resolution than vinyl (a lie) that it was indestructable (a lie) and that you could take it anywhere with you (true). CDs were a breath of life to a fairly static industry - suddenly, all the people who were teenagers in the 70s at the dawn of stadium rock were now successful 30-somethings with disposable cash and a deeply fragile sense of self.
But, of course, what we're seeing now is totally different. The internet presents a disruptive or transformative change.
When you take an industry that has 4 big costs - recording, manufacture, distribution, promotion - and remove 3 of them, that changes everything. All of the assumptions about how much it costs to make a record, what infrastructure is needed to make a sales team effective, who needs to own the trucks and delivery guys who take your product to shops - they all disappear. They are all now choices that you make, not assumptions.
The problem for the industry is that it structured its entire business around the idea that those four big costs are a big problem that any musician needs help with -- and they're willing to sign their lives away to get that help. But the transformative change that occurs with the internet is that much of that becomes significantly less expensive, and the need to sign your life away becomes not a need, but a choice -- and the businesses that were built to only work if musicians signed their lives away suddenly find themselves in trouble.
As in the innovator's dilemma, however, the labels still don't recognize this. They can only think in terms of the incremental change of "how can we sell more units of music." That's the only change they've ever really known. They're not prepared for a situation where the selling of music may not even make sense, and the level of control over an artist has changed dramatically. But they still view -- as is often the case in the innovator's dilemma -- as something to be dismissed. The fact that musicians can record for less money... well, it's not as good as having a record label bankroll you hundreds of thousands of dollars. True, but it's pretty damn good and getting better. The fact that you don't have to go through an expensive processing plant to print CDs? Well, it may not look quite as nice, but the technology again gets better and cheaper everyday. The fact that the music can be distributed and promoted for free online? The labels really still don't quite get that part of it, but it's been working great for musicians who know how to use it to their advantage.
The Year in Digital Music and Predictions for 2010
by Jason Feinberg, December 17, 2009
As 2009 comes to a close, and the music industry shifts focus to 2010, it's worth looking back at some of the noteworthy events of the past 12 months. This is also the right time to look ahead and predict what will happen next year.
For some in the business, this year brought trouble after trouble; for others, 2009 was a time for growing revenue, relevance and positioning. Whichever end of the spectrum you are on, there have been few dull moments for digital music this year. And next year promises even more change and growth.
Innovation and Acquisitions Abound
A number of high-profile acquisitions in recent months have shifted the digital music landscape.
Apple's recent purchase of streaming/download service Lala has sparked much speculation. Articles from the New York Times, PC World, and Apple Insider have discussed possible reasons for the purchase, and most tend to focus on the creation of an Apple-powered music streaming platform.
Unlike iTunes, Lala allows users to stream music they own from the web, effectively creating an anything/anywhere platform. It would give users the ability to listen to music via the web and mobile phones without having to download the content to different devices. There's still a scramble for a sustainable streaming model, and Apple wants in.
This is interesting on its own, as it adds a dimension to music consumption that is basically the opposite of how iTunes was built from day one. But this is only one part of why industry players are talking; everyone loves drama, and this story has plenty.
Just one month prior to Apple's acquisition, Lala made headlines as one of the key partners in the new Google Music service. Lala, along with a number of other partners, now powers streaming music search results through Google. When a user searches for music on the search engine, the option to stream the song (as well as purchase, get lyrics, and find tour dates) appears at the top of the results. With Apple's buyout of the company, people are left to wonder what may come of this service.
MySpace was also busy on the acquisition front, recently absorbing two music streaming services, iLike and imeem. Each of these companies had built a solid user base, but had not found the profitability investors expected. A buyout wasn't a surprise. Speculation abounds here as well: Both of these companies offer enhancements to what MySpace currently provides, but they do not bring anything particularly new or unique to the table.
That said, these deals are not without their own drama. iLike has powered Facebook's most popular music service for years, so this acquisition creates an interesting relationship between MySpace and Facebook. There are many other music applications on Facebook, so this development probably won't be significantly disruptive.
The same can't be said for imeem. It built its massive user base by allowing fans to create streaming playlists and embed them across the web. Bloggers and others relied on these players, as did web technologies such as twt.fm, which allowed users to easily tweet a link to an imeem-powered streaming track.
These services immediately broke last week when, without warning, MySpace completely pulled the plug on the imeem service. All traffic to the imeem.com domain now points to MySpace Music, and all backend access to the site (via its APIs) is turned off. This has created unhappy fans, bloggers, and developers.
Is innovation flourishing, or is the herd thinning out? These were only some of the more high-profile acquisitions this year. Expect to see more in 2010.
Direct-To-Consumer Continues Ascent
Another important trend this year was the continued emergence of a hyper-charged direct-to-consumer business model. Companies such as Topspin, Audiolife, Nimbit, and Reverb Nation are enabling artists to interact with -- and sell to -- their audiences in many new ways. I wrote about this topic in a MediaShift article earlier in the year.
The idea of direct-to-fan goes back decades. Massive value can be created when an artist engages their audience directly. This has been demonstrated for years at concert merchandise booths, and online in the form of things such as newsletters and e-commerce using PayPal.
The difference, and the reason this topic is on people's minds, is that technology has quickly propelled the D2C marketplace both downward and forward. Direct-to-fan has always worked well for large bands, or for artists with momentum. Now, small artists -- if, and only if, they are creative and good -- have the tools to recreate this revenue stream at their level. It doesn't mean every garage band can quit their day jobs, but it does mean more artists have new opportunities to make a living.
Forecasting, marketing, commerce, distribution, customer service, analytics, and deep fan engagement are all now available to artists at any stage of their career. This year saw some highly innovative and often successful campaigns run by emerging artists. In 2010, more artists will embrace this model, which means a lot of noise and competition. It will be more of a challenge for the brilliant acts to shine through.
What Else is Next
A few more thoughts about the year ahead:
- 2010 will be the year of analytics. Digital marketing and sales departments have been cobbling together metrics for years. Many things are trackable, but it's often impossible to access the data or find the means to implement structured analysis. Platforms such as Next Big Sound, RockDex and BandMetrics are looking to fill this need. As APIs and data sources continue to open up, these services will get better and better.
- The conversation about an ISP tax for unlimited downloads will continue. The big players working to combat piracy will continue to focus on this.
- Spotify is still gearing up for a U.S. launch, but in light of imeem's troubles, the ad-supported streaming model is under further scrutiny. There are fundamental differences in their ad structures, but ad-supported is ad-supported.
- I am curious to see where advertising goes on Twitter. The Huffington Post has one idea, trying to sell ads into feeds.
There are many more things on the horizon. I'd love to hear your thoughts on the state of the digital music industry, and what's next.
December 15, 2009
One of the recurring themes of the recent Future of Music Policy Summit in Washington, DC was the necessity, for musicians, to develop an “active fan base.” There wasn’t one specific panel about this, or one discussion; it was instead a constant thread through many different panels and discussions, and the seemingly inevitable answer to the industry’s $64,000 question: how on earth can musicians earn a living in the digital age?
We all know the basic plot by now. Musicians are on their own out there, lacking both the imprimatur and promotional budget once afforded by big record labels. And by the way no one wants to buy music anymore either. What’s a poor singer/songwriter boy or girl to do?
At the conference, something like a consensus emerged in response: foster the artist-fan relationship. Any number of experts in any number of different ways ultimately said the same thing: succeed with so-called “fan engagement” and you’re on your way. (Well, okay, musicians were also told, repeatedly, “not to suck.” Another worthy goal, but outside of the purview of this essay.)
And luckily for today’s musicians, the internet is just one big crazy fan-engagement machine, if properly operated. Through regular forays into blogging, Twittering, and Facebooking, musicians can get up close and personal with their fans, and use this interaction to—let’s be blunt—make money.
In the minds of those pinning the future of musician well-being on fan engagement, what they’re talking about is really a sort of fan engagement on steroids. It’s not just about collecting email addresses and talking to fans at the merch table after the show. That’s relatively easy, old-fashioned, and, now, inadequate.
Fan engagement as newly conceived is relatively difficult. It involves managing an arsenal of 24/7 social media pages and being ever on the lookout for creative avenues of interaction and out-of-the-ordinary sales opportunities. Needless to say, this is time-consuming. And—it should be noted—the path from this new, aggressive kind of fan engagement to revenue isn’t necessarily clear.
The general idea, however, is that the more that fans feel connected to musicians they love, the more they are likely to want to attend their concerts, buy not merely songs but premium items (specially packaged albums, boxes, et al), and be interested enough in their beloved musicians’ comings and goings to be willing to pay as well for any number of offshoot endeavors that the musician can dream up—custom clothing, exclusive video performances, hand-made art items, you name it.
With all this in mind you can see why the experts at the conference seemed to agree that in the digital age, the central important thing that’s changing in the music industry is not so much the technology as the artist/fan relationship. Musicians should be thinking of fans not as fans at all but, said one panelist, as “co-conspirators.”
So I’m listening to these ideas in Washington and I’m wondering what isn’t sitting right with me. Not that there’s anything wrong with the concept of fan engagement per se. How could there be? All any committed band wants to do is make an honest living through their music, and I understand why an augmented sort of fan engagement strategy may be just the way some bands eke it out in the digital age.
But I also think the fan engagement bandwagon is missing something significant in the bigger picture of how music functions in the world.
Outside of the confines of the Future of Music Policy Summit, this new approach to fan engagement has been most widely pondered and discussed in the context of Kevin Kelly’s well-known “1,000 True Fans” post from last year. As pundits are wont to do, Kelly attempted to crystalize an interesting idea into a concrete credo, which was his hypothesis that anyone producing any kind of art needs only to have 1,000 passionate, committed fans to make a living.
Most of the discussion generated by “1,000 True Fans” has focused on whether it works or not financially. Is 1,000 the right number? Is it more if you have more people in the band? I’ll leave that to others. I’m wondering about whether it works culturally.
In some important ways, if the music scene is transformed into a place in which all worthy musicians are supported by enclaves of super-engaged fans, 21st-century rock’n’roll musicians may win the battle but lose the war. Because the more that artists require so-called super-fans for their livelihood, the more they will leave behind the very sorts of casual fans that made rock’n’roll such a robust musical arena for such a long time.
For better or worse, popular music depends upon the existence of casual fans. Back when the big albums of the day were selling a few million copies, these were not purchased by a few million super-fans. Even when a band like Arcade Fire sells a “mere” 300,000 copies of an album, this does not represent an audience of 300,000 super-fans. Once a band achieves any measure of widespread success, that success hinges, somewhat paradoxically, upon catching the attention of people who aren’t really paying attention.
Today’s fan engagement schemes, however, deny the existence of casual fans by leaving them out of the picture entirely.
Because what entices a super-fan will almost, by definition, be of no interest to a casual fan. Just because you happen to like a song or two, or even an album or two, doesn’t mean you require a musician’s real-time biographical details, doesn’t mean you crave endless streams of recording flotsam and jetsam (b-sides, live takes, remixes, etc.), doesn’t mean you’ll want to purchase objects lit by physical association with the musician (self-designed t-shirts, hand-addressed postcards, and the like) or watch repeated video presentations.
Casual fans also lack any need for the very sort of online interaction that sits like a holy grail at the center of this new idea of fan engagement. The various schemes I’m seeing now on a daily basis—make a video of a song for a contest! donate money so your name can go on the album jacket! subscribe to a service offering journal entries and/or webcasts and/or live recordings!—make no sense to a casual fan.
Most important of all, a casual fan will not spend upwards of $100 a year purchasing music and other accessory items from one band or musician.
In his original “1,000 True Fans” post, Kelly asserted that the processes artists develop to feed their diehard fans will also nurture what he calls “Lesser Fans.” I see no evidence beyond wishful thinking to support this idea.
I believe, on the contrary, that the more the music scene focuses on these kinds of super-fan activities, the more likely it will be that casual fans more or less disappear.
Such a development will not be unprecedented in the unfolding history of music. For instance, you have to be something of a super-fan to know what to do with, how to listen to, and how to interact economically with classical music. Jazz is another genre that caters by and large to super-fans.
This could be rock’n’roll’s trajectory too. And that may be for the best for all I know. But I don’t think anyone busy touting hyperactive fan-engagement scenarios has considered the large-scale consequences of transforming rock into a super-fan genre.
So let’s look at four such consequences.
Consequence No. 1: Far, far fewer fans for rock music
Proponents of these super-fan scenarios seem to be presuming that the total number of active music fans will remain somewhat the same. That’s the beauty of it, in theory: so, instead of three million people buying one particular artist’s album, 1,000 people will buy 3,000 different albums. That’s still three million music fans, right?
Actually, no. As noted earlier, in the glory days of the album-selling past, if any one artist sold an album to three million people, a large percentage of those people were casual fans—people who heard a song or two and liked them enough to buy the album, or people who had been exposed to the music via a friend, or people who were just kind of swept along by the zeitgeist.
There is of course no research to cite here; I can only go with decades of my own anecdotal observations. I’m suspecting that the ever-useful 80-20 rule may be applied, but in any case it is clear that any band throughout rock history that has broken through to some amount of widespread success—say, sales of 250,000 copies or more of one album—has done so largely on the backs (and purse strings) of casual fans. Probably, also, the higher the total number of albums sold, the higher the percentage of casual fans.
Super-fan orientation shrinks the rock’n’roll marketplace because to foster tribes of passionate fans requires throwing maybe 80 percent of the potential audience out the window.
Musicians nurturing diehard fans are not, of course, making a conscious decision to freeze out casual fans. It’s just that seeking to promote super-fans inherently alienates the non-super-fan. I disagree with Kevin Kelly’s belief that musicians will be able to “convert” their “Lesser Fans” into “True Fans” in an ongoing way. I contend, instead, that casual fans (a phrase I prefer to “lesser fans”) are disinclined, behaviorally, to be somehow lured into ratcheting up their involvement with any musician simply because they happen to like a few of his or her songs.
In my experience a True Fan is actually a type of person (and I mean that almost archetypally). I don’t think casual fans are typically or easily converted into True Fans. Sure, you might get them to give your their email address for a free MP3 but their hearts won’t be in it for the long run. (What is likely, instead, is that a True Fan of one musician will be open, additionally, to becoming a True Fan of any number of other musicians. The market isn’t expansive but, rather, cannibalistic.)
From the perspective of any one individual musician who is happy now to be supported by his or her diehard admirers, freezing out or alienating casual fans may be pretty much okay—a necessary evil, say. And maybe this will foster a whole new kind of music, as bands aim not for mass success at all, but for idiosyncratic sonic niches, or, in any case, sounds that appeal to much smaller rather than much larger numbers of people.
Let’s just be clear, however, about what casting aside casual fans entails. If industry pundits are wringing their hands to date over shrinking bottom lines, just wait till the super-fans take over.
Consequence No. 2: Cultural disconnect
Beyond plummeting album sales, another disorienting hallmark of the digital music age has been the fragmentation of popular music into a mind-boggling array of genres and sub-genres. Are there any songs or artists that “everyone” listens to and knows about any more? Not apparently.
And yet so far, at least, this is not for want of trying. That is, many musicians still aspire to gain the ear of the multitude, if only from the instinctual understanding that if as a musical artist you have something important to say, you hope to say it to a larger rather than smaller number of ears.
In the brave new musical world of fan engagement, musicians need no longer aim in this direction. As artists, by necessity, nurture their super-fan following, no one will need to think about creating something for everyone rather than something for their marketplace of 1,000—or, even, as one recent story would have it, just forty.
By and large this is presented as a liberating idea. Release yourself from the desire to appeal to large numbers of people, follow your individual muse in a way that pleases your flock of supporters, and you shall be set free, goes the basic thinking. Let go of the ego need for millions of fans and you’ll see it’s okay to seek a micro-audience, because a) you’ll be making a living, and b) everyone listening will be listening really carefully and pretty much worshipping you.
But the point here isn’t psychological. It’s cultural. The point isn’t getting artists accustomed to aspiring to selling to only a thousand people. The point is the different nature of the involvement sought and the consequential effect on a culture being served by this new kind of musician.
Aiming to reach a vast audience and seeking to connect with a limited group of people are two very different things. The end result of having all or even most of our contemporary musicians seeking the former rather than the latter style of artistic connection means the loss of a meaningful musical commons in our joint public experience.
The restorative effect of this type of commons is subtle but powerful. Just the other day, I was working out at the gym and the song “One” by U2 came on the sound system. I am not a diehard U2 fan, and yet the song in that context triggered a deep, ineffable pleasure. Hearing a good song that everyone knows in a public setting recharges the spirit in a subtle but meaningful way.
Note that this is not just about me hearing a song I like. I hear a song I like every time I’m listening to a playlist on my iPod. This is about me hearing the song in the midst of other people, total strangers, who also know the song and are hearing it at the same time. What transpires is a communal, connective experience, even without any words passing between those having it.
This effect is the antithesis of a super-fan moment. The connection to the music is casual; it’s a sense of human connection here that provides the frisson of aliveness. Music in this way can offer a culturally constructed way of feeling at one with the world around us.
In a world in which musicians are encouraged, if not forced, to cater exclusively to their most passionate followers, likewise a world in which music fans listen exclusively to music most passionately loved, we lose this important but overlooked capacity to connect. The world shrinks. Something about being human is lost.
Consequence No. 3: Artistic claustrophobia
The decision to go from having an audience which includes diehard fans among others to having an audience exclusively comprised of the diehards will have aesthetic consequences too.
That’s because musicians aiming to slake the appetites of diehard fans are likely to retreat, however unconsciously, into a closed-off, self-referential space. The music is likely to become constricted over time, for a few reasons.
First, think about the time and energy required to feed and nurture a group of super-fans, and whether this leaves a musician time to tend to his or her actual art. In the old days, musicians needed only to convey the idea that their music was worth the price of an album or a concert ticket. This modest goal involved first putting out a good album and second getting the word out that it was indeed good—no mean feats to be sure, but at heart not too complicated. The energy was by and large directed towards writing and performing good songs, and trying to convince people to give a listen.
In the age of the super-fan, the musician is charged with conveying the idea that his or her music is worth $100 a year of various and sundry purchases, some or even most of which may not involve actual music. I am not saying that this can’t be done, I’m only pointing out that this is first of all a less modest goal than musicians of the past were charged with and second of all requires a different approach to a music-making life.
Some 21st-century musicians appear to be well-suited to this new mode of being. It requires an unmitigated willingness and ability to be a public person in a much different way than is involved when simply singing songs on a stage. Artists for whom such conduct feels natural may not find it any particular kind of burden.
I suspect, however, that many musicians will find this behavior difficult to come by in any consistent way. I suspect many musicians will be unhappy when they find that time and energy that once could be devoted to writing and performing must now be deflected into other endeavors and activities that may have little to do with music.
Even if a musician can find a manager-like person who can help out with all the social media interaction and the peripheral offerings required to stoke the super-fan base, staying on top of fan engagement will still consume personal resources he or she may not have. The music may suffer. The first stage of claustrophobia is arrived at out of basic depletion.
Above and beyond the time and energy situation, creating for a tribe of passionate fans has a couple of additional artistic drawbacks as far as I can see. To begin with, the situation strikes me as similar to a politician surrounding him- or herself with sycophants, or to a writer who, after a big bestseller, no longer feels the need to be closely edited. Regardless of how talented the artist, to create exclusively for people who are predisposed to believe that you are utterably brilliant is a less than ideal environment in which to create meaningful art.
The final element of the claustrophobia relates to the look and feel and vibe of an artist catering to and grooving off of his or her tribe of super-fans. Artist and super-fans are insiders together, sharing information and ideas with an ever-present interactive feedback loop.
To the expert I heard at the DC conference, the idea that artists and highly-engaged fans will “co-conspire” like this represented nothing less than the future of music. To me, it sounds like middle school. You’ve got the cool group on the inside, and what they mostly conspire to do is keep the uncool and unworthy outsiders outside.
Insider cliques stoke egos but fall short when it comes to worthwhile activity. I am not optimistic about the quality of music likely to emerge over time from super-fan-driven musicians.
Consequence No. 4: Debilitated listeners
If the musician motivated by fan engagement is in danger of losing his or her creative touch, the fans in this scenario are at risk of a similar loss at the receiving end of the creativity.
To begin with, just as musicians may grow artistically flabby catering to a tribe of worshippers, listeners likewise may find their powers of discernment slacken in this environment.
Think about it. Listeners are congregating exclusively around artists they passionately love. They pay $100 a year or more for the privilege of buying a variety of products from their beloved musician. In that environment, there is little room for critical thinking.
And so, among this small group of devotees—who, don’t forget, have an unprecedented capacity to talk amongst themselves, and therefore reinforce established opinions—what the musician produces will wind up in one of two basic drawers: the drawer of “oh my god, I’m gonna cry, this is so brilliant”; or, the drawer of “oh my god, I’m gonna hurl, this sucks.” That’s because in this group of super-fans, particularly as the artist acquires a body of work, those who think that every tiny thing the musician does is genius will exist side by side with those who think that every tiny thing the musician did used to be genius but now (as noted) sucks.
It’s the nature of diehard fandom, and not a big deal, except to the extent that the fan engagement model becomes the bedrock of the music scene and we’re left only with the diehards. Not a lot of good happens when we are left only with colliding extremes (cf. 21st-century U.S. politics).
One of the great, if paradoxical, things casual fans bring to the scene is the fact that they don’t care quite so much. They are somewhat objective observers. For those who’ve read Nick Hornby’s new book, it’s the difference between the written reviews of Juliet, Naked that Duncan (the super-fan) and Annie (the casual fan) post online (not to mention the difference between what proceeds to happen to each of them).
Another way listeners may be debilitated over time by the super-fan scenario is how it will accelerate the already existing trend of closing ears off to music that is not already known. And some of this closing-off will be a purely logistical problem.
The key word in fan engagement is “engagement,” after all. Musicians in this model are trying their damnedest to keep your attention—encouraging you to browse offerings, haunt message boards, enter contests, follow tweets, read newsletters, leave blog comments, and so forth. All of this takes time. A lot more time than just listening to a song or two. A principal reason that the super-fan scenario will close listeners off to experiencing new music in a more casual way is that there are still only 24 hours in a day.
Consequence of the Consequences
The ironic bottom line about the fan-engagement model of Saving the Music Industry is that, if effected, it will shrink the market for rock music far beyond the place to which technology and circumstances have already shrunk it—far beyond the place, that is, where everyone’s already freaking out.
Remember, there is no such thing as popular music without casual fans; remove casual fans from the mix and out the window also goes popularity.
I know that in theory most critics and pundits and sideline observers don’t really care about that. Being “popular” is never that cool a concept with such folks. So if that’s the case, then sure, let’s sit back and applaud as rock’n’roll takes its place next to jazz at the table reserved for music that used to be popular and now caters to a specialized set of listeners. Maybe some new and interesting musical avenues will be opened up in the process.
But here’s the thing. This happened to jazz in a more or less organic way. Yes, I know I’m oversimplifying, but with jazz one could say that the music went one direction, the mainstream audience another. (Same with classical, sort of.) The idea behind something like “1,000 True Fans” is different. Here, musicians are told to aim for slender segments of listeners. This is an aim that purposefully—if somewhat obliviously—shows casual music fans out the door.
What’s more, it’s doing so in a way that seems kind of…well, icky. Jazz musicians followed their muse away from the mainstream. It was all about the music, and if a limited number of people still wanted to listen, so be it. Via “1,000 True Fans,” musicians are being told that it’s not just about the music. It’s about the tweets and the video updates and the t-shirts and the personally-signed pottery cats and dogs and who knows what else.
Because here’s what it’s really about: figuring out how to pry $100 a year from your most ardent admirers.
There are many who say: and what the hell is wrong with that? Maybe nothing. It’s nice work if you can get it. As a major consumer of music for 30 some-odd years, I will note, however, that I am much happier when I feel as if I’m pushing money to my favorite artists rather than having it pulled out of me.
Look, it’s always been nearly impossible for most musicians to earn a living wage. And yes, the 21st century has made it even more difficult. There’s file sharing. There’s the bad economy. There’s more file-sharing. (And did I mention file-sharing?)
Worse—and pay close attention now—there’s the badly overcrowded marketplace. Thanks to the combination of laptop recording and web-based distribution, the barrier to entry for being a musician in the first place has all but disappeared. Amateurs and imposters have flooded the marketplace.
And so, even as industry experts propose fan engagement as a panacea, my conclusion is that, if effected, it will only make matters worse. It may ultimately be even harder for musicians to earn a living.
Because if everyone now thinks they only need 1,000 fans to make it as a musician, then yikes—you won’t believe how many more people will be out there trying to do just that.
And that, to me, is the biggest indictment of this well-intended but not well-thought-out idea: that it will in fact be a beacon of hope for “vanity press” musicians who write and sing and record songs that they should not even be sharing with their friends, never mind 1,000 strangers. No matter how untalented and unpromising any one person with a Mac and a dream may be, he or she will be nothing but inspired to know that all all they need are 1,000 fans and they can be a full-time, professional musician. Why, most of them probably have at least 600 Facebook friends. That sounds like they’re already more than halfway there.
Will “1,000 True Fans” work nicely for any one particular musician? No doubt it may. Set it loose on an unsuspecting marketplace, however, and watch out. Casual fans will disappear and in their wake come those we may as well call the casual musicians. I for one don’t like the trade-off.
Learning From Our Past
Is it just me, or does it seem like recorded music doesn’t have the same value that it used to? I mean, albums still cost $10-15, and iTunes tells me that my songs are worth $1 to each of you (or hey! maybe $1.29!), but that’s not what I mean. It’s just that people aren’t impressed anymore. It used to be that someone would tell you that they had an album and you’d be like, “Wow! You made an album! I’m so impressed and excited that I’m going to pay money for it!”
But these days you have to beg someone to buy your album. Friends and relatives begrudgingly buy it as if they are doing you a favor. I feel like major labels are even trying to trick me into buying albums by including extra incentives that have nothing to do with music – behind-the-scenes materials, bonus videos, etc., etc.
Let’s face it, recorded music just isn’t as valuable as it used to be and as working musicians, we’re going to have to stop relying on recorded performances for our bread and butter.
Here’s the problem, though: we’ve been relying on recorded music as an income for nearly 100 years! Remember when musicians would retire from playing live and only record music for a living? The Beatles…Glenn Gould…Rubinstein – it doesn’t look like we’ll be able to do that anymore. Not, at least, as easily as they did.
Ok, but let’s not lose our heads here. “Professional musician” was not a career created by record labels and recording gear. Ours is a proud, ancient profession. There have always been working, professional musicians. In fact, for the majority of human history, professional musicians did not have the luxury of recorded audio and still made a living.
As we move forward into this new era of the musician industry, maybe we should look back. What did musicians do for a living 100 years ago? 300 years ago? Who hired them? How did they get gigs? What kind of money did they make? Which of their mistakes and triumphs can we learn from?
I believe that we are moving into a new musician industry that is a hybrid of the old world (pre-recording industry) and new world (post-recording industry). We still can sell recorded music – we shouldn’t abandon everything we’ve achieved in the past century – but we also have to relearn how to make a living as musicians did before the invention of audio recording.
What if we are able to create a new, more sustainable model for the musician career by combining all of the knowledge of the two traditions? Who knows. Maybe musicians are broke, have always been broke, and that’s just the way it is. I don’t know – I think it’s worth looking into.
And now you know my new project. I’m lucky enough to live near one of the largest and best supplied performing arts libraries in the world (The Lincoln Center Library) and I’ve started looking into it. I don’t pretend to be a qualified historian, I’m just a working musician – but I’ll let you know what I learn. I’ll write about it here on MusicianWages.com. Subscribe to our feed or email list, join our Facebook group, follow us on Twitter…or find us any of the other ga-billion ways that you can follow people these days.
More to come. Thanks.
Is it just me, or does it seem like recorded music doesn’t have the same value that it used to? I mean, albums still cost $10-15, and iTunes tells me that my songs are worth $1 to each of you (or hey! maybe $1.29!), but that’s not what I mean. It’s just that people aren’t impressed anymore. It used to be that someone would tell you that they had an album and you’d be like, “Wow! You made an album! I’m so impressed and excited that I’m going to pay money for it!”
But these days you have to beg someone to buy your album. Friends and relatives begrudgingly buy it as if they are doing you a favor. I feel like major labels are even trying to trick me into buying albums by including extra incentives that have nothing to do with music – behind-the-scenes materials, bonus videos, etc., etc.
Let’s face it, recorded music just isn’t as valuable as it used to be and as working musicians, we’re going to have to stop relying on recorded performances for our bread and butter.
Here’s the problem, though: we’ve been relying on recorded music as an income for nearly 100 years! Remember when musicians would retire from playing live and only record music for a living? The Beatles…Glenn Gould…Rubinstein – it doesn’t look like we’ll be able to do that anymore. Not, at least, as easily as they did.
Ok, but let’s not lose our heads here. “Professional musician” was not a career created by record labels and recording gear. Ours is a proud, ancient profession. There have always been working, professional musicians. In fact, for the majority of human history, professional musicians did not have the luxury of recorded audio and still made a living.
As we move forward into this new era of the musician industry, maybe we should look back. What did musicians do for a living 100 years ago? 300 years ago? Who hired them? How did they get gigs? What kind of money did they make? Which of their mistakes and triumphs can we learn from?
I believe that we are moving into a new musician industry that is a hybrid of the old world (pre-recording industry) and new world (post-recording industry). We still can sell recorded music – we shouldn’t abandon everything we’ve achieved in the past century – but we also have to relearn how to make a living as musicians did before the invention of audio recording.
What if we are able to create a new, more sustainable model for the musician career by combining all of the knowledge of the two traditions? Who knows. Maybe musicians are broke, have always been broke, and that’s just the way it is. I don’t know – I think it’s worth looking into.
Is it just me, or does it seem like recorded music doesn’t have the same value that it used to? I mean, albums still cost $10-15, and iTunes tells me that my songs are worth $1 to each of you (or hey! maybe $1.29!), but that’s not what I mean. It’s just that people aren’t impressed anymore. It used to be that someone would tell you that they had an album and you’d be like, “Wow! You made an album! I’m so impressed and excited that I’m going to pay money for it!”But these days you have to beg someone to buy your album. Friends and relatives begrudgingly buy it as if they are doing you a favor. I feel like major labels are even trying to trick me into buying albums by including extra incentives that have nothing to do with music – behind-the-scenes materials, bonus videos, etc., etc.Let’s face it, recorded music just isn’t as valuable as it used to be and as working musicians, we’re going to have to stop relying on recorded performances for our bread and butter.Here’s the problem, though: we’ve been relying on recorded music as an income for nearly 100 years! Remember when musicians would retire from playing live and only record music for a living? The Beatles…Glenn Gould…Rubinstein – it doesn’t look like we’ll be able to do that anymore. Not, at least, as easily as they did.Ok, but let’s not lose our heads here. “Professional musician” was not a career created by record labels and recording gear. Ours is a proud, ancient profession. There have always been working, professional musicians. In fact, for the majority of human history, professional musicians did not have the luxury of recorded audio and still made a living.As we move forward into this new era of the musician industry, maybe we should look back. What did musicians do for a living 100 years ago? 300 years ago? Who hired them? How did they get gigs? What kind of money did they make? Which of their mistakes and triumphs can we learn from?I believe that we are moving into a new musician industry that is a hybrid of the old world (pre-recording industry) and new world (post-recording industry). We still can sell recorded music – we shouldn’t abandon everything we’ve achieved in the past century – but we also have to relearn how to make a living as musicians did before the invention of audio recording.What if we are able to create a new, more sustainable model for the musician career by combining all of the knowledge of the two traditions? Who knows. Maybe musicians are broke, have always been broke, and that’s just the way it is. I don’t know – I think it’s worth looking into.And now you know my new project. I’m lucky enough to live near one of the largest and best supplied performing arts libraries in the world (The Lincoln Center Library) and I’ve started looking into it. I don’t pretend to be a qualified historian, I’m just a working musician – but I’ll let you know what I learn. I’ll write about it here on MusicianWages.com. Subscribe to our feed or email list, join our Facebook group, follow us on Twitter…or find us any of the other ga-billion ways that you can follow people these days.More to come. Thanks.
Business Matters: Apple, Vevo, Virgin Media, Spotify
December 10, 2009 - Digital and Mobile
By Glenn Peoples, Nashville
Business Matters is a daily column that offers insight, analysis and opinion on the day's news.
-- Apple's acquisition of Lala: What it might mean for both iTunes and record labels? Lala executives will be in "very significant roles," according to a source in the Wall Street Journal. Record execs are said to be both optimistic of what could come of iTunes but (not surprisingly) wary of Apple gaining more market power. (Wall Street Journal)
-- Vevo's sluggish launch is not necessarily a disaster, said MediaMemo's Peter Kafka. Most people will see Vevo videos at YouTube. Wrote Kafka, "When you read about Vevo launching with 400 million video views in the first month, the majority of those aren't coming from the new site, but from YouTubers who are watching music clips the same way that they always do - on YouTube. But Vevo will get credit for those eyeballs, and any ad dollars they generate." Vevo's integration with YouTube does have a significant angle beyond additional eyeballs: the effect on the brand. When people watch Vevo videos at YouTube, Vevo is not becoming a destination. To realize the vision of its founders, the site will need to build its own identity and its own relationships with viewers. YouTube should be more of a springboard than a host. (MediaMemo)
-- In the UK, ISP Virgin Media has started a trial of technology that allows it to inspect the data passing through its network. The goal is to gauge the amount of piracy on its network. The technology looks for data being transferred using file sharing protocols. IP addresses will be stripped from each data packet, so Virgin will not be able to identify the source of the data. While this is not an effort to police its users, the trial should give Virgin an idea of what amount of traffic infringes content owners' copyright. It should be noted that Virgin is also working on an unlimited MP3 download service that should launch in 2010. It stands to reason that an ISP seeking to build a music service would have to address content owners' concerns over piracy on its network. (NewScientist)
-- Spotify has a new release for Android that runs on the new Motorola Droid phone. (Spotify blog)
The graph the record industry doesn't want you to see!
It shows the fate of the three main pillars of music industry revenue - recorded music, live music, and PRS revenues (royalties collected on behalf of artists when their music is played in public) over the last 5 years.
We’ve broken each category into two sub-categories so that, for any chunk of revenue - recorded music sales, for instance - you can see the percentage that goes to the artist, and the percentage that goes elsewhere. (In the case of recorded music, the lion’s share of revenue goes to the record label; in the case of live, the promoter takes a cut etc.)
Hopefully, this analysis - and there’s more on the nuts and bolts of our method below - sheds some factual light on the claims and counter-claims that are paranoically sweeping across the music industry establishment, not least that put forward by the singer Lily Allen in this paper recently - and the BPI - that artists are losing out as a result of the fall in sales of recorded of music.
The most immediate revelation, of course, is that at some point next year revenues from gigs payable to artists will for the first time overtake revenues accrued by labels from sales of recorded music.
Why live revenues have grown so stridently is beyond the scope of this article, but our data - compiled from a PRS for Music report and the BPI - make two things clear: one, that the growth in live revenue shows no signs of slowing and two, that live is by far and away the most lucrative section of industry revenue for artists themselves, because they retain such a big percentage of the money from ticket sales.
(It’s often claimed that live revenues are only/mostly benefitting so-called ‘heritage acts’. Unfortunately, the data doesn’t shed any light on this because live revenues are not broken down by type of act, gig size or ticket price.) Read more...
-------------------------------------------------------------------------------
Tim Quirk was the singer of punk-pop outfit Too Much Joy, signed by Warner Bros. in 1990. Now he's an executive at an online music service, giving him insight on digital sales data and just how labels fudge their numbers.
I got something in the mail last week I'd been wanting for years: a Too Much Joy royalty statement from Warner Brothers that finally included our digital earnings. Though our catalog has been out of print physically since the late-1990s, the three albums we released on Giant/WB have been available digitally for about five years. Yet the royalty statements I received every six months kept insisting we had zero income, and our unrecouped balance ($395,277.18!)* stubbornly remained the same.
Now, I don't ever expect that unrecouped balance to turn into a positive number, but since the band had been seeing thousands of dollars in digital royalties each year from IODA for the four indie albums we control ourselves, I figured five years' worth of digital income from our far more popular major label albums would at least make a small dent in the figure. Our IODA royalties during that time had totaled about $12,000 – not a princely sum, but enough to suggest that the total haul over the same period from our major label material should be at least that much, if not two to five times more. Even with the band receiving only a percentage of the major label take, getting our unrecouped balance below $375,000 seemed reasonable, and knocking it closer to -$350,000 wasn't out of the question.
So I was naively excited when I opened the envelope. And my answer was right there on the first page. In five years, our three albums earned us a grand total of… $62.47.
What the fuck?
I mean, we all know that major labels are supposed to be venal masters of hiding money from artists, but they're also supposed to be good at it, right? This figure wasn't insulting because it was so small, it was insulting because it was so stupid.
Why It Was So Stupid
Here's the thing: I work at Rhapsody. I know what we pay Warner Bros. for every stream and download, and I can look up exactly how many plays and downloads we've paid them for each TMJ tune that Warner controls. Moreover, Warner Bros. knows this, as my gig at Rhapsody is the only reason I was able to get them to add my digital royalties to my statement in the first place. For years I'd been pestering the label, but I hadn't gotten anywhere till I was on a panel with a reasonably big wig in Warner Music Group's business affairs team about a year ago
The panel took place at a legal conference, and focused on digital music and the crisis facing the record industry**. As you do at these things, the other panelists and I gathered for breakfast a couple hours before our session began, to discuss what topics we should address. Peter Jenner, who manages Billy Bragg and has been a needed gadfly for many years at events like these, wanted to discuss the little-understood fact that digital music services frequently pay labels advances in the tens of millions of dollars for access to their catalogs, and it's unclear how (or if) that money is ever shared with artists.
I agreed that was a big issue, but said I had more immediate and mundane concerns, such as the fact that Warner wouldn't even report my band's iTunes sales to me.
The business affairs guy (who I am calling "the business affairs guy" rather than naming because he did me a favor by finally getting the digital royalties added to my statement, and I am grateful for that and don't want this to sound like I'm attacking him personally, even though it's about to seem like I am) said that it was complicated connecting Warner's digital royalty payments to their existing accounting mechanisms, and that since my band was unrecouped they had "to take care of R.E.M. and the Red Hot Chili Peppers first."
That kind of pissed me off. On the one hand, yeah, my band's unrecouped and is unlikely ever to reach the point where Warner actually has to cut us a royalty check. On the other hand, though, they are contractually obligated to report what revenue they receive in our name, and, having helped build a database that tracks how much Rhapsody owes whom for what music gets played, I'm well aware of what is and isn't complicated about doing so. It's not something you have to build over and over again for each artist. It's something you build once. It takes a while, and it can be expensive, and sometimes you make honest mistakes, but it's not rocket science. Hell, it's not even algebra! It's just simple math.
I knew that each online service was reporting every download, and every play, for every track, to thousands of labels (more labels, I'm guessing, than Warner has artists to report to). And I also knew that IODA was able to tell me exactly how much money my band earned the previous month from Amazon ($11.05), Verizon (74 cents), Nokia (11 cents), MySpace (4 sad cents) and many more. I didn't understand why Warner wasn't reporting similar information back to my band – and if they weren't doing it for Too Much Joy, I assumed they weren't doing it for other artists.
To his credit, the business affairs guy told me he understood my point, and promised he'd pursue the matter internally on my behalf – which he did. It just took 13 months to get the results, which were (predictably, perhaps) ridiculous.
The sad thing is I don't even think Warner is deliberately trying to screw TMJ and the hundreds of other also-rans and almost-weres they've signed over the years. The reality is more boring, but also more depressing. Like I said, they don't actually owe us any money. But that's what's so weird about this, to me: they have the ability to tell the truth, and doing so won't cost them anything.
They just can't be bothered. They don't care, because they don't have to.
"$10,000 Is Nothing"
An interlude, here. Back in 1992, when TMJ was still a going concern and even the label thought maybe we'd join the hallowed company of recouped bands one day, Warner made a $10,000 accounting error on our statement (in their favor, naturally). When I caught this mistake, and brought it to the attention of someone with the power to correct it, he wasn't just befuddled by my anger – he laughed at it. "$10,000 is nothing!" he chuckled.
If you're like most people – especially people in unrecouped bands – "nothing" is not a word you ever use in conjunction with a figure like "$10,000," but he seemed oblivious to that. "It's a rounding error. It happens all the time. Why are you so worked up?"
These days I work for a reasonably large corporation myself, and, sadly, I understand exactly what the guy meant. When your revenues (and your expenses) are in the hundreds of millions of dollars, $10,000 mistakes are common, if undesirable.
I still think he was a jackass, though, and that sentence continues to haunt me. Because $10,000 might have been nothing to him, but it was clearly something to me. And his inability to take it seriously – to put himself in my place, just for the length of our phone call – suggested that people who care about $10,000 mistakes, and the principles of things, like, say, honoring contracts even when you don't have to, are the real idiots.
As you may have divined by this point, I am conflicted about whether I am actually being a petty jerk by pursuing this, or whether labels just thrive on making fools like me feel like petty jerks. People in the record industry are very good at making bands believe they deserve the hundreds of thousands (or sometimes millions) of dollars labels advance the musicians when they're first signed, and even better at convincing those same musicians it's the bands' fault when those advances aren't recouped (the last thing $10,000-Is-Nothing-Man yelled at me before he hung up was, "Too Much Joy never earned us shit!"*** as though that fact somehow negated their obligation to account honestly).
I don't want to live in $10,000-Is-Nothing-Man's world. But I do. We all do. We have no choice.
The Boring Reality
Back to my ridiculous Warner Bros. statement. As I flipped through its ten pages (seriously, it took ten pages to detail the $62.47 of income), I realized that Warner wasn't being evil, just careless and unconcerned – an impression I confirmed a few days later when I spoke to a guy in their Royalties and Licensing department I am going to call Danny.****
I asked Danny why there were no royalties at all listed from iTunes, and he said, "Huh. There are no domestic downloads on here at all. Only streams. And it has international downloads, but no international streams. I have no idea why." I asked Danny why the statement only seemed to list tracks from two of the three albums Warner had released – an entire album was missing. He said they could only report back what the digital services had provided to them, and the services must not have reported any activity for those other songs. When I suggested that seemed unlikely – that having every track from two albums listed by over a dozen different services, but zero tracks from a third album listed by any seemed more like an error on Warner's side, he said he'd look into it. As I asked more questions (Why do we get paid 50% of the income from all the tracks on one album, but only 35.7143% of the income from all the tracks on another? Why did 29 plays of a track on the late, lamented MusicMatch earn a total of 63 cents when 1,016 plays of the exact same track on MySpace earned only 23 cents?) he eventually got to the heart of the matter: "We don't normally do this for unrecouped bands," he said. "But, I was told you'd asked."
It's possible I'm projecting my own insecurities onto calm, patient Danny, but I'm pretty sure the subtext of that comment was the same thing I'd heard from $10,000-Is-Nothing-Man: all these figures were pointless, and I was kind of being a jerk by wasting their time asking about them. After all, they have the Red Hot Chili Peppers to deal with, and the label actually owes those guys money.
Danny may even be right. But there's another possibility – one I don't necessarily subscribe to, but one that could be avoided entirely by humoring pests like me. There's a theory that labels and publishers deliberately avoid creating the transparent accounting systems today's technology enables. Because accurately accounting to my silly little band would mean accurately accounting to the less silly bands that are recouped, and paying them more money as a result.
If that's true (and I emphasize the if, because it's equally possible that people everywhere, including major label accounting departments, are just dumb and lazy)*****, then there's more than my pride and principles on the line when I ask Danny in Royalties and Licensing to answer my many questions. I don't feel a burning need to make the Red Hot Chili Peppers any more money, but I wouldn't mind doing my small part to get us all out of the sad world $10,000-Is-Nothing-Man inhabits.
So I will keep asking, even though I sometimes feel like a petty jerk for doing so.
* A word here about that unrecouped balance, for those uninitiated in the complex mechanics of major label accounting. While our royalty statement shows Too Much Joy in the red with Warner Bros. (now by only $395,214.71 after that $62.47 digital windfall), this doesn't mean Warner "lost" nearly $400,000 on the band. That's how much they spent on us, and we don't see any royalty checks until it's paid back, but it doesn't get paid back out of the full price of every album sold. It gets paid back out of the band's share of every album sold, which is roughly 10% of the retail price. So, using round numbers to make the math as easy as possible to understand, let's say Warner Bros. spent something like $450,000 total on TMJ. If Warner sold 15,000 copies of each of the three TMJ records they released at a wholesale price of $10 each, they would have earned back the $450,000. But if those records were retailing for $15, TMJ would have only paid back $67,500, and our statement would show an unrecouped balance of $382,500.
I do not share this information out of a Steve Albini-esque desire to rail against the major label system (he already wrote the definitive rant, which you can find here if you want even more figures, and enjoy having those figures bracketed with cursing and insults). I'm simply explaining why I'm not embarrassed that I "owe" Warner Bros. almost $400,000. They didn't make a lot of money off of Too Much Joy. But they didn't lose any, either. So whenever you hear some label flak claiming 98% of the bands they sign lose money for the company, substitute the phrase "just don't earn enough" for the word "lose."
** The whole conference took place at a semi-swank hotel on the island of St. Thomas, which is a funny place to gather to talk about how to save the music business, but that would be a whole different diatribe.
*** This same dynamic works in reverse – I interviewed the Butthole Surfers for Raygun magazine back in the 1990s, and Gibby Haynes described the odd feeling of visiting Capitol records' offices and hearing, "a bunch of people go, ‘Hey, man, be cool to these guys, they're a recouped band.' I heard that a bunch of times."
**** Again, I am avoiding using his real name because he returned my call promptly, and patiently answered my many questions, which is behavior I want to encourage, so I have no desire to lambaste him publicly.
***** Of course, these two possibilities are not mutually exclusive – it is also possible that labels are evil and avaricious AND dumb and lazy, at the same time.
Reprinted with permission from Too Much Joy.
Catherine Hol
