If I had a record label, would you be signed to it?

I never liked the idea of having a record label, because you’re too deeply invested into something you don’t control.

So if I were to have a label, my decision on who to sign wouldn’t be decided just by the quality of the music. There are plenty of people with great music but destructive work-habits or an unsustainable approach to their career.

To confidently invest in an artist (as a label), I’d want to see:

• every song has been absolutely improved repeatedly - every note/syllable crafted to be the best it can be
• vocal performance is not just perfect but head-turning, striking
• arrangement is everything it can be to bring out song/vocal
• arrangement offers a new idea to the world, and not just the usual paint-by-numbers
• photos/image are striking and amazing, and capture the essense of the music
• live show is so entertaining that even a deaf person would enjoy it
• band has been around, recording and gigging, for at least 2 years
• artist has done this for a few years and still believes that this is their real calling in life, regardless of external rewards (or total lack of)
• band members don’t need unreasonable amounts of money to perform (can perform profitably)
• band can entertain a crowd without props or big sound system (in-store appearances)
• off-stage persona is sustainable (stamina, dealing with fans well, etc)
• no addicts - to anything
• an unflappably healthy attitude to the immense amount of work it really takes to be successful at anything

And so you see why I’ll never have a label. Who could possibly fit this list? Garth Brooks? Dave Grohl?

I haven’t talked to any labels about this yet, but I wonder what their perspective would be. I’m friends with Jac Holzman who discovered the Doors and obviously didn’t regret it, despite Jim Morrison being the opposite of everything on my list. I should ask him. (Jac, not Jim.)

Looking Ahead Into The New Music Business (aka What I Learned From Terry McBride, Again)

Terry McBride & Ariel Hyatt I had a distinct honor and privilege to be in the audience where I saw the unflappable music business icon Terry McBride of Nettwerk Music Group (Avril Lavigne, Dido, Sarah McLachlan, Barenaked Ladies), be interviewed as the keynote for the Le Recontres conference in Montreal last Thursday.

Terry was, of course, engaging, interesting, and controversial. I have long been following his career, and was moved deeply by his profile in Wired magazine in 2006 which got many music business entrepreneurs like me really thinking…

This talk was so perfect and it so succinctly summed up this point and time in the music business, I don’t think I need to insert my opinion here, I for the record agree with everything he said.  I would also like to point out that during this time of complete music business turmoil Terry McBride’s company is doing extraordinarily well.  So without further ado:  Here are some highlights from his interview, I think most traditional record industry people probably find Terry a bit on the radical side he is outwardly pro artist and anti mainstream industry mentality. It is my genuine hope that all independent artists and music business professional take a page out of Terry’s insight and apply just one nugget –

On why Nettwerk was structured the way it is:
“Artists are inherently lazy, so we had to do everything for them.”  

On the 360 deal & The Barenaked Ladies:
“To control aspect of an artist’s career of a 360 deal is a disaster. It’s not a solution. It’s a paradigm created by fear.”

Terry says he thinks he’s got his artists somewhere between 180 and a 270 deals, but he believes that a 360 deal is fraught for disaster. He talked about his experiences with Sarah McLachlan. “At first with Sarah we had a 360 deal, but as she grew, we gave her publishing back, and she owns half of her merchandise company. There is no business without the artist.”  

Barenaked Ladies started their own label called Desperation. They own the masters and publishing, and so far they’re on $10M in sales using only Nettwerk as their label and management firm – Nettwerk’s team manages all of the aspects of their career and leverages them through their own management company and connections.  

Bands are brands and emotions
Terry talked a lot about artists being both brands and emotions. Consumers attach their own life experience to every song. These songs become the fabric of the people’s lives who listen to the music. With the advent of the CD and computer, we went from pushing to pulling, and it created a change of behavior with having the “repeat” button on all CD players and listening to the same track over and over, which was something that was not possible with cassette tapes or LPs  

Music is free
Terry has always believed that music is free. Back in the 1930’s, music companies were terrified about radio and it took an act of Congress to get music played on the radio. His question is: How do you monetize free now that the fan owns the song, and the fan is part of a tribe?

Wherever there is fear, there is always opportunity
You will never change the behavior of tens of millions of teenagers, but you can monetize that behavior. If you shut down one avenue of dispersing free music another opens. Terry asks: “How many tens of millions of songs are being sent via IM?” and points out that we are so focused on suing the kids that we forget that they’ll just go around us, and I’m not about that type of negativity. Litigation is an awful thing to do.  Terry also made a great point: There are millions of hackers versus thousands of programmers.  Kids will always find a way around the system.

The consumer does not understand copyright. They never have and they never will. So, educating the consumer on “why it’s wrong” will get us nowhere.

Bury the suing paradigm and figure out how to monetize.

The new paradigm = more profits
A CD in the old paradigm of traditional printing and distribution used to cost something like this: $3 for the disc, $2 to get it on the shelf, $1 for marketing, $1 for the publishing royalty, and maybe $2 went to the artist, then you get 20% to 40% of those CDs returned on top of all of this.

In digital, there is no manufacturing, no distribution, and no return. The profit on digital is so much higher. When you go digital, you will be more powerful and more profitable.

Digital profits are currently up 300%.

Controlling intellectual property worked for between 30 and 40 years, and it does not work anymore. All of his peers disagree 100% with his philosophy. Terry thinks from their standpoint, they are right. Trying to control music is right. However, Nettwerk has another vision.  They see a lot of opportunities and they are having a lot of fun.

If a share of the profit from cable companies could go directly to artists
music industry profits would double overnight
Terry is always looking at who is making money from this and are they sharing it?  Cable companies, tool manufacturers like Apple and iPods, blank CD manufacturers — that’s where laws and litigation should be pointing their fingers. Litigation and legislation should work in the realm of business to business, but litigation should not be business to consumer.

Now kids are getting sued for something that we’ve been doing for years. I used to make mix tapes and share them.

Terry also thinks there should be a compulsory license, and if there was, the music business revenue would double overnight.

So where is the music business in 10 years?
Terry thinks music will be available everywhere. You won’t pay for it
10 years from now, music will be in the clouds. You will be able to audit one company to get all of the numbers. It’s not going to be Bell, it may be Google. Consumption of media knows no borders.

I believe the price of music has to come down. The millennium generation looks at value, and the value of music is not 99 cents a track.

Music is the connective glue between the fans and the artist.
People love artists, they love what artists stand for. They don’t love all of their songs. We need to re-evaluate free.  We need to understand that music is the connective glue between the fans and the artist.

We must ask: What causes that artist is related to? What causes is that artist supporting? What does that artist stand for? Who is this artist? Using those pieces of information, we can put ads on websites and links on websites to monetize the fans’ behaviors. Everything you do around or about needs to be directed back to a lifestyle and back to that artist.

Last Advice?
If I were a long-term investor, I’d buy servers and the buildings that all the servers are going in.  The millennium generation does not care about ownership. They go where the data is.
http://www.digitalmusicforum.com/mcbride_bio.html

And, if you have been living under a big rock and did not see the article on Terry Mcbride in Wired:
http://www.wired.com/wired/archive/14.09/nettwerk.html 

1,000 True Fans - Another Perspective

If you have not read Kevin Kelly’s Technium today - artist Robert Rich has a very interesting perspective on 1,000 True Fans.  Here’s a quote:

I don’t want to be a tadpole in a shrinking puddle. When the audience is so small, one consequence of specialization is extinction. I’ll try to explain.

Evolutionary biology shows us one metaphor for this trap of stylistic boundaries, in terms of species diversity and inbreeding (ref. E.O. Wilson). When a species sub-population becomes isolated, its traits start to diverge from the larger group to eventually form a new species. Yet under these conditions of isolation, genetic diversity can decrease and the new environmentally specialized species becomes more easily threatened by environmental changes. The larger the population, the less risk it faces of inbreeding. If that population stays connected to the main group of its species, it has the least chance of over-specialization and the most chance for survival in multiple environments.

This metaphor becomes relevant to Artists and True Fans because our culture can get obsessed with ideas of style and demographic. When an artist relies on such intense personal commitment from such a small population, it’s like an animal that relies solely upon the fruit of one tree to survive. This is a recipe for extinction. Distinctions between demographics resemble mountain ranges set up to divide one population from another. I prefer a world where no barriers exist between audiences as they define themselves and the art they love. I want a world of mutts and cross-polinators.  I would feel more comfortable if I thought I had a broader base of people interested in my work, not just preaching to the choir. 

MySpace Music & Corporate Conspiracies

It seemed simple enough. But who knew it would stir up such venom from my readers?

I’m referring to my recent blog post about the upcoming launch of MySpace Music, which is supposed to allow MySpace artists (both signed and unsigned) to sell music downloads, merchandise and concert tickets from their MySpace profiles.

The opportunity to not only get exposure, but also make a few bucks from a MySpace music profile, seems like a potentially good thing to me. But some readers felt otherwise, mostly because of the involvement of major labels in the new MySpace Music venture.

One reader wrote “How can this be a good thing for indies if 3 out of the 4 major labels have a stake? It smells fishy to me. Why does a major label need a percentage of ownership?”

From what I’ve read, it’s a business decision on the part of MySpace. For any company to take on iTunes and make available a vast amount of music to sell, they’d have to pay the major labels exorbitant licensing fees.

By bringing on the labels as partners in the project, MySpace is most likely avoiding a ton of upfront costs and the labels will get paid later as their music sells, and will likely get a cut of ad revenue as well.

I understand the concerns. Here’s this hugely popular site that was built in part by the indie musicians who flocked there and promoted it to their fans. There’s a fear that the magic will be tainted now because the struggling and desperate major labels are sinking their claws into it.

Hence the fear, the worst case scenario expectations, and the cries of “Chicken Little, the sky is falling!”

But here’s some news for you …

Three years ago, MySpace was purchased by NewsCorp, the media conglomerate owned by Rupert Murdoch. Back then, the conspiracy theorists predicted that life as we knew it would come to an end. But here we are in 2008, and MySpace continues to be a major online force in music.

I’m not saying that all is well and these business entities have the best interests of indie artists in mind. (Remember, I’m the guy who for many years has been saying “You don’t need a record deal.”) My attitude is, it sounds good, but let’s wait and see. Why rage against the machine when nobody has even seen what the new music agreement will be?

If the new MySpace Music lets artists sell stuff (without claiming rights to the music) in addition to what artists can currently do with a music profile, who cares if the majors are involved? Who cares if they’re getting a cut of ad revenue? Heck, maybe they’ll help draw even more traffic to the site. No one knows, so let’s just wait and see what happens.

But what if they change the rules and make it harder for indie acts to get exposure on the site?

Well, that would indeed be very short-sighted on the part of MySpace. But here’s the ugly truth: MySpace doesn’t owe you or any other artist anything. Just because they’ve made all these cool tools available to you the last few years doesn’t mean it’s now part of the Bill of Rights.

There were no guarantees when you first signed on, and there are no guarantees now.

In case you’re wondering, my core message here isn’t one of being helpless in the shadow of a corporation. Instead, it’s a message of self-reliance. If your success depends on the existence of some distant entity, there’s something wrong with your career plan.

I think MySpace is a cool promotional tool (so much so I wrote a popular book on it). But I’ve always warned musicians about making MySpace their primary Internet presence. Every artist needs their own domain name and web site. Then you use MySpace, Facebook, YouTube and other popular sites to funnel fans to your personal space on the Net.

That’s the best plan, in my opinion. That way, if one stream in the funnel dries up, you have multiple other streams to keep fans coming your way.

There’s another aspect of this that concerns me, especially after reading comment threads on this around the Internet. It’s the anger, resentment and fear that wells up in some artists at times like these.

Why get so worked up over something you know few details about? Plus, I believe you are far better off focusing your energy on what you WANT, not on what you DON’T want.

It’s a choice. You can get frustrated and rail against the evil you perceive in the world. Or you can decide what you really want from your life and music career, then go to work making that positive vision a reality.

As Mother Teresa said, “I don’t participate in anti-war demonstrations. But as soon as you have a pro-peace rally, I’ll be there.”

-Bob

P.S. I encourage your comments, whether you’re a lover or a hater.

A Buyer's Market: The way we purchase online music

The NDP Group published a study this week that found that only 10% of Amazon MP3 customers had also purchased music on iTunes. The study also found some significant age and gender differences between iTunes and Amazon MP3 customers.  

When I read this, it reminded me of an important point which musicians and labels should always keep in mind: There’s not an online music market; there are many online music markets. And each one is its own little world with its own set of core users.

Most consumers I know, myself included, tend to gravitate towards one or maybe two online music services and use them almost exclusively to acquire music. The Rhapsody folks I know use Rhapsody. The iTunes loyalists use iTunes. The only times they venture out to other services is when they really want something that they can’t find on their preferred site, or in certain instances when they want to buy from an artist directly.

When it comes to marketing your own music, it can be tempting to want to sell your album only on those sites that offer the highest payouts. Or to think you can convince droves of listeners to purchase your music from your own website. But the reality is that it’s very difficult to get customers to go where you want them to go.

It’s critical to make your work available wherever your fans like to purchase music. That includes smaller, niche sites as well as the big retailers. Putting your music in more places is like opening stores in new cities. It can only increase your customer base. And the likelihood that you’ll cut into downloads on one site by making your music available on other sites – even for very cheap or free – is low. If I want to buy your album and I’m an iTunes user, I probably won’t even look at Amazon, Amie Street or other sites where I could find your music for a lower price. I’m just going to buy it from iTunes. It’s convenient and it’s what I know.

Instead of worrying about cannibalizing or losing sales, focus on being present everywhere that your potential fans buy music. You have little to lose and much to gain by doing so.

What’s really keeping you from where you need to be? (It’s not piracy.)

I spoke at a conference last weekend, where a woman in the audience was SO mad about piracy that she was physically shaking, red in the face, tears in her eyes, fuming spitting livid, asking how we can stop this rampant piracy.

I didn’t answer her concern well, but I said “More people are killed by pigs than sharks each year, but because shark attacks are more newsworthy, they seem more prevalent. Piracy gets all the attention, but I don’t think most of you in this room have lost more than $30 to piracy.” (I got a big “Booo” from the audience for this.) “Obscurity is your real enemy. Fight obscurity until you’re a household name, then piracy will be more of a problem than obscurity. Until then, worry about pigs, not sharks.”

The woman got so furious about this that she screamed at me with tears in her eyes, “I HATE YOUR POINT OF VIEW, BUDDY!” (and some other angry things I forget.) From her point of view, piracy was Enemy #1 and anybody ignoring this massive threat was hurting us all.

Driving away from the event, of course I figured out what I wish I would have said in that moment:

The thing separating us from where we are and where we need to be is not piracy.

It’s always something more internal, whether writing, communicating, producing, networking, promoting, or taking a wildly different approach to marketing.

Putting so much attention and energy into fighting piracy (as if, when solved, you’ll suddenly start selling 10 times more) - is misguided effort, distracting you from what you really need to be improving.

That’s the real reason I often tell musicians not to worry about piracy. I’m not saying it doesn’t exist. But energy spent worrying about it is energy better spent working on what you know you really need to do.

Update on April 17, 2008 by Andrew Dubber

Follow-up by Dubber 

Wow. I should start going to the conferences you go to, Derek. I've run that same line at a few seminars across the UK in the past couple of weeks (though the pigs and sharks line is one that hadn't occurred to me... nice). And the musicians I've been addressing all seem to just get it straight away.

Piracy, if you're a musician, is probably the best problem you could hope for. That's not to say it's a good thing (when it's actual piracy and not just unauthorised copying) but that if you're in such a great position that piracy is a real concern, then you can be pretty pleased with how far you've come.

The myth of the 'lost sale' is one of the Ideas That Just Need To Die. 

Update on April 17, 2008 by Bruce Warila

This is a graph I created about a year ago.  Every artist should have (and will have) free songs in circulation throughout his/her career.  The numbers may be off, but the concept applies.

Crowdsourcing for Hits - is it a Mistake?

Two weeks ago I wrote a post titled Create, Validate, Sell.  I have been wondering since - could there be a fundamental flaw in the crowdsourcing methods I described to commercially validate music?  This may not only be a problem for me, but it could be a serious problem for the record labels and festival operators that are relying upon technology that enables crowds to pick the next “idol”, artist, band or opening act.

Crowdsourcing is the practice of enabling a group (usually a large group) of people to pick a winner, a direction, a strategy, or crowdsourcing can even be used to design something (for example).  Faith in crowdsourcing rests upon research that has shown that groups can make better decisions than individuals, even when the individuals are experts.     

In 2004, James Surowiecki wrote a book titled Wisdom of Crowds.  Just about every venture investor on earth has read this book, and it has been the bible for numerous startups that have wrapped crowdsourcing into their business models.  In the music industry you can experience crowdsourcing at work by visiting OurStage, Amie Street, SliceThePie, SellaBand, TheSixtyOne and on many other sites on the Internet.  Investors that have been seduced by the potential of the efficiency and effectiveness of crowdsourcing for the next U2, have funded many of these sites.

Here’s the problem - crowdsourcing really works well when the sum of the crowd possesses more knowledge than the expert(s); after all, an expert can never know as much as one thousand people (for example).  However, when it comes to songs, ISN’T ALL YOU NEED TO KNOW in the package?  Everything - melody, harmony, tempo, pitch, octave, beat, rhythm, fullness of sound, noise, brilliance, lyrics and chord progression - is in the package.  If we are moving toward a world where people are more interested in single songs than albums or artists - what else do you need to know about a song to pick a winner?  Does the expert have all the knowledge he or she needs to make a decision?  Can the sum of the crowd possibly possess more knowledge about a song than the expert(s)?

So, I’m asking your opinion: should those investing in music/songs (like I have) rely on a small group of experts, should we use technology that enables crowds to pick the next hit single, or should we use both?

Has Online Radio Growth Stagnated?

From the new Edison/Arbitron study on media platforms comes this headline:

Weekly Online Radio Audience Increases from 11 percent to 13 percent of Americans In Last Year.

What that headline doesn’t say is that this number was evidently 12% in 2006. Thus the statistical fact of the matter is that online radio listening - according to these data - are utterly unchanged over the past two years.

Does that seem odd to you? It sure seems weird to me.

Now granted, this is a specialized subset of listeners - the folks who participate with Arbitron. But still.

It’s not clear how this question was asked (What, exactly, is “online radio”? Do listeners know what we’re talking about here?). Laying out that definition might clear things up.

Whether or not the numbers are correct, the headline is abjectly misleading.

But it still puzzles me that in an environment where access to home broadband (as noted in this study) is skyrocketing, where penetration of portable music players - driven by the Internet - is increasing, where radio station streaming grows annually, where online is catching up to radio in terms of its influence on music discovery, in this environment…

…”online radio” listening remains unchanged since 2006?

If true, what does this say about the taste for “radio” online in what is otherwise a growing market for online audio?

Is “radio” what I use primarily when I choose to turn off the PC and the iPod?

Let me ask the most provocative question of all: Why should we stream our stations if the market for online radio is stagnating?

Unless it’s not.

Music Industry Trends have a Lesson for Radio

Ah, how things change.

I have spent a lot of time studying the pictures in this post. The data illustrated here is not new, of course. We all know music sales are going to Hell in a proverbial handbasket.

But when you chart the data as National Geographic has done so here (from their December issue), some new insights arise which have implications for radio as well as the music business.

These charts, especially the second one, is incredibly illuminating for several reasons:

1. It shows the transitional nature of all - ALL - recorded technology that distributes music to consumers. That is, one technology shrinks as another expands, ad infinitum. Radio, too, is a technology, a very well established and popular one. The erosion we’re currently seeing in radio usage - especially among the young - is not a hiccup. It is part of a long-term trend we are only beginning to experience. The more we face competitive alternatives which substitute for radio’s core benefits, the more this trend will accelerate.

2. This chart obviously excludes music distributed for free - a.k.a. “illegally.” One can assume that the steady decline of CD sales is matched - and exceeded - by a stunning rise in off-the-chart downloads. That is, demand doesn’t go away, it just moves to something else. Being in the right place at the right time with the right revenue model is the key.

3. This chart shows the amount of time it generally takes for transformation to occur. For example, it took 16 years for CD sales to peak. If it takes as long for CD’s to disappear, then by 2015 the last CD will be sold. Radio’s erosion - and the revenue problems that result in part from this - is not going to stop. We need a model and a strategy that anticipates and exploits the future, not a head-in-the-sand public relations gimmick. We need to surf the trends, not fight them.

4. This chart shows the absurdity of relating the present state of the radio (yes, radio) industry to any time in its ancient history. For example, the birth of FM back in the late 60’s to 70’s lived in a technological environment which this chart clearly shows has completely disappeared. It’s like comparing the Jimmy Kimmel show to the Dean Martin Roast. Let’s compare apples to apples.

5. This chart shows that older technologies yield to newer technologies if the benefits those newer technologies provide substitute for and beat the ones they replace. CD’s are unambiguously better than tapes - they provide similar benefits, but do a better job of what they do. If I can get music in my car delivered in a radio-like experience from Microsoft or Slacker or whomever - and if it has broad enough distribution - then my radio listening will shift - assuming it’s music I’m looking for (and it may not be).

6. Growth and decline in this chart are “steady” in all cases, not “explosive.” It may be strongly steady, but it’s steady. Thus the best reflection of future momentum for any new technology in this space is the momentum among its early adopters. Not the crazy gadget freaks, but the next wave of users, the early adopters. So what does this mean for radio? Well, if the momentum for a new technology, say, HD radio, is slow at the onset it is not likely to accelerate with time. What you see is what you’ll get. Look at this chart and all the evidence is right there. Ah, you might say, but look at the slow growth of cassettes. Would that it could be 1980 again and we could be faced with the slim choices of that era.

7. It is clear that the horse has left the barn on tangible media for the music industry and all things digital are the immediate future. That means it’s inevitable that the music industry will make up the shortfall in music sales with licensing (including licensing revenue from radio) and (drumroll, please) advertising. And a world of music for free with advertising is functionally identical to music-oriented radio. That is, the competition is going to get much tougher, folks.

Enjoy these charts. There’s a lot to learn hidden in those numbers.

[Double-click to enlarge]

Update on April 8, 2008 by Bruce Warila

I asked Mark to revisit this post for Music Think Tank because I believe the graphs and Mark's analysis of them tells a lot.  Just to be clear, when Mark says "the competition is going to get much tougher, folks", he is referring to the radio industry.  

I believe the takeaways for artists are:

1) As Mark said - the music industry will make up the shortfall in music sales with other music-derived revenues.  However the timing, according to the historical patterns demonstrated in the graphs is important.  The last CD should be sold in the year 2015, and as CD sales decline other revenue sources will fill the void.  Unfortunately, those "other revenue sources" have not been fully sussed out; there is not one clear and simple "standard" that's emerging that everyone can gravitate toward.  The only standard that's clear to me is - everything!

2) Radio is loosing its' dominance and its' importance.  Over the next five years, someone on your team is going to have to make sure that your music is everywhere and anywhere consumers are.  There's no clear winner in the race for ears.  The radio audience is not being fractured by one big competitor; it's being split by lots of competing sources of audio entertainment (the "everything" standard applies here also).

3) "Advertising tacked onto your streams of music is functionally identical to music-oriented radio".  I would take this statement to the bank.  Don't fight advertising when consumers are opting for "free" music.

4) We are still in the early stages of a transition.  You have to have one foot in the old and one foot in the new.  It's a lot of extra work and it's going to take a few years to sort out.  However and most importantly for everyone making great music, when we reach the puffing point in the graph we are in now - you should see a corresponding rise in income.

Thanks for the post Mark. 

Never have a limit on your income

A wise man said, “Never have a limit on your income.”

Example he gave:

If you sell pens for a living and someone orders a million pens, no problem! You just place an order with your manufacturer for a million pens, get them to the customer, and celebrate.

But if you do hands-on massage for a living and a recent spot on Oprah gets you a waiting list of 10,000 people, “you’ll wish you were in the pen business.”

Point being : if you make a living only providing an in-person (hands-on) service, you are limiting your income. If you were in a “while you sleep” business, there is no limit to how much you can make.

So… what about musicians?

For the last few years, many people have suggested that the products (CDs, even downloads) are now just the free giveaways to get people to go to the show - that musicians are only in a hands-on service-provider business now.

Of course I disagree because I watch CD Baby pay more and more to musicians every month (while they sleep).

Musicians MUST NOT buy into that “only earn by performing” belief because it limits your income.

I spend a LOT of money on music, but haven’t been to a live concert in years. The recorded music has great value to me, whether MP3s, CDs, or even subscription services.

What other ways can music be a “while you sleep” income-earner for musicians? (STUPID BRAINSTORM WARNING:)

• write songs for others to perform
• creating commercial-use music (that businesses will use in advertising, for example)
• getting your music into film/tv
• paid-area access to your web-archive with all your music, even works-in-progress
• make it easy for fans to donate
• create a recognizable brand once, then license the name or model to others (like “Chicken Soup for the Soul”)
• franchise your band: train multiple bands how to sound just like you, then all can go tour, while you get royalty when they do
• creating music-education programs used by many schools
• release your unmixed tracks for fans to remix, letting them sell the remixes on a 50/50 split

WHAT ELSE?

Update on April 21, 2008 by Bob Baker

Great post, Derek. This is classic passive (while you sleep) vs. active (while you work) income. The key is to grow your passive income streams while lowering your reliance on hands-on revenue. Artists should always put a focus on live performance (if that suits them) but not have to rely on it for their survival.

There's a growing sentiment that recorded music is now like a business card. Give tons of them away free to build recognition and exposure among your core fans. I agree that can be effective, especially early in an artists career. But as the fan base grows, an artist has a lot more options to profit from his or her music, as well as live shows, merch, etc.

One passive income model I like is what Trent Reznor did with the recent indie Ghosts release. He made it available at five different price points: from free to a $300 Ultra-Deluxe edition. Smart move. Instead of a new CD available for $15, he gave his fans a choice. And 2,500 people took him up on the $300 option.

This is basically the PBS pledge drive approach. Ask people for their help, and let them choose their level of support. Don't assume all of you fans are looking for free downloads. Many of them may actually want to support you and will send money your way -- if you only ASK. And you won't have to lug in and set up equipment to get paid that way!

-Bob 

Bus company sues maids for carpooling - sound familiar?

This post is a quote directly from the book Here Comes Everybody by Clay Shirky

In 2005, a French bus company, Transports Schiocchet Excursions (TSE) sued several French cleaning women who had previously used TSE for transport to their jobs in Luxembourg. The women’s crime? Carpooling. TSE asked that the women be fined and that their cars be confiscated, on the grounds that the service the women had arranged to provide for themselves - transportation - should be provided only by commercial services such as TSE. (The case was thrown out in a lower court; it is pending on appeal.)

This strategy - suing former customers for organizing themselves - is precisely the one being pursued by the music and movie industries today. Those industries used to perform a service by distributing music and moving images, but laypeople can now move music and video easily, in myriad ways that are both cheaper and more flexible than those mastered and owned by existing commercial firms, like selling CDs and DVDs in stores. Faced with radical new efficiencies, those very firms are working to make moving movies and music harder, in order to stay in business - precisely the outcome that the bus company was arguing for.

Back Catalogue To The Future

For the last few days I’ve been listening to Bohemian Rhapsody and I’ve been having a lot of fun. I must have heard this song hundreds, if not thousands, of times since I’ve been alive but now I’m listening with fresh ears. Why?

Surely there can be nothing left to know about this tune. Anyone that wants to own Bohemian Rhapsody surely already does so in one format or another. If you don’t own it then you could easily go and buy a legitimate copy online in less time that it would take you to read this article. However, the more likely scenario is that if you did want it then you could go online and ‘find’ it without having to use your credit card. The problems this causes the music business are well known and oft bleated about, and particularly in terms of back catalogue as this has traditionally been a stone-cold money spinner for the industry.

Think of any classic album that is over 35 years old. It doesn’t matter whether it’s Dark Side of the Moon or Astral Weeks…any ‘classic’ album will do….

Got it?

Ok..

A completist could conceivably own this album on vinyl, tape cassette, 8-Track cartridge, common or garden CD, DAT tape, Mini-Disc, 180g re-issued vinyl, DVD, any number of enhanced or remastered CD formats (5.1 etc) and, with very few exceptions, digital download.

That’s 10 different formats in the 35 year history of that ‘classic’ record, and this in turn means that fans (old and new) can have bought it brand new and at full retail price once every 3 and a half years since it was released. This is why Mick Jagger looks so good for his age.

Formats have, of course, been driven by the availability of affordable technology and this technology in most cases has been developed and sold by different arms of the same companies that were/are the major recording companies. It wasn’t so long ago that CD players retailed for over £200 yet these days you can pick one up for less than £20. As for buying a half-decent vinyl turntable on the high street, forget about it. CD discs themselves are cheaper than they were 15 years ago, and vinyl releases are rare as hen’s teeth. Meanwhile, everyone wants an MP3 player but no-one seems prepared to pay for the music.

There are many reasons for this. There can be nothing limited, special or desirable about an individual digital release file since each ‘copy’ is a 100% accurate representation of the ‘original’. In fact the concept of a ‘copy’ is pretty much redundant; as is the need for proprietary technology to play your copy on (I’m treating DRM with the disdain it deserves). Additionally, since no-one has yet managed to crack the problem of cool or desirable packaging to accompany a digital release there really is nothing to distinguish the commercially available MP3 file from the one you can make / find for yourself. You can - and probably have - filled your new MP3 player with music that you’ve already purchased in another format, or else with music that you’ve ‘found’ on the interweb. You’ve got a £50,000 record collection on a £300 device, and that’s bad news for Mick Jagger.

Digital as the new, prevailing format has moved the goalposts to such an extent that companies now sign artists based on a slice of future touring and merchandising revenue, rather than that artist’s (continual) ability to shift (the same) units. Jay-Z is the very latest artist to do so, hot on the heels of Madonna and U2. So, where does this leave back catalogue in the digital age? Where does it leave your back catalogue?

Well, the copy of Bohemian Rhapsody that I’ve been having so much fun with has got me thinking. Yes, it is a digital copy that came with no fancy packaging whatsoever and it was indeed ‘found’ rather than purchased - I was given it by a friend, since you ask. What is different about this zeros and ones version of Bohemian Rhapsody is that it comes in 24 different pieces, each part being a copy of one of the original 24-track studio tapes that go to make up the song.

I have been able to import these files into Logic Audio and have been mixing the song myself. I’ve been able to isolate Freddie’s voice and add my own effects, I’ve been listening to Brian May’s guitar on its own and have been messing with the volume settings. Essentially I’m making my own mix and consider it to be a massive musical jigsaw puzzle that I have to solve. Unlike traditional jigsaw puzzles I don’t need the picture on the box because my brain already knows what the picture should look like. I’m trying to make it sound like the song that is ingrained in my memory after thousands of listens - and herein lies the FUN.

Now, you may hate Queen and Bohemian Rhapsody and it’s certainly true that one man’s classic album is another man’s dinosaur tosh. For example, I don’t get Pink Floyd in the slightest but I’m willing to wager that there are thousands (if not millions) of people who would love to play with “Dark Side of the Moon” in the same way that I’m currently playing with Queen….and moreover they’d not only pay for that opportunity, I reckon they’d pay a premium.

Ok, not everyone has Logic Audio or the necessary skills to use it, but what if consumers were able to purchase a package that contained the component audio files of a song or album along with some rudimentary audio mixing software (Garageband, perhaps?) and helpful information and tutorials on mixing? Off the top of my head I can think of several albums I’d love to get my hands on.

So, how does this relate to the independent artist?

Could artists with small fanbases charge a premium for their raw files? Could giving away raw files increase your fanbase? What if a stranger on the internet makes a better job of mixing your tunes than you did? I realise I’m throwing up more questions than answers, but that’s kind of the point as I can’t think of answers to any of the questions that would involve an artist making less money or generating less interest, whatever their status.

User-generated content and online mixing tools are of course not necessarily new things, and I hear that Radiohead and Nine Inch Nails both have similar ‘premium rate’ ideas in the pipeline with their future releases, but the crucial point is that so far no clear market leading process has emerged for this - there is no ‘Killer App’ to speak of, and certainly nothing that could become the online equivalent of the CD or the 7” single and therefore sweep all before it.

I genuinely miss buying records. I stopped buying them when the industry made it too hard (impossible) for me to get what I wanted on vinyl. Since I never liked CDs I now ‘find’ my music online and buy vinyl second hand. How about something that might make me feel connected with the music and willing to start parting with my cash again?

I’d like to hear your thoughts on this.

Bismillah!

Update on April 3, 2008 by Laurence Trifon

There are indeed thousands, if not millions, of people who enjoy playing with songs in the way Craig has described. Many artists – the most notable being Nine Inch Nails – have recognized this segment of their audience and started making their studio tracks available for remixing. Sites like ccMixter, an online remixing community, make it easy for independent artists to offer their multi-tracks for free to a large pool of producers, DJs and others who like interacting with music.

One of the biggest challenges in offering audio for interactive use is determining who owns what rights in the remixed work. Let’s say I’ve produced a killer remix of Bohemian Rhapsody… now what? Can I post it on my website? Can I let people download it? Can I sell it? Can Queen sell it? Do I own the recording, or does Queen? As you can imagine, this could get quite complicated from a legal standpoint.

One popular solution has been to use Creative Commons licenses to spell out what users can and cannot do with their remixes. For example, an artist could choose a CC license that would let users create a remix and let anyone (the user, the artist, and others) share it non-commercially. In this scenario, if either the artist or user wanted to use the remix commercially, they would have to get permission from the other party.  

Up to this point, most artists have chosen to offer their multi-tracks for free. Nine Inch Nails, for example, set up their own remix site where users can download audio for free after they register. The publicity and goodwill generated by offering multi-tracks, as well as the opportunity to build interactive fan communities and collect demographic data, are obviously of great value.

Radiohead, on the other hand, has gone a different route on both the legal and pricing front with their Nude remix offering. The terms state that all rights to the remixes will belong to Radiohead and their label/publisher. And they are selling the multi-tracks (5 total) on iTunes for the standard $0.99 each. I’m curious to see how many fans are willing to pay $5 for the chance to create a remix in which they have no ownership. Even if Radiohead can get away with something like that, I’m not sure the majority of artists can.

Create Validate Sell

Up until recently, and in a caveman sort of way, I divided the tasks of building a music business into two rock piles: a pile of things related to creating music and a pile of things related to selling music.  

In the creating music pile I accounted for iteratively improving songs based upon fan and professional feedback, and in the selling music pile I accounted for monetary feedback; you either sold music or you didn’t.  

Recently, I evolved from lumping tasks into two piles to lumping tasks into three piles.  Create and sell has become - create and validate and then sell.  In fact, the sequence has become create-validate, create-validate, create-validate, and then sell.  Thanks Steve Lawson.

While this is not information that makes the earth spin in reverse, adding a third classification column to your to-do list does cause you to perform discrete actions that you may not have taken otherwise.  

For example, when you approach validation as an essential task to be executed efficiently, as unbiased as possible, and without prejudice or lasting consequences, you end up reclassifying products or services previously lumped into another pile.

On Saturday, as I wondered about the simplest way to validate music using the criteria I just described, I ended up reclassifying the music community site Aime Street out of the interesting-way-to-barely-sell-music rock pile to the music validation pile.  For me, this action shed an entirely different light on the value Aime Street generates for artists.

Aime Street is a music community site that has a unique pricing model where tracks start out as free and as popularity increases the price of a track goes up.  I only recommend sites that charge flat fees to artists and I steer clear from sites that extract percentages.  However, when I reclassified Aime Street as a music validation service instead of a place to sell music, a new recommendation emerged.

Aime Street probably isn’t going to put a lot of money into your pocket, but I have to say that Aime Street is the fastest way to validate music that I have tried to date; it’s also fun.  I would have gladly paid them a flat fee to validate songs within their community.

I simply uploaded music to Aime Street and over the next 48 hours I watched as the price of the tracks rose and the recommendations rolled in.  It was hardly profitable, but it was gratifying and comforting validation.  I’m surprised that Aime Street is not growing as rapidly as some of the other music sites on the Internet; as a music fan, this site really appealed to my sensibilities.

Similarly, I am trying the site called OurStage for the same reason.  I really like the unique voting funnel that OurStage offers, but the gratification will not come as rapidly as on Aime Street.  My guess is that both of these sites will yield the detailed validation or invalidation I’m looking for ninety days from now, albeit using entirely different methods.

The bottom line: setting out to purposely seek validation is not only important; it enables you to reframe your approach to sites, services and relationships.  The saying “necessity (to validate) is the mother of invention” applies here…

Think Tank Talk Question?

Would you give exclusive rights to a download store in exchange for keeping 100% of your music revenue?