The Long Fail: the cost of digital distribution

Digital distribution as well as promotion has undoubtedly been the best thing that could have happened to music fans as well as musicians. Even bigger content owners are finally seeing the opportunities (instead of the threats) that come  with the technical change of delivering ‘media’ over the last ten years. It is now easier than ever for artists to connect to their fans and delivering the music to them, gatekeepers have been eliminated and (in theory) artists can reach out to millions of music fans out there through the internet. So far, so good.

Everyone who works in music knows that there are various new challenges that have developed through new digital delivery methods and those challenges can make it difficult to monetize digital music. I won’t be going into the issue of file sharing (there are enough people out there who have something to say about that) but I want to explore a common misunderstanding about digital media: “digital distribution is free” (or at least very cheap). It is not at the moment.

Click to read more ...

Who says what now?

Cory Doctorow. He’s from the EFF and he’s here to help. Agree? Y/N
Image via Wikimedia Commons under a CC Licence

Yesterday, I sort of took Jupiter Research analyst Mark Mulligan to task about some fairly sloppy thinking. I did it on a blog of mine that almost nobody reads (sort of a scrapbook of things I note as interesting in passing), rather than in a major public forum like Music Think Tank, or on my own New Music Strategies site - because actually, it didn’t seem that important.

I wasn’t out to start anything - just kinda making notes.

Mulligan himself has painted the feedback he got as something of a firestorm, and has offered to host the raging debate he expects to ensue online at his personal blog. That’s fine. I recommend that strategy to you. Pick a fight, and then make sure you’re the destination where that dispute takes place.

Click to read more ...

Music Blogs - Are They The New Radio?

A couple of months ago I received an email from the International Federation of Phonographic Industries (IFPI). They asked me to remove a music file (MP3) of ‘Silence’ a track from Portishead. Under the rules of the Digital Millennium Copyright Act (DMCA), the IFPI has every right to ask me to comply with the law as it stands. To avoid litigation I complied. I then received an email from the office of the IFPI asking me if I would agree to an email interview that would be posted on their sister site, Pro-Music.org; I said yes, here it is:

Click to read more ...

Twitter is radically changing the way musicians are building communities of supportive fans around them. Are you still resisting it?

Musicians Twitter Roadmap

By Ariel Hyatt (@CyberPR) & Laura Fitton (@Pistachio)

[Note from Music Think Tank: This is a comprehensive post on Twitter.  If you are an artist and you have not heard about or used Twitter, you shuold read this post.]

It has been over 18 months since I joined the Twitter community and since I began to really use it something has shifted for me radically. Using Twitter has directly contributed to my life in meaningful ways.

I must admit that when I first saw it, I wanted to cry.  Why would anyone care about what it is I do?  As a still recovering traditional publicist I couldn’t really understand the benefit for my artists if I was using Twitter.  After all, it’s about my clients not about me. How wrong I was…. It turns out the social web isn’t directly about you, it’s about other people: The audience that you become engaged with, and how you interact with them and with them in mind magic can happen.

Some things that happened since I joined Twitter:

Click to read more ...

Social Media, Blogs and Music: Some Philosophical Thoughts

These days the music marketing world is all abuzz with phrases such as - Social Media, Social Advertising, Facebook Ads, Mass Media Networking Advertising…..etc, etc.. In recent months I have been a panelist at the L I S A seminar in Portland and the Hawaii MusicTech Conference in Honolulu. L.I.S.A., which is an acronym for Lessons In Social Advertising, was aimed at marketers and advertisers who [for some reason] don’t understand social networks or haven’t yet worked out how to advertise effectively to them. It focused on topics such as ‘What is social advertising?’ and ‘How do you get young people to recommend your brand?’ The Hawaii MusicTech panel was presented by the Northwest Chapter of NARAS [The Grammy Org] of which I am a Board Director, and we discussed how musicians could effectively use social networks such as Facebook and MySpace to reach an audience and communicate with them.

Two sides of the table as it were. One group wants to advertise, or push, their messages to a mass audience, while the other wants to create a network of like-minded people who hopefully will pull content such as free MP3s and then “evangelize” on behalf of the musicians by spreading messages by electronic word of mouth. With no hint of schizophrenia I happily migrate between both camps. What follows here is an attempt to share my thinking with bands or musicians on what works and what doesn’t when it comes to embracing the many social networking sites that are available to them.

To understand and embrace social networking is to place the idea that says “technology makes this possible” to one side and embrace the idea of the basic human need to stay in touch with other like-minded people at all times. As Clay Shirky says “The desire to be part of a group that shares, cooperates, or acts in concert is a basic human instinct.” Think about rock concerts for a minute…..

Click to read more ...

The only thing wrong with Music 2.0 is your mental model of how it should work.

Metaphorically speaking, this is a post for those looking to become rock stars and their advisers.

I loved Rhodri Mardsen’s article on Music Think Tank.  The post was entertaining and it perfectly expressed the sentiment that I hear from artists and managers everywhere.  Moreover, the comments were equally telling.  The music industry is a bitch. You have to do it because you love it.  Music 2.0 hasn’t changed anything for artists.  It’s harder to earn a living than it’s ever been.  The consultants, the promoters and the bloggers - all their talk is a bunch of repetitive, give your music away, start a blog, post banner ads, sell t-shirts, build a brand, and other blah, blah, blah bullshit.

Ok, since I’m not one to swim in the tide of current sentiments, I spent the last seventy-two hours asking myself what’s wrong with that picture.  After all, artists have gotten just about everything they asked for…  

Click to read more ...

Should you go digital-only, and skip the CD?

Should you go digital-only, and skip the CD?

The real question is: How much of your potential audience are you willing to exclude?

We’re in transitional times. A lot of people have iPods. But most still don’t. A lot of people get all their music online. But most still don’t.

If you decide not to put your music on iTunes or Rhapsody - (say, if you have cover songs and don’t want to bother with the paperwork) - your music will never be heard by the millions that get all their music on iTunes or Rhapsody.

But if you decide not to have your music on CD, your music will never be heard by the millions that still do all their listening on CD. (Even if they listen to streaming clips while sitting at their computer, they do all their real listening in the car, or on the home stereo.)

So the answer for 2008 is : if you’re serious about being a professional musician, you need to do both.

If you’re just playing around, and never expect even 100 people to want your music, then just upload to MySpace like everyone else does, and don’t make a CD.

But in these long-tail days with over a million bands on MySpace, having a professional CD - a beautifully designed and manufactured CD - really sets you apart and shows you’re serious to anyone in the music industry receiving your CD. Investing $1000 into manufacturing CDs shows that you plan to make at least $1000 selling them. Not spending the $1000 is like saying, “I don’t think I’ll ever make $1000 doing this.” Then you wonder why a booking agent or label is not interested?

To close with a telling example:

When visiting Apple iTunes, I had lunch with the guy who’s in charge of independent music editorial - the one who chooses who gets featured placement.

I asked him, “What’s the best way for me to turn you on to something I think you’ll love?”

His answer? “Send me the CD.”

I said, “Uh.. really? What if it’s already on iTunes? Shouldn’t I just send you the link?”

He said, “Yeah. I commute an hour each way to Apple’s office. I do all my real listening in the car, so I need the CD.”

From Exposure to Conversion "How to Create a Real Fan" - Part 2

Thanks for the comments I received on the Fan Funnel model we employ at ReverbNation.  I’m still looking for more feedback, so please speak up if you have any.

Now, to continue the train of thought begun in the first post…

The Fan Funnel, in any incarnation, is incomplete.  It is a ‘stock’ measurement in that it tells you how many fans you have in each section of the funnel at any given time.  But it fails to measure some important things like the trajectory the Artist has (rate at which fans are entering the Funnel or moving down the funnel), and how deeply engaged those fans are with the content, to name a few.  As a result of this deficiency, we developed a proprietary metric for every Artist that uses ReverbNation called a Band Equity(TM) Score.  Artists use this in conjunction with the Fan Funnel.

Band Equity(TM) takes into account four factors that add up to the current value of the Artists’ portfolio of fan relationships (normalized as a ‘score’), as well as the trajectory of that value:

(1)  Breadth
How many people does your content touch, overall?  How many listen or even view it in a given time period?  Having your content on many web pages, touching many people is a great way to understand the total conversion ‘potential’, and might be summed up as ‘awareness’.  All else equal, an Artist whose content touches more people has a higher potential  for converting fans and developing relationships than an Artist whose content touches fewer.

(2) Influence
How frequently do those people seek out a second instance of the content (like play a second song or video or view the blog after they play a song)?  What is the ‘open rate’ on your emails to fans (what is the probability they will actually open and read it instead of just deleting it when it comes in)?  How long do they play a song or video before they turn it off and do something else?  All else equal, an Artist that garners more engagement per interaction has stronger and deeper relationships with their fans.

(3) Recency
When was the last time you engaged your fans?  All else equal, an Artist that had their fans engaged yesterday has more Band Equity(TM) than an Artist that last engaged them six months ago.  Recency causes your Band Equity (TM) to deteriorate over time if the # of fan interactions and level of engagement drop off.   Think of this as the main ‘trajectory’ element.

(4) Access
Of your total ‘FANS’ and ‘LISTENERS’, how many of them can you contact without the assistance of a social network?  If the only way you have to communicate with your ‘FANS’ is via a MySpace Bulletin, then you do not have the Band Equity(TM) that another Artist, all things equal, has if they can send a custom email or other custom message promoting their show or new release (full disclosure:  ReverbNation provides a free email service for Artists, Labels, Managers, and Venues).  This element cannot be underestimated by Artists.  Social networks are a great place to RENT fan relationships, but the most savvy and successful Artists find ways to OWN their fan relationships, so they can access them when they want, and how they need.

From these four elements we construct a Band Equity(TM) Score for each Artist (and we also build our Charts from those scores, because we believe that it measures the right things).  It is updated once per day.  The goal is to raise their awareness of these important factors in their success, and to give them visibility into which promotional/marketing efforts deliver the desired result - stronger, deeper, and more fan relationships.

 
Let’s face it, record labels, talent buyers, gig promoters, and brands (people who pay the Artist) do not believe in MySpace friend counts anymore.  The numbers can be easily spoofed and a few bad apples have spoiled it for everyone else.  Artists, likewise, should not measure themselves by a metric like this alone, as the correlation between MySpace friend totals and commercial success is dubious, at best.  That is not to say that establishing friend relationships at MySpace is not a valuable endeavor (it can definitely add to awareness, and MySpace is probably still the best place to go to harvest fan relationships).  But, as a single metric for understanding the ‘financial potential’ of your band (notice I did not say the ‘artistic value’), it falls short.  We provide tools for the Artists to actually incorporate the activity happening at MySpace, Facebook,  blogs, homepages, etc, into the Band Equity (TM) Score, so they can have a global view of their success.  Its a big music world out there on the web, and Artists need a way to consolidate and understand how those fan relationships are changing across the board.



 

From Exposure to Conversion - 'How to Create a Real Fan' - Part One

Steve Lawson recently posted an entry on understanding and measuring the path that fans take from simply listening to a song, all the way to ‘conversion’ into a fan.
 
That got me thinking about the Fan Funnel metaphor we use at ReverbNation.  I am looking for feedback from Music Think Tank readers on the steps below and the process we use to enable artists to essentially operate a “Fan Funnel”.  Our goal is to provide a framework for understanding the process, and to provide tools for the Artists to experiment with marketing and promotion efforts so they can see what ‘works’ for them.  Here is a crash course in what the FAN FUNNEL  is:

 
Step 1 - Exposure
People must be exposed to the content.  Once exposed, there is some probability that they will either move down the funnel, or pass the exposure along to friends who may move down the funnel. People who check out the content are called ‘LISTENERS’.  Certainly the quality of the content matters here.  Good songs and good videos will have a higher probability of moving folks down the funnel, but for ALL artists, increasing the number of exposures will have a positive impact on their raw conversion numbers.  As a result, we began to provide tools for increasing exposure for the artist (widgets that make it easy to post the music and let fans spread it, street team functions so that the Artist can encourage existing loyal fans to spread it for them, applications for social networks, etc).
 
Step 2 - Starting A Relationship With The Fan
Once a person is exposed to the content, it is imperative that the Artist offer up some way for them to identify themselves to the Artist as a ‘FAN’ of the music.  This could be going straight to a ‘conversion’ by letting them join the street team or providing them with a purchase option, but most often it simply manifests with a person joining the mailing list or just identifying themselves as a ‘FAN’ of the Artist.  We ensure that potential ‘FANS’ can do this with every exposure tool we offer.  Its critical that Artists OWN this ‘FAN’ relationship for themselves, and not RENT them from the various social networks on which the relationship was created – more on the importance of this later.
 
Step 3 - Converting FANS Into STREET TEAMERS
Once you OWN the relationship with the ‘FAN’, you have a ‘pipeline’ of folks that you can talk to, on your own terms, and in any way you wish.  This is critical to success by our observations, as this allows the Artist the most flexibility in the messaging they convey to their ‘FANS’.  The next logical step, beyond asking them to buy a product (ticket, song, t-shirt), is to ask them if they want to exchange loyalty or behavior for something of value to them (something you can give away that actually deepens the relationship with them, like a backstage pass).  This is the act of building a ‘STREET TEAM’.  Artists that have ‘STREET TEAMS’, all else equal, find much more success than those that do not.  In addition, these Artists have the ability to execute marketing and promotional programs for less money than those that do not possess a ‘STREET TEAM’, as they work for non-monetary items like being put on a guest list, etc.
 
Step 4 - Getting Fans To Promote You
Now that you have some ‘STREET TEAMERS’, the next step is to give them tasks to do that promote your music or add more ‘FANS’.  This can take many forms, but usually involves prompting them with the right tools and clear instructions on where to post your content on the web in order to help you (something you need to OWN the relationships to do properly).  Many Artists have an untapped base of extremely loyal fans who have never been engaged to actively help them grow their popularity.  This is a wasted marketing asset.  The most successful Artists that we have observed tap into their fans at least once per month to help them spread content, recruit new fans, or promote a specific product (we provide tools to help them do this).  You are probably thinking that this can only help established Artists, but we have seen the power of this tool for even the newest Artists, and it is POWERFUL.  Remember, Artists with smaller followings often have a familiar relationship with their fans (read: friends and family) where established Artists only have an affinity relationship.  It is often the case that these close relationships can be the seed crystal that these Artists need to grow from obscurity to local recognition in their area.
 
That is the ‘FAN FUNNEL’ in a nutshell, and it is the framework with which we encourage Artists to view their business.  We provide ‘FAN FUNNEL’ stats directly to every Artist that uses our site in hopes that they will use it as the framework for understanding how to approach the challenges they face at growing their popularity.  It is based on the empirical evidence we have around the things that make a ‘successful’ Artist.  Soon we will be able to incorporate the actual sales data that come back from digital retailers like iTunes, closing the loop on how the activities of the ‘FAN FUNNEL’ impact real business objectives like selling music.
 
But the ‘FAN FUNNEL’, even as it grows in scope, is deficient in some respects.  It does not take into account the relative value of your content above other Artists (comparing you to standards in your genre), nor does it factor in a few other things of critical importance to understanding how you are doing, overall, at growing your fan base in both breadth and depth (especially depth).  For this, we developed an overall metric of the Artists’ ability to develop and nurture fan relationships called ‘BAND EQUITY’.  I will post a follow-up entry on how we look at this concept, but I’d love your feedback on the FAN FUNNEL in the meantime.

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.

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.

Save The Earth Use BitTorrent

A recent article in Harpers (via Nicholas Carr) describes a data center that Google is building that will use enough energy to power 82,000 homes a year.  Information Week also reports that data centers worldwide will consume the combined output of fourteen nuclear or coal-fired power plants this year.

What if BitTorrent was repositioned as earth saving technology, and every time someone purchased a digital media file they had the opportunity to buy a locally “recycled” file instead of one that was sent from an energy intensive data center located 3,000 miles away?  And, what if recycling everyone’s “spent” media files could save enough energy to power 1,000,000 homes a year?

In the scenario above, recycling is a codeword for file sharing.  Language is powerful.  Sharing is a negative word in the media industry, but recycling gives sharing an entirely new meaning.  It would be hard to justify putting an end to file sharing - if sharing/recycling was found to be a highly efficient method for conserving a significant portion of the energy required to deliver digital media.



The consumption of digital media and cloud computing is exploding.  You have to wonder if the far-flung, hub and spoke model that large data centers are founded upon is hugely inefficient compared to obtaining a song or a movie from your friends in the neighborhood?  My guess and investors are betting that BitTorrent is more efficient.

BitTorrent may not be ideal for streaming; however if waiting ten minutes saves energy, the benefit should outweigh the inconvenience.

When companies, organizations and governments clamp down on file sharing, whose interests are being served?  Are they protecting copyright holders, or are they protecting the billions of dollars that have been poured into the hub and spoke model for owning and delivering media files?  It makes me wonder; there are legal and legitimate ways to use BitTorrent.  

Think about this: BitTorrent is a disruptive technology; it enables just about anyone to be a media company without the burden of running a huge data center.  The next time some entity clamps down on media sharing, politely remind them that they could be contributing to global warming☺

For the record, I am a rights holder.  At this point, I believe file sharing will help the music industry more than it hurts.  I also believe that every artist should be so lucky to have his or her music wildly shared around the globe.  MP3 players are the new radio, BitTorrent is a broadcaster; if an artist is not on the “radio”, he or she will remain unknown.  

What do you think?  Conserve energy and get on the new “radio” - it all sounds like a win-win to me.  (Note: The GreenBrick advertisement above is something I invented for this post.)