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MUSIC BIZ INSIGHT #22 Power Reading for Busy Music Professionals Hope you're hungry! MUSIC BIZ INSIGHT is published for musicians, songwriters, managers, label reps, booking agents, entertainment attorneys, studio owners, music publishers, and all others involved in the music business. Its purpose is to help boost your business, find new markets, make the right connections, develop professionally, work smarter and improve your bottom line. "As a general rule, the most successful people in life are those who have the best information." Benjamin Disraeli Published bi-monthly by Peter Spellman, Director MUSIC BUSINESS SOLUTIONS: Turning Music Business Data into Useful Knowledge. Career and Business-building books, articles, consulting and more. P.O. Box 230266, Astor Station, Boston, MA 02123-0266, USA Phone: 978-887-8041 Email: success@mbsolutions.comWebsite: www.mbsolutions.com© 1997 - 2003, Peter Spellman, MBS Business Media, www.mbsolutions.com Please feel free to redistribute with above credit and copyright. IN THIS ISSUE
NEWS & VIEWS I hope youve had a chance to see the NEW, improved MBS web site. Everything looks better and theres a huge, new feature called "The Musicians Resource Directory." Its organized along music career path lines. It contains what yours truly considers the best in books, magazines, organizations and web sites for music career development. Check it! THE FIX IS STILL IN Newspaper reports now confirm what any record buyer already knows: The much-ballyhooed order by the Federal Trade Commission to major labels to stop fixing CD prices not only hasnt lowered them one penny, it hasnt stopped the "coincidental" multi-label creep of superstar product to the $18.98 level. On June 6, Colin Hand of Seattles Up Records hit the Internet to add that "its fairly clear that its the chain stores who are the ones responsible for any fixed pricing, or overcharging of the consumer The problem is that chain stores, such as Tower, will take our list price of $12.98 and mark it up to $16.98. Our distributor tells us we should raise our prices because the stores are doing it anyway. As a label, wed like to offer our releases at what we believe is a fair price. Chain stores arent allowing us to do that. If prices were not being fixed, I would be able to walk in Tower and pick up one of our releases for $11.98-$13.98 (Tower has them priced $14.98-$17.98). There is a similar situation with online discount retailers. They bump our list price to whatever they want, and then discount it to a price that is still above our suggested list price." UNIVERSAL HOG: The Digital Millennium Copyright Act says that 50 per cent of Internet licensing fees for music go to performers. But Universal Music, the worlds largest label, claims the new money comes from "blanket licenses," on which no royalties are due. The other labels will follow that lead. The RIAA says that it cant force its member labels to obey the law and pay artists. "Were not in the business of telling our members what to do," says its spokesperson. No, just everybody else. END QUOTE: "We can count our money and we can fix our own problems, but we cant do that if were held under these constrictive, restrictive contracts. There were talks in Washington about the work-for-hire clauses which record companies instituted without debate. This states that all sound recordings will become the sole ownership of said companies for all time. Do we really need to discuss this? Work-for-hire would be an art director who designs the cover of a CD. Even at 17, when I got in the business, I never believed that I worked for Warner Brothers. We picked them, after much deliberation, to perform a service." Prince ))) FEATURE ((( THOUGHTS ON THE FUTURE OF MUSICby Peter Spellman Excerpted from the forthcoming book, "And the Web Played On: Internet Intelligence for the Online Musician" by Peter Spellman (2001, Berklee Press). Jeff Bezos, founder of Amazon.com is fond of saying that when it comes to the Internet, were in day one. This new technology is transforming the world and none can predict what the future holds for the Net and its millions of users. Despite the Internets promise of democratization, the age-old struggle between art and commerce is alive and well, and barreling like a high-speed train into the digital future. Like all technology, the Internet music revolutions will have consequences that are difficult or impossible to foresee today. Heres my prediction. We are now in a painful period of transformation that will change soon. Music will be freely available on the Net or available at a very low price. The upside is that many more people will buy much more music at a quarter a hit, why not buy 40 songs instead of 10? In the end, the music business will be worth even more than it is today, and everyone, including the artist, will be wealthier as a result. I also predict that it will be the new generation of music fans, armed not only with cutting-edge technology but with entirely reconfigured appetites, who define how music is consumed in the coming years. The digital downloading revolution is going to transform the music business into a service business. No longer will we see the music industry as the selling of goods, but rather, as the provision of a distribution service, not unlike TV. And should you think that the consumer really wants to own CDs, think again. The majority of people listen to music on radio much more than to their CDs. The music world will eventually settle into a new equilibrium some years in the future, and it will look very different from today. Musical artists will make more money from appearances, sponsorships, and product licensing than from the sale of the actual music (this is already true for many musicians). Advertising may play a role, as may new business models such as subscriptions to electronic distributions. We may even find that major artists will choose to deal directly with consumers via the internet, bypassing the need for the large record companies. Innovative industry leaders will embrace the new models and increase their chance for survivability and success. For several decades now, commercial radio has had a stranglehold on what music gets heard. The advent of Internet-based platforms for music performance and sales will introduce a new flexibility into this marketplace. With a true custom-casting approach to audio programming, the mass-audience derivation of radio formats could be blasted apart by the on-demand programming of the individual. The problem with current radio formats is less that they empower users than that they dont empower users enough. The authority of the artist has been supplanted by the authority of the radio programmers. The solution, in my opinion, is not to move back to the artists authority, but forward to the users authority in terms of programming the experience. The artistic experience is, of course, a relationship between artist and audience. In the past it was controlled mostly by the artist, currently it is strongly intermediated by promotional/ distributional channels (most commonly, record companies), which often perverts the artistic relationship. Moving forward to individual audience empowerment brings it back into a more purely aesthetic relationship again, which is good for the art itself, and better for artists themselves. Artists may never recapture the kind of control of their relationship with their audience that they had in the past (except live, in concert), but a genuine aesthetic interplay with their audience is much better than being beholden to the least common denominator of the average of a mass audiences taste. A Wall Street Journal article described how an already established act, Widespread Panic, has used the Internet to flourish independent of its label. The groups releases on the Capricorn Records label consistently sold approximately 150,000 units, hardly significant in big-name industry workings. But by cultivating grass roots fan enthusiasm through its online presence, the group grossed $8.5 million touring during 1998. And merchandise and music sales through its web site grew from $100,000 for 1997, to $350,000 for 1998. This illustrates a potent trend in contemporary music, and one seen also in the careers of Prince, Ani Difranco and others: artist-driven marketing. Such developments herald what John Perry Barlow sees as a possible shift from the "music business" to what he calls the "musician business." Artists are going to be faced with "free agency" for the first time _ analogous to the movie studio systems. This sets the tone for new business models in the music industry. In essence, artists will become clients of the online distributors, as opposed to employees of record labels. It is clear we are coming to a point of extreme change in the music industry (and really, in all the "content creation" businesses). Technology is pushing the idea of copyrights to the limit, and something is going to give. The good thing about radical change is that, during those times, the little guy has a chance to make a big difference. It is the time when big ideas are brought to life (not all of which will succeed), big names are made, and, yes, even big money is made. I believe the music industry is reaching a critical point - Napster and all those other file-sharing programs, are only the beginning. If you are a musician, a writer, a photographer, a software developer youd be wise to be thinking about ways youll be able to earn a living in a dramatically different world. Im not suggesting you have to have the answer, but if you depend on generating "content" for a living, its a topic that will be more and more important in the near future. ILLUMINATING TRIVIA Did you know thatwhen Crosby, Stills & Nash first began singing together, they were known as the Frozen Noses for their unique harmonies and their drug habits? ))) GENRE SPOTLIGHT: TRANCE MUSIC ((( "Genre Spotlight" focuses on a niche music style with a promotion and marketing slant. INTRO"Trance music" is one of those "putty" genres. Heck, Ive found everything from early Mahavishnu Orchestra and Studio One Dub to ECM jazz and Indonesian gamelan music to be "trance-inducing", that is to say, psycho-active, where my normal surroundings melt into the cosmic ether and my heart slows to an alpha bed of peace and well-being. As a music style in todays marketplace, however, Trance has a pretty solid definition and history, as well as mucho-varied manifestations. Breaking out of the German techno and hardcore scene of the early 90s, trance emphasized brief synthesizer lines repeated endlessly throughout tracks, with only the addition of minimal rhythmic changes and occasional synthesizer atmospherics to distinguish them -- in effect putting listeners into a trance that approaches those of religious origin. Despite waning interest in the sound during the mid-90s, trance made a big comeback later in the decade, even supplanting house as the most popular dance music of choice around the globe. Inspired by acid house and Detroit techno, trance coalesced with the opening of R&S Records in Ghent, Belgium and Harthouse/Eye Q Records in Frankfurt, Germany. R&S defined the sound early on with singles like "Energy Flash" by Joey Beltram, "The Ravesignal" by CJ Bolland, and others by Robert Leiner, Sun Electric, and Aphex Twin. Harthouse, begun in 1992 by Sven Väth with Heinz Roth & Matthias Hoffman, made the most impact on the sound of trance with Hardfloors minimal epic "Hardtrance Acperience" and Väths own "LEsperanza," plus releases by Arpeggiators, Spicelab, and Barbarella. Artists like Väth, Bolland, Leiner, and many others made the transition to the full-length realm, though without much of an impact on the wider music world. Despite a long nascent period when it appeared trance had disappeared, replaced by breakbeat dance such as trip-hop and jungle, the styles increasing impact on Britains dance scene finally crested in the late 90s. The classic German sound had changed somewhat though, and the term "progressive" trance gained favor to describe influences from the smoother end of house and Euro dance. By 1998, most of the countrys best-known DJs -- Paul Oakenfold, Pete Tong, Tony De Vit, Danny Rampling, Sasha, Judge Jules -- were playing trance in Britains superclubs. Even America turned on to the sound (eventually), led by its own cast of excellent DJs, including Christopher Lawrence and Kimball Collins. Related styles: Since Trance music occupies a micro-niche in the music styles landscape, youll often find it in close association with one or more of the following genres: Club/Dance, Techno, Ambient, Dub, House, Progressive House, Detroit Techno, Kraut-Rock, Rave, Electronica and, at times, New Age. The House side of Trance has been described by Gav on the Goatrance site: "I cant give you a definition of Psychedelic Trance simply because theres NO definition!! But I can give you some typical things of Goa-Trance:
KEY TRANCE ARTISTS:Arpeggiators, Astral Pilot, Joey Beltram, CJ Bolland, Cosmic Baby, Hardfloor, Immersion, Jam & Spoon, Juno Reactor, Loop Guru, MLO, Moby, Paul Oakenfold, Resistance D, Sasha, Speedy J, Spicelab, Sven Väth, Trance Mission Trance Music Hubs:
KEY TRANCE RECORD LABELS:RADIO SHOWS THAT FEATURE TRANCE MUSICFLAG! MUSIC BIZ RESOURCES TO HELP YOU DO-IT-YOURSELF!MBS Business Media now has available a 36-page RECORD COMPANY BUSINESS PLAN, complete with mission statement, executive summary, company description, industry analysis, marketing & promotion plan, management description, complete financials and tips for hunting down financing. This particular plan is for a multi-genre label that puts out a broad spectrum of music, from jazz to contemporary Christian, to rock, but youll find it applicable and relevant to any label venture. $25 postpaid to MUSIC BUSINESS SOLUTIONS, P.O. Box 230266, Boston, MA 02123-0266. Credit card orders (MC, VISA or AmEx) call toll-free 888-847-5444. Outside U.S. call 781-639-1971. Please leave full acct. number, expiration date and address you would like the plan shipped to. And dont forget about our NEWLY REVISED other resources: HOW TO START & GROW YOUR OWN RECORD LABEL OR MUSIC PRODUCTION COMPANY (4th edition), PROMOTING & MARKETING MUSIC TOWARD THE YEAR 2000 (3rd edition) and MUSIC BIZ KNOW-HOW -- three books packed with strategy and resources to help you succeed in the commercial world of music. You can get full info on these at: http://www.mbsolutions.com/books/ !!!!!!! MUSIC BIZ KNOW-HOW: DO-IT-YOURSELF STRATEGIES FOR INDEPENDENT MUSIC SUCCESS is available for $10 (+ $4 S/H) EXCLUSIVELY for subscribers of MUSIC BIZ INSIGHT at the address above. The regular price is $26 with shipping. SAVE $12! BIZ SMARTZ: FIND YOURSELF AN "ANGEL" INVESTORINTROIf your company is too new, too risky and unproven, or too offbeat to qualify for traditional bank financing and attract venture capitalists, you may want to look for an angel. An angel is a private investor, often a successful entrepreneur, who invests in small businesses close to home for a variety of economic and personal reasons. Usually, angels are friends, relatives, or colleagues. Successful entrepreneurs, especially retired ones, are especially likely to become angels. Although the figures vary widely, angels are believed to provide billions of dollars in capital to entrepreneurs every year. Based on demographics, studies characterize angels as follows:
Angels prefer to invest in companies they are familiar with. They usually seek out small and growing companies in their own industry. FINDING YOUR ANGELHow do you find an angel for your business? Here are some tips:
Check out the following sites:GALVANIZING ANGEL INTERESTHowever, the rule is always to raise money at the right time. Convincing angels (or anyone else) to part with their cash to support your venture takes a lot of time and hard work. Be sure to dedicate enough time and budget in your search for financing. Once you find a prospect, send a letter requesting a short meeting to discuss the proposal. A more effective approach is to be personally introduced to the angel investor by a common friend. People are more inclined to be receptive to offers from other people if the request come from people whom they trust. In the event that the prospective angel shows interest in your business idea, make sure that you have prepared a well-researched detailed business plan. Your plan should emphasize why you need additional financing and exactly what you plan to do with the money. Write an executive summary for the plan that spells out in one page why someone should invest money in your business. Explain too, how you can repay the money and when. Better yet, have presentation materials ready based on your business plan in order to have a more effective discussion with your prospective investor. You want to appear relaxed, confident and knowledgeable as possible. If the investor is interested, bring in your lawyer and accountant to the negotiations. Informal investors usually invest from $10,000 to $100,000 in each venture. While angels may be able to invest considerable money in your venture without requiring the kind of documentation that other investors do, put your arrangement in writing to reduce misunderstandings. Angels may prefer to make straight loans at rates comparable to banks or slightly higher rate. They generally expect to lend their money from three to seven years, with some guaranteed exit provisions such as mandatory buy-out. Others may want to be repaid in stock if your company eventually goes public. Be sure to tailor the financial arrangements to fit your angels needs. NURTURING THE ANGEL RELATIONSHIPAngels can also provide you, not just with money, but guidance, advice and a mentor relationship. Also called "advisory investors," they are generally not interested in controlling the business, but may require you to meet certain business goals or follow certain business practices. If possible, encourage your angel to become a member of your informal advisory board. Many angels like to keep a close eye on their money; plus, they can offer you invaluable advice. If your angel is well connected in the local business community, he or she may help you find additional investors, introduce you to a banker or an attorney, or bring in new customers. An angel may also help you gain membership in a club or professional society that will benefit your business. Remember that every relationship is different. The key to success is doing everything you can to increase your angels comfort level so the persons investment and relationship with you and your business will be longstanding and profitable. TO SUBSCRIBE to MUSIC BIZ INSIGHT: send email with the message in the body, "subscribe" to success@mbsolutions.comIt's not an autoresponder so feel free to include any other comments, ideas, suggestions, etc. you may have.
About the Publisher PETER SPELLMAN is Director of MUSIC BUSINESS SOLUTIONS, a business and marketing consultancy to the music industry, and Director of Career Development at Berklee College of Music, Boston. He is the author of several books for music entrepreneurs and teaches music industry courses at Northeastern University (Boston) and the University of Massachusetts (Lowell).A musician since he was ten, Peter continues to spin riddims in the improvisational collective, Friend Planet and sing Cat Stevens' songs to his kids every night before bed. BLOOM WHERE YOU'RE PLANTED! Quote of the Month-- "When I hear music, I fear no danger. I am invulnerable. I see no foe. I am related to the earliest time, and to the latest." Henry David Thoreau E-mail: success@mbsolutions.com © 1997 - 2003, Peter Spellman, MBS Business Media, www.mbsolutions.com P.O. Box 230266, Boston MA 02123-0266 978-887-8041 Rise up! Home | Resource Directory | Consulting |