Music Business Solutions: Music Biz Insight

MUSIC BIZ INSIGHT #25

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

Written and published bimonthly by Peter Spellman, Director of

MUSIC BUSINESS SOLUTIONS: Turning Music Business Data into Useful Knowledge.

Career-building books, articles, training, consulting and more.

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Phone: 888-655-8335

Email: success@mbsolutions.com

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IN THIS ISSUE

NEWS & VIEWS
FEATURE: SPELLMAN INTERVIEW WITH THE MUSICIAN'S EXCHANGE
MUSIC MARKETING MOXIE: WORKING MUSIC RETAIL
ILLUMINATING TRIVIA: HOWLIN' WOLF
BIZ SMARTZ: WHY MOST BUSINESS OWNERS RESIST BUSINESS PLANNING

))) NEWS & VIEWS

INSPIRATION: He failed in business in '31. He was defeated when he ran for the legislature in '32. He failed once again in business in '34. His sweetheart, his fiancee', died in '35. He had nervous breakdown in '36.

He went back into politics and was defeated in the election of '38. He decided to run for Congress and was defeated in '43. He was defeated for Congress in '46. He was defeated for Congress in '48. He was defeated for the Senate in '55. He was defeated for vice president in '56. He was defeated for the Senate in '58.

After that, you'd say he was through, wouldn't you? He was, as they say, "all washed up," wasn't he? He had had it, had he not? No, he hadn't at all. He went on be elected President in 1860! The man, of course, was Abraham Lincoln.

DON'T GIVE UP!

))) FEATURE (((

"READ THIS IF YOU WANT TO BE FAMOUS"

An interview w/Peter Spellman by Jake Sibley, originally appearing on "The Musician's Exchange" at About.com (3/1/01)

Q: The major labels are under fire from many directions: Investigations of price inflation on merchandise and the threat of unauthorized (but uncontrollable) distribution of recordings are two examples. Are the labels really in trouble? How will the music industry look five or ten years from now?

A: The traditional recording industry has entered its "mature" phase. Like any other industry in this phase of evolution, its challenge now is to re-purpose and reinvent itself. The other alternative is to become increasingly irrelevant and marginalized. The musical industrial complex has been practicing growth-through-acquisition for over 30 years now. Growth is a corporate imperative. But a company can get so big that it looses its contact with market demands.

The music market is segmenting at a dizzying pace. Not only do we have "dance" music, but we have 30 or 40 sub-genres within dance, each with its own media culture and channels. The big record companies are not benefiting from this. They are optimized for "mass" market tastes (i.e., least-common-denominator music pabulum). They rule the Top 40 but haven't a clue about how to deal with "dubcore" or even bluegrass. The indies are the champions of these niche styles and will continue to benefit from the fragmenting market, sniffing out the new sounds, developing artists, and grabbing market share in the process.

Of course, the surprise ascendancy of the Internet is putting additional pressure on the industry to change. The advantage the major labels had in the past (control over music distribution) is now being wrenched from its fingers. The industry response has been to dig in and deploy its legal armies to find ways of keeping what they consider theirs. Some, like BMG, have showed a little more open-mindedness through its pact with Napster. But don't be deceived; as corporate loyalists, the Big 5 record companies (including BMG) must maintain control at all costs.

And I don't think ethics play much of a role here. Its simply amazing to me that right in the middle of the industry's fight with MP3.com and Napster, when they were already becoming the bad guy in the eyes of both musicians and consumers last year, the "works for hire" and price fixing debacles hit the news. In my opinion, the recording industry and the RIAA should both be ashamed of themselves. I mean, how do they sleep at night? What will the next pr black eye be?

If things continue as they are, the large labels in ten years will be reduced to music ad agencies: one choice among many for artists seeking to promote their music to the world.

Q: Pete Townshend of The Who recently announced his support for Napster. "Two things struck me looking at Napster. One was Hooray - at last I might as well say fuck BMI. They are not protecting me any more, if they ever did." Given the self-marketing opportunities available on the internet and the conventional wisdom that the industry treats artists poorly, should musicians even pursue a label deal?

A: Well, with all due respect, Pete has the luxury of criticizing the industry and his performing rights organization (BMI) from a fantastically wealthy vantage point, so I take his comments with a grain of salt. Better examples might be Aimee Mann or Christine Lavin, both of whom are vets of major record contracts and who've now decided to go it alone.

At one time both these women saw the record deal as the "holy grail" of music career success. Then reality set in: the sale of companies, executive turnovers, incompetent marketing departments, short-circuited record release plans; you name it, they experienced it. And not just them, but thousands of other artists as well. You don't hear a lot about these "failures" because their contracts included "gag orders" that keep them from discussing their label experience in the media.

It's crucial for aspiring recording artists to understand that there are numerous forces way beyond their control that can easily derail and demoralize their record contract dreams. Keep in mind that 9 out of 10 new releases from major record companies never recoup their production costs. In my opinion, most artists have a better a chance doing it themselves, than signing with a major company. Of course, this assumes the artist is equipped with the necessary business and marketing skills to grow a successful career slowly but surely.

Ideally, the artist should find a partner, perhaps a small indie label, that can add time, energy and expertise to the project. Today, many indie companies are re-engineering their contracts into more of a profit-sharing model rather than the old-school royalty model. This seems to be a more promising path.

Q: The internet is a double-edged sword. With the advent of an essentially free exchange of all recorded music, how are major artists going to make money five, ten, twenty years from now? Live pay-per-view performances on the web? Merchandise sales? Or will the market for recorded music survive?

A: When we start discussing the "free exchange of all recorded music", I think we need to be clear about one very important thing: the rights and revenues our civilization won for musical creators deserve special respect and repeated mention.

I think it is laudable that people at different times during this century were able to discern and dignify several rights in a single song: a performance right, a mechanical right, a synchronization right, a publication right (sheet music), and several other miscellaneous rights. Each "right" is a revenue stream. This revenue has supported composers and performers for many years now and, by extension, enriched our own lives too. I think it can be said that "the song makes the industry go 'round".

I see very little understanding of these hard-won battles in the present discussions of music file sharing. I think organizations like the "Future of Music Coalition" are a welcomed addition and I hope it and other groups begin to shed light on all matters pertaining to song rights in a global electronic environment.

With that said, it's also important to realize that, except for maybe 3% of all recording artists throughout history, none has ever seen a single penny in record royalties. Most artists should see recordings as a "promotional expense" and leave it up to touring, sponsorships and merchandising (and, hopefully, publishing if they're also writers) to generate revenue that they can actually put in their pocket.

In Big Picture terms, I believe we are witnessing the decline of the "music business" and the rise of the "musician business" (to borrow a phrase from John Perry Barlow). We may not see a lot of millionaire artists in this new picture, but we'll be seeing more and more "middle class" musicians making a sufficient living while still having full ownership rights to their creations.

Today's musicians need to think outside the box of the traditional approaches and creatively engage with the new possibilities. The power belongs to you and it's an awesome responsibility.

Q: How important is radio support to an independent artist? Is it worth pursuing, or do major labels essentially control the programming?

A: Radio is still a significant factor in introducing the public to new artists. The problem is that most big-market commercial stations have been bought up by conglomerates like Clear Channel Communications. When this happens, all the programming (including the music playlist) gets centralized so that there is little latitude for local program directors to have a say in what gets played. Major labels exchange advertising money and access to artists for preferential treatment.

The result is that you can travel cross country by car and here the same 20 or 30 "hits" for the entire trip.

College radio and, to a lesser extent, public radio are still open to independent music, and these should be pursued for airplay when possible.

Q: Young musicians tend to get in a band and try to make it work as a group. Is it wiser to build musical and business skills yourself and then think and work as an individual, as opposed to "marrying" a group?

A: If you want to be a successful 21st century musician then versatility and flexibility are key qualities to nurture. Musicians should try to develop both musical skills and business/marketing skills as circumstances allow. This will give them the independence they need if the band "marriage" doesn't work out. It seems to me imperative to be able to express yourself musically in a variety of ways: as a performer, a writer, arranger, educator, sound designer, scorer, music editor, jingle producer, etc. The more hats you can don, the more revenue streams you can draw from.

Q: In your articles, you write about a changing music market in which clubs play an increasingly minor role. What are the most viable markets for a rising professional musician - jingles, studio sessions, casuals? What are the undiscovered, under-appreciated opportunities for working musicians?

A: Clubs still play a significant role for local and regional artists. After a fifteen year slump, the club-going demographic (ages 20-30) is on a growth path until around 2012. This is good news for clubs and club acts. It's also good news for colleges and universities, many of which are currently experiencing record enrollments. So the college market is a viable outlet for performing musicians.

Bands are facing increasing competition from DJs so, if you are a musician, you may want to also develop turntablist skills too. Lots of DJs are themselves getting record deals based on their creative arranging and sampling abilities, and the buzz they've sparked in clubs.

Besides these, there's musical theater, corporate parties, fashion shows, trade shows, country clubs, conventions, park programs, festivals and the like.

Q: In your article "Every Business is a Music Business" you discuss how >awareness of the arts is rising in corporate culture - business leaders are learning to run their company like a "jazz band" as opposed to like a "well-oiled machine." How does this provide new opportunities for >musicians, and how should musicians move to capitalize on these opportunities?

A: I've been exploring this theme for a few years now. John Kao's book, Jamming: The Art and Discipline of Business Creativity (1996, Harper Business), is perhaps the ultimate example of this. The use of metaphors from the arts to describe business practice is just one manifestation of this trend.

In their desperate attempts to increase and retain customers, many companies are realizing that music and entertainment are important and potentially profitable values to add to their image marketing mix. This extends from the ads they create (commercials are now more musically "cutting edge" than what's on the radio) to the music therapy workshops they sponsor for executives and managers. In many companies the windows are wide open for creativity and alliances of all kinds are waiting for development.

Musicians interested in working in the business side of music should be scoping out these emerging opportunities by reading magazines like Fast Company, Business 2.0, Wired and Inside. These publications are chronicling the evolution of the new economy in its various manifestations, and can provide leads for further exploration.

Q: The internet facilitates communication at unprecedented speeds over unprecedented distances, but variety, creativity, and depth of content seem to be suffering. (For, example, in order to publish this interview on the internet, I'm going to have to edit it into compact sound bites that will capture and hold impatient web traffic.) Do you foresee a backlash against this trend that will bring a renaissance of pure, deep arts - live jazz, for example - or will we continue the surge toward high-turnover, hyperlinked, multimedia entertainment? What are the consequences for musicians?

A: I think it's sad that the pace of life keeps many of us from enjoying the deeper experiences of music and art (not to mention spirituality, family, literature, etc.). Sometimes it seems that everything is recycled, and creativity (one of the things that makes us human) is forgotten. But, because it's so rare, creativity is the thing that stands out the most in our cultures, and certainly in music. My advice to musicians is: originate, don't imitate. Pursue your own voice and trust your instincts, and be part of the "backlash" to the "high-turnover, hyperlinked" environment.

Your question brings something else to mind that I think holds tremendous significance for all those involved in creating online expressions. A while back I heard Paul Saffo (from the Institute for the Future) do a talk on "the new scarcity". He said that at the turn of last century there was a scarcity of conduit (electrical pipeline); then conduit became hyperabundant. Then there was a scarcity of content to fill the pipelines; now content is hyperabundant. Today, he said, there is a scarcity of context. Context or point of view is the new scarcity.

We're drowning in information. That's why services like About.com are so important in the hypertext environment. Guides, like yourself, act as editors and filters toward providing meaningful content to your audience. That's a very important gig in the new economy.

What does it mean for musicians? See your web site as a portal that gives meaning and context to what your are about. If you're an Afro-pop band, then take me on a journey into the world of African music and where your brand fits in. If you're a jazz trio, take me on a journey into the world of jazz. You can provide background to your particular jazz expression, touching on everything from clubs to charts. Provide meaning to all the information and your site will grow in value for the visitor.

Q: Is it getting easier or more difficult to survive as a full-time musician?

A: We're right smack dab in a transition phase now, where old business models are dissolving and new ones will eventually take their place. As long as people love music, there will always be opportunities for musicians to express themselves and ply their trade. But just as business is repurposing itself, so musicians need to as well. Again, versatility and flexibility are key.

The thing that may be harder today is the amount of work a DIY (do-it-yourself) musician must take on. Learning how business, marketing, sponsorships, grant-writing, endorsements, etc. works presents a challenge to the artist who may feel an aversion to these things. Talent and energy alone will rarely float your boat. But talent combined with business smarts and the right information will help you map your course much more effectively.

Q: Consider mainstream platinum acts like Blink 182, Matchbox Twenty, and >Limp Bizkit. To get to that level you must be a talented entertainer, but how important is musical talent to their success, as opposed to marketing and luck? If a kid decides that he wants to be a rock star, how should he get there?

A: If you want to be a rock star, that is, if you have an undying vision of yourself performing to stadiums full of adoring fans, then you should go for it. The bands you mentioned got there through an alchemy of talent, drive, good songs, rigorous touring, and perhaps the most important ingredient, the one that allows a band to rise above the hordes of competitors: smart, connected management.

More than talent, it is the network of relationships a band forms through its mangager (or entertainment attorney) that drives it to the level of success described above. And to reach that level of success we're talking a major label recording deal. More often than not, it takes the deep pockets of the major record companies to carry an act to these heights.

But artist beware!

A little inside knowledge can go a long way in helping you prepare for major label affiliation...

For example: A lot of records are released by major companies in the hope and belief that they will succeed. However, there are occasions when label staff know that a particular record is not going to make it, but are obliged to go through the motions anyway. This is done to maintain a relationship with an artist, lawyer or manager, and is variously referred to as a "political signing", "grace and favor deal", "courtesy signing", or "public relations exercise". If a manager represents a successful act, for example, then that manager can often use the incentive of future access to that act to persuade companies to sign other artists.

This often results in label rosters full of unprepared acts lacking talent. More often than not, these acts are quickly dropped from the label when the individual or those individuals were terminated from employment with the label for not making wise choices about signing talent.

Major labels have been abusing their perceived power for decades and in order to play "the major label" game, one needs to be prepared to "force" (through available legal means) many of these corporate dinosaurs to live up to the terms of their agreements. Most will not be fair, honest or legally responsible without pressure. As always, there are exceptions to this rule.

It is imperative, therefore, that an artist educate himself or herself about the BUSINESS aspects of the music industry. Again, this is something that I found most artists unwilling to do and given the choice of, a) "let me tell you about realities so that you can make sound choices about your career", or, b) let me make you a STAR, most chose the "B" response.

A band seeking to go the distance to "rock stardom" should understand that landing a record deal is not an arrival but a beginning. That's when the REAL work begins. My advice for attracting management or the support of a well-connected music attorney is to work a 100-mile radius from your base, cover every venue willing to host you, get to know every "tastemaker" (radio dj, music news editor, etc.) in the area, and sell and document lots of CD sales. This will create a buzz and the buzz will attract the managers and attorneys.

Of course, once attracted, you'll need to assess these people to make sure they are aligned with your goals and have your best interests in mind. But that's a whole other interview...

Q: When a student walks into your office at Berklee College of Music and says, "What do I need to do to make it as a musician?" - what do you tell him?

A: The first thing I usually do is ask the student to go off and write his or her own obituary. Why? Because everything begins with clear goals. And what better way to clarify your goals than to reflect on what you achieved with your life when it is over? It's a sobering but illuminating exercise. Try it.

Once goals are clarified, I then get a sense of the students' knowledge about their options as musicians. Music careers today are being re-written as traditionally separate industries converge and spawn new opportunities for those familiar with audio in its manifold expressions. For example, did you know that book publishers are establishing music divisions as they "re-purpose" their titles onto CD-ROMs and other multimedia formats? Think about where music is used today and an explosion of new paths will present themselves.

The cool thing about Berklee is that the students are, for the most part, very focused individuals. In the eight years I've been there, I can count on one hand the number of students who came to my office saying, "I don't know what I want to do do with my life." Most are extremely focused and simply need additional information to add to their talent and drive.

Q: When an artist walks into your office at Music Business Solutions and says, "What do I need to do to make it as an entertainer?" - what do you tell her?

A: MBS clients are mainly musician/entrepreneurs who need help with business and marketing planning. I help clients create an architecture for their dreams. This translates into putting together plans and strategies for micro-businesses. These micro-businesses can be anything from band projects to booking agencies to indie record labels and music production houses. I don't really advise entertainers per se, but when I do I tell them the same things contained in my previous responses above.

Q: Is there any other insight that your unique occupation has given you that you'd like to share with the members of the Musicians' Exchange?

A: I don't hold much value in success formulas, but in my twenty years doing artist development work I've come to see that music success can be summed up in the following way:

TALENT + INFORMATION x ENERGY = SUCCESS

Talent and energy are usually in abundance. It's the information piece that is so often missing from musicians' lives. It's the absence of the right information that often keeps musicians from creating a map to help them navigate to their dreams.

Today, information about industry dynamics, successful performance, creative marketing, and smart business management is hyperabundant on the Net. The Internet is not only your open mic to the world but also your library of career-building knowledge. Drink deeply and come up taller.

))) MUSIC MARKETING MOXIE

WORKING MUSIC RETAIL

If you have your discs in record stores, then you can maximize their presence by following this advice:

1. Target stores near important venues, especially college areas.

2. Call stores, ask to speak to the manager or buyer. Briefly make that person aware of your product. Offer to send promo copies and a one-sheet. Also let them know which suppliers (i.e., distributors, one-stops, etc.) are carrying the line.

3. Send stores promo copies (2 each), one-sheets and any other P.O.P. (Point of Purchase) materials you have available (posters, T-shirts, stickers, etc.) Make followup calls a week after mailing to see if they received the package.

4. Always contact retailers one week prior to performing in their vicinity. Get names of store personnel who might like to see the show. Make a guest list.

5. If at all possible, visit the store on the day of the gig with posters, T-shirts, etc., and make friends. Remember their names. Double check the guest list.

6. If you have radio interviews arranged the day of the show, be sure to give the store(s) a free plug when you mention the album.

7. If the store personnel do show up at the gig, treat them royally...buy them a drink and be sure to plug the album and the store from the stage. Example: "Here's our new album (hold up a copy of the album), it's called, 'Sick and Phat', and it's available right around the corner at MoJo's Records!"

8. Send friends/fans to stores to purchase copies of the album.

9. If an important store is not carrying the record, have friends, family members and fans call once a week to ask for it. Chances are if they hear about it enough, they'll eventually stock it.

10. Be sure to keep your distributor informed of all press items, radio airplay, TV appearances and other helpful news... especially all tour dates and itineraries. Fax tour schedules to them monthly.

Summary: Treat retailers as your best friends because they are your best friends! You simply cannot sell records without them, unless you want to be selling records off the stage the rest of you career. One enthusiastic store clerk can sell as many copies of your records as a spin on the radio! In-store play is every bit as important as radio play; in the absence of radio play, it is one of the only avenues open to you for exposing and selling your music.

))) ILLUMINATING TRIVIA

Did you know...

In protest aginst the pressure from his record company (Chess) to "go electric," Howlin' Wolf gave his second electric album in 1968 the unwieldly title, "This is Howlin' Wolf's New Album. He doesn't like it. He didn't like his first electric guitar album either".

BIZ SMARTZ:

WHY MOST BUSINESS OWNERS RESIST BUSINESS PLANNING

EXCUSE #1: My business is simple, plans seem too complex.

Hey, a business plan is a map; most company budgets won't allow spontaneous leisure travel. Can yours?

EXCUSE #2: Business plans are only for the big guys. My business is only me, so I really don't need a plan.

Size makes no difference and it's a lot cheaper working things out on paper than trying them in real life and failing.

EXCUSE #3: I'm too busy trying to get everything else going in my business to write a business plan.

Don't let the tail wag the dog. A plan will act as a compass in the storm; and there will be storms.

EXCUSE #4: What if I change my mind after I've written my plan? I'm afraid I won't be able to stay as flexible.

Plans are not written in stone; they will change and adapt as you change and adapt.

EXCUSE #5: I don't know how to write a business plan .

There's no single "right way" to write a business plan. Apart from formal plans designed for investors, your plan is simply an articulation and "fleshing out" of your mission.

Don't forget that MBS offers both music career and business consulting as well as career-building publications. Discover powerful tools and leads to help you grow your music career and business!

TO SUBSCRIBE to MUSIC BIZ INSIGHT: send email with the message in the body, "subscribe" to success@mbsolutions.com

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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--

"Today is a gift; that's why they call it 'the present'."

-- Anonymous