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MUSIC BIZ INSIGHT #39 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. P.O. Box 230266, Astor Station, Boston, MA 02123-0266, USA Phone: 888-655-8335 Email: success@mbsolutions.com Web site: http://www.mbsolutions.com © 1997-2004, Peter Spellman, MBS Business Media, www.mbsolutions.com Please feel free to redistribute with above credit and copyright notice.
SPELLMAN ONLINE! If you're at a crossroads in your music career and are looking for new ways to express your musical desires, then consider signing up for my online course, "The Self-Promoting Musician." "thought-provoking and valuable" -Brian Rampling, W. Australia "Enlightening!" -Stephane Moor, Switzerland "an inspiring course" -Steve Fuller "This class has made me more optimistic about both my future and that of the music business in general. You may never know how much this course has helped me, but hopefully you'll find out soon enough." -Thomas Dennehy Built from my book by the same title, this 6-week journey will help you discover your particular niche in the biz and then build a career marketing plan from it. You'll also get plenty of individual attention from yours truly. Sign up now! Get the skinny at berkleemusic.com. JUST EXACTLY WHY DO WE NEED THE MUSIC INDUSTRY? Last year the music industry had to pay over $70 million to consumers as a penalty for fixing the prices of CD's. In April, New York state attorney general Elliot Spitzer announced that the major labels had agreed to pay upwards of $50 million in unpaid artist royalties. (The labels get to keep the interest on the money for themselves.) And the RIAA calls file sharers thieves?Not only are the record labels who make up the RIAA thieves, they're liars too. They claim that the reason they hadn't paid the royalties is that they just couldn't find artists such as Dolly Parton, Public Enemy, David Bowie, Puffy Combs, and Willie Nelson. Then there are artists such as guitarist Wayne Moss, who was in Barefoot Jerry and Area Code 615 and played on Blonde on Blonde. The labels he recorded for said they couldn't find him but the Nashville Tennessean found a working phone number for Moss with a single Internet search. "Smaller artists...don't have the wherewithal to hire lawyers to beat a big corporation, " Moss noted. "We lose and they buy another chandelier for the office." (Used with permission, Rock & Rap Confidential, May 2004) BIONIC COMMERCE Tuesday is "implant day" at the Baja Beach Club in Barcelona ... stop in and have "an electronic credit card" inserted under your skin, reports Kevin Maney in USA Today. The device is "a slender glass capsule about as long as a dime is wide," writes Kevin, and is inserted via a syringe. "Inside sits a computer chip, which stores a unique code that can identify an individual," and "holds a tiny antenna, which can radio that code to a receiver many feet away." In short, "you become your own credit card," courtesy of a company called VeriChip, which "has dreams of going global with its 'human implantable ID technology,' -- once implanted, you could wave a body part to pay for a burger at Wendy's, a beer at a baseball game, or whatever." One drawback is that you can't turn it off. "Privacy groups are going to dog-pile on that one," Kevin predicts. If that's not for you, perhaps BrainGate is. BrainGate is a device that will allow you "to control a computer just by thinking." Yes, it is implanted in one's brain -- and Cyberkinetics, its maker, last month won "federal approval to implant the chips in five paralyzed people as a test." The idea is to help paralyzed people, of course, but the vision is that BrainGate -- "essentially a mouse moved by brain waves" -- might one day find application in healthy people. The military, for example, "has visions of pilots flying planes by thought," Kevin notes. Raytheon, meanwhile, earlier this year introduced thermal-imaging cameras that enable night vision. Called the Thermal-Eye 2600AS, Raytheon says "the technology can keep getting smaller and better," perhaps to the point where "it could make regular eyeglasses into night-vision glasses, or even contact lenses." In some cases, the computers-in-humans idea does a reverse commute. Such is the drill at Carnegie Mellon University, where researchers and drama students have collaborated to create a "roboceptionist." Her name is Valerie, and her head is projected on a "flat computer screen" that "sits on top of an industrial mobile robot that is always dressed" like a "typical corporate receptionist." Valerie is "equipped with a laser scanner that can detect and track people in the room," and visitors communicate with her by typing questions on her keyboard. As Kevin describes it: "If you take a seat in the waiting area, you'll hear Valerie talk on the phone to her friends or her 'motherboard' about all her problems, including how she hates to date vacuum cleaners." Kevin comments: "It might seem whimsical, but Valerie pushes at the boundary between machines and humans -- a step toward the Robot on Lost in Space, the most likable character on the show." All in all, Kevin foresees "a lot more news about the merging of machines in humans. University labs are doing research," he notes, and "companies are being started." FREE CULTURE The author of a new book that argues against restrictive copyrights is making the medium his message by offering his tome via free download, reports Thomas D. Sullivan in The New York Times. The book, called "Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity" (but not limit the length of book titles), is written by Dr. Lawrence Lessig and is also available in hardback, for $24.95. Wait -- why would anyone pay $24.95 for a book that can be had for free? Well, that's exactly Dr. Lessig's point. He explains: "What so many examples around the world demonstrate is that free content actually helps push commercial content." Dr. Lessig's hope is that his distribution model will make more content "available online to people around the world, even to people who can't buy it. If we're right," he says, "it also means the sale of more books." Dr. Lessig's publisher, Penguin Press, apparently was willing to take a chance on his concept, having had success with his earlier books, such as "The Future of Ideas". Penguin says that so far the model does seem to be working. Since its March 25th release, more than 180,000 e-copies of Free Culture have been downloaded for free. Penguin won't say how many hardback copies have been sold, although according to Nielsen Bookscan, about 2,600 copies were purchased with real American dollars through April 25. In any case, using free content to promote the sale of commercial content actually is only part of Dr. Lessig's idea. He also believes that "excessively long copyright protections and the aggressive tactics of media conglomerates have upset a traditional balance of intellectual property and creativity." In other words, Dr. Lessig thinks traditional copyrights stifle creativity. You may remember this fellow as the Stanford law professor who faced down Disney over the Copyright Term Extension Act ("Free The Mouse"). He also is chairman of Creative Commons, which promotes a license that allows "creators to share their work freely." While a Creative Commons license doesn't eliminate copyrights, it grants permission "to change the work for non-commercial purposes as long as the original is attributed". A number of people have, in fact, re-worked Dr. Lessig's book (free-culture.org/remixes). He says he's gratified -- and also slightly mortified: "I confess when it first happened, I had to take a deep breath and re-convince myself of the principles here. Pick your principle: You can buy a copy of Free Culture at Amazon.com, or download a free copy at Free-Culture.org. E-COMMERCE COMFORT "It's a milestone in the normalizing of e-commerce," says Lee Rainie of the Pew Internet and American Life Project, commenting on Pew's new stats showing that "two-thirds of Internet users are now online shoppers," as reported by Bob Tedeschi in The New York Times. "What's striking about this," Mr. Rainie continues, "is that the percentage of Internet users who do shopping has been growing, even as the Internet population continues to grow ... So the increase is doubly important because it's a bigger slice of a bigger pie." A key driving factor here, is simply that most people simply become more comfortable with e-commerce once they've spent three or four years online (and 80 percent of Internet users today have been only at least three years, according to Pew). Pew, pewinternet.org, also finds that "gaps in income and education between those who shop in cyberspace" and those who don't, "are narrowing. Half of those who live in households with incomes of $50,000 or less have shopped on line." That's great news for retailers like Home Depot because it opens up new opportunities with its "traditional customer base," giving Home Depot "more opportunity to bring" its "traditional strategies online." For example, Home Depot is already enjoying a strong response to an online iteration of its gift registry. Any previous gaps in e-commerce comfort levels between ethnic groups are also narrowing: "Today, Hispanics and African-Americans generally shop online in the same proportions as non-Hispanic whites, a sharp increase from a year or two ago," according to Pew's Mr. Rainie. FAITH & FEAR Two kinds of fear afflict Americans these days, says futurist Faith Popcorn in a Wall Street Journal interview with Suzanne Vranica. There's fear of the "internal" sort, which, she says, "includes the fear of carbs, office stress and aging." Then there are the "external" fears, which of course include terrorism, but also fear of the flu. Our many fears, she goes on to say, help explain "why the alcohol industry is doing well" (hope she was smiling when she said that). Her point, actually, is this: "Fear makes consumers suspicious and it makes it harder to sell to them." Her advice: "Big advertisers should be more maternal in this type of environment." The problem: Few are. Maybe that's because they're living in their own kind of fear? Indeed. Advertisers, Faith suggests, should be very afraid. "TiVo will take the guts out of the television industry," she predicts. The business of advertising, moreover, is "on its way to extinction." Take this: "In three to five years, you will see consumers rejecting advertising -- which will cause agencies to scramble as they try to make a living." Most of them, however, are "very late to the game," says Faith. She says most marketers don't understand, for example, that only 51 percent of households are married-couple households. Advertisers, she charges, are ignoring nontraditional families. Faith, whose books include "EVEolution" and "The Popcorn Report" , also says marketers don't understand the aging baby boomers, or how to reach them (especially those grandparents who are raising kids these days). And she says we all need to learn to speak Chinese, study their culture so we are sensitive to the fact that black is a bad-luck color over there, for example. No such worries on the homefront, though, because America, says Faith, has become "desensitized." She observes: "Our shock button has been turned off and that is why advertisers are finding it hard to get their message through." On a brighter note, Faith mentions a new technology that might help: "One company," she reports, "has begun putting built-in mini TV screens on wine bottles " that "shows a short film about the wine and how it was grown." Cheers! RIAA WANTS LIMITS ON DIGITAL RADIO The Recording Industry Association of America (RIAA) has called on the Federal Communications Commission (FCC) to institute regulations to prevent digital radio broadcasts from becoming another avenue for music pirates. Digital radio allows broadcasters to transmit CD-quality music over the airwaves, which could allow users simply to make digital recordings from the radio and share them on P2P networks. According to the FCC, about 300 radio stations already send digital signals or are working to do so. The RIAA has proposed restrictions that would allow recordings of digital radio broadcasts but would not allow those broadcasts to be broken up into individual songs. Under the proposal, users also would not be able to share recordings on P2P networks. In discussing the threat posed by digital radio, Mitch Bainwol, CEO of the RIAA, said, "A little bit of prudence right now goes a long way." A spokesman for the National Association of Broadcasters, however, expressed that group's concern that the proposed restrictions would slow development of digital radio. "We want to roll out this technology as quickly as possible," he said, "and if this is going to delay that, that's something that's going to cause consumers and broadcasters a lot of concern."-CNET, 11 June 2004 VIDEOGAME THERAPY "People now want to play games to learn something," says Mia Consalvo of Ohio University, explaining the advent of so-called "healthful games" in a BusinessWeek article by Olga Kharif (6/14/04). Indeed, an emerging category of game developers is "creating games to help people relax, learn proper nutrition, overcome phobias, and even help children overcome attention deficit disorder." The thinking is that "the impact that games can have on emotions and learning" can be put to good use to help people help themselves. For example, a computer game called the Journey to the Wild Divine combines "elements of Buddhism, Christianity and Kabbalah ... to teach players to relax and relieve stress." Wild Divine, www.wilddivine.com, "comes with sensor rings that slip over three fingers to monitor heart rate and muscle tension." The action involves climbing a hill to get to "a temple floating above you in the sky." Along the way, you meet a tree that inhales and "holds its breath for five seconds and slowly exhales. If you can mimic that pattern for two full minutes, the tree will build you golden stairs to the palace." A far piece indeed from Grand Theft Auto, "in which players tear drivers out of their cars, mug them and run over pedestrians. Other "healthful games" use 3-D effects to help players overcome phobias -- of heights, spiders and flying, for example -- reportedly with a success rate of 80 percent, similar to that of traditional therapies, although some say more study of results is required. A game from CyberLearning Technology, developed in collaboration with NASA, treats attention deficit disorder via a race-car game that adjusts the action to force players to focus their attention. Both CyberLearning and Wild Divine report brisk sales, and while the big game players haven't yet gotten in on the action, some say the category is ripe for development. "I really see this as a missed opportunity so far," says Alan Pope of NASA's Langley Research Center. Not everyone is out to make a buck, though. Scientists at McGill University have created free-of-charge games designed to help people suffering from low self-esteem. McGill's Mark W. Baldwin reports good results ("a study of 139 people showed that playing these games for 10 minutes a day resulted in higher self-esteem"). The games can be accessed at: http://www.selfesteemgames.mcgill.ca Did you know...? Grammy winning lead singer, Jimi Jamison of 80s band "Survivor," sings the vocals for the Bud Light Real American Heroes commercials? ))) FEATURE: NICHE YOUR RECORD LABEL (adapted from INDIE POWER: A Business-Building Guide for Record Labels, Music Production Houses and Merchant Musicians by Peter Spellman, MBS Business Media) Indie labels are a richly diverse group of small companies, spanning every music style from a capella to zydeco. Their business structures are diverse too, from full-corporate subsidiaries to solo micro-business. And so defining them remains difficult. Some indies with minority or majority ownership by major record companies are classified as "independents" thanks to their use of independent distribution (i.e., national and regional distributors NOT owned by the major labels). Others are distributed by majors, but remain fiercely independent in terms of spirit and ownership. The rest (most, really) are very small, often artist-run music production/marketing companies doing the best they can in a tight marketplace. Indie market share in the U.S. is about 25% (most surveys say 20%, but they don't account for "under the radar" sales that happen at performances and through direct mail). Indie market share is even higher in other countries like Japan where indies account for well over 50% of all record sales. What they all have in common, however, is a focus on "niche" markets. "Niche marketing" strategies have long been used by small or undercapitalized firms as a means of achieving some sort of competitive advantage against other companies in their market. "Niche" is an architectural term referring to a special place that's designed to display or show off an object of some kind, like an ornament, that's placed in a recess of a wall or an arched area of a room. And that's just what a niche can be for small labels. A niche sets them off from other labels who do something similar and draw the best possible attention to what they can offer. Your best niche will always be the one that you're most motivated to work hard at, learn as much as possible about for years to come, and evolve with as it matures and develops. Successful niche marketing among independent labels has taken a number of forms, including:
The Americana sounds of New West Records, Red House Records' focus on singer/songwriters, the creative acid jazz of Instinct, and the deep reggae catalog of Trojan insures listeners they can expect quality discs from each company within their respective niche. Indie labels have almost exclusive dibs on niche styles since their market size fails to attract major label attention. The majors simply can't justify putting resources into music styles where unit sale outcomes hover in the 2000 to 20,000 range. They need 150,000 sales and up to even register on their radar screens. Music genres operate as social contracts of sorts, uniting those involved in the music production (including musicians, engineers, producers, and songwriters) and the music promotion (distributors, record stores, publicists, radio stations, clubs, TV networks, the press and consumers) in a shared understanding. In a real sense, music genres serve as a shorthand between artist, label and listener. Each music genre is surrounded by its own media culture too, enabling its promoters to target its unique market channels quite effectively, with high contact and little waste. The indie sector is the crucial breeding ground for new music. It serves as the R&D lab for the majors but its primary motive (unlike the majors) is the love of the music and an intimate acquaintance with the same. "While the majors want to sell music like MacDonalds sells hamburgers, we'd rather be a small chain of gourmet restaurants with a line going around the block," says Alligator Records' founder Bruce Igl auer. "It's the menu that counts-not how many are served." Independent labels are artistically and creatively on the cutting-edge of the new music. These companies didn't simply find a niche and fill it-as so many lesser new age and "fuzak" labels do. Nor did they just concoct one and market it, like so many major-label-forged "alternative" indies. They usually developed their label along with the music they presented, often as a hobby, bringing bands and artists to an ardent audience and then riding the crest of their influence. For a number of the smarter ones, yesterday's hobby has become today's gold mine. If you're interested in this subject, then you'll love my book, INDIE POWER! Get it in print or as an eBook at: mbsolutions.com/books "With an eye on both the 'big picture' and the details, Spellman offers a comprehensive guide for creating your own 21st century music business from the inside out. Awesome and empowering". -- John Braheny Songwriting/music industry consultant. Author: "The Craft and Business of Songwriting" Set a time once a year to shop your main suppliers. Are they continuing to provide the best products or services? Are the prices competitive? Is the relationship worth continuing? Too often we become comfortable or complacent with our suppliers, accepting situations that are not in the best interest of our business. By establishing a specific time each year for supplier review, you can rectify any problems, negotiate better pricing, strengthen the realtionship, or find another source. TO SUBSCRIBE to MUSIC BIZ INSIGHT: send email with the message in the body, "subscribe" to success@mbsolutions.com It's not an autoresponder so feel free to include any other comments, ideas, suggestions, etc. you may have. About the PublisherPETER 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-- "One man with a dream, at pleasure, Shall go forth and conquer a crown; And three with a new song's measure Can trample a kingdom down." -Arthur O' Shaughnessy, "Ode" 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. P.O. Box 230266, Astor Station, Boston, MA 02123-0266, USA Phone: 888-655-8335 Email: success@mbsolutions.com Web site: http://www.mbsolutions.com © 1997-2004, Peter Spellman, MBS Business Media, www.mbsolutions.com Please feel free to redistribute with above credit and copyright notice.
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