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MUSIC BIZ INSIGHT #40 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.
STEAL THIS SONG Over the last year or so, the music industry has sued "4,679 alleged digital pirates," but next month, 16 artists will release a CD they hope will be freely copied, swapped, re-mixed and sampled by their fans, reports Ethan Smith in The Wall Street Journal. The CD is the brainchild of the editors of Wired magazine, and it will feature songs by artists including David Byrne, The Beastie Boys and Paul Westerberg. Called "Rip. Sample. Smash. Share", the disc will be issued under a Creative Commons license (see creativecommons.org), under which "some rights are reserved," which, in this case, "essentially represents a promise on the part of artists and their labels not to sue people for copying their music. Wired, www.wired.com, embarked on the project just to see what happens when artists are allowed to spell out which rights are reserved or waived without involving their explicit permission (or lawyers). David Byrne, who is otherwise signed to Warner Brother's Nonesuch Records, says such file-sharing is not unlike book-sharing. "If you were a publisher," says David, "you didn't say, 'Oh no, Mr. Carnegie, don't go build those libraries -- it's going to destroy our business." In fact, two of the lesser-known artists on the CD -- Le Tigre and the Rapture -- hope the exposure will generate the kind of buzz they never would on radio, perhaps reaching tens of millions of music fans that might otherwise never hear their music. Surprisingly, Hilary Rosen, a former CEO of the RIAA, says she's a fan of Creative Commons, although her comments about it suggests she's still conflicted: "... I don't think the major problem in the music business is that thousands of artists are looking for a legal and simplified method to give away their music." No, but at least 16 of them know a potent promotional idea when the see one: A total of "750,000 copies of the disc are to be distributed free with the magazine's November issue." If the experiment is a success, well, other artists just might start to give away some songs "to promote concerts and related merchandise, as well as to drive sales of CDs and digital tracks protected by standard copyright notice." SAD BUT TRUE "Bob Marley probably wouldn't have been signed because of his strong dialect, Pink Floyd would have been too weird to take a risk on, the Beatles probably had too strong a regional accent - all of them could have been ignored by record companies in today's environment". From a discussion titled, "Label Mergers: Bigger 'n' Better 'n' Rougher 'n' Tougher? At musictank.co.uk (great resource!) MOM & POP JUKEBOX A former Hewlett-Packard product manager and his wife have found a competitive edge against Microsoft, Apple and RealNetworks with a music file-sharing platform that even record companies and artists can love, reports Jefferson Graham in USA Today. "All those companies are spending their time and energies working on lots of products," says Dennis Mudd, ceo of Musicmatch Jukebox, www.musicmatch.com. "We're the only company totally focused on music. And we have the matching technology." That technology, just released in version 9.0, can be downloaded for free, although signing up for on-demand listening runs $7.95 for an annual commitment, or $9.95 on a month-to-month basis. Users create their own playlists -- and here comes the beauty part -- which they can forward to a friend who can listen to the songs "three full times" before access times out. Napster, by comparison, only permits 30-second samples, and RealNetwork's Rhapsody requires a paid subscription. Explains Dennis: "We realized we could pay quite a bit of money for these tracks on the probability that the person would either buy the song when it timed out, or if nothing else, try out our service." EMI's Ted Cohen thinks it's a great idea: "This is a way for music to be enjoyed and shared and artists to get paid, and they're not mutually exclusive." Musicmatch also has attracted labels including Sony, Universal, Warner and BMG. So far, Musicmatch "sells 1.5 million songs a month," and also has "225,000 subscribers to its online radio offerings, ad-free specialty stations that cost consumers $2.95 to $4.95 monthly." A total of 9.6 million people used its media player in September, and "about 100,000 people download the Musicmatch software each day." Those numbers are way smaller than Apple's and Microsoft's. But Musicmatch does have some 600,000 songs from which to choose, and "processes 30 million playlists" a day. That means Musicmatch "goes way deeper" than its competition: "Search for Aretha Franklin on Musicmatch, and it recommends 98 other artists. A similar process on Napster offers 20 artists, 10 on iTunes, seven on Rhapsody." That goes right to the heart of Dennis Mudd's innovation: "There's so much great music out there," he says, "the challenge is finding it. That's what we're all about." INSTANT MESSAGING PLANET http://www.instantmessagingplanet.com Those who do not use some form of IM (instant messaging) simply do not understand how it fundamentally changes your daily life, although those same people would probably totally agree that their worlds are divided into "before the Web" and "after the Web." In any case, IM goes beyond the Web because it can be accessed on cell phones and other mobile devices. To those who understand it, instant messaging is a viral marketing weapon of formidable strength. Bulk up your IM arsenal at this site, where you will find articles and research reports on Wireless IM, Enterprise IM, Public IM, security issues and IM vendors, products and next generation technologies. FYI, AOL's IM product (AIM) is used by 50 million subscribers each month, who send 2 billion text, voice and video messages every day. Ten million cell phones will be IM-equipped in the US in 2004, and the US lags far behind the rest of the world in its adoption of mobile technology. USELESS WONDERS:
GOLDEN BOOMERS "The 45-plus market is the new customer majority, " says Lori Bitter, as quoted by Kenneth Gilpin in The New York Times. "This isn't anything we are making up," she says, "This is real. It's huge." Lori is a partner of J. Walter Thompson's Mature Market Group, and if you don't believe her, then just take a look at Census Bureau estimates that "roughly half of the nation's population will be older than 40" by the year 2010 ... Right now, about four million people a year are turning 50," and that's a trend that will continue for years ... in addition, more than 40 million Americans are already 65 or older." The good news is, these golden boomers tend to have money, and lots of it. According to a firm called Mature Marketing and Research, "those 46 and older control more than half of the nation's discretionary income .. and they own more than three-quarters of the nation's financial wealth." A study by Scarborough Consumer Behavior Research finds that two-thirds of those dollars are spent on "housing, transportation and food," with "the remaining third ... carved into a variety of slices," such as "insurance and investments, health care entertainment and clothes." Another study -- this one by CNW Marketing/Research -- took a look "at the top ten spending intentions for Americans 45 and older put making personal investments and taking long vacations at the top of the list. Other top-ranked spending intentions were consumer electronics and cars (with Ford the most popular brand among those 45-plus). Another key expenditure area is grandkids, upon whom some $26 million was lavished last year, according to NPD Group . Also worth noting, "42 percent of those over 55" say they've bought something online, according eMarketer.com . And, maybe most important of all, the golden boomers do not intend to fade away: Seventy percent of boomers say they plan "to work in their retirement years or never retire ... Almost half said they envisioned working into their 70's, or beyond." BUMPER-STICKER RAP In Israel, "the surprise pop-music hit of the season" is a collaboration between a novelist and a rap artist that transforms 54 bumper sticker slogans into "an aural collage of the fractious and volatile political climate," reports Samuel G. Freedman in The New York Times. Shirat Ha'Sticker -- "The Sticker Song" -- is ubiquitous on radio stations in Israel " and the album containing it has topped sales charts, " having sold "15,000 copies in only two months, the equivalent of 750,000 in the United States." Performed by the rap group Hadag Nachash "over a Jamaican dub beat," the song strings together "slogans as irreconcilable as "'A strong people makes peace,''No Arabs, no terror' and 'Long live the king Messiah.'" Its refrain -- "Kama roa efshar livloa" ("How much evil can we swallow") is taken from an animal-rights bumper sticker protesting "the force feeding of geese." David Grossman, the novelist who came up with the idea to turn bumper stickers into rap lyrics, says the concept came to him after watching a man scrape an anti-Yitzak Rabin sticker from his car shortly after the late Israeli Prime Minister was assassinated. That's when he "fathomed the peculiar and intense importance of bumper stickers in Israel, where sometimes an entire car can be pasted with them." He observes: "The more the dead end of the situation grows, the more frustrated people become ... And the more they are frustrated, the more they are extremists, the more bumperstickers they have on their car. Sometimes you stop behind a car that looks like a shouting demonstration." Mr. Grossman, who is 50 and "best known for magical-realistic novels like 'See Under: Love,' as well as "volumes of left-of-center political essay, including last year's 'Death as a Way of Life,' was introduced to the music of Hadag Nachash by his teenage children. He says the bumper-rap combo is a natural one: "As soon as I was rhyming the lines ... I realized it was best suited to rap. Rap has the energy and immediacy of the bumper stickers." Since Hadag Nachash had "made its reputation with raps about Israel's domestic issues," Grossman and the group's lead singer, Sha'anan Streett, hit it off. Their collaboration was released in June, www.israel-music.com, and has become the group's "most commercially successful, heading toward the 20,000-unit level that brings platinum status" in Israel. "I hear people are even playing it at weddings," says Streett. The song is also helping sales of David Grossman's latest book: "Somebody approached me in the post office the other day," he reports, "and told me, 'My daughter said she should read your new novel because you wrote the sticker song.'" Did you know...? It took the mail order catalog industry 100 years to represent 4.5% of retail sales. It took online retailers only six years to accomplish the same feat. Source: NARM Research Briefs (narm.com) As a side note, according to the Computer Industry Almanac the number of people on the Internet in 2004 is closing in on 1 billion! Projection for 2005 - 1.07 billion, 2006 - 1.21 billion, and 2007 - 1.35 billion! The following is an excerpt from an article titled "Staying Ahead of the Curve" by Peter Spellman, now making its way around the Web and also published as lead article in the new edition of The Indie Contact Bible (indiebible.com) METATREND #2 Music Product to Music as Service Presenting music as a service, like radio or TV, would seem on the surface to be less profitable than selling millions of CDs, but actually, this change will be positive for the music industry. It will be able to sell more things associated with music. But the actual sale of music as a product will make less sense. It will be a move from transaction-based push to flat-fee pull. Consumers have clicked, and they demand access to content by any means necessary. Just as AOL has gone from selling you five minutes of access to a take-whatever-you-want model, music too will move to a flat-fee model. We're not there just yet. But in the next few years, the requisite technology will fall into place. Then most of us will carry a wireless Internet uber-gadget wherever we go - a unified cellphone/MP3 player/ digital assistant/Blackberry/ camera/GPS locater/video recorder/co-pilot for life. This device will receive wireless Internet audio, a loose term I use to describe the various forms of streaming audio starting to appear on the Internet. With streaming audio, you can hear the music you love any time, anywhere. The future isn't about a change in distribution, it's about the atrophy of distribution itself. Instead of distributing things, we'll get access. It's a critical difference. The future isn't about downloading songs and burning CDs. It's about just-in-time customized delivery. Music as on-demand service not as industry-dictated product. Just as in the early days of the record industry (c. 1900), music publishing will once again assume the primary role in the biz. Music will become available for diverse uses dictated by consumers and businesses. How fast will the sun set on the compact disc? Quarter-size CDs that can float among compatible music players, computers, game devices, digital cameras and personal digital assistants are already developed. Of course, a massive installed base of CD players means that the traditional recording industry markets are not going to disappear or even be impacted by digital distribution in the short term. But rising consumer interest in downloads and an increasingly multi-media business-to-business economy opens new opportunities for composers, editors, sound designers, and all forms of audio producer. What You Can Do About It
Marketing by Voice Mail: Voice mail can do more than just capture incoming messages. Make the most of your outgoing voice mail announcement by including in it a brief "sound bite" of marketing news. For example, you can mention a new product or service, or a recent award. It's a great way to bring customers up to date on news of your company, and can be a great conversation starter when you call them back. Just remember to keep it to a few seconds, and weave it into your general announcement. To increase business, don't automatically cut prices. Many business owners are tempted to boost sales by reducing the price of products or services. Problem: Cutting prices significantly reduces profit margin and may encourage your competition to start a price war. Alternatives: extend the time that the costumer has to pay. Rather than decrease the price, give your customers something extra. Offer a "free" initial period in exchange for a long-term agreement. Smarter On-line Bargain Hunting: Shopping.com combines DealTime.com's shopping search engine capabilities with Epinions.com's consumer reviews and ratings platform. Both sites also are available on their own and offer customized searches and purchasing links for every links of consumer product. 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-- "When I hear music, I fear no danger. I am invulnerable. I see no foe. I am related to the earliest times, and to the latest." 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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