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MUSIC BIZ INSIGHT #45Power Reading for Busy Music ProfessionalsHope 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 - 2007, Peter Spellman, MBS Business Media, www.mbsolutions.com Please feel free to redistribute with above credit and copyright notice. IN THIS ISSUE — MBI#45:
NEWS & VIEWS U CAN USEThe Industry of Tomorrow: Artists, Labels, & Consumers In the middle of a disruptive technology storm, predictions about future sales models are often difficult to make. Compounding the problem is an already-complicated traditional business, characterized by multiple rights holders and revenue channels. As part of a discussion at the recent Bandwidth music technology conference, Nettwerk Music Group CEO Terry McBride pointed to a future landscape that will offer far greater control and opportunity to artists. McBride, a top manager for artists like Sarah McLachlan and Barenaked Ladies, suggested a future concept of “collapsed copyright,” which will offer centralized ownership over “masters, publishing, and likeness.” That differs from a fragmented ownership puzzle today, which often limits licensing flexibility. But what happens to labels in this process? Majors have largely been suffering in the digital era, especially as consumers migrate away from physical CDs. McBride outlined the current core strengths of labels, which include physical distribution and radio promotion, two areas that are becoming less critical for artist success. Looking ahead, labels may increasingly assume the roles of “bankers and facilitators,” a profile that leverages the power of deeper pockets. Meanwhile, the way that music is soldcould experience a massive shift over the next few years. “Music will finally be sold the way it is already consumed,” McBride noted, pointing to a landscape characterized by fan-to-fan sales, a vision that resembles a model currently being chased by upstart BurnLounge. And the evolution will increasingly be driven by the consumer side. “The biggest retailer in five years will be the consumer,” McBride predicted. Podcast Pickle The sheer quantity of podcasts and videocasts now available make the existence of sites like Podcast Pickle a necessity—how else would you keep up? Last we checked, the directory boasted nearly 10,000 casts. Use the advanced search tools or browse the Top 100 list or weekly picks to find something worth loading onto your own portable player, or add your own cast to the mix. The site automatically downloads new feeds as they are posted by the source; register to create a personal page of favorites, and you’ll be able to access everything you want in one place. Recently launched by the same outfit: Sportpodcast.com and Churchpodcasts.com; other genre-specific sites, including SciFicaster.com and WallSteetpod.com, are coming soon. Record Label.ORG? Verge Records, an independent record label based in New York City, recently announced that it won the Social Entrepreneurship Award at New York University’s Stern School of Business 7th Annual Maximum Exposure Business Plan Competition. In winning the competition, Verge demonstrated its commitment to a double bottom line: financial profitability and social impact, and received $50,000 in seed money from the Stewart Satter Family fund. “Verge is both a social venture and a real market opportunity in an untapped niche,” says Emmanuel Zunz, the label’s founder and creative force. The label showcases cutting-edge, politically and socially conscious music from distressed neighborhoods across the globe. “It’s a style of music which builds upon musical and cultural traditions, and incorporates contemporary elements such as Hip Hop and Electronica, making it accessible to American audiences.” Verge uses record sales to support educational organizations in artists’ neighborhoods working with at-risk youth through music and art. The cycle comes full circle when Verge identifies and recruits promising young talent nurtured by these programs. What kind of application does this story have for your budding enterprise? ))) FEATURE (((You Get it First! Electronic Musician Magazine Interview with Peter Spellman (appearing in the October ’06 issue). Conducted by Senior Editor, Mike Levine Q: Do you recommend the DIY route as a better alternative to the traditional route of “getting signed?” A: In general, yes. In my opinion, the best way to get a record deal is to prove you don’t need one. That is, your act is filling rooms, selling lots of music and merch, securing airplay and media coverage. If you’re an act that wants to get signed, then don’t wait for the record company to do these things for you. You will need to do them yourself. In doing so you build your value in the marketplace so that when you are offered a deal, you’re in the best bargaining position to secure the best deal possible. As my friend George Howard likes to say, “the more you can bring to the table, the less the company can take away.” In the world of business it’s called “leverage” Getting signed also depends on ones level of tolerance for not having control of one’s music and career. Today it is both easier and more difficult to make it in the music business. While there are lower barriers to entry, there is also more competition. And, of course, doing it yourself should not be seen as working all alone. As Derek Sivers of CDBaby likes to say, DIY really means "decide for yourself". Creative artists are moving away from that paternalism of wanting to be taken care of, and waking up to their own creative powers. Someone recently said, "The real social revolution of the last 30 years is the switch from a life that is largely organized for us to a world in which we are all forced to be in charge of our own destiny." There are powers in the artist’s corner today that are brand new; or, more accurately, an expansion of old powers. As Thomas Dolby once eloquently stated: “The computer sets the music industry back 300 years.“ An artist plays directly to his audience and the patronage model re-emerges. An ultimate story of DIY that closes the circle is what occurred last April when Sandi Thom signed a $1.2 million deal with RCA Records out of her basement in London where she had been webcasting her lo-fi performances for several months and building up a nightly audience of 70,000 listeners. How many people would have heard those performances just 10 years ago? The collapsing of distance, which is the Internet, brings the whole world potentially into the same room as you. The key, however, is to start a conversation with those who do show up. Q: In your new book, Indie Marketing Power you state that the major labels are no longer really "record companies." Can you explain what you mean by that? A: Traditional record companies were “soup-to-nuts” businesses—they found the talent, recorded the talent and marketed the talent’s recorded product. This is no longer the case. Since the late eighties major labels have been outsourcing most of the production work to a sort of diffused music production network. This coincided with the decline of “artist development” and the ascendancy of “product development” departments at record companies. So today the major record companies tend to act more like film distributors than production houses. They have the infrastructure and capital to take new music to the public, but little ability to create the music themselves. The solution? Buy up successful independent labels and artist-owned companies, enter into joint ventures with them, or contract with them for distribution. In the future, the new majors will be the telcoms and the power brokers will be Google, Apple, Yahoo and Microsoft. Q: What are the biggest mistakes that artists typically make when they try to market their own CDs? A: Well, first off, just because you can produce a CD doesn’t mean that you should. One of the biggest mistakes is not having built up enough of a market demand to sell to. Just because you build it doesn’t mean they will come. This often leaves the artist feeling defeated and demoralized. I recommend artists see their first recording as a promotional expense, where it’s essentially given away for free, in hopes of breaking new ground and creating some visibility for their name. This is one way you invest in your career. Other mistakes I’ve seen:
Q: You go into a lot of details about generic marketing practices. How many of these skills do musicians really need to know? A: It’s always good to notice the things that haven’t changed during a revolutionary transition like the one the music biz is currently passing through. Things like accurate and consistent communication, the ability to translate product features into customer benefits, follow-up, relationship-building, effective management of the whole process, and customer serviceÉThese are essential skills every musician seeking to shop her music should master. Q: You mention that for a DIY musician/artist, finding a narrow niche can sometimes be a roadmap for success. Explain. A: A market niche is a specialization within a market. For example, a studio musician in the L.A. area who primarily plays piano on country sessions, has created a personal niche. Nashville’s Eric Stone took a love of music and boating and in 1999 turned it into boatsongs.com, music CDs and performances with a nautical theme. So far he’s played in four continents and sold over 250,000 CDs, and his audience continues to grow. He created a niche. Singer/songwriter Ellen Bernfield and her composer/conductor friend Anne Bryant began singing lullabies to soothe and calm their new English springer spaniel puppies. Then their creative juices started flowing, and they decided to produce an entire album of music for dogs and the people who love them. Working out of Anne’s home where Ellen has a recording studio, they produced a CD and fully illustrated book called Songs for Dogs. In order to expand their business, however, they’ve needed to add other CDs to their line, so now the are creating CDs under the umbrella concept music for pet owners. Their next album is Songs for Cats and the People Who Love Them. They found a niche. Your ideal niche will lie at the crossroads where your interests and assets intersect with opportunities you have to meet real-life needs around you. I have an exercise I’ve adapted in my book called “Matrixing” that helps musican/entrepreneurs get at what that niche is. I’ve also developed a whole workshop around this topic. Q: You say in the book, “There’s a huge opportunity for low-volume sales.” Can you explain what you mean? A: By low-volume I mean in contrast to the half million and up the majors are aiming for. Most CDs (both major label releases and indie) sell on avg. about 1100 units. That’s the market. That’s the benchmark, and if you go above that, then you’re having above average sales. No doubt, if you’re going to sell physical CDs, then you’ll need to build a catalog, either through creating your own record company and signing artists, or by partnering up with other indie recording artists of the same genre. No single recording will float the boat. Of course, when you ask this question in the context of digital downloads, you then have a truly global reach with your tracks. The net is facilitating the promotion and discovery of new and seldom heard music. This phenomenon shows consumers’ increasing power to bypass hyped-up hits and follow their own tastes. It also promises more financial support for artists working on the fringes. This has been called, The “Long-Tail” market. As fast as Rhapsody adds tracks to its library, those songs find an audience, even if it’s just a few people a month, somewhere in the country. This is the long tail. Amazon offers 2.3 million books and 57% of these are ordered less than 12 times a year. So, in a Long Tail market, the brands that matter most are the tastemakers. These are the filters you trust, who point you to the niche (or mainstream) stuff you wouldn’t have found on your own. And because you trust them, you’re willing to follow their recommendations, voyaging down the tail with confidence. In the Long Tail, great filters become brands. As the music market segments, entire media cultures grow around each segment, providing channels for promotion. Q: In addition to selling your CD at a gig or offering it for download from your site, what are some other ways for an artist to sell their music (for instance, you mentioned a route via instant messaging)? A: I think it’s important to see it not so much as opportunities to sell CDs, but to build your value in your target market over time. Q: Here’s a quote from the book: The only way to lead in the new world of music is to deconstruct the ruling dogmas of our industry (like, for instance, that records are the best vehicles to convey music and they should remain the chief support pillar of the industry), to generate heretical ideas to challenge that dogma, and then to build strategies around them. Can you give any examples of “heretical ideas” that have already been introduced into the marketplace? A: “Heresy” is only such in relation to the “received tradition”. So what has been the “received tradition” in the music industry?
User-generated content (video, music, blogging, etc) and digital social networks (such as Myspace) are reshaping the value of content and challenging the “professionally-produced” content of the film, music, TV and publishing industries - offline and on. This “consumer empowerment” is the ad industry’s worst nightmare. People have become unpredictable and harder to sell to. Large corporations can’t move quick enough to respond to a dynamic market. It is nothing short of reinvention of the business of market communications, a fundamental transformation from an intrusion-based marketing economy to an invitation-based model. This switch from the push model to the pull, from intrusion to invitation is a fundamental transformation for everyone involved in the business of content, whether the content is a 2-hour film, a half-hour sitcom, a radio program, recorded music, an Internet site, or a 30-scond advertising message. The end users rather than the creators and distributors of content are in control. And that changes all the rules. Q: Here’s another quote: “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 service, not product.” How does the indie musician fit into that scenario? A: The mobile economy enables access to your music anywhere anytime and indie artists should be exploring ways to get involved. Once wireless network access is reliable around the world, we will see an ever-growing surge in digital music options. More options will lead to greater variety, new niche markets, and more opportunities for artists, consumers and music businesses. This is where something like the iTunes music store really shines—by providing deep access to millions of recordings. For example, I love funk music. Have you ever heard of Bama & the Family? How about The Whitefield Brothers or El Michaels Affair? I would never heard of these great artists if someone hadn’t created a “Deep Funk” playlist on iTunes. Now I know these artists, and if I ever hear of any of them performing within driving distance, I’ll be there spending money and lending my support. Any indie recording artist can get involved with this. You want as many people to have access to your music as possible. Also, most music lovers don’t view music as a commodity but as a relationship with a band or artist. This is what Internet technology gives us—new ways to connect with bands. There’s this band Cut Copy from Australia who did the Franz Ferdinand tour, and when they played Los Angeles they had enough people on MySpace saying, “Oh I wish you were playing your own show!” So they booked a show at a smaller club called The Echo and gave discounts to their MySpace friends and sold the place out. Bands like that who keep in contact and get a little more personal with their audience can really have success. How do you envision that working? One of the most important things for musicians to realize today is that every business is becoming a “music business” (Toyota started a record label; so has Artois Brewery in Belgium; Bacardi Rum started a radio show on Live365.com.; and National Geographic is launching a digital music destination. I’m currently helping a natural vitamin company in CA create a music service!). The possibilities are limitless. ))) ILLUMINATING TRIVIA (((Songs that have hit number one by two different artists:
))) BIZ SMARTZ (((Online Shipping Info Detailed shipping information is only a few key strokes away via the Internet. Using your personal computer, you can find correct address information (including ZIP+4 coding), domestic and foreign postal rates, and guidelines on designing business mail. Once your package is en route, you can track it to see when delivery is anticipated, or if it has already taken place. It’s like peering through the digital keyhole to watch the systems that transport millions of packages around the world each day. Resources: FedEx, on the Internet at http://www.fedex.com United Parcel Service, on the Internet at http://www.ups.com United States Postal Service, on the Internet at http://www.usps.gov Only Value Need Apply How much of your day is spent on activities that don’t appear to add value? Wage war on those things. Ask yourself, “What percent of my time is spent doing things that no one would miss if I stopped?” Stop doing them! You’ll be surprised how much time you can free up. Play to Your Strengths Use your time and energy wisely by choosing projects that are a good match for your talents, abilities, and goals. Just because you can do something doesn’t mean you need to do it.
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 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…. The greatest moments of the human spirit may be deduced from the greatest moments in music. — Aaron Copland 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 - 2007, Peter Spellman, MBS Business Media, www.mbsolutions.com Please feel free to redistribute with above credit and copyright notice.
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