A blog for musicians and music industry people. It is a free educational resource and it is also the way I advertise my music consulting services. I am an entertainment professional with deep roots in the music industry. Throughout my music career I have been a major label A&R representative, a music supervisor, an artist manager, a reality show producer, a bass player and the head of a digital record label.
Posts Tagged ‘crowdfunding’
Spotify finally published the specifics of its revenue model. Also, Jared Leto and his band 30 Seconds to Mars revealed lessons behind the documentary about their experiences with the music industry. And several indie artists talked about whether or not crowdfunding is helping them advance their careers in the modern music business.
The Spotify Revenue Model
Spotify published its business model last week in a lengthy article in the Spotify Artists section of its website, finally officially demystifying how artists earn money through the platform. The information Spotify posted is more transparent than anything Pandora and Apple have revealed, combined, reported Business Insider.
Spotify stated that each time a user plays a song, an artist gets as little as 0.6 cents, which means a song would need to be played 166 times for that artist to earn $1 in royalties. But according to the company, “Spotify’s model aims to regenerate this lost value by converting music fans from these poorly monetized formats to our paid streaming format, which produces far more value per listener. The chart below shows the money a Spotify Premium customer spends per year compared to the average spend of a U.S. music consumer who buys music (not including those who spend $0 on music).”
And pennies can add up fast: The company said it has 6 million users paying $9.99 in 2013, which would add up to more than $720 million annually. Spotify also said it will pay out $500 million in royalties to artists by the end of the year and that 70% of its gross revenue goes directly to artists. Spotify did not discuss its advertising revenue, which provides additional income.
Spotify also made projections on future artist revenue based on predictions that the service will grow to 40 million paid subscribers.
The publication of Spotify’s revenue model comes alongside the announcement that the company will be teaming up with analytics company Next Big Sound to create an artist portal that makes Spotify listening data available to artists and their managers for free. However, these features have been available for almost a year through analytics company Musicmetric. Spotify also used Musicmetric data to support a piracy study released in July.
30 Seconds to Mars Offering Advice to Artists via Artifact
Jared Leto and his band 30 Seconds to Mars released Artifact in 2012, a documentary about the music industry and the events leading up to their contentious $30 million dollar breach-of-contract lawsuit with former label Virgin/EMI in 2008. Now Leto is using the documentary as a way to offer aspiring musicians some advice about navigating the modern music industry, said Forbes.
Leto’s band, which also includes Tomo Miličević and older brother Shannon Leto has recorded four albums and sold over 10 million copies worldwide as well as set the Guinness World Record for most shows by a band on a single album cycle. Still, Virgin claimed that Jared Leto and his brother Shannon did not record three of five albums promised by a 1999 contract, while the two argued their agreement was nullified by California labor law, which nullifies contracts after seven years.
While researching the band’s defense, Leto stated, “We were blown away by what we discovered: a convoluted contractual quagmire that was impossible to remove ourselves from.”
Instead of filming a “making-of” video for their self-funded third album This is War, the band decided to film the documentary Artifact, which explores the complicated relationship between major labels and artists and how signing to labels can lead to the accumulation of debt for bands caused by promotional costs, recording studio bills and album advances.
The 2008 lawsuit was ultimately dropped and 30 Seconds to Mars released their third album through EMI. Leto admitted, “Record companies aren’t all bad … The idea of having a group of people bring a vision to life is awesome – the problem is greed.” He added that he is not against labels or the music business: “We’re a global band, we’re on an arena tour right now, and in each market you need people that understand local customs and culture to help you do what you need to do.”
And he shared some advice for young musicians: “… Read some good books, get a great lawyer and don’t sign a record deal until you absolutely have to. Gain as big an audience and community as you can, work on your craft and art, get on the road and tour and then find a partner. You need a record company and if you don’t have one you’re going to have to hire a bunch of independent companies to do what you need to do. There’s no global success that hasn’t had a record company of some kind, a distribution deal, or a publishing deal. You have to have something in place, and that’s not always a bad thing, to have people working really hard for you.”
Leto concluded, “I hope artists and other musicians [that watch the documentary] get to see how nobody is impenetrable. I hope people are inspired that if they feel they’re in a situation where they believe they’re treated unfairly, to fight for what they believe.”
Is Crowdfunding Helping the Modern Artist?
New York-based crowdfunding company Kickstarter finally opened up shop in Australia in November, joining Indiegogo, Pledge and several other specialized companies offering artists the chance to raise money with their fans for creative projects.
Crowdfunding first came into fashion in 2009 as a way to help up-and-coming acts raise money for small projects. But recently, high-profile artists like Amanda Palmer and others have run enormously successful campaigns that have raised hundreds of thousands and even millions of dollars.
Australian website The Vine asked several DIY and indie artists about how crowdfunding has helped their careers, what they think it means for record labels and whether or not they believe it is the future of the music industry.
Popular Australian artist Eskimo Joe said, “I think it’s one very viable future option. Labels have got less and less money to spend, so it makes more and more sense to be independent these days. But bands still need to be able to justify going into a studio and spending $60,000 or whatever making an album, and working with a producer and so on. And that can be hard to do in the current environment of streaming and illegal downloads, when you’re not sure if people are going to buy your music … So it does become trickier to justify going and spending a bit of money, but by the same token you don’t want everyone making records in their bedrooms without a producer or without an engineer or whatever, because the records just aren’t going to be as good without these expert people who bring so much to the table.”
He added, “I think crowdfunding is a really direct way to go straight to your fans.”
Tim DeLaughter of The Polyphonic Spree admitted he definitely feels it will be a major player in the future of music: “… Everyone’s been looking at the internet and how it basically deconstructed the music industry as we knew it. But there’s also a lot of positive things that are happening with the Internet. It’s giving us tools and one of those tools is crowdfunding … It gives the artists this opportunity to raise funds, make the recordings, and not lose the ownership of the songs. That’s always been the real struggle for the artists. And the record companies own it for a lone that you ultimately pay back through success. So that’s what Kickstarter’s done and that’s all from the Internet. I just look at it as all going through a change and there are some tools along the way to make that change happen … You’re talking to a dude who’s been on eight labels – dropped and signed and that’s not including the labels I was on with Tripping Daisy [DeLaughter's band prior to TPS]. I’ve done it all and labels are great – they’re really, really great at helping you out at the beginning – but that tour support runs out really quick and then you lose ownership of your songs … I think bands are becoming savvier on how they do their deals. That business has to change, because the artist getting smarter has everything to do with the Internet.”
Helmet’s Page Hamilton admitted, “We’ve batted it around a little bit because we don’t have a label at the moment. It’s becoming increasingly difficult as an indie band to pull money out of your pocket and not make it back. Album sales don’t exist in the way they did ten years ago … You’re asking the fans to buy tickets and t-shirts and stuff, but really the most important thing is the music. So I guess asking them to help you to pay for your recording makes sense … It’s so hard to make ends meet and get out there and tour. Most bands have other jobs. I supplement my income by scoring movies and producing … I look back to the days of jazz musicians – guys who were barely selling enough to get by and do shows. It’s kinda similar now, and the band you’re investing in is honestly trying to make a great record and not trying to compete with radio music.”
Colette is a DJ, singer and songwriter who has been making dance and house music for two decades. A classically-trained vocalist, she got her start in the business working in clubs in the ‘90s as a promoter, singer and DJ in her hometown of Chicago. A pioneer in combining live vocals with DJ sets, since her single, “Moments of Epiphany” debuted in 1995, she has released several full-length albums as a solo vocalist as well as many more singles and DJ mixes. Her songs have charted on Billboard’s Dance Club Play chart and been played in clubs worldwide as well as prominently featured in films like Sex and the City and The Devil Wears Prada. Previously attached to the legendary San Francisco imprint OM Records, Colette has just successfully raised funds through a PledgeMusic campaign to release her first independent full-length album, When The Music’s Loud on her own imprint Candy Talk Records.
I talked to Colette about her experiences building a successful music career and how marketing and promotion have changed for musicians since the 1990s. She also talked about what it means to be an independent artist in the Digital Age and how she was able to use crowdfunding to successfully release an album on her own.
Thanks so much for taking some time to talk, Colette. How did you become a musician?
I grew up in Chicago and always loved singing. When I was four, I told my mom, “I’m going to be a singer.” I started studying classical vocal performance when I was nine and did it for nine years. I even did all the voice competitions, where I competed against other children, and there were judges that rated me on the spot. It was kind of like American Idol for classical music. And it was really intense, because they did critique me in a way that was not friendly or child appropriate. I also started listening to house music when I was 10. It was on the radio in Chicago, and I probably took it for granted that everyone in the world heard that type of music on a regular basis. And I went to my first party at 14.
So, I had these two worlds of music happening at the same time. When I was 16, one of my friends, DJ Lego said, “You should come and sing over my set.” I thought that sounded like a great idea. I sang through a pair of headphones that were hooked up through the mixer, which is horrible sounding. They’re great if you don’t have a microphone, but pretty terrible otherwise. I thought it was pretty cool, and he kept asking me to sing on songs with him. It was actually a pretty big transition for me to go from singing classically to singing over house music. It took me about a year to really figure out what my sound was going to be. I had this really strict training and had developed a style that just didn’t really work over dance music.
I know a lot of people who have trouble breaking the rules when they learn all of them.
Yes. Luckily, I was still so young that it didn’t take that long for me to get comfortable with it. I realized that I just loved dance music; it really made more sense to me. I could see myself sitting down to write dance songs. As much as I enjoyed singing classical music, I wasn’t going to write an opera. It just wasn’t where my head, heart or sound was. I was the contra-alto soloist for Handel’s Messiah, and I remember these women saying I sounded like a pop singer trying to sing classical music. And I realized they were right.
As soon as I graduated high school, all I wanted to do was house music. I started working with a lot of people and put out my first release as a vocalist when I was 19. I’m actually coming up on almost 20 years of releasing music.
What was it like putting out that first single?
It was really exciting. I was already working in night clubs when I was 19 as a host. In those times, it was a little bit easier to get those jobs, because you could maneuver your way out of having to show your ID, because they didn’t check them the same way as they do now. Aside from working in clubs, all my friends were DJs, and I was also hanging out in record stores. It was really thrilling to have one of my songs on vinyl and to have DJs playing it. At that time, in the mid ‘90s, vinyl was the only format that house music was being released on. And I realized that this was all I wanted to do.
It wasn’t until a year later that I started DJ’ing, because at the time, no one had a band. Everyone was DJ’ing. So, I thought that if I wanted to sing more, I should learn how to DJ. I wouldn’t have to wait around for a friend to hand me his headphones to sing through and could sing when I wanted to. So, I started DJ’ing and singing over my own sets.
I confess that I never got deep into dance or house music culture. So, the fact that I know your name speaks to your success as a DJ. How did you go about marketing yourself? What did you do that you think helped you establish a real career as so many other DJs were falling by the wayside?
I never gave up, and I worked seven days a week. I went to college and got a degree in art. At the time, I didn’t know you could go to school and study electronic music. I know now that there were a couple kids that were doing that, but when I was graduating high school, I wasn’t aware of it. So I went into painting. But at the same time, I was working in clubs. I lived on naps because I was working nights and going to school during the day.
As soon as I graduated from college, I got a job at Gramophone Records and at UC Music. I was still throwing events as well as DJ’ing. I was working every day and constantly. I think sometimes people make the assumption that if you’re working in dance music or the night life industry, you’re just showing up, drinking cocktails and dancing. It’s actually non-stop work. It’s a lot of promoting events, music and really letting people know what is going on and what you’re working on.
That type of promotion is a really difficult skill to master for most musicians. Most of them feel really self-conscious about self-promotion. I commend you for being able to do that, because it doesn’t come easily to most artists.
I think there’s a fine line between talking about music/inviting people to come see someone play and being obnoxious and overly self-focused. Because I started promoting other DJs first, I got used to having those types of conversations, and the process just became very organic. I would go out to other nights and just talk about what we had going on. It wasn’t like I was on a corner passing out flyers. I was genuinely inviting people to experience the music we were putting on.
When I started doing my own music, I kept that same spirit. I wasn’t in their face. I just was inviting people to come and experience the whole DJ night. It was about everyone’s music that was participating, not just my own.
I often tell people that getting people interested in them as artists is difficult. They have to have something else going on in their lives to talk about that isn’t just focused on them. It sounds like you were doing so many collaborations that it allowed you to talk about not only yourself, but also your peers.
Yes. There are so many things that go into making music. And I have always been more of a songwriter than a producer. I will be in the room and have ideas and thoughts about what I want things to sound like during the production process, but I’m always collaborating with other artists and producers and have always been really honest about that.
I know some artists have ghost writers and other people making the music and still claim full responsibility for it themselves. But I always want people to know how many people worked on a song. The only person I know who really does everything himself is Prince.
People think they can do the Prince thing. And not all of us get touched by that kind of genius.
I love working with a group of people and find it really inspiring. I don’t want to be locked up in a studio by myself for eight hours a day, so I’ve always been very honest about who I am working with. I have also always been very honest about my age. I know some people believe everyone has to be 25. But it’s a long road. And I don’t want anyone who is 16 to feel like if they haven’t made it by the time they’re 20, it’s all over for them. It takes a lot of time to make it. And I’ve learned so much throughout the process.
And on that note, what would you tell your 16-year old self, looking back?
Be patient. Keep learning your craft, because that’s the most important thing. There are really no shortcuts. I’m finally just now starting to understand that.
What about the business side of things? I know you wound up signing to OM Records, but now you’re an independent artist releasing music on your own. You are out there promoting everything yourself. What has worked for you business wise?
The business side is definitely just as relevant and important as the artistic side. I became a corporation in 2001, because I think as an artist it’s important to have a legitimate business, especially when you’re an independent contractor.
To be totally honest, I tend to learn everything the hard way. I didn’t have a company, and then I was just DJ’ing. One year, the government totally reamed me, and I paid an exorbitant amount of taxes. My account told me that if I were a company, I would be able to write off all these business expenses. As a person, you can’t. So, you have to have a company. All these expenses are valid. For example, when you buy a flight to go play a show, you should be able to write it off.
Since I set up a corporation, things have become a lot more solid for me, both as an artist and as a business person.
What about the marketing side of your career? Were there specific tactics you used to make sure people knew about you?
I’ve been really lucky, because I’ve worked with a lot of great labels over the years. My first mix CD came out on Afterhours, a big label in Chicago. And then I moved to Los Angeles a year after that. I was playing a small club, and someone from Nettwerk Records saw me singing and playing music. I got my first really big mix compilation with them. And this was around the time Nettwerk had just picked up Coldplay. I actually played an after party after one of their shows. There were a lot of little opportunities that came my way – all these happy accidents.
I did my first big mix with Nettwerk and went on a big tour to support it. And a year later, I got signed to OM Records at the end of 2004. And I had already been working on songs for my first album for three years at that point. I had already released 18 singles at that point, but that experience is just not the same as making a full record in my opinion. Releasing a full album has always been more important to me than making singles. My album that just came out is the first album I’ve released in six years. And I released tons of singles in between my last album and this one. But when I release an album, I usually get more attention from people who listen to music than when I just release a single.
I think it’s easier to be faceless on a single. A body of work speaks more to the culture of an artist. And we’re not selling recorded music as much as we’re selling a branded culture these days.
Now that you’re doing all this on your own after having been on a bunch of labels, how are you experiencing your career differently?
One of the reasons I decided to release the album on my own is that the climate of the label system – especially independent labels – is really tough for artists. In the last eight years, people have developed the ability to download music for free wherever they want, and that has made it hard for any label to exist. They have to find different ways to monetize, and it’s usually by selling merchandise – not really by making music.
I really believed in this record. I played it for a lot of labels, and they wanted to change little things here and there. I had already changed the record to the point where I knew it was done and I needed to put it out, because we had written and re-written and re-recorded everything. We wrote 20 songs, and in the end, only 11 made the cut.
Making music is all a matter of opinion; there’s no fact attached to what makes a good song. And I didn’t want to wait another year for my songs to come out, so I decided to do it on my own. And doing it on your own is so much work, but I know what’s going into it now. I know how much needs to be done, and I know it’s getting done, because I am responsible.
Well, and you hired Girlie Action to help you with PR. Can you talk me through that process a little bit?
When I decided to be an independent artist, it became important to me to have a publicist. I actually think a publicist is even more important than a label in the current climate. Because you can release music on your own now, you need people to know about it. And of course, labels hire publicists.
I started a label two years ago, mainly so I could release music whenever I wanted to and not have anyone else dictate the style it should be. It’s similar to why I started DJ’ing: I didn’t want to stand around and wait for someone to tell me I could sing. As a person making music, I don’t want to wait around for a label to tell me when and how I could release it. It was perfect, because when this album was done, I already had a home for it. But I still had to worry about people knowing about it. You can make an album and put it out, but if no one knows about it, what’s the point?
I had been talking to one of my friends, and she worked with Girlie Action and said they were amazing. I asked around, and all the reviews were great. And I have to say, now that I’ve been working with them, I think they’re great. They’re an amazing group of people, and I love that they listened to the record before they made a decision to work with me.
It’s so tragic, but some PR firms really don’t listen or don’t care what it sounds like. They will just take your business.
And you want a PR firm that believes in your project. You want your PR company to be able to tell people, “We love this record, and we want you to listen to it” and mean it. Otherwise, the message is, “This artist paid us some money. You should listen to this record.”
Did you hire any other team members aside from Girlie Action?
So, your label isn’t distributed by one of the affiliates of a major?
It’s distributed by Orchard. I’ve only been with them for a little while. And we’re looking for someone to do the licensing, which has been challenging. Once again, anyone who is really worthwhile to work with can’t just be called up. You have to have someone introduce you. That’s one of the things that’s really interesting about being an independent artist or having a very boutique label: It’s really true that “It’s who you know.” The company I’m looking into, for example, has an email listed on its website, but then it says, “We don’t take any solicitations.” So you can’t just approach.
You have to be vouched for. It’s just the way it is for companies of value. If you can come through the front door, the company is often just not of as high quality.
Because I have been making music for as long as I have, I’ve met a lot of people and luckily discovered I already have some connections with people I want to work with. It’s not an easy road, but at the same time, because of all these different relationships I have, I’ve been lucky to be able to connect to a lot of the people I want to work with.
And you got funding for this album through a PledgeMusic campaign. Do you have advice for people who are self-releasing music using this method?
The reason I chose PledgeMusic over Kickstarter or another crowdfunding platform is that it’s specifically for musicians. I was nervous about doing it, because it’s promoting yourself and also asking everyone to help you in the biggest way possible. We’re in an age where people can just go online, Google a song and find a place to download it. And when you do this type of campaign, you’re saying, “I’m trying to make this music, and I can’t do it without your help.” And you don’t know how people will react. But I needed the help, because making an album is a huge endeavor. I actually put in more money than we made through the Pledge, so we didn’t really do it all through that campaign. I found out about crowdfunding a little bit late. I know there are some artists that have a Pledge campaign running for a whole year while they’re making a record, so you see the process happening. We had already made the album, so we just used PledgeMusic to tell people we were releasing it and give them a chance to pre-order it. We needed help with mastering, mixing and printing the CDs.
The experience was really incredible. I couldn’t believe it. It was one of the hardest things I’ve ever done, because it was promoting the music in a way I had never promoted anything before. I was talking about my music every day, and it was really an intense experience. A crowdfunding campaign is the one time when you really have to do what you were talking about before: You are constantly saying, “Check me out.” Because, the campaign only lasts 30 days, and you need to get people to help you release the music.
Everyone was so positive throughout the process. We played music for them before it came out. And people had conversations about songs with each other. I’ve never done that before.
What was the biggest driver for the campaign? For example, did social media bring more awareness or was it email, etc.? What was the most successful way to get people to pledge?
It was definitely social media. I had email lists, but I’m not sure why people really signed up for them, because they weren’t participating. It was all Facebook and Twitter. And also, my husband really rallied. He was helping with the campaign every day. I think it’s a little bit easier when you’re promoting someone else than it is when you’re just talking about yourself. My husband made up games to help with it and he actually got all these people who don’t even listen to dance music to pay attention and come to support the project because they were excited to help an independent artist.
You have to remember that it’s not just about your genre or your little world of music. There are people out there that just really love the idea of others making art and putting it out. And they will be there to support it if they can find it.
How did you determine the different tiers of participation and rewards?
I spent a lot of time researching the process before I actually did it. I looked at other people’s PledgeMusic pages and saw what they were offering. Some of the offerings were kind of silly. For example, one person said, “I’ll get a tattoo with you,” which I thought was incredible. But can you imagine getting a matching tattoo with an artist you really love? It’s kind of amazing.
Well, and Tool put up some pretty crazy things, which I think they intended to be a joke. In some of the higher donation ranges – I think $5,000 – $15,000 – they had something along the lines of, “You can drop acid with us.”
Wow. I am definitely not so adventurous that I would want to get a tattoo or drop acid with anyone, but when I was figuring out my levels, I actually found a box of cassette tapes that had my first mix on them. They were from 1998 or 1999. And that was one of the things I put up, because people were always asking about this tape. And it was funny: Those who bid on it didn’t know it was a cassette tape. And they were surprised it was an actual tape when they got it. I had been pretty clear that it was a cassette tape and even had a picture of it. And they were excited, but a lot of them didn’t even have a tape player. But we have a link to the digital version, so I was able to send that out to people.
So, I had the mixtapes. And then, the thing we did that was pretty different was that we threw a party through PledgeMusic. It’s happening next month at the Viper Room. And you can only get tickets through PledgeMusic. It’s been insane. I’ve never sold tickets to a show three months ahead of time. Normally, I’m amazed if I even sell 10 presale tickets. Everyone usually just shows up and pays at the door. And we managed to sell out. It should be a really cool show. Mark Farina is going to play a mushroom jazz set. And then I will perform all the songs from my album. I’ve never really done that before. I will usually perform four or five songs from a new record. So, this will be the first time I’ll do the whole thing. I thought that would be really special to offer through PledgeMusic. Putting together this show was the most stressful part of my campaign, but it worked out.
I also had some other rewards that were interesting. I sold an old tour mic and also had a few Skype sessions. I’ve already done those. Those were interesting, because I thought people would just want to talk about music, but they really wanted to talk about everything. They wanted to talk about what was going on with me, but also what was going on with them. In the end, everyone was so sweet.
And speaking of that, where do you feel like you connect with your fans the most personally?
I would say Facebook has been great for me. I have a website, but Facebook is where I can have the most interaction with people that want to learn about me and hear my music.
The Economist noted the increasing popularity of “on-demand touring” to help bring artists more income from live performances. And the White House’s chief economist spoke at the Rock & Roll Hall of Fame about how the larger economy is shifting towards a “winner-take-all” economy similar to the one within the music industry. Also, the launch of iTunes Radio had experts discussing how Apple’s latest business model might once again change music.
On-Demand Touring on the Rise
Artists’ live music income was a major topic of discussion at the recent SF MusicTech Summit, and many attending develpers and entrepreneurs stated that the machine of touring is not bringing artists enough money, according to The Economist.
Fans still demand concerts, but new options offered to them by digital tools has led to a significant decline in live concert attendance. Many are not interested in going out when they can see live music streamed on their computers and mobile devices. And others say the ticket-buying process has become so unwieldy that they opt out of buying altogether.
Cellist Zoe Keating is one music entrepreneur that is uncovering new and creative ways to earn money from live performance. She publicly complained about the paltry income received by artists via streaming services for the past several years, announcing via her blog that she gets $0.0033 per play through Spotify. Yet, she is earning $200,000 – $300,000 per year almost exclusively through live performances.
Solo performance and a lack of manager helps Keating take more money home. When she tours, she travels with, at most, a designated merch peddler. But it is Keating’s ability to read her social media analytics that have helped her succeed. She looks through the data from her social networks to determine the location of her biggest fans and their favorite songs. By using SoundCloud, she measures which cities and countries bring her the most clicks so she knows where to travel, then reads comments for information about their favorite music and builds set lists based on these preferences.
When Keating began to use this system last year, she realized she had a large number of fans in London. On her own, she booked and sold out a show at a 100-seat jazz club in East London. And she turned to Songkick – a London-rooted live music site – for help booking an additional London show at St Giles-in-the-Fields in Camden with a 300-person capacity.
In response to the on-going challenges artists are facing with making money off live music, Songkick and other companies are starting to develop crowdfunding programs to help. Sonkick’s Detour allows music fans to order advance tickets for potential concerts not yet planned, which shows artists how much money they might make if they travel to a specific city and play at a specific venue, before they invest the money in making the show happen. According to Ian Hogarth, co-founder of Songkick, after investing in venue rental, flight and equipment, Keating would have made somewhere between $3,000 and $4,000 for her London mini-tour.
Detour and other services are starting to show that fans will still leave the house to enjoy live music if process of buying tickets and the show experience itself is streamlined and organized. Hogarth said, “Instead of waiting, fans say ‘here are our credit cards, we’re in.’” And tour crowdfunding also helps make the artist-fan connection more direct and personal.
Additionally, because many venues do not like working directly with artists whose fans don’t crave giant concerts, “on-demand touring” could be a great route for DIY and independent artists.
The “Winner-Take-All” Music Economy and Income Inequality
White House chief economist Alan Krueger spoke at the Rock & Roll Hall of Fame on June 12 about how the music industry’s provides insight into how the overall economy of the U.S. is changing, reported The Washington Post: “The music industry is a microcosm of what is happening in the U.S. economy at large … We are increasingly becoming a ‘winner-take-all economy,’ a phenomenon that the music industry has long experienced … [T]echnological change, globalization and an erosion of the institutions and practices that support shared prosperity in the U.S. have put the middle class under increasing stress. The lucky and the talented – and it is often hard to tell the difference – have been doing better and better, while the vast majority has struggled to keep up.”
Kruger added that this is most visible in the music industry when looking at the big concert revenues going to the most popular bands. In 1982, the top 1 percent of performers earned 26 percent of concert revenue, and now, they earn 56 percent. He notes that technology is controlling that shift. A hundred years ago, a singer could only perform for as many people as showed up in the places he was able to travel. Because of high-quality recordings distributed to billions of people with one click, everyone now has access to endless amounts of music that exactly fits the type of music they like best. And that makes the process of building a fan base incredibly challenging for aspiring, emerging and mid-level bands and artists.
Kruger pointed out that despite all the opportunities for reaching music lovers technology has given all artists, luck still plays a huge role in which songs and bands achieve major success. He noted that during a study conducted by Matt Salganik and Duncan Watts, participants were given the opportunity to go on the Internet, listen to songs and download the ones they liked. But the researchers threw a cog in the wheel by showing some of the study participants a ranking of which songs had been downloaded the most previously rather than just a random collection. And the appearance that a track was in high demand actually did lead more people to download it. Kruger noted that this shows the music business is not a “pure meritocracy” where the best float to the top; instead, “popularity breeds greater popularity.”
Kruger added, “In addition to talent, arbitrary factors can lead to success or failure, like whether another band happens to release a more popular song than your band at the same time … The difference between a Sugar Man, a Dylan and a Post Break Tragedy depends a lot more on luck than is commonly acknowledged.”
Will Apple Transform the Music World again with iTunes Radio?
iTunes chief Eddy Cue officially announced the launch of the new iTunes Radio service at its developer conference in San Francisco on June 10. For many months, analysts have been wondering whether Apple’s entrance into the streaming music market will crush current leaders like Pandora and Spotify. But Paul Sloan of CNET revealed that this question could be irrelevant, because the digital music revolution is really just beginning.
Pandora was the first to criticize Apple’s lateness to the party, reiterating its command of the market with 200 million registered users, 70 million regular listeners and 5 billion stations. Even Nokia felt it was more forward-thinking than Apple on music streaming, when a company spokesperson announced, “We launched our streaming radio service in 2011.”
Apple’s announcement that it was entering the Internet radio and streaming music space was subtle, likely because it did not strike deals with all three major music labels until the Friday before the keynote. Cue demonstrated the features of the service and how easy it is to use as Led Zeppelin’s “Whole Lotta Love” played for 6,000 attending Apple developers. Considering how long it took Apple to develop the service, the short, four-minute demo that did not oversell the platform was a surprising first introduction.
And as Sloan noted, “This is a giant opportunity for Apple, which also makes it Apple’s to mess up.”
Streaming music now makes up the fastest-growing part of the music industry, but a majority of the world is still stuck on AM/FM radio. However, listeners continue to move to online channels, whether to hear AM/FM stations or stream digital radio. And despite Pandora’s popularity and growth, it is not a global service, which could be a major challenge going forward with the globally-recognized Apple and iTunes brand. Apple struck deals directly with labels and publishers, whereas Pandora goes through PROs in each country, which means growing to new markets is expensive and wrought with challenges.
Comparing iTunes Radio to a service like Pandora might work now, but once Apple officially launches its service in the fall and likely expands to new countries including the UK, France, Germany and Japan shortly thereafter, Pandora could lose its footing. iTunes is already available in 119 countries and territories.
Michael Nash, a music industry executive and former head of digital for Warner Music noted the real significance of iTunes Radio: “This is the first global radio deal that any service has established … This type of service does not exist in many places. This is not about feature enhancements. Apple is in a position to execute, and no competitor has a business partnership with the music industry or a music operation in place to match them.”
And because iTunes is a worldwide phenomenon, Nas said that Apple has access to rare data that calculates local tastes and genre popularity. Pandora uses musicologists who log music through the 13-year-old Music Genome Project, which does not make the company competitive with Apple, even if it can expand to new countries.
Nash has worked on countless deals with iTunes: “Apple has the best music consumption data of anybody … They know not only what’s in your music collection, but what you listen to and how often you listened to it. That’s huge in driving recommendations.”
Additionally, historians note that Apple was not the first to bring a digital music player, a smartphone or a tablet computer to the table. It instead took its time bringing these to market, and the result has been, in all cases, wild success.
A Nielsen study found that untapped resources within the music industry could increase revenue by billions of dollars. And Twitter hinted that its new music discovery app could release later this month. Also, a report showed that retitling is steadily becoming one of the top problems faced by artists and publishers.
Fan-Artist Connections and Premium Content Key to Increased Music Revenue
The billions of dollars in revenue lost by the music industry in the past decade could be recouped by allowing music lovers to connect more personally with artists and by offering premium content to fans, according to Billboard and a Nielsen study.
The study was revealed on March 12 at the SXSW panel “The Buyer and the Beats: The Music Fan and How to Reach Them.” The survey was of 4,000 music consumers, including PledgeMusic users and fans attending SXSW. The questions explored how enthusiastic the different types of consumers were to connect with artists through exclusive music merchandise and premium content.
Nielsen discovered there could be incremental revenue totaling anywhere from $450 million, to $2.6 billion if artists, managers and labels improved the products and unique experiences offered to fans. Chief Analytics Officer at Nielsen Entertainment Measurement confirmed the findings: “Fans want more … There is an unmet need there. There is a desire to engage at a different level than what they have.”
Of course, the concept of building highly-personal relationships between artists and fans is not a new concept. Crowdfunding sites like Kickstarter allow artists to enlist the direct support of fans as they work on new projects and, in turn, offer these fans special goods and experiences that get sweeter for fans the more money they contribute. For example, if more artists capitalized on these types of platforms, instead of getting just $15 for a CD from a die-hard fan, an artist could get $300 in exchange for a CD, a t-shirt and a 30-minute Skype conversation.
Nielsen’s findings extended beyond crowdfunding and superfans. Even less engaged fans will pay for premium content if it is offered. Over half (53%) of the most active music buyers said they would pay for exclusive content while a band they like is recording a new album. And while those that spent less on music overall were less interested in paying money for premium content, 22% of listeners that spend an average of $73 per year still admitted they would spend money on special content.
Zack stated, 80% of survey takers were referring to major label artists when they said they would pay extra. However, those that spend a lot of money on music annually were more likely to be interested in indie artists than those that spent less.
But even if more artists take advantage of crowdfunding sites like Kickstarter, there could be a problem when dozens or hundreds of artists are fundraising at the same time. CEO of PledgeMusic Benji Rogers took part in the study and said that “donor fatigue” could be a real problem if too many bands are constantly asking their fans for money: “I think we have to change the conversation. Part of what we did different at PledgeMusic was we didn’t show the financial target. One of the reasons is, I don’t think it’s about the money. [Fans] want experience.”
Twitter Working on a Music Discovery App
Twitter has a standalone music discovery app in the works, thanks to technology attached to its recent acquisition of the music discovery service We Are Hunted, said CNET. The app will be called Twitter Music and could be available on iOS as early as late March.
Twitter Music offers up artist suggestions based on user behavior and is personalized based on which accounts users follow on Twitter. Songs stream through the app courtesy of SoundCloud.
The release of Twitter Music will coincide with the overhaul of Facebook’s music section of its News Feed. The app provides proof that Twitter is finally working towards becoming a comprehensive media company and acknowledges how integral music has been to, in particular, attracting new, younger users to the platform. Pop stars are incredibly popular on Twitter and some are followed by tens of millions of fans. The TwitterMusic account already has 2.3 million followers.
Twitter also released a video sharing app in January called Vine, but the Twitter Music app will, firstly, be different because it will have Twitter branding. Once launched, the app will feature a guided tour. Once signed into the app, those with Twitter accounts will get personalized music recommendations. Non-Twitter users will also be able to use the app, which could convert new users. Twitter Music is also very artist friendly and will allow users to follow artists on Twitter directly from the app.
The We Are Hunted free music discovery service technology will run Twitter Music. We Are Hunted was started by a group of Australian software developers in 2009 and is still available, though it was acquired by Twitter sometime within the past six months. The service builds a Billboard-like chart for online music and tracks popular songs on blogs, social media, message boards and BitTorrent. Through the service, users can stream music, build playlists and share songs through social media.
Industry experts continue to speculate whether or not an influx of new users on Twitter Music will be enough to make it competitive with the many other popular companies that offer music discovery features, especially since it will not provide offline storage of songs and other attractive features. Pandora has over 67 million users and Spotify has 24 million and growing. Facebook also made music discovery a major focus of its latest news feed redesign, and, of course, Google is in the process of securing licensing to create its own subscription music service.
However, Twitter Music could boost successful artists’ abilities to forge new relationships with their fans on a platform they use many times daily.
Is Retitling a Real Threat to the Music Industry?
The music industry has been intensely focused on curbing piracy for the past decade, but retitling could be just as much of a threat to artists’ and publishers’ royalties. An infographic published in Memeburn revealed how ingrained retitling is and the negative effects it could have if it continues to grow.
“Retitling” refers to the phenomenon where a music licensing company re-registers a song under a different title with a PRO, so that royalties are tracked separately for different sync placements and the music licensing company gets a share of the placement royalties.
The infographic report was originally published by The Music Licensing Directory and points to the complexity of the retitling problem, especially when it comes to existing artist, label and publisher contracts. The report said: “Sync placement is the strategic airing of a song across different mediums, such as television shows, films and games. The person who decides which song to put where and when is the music supervisor and they deal with the music licensing companies directly.”
Getting a song into a TV show can be challenging, because the relationship between the artist and the music licensing company or publisher must be solid. Artists record the song, sign the rights over to one or many publisher(s) as part of an exclusive or non-exclusive deal. Then the publishers pitch the song to different music supervisors. When the deal is non-exclusive, the publisher will frequently retitle the song with a PRO, giving the artist writing credits and the publishing company publishing credits. This should technically provide a 50-50 split return on royalties. However in an exclusive deal, the publisher often only gets 20-35 percent.
Retitling regularly causes the same song or songs to go to many different publishers. So, the same song will get pitches to TV shows, films, games, etc. over and over again under different names. The result is, the music supervisor will not know who should get the publishing royalties.
Winston Giles, CEO/Founder of the Music Licensing Directory said, “Music supervisors are becoming more and more reluctant to accept retitled works, and some of the bigger studios and companies are now refusing to work with retitled works in their productions.”
And the infographic shows the extent of the problem: Of the over 1,500 companies worldwide that identify as music licensing businesses, 40% of them retitle tracks. And only 420 of the companies have been confirmed by Giles and his team to be legitimate.
However, digital fingerprinting technology could offer some relief and help eliminate retitling. It identifies a song’s data automatically and records its broadcast details. But Giles admitted, “Some royalty collection societies have begun the implementation of digital fingerprinting. However, there remains no industry standard and the adaption away from archaic cue sheets to the new technology has been very slow.”
Ultimately, technology alone will not solve the retitling problem. Artists will need to better educate themselves before signing any contracts in order to maximize their royalties.
Holiday music sales were down this year in comparison to 2011. And music startup investment hit $600 million in 2012, bringing to light several music startups to watch in the coming year. Also, Billboard.biz reported that reversion rights might significantly change the music landscape in 2013.
2012 Holiday Music Struggling to Sell
Holiday music sales are down this year, according to Billboard.biz. Without a best-selling album like Adele’s 21 or a definitive Christmas hit like Michael Buble’s Christmas, the usually-busy music sales season has been slow. Compared to the period between November 12 and December 23 with weeks 46-51 of last year’s SoundScan calendar year, unit sales dropped 10 percent to 54.9 million from 61 million copies scanned last year. However, digital album sales were up 5.3 percent, while CD sales went down 15.4 percent.
Even though year’s 51st week on the SoundScan calendar included December 24 – a huge shopping day – analysts say the 52nd week of 2012 will not likely add much extra to the year’s sales. Last year’s holiday season boasted Drake’s Take Care, Buble’s Christmas, Nickelback’s Here and Now, the Black Keys’ El Camino, Adele’s 21, Young Jeezy’s TM 103: Hustler Ambition and Justin Bieber’s Under the Mistletoe, which combined offered weekly sales of more than 200,000 units on 12 different occasions during the holidays. This year, sales only hit the 200,000-unit mark four times with One Direction’s Take Me Home, Taylor Swift’s Red (which hit the 200,000-unit mark twice) and Rihanna’s Unapologetic (which sold 238,000 in the period around Black Friday).
While many music merchandisers complained of lackluster music sales, others said that business was not down for those not relying on music. For example, Newbury Comics, which has branched out into fashion merchandise, experienced a sales boost this year because of its shift in focus. And Super D’s CD online sales and online fulfillment company’s VP of retail sales Tim Hinsley said he believes there was significant sales growth this year, even though VP of wholesale sales Bobby Miranda took a slightly different view: “Some were up a little, and some were down a little … Retail saw a last minute rush … There weren’t a lot of releases that made an impact. There wasn’t a blockbuster release that sold throughout.”
Newbury Comics’ chain director of purchasing Carl Mello said that Red sold well, but there was a lot to make up for with the lack of “200k deltas” in 2012. But there were “a lot of albums that did what you hoped.” There was Bruno Mars’ Unorthodox Jukebox, Alicia Keys’ Girl On Fire and several other new heritage artist titles like Led Zeppelin’s Celebration Day DVD and the vinyl versions of Beatles’ catalog albums: “At the end of the day, there was a lot of decent records, but with less demand.”
Music Startup Investment Hitting Big Numbers
Music startups raised record dollar amounts in 2012, according to a recent post in Digital Music News. This year, investors shelled out $619 million to music startups. And much less money was invested in companies attached to music, with even less being given to businesses that license music.
Despite the over $600 million raised by startups in recent months – which represented a 34-percent increase in funding among startups compared to funding in 2011 – Billboard asserted that the dollar amounts are a bit skewed, as not all are strictly music companies. For example, Gumroad, which got $7 million, has an online direct-to-fan solution for musicians and labels, but is not only a music service. And Backplane, which got $4,500,000 is an online social network that has been pushed by Troy Carter and Lady Gaga but is not any more music related than Twitter or Foursquare. And there are many others that do deal in music, but only because they help build brands, offer software, hardware and media or provide ticketing solutions for people in all industries.
With all the companies that are not exclusively music related removed, $398 million was raised by companies rooted solely in music. And of that amount, $230 million went to on-demand, licensed services like Spotify and Deezer, thus proving what many have said is impossible: Some companies that require negotiated licenses can actually raise millions of dollars.
And Spotify and Deezer are major points of focus for those who are hoping for evolution away from the current digital market that is heavily focused on Amazon, Apple and Google. This $230 million is invested in changing the way people listen to music and will probably bring about the most revenue and the biggest mergers, acquisitions and IPOs.
Investors also spread out $168 million among music startups not concerned with licensing issues. Radio services like Senzari, TuneIn and the social radio service attached to Spotify Soundrop collectively took in $20 million.
Analysts do not expect digital music services other than Spotify and Deezer to raise huge amounts of money in 2013. However, more money could come into the industry as a result of those services. Other companies like Soundrop will likely establish themselves as streaming companies grow.
And who among the startups funded in 2012 will make it big? Billboard reported there are several to watch in 2013, including audio hosting site SoundCloud, e-commerce and Twitter hybrid Chirpify, e-commerce tool Tictail, crowdfunding site PledgeMusic and music recommendation platform The Echo Nest.
Will Reversion Rights Change the Music Landscape?
2013 is officially the year that the copyright licenses or many master sound recordings will expire for many albums. And this will put many albums released in 1978 in line for potential reversion of ownership from labels back to the artists. Still, the only artists to file notice of termination with the U.S. Copyright Office have been artists including Pat Benetar, Journey, Devo and Billy Joel. And even experts and analysts are unsure of exactly how reversion rights will impact the industry, said an article on Billboard.biz.
Some artist supporters have said that reversion rights will be “cataclysmic” for the industry and could be the beginning of a major and fast evolution. Still, label executives maintain that their companies will not see any significant change, and that it could just be an “overhyped potential disaster” in line with the Y2K non-event of 1999/2000.
There was no federal copyright law for master recordings before 1972, so discussions of what will happen have been surrounding albums released after that year. After 1978, there is a 35-year copyright period, which will expire for artists that file a termination notice. Master recordings that were made between January 2, 1972 and December 31, 1977 are protected for 56 years. Artists have five years to file their notices. Those with 1978 recordings needed to file their notices between 2003 and 2011 to get back recordings in 2013, but can still file until 2016 to get them back in 2018.
Although artists like Pat Benetar, Journey, Billy Joel, Kool & the Gang, Lipps Inc., Roberta Flack and Peabo Bryson have filed their notices, major labels and artists alike have been ignoring these filings. And which albums the notices of termination cover has been confusing.
To make matters even more confusing, artists and the RIAA have been fighting over the provision in a 1,740-page bill from 1999 that stated that sound recordings are considered “work-for-hire” and thus potentially can never belong to artists who were technically employees of a label.
Elliott Resnick, an associate with the firm of Shukat Arrow Hafer Weber & Herbsman said, “The issue is a complex one, and ultimately, this is an area where case law and business practices are still developing.”
An unnamed artist manager reinforced this uncertainty: “It’s kind of a jump ball at this moment … [While artists have sent termination notices to their labels], there is a complete wall of silence from the labels.”
Some artist lawyers are confident that all lawsuits related to reversion rights will be sure victories for them and are choosing high-profile locations for the proceedings in hopes of setting legal precedent. But these legal proceedings will likely be expensive and take a long time.
Eric German, an entertainment lawyer from the firm of Mitchell Silverberg & Knupp said, “If you look at these past artist-label negotiations from a neutral perspective, the parties to these agreements always intended sound recordings to be considered a work-for-hire … that’s why the agreements use that language.”
One area where copyright terminations might not be relevant is in films. Because a movie is a collaborative project with many “creators,” it is seen as a collective work, ineligible for termination. Some have claimed that albums also fall into this category, because there is a band, a producer and often songwriters and musicians involved in its creation.
But lawyer Bob Donnelly, who was a part of the initial 1999-2000 work-for-hire battle said, “It’s a stretch if they will be able to squeeze a typical recording into a collective work. Collective works were created to cover things like an encyclopedia. It strains credulity to try and say sound recordings are collective works.”
When it comes to publishers, there is no work-for-hire provision, so the songwriter frequently gets ownership restored once paperwork is done. And most publishers are keeping their works, even if they see lower profits. One publisher agreed, “It’s hard to get pole position over the publisher in place.” And even though individual songs are up for termination and reversions, these songs will likely not be reclaimed unless part of entire albums, because the revenue from single songs will not support this type of lawsuit.
And will record labels continue their “ostrich strategy,” or will they eventually fight termination notices? Chris Castle of Christan L. Castle Attorneys said, “The whole issue is definitely not settled, and I don’t think anybody wants to have a lawsuit about this … I don’t think either side wants to take a chance and lose. The labels and artists will settle this on a case-by-case basis.”
Many major label executives argue that artists are better off keeping their recordings in house. One unnamed executive said, “There are a lot of levers at our disposal that the record labels can employ in a negotiated settlement in order to retain those rights … We can offer a higher royalty rate for the expiring copyright, and we can sweeten the pot by offering to pay a higher royalty rate for albums that have not yet hit the 35-year point, and we can offer a higher royalty rate on records outside the U.S. Sure profit margins will be less, but record companies will likely end up keeping those rights because of the leverage they can bring to negotiations.”
The executive added that he believes only the top 5% of artists will pursue the reversion process, in great part because of the expense involved.
Another major-label executive said, “Ultimately, this issue will wind up making for a really interesting couple of years.”
Last week was marked by some big wins for independent labels and artists as Clear Channel Media signed a new radio royalties deal with country label Big Machine and DIY darling Amanda Palmer hit the $1 million mark on crowdfunding site Kickstarter. Also, YouTube fine tuned its licensing deal with music publishers.
Applause for Clear Channel-Big Machine Deal
Indie country label Big Machine cut a first-of-its-kind deal with Clear Channel on June 5 that will pay its artists royalties and also potentially spark online radio growth. The deal – effective immediately – will finally pay artists like Taylor Swift, Tim McGraw and Reba McEntire for songs played on traditional radio stations. As part of the agreement, the artists will earn a fixed percentage of revenue on Clear Channel station websites and on its iHeart Radio streaming service, which will allow Clear Channel to run promotional campaigns to increase its online audiences without going over its budget.
Big Machine CEO Scott Borchetta stated that he sees this groundbreaking agreement as an investment in the future of digital radio as well as the first big radio win for a small label: “We’re going to more than double our income from Clear Channel in the short term, and they’ll make it up on the back end as digital continues to grow.”
Radio broadcasters and the music industry have been at odds for nearly 100 years when it comes to paying royalties to artists. Prior to this point, songwriters and music publishers were compensated, but not performers. The chairman and CEO of the Recording Industry Association of America (RIAA) Cary Sherman sang praises for the deal at a congressional hearing, “The Future of Audio,” on June 6: “We’re obviously delighted that the biggest radio group acknowledged that something should be done.”
However, Sherman and other industry leaders said that individual deals will not be the answer going forward; an industry-wide agreement needs to be met. Jazz musician Ben Allison, who is also the governor of the New York branch of the Recording Academy (the Grammy® Awards) said, “Terrestrial broadcasters have an inexplicable ‘free ride’ when it comes to performance royalties … This makes corporate radio the only business in America that can legally use another’s intellectual property without permission or compensation.”
Broadcasters also want to keep government out of the radio royalties issue. The National Association of Broadcasters (NAB) issued the following statement after the Clear Channel-Big Machine deal was announced: “NAB remains steadfastly opposed to a government-mandated performance tax on local radio stations.” The radio industry’s recurring argument is that radio provides free promotion for artists that allows them to build their fan bases and sell more records.
Regardless, this past week’s Clear Channel deal shows the corporation is finally willing to invest in online radio and make its iHeart Radio app a priority. Clear Channel Chief Executive Bob Pittman stated, “This is a big step, but we think this investment is an opportunity worth taking to align our interests in all of our revenue streams and grow digital listening to its full potential with record labels and their artists as our partners.”
Amanda Palmer’s $1 Million Kickstarter Win
As the music industry has shifted away from the traditional label system and musicians have had to take control over their own careers, crowdfunding sites like Kickstarter, RocketHub and others have developed as a trend to help them raise money for their creative projects. Indie sensation Amanda Palmer (formerly of the punk cabaret duo The Dresden Dolls) made history this past week when she raised $1 million in one month on Kickstarter to fund her record Amanda Palmer & the Grand Theft Orchestra. According to Simon Usborn of The Independent, her success could be the sign of a huge shift in the music industry.
Palmer made the announcement she would be ditching record labels and recording a new album in April with the help of the fan-funding site Kickstarter. Her goal was to raise $100,000 from fans, who would get a variety of special opportunities commensurate on their level of investment. For a dollar, she said fans would get a digital download of the record. For ten thousand dollars, they would get a whole day to hang out one on one with Palmer herself.
Palmer reached her goal within six hours and in a month, had raised over $1 million thanks to 25,000 fans. This feat caused her to see fan-funding as “the future of music:” “The industry has long needed a new system, and crowd-funding is it.” (As a side note, a party was held for Palmer in New York City this past week where many artists played, including Shayfer James, who has been previously featured in the Musician Coaching newsletter.)
However, many experts continue to debate whether or not the crowdfunding model works consistently for artists, and whether or not cutting out the middle man is a new trend. Radiohead released its album In Rainbows in 2007 through its website and asked that fans pay what they wanted. And SellaBand.com was already offering investment opportunities for fans.
Still, Palmer was the first to make $1 million – more than any record label would invest in an artist the size of Palmer. Manager Colin Roberts, who works at Big Life Management (Scissor Sisters/La Roux) said that while music stores used to get away with charging a lot more money for albums than artists do on their own now, fans were always frustrated about spending. They have come to see labels as rich, powerful and greedy, even though the labels are losing money. Now that fans have a new way to get music, Roberts agreed with Palmer that “the tide has turned,” in part thanks to a change in attitude among artists: “In the past it felt like holding a cap out. Artists used to say, ‘no way!’. Now there’ll be a conversation.” Big Life is currently considering moving to crowdfunding to support some of its acts.
Roberts and others continue to agree that fan funding does not work for every artist. It works best for those that have a strong fan following and a heavy online presence. Without fans, there will be no funding, so new artists will still likely have to rely on traditional models in the beginning (and throw in some money themselves).
Roberts also said that record companies should definitely pay attention when their big names turn towards fan funding: “When Coldplay say, ‘We’ve just done four nights at the Emirates, do we need EMI to sell records?’ That’s when they should be worried.” He added that Palmer’s feat, while impressive is not revolutionary: “What would really change the game is if people could do this from nowhere in their bedrooms … But unless you’ve got hype, that’s not viable. Nobody’s found that model yet.”
YouTube: A Sweeter Deal for Music Publishers
YouTube declared it had inked a deal that “opens the door for more songwriters, publishers and content creators” in its blog this past week. The Google-owned site came to an agreement with BMG Rights Management, Christian Copyright Solutions, ABKCO Music, Inc., Songs Music Publishing, Words & Music, Copyright Administration, Music Services, Reservoir Media Management, and Songs of Virtual , publishers that represent works from artists including Adele, Cee Lo Green, Foo Fighters, The Rolling Stones, Sam Cooke, etc. The deal will give these entities more opportunities to earn money and improve their copyright protection.
Elizabeth Moody, head of YouTube Music’s strategic partner development wrote that the deal will bring “more of the great music you all love on YouTube, and more opportunities for artists to make money.” What that means according to PC Mag, in layman’s terms, for YouTube users is that the next time they upload a video with their favorite song playing in the background, the Content ID system – an audio and video matching tool – might not cut out the audio track or remove the video from the site. The improved Content ID system will give content owners the option to leave the copyrighted material online and place ads next to it that will allow them to earn money.
YouTube made a similar agreement last year with the National Music Publishers Association (NMPA) and Harry Fox Agency. This contract and the previous contract will allow YouTube to monetize nearly all the user-generated YouTube videos with accompanying music. When publishers enable YouTube to run ads with videos that feature their compositions, the publishers, songwriters, record labels and artists will make money, “so they can reinvest in their careers and keep making great music, and the music industry can thrive,” said Moody.
Google has been heavily attacked recently for aiding piracy via the Google search engine and YouTube. While Google has been working to fight this problem, not all within the music industry are convinced. Google announced plans in late May to publish copyright takedown notices on a daily basis, but the RIAA felt this action was insufficient. (See last week’s Musician Coaching news story.)
Evan Lowenstein is the co-founder and CEO of Stageit, a Web-based platform that empowers artists to deliver and monetize interactive live experiences. Evan got his start as a guitarist, singer and songwriter. In high school, he started the group Evan & Jaron with his brother and ogether, they released albums on both Island Records and Columbia Records and had three Top 40 hits, including the Top 10 song “Crazy for This Girl.” With nearly 20 years’ experience in the business as a recording artist, award-winning writer and executive, Evan was named to Digital Media Wire’s list of 25 Execs to Watch in Digital Entertainment in 2011 for the work he did with Stageit. He also founded and served as President of HookUp Feed, a mobile marketing company whose clients include American Airlines, Domino’s Pizza and Cold Stone Creamery.
Evan talked to me recently about creating engaging fan experiences, the importance of resilience, and how artists can financially survive in a time when fans have now become friends.
Thanks for taking the time to talk, Evan. How did you get started in the music business?
The real, honest truth is that my parents were so frustrated that my brother Jaron and I were so uncultured. We were so into sports that we wouldn’t spend a minute on music or the Arts.
My dad said to me, “Hey, if you’ll take up an instrument, your mom and I will really get behind it.” So, I started piano lessons when I was 12, but I hated it. My dad had a guitar from when he used to play in a band, and I started playing it and really took to it. Within a year and a half, I decided I wasn’t going to go to college, because I wanted to play music. My parents objected a little, and I told them, “Hey, I’m really cultured now.” And I started writing songs. I think I was impatient and didn’t want to take the time to learn other people’s music so instead I decided to formulate my own songs and found it to be very cathartic as a means to communicate my feelings.
In the beginning, my friends said we were really good. But, you of course don’t really trust your friends when it comes to stuff like that. We started playing some open mics out in Atlanta, Georgia. And pretty much every club asked us back to play more shows. So, the end of 1994 we cut our first record for $140 live from a coffee shop. We ended up selling about 25,000 copies back when people still bought CDs and would pay $10 for them.
Then, we were discovered by Jimmy Buffett and put out an album on Island Records. But nine weeks after the record came out we were told to go home, We thought about quitting but decided to dig deep and stay in the game. So we dropped $500 on a 3 song demo that got us signed to Columbia Records in relatively short order. That demo contained two songs that would go on top be hits.
I definitely want to jump back into your trials as a musician. But tell me why you believed there was a need for Stageit. What were some of the holes in the marketplace that you felt it could fill?
I had always been fascinated by how artists connect with their fans online. I think I was really well positioned to watch the paradigm shift in the music industry. When I started playing in 1993, it was the old business; it was the way it had been for 40 years prior. And as I began, things began to change. We had a website in 1995. In fact, the record we released in 1996 actually had the URL on the spine of the record. So, we were really digitally minded early on. We spent a lot of time hanging out on the message boards and in chat rooms. And we watched as social media came out and our fans became our “friends.”
Services like Facebook and Twitter began to offer more accessibility, transparency and immediacy and this amazing connection with the artist, which was great. But through the process artists found themselves losing the ability to monetize. And I spent a lot of time thinking, “Where are things headed next?” Once I realized social platforms were headed to video, I started to become really scared that we were minutes away from going back to being waiters, playing when commissioned by others – the way it used to be. And while many would argue that’s where it’s headed, I felt there were things we could do to disrupt that. And it started with awareness. There was just this gigantic conflict between the new generation and the old generation. The old generation still wanted you to spend $18 for a CD with one hit. And the new digitally-minded fans were saying, “How about an a la carte method? Why can’t I just buy that one song?”
I felt like what was missing was a service that truly understood both what the artist was looking for and what the fan was looking for. It was a very uncomfortable position for artists, because, of course they wanted to make money – and any artist that tells you differently isn’t being honest. But at the same time, record labels were suing fans. So artists had to remove themselves from that to keep their fans. And in order to do that, they had to say, “Hey, take our music for free.” But I don’t think that was really the appropriate answer.
So, artists had to find a way to connect with fans. But I wondered, was there a way to monetize that without forcing the fans into it. As a result, I created a platform that really understands the notion that time is money. That’s something that the fans can really relate to as well, because time is money to them, but they also understand that the time is money for the artist. And as clichéd as it is, that concept was really what was missing in the marketplace.
One thing I’d like to add is that prior to Stageit, there really wasn’t any sort of social media platform that was created with the artist in mind. MySpace, Twitter and Facebook were never created with musicians or artists in mind.
Do you consider Stageit a social networking platform?
I wouldn’t categorize Stageit as a social networking platform, but I think that everything today is social media platform to a certain extent.. There are certain times when Stageit acts as a tool and certain times when it acts as a platform. The larger point is that here’s a platform that allows artists to connect with their fans and is truly focused on the artist and the fan.
Some of the other methods and media by which artists connect with their fans like USTREAM or YouTube are not built with the artist and the fan connection in mind and do not offer the same services we do. Are you aware of any other platforms that have the artist in mind?
No. Not that I know of either offhand. There are a handful of platforms, but not those that are purely meant for live shows.
You’ve said a lot of interesting things already. First of all, we’re actually a week apart. I’m seven days older than you and your brother. But as such, we’re really in an interesting place. Because, we could understand what was happening in the music space and were young enough to be on top of it. For example, I was the first person to have an email account at Atlantic Records in 1995. And on the other hand, we’re also old enough to remember the way it was. And as broken as the system was, there was a methodology to the old way, and some things carried over.
I’ve been reading a lot of psychological studies lately about the way we view purchases and media. And what experts are discovering is that people are much more likely to not regret a purchase that was an experience rather than something tangible. So, having an experiential product is extraordinarily important. But as you know – as someone who toured – Stageit really does take out the need for having to go from town to town.
With total respect for your platform, I don’t think the Internet will ever replace shaking someone’s hand. Because, there’s something special about seeing someone in person.
I agree with that.
Do you have any general advice for musicians about putting on their streaming shows, whether they stream them through Stageit or using some other method? Do you see a lot of mistakes being made by artists, or things they should be doing better?
Yes and no. One of the things I also know as an artist is that it’s challenging. I would never tell another artist how to relate with their fans, outside of some general guidelines. Because, any artist that gets on stage is looking at their data points every night– even if they’re not actually calling them data points. They’re tracking what happens. They know when they play a song and it gets a great reaction. So, it’s very hard for me to tell an artist what to do and what works for them, even if it has worked for me.
As it relates to Stageit, we have some artists that come back week, after week, after week. But I might be a guy who can do that once per month. It’s really trial and error and for the individual artist to figure out what works best for them and their fans.
But in general, I think it’s really hard to dispense blanket advice. I could tell you, “Listen, if you want some credibility, don’t ever play in a mall.” And then some credible artist will go into a mall make me feel like a jackass. The truth is that you just need to be credibly and authentic to yourself.
I know there are no hard, set rules. But I think there are a lot of things that artists have magical thinking about, especially in terms of consistently marketing and promoting. Are there things that people misunderstand about live streaming?
Here’s my thinking on this: The blanket statement is, “Don’t ever play a live streaming show for free. If you do, you’re hurting yourself and the rest of the music community.”
I’m not going to go into the whole story about how we became a broadcast medium but suffice it to say, prior to 170 years ago we were living in an era of social media as well. Now, because of technology, we live in an mp3 society where things can be cut and pasted, dragged and dropped and easily passed onto someone else. What’s happening now is that the fans finally have the power.
For years, music fans complained that they were sick of spending money when they only wanted one song and didn’t know the rest of the record. They said, “If you let me have it, I might actually consider paying for it if I actually like it.” Now that they have the ability to do that, fans are saying, “Screw you” to the business and, “We have control, and we’re going to tell you how to run this.”
Before you mentioned the “experience,” I was going to say something about that. And I’d love to see your research on that, because I’ve done a ton of research on it as well. But from a fan perspective, above all, the one thing they understand and can relate to is paying for an experience. What they don’t understand is how an artist can spend six months in the studio, and five years later ask a fan to pay $10 on the product that was created five years prior.
Our fans are everyday workers. They bag groceries, mow lawns, are doctors, etc. They can’t fold one t-shirt while working at the Gap and then cut and paste it and say, “Hey, I have a hit t-shirt.” It doesn’t work like that. Every day, our fans go to work, so they understand that time is money. And this idea is what I started getting freaked out about three, to four years ago when I started noticing we were going to video.
I don’t tell artists that I think it’s a bad idea to give away music or a bad idea to sell it. Whatever works for you – if you have those fans – you should do it. The problem is, selling your music is a very crappy business model, especially in the day and age where people can easily steal it. If you have fans that want to pay you for it, excellent. But you have to understand that people are going to steal your music because they can. The one thing people can’t steal is you, right now, in this moment.
It’s gone on long enough that artists are embarrassed to ask their fans for money, because they feel so guilty about doing it: “Oh – I can’t do it.” They’ve fallen victim to the idea that everything on the Internet is free. Maybe that’s fine. But the one thing that isn’t free is your time. The reason why is because your fans understand that 30 minutes of your time is valuable, because 30 minutes of their time is valuable. So, in the event that you as an artist decide to play on a live, streaming platform and give it away for free, you’re hurting yourself and also really confusing the fans at home. Now your fans will be saying, “Artists are completely worthless. Because, even my time is worth $10 an hour, or $40 an hour. It’s so interesting that artists have no sense of self worth. They think they’re so bad that they wouldn’t even charge for their time.”
That’s my big hang-up about streaming services. A lot of these free streaming services are great if you’re a dude in your dorm playing music or streaming your fish tank. But the second you’re going to create some sort of premium, quality entertainment and people are going to be tuning in, you have to be mindful. Even YouTube is great if you want to make a free video and have people tune in. But when it comes to you live in real time, to not charge for your time is a big problem.
Do you think that we’re almost in a place where people believe a live experience should be free?
Absolutely. And we’re working really hard to change that. There are a lot of people we work with that use live streaming platforms. And it becomes challenging for them, because they have to back out of that and slowly work their way back up. I think artists are starting to get it and realizing they’ve been giving something valuable away for free for a long time.
In general, the biggest comment we got from artists has been, “I wish you guys were around sooner.” And we do to. But we’re here now and apparently just in time. Our success is clearly showing us that it wasn’t too late.
As I mentioned earlier, we live in an era where your fans are now your friends thereby creating what some perceive to be a challenging environment to charge for ones music. The irony is that the artists understand less than the fans that charging money is okay.. Fans are completely okay with spending money on an experience. Artists are a still a little bit nervous about that. They are worried it’s a landmine that’s going to blow up on them.
We give them the data so they can see the reality. At Stageit, we have a ticketing system and a tip jar. We show artists that nearly 50 percent of the revenue on average will come from the tip jar – which is a voluntary spend. I also make the point that by not giving your fans a way to compensate you for your performance, you’re actually taking something away from them. When you’re so hung up on not charging your fans, you’re denying them the right to give you money for something they would like to do. It’s clearly proven.
It was harder to convince artists they needed to charge for their streaming experiences when we first started. But now that we’re getting out there and success is happening, they’re getting more comfortable with it. The fans are already comfortable with it. It’s a giant misunderstanding that the fans won’t pay. In the two years we’ve been in business, I think we’ve only had about two fans comment that they wish we would do something for free.
You definitely have to leave yourself open to patronage, without question.
When I first saw the platform and spoke to you about how it works, the first thing that came to mind for me was digital busking.
That’s totally accurate.
People can make a living with their guitar case open. They can go out and play for a few hours in a crowded train station and walk away with a decent living, depending on where they live.
I did a test case at SXSW last year. There were all these musicians on the street. So, I opened up my laptop for about 15 minutes and played a few songs and made over $100 online – much more than the people next to me, because I played for a worldwide audience. The others were just playing for a few people walking by.
We basically take the idea of busking – which you can do on the subway or on the street – and give it a larger audience.
If you were an artist starting out today – knowing what you know from about 20 years worth of banging your head against the wall as a musician and now an executive – what advice would you give yourself?
This is a difficult question for me. I’d say my biggest advice is, “Don’t get hung up on the mistakes you’ve made in the past.” It’s almost like saying, “Don’t ask yourself this question.”
I would say to go with your gut. You have to believe in yourself. Even when people tell you, “You’re not going to make it in this town,” just keep going. If you had a bad show, a bad review, that’s yesterday, and you have to move on. And you can’t get hung up on past failures. It’s not about getting knocked down; it’s about getting back up. That attitude is the difference between successful people and people that never do anything.
When my brother and I first came out to Los Angeles, we were 17- or 18-years old. We just spent a lot of time on Third Street Promenade. We would play twice a week for about an hour and would make anywhere from $20, to $50. After the first time, there were a couple homeless guys around. Instead of giving them money, we decided to go to the local pizza shop and take them to dinner with us. It became a regular thing to have homeless guys walking into the pizza shop with us. We actually wrote a song about it called “Could’ve Been James Dean” that was on our first record. The idea was that we were actually trading dinner for their stories. I don’t think we ever met a homeless guy that wasn’t “screwed” by the system somehow. One of the guys always would say he “could’ve been James Dean.”
What they all had in common was that they basically threw their hands up and stopped. I’m not saying if you stop playing music, you’re going to be a homeless person. But, they all had that story; they all had somebody else to blame. It was so easy to say, “It wasn’t my fault. I was supposed to get the Vice President gig, but somebody else screwed me over.” They were able to take comfort in the fact that they were dealt a bad hand.
That attitude just isn’t going to fly in the music industry or any industry for that matter. I think that’s the difference between successful people who keep going and those that don’t make it. And, by the way, I’m not going to define success, because that’s really up to each individual person. My main point is blaming others isn’t going to get you very far. So, when your record label drops you, it doesn’t matter. I was dropped hard nine weeks after our record came out on Island Records. We were told to go home. We could’ve easily just blamed them and named the reasons it wasn’t our fault. But instead, we proved them wrong.
To learn more about Evan Lowenstein and the work he does with artists, visit the Stageit website.
The opportunities for musicians that go fully “DIY” was explored this week as they weighed in on the benefits of fan funding sites, and indie record label head Daniel Glass discussed why artists are misunderstanding the concept and missing out on the full benefits of success. Also, Philadelphia-area classical musicians and other professionals within that space discussed how the classical music landscape is changing – but also staying the same – for artists and record labels.
Fan Funding: Practical Support for Unattached Artists
Many artists are ditching the idea that music executives are the key to ultimate success and turning to their fans for support, according to an article published in The Guardian last week. Up-and-coming musicians like Miss Stylie and Esco Williams and the band The Libertines have all begun to rely on crowdfunding sites like Kickstarter and Pledge Music to help them fund recording and touring projects, get their music out there and grow their fan base and build viable careers.
Liverpool-based hip hop/house artist Miss Stylie (aka, Jade Jackson) – winner of the Mercury Music Prize – recently appealed to her fans through the crowdfunding site PledgeMusic to raise funds to get her album produced. She stated that today, artists need to prove themselves as self-reliant master marketers and really establish their personal brand in order to get noticed by gatekeepers within the music business: “People think it’s easy to put out an album but it ain’t like that no more … This industry can be cruel, it can run you over. These days you have to create your own platform before anyone will even look at you.”
With digital transforming the music market, even artists like Public Enemy (who have used Sellaband) and the Libertines are using crowdfunding to get help from fans to move forward with their creative endeavors. Since 2009, PledgeMusichas gone from launching two new artist campaigns per week, to two campaigns daily. Managing director Malcolm Dunbar attributed this directly to the decline in popularity of CDs and CD retailers: “CD sales are falling … so creating your own buzz is much more necessary than it was.” And he added that fans could have the sole power to build successful careers for many musicians, so they need to focus on making them – instead of music executives – happy: “Selling direct to fans will be an integral part of the industry. Fans are an artist’s lifeblood so it is increasingly necessary to engage with them and give real value for money.”
Liverpool-based music writer and owner of the Getintothis blog, Peter Guy said that direct-to-fan business models are all part of the new grassroots movement that continues to develop as digital music transforms the way artists make money from their art: “That DIY spirit has just become the norm … Artists and the people in the music game don’t have to rely on that old record label infrastructure; people are just coming together, working collaboratively and doing it for themselves.”
Esco Williams, another Liverpool-based artist, who has been compared to Marvin Gaye recently made a video using fan funds and just hit his £5,000 target, which will allow him to record his debut album. He said that aside from providing him with the necessary money to complete his important projects, crowdfunding – which, he said, includes creating a buzz at his live gigs and building personal relationships with fans through Twitter and Facebook – has imbued him with the confidence he needed to blaze his own trail: “We’re doing everything in-house; whatever we do and whatever we make is for us, we don’t have to sell out. With a big label, you are not a priority unless you are Beyoncé.”
Because many artists are going their own way, major record labels, like Universal are starting to rely on shows like The Voice to feed them new talent. And musicians that want to achieve stardom are having to create totally new routes, according to Jon Webster, chief executive of the Music Managers Forum: “Above my desk is a sign which says, ‘There are no rules anymore.’” Despite a growing “pioneer” spirit, some continue to be reluctant to use fan-funded sites to sell some of the more non-traditional experiences to fans, such as the opportunity to have dinner or go bowling with bands.
However, Miss Stylie’s manager, Andy Ng asserted, “In this day and age, fans are the taste-makers. In the past, you signed with a label because they had distribution, radio pluggers, press team, but that whole system is breaking down now. It’s a democracy, not a dictatoriship …”
“If DIY is Killing You …” You Might not be Doing it Right
Daniel Glass, founder of the indie label Glassnotes Records spoke at Musexpo last Monday about how many artists are taking the term “DIY” too literally and forgetting that the most responsible business strategy for musicians is to give themselves a chance to focus on honing their craft and creating music. Digital Music News highlighted Glass’ belief that in order to be successful, they need to stop thinking of DIY as a “romanticized, religious idea” and instead surround themselves with a hired team of competent professionals who can prevent the DIY process from breaking the bank, distracting them and even demoralizing them.
Glass said, “I think it’s very difficult to do things without a team. I would hate to have an artist or a manager [think], ‘oh that’s easy, I can do this myself, I can just do the site, do the work, get my records loaded in and everything goes well,’ or ‘I can just sign the artist and go to a distributor and it ends there.”
He added that DIY does not mean what artists have come to believe it means – that they do not have to depend on someone or tell them what to do with their music. Instead, it means “the autonomy of the decision-making on the taste within [an artist’s] operation … I still think that either you’re putting together a loosely or tightly knit team of professionals to perform functions and rent them out or use consultants.”
As an example, The Civil Wars recently won two Grammys. The outside perception was that they did it entirely themselves. While this is true, they also put together a strong team of song pluggers, publicists, distribution people, etc. to support them and spent a lot of money to pull themselves up.
Glass’ most passionately-delivered message for artists was that, at the root of everything is the music, so they need to find a way to focus on that and avoid getting distracted by the other tasks: “My advice to people is not to be too DIY … you should focus on the essence of why you got there. And most of us feel that it’s the music, and repertoire, so if you get bogged down in distribution issues, and payment issues, and sub-contracting issues, I think that’s when you kill your business, and kill your spirit.”
The State of the Classical Music Industry
In major classical music hubs like Philadelphia, classical musicians and industry experts have been examining the effects the digital shift has had on their piece of the recording industry, according to an article published Thursday on Philly.com. Despite many reports that classical music labels are dying or already deceased, a closer look at sales tells a different story and points to the possibility that classical music is simply – like other types of music – growing new legs as the industry changes.
Recordings including the late, great Philadelphia Orchestra music director Eugene Ormandy has enjoyed a resurgence recently in digital stores like rural-France-based Pristine Classical. And Pristine’s Founder Andrew Rose said that Arturo Toscanini – another deceased conductor – also continues to sell “spectacularly.”
Despite the potential for sales, more money can be lost than made by musicians and artists on these recordings. Donald Nally, founder of the new-music choir the Crossing admitted, “One does not record for residual income.” Still, classical musicians are still clamoring to record and spend hundreds of hours on recording after working to raise anywhere from $18,000,to $100,000 to create masters of high enough quality to send to record labels to be distributed as physical and digital product.
Why do they keep at it? Artists see it as invaluable marketing to help them get more live performing opportunities. Flutist Mimi Stillman recently spent $20,000 to put together a two-CD set called Odyssey of 11 new flute works by Gerald Levinson and Mason Bates. For her money, she scored a May 18 radio concert on the coveted Soundcheck radio show on WNYC-FM. Stillman also noted that part of the allure of recordings is the joy of being a memorable part of the very long-standing, prestigious tradition within the classical music world of highlighting new composers who will one day become part of the canon: “When you’re responsible for the creation of new work … you want to launch the pieces so they can enter the canon and have others play them.”
And for long-standing classical music organizations, recording keeps them relevant by building awareness of their presence and keeping funding in place. The Bach Choir of Bethlehem recently re-released its St. John Passion on the Analekta label. Recordings like this help the organization promote its biggest performance of the year, held in May by having something fresh to give to radio stations.
In terms of major recording contracts with labels like Deutsche Grammophon, Sony and RCA, they still exist, and help showcase the talents of music school graduates like those coming out of the prestigious Curtis Institute that might be the next big virtuosos. However, the Digital Age has also breathed new life into nichier releases, because the recording and distribution processes are less expensive than they were in previous decades.
In terms of funding for albums, creative business models have emerged in classical music just as they have been developing in other music markets. Classical music recording guru Ward Marston of Swarthmore, known for putting together lush box sets on his Marston label has found a way to make discs for as little as 40-cents apiece and can thus focus his funds on well-designed,eye-catching booklets. He used to propose projects on his website and wait for interest to grow before moving ahead with a 1,000-set run. Now, foundations have started to come forward because of his focus on recordings of historically-important composers like Chopin. And because of foundation grants and other gifts that help offset the cost of recording and distribution, many classical music labels are able to give more royalties to the musicians.
Classical artists, like artists in other genres are also using crowd funding sites like Kickstarter to raise money. Brooklyn-based composer Missy Mazzoli used Kickstarter to fund a recording of her opera Song From the Uproar. She raised $7,698 from 103 supporters in just 10 days.
Many classical musicians agree they will continue to record because the recording process is a critical part of honing their craft. It requires them to stay disciplined and stay technically proficient. Stillman admitted she still pays for the best sound engineers possible because the quality of the recording is more important in the classical world than it is in any other market.