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 51^st week on the SoundScan calendar included December 24 – a huge shopping day – analysts say the 52^nd 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.

 

Musician Coaching:

 

Thanks for taking the time to talk, Evan. How did you get started in the music business?

 

EL:

 

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.

 

Musician Coaching:

 

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?

 

EL:

 

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.

 

Musician Coaching:

 

Do you consider Stageit a social networking platform?

 

EL:

 

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?

 

Musician Coaching:

 

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.

 

EL:

 

I agree with that.

 

Musician Coaching:

 

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?

 

EL:

 

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.

 

Musician Coaching:

 

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?

 

EL:

 

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.

 

Musician Coaching:

 

Do you think that we’re almost in a place where people believe a live experience should be free?

 

EL:

 

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.

 

Musician Coaching:

 

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.

 

EL:

 

That’s totally accurate.

 

Musician Coaching:

 

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.

 

EL:

 

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.

 

Musician Coaching:

 

That’s fantastic.

 

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?

 

EL:

 

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.

This past week marked technological breakthroughs as Record Store Day 2012 revealed some innovative new tools to help small business owners, music fans and artists seamlessly combine digital and physical products. And indie bands gained a major supporter as crowdfunding site RocketHub partnered with eMusic to help increase dollars and awareness. Also, Forbes revealed a new book by music manager Tom Gates about how travel can help artists and music industry professionals make sense of the music industry and better manage their careers.

 

 

Record Store Day 2012, Tradition, New Tools and Better Business

 

This year’s Record Store Day was more exciting than ever for artists, small record store owners and others in the industry, as they were poised to celebrate a 1.3 percent rise in 2011 record sales – the first sales increase since the early 2000s. This five-year-old initiative was designed to build support for small music businesses and reinvigorate the spirit of “record store culture” (which has suffered in recent years thanks to a shift to digital) and was originally started by Michael Kurtz, head of the Music Monitor Network, a coalition of indie record stores that provides resources and brainstorms about how small business owners in the space can continue to compete with major music retailers.

 

An article posted on the CNBC site last week detailed Record Store Day’s small beginnings and some exciting, big new tools that have sprung forth from it in the past half decade and now benefit indie record stores, music fans and artists of all sizes. Five years ago, Kurtz talked to labels and his friends to gauge their interest in a day-long celebration of the unique culture of record stores as well as art and music. His first response came from Sir Paul McCartney, who had recently performed at an Amoeba Music shop in California, which he said had reignited a passion for small record stores. Many other artists reached out, and the first Record Store Day took off with the support of 300 stores in April, 2008.

 

This year’s day involved the participation of 1,700 independent stores worldwide and a huge number of special edition releases. Aside from re-building awareness about the value of small record shop owners, Record Store Day has also breathed new life into the vinyl record market. Stats from Nielsen Soundscan reveal that in 2006, only 1.4 million records were sold. But in Sepember, 2007, as Kurtz and his Record Store Day co-founders met to try to figure out how to get people to love buying music again, they decided to combine the uniqueness of vinyl with the special atmosphere of people’s local record stores. Record sales grew 89 percent in 2008 and continued upward with a 33-percent rise in 2009. As a testament to Kurtz’s initiatives, 67 percent of vinyl sales last year were sold through the independent stores supported by Kurtz’s annual event.

 

According to Kurtz, even artists continue to recognize the distinctiveness of vinyl:  “Vinyl is not massive in the grand scheme of album sales and downloads – it will never be that – but it’s very real … When we were first making these Record Store Day releases, in conversations with artists so many were adamant about not pressing the exclusive releases on CDs. All the artists said they wanted vinyl.”

 

Record Store Day has also been teaching small business owners more about how to market to their customers and build their companies. This year, there were 300 in-store performances, a slew of one-day-only sales and special releases that brought out music fans in droves. The Flaming Lips released 10,000 copies of a new record in collaboration a wide range of artists, from Ke$ha, to Bon Iver. Each copy of this album sold was different, offering a special message inscribed at the end of the record.

 

But while vinyl has grown, its growth still pales in comparison to the rise of digital sales, which take up 50.3 percent of the market. And many music fans live in areas without local small retailers. As a response to this reality, this year Kurtz and his cohorts announced “Third Option,” a widget designed to blend the physical and digital sales worlds. The first step was the release of an iPhone app that let people find all the stores and specials within their area. Then, “Third Option” – a link placed on band websites, record store websites, band pages, etc. – was revealed.

 

The Third Option button says, “Buy Local,” and when users click on it, they are automatically taken to the site of the small, independent store closest to them. Then, they have the option of either buying the music at the store, buying it online from the store and having it shipped to them or buying it digitally, with the proceeds going to the small retailer. This button has already been implemented by many artists, including Bruce Springsteen. Thousands more are expected to follow suit, which Kurtz hopes will make this widget as visible on websites as links to iTunes and Amazon.

 

Kurtz also stressed that Record Store Day and Third Option can both help support not just local businesses but entire communities:  “John Kunz, who runs Waterloo Records [in Austin, Texas], showed us this study on how purchasing locally effects the local community, and [it] found that when you purchase something locally, a larger percentage of the tax dollars stay in the community, meaning schools don’t have to close, potholes get fixed, and so on … We feel passionately that it’s better if the money stays in the community so that it can remain healthy.”

 

RocketHub + eMusic = More Powerful Crowdfunding

 

On Friday, the crowdfunding site for creatives, RocketHub announced its new partnership with eMusic and the eMusic Selects program, which has provided a launch pad for emerging indie artists since 2008 and offers marketing, publicity and editorial support to help them navigate the industry. The expanded eMusic Selects program will bring more support to indie bands trying to raise money to support their creative endeavors, with “matching funds” for select campaigns.

 

The RocketHub-eMusic partnership will kick off with the Iranian post-punk band The Yellow Dogs – the 25^th indie band to be featured by eMusic. RocketHub offers a wide range of tools that help artists raise funds and get their music and message out there. Thanks to the new partnership, fans can now directly support The Yellow Dogs and other artists that are signed to eMusic Selects and have their dollars go even farther, because eMusic has signed onto be the first partner brand to match all funds raised through this project.

 

The Yellow Dogs’ album Upper Class Complexity can be purchased through eMusic for a limited time. The band is made up of friends from Iran’s new punk scene, who met at a park called “ghorbaghe,” where musicians, skaters and street artists would meet to explore their art – illegal in Iran. After gaining popularity in its home area, the band now resides in Brooklyn. A video detailing the band’s story can be found here.

 

The Yellow Dogs crowdfunding campaign – a push to raise funds for the band’s first-ever World Tour – started on April 27. Fans that want to support the band can visit their RocketHub page.

(Also check out Rick’s interview with RocketHub CEO and co-founder Brian Meece here.)

 

Wayward:  Fetching Tales from a Year on the Road

 

A recently-released book by manager and music industry jack of all trades Tom Gates (Christina Perri, Good Old War) about what his experiences on the road, traveling the world by himself taught him about life and even the business provides some helpful lessons for those looking to follow their passions and build solid careers. According to a review in Forbes, the book combines memoir with practical advice for navigating the ever-changing music business climate.

 

Like many others in the industry, Gates had a love of music before he started managing musicians or working for labels:  “I used to spend every penny I had on records and read liner notes, and I had a subscription to Billboard magazine when I was 12 … It was when I went to college and I went to my college radio station and I realized, ‘is this a f****** job?!’” Since graduating from Central Connecticut State University in 1992, he has worked for everyone from Roadrunner Records, Arista and the Nettwerk Music Group, playing every role from promoter, to A&R professional to band manager (a role he has played since 2000).

 

In 2008, Gates began to feel trapped living and working long hours in New York City, and explored ways he could add his lifelong desire for more travel to the table. A few bands he was managing went through huge changes, with one breaking up and another putting emphasis on a studio album. He saw his opportunity to take a break and in January of 2009, decided to step out on a year-long, worldwide travel adventure.

 

Wayward:  Fetching Tales from a Year on the Road is Gates’ book about his experience, released on eBook in March and immediately jumping to the top of the best seller list on the iTunes’ bookstore.

 

The book details everything from watching Obama’s inauguration in a bar in Argentina, to watching a dubbed version of the new Star Trek film in France, to eating dog in Vietnam, to working with Patti Smith in New York. While on the road, he managed to stay connected to art and music, writing for Matador – an independent travel site – and posting pieces on his personal blog. One of the book’s chapters, originally a blog post entitled “On Drowning,” was written up by AbsolutePunk in February 2009 and detailed the breakup of one of his former client’s – the band, The Format – as it coincided with events that were happening on his travel journey.

 

And as Gates was traveling, the bands he had been managing were moving forward. Brand New – his main client when he first left – released the fourth album, Daisy in 2009 and managed to reach #6 on the Billboard 200. And The Format members had separated but started their own projects. In fact, one of the band’s main songwriters, Sam Means became a graphic designer and worked with Gates to make the cover of Wayward.

 

After returning to the U.S., Gates moved to L.A. and jumped right back into music, becoming part of the team at Bill Silva Entertainment. And he has learned from his experiences that a career in music is perfect for an avid traveler, and that traveling can actually lend new perspective to artists that can help keep them motivated to push their careers forward:  “The great thing about managing bands is that you can go to these places while managing that band … Before I went on the trip, I could end up letting the music business completely and totally overwhelm me some days, and now it doesn’t … When the water runs out in the well in Laos and you’re on an island, it’s a problem … When an artist misses a flight …it’s a different kind of problem.”

Brian Meece is the CEO and co-founder of RocketHub, a platform that has helped thousands of artists and entrepreneurs further connect with their fans and brands, providing them with tools to help them raise funds and awareness for their creative projects. Brian is also a lifelong musician who continues to perform and record. A graduate of film school, he officially made his way to the music industry through creative media and creative arts. Brian started RocketHub when he began to see how powerful the community funding/crowdfunding model could be for artists across media and decided he wanted to create a company specifically geared towards artists that would educate, empower and support them as they worked get their creative projects off the ground.

 

 

Brian talked to me about how the crowdfunding model works and about the mission of RocketHub. He also shared some tips for artists that want to successfully harness the power of this fan funding model in order to build mutually-beneficial relationships with their fans and get their dream projects off the ground.

 

Musician Coaching:

 

How did you get into the music industry and come up with the idea to start the RocketHub platform?

 

BM:

 

My background mostly before starting RocketHub was in creative media and creative arts. I went to undergrad for film and made some films. And I have been playing in bands since I was in high school. I recognized that in the world of indie filmmaking and the world of indie music, a lot of early adopters were gravitating towards a community funding model that we now know as the crowdfunding model. We were seeing it when Darren Aronofsky raised money for his first breakout movie Pi in the late ‘90s. He reached out to his community to raise about $60,000 and make that movie happen. It was the first time I had seen this phenomenon.
Then, years later, I saw Jill Sobule do a fan-funding campaign on her own and raise over $100,000. I recognized that this community funding model that we know as crowdfunding was something that was going to become part of the new media landscape. And I wanted to build a company that was artist friendly and would educate, empower and support artists and creative people looking to get funding and build awareness for their projects. So, that’s how RocketHub came to be.

 

Musician Coaching:

 

And your official title is co-founder and CEO?

 

BM:

In the tech startup world there are a lot of CEOs out there. It’s important to note that it’s not just me, but the whole team behind RocketHub that are all also cut from a creative cloth. We all came together to build a company and organization that’s really supportive of the Arts and of the folks pursuing their dreams.

 

Musician Coaching:

 

What is crowdfunding, and how does the RocketHub platform work?

 

BM:

 

Crowdfunding is an online event that harnesses a community for funding, awareness and feedback. This event has a beginning, a middle and end to it. It’s very different from the standard ecommerce play where you open up a store and sell stuff online. And it’s different from a donation play where there’s an online tip jar. Crowdfunding is very much an event that galvanizes communities to participate within a very specific amount of time.

 

The way our platform works is that an artist comes to RocketHub, uploads the title of their project and what they’re looking to do – whether it’s recording an album, a music video, doing a tour or something along those lines. And they’ll typically have a pitch video talking about themselves, their passion for the project, and a detailed project description. Then, they’ll set a goal amount – what they’re looking to raise. Most music projects we’ve seen are between $2,000 and $10,000. We’ve had other projects raise tens of thousands of dollars and some raise over $100,000. But, most music projects raise in that $2,000 – $10,000 range. And they usually accomplish this goal in between 60 and 90 days. On the project page,  there’s also a rewards menu that outlines what funders get in exchange for their financial contributions. For example, they might get a digital download of the album for $10 or a physical CD that’s signed with a memento for $20. They may get a bundle or another cool experience for $50. And it scales up. We’ve seen donations of $100 and even $1,000 or $5,000 come in for certain projects. If the reward is really exciting, and the fan base is there to support the project, it can be a cool and interesting way to monetize communities based on these different levels of support.

 

Musician Coaching:

 

You said something interesting to me the other day. You mentioned you really weren’t selling music and the final product as much as you were selling an experience.

 

BM:

 

Yes. We really are selling the experience. This funding model is about the relationship that these funders – and we call them “fuelers” on RocketHub – have with the artist/person spearheading the project. It’s about the relationship that those fuelers have with this creative person and that they have with each other – their ability to connect and communicate. It’s really about how fans participate with the funding, how they connect with the artist and the other funders and what they get back in exchange for the financial contribution. It’s a very different phenomenon from just going to the store or downloading something. It’s very impactful when done correctly.

 

The music projects on RocketHub make up about 25 percent of all the projects that come through the site. And we have a really high hit rate for music projects. Many musicians already have loyal fan bases and are already communicating with fans in ways that they weren’t doing ten years ago. A lot of projects can get made with 50-100 people, because the average contribution to music projects on the site is a little over $60. So, you can go back into the project budget and say, “Okay, if I need $6,000, that’s a little over 100 people I need to say ‘yes’ to this project.” And that’s very doable for a lot of emerging artists that are looking to take the next step with their careers by getting a tour or an album or music video out.

 

It’s really exciting to see music and crowdfunding fitting together so well.

 

Musician Coaching:

 

I’m the kind of guy who struggled to even ask people to sponsor me when I ran a marathon. Do you find that there is some sort of acclimation process involved in the process of getting people comfortable with the idea of asking their peers for donations? How would you advise people to get past that mental hurdle?

 

BM:

First of all, I don’t really like to look at this as a “donation” model. You want to push the “trade,” not the “aid” angle. And the “trade” angle is where the rewards come in. Also, we’re artists, not charities. We’re asking for support and contributions. But we’re also offering something to our network. We’re offering cool rewards and scarce experiences. That’s really what the campaign should be about:  “Here’s what I’m up to. Here’s why I’m doing it. And here’s what you can get if you come along for the ride.” When you frame your campaign around that type of communication, you get a lot better response than you do if you say, “Hey, I need money for this.”

 

For example, I ran my own campaign. And I can tell you, it takes a little bit of commitment and a little bit of gusto to get it together and put a project out to the world. It’s a little scary. But what I really enjoyed about it was that it gave me an excuse to reach out to people that I hadn’t talked to or seen in a while. I said, “Here’s what I’m up to, just FYI. Here’s what I’m doing and how I’m doing it. If you’re interested in this – and I hope you are – here’s how you can become a part of it. If you’re intrigued, come join the tribe.” And that communication really worked well with my audience. I have a hunch it would also work well with a lot of other artists’ audiences.

 

That “trade, not aid” mantra gets us, as artists, out of the mindset of fundraising or asking for tips or donations; because that’s really not what crowdfunding is about. It’s patronage meets commerce – a new spin on an old  idea. I like to say, “Beethoven, plus social media equals crowdfunding.” What I mean by that is, it’s the old idea of patronage meets this new concept of being connected to a massive amount of people; crowdfunding is really just mass patronage. It’s pretty cool to see this idea of patronage reemerge on top of social media.

 

Musician Coaching:

 

Yeah. It’s wonderful.

 

I often find that musicians, myself included, get ahead of ourselves pretty often and place the cart before the horse in a lot of situations. My inclination with setting up a crowdfunding campaign would be to say, “I put a band together, and we had one rehearsal. Now, let’s raise some money!” Because I don’t have any patience. When is the right time in a musician’s career for this type of crowdfunding campaign? Is there a baseline amount of fans or activity a band should realize before embarking on this type of project?

 

BM:

I would say that crowdfunding works for artists at a lot of different levels. So, it depends on what you’re trying to raise. The band you just described that has been jamming in a garage for a month or two may not be ready to raise $10,000 – $12,000 to do a big double LP. But they will very likely be able to raise $1,000 – $1,500 to go do a little demo EP or to do a higher-end show to premiere the band.

 

If you’re an emerging artist, I’d say, be realistic with your goals. And know that the average contribution to music projects is about $60. So, to raise $1,000 you need 20-30 people to say “yes” to a project, which is not really a lot. Just be reasonable in what you want to raise based on where you are in your creative journey. We’ve found that emerging artists that are just looking to start something raised $500 – $1,500. We’ve seen mid-level artists raise $5,000, plus. And we’ve seen larger, working artists that everyone may have heard of raise significantly more. It really just depends on where you are in your career. But you need to be aware that there is a strategy involved. If an emerging artist tries to raise $10,000, it’s going to be a lot tougher.

 

Musician Coaching:

 

I know not every campaign is successful. From the vantage point of someone who sees thousands of these campaigns start up on RocketHub, which specific qualities do the artists that are successful at crowdfunding tend to have?

 

BM:

 

A successful RocketHub campaign typically has three core components. The first is an awesome project spearheaded by awesome people with passion. Believe it or not, just the fact that you’re making a record, a music video or planning a tour is not enough. It really needs to be as awesome as you can make it. The project doesn’t have to be really big either; it can be something really cool on a small scale. But as an artist, you just have to make it as awesome as you can and be front and center and have your band’s personality, or the creative team’s personality be front and center.

 

The second component you need in order to be successful is some sort of audience or network to start the campaign to. Obviously, the bigger the network, the more successful a campaign will be. But a lot of projects are funded through small communities. 20, 30, 50 or 100 people can add up significantly with a crowdfunding campaign. You want to have some kind of fan base to start. It doesn’t have to be massive.

 

The third thing you need in order to run a successful crowdfunding campaign is cool rewards. The $20 level is most popular one for music. It’s the single-most popular price point. But the average – the mien – is a little over $60. So, you want to make sure you also have a cool $50 reward and cool $100, $250, $500 and even $1,000 and $5,000 rewards, just in case you get a big-ticket player that wants to jump in.

 

Those are really the three core components we find successful projects have:  1) an awesome mission spearheaded by awesome people; 2) that fan base/audience that’s connected to them; 3) cool rewards to offer in exchange for the financial contribution. Those three things together are the Holy Grail.

 

Musician Coaching:

 

The tiered model is always an interesting one. I was fortunate enough to work with Jill Sobule – who you mentioned earlier – when I was at Lava Records. For a $10,000 contribution, she actually offered the reward of being allowed to sing on her record. And somebody did it. And I don’t know if he ever sold any of these, but the drummer Josh Freese came up with a list of tiered rewards. And one of the upper echelons was, “Do mushrooms with me and the guys from Tool.” I don’t know if that’s something you’d want to advise, but it’s an interesting take on the model.

 

BM:

 

Well, and also, the RocketHub team loves helping artists. We love educating them on how to run campaigns and giving them a little feedback when they need it. As a team, we’re very accessible to artists. If you’re an artist, you shouldn’t look at the platform as just a website. The people behind it – myself included – are really passionate about helping artists raise funds and awareness.

 

Musician Coaching:

 

There are a few crowdfunding sites out there, including Kickstarter and PledgeMusic. Why do you think artists should choose RocketHub?

 

BM:

 

We share this space with a variety of different companies. And overall, that’s a really good thing. Having some choice in the overall market stimulates demand for the entire industry. I think the biggest way we’re different because we’re always looking to add value for our creative users.

 

I think RocketHub has some technical differences as well as some softer-touch differences. In terms of technical differences, on RocketHub you don’t have to reach the full funding amount in order to unlock your funds like you do on some of our competitors’ platforms. So, if a musician sets a goal of $15,000 and raises $9,000 or $10,000, they’ll be able to walk away with funds – minus their credit card fees and RocketHub fees.

 

We’ve found that RocketHub is a great platform for creatives looking to make their projects happen and that are committed to making their projects happen, because they can aim high and still have a safety net if they don’t raise all their funds. On some of the other platforms, you can run a campaign, raise $8,000 or $9,000 of a $15,000 goal, and walk away with nothing because you didn’t hit the full funding amount. We want to really be artist friendly in that regard.

 

Another way we’re different is that we allow artists to launch projects from around the world. Some of our competitors don’t do that.

 

We also are looking to add value beyond the funding campaign. So, if you look at the front page of the RocketHub site now, you’ll see one of our Launchpad products. It’s basically a publicity firm in New York that’s going to give a month-long publicity campaign to an artist on RocketHub. These opportunities we open up are free to our creative users that have successfully funded on RocketHub. And we’re going to be doing more and more of that – trying really get exposure and extra awareness for artists that are doing special things on our site.

 

To learn more about Brian Meece and how his crowdfunding platform helps artists, check out the RocketHub website.