The value of music fans was explored this past week as Billboard analyzed how the gaming and gambling industry’s customer-centric business model might help the music business rebound, and a major study of digital music piracy revealed that customers will be key to future market growth. Also, Warner Music Group closed the deal on the Parlophone purchase.

 

 

How Can “Whales, Minnows and Dolphins” Help Artists and Labels?

 

Leading music industry experts and analysts continue to point out that many labels, artists, managers, promoters and venues are stuck in the past when it comes to making money. This past week on Billboard.biz, Hany Nada, founding partner of the global, expansion-stage venture firm GGV Capital explored how the customer-focused whales, dolphins and minnows (WDM) segmented monetization strategy that is used in the gaming and gambling industry could benefit – and potentially triple revenues in the next ten years – by focusing on satisfying fans rather than selling products.

 

According to Nada, each music fan is like each player in a casino, with a different value based on how much he/she is willing to spend. Fans can be separated into three types:  whales; dolphins; minnows. In the casino system, whales make up the majority of the profits in the casino industry, because they are the people willing to pay more for an “elite experience.” And because of whales’ inclination to spend more, the casino caters to them, treating them to incredible services like flights, suites, private chefs, rebates on losses and shopping sprees to keep them spending.

 

Games companies also follow the WDM model. As Nada pointed out, Korean video game companies – “free-to-play” or “freemium” companies – decided to give away their products in order to attract new gamers, turning games into a service instead of just a product/box that ships every 18 months. They get more of what they like and truly “engage” when they get special updates and virtual goods. And players are happy to pay for these extras. In fact, freemium companies have 10 times more gamers than other types of gaming companies, 30-percent longer play sessions and three, to five times the revenue.

 

Free-to-play games companies have become experts at WDM, stated Nada. Minnows make up about 90-90% of the players in a freemium game, and the games that do the best take care of their minnows, because they are fans who help attract new players through their networks and become experienced players that make the game experience better for paying “dolphins and whales.”

 

Freemium games also treat dolphins well. They are not better players than the minnows, but they get better customization and access to premium content, because they typically generate 50% of a game’s revenue. And gamer whales get the same “white glove” treatment as casino whales get. They make up about 3-4% of the paying users for a game but generate the remaining 50% of revenue. Sometimes whales will spend thousands or even tens of thousands of dollars per month on a game, so they get special avatars, gifts and exclusive opportunities to help test new games and connect directly to developers.

 

How can this apply to the music industry? Nada suggested that the music industry has to start seeing music as a service, and then monetize that service in the WDM way. Then, artists and labels need to accept that some people will never pay for music, rather will get their music from radio, YouTube, downloads from friends, etc. These are the minnows, and they are important. Without them, no artist or label could attract dolphins or whales. They provide critical influence.

 

And dolphins are willing to pay for albums and concert tickets. They make up about half of an artist’s fan base, according to data collected by Kickstarter. They go to concerts, buy merch and are the second-biggest money makers for artists next to whales.

 

Whales can and will spend a lot of money (more than most artists and labels probably realize). They will buy plane tickets to go to a band they love’s show in another part of a country, and they will pay tens of thousands to personally meet the band, maybe even hundreds of thousands for a private concert. While they only make up less than five percent of a fan base, they still represent 50% of revenue. Artists need to reward these fans’ loyalty and build very personal relationships with them.  

 

Some bands, like Radiohead, have already explored the WDM model, but the business model is still a new concept in the music industry. And even with its In Rainbows project, Radiohead didn’t figure out how to monetize the dolphins and whales they attracted. And fan funding sites like Kickstarter, Indiegogo and some artist websites are just scratching the surface of WDM.

 

Nada concluded, the music industry has to adopt new business models “that focus on what’s driven the consumption of music since the days of minstrels and Mozart:  the emotional relationship between a fan and an artist. By treating listeners as fans instead of customers, and monetizing them accordingly, the rapid and unpredictable advance of technology becomes a tool for innovation and success instead of a menacing threat.”

 

Is Enhancing the Music Fan Experience the Key to Ending Digital Piracy?

 

Researchers at Bristol’s University of the West of England (UWE) recently concluded that while online piracy needs to be curbed, the industry also needs to start trying to woo customers disinterested in digital downloads.

 

A major study of piracy around the world conducted by academics at UWE revealed that more government controls preventing illegal downloading will help protect the music business, according to an article on the Bristol 24-7 website. However labels, fans and others in the industry need to explore methods for winning back music fans that have stopped buying music due to the digital revolution.

 

Research revealed that globally, 28% of digital music is shared illegally through file sharing, providing additional insight into the latest trouble brick-and-mortar chain HMV has faced. Results from the study of 10 countries showed that the range of illegal downloading was between 14 percent (Germany) and 44 percent (strange). And revenue from the music industry worldwide has fallen from $22 billion in 2000, to $13 billion in 2010.   

 

Professor Glenn Parry of UWE said, “Our results support the need for policy makers to introduce stronger legislation to protect this industry. However, preventing piracy through legislation is not the only response open to the music industry … We found that the fall in revenue is also partially due to a reduction in consumption. We identified a large percentage of people who enjoy music but have not been engaged by the digital music market. They represent an important segment of people who may come back to the market through innovative new approaches to music provision.”

 

He added, “… There is a need to look more closely at customers’ behavior and to develop businesses which seamlessly meet their needs and get them passionate, engaged and buying music again.”

 

Parlophone Purchased by Warner Music Group

 

Warner Music sealed the deal this past week on Parlophone, purchasing the label for $765 million, stated an article on Vintage Vinyl News. The original home of the Beatles, was nabbed by Warner after Universal bought EMI and was forced to sell off some of its assets.

 

Warner music, owned currently by Russion billionaire Len Blavatnik was able to win out over fellow music executives Simon Fuller and Island Records founder Chris Blackwell. However, the sale excludes The Beatles Parlophone catalog (everything from Please Please Me, to Sgt Peppers Lonely Hearts Club Band). This catalog was picked up by Apple and will stay with Universal.

 

Artists that will make the switch to Warner are Air, Coldplay, Daft Punk, Danger Mouse, David Guetta, Deep Purple, Duran Duran, Edit Piaf, Gorillaz, Iron Maiden, Itzhak Perlman, Jethro Tull, Kate Bush, Pet Shop Boys, Tina Turner and several others.

 

Other Warner labels are Asylum, Atlantic, East West, Elektra, Fueled By Ramen, Nonesuch, Reprise, Rhino, Roadrunner, Rykodisc, Sire, Warner Bros. and Word plus Warner/Chappell Music, a leading music publisher that holds more than one million copyrights throughout the world.  

 

EMI’s oldest running label, Parlophone began in 1955 as a label that released mainly comedy act recordings. Parlophone manager George Martin signed The Beatles in 1962 after the group was turned down by Deca Records.

 

 

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.

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.

Benji Rogers is the founder of Pledge Music – a platform that enables musicians and fans raise money for new records or touring while simultaneously raising money for charity.  Prior to founding Pledge Benji played (and actually still plays) in a group called Marwood that were signed to a few different labels in the UK.  He started off in the music business as a roadie on various high profile tours.  I wanted to catch up with Benji because I had been hearing that large numbers of people were raising money with Pledge – and it was actually working!

Music Consultant:

Benji, thanks for your time.  In your own words tell me what you guys are about and what the vision of the company is.

BR:

I was asked to define what we’re about the other day. One of the business people we are working with said, “What’s your mission statement?” And I think I can really pare it down to this:  I want to get as much money in to the hands of artists, their management and their teams as I can, as quickly as possible, thereby putting as much money into the hands of charities as I can as quickly as possible. Basically, I want to create a scenario in which nobody in the transaction loses. The artist wins, the fan wins, the charity wins, the studio wins and the manager wins, because everybody actually gets paid what they are due. That’s the founding principle:  to get as much money into the hands of the artist as quickly as possible.

The second founding principle is, it has to be excellent. It has to be the best thing it can be, whether it’s the artist’s campaign or the platform. We won’t let projects launch unless we really feel we’ve gotten the most from the artist creatively in the making of the project, and that we’ve done our job. I like that our business model ties our company’s fate in with the fate of the artist. If we don’t do our job well, the artist doesn’t do well, and nobody wins. If we do our job well, we make sure the campaign has the best chance, and then it’s a success.

Music Consultant:

Does Pledge actually participate in the marketing of these campaigns?

BR:

What happens is, everybody can sign up on the site, and when they submit the project, we say things like, “This can work, this won’t work, we’ve seen this work, this is illegal, this is improbable.”   And we’ve seen some things where we’ve had to consult legal counsel and at one point, we had to consult health and safety as well. It really is an all in process.

One of the reasons we’ve achieved a 77% success rate is because we’re uncompromising in what is possible.  We don’t want to limit the artists in what they want to do. We simply say, “This is what works and this is what doesn’t.”  The other guiding principle to the way it works is that the artist must at no point appear to be desperate. A lot of times we lose this battle, but what I say is, “Never ask your fans for money.” The job of the platform is to create these incredible campaigns. We’ll help you with them. We do this every day. And there are literally thousands of these back and forth every day between us and the artists. And we’ll say, “This sounds desperate, this is too preachy.” At the end of the day, I want to achieve an 80% success rate. I’m very proud of 77%, but I know why some of those don’t work. We’ve hit a formula that seems to be working again and again. I think it’s really important that artists understand, they don’t need to spend their entire lives blogging or tweeting to do this. What they need to do is spend the right time doing the right things. That’s what we’ve tried to pare the system down to be able to achieve.

Music Consultant:

Take me through the process of building a typical campaign, once you see an idea you like.

BR:

The fan funding principle, as we call it, is “Pledge here now, and I’ll give you something when I finish.” And there’s a financial transaction involved. That to me is quite prosaic, and a little dull. Ours is a lot different. An artist comes to us and says,  “We want to do a new EP. And we want to do nine tour dates and have it come out January 1^st, and we have this distributor in mind, and this is a charity we love and have worked with. We like what they’re doing.” So, we turn that into “Pledge here to be a part of the making of our new record. From Day 1, you get access to our ‘Pledges Only’ page. These are exclusive to our pledges, and they give you access to rough mixes, live tracks, demos, video blogs, Ustream concerts, and all this stuff available to you. And once we hit the target, 10% of all the profits from that campaign go to the charity of our choice. Pledge now to get involved, and it will be an amazing time for all of us.” And the updates section and pledges on the updates is really the key driver here. It’s an exclusive part of the site that has a very low barrier to entry. One of the things we didn’t want to do is drop the price too much, because a lot of times people will say, “$10 is a lot of money for an EP.” My point is, “Who’s selling an EP? You’re selling 30, 60 or 90 days of experiences via the updates.” If they are not worth $10, our philosophy is not matching. Five dollars will be way too little to put in. What we’ll see is that people will come in for the minimum, see five pledges on the updates, and see a Ustream concert and say, “I have to put more money in. I have to put $50 or $60 in.” And also, we release a lot more updates as the campaign is rolling along. So let’s say the artist does very well with a certain number of house concerts, then we can release more house concerts. It’s basically a platform that is not bound to a set of structured models. Another founding principle of the company is, “We’re not beholden to what was.” So, we can basically move very fluidly across the music business landscape. And that’s how we’ve been able to work with artists that are signed to major labels, independents and across the board.

Music Consultant:

Can you part with ballpark numbers? How much money have you raised for artists and charities at this point?

BR:

To be honest, we haven’t really counted it. And I haven’t tallied up because we’re going to do an end or year thing. Our average front line, major artist campaign hits anywhere from $30,000 to $50,000. We do a lot of campaigns in the $7,000 range. The biggest numbers one we did was $75,000 from 633 fans. That was pretty impressive. The fans wanted to give more, but the artist didn’t want to change the campaign once it was in place, so we left it as it was. Just speaking to your previous question too, anyone can sign up on the site, and we will help them through the process. But we also meet with managers, agents, lawyers, producers and studio owners all the time and listen to what it is they want from this process.

A lot of times a manager isn’t going to go to the website, sign up and create a campaign. That just isn’t going to work for them. So we collect their information and say we’ll submit all the information and create the campaign for them to edit in the background.  The system is designed to scale to what’s required, but at the moment we seem to be hitting a phenomenal level of talent. We’ve had people signed to everyone from Cherry Lane to Warner Publishing and a lot of labels are approaching us and telling us what sounds good, because it’s the real deal and a real campaign. It shouldn’t ever be seen as a poor man’s record deal. What it should be seen as by artists is,  “This is the most exciting, compelling and amazing way for me as an artist to get my music to you, my fans and friends. And I’m going to give you the greatest experience of your life for a minimum of $10 or a maximum of whatever it is you want to put in.  The key is that this experience and journey is something we’re going on together. A lot of times managers will say, “I’m worried about providing that much content.” And what we say to them is, “You spend a day with the band, you can record a bunch of pledges only content, and you can set it in the system when it gets sent to the fans.” It doesn’t have to be a lot of downloading and uploading.  It’s just running in the background. And what we find is that nine times out of ten, once it begins, the bands really start to have fun with it. They start to make crazy videos, and they have a live, real-time, engaged audience participating. And that’s when it really starts to get exciting.

Music Consultant:

Have you ever done pledges not driven around the creation of recorded music?

BR:

We’ve done a lot of them. A lot of times an act will come to us and has just finished the record, have gone into massive amounts of debt and don’t have the money to market it. When I first started the company, I met with the directors and said, “Guys, there are thousands and thousands of people that have 850 CDs sitting in their apartments right now because they spent all their money on making them and have no way to actually go and sell them.” Part of what it was designed to do is to say, “Pledge here and be part of helping my CD get out of the can and into the wide world.” And then you would hire a PR person to do a campaign with you. What we’re looking to do is to do campaigns with people like that. We have a partnership thing with Planetary where they will give you a discount on a radio campaign because we can bring a lot of bands to them, and they can do us the favor of giving our artists a deal. It’s about bringing the cost to the artist down as much as we possibly can as a company.

We also do campaigns for tours. We say, “Participate in our tour, and we’ll bring you back a live recording from South by Southwest” or something similar.

Music Consultant:

What kind of fan base is required to do a successful pledge campaign in your estimation? Because, clearly, we speak about polarizing the fans and having a fan club-esque experience or something that is proprietary to only the people willing to invest upfront. How many fans does someone have to have to make this work? Is there a minimum?

BR:

There isn’t a minimum. And one of the things that has been remarkable is that an A&R friend said to me, “I have an artist I work with, and you have to check her out.” And I checked her out, and she was phenomenal. And I wanted to make it work. So, I asked the artist, “How many e-mail addresses do you have?” And she said, “I have 150 gmail contacts.” And I thought, “Oh boy.” I talked to her and wrote a blog about it that was entitled, “If you want to make music, you have to tell people about it.”

What I said to her was basically, “Tonight at the show, pass a mailing list down from the stage.” And she went from having a mailing list of 150 to 197 in one night. Then, a few weeks later, we were tallying up data capture – because we offer free data capture to our artists – she was able to raise enough money to mix, master and manufacture her CD in about three weeks. It really comes down to how much work you’re willing to do, and if you’re going to give even a few fans an experience.

Music Consultant:

There’s also the X-Factor of will people respond to your music or what you have out there?

BR:

Yes, there is that. The artist I just mentioned was one of those rare artists that I sent a link out to all my friends saying, “You have to check this out. This is incredible,” and all of a sudden they said it was amazing and that they were pledging. It really depends. I’ve also seen artists with 900 fans raise $24,000. Actually I lost a bet on that one. We ended up giving some more money to charity.

But really, you don’t need hundreds of thousands of fans. You just need to engage with the fans you have.  The most important thing for an artist to get into their heads is to stop selling their fans ordinary things. Stop selling them stuff to buy and start offering them experiences. Offer them a way to be a part of what it is that makes you a musician.

It may feel a little weird at first, but I’m bombarded by “Come to my show, buy my CD,” or “Come to my show, buy my bundle with a T-shirt.” And I don’t care anymore, because it’s too much. It’s overwhelming. Whereas, if I see on my Facebook wall, “Here’s an undiscovered track for my pledges only,” I want to check that out. I’m curious, and when it happens again, I’m curious. To play along those lines, what we did is that if you do a pledges only update as an artist, it automatically feeds to your Facebook, your MySpace and your Twitter. If I’m a fan and I pledge, I can set it so that every time you update your pledges only section, it goes on my Facebook, my Twitter and my MySpace. So my friends can see that I’m watching the unreleased song by a certain person, and they have to pledge to get in. Because of the way friend groups work, they get involved, and that’s how you get more people involved with what you’re doing. The other thing we found is that because the pledge campaigns are very personal, the personality of a lot of artists really shines. Some are shy, and that’s when you write a different kind of campaign built around exclusive tracks or handwritten lyric sheets or art pieces. If they’re extroverts though, that wins a lot of people over that might be skeptical. Couple that with amazing music, and you really can’t lose.

Music Consultant:

I haven’t taken any artists through a pledge campaign, although I’m thinking of submitting a few to you.  But I do often tell people that they have to provide their audience with some sustainable and constantly updatable feed of news/entertainment about themselves or their lives to maintain people’s interest. And I think that’s what you’ve hit upon. You’re creating a stream of content or the experiential product that flows over the course of a recording or a tour.

BR:

Absolutely. The other thing a lot of people will say is, “Why don’t I just do an online fan club?” What happens with those online fan clubs, which roll out through the year is they’re incredibly difficult to maintain interest in. There’s no focus to it and no locus on which it revolves.

Music Consultant:

There’s no urgency…

BR:

Exactly. I see pledges as a three-month fan club. “For three months we’re going to give you the most incredible ride of your life.” And then you go and make a record and do other things, and then you come back with another one. And we’re in our first year, so we’re having our second, third and fourth bands come back right now. The fans are just loving it and eating it up. The bands we have worked with have grown their fan bases. I think it’s really cool. The other thing  with the fan club aspect of it that we’ve seen that’s been really interesting is that we don’t display how much money the artists are trying to raise, so on a fan funding site, it’s all about, “We’re looking for $10,000. So, give us your money now, and we’ll make this album.” It’s a big presale in one sense. We don’t show the target amount. So we say, “Pledge to be a part, and once we hit the target …” What’s been phenomenal is that since we’ve began only three people have emailed to ask what that target amount is.  Most don’t seem to care. It’s really irrelevant to them, because the campaign is what they’re buying into. And that’s been a real eye opener. The other thing we found is that we offered the ability to show the target amount, and artists that show the target amount tend to get 20% less. So, pledges give 20% less if the target amount is displayed, which is very interesting.

Music Consultant:

So you came from management DNA (Benji’s parents were managers), you were in a band that signed a few indie deals and now you have started Pledge Music.  You are in a pretty unique situation to offer advice to aspiring artists with that varied experience.  I was wondering if you had advice for artists in general?

BR:

Absolutely.  For one, I’m always cautious of is any service that you pay that purports to get you above and beyond where you are. I fell for so many of those things and I tried everything. All the partners we have on our site, I’ve tried them, or know someone who has tried them. The thing I would say to most artists is that if you don’t have an e-mail list, you aren’t going to be able to tell people about what it is you’re doing. And no one else can tell people that way you can.

It’s a staggering thing, but we had an artist that raised $98,000 from 1300 fans on our site. She released the record to the public two weeks after she released it to the pledges. So basically, the pledges got it, and then two weeks later it showed up in stores. It was projected to sell 5,000-7,000 copies, the reason being that it was a bizarre record. It was a soundtrack and not necessarily a “real” release. Those pledges spoke so loudly and so highly about how much they loved it that 22,000 people bought it with minimal promotion. What that really shows is that you don’t need hundreds of thousands of fans to get the message out; you need great material and to give fans the ability to share, not just what you’re selling them, but what you’re doing and who you are. That’s what people really buy into and want to be a part of.

So many artists sit there and say, “This is such a huge amount of work.” And what I say is, “I launched my own pledge for my band Marwood and I was able to raise $6,200 in six days to record the album. I went and recorded the album and released it about a month later while starting this company.” It can be done, and I know it can be done, because I’ve done it and watched hundreds of other people do it as well. What they have to realize is that if you raise $1,000 or $100,000 on pledge, it’s a) money that wasn’t there in the first place and b) this idea that a record label is going to come and scoop you up and make it all better just doesn’t happen. It’s not part of the mix anymore. As sales decline, what you have to realize is that trying to sell CDs to people that don’t own CD players is kind of insane. There’s no way around that. When we work with labels, we look at them and are dealing with the old school at some points. What I will say is that there are some incredible labels out there, and they look to us and say, “Who looks good?”

Music Consultant:

I’ll tell you a very funny story. I was on the phone with one of my very good friends who is a concert promoter and was talking about doing deals with an artist and some corporate sponsor. A manager of a big artist said to my friend, “Well, we don’t know. We really have to check with the label, because they really have a lot of influence.” And he said, “Wait. You sold 20,000 records? I’m offering you $20,000 right now. How important can they be?” When he put it in that context it was really eye opening.

BR:

Speaking to that too, we actually started a label and a publishing company just recently. We’re about to start rolling that out. In the time when labels aren’t making sense, it was a big question as to why we would start a label. And the answer I have is that it’s because I really believe in my heart that for the artists I know we can work with, we can do well for them, because we’re going to give them an incredibly fair deal, and my job is to put as much money into their hands as I possibly can as quickly as possible.

This means I can’t strangle them for merch and can’t put them on a 360 deal, but what I can do is give them a way to get to that next level, whether it’s with our label or another label. You have to go in with a base of something., Otherwise, there are a million people with their hands out. And labels are in a position where they have declining sales, so why would they sign you? It’s a tough call.

Learn more about Pledge Music and check out Benji’s band Marwood.