This site is a blog for musicians and music industry people. It is a free educational resource and it is also the way I advertise my music consulting services. I am an entertainment professional with deep roots in the music industry. Throughout my music career I have been a major label A&R representative, a music supervisor, an artist manager, a reality show producer, a bass player and the head of a digital record label.
In the first week of the new year, experts analyzed the music business in 2011, as Billboard reported on the performance of the 10 biggest music stocks last year and also presented the official figures for 2011 music sales. Also, Daniel Ek, CEO of Spotify and his promises to redefine the future of digital music went viral.
Music Stock Performance in 2011: A Mixed Bag
While the stock market for the music industry experienced an overall decline – falling by an average of 4 percent and ranging from a 42.5-percent decline to a 46.5-percent gain – in 2011, some of the 10 biggest music-based companies did well, according to an article published on Billboard.biz.
The five most heavily-music-focused stocks – Pandora, Live Nation, Sirius XM, Trans World and Warner Music Group (WMG) – gained 7.2 percent. The following is a quick list of the ten biggest music companies and how they did last year:
Trans World stocks rose by 47.4 percent. As a “brick-and-mortar” retail, the company faced some significant challenges in the market. While its revenue was down 17 percent in the 38 weeks ending on October 29, it still improved its net loss by 67 percent.
WMG was up significantly in 2011, by 46.5 percent. Experts attributed this improvement to its sale to Access Industries last spring. Last January, when the news leaked that the company had hired powerhouse Goldman Sachs to look for buyers, stock value spiked.
Apple stocks were up 25.6 percent, having risen 7.7 percent when Tim Cook took the CEO position on August 24. And they rose an additional 7.1 percent after Jobs death on October 5.
Sirius XM’s stock was up 11.7 percent, but, as in years past, rose and fell all year. There was a significant rise in December when analysts ascribed a “buy” rating to it based on its subscriber growth and good margins.
Amazon fell 4.3 percent last year. It peaked in October, but then quickly fell again. Despite the company’s big sales numbers surrounding the new Kindle Fire tablet, the stock never recovered.
Vivendi – which is the parent company of Universal Music Group (UMG) – was down 16.2 percent, falling steadily throughout the year. Despite poor performance, analysts still believe that Vivendi will rise above the market and continue to encourage stock holders to ride it out.
Live Nation stocks fell 27.3 percent last year, though the company did well overall despite a decline in the sale of concert tickets and other non-in-home entertainment. The company also expanded last year, taking on new ticketing, promotion and analytics features.
Best Buy fell a whopping 31.8 percent this past year. The stock fell in mid-December after releasing poor third-quarter numbers. The company also had to cancel some online orders for high-selling items right before Christmas, further impacting its popularity.
Pandora stock fell 42.5 percent. (It was judged on a period of only a little more than half last year because it went public in June.) Experts attribute this decline to concerns about the high cost of the company’s content, its ability to get local advertising revenue and competition from other streaming and satellite radio companies.
Finally, Sony fell almost 50 percent in 2011. Sony headquarters was hit by both a tsunami and computer hackers last year, so these events had something to do with the decline. However, it also experienced some significant losses in TVs and acquisitions. This marked its third year taking a loss. Many feel it will likely have a similarly bad year in 2012.
Music Business Profits Up with Digital Trumping Physical
Nielsen SoundScan released its official annual report on the music business this past week, and as expected, overall music sales are up 1.4%, the first increase since 2004. According to the president of NARM, Jim Donio, “This year’s results can be attributed to a variety of influences, including more aggressive marketing efforts and offers, availability and consumer adoption of legitimate digital commerce models, the power of social media, etc.
British singer Adele had the best-selling album , selling 5.82 million copies of 21 in the U.S. And without her, album sales industry wide actually would have been lower than in 2010. And her effort sold more than twice the copies of Michael Buble’s second-best-selling Christmas album.
And as also reported in Time magazine, for the first time, digital music sales exceeded physical album sales. They took a 50.3-percent market share of all music purchases, and, as in 2010, digital song downloads rose by 8.5 percent even when physical sales declined by 6 percent.
Experts speculate that 2010 might have been the music industry’s rock bottom. However, Donio and others are just looking forward to a hopefully brighter 2012: “It will be exciting to see what 2012 has in store as we anticipate new music from established artists and speculate about which stars-in-the-making might be making critical and commercial headlines in the next twelve months … Not to mention how products and services from familiar freshmen players in the digital commerce space will continue to unfold.”
More specific details about Nielsen’s report can be found at this link.
Who is Daniel Ek?
It was almost impossible to search for music industry-related stories last week without coming across the name Daniel Ek, the Founder and CEO of Spotify. In the past year, Ek has already been featured in Business Week and on almost every online tech publication in existence. The first week of January found him in The Wall Street Journal and Forbes, where he was presented as “the most important man in music.”
But is all this hype true? While Spotify has been popular among music fans, there has still been some significant controversy among artists since the streaming service arrived in the U.S. last summer, with several artists pulling their music complaining the site would not provide them with appropriate revenues.
On January 4, Forbes posted an early view of an article on Ek on its website, set to publish in its January 16th issue as part of its “30 Under 30” entrepreneur series, exploring Ek’s past, present and potential future impact on the music industry declaring him to be the savior that could potentially solve all the problems the Digital Age has introduced: “Daniel Ek created a free, Facebook-enabled platform that could save the recording industry from piracy – and iTunes.” The article takes an inside look into Ek himself and also daily life at the Spotify headquarters in Stockholm, which is described as being run by “frenetic energy,” which is representative of the “strange new reality of the music business.”
Born in 1983, Ek started his first successful internet-based business in 1997 at age 14. And as Forbes states, the industry has been waiting for an entrepreneur like him for the past decade – someone who could build an online music tool that was more tempting than music piracy and could also offer up a sustainable revenue model. Despite breaking new ground, Ek has stated he was inspired at an early age by the Napster experience (and he is among the generation of 18-30-year-olds who came to believe no one should have to pay for music).
According to Ek, his goal is to disrupt the music landscape in much the same way Sean Parker and Shawn Fanning disrupted it at the end of the last century. As put by Forbes, “In the current tech landscape, where Google provides the search, Facebook the identity and Amazon the retail, Ek wants Spotify to supply the soundtrack.” He wants to create an entire “music ecosystem.”
However, he has some critics. A November issue of The New Yorker featured an analysis by Malcolm Gladwell that talked about Walter Isaacson’s biography of another music pioneer, Steve Jobs, comparing him to a “tinkerer,” not an “inventor:” “Jobs’s sensibility was editorial, not inventive.” And Ek admits he falls into this same category: “I’m not an inventor. I just want to make things better.”
However, with 2.5 million paying customers globally and significant advertising revenue, many analysts would say that Ek has managed to at least revitalize the music industry. Still, labels and artists continue to be doubtful that Spotify, or Ek can actually save it.
Happy New Year! In this last week of the year, technology innovation was highlighted as Megaupload launched a new online music locker and a Spotify executive shared her thoughts on the powerful present and future of digital music. Also, Reuters announced that the music industry has finally seen a profit in 2011 for the first time since 2004.
Megaupload’s New “Megabox” Music Storage Space Launched
The controversial file-sharing site Megaupload announced the arrival of Megabox, a web-based online music locker and player and fully-integrated music store. But an article published on the Billboard.biz site, the company may face some significant challenges.
Based in New Zealand, Megabox works similarly to many other online music lockers, including Google Music, Amazon Cloud Drive or mSpot. Music is uploaded using Megaupload’s file-uploading application Megakey and sent directly to the user’s online locker. While the website does not indicate exactly how much storage space each user gets, information implies that it is capable of handling anyone’s entire music library.
Megabox also has a social networking component that allows people to search for and follow friends and send messages to them using the service.
And the music purchasing element of Megabox is its least striking component, though it is connected to Amazon and 7digital. Information about available music comes from Sony’s Gracenote service.
But Megabox will likely have some legal issues to overcome. History has shown that P2P services can create successful free file-sharing services that attract significant numbers of users. But legally-created stores and viable services are a much different story in the digital space. Limewire tried its hand at an MP3 store, but the service shut down late last year. And iMesh debuted a service that mimics P2P in 2005 after settling its lawsuit with record labels.
Over 50 million people use Megaupload daily, and the site accounts for 4 percent of Internet traffic worldwide. The key to Megabox’s success could lie in being able to appeal to its global popularity and huge user base.
Some Quick Music Industry Predictions from a Spotify Executive
Spotify’s VP of marketing, Angela Watts last week shared her assessment of the digital music space in 2011 and gave her forecast for 2012 in an interview with The Guardian. While she focused her statements heavily on the influence her company specifically has had on the music business, she did offer some insightful words about how innovations in online music has changed the way people use it to connect with each other.
She named 2011 as a “watershed” for the music industry: “The line between music access and ownership is blurring now that you can listen to whatever music you want, wherever you are.” And she added that new streaming services have expanded music listening and discovery into a collective experience that creates an ongoing conversation: “We’ve seen a big psychological shift with the realization that you don’t need to own music, that your musical universe can be blown wide open by not only having all of your tunes at your fingertips, but that of your friends, your favorite artist … Music forms such an important part of people’s lives and is to be given the power to discover, share and enjoy an unlimited amount.”
In this interview, Watts also hinted that the Spotify platform would be significantly expanding its apps offering in 2012.
Music Industry Profits Officially Up in 2011
Year-to-year comparisons put 2011’s album sales up from 2010, so says a report released by Reuters. Though the Soundscan sales year does not end until January 1, numbers show that by a small margin of 1 percent, this year will mark the first year there hasn’t been a profit loss in the music business since 2004.
In 2010, sales had dropped 13 percent since 2009. And before that, they had been steadily declining by an average of 8 percent annually since the early-mid 2000s as the industry adjusted to the rise of digital music.
But there is concern among experts, as the big successes of 2011 will not be very easy to recreate in 2012. The two highest-selling albums were Adele’s 21 and Michael Buble’s Christmas. And neither of these artists represent what has made for the typical “hit.”
Reuters also provided a rundown of what was successful and what failed in 2011. The following are the top three:
With digital music still on the rise (and music retailers ever shrinking), many wonder whether or not 2012 could possibly offer another surge – or even a flattening out – for the music industry.
Last week, older artists and songwriters as well as analysts and legal experts discussed why induction into the Rock and Roll Hall of Fame and potential copyright amendments are keys to their continued success in the modern music industry. Also, RightsFlow was acquired by Google to help manage YouTube licensing.
Legendary Artists Look Towards Cleveland to Lengthen their Careers
How can older, established bands and solo artists compete with younger up-and-comers in today’s music business? The answer lies in being inducted into the Rock and Roll Hall of Fame, according to a recent article in The New York Times. Not only does recognition by the Hall of Fame bring immortality to many legendary artists, but it also could mean more sales and a bigger paycheck.
Many older bands and artists have been hit in today’s ever-shifting music industry, with sales dwindling and music fans gravitating towards younger acts. The net worth of the music industry is half of what it was ten years ago. To counteract this, every fall, managers and record labels fight to get their oldest artists nominated in hopes of them getting officially acknowledged as the “royalty of rock.”
Rewards for those that score a place can be huge. Weekly record sales for artists that are inducted typically jump between 40 and 60 percent in the few weeks after selection, says David Bakula, a senior VP at Nielsen SoundScan. A Grammy might help an artist sell more of a particular album, but Hall of Fame induction usually means more sales across an entire catalog.
However, the path to getting recognition in the Museum is not an easy and can take many years. And controversy has historically accompanied the process of selection. It starts with a nominating committee of 30 music critics, entertainment lawyers and recording executives who narrow the playing field down to 15 worthy artists. Then another committee consisting of 500 people that includes past winners chooses just five inductees. Artists cannot qualify for a spot until 25 years after their first recording, which means today, artists that started releasing music in the 1980s and earlier are eligible.
According to artists and others who have participated in and witnessed the induction procedure, there is a lot of backstage lobbying, and most of them are not even sure how acts get chosen during the first step. As an example, the Bee Gees were ignored 11 times before finally making it in 1997. And in spite of 27 studio albums and 45 years of non-stop touring, superstar Alice Cooper was rejected 16 times, finally being invited to join the ranks in 2011. As Cooper said, “I used to think when you got in, you’d understand how it worked, and how you get nominated – there would be a secret handshake, and there’d be a dossier about Area 51 and the president’s assassination.” However, nothing was revealed to him.
Rhino Records, in control of Cooper’s back catalog capitalized on his induction by running 30-second spots on TV during the induction ceremony and making Alice Cooper compilations, boxed sets and deluxe editions available both online and at physical retailers. As a result, in 2011, the number of young people attending his concerts increased significantly, and sales of his entire collection rose from 75,000 to 115,000 from 2010, to 2011.
And not only do record sales increase for inducted artists, but new, career-reviving opportunities appear. In 2009, now 74-year-old Wanda Jackson, “the queen of rockabilly” was inducted and got to collaborate on an album with Jack White as a result. Suddenly she was appearing everywhere, making television appearances and opening for Adele during her 2011 tour.
Labels benefit also, when awareness of some of their back catalogs is increased and people start buying older albums.
Those being inducted in 2012 are Guns N’ Roses, the Beastie Boys, Donovan, Red Hot Chili Peppers, Laura Nyro and the Faces. The official induction ceremony will take place in April, 2012.
“Funkytown” Songwriter is Leading the Copyright Fight
The emergence of a long-existing provision in U.S. Copyright Law could cause a battle between Minneapolis-based songwriter Steven Greenberg and the music industry. And this battle could cause other songwriters and artists to start a war. Greenberg was responsible for writing the 1980 hit “Funkytown,” which led to huge sales for Mouth to Mouth, the record by Lipps Inc.
Since the ‘80s, his song has been used in TV shows, films, commercials and stage productions. Greenberg also gets paid for the song being institutionalized in several museums around the world. While “Funkytown” has not been played as much as the most-played song in history – which is “Yesterday,” by the Beatles, at 7 million recorded performances – its performances are approaching two million.
While Greenberg has refused to discuss finances publicly, the royalties and licensing fees his song has generated throughout the years have provided a great source of income. However, Universal Music Group, who owns the song’s copyright, has made even more money on “Funkytown.” The label has taken most of the funds generated by the song.
A 1976 amendment to the Copyright Act could cause revenues to shift. The amendment allows song authors to take back ownership of the song’s copyright 35 years after its creation, and it applies to every recording released since January 1, 1978. And Greenberg is the first songwriter in the country to file a “termination of transfer” notice with the U.S. Copyright office. If he is granted the transfer, the copyright will revert from Universal to him in 2015.
Greenberg said, “I’ll then own my own copyright and I’ll be able to negotiate with anyone I want, therefore giving me a much, much better royalty rate, licensing, you name it … I just get a much better deal all the way around.”
If more artists take advantage of this provision, it could mean another massive blow for the music industry, which continues to reel from the digitalization of the marketplace. As Greenberg’s attorney, Ken Abdo said, “If you can imagine having the vault of the catalog of major hit songs from 1978 on – and there are many – start reverting to the authors, that’s going to eviscerate the economic core of many of these record companies.”
Experts believe that labels and publishers will fight, arguing songwriters are employees of their record companies, making everything they produce their employers’ intellectual property. Obviously, artists will maintain they are independent contractors who deserve to ultimately own everything they create.
If artists win this battle, in an increasingly DIY-favorable environment, many will take control of the sale and marketing of their music. However, others like Greenberg may allow their labels to continue to handle their song’s copyright with a renegotiated contract. Greenberg predicted an entirely new music business: “I think companies are going to pop up all around the country if this thing happens, and there already are companies [that administer artists’ copyright] … [These new companies] will do it for a lot less, and who knows, maybe they’ll do it better.”
Abdo also stated that music fans could be impacted when songwriters pursue this copyright transfer: “This potentially changes the entire economic environment for the purchase of music.” However, the full impact on every piece of the puzzle will remain unknown until Greenberg and other artists take their cases to court.
YouTube and RightsFlow Merge
The popular online video site YouTube acquired the New York-based royalties company RightsFlow on December 9 in order to help it identify the owners of music people use in posted videos. The deal was made to help YouTube better manage its relationship with content owners, who are not typically asked by video creators before their music is used for free.
RightsFlow is in control of a database of over 30 million songs and helps ensure artists get paid royalties when these songs are used. YouTube already has a Content ID system that identifies songs uploaded by its users, but until acquiring RightsFlow, it did not have a mechanism that could find the songs’ rights holders. Content owners will now be able to decide to take down videos that use their music, or leave them up and collect a share of ad revenue.
In a blog post, YouTube product manager David King said, “We’ve already invested tens of millions of dollars in content management technology … We want to keep pushing things forward.” He added that by acquiring RightsFlow, the company is enabling the chance for more music to be available on YouTube and for the platform to be a better way to launch new artists.
Official terms of the deal were not released.
(And if you are looking to get your cover songs licensed legally by Limelight/RightsFlow, you can link directly through the main page of the Musician Coaching site.)
Tom Silverman is the founder and the head of TommyBoy Entertainment. Throughout his amazing career Tom has worked with and broken artists like De La Soul, Digital Underground, House of Pain, Queen Latifah and Afrika Bambaataa. In addition Tom is one of the main executives who has revived the New Music Seminar. I was grateful he took the time to speak with me. Please check the bottom of this post – Tom was kind enough to offer my readers a code for two for one admission to the L.A. New Music Seminar coming up on February 1st & 2nd.
Tom, you have a unique worldview given your history and current position in entertainment. Tell me what you’re seeing out there. Some of the statistics I saw at New York’s New Music Seminar are a little daunting. What is the reality for the aspiring artist these days?
TS:
Last Thursday, the new 2009 statistics came out from SoundScan. I’ll go over the most recent things because that just came out. Interestingly enough, and this is what we’ve been identifying at the New Music seminar is that overall music sales are up by 2.1% — 1.545 billion sales were made. That includes physical, digital, singles, albums, everything, video, music video. Total album sales including digital are down 12.7%. Digital tracks are up 8.3%, which is pretty great considering everyone is saying digital is leveling off, and I find that to be a hype. The percentage of increase is slowing down, but that’s because it’s a numerator/denominator thing. The actual amount — the number of additional units was almost 100 million more digital tracks sold this year than the year before, and 100 million is nothing to laugh at.
When you want to talk about vinyl, it’s up 33% and it went from 1.88 million to 2.5 million; so, the increase on that was about 700,000. Full-length digital albums are up 16%, but then again they started at only 65.8 million, so they’re only up to 76 million. The interesting trend we follow at the seminar also is the ratio of singles to album sales; In 2004 there were virtually no singles sales- it was all albums. Last year there were 2.5 times as many digital download singles as albums, physical and digital combined. This year it’s moved to 3.1 times as many, so look to see the ratio of singles to albums to increase. A lot of this comes from the radio hits. What’s happening is that where the major labels play, they’re getting marginalized faster than the indies and the smaller artists. We identified that the Top 10 has dropped 65-70% since 2000, probably 70% as of this year. If you just take records that sold over a quarter of a million that’s down 65%; but if you take records that sold under 10,000 it’s only down three or four percent.
I don’t recall the exact figure but I heard the number of albums that went platinum in 2009 was frighteningly low.
TS:
There weren’t that many. In 2008 there were only 112 that sold over a quarter of a million. So if you think that the major labels only make money – they can’t justify their existence at the size they are on records that sell over a quarter of a million. A good part of those records that sell over a quarter of a million they hoped would sell over a million or two million, and only sold a half a million or less. So they overspent on them and didn’t make money on them. So those 112 records are the only records they could make money on at all. Probably 25-50% of those didn’t make money either. So only 60 releases make money, and the amount of money they make except for maybe four or five giants hits – the Lady Gaga and Black Eyed Peas level of hits – aren’t really making significant money. In the old days, one hit used to pay for 20 stiffs. Now one hit doesn’t even pay for one stiff.
Depending on what’s spent, one hit doesn’t always pay for one hit.
TS:
Exactly. Half of those 112 didn’t even make money or broke even. To sell 300,000 albums and not make money? That’s not a good thing. It’s because they were hoping to sell 600,000 or 700,000 or 800,000. The labels are getting more cautious. So here’s what’s happening, and this is what we discuss at NMS. There are two major concerns we have. One is, the labels, both majors and independents are more conservative; they’re not going to take risks on artists or invest in artists just because they hear the demo and they like the songs or just because they can pack a house. That’s not enough – at least not the major labels. They need to know the artist is going somewhere between 30 and 60 miles per hour already to make an investment in it. They can’t start from scratch anymore, because so few artists are breaking. Here’s another statistic in 2008 there were 1500 releases that sold over 10,000 album units. Out of that there were only 227 of them that were artists that had broken 10,000 for the first time. So in the whole year only 227 of the artists were artists that had broken what we call the “obscurity line.” When you sell 10,000 albums, you’re no longer an obscure artist; people know about you. You may not be a star yet, but you’re in the game. That gets you out of the glut and into the game. We looked at the 227 and identified that only 14 of them were artists doing it on their own and all the rest were on majors and indies; a little more than half were on indies. And that includes Lady Gaga in that number of 227. It includes the biggest artists and ones that sold 10,000 as well, whether they sold a million or 10,001. That’s a pretty daunting number.
How have you adapted with Tommy Boy Entertainment? How has your personal business adapted to this shift? You seem intimately acquainted with how things are going. How have you weathered this transition?
TS:
By starting the New Music Seminar again and doing tons and tons of research deep in the data, identifying what’s happening and not happenings, talking to people who are making it happen and doing it alternative ways, we’re identifying what the opportunities are out there. Tommy Boy is more than a record company; we don’t consider ourselves a record company anymore, we’re much more than that. Now we’re sort of a strategic artists positioning company, and our job is to take an artist from where they are in revenues to a much higher number. If we work with Artist A that’s making half a million dollars a year, our goal is we take them to a million in year one, two million in year two, and three or four in year three. That’s our goal. And then we take a percentage of that revenue. And we’re talking about dollars, not record sales, because we may decide to give the records away, and we may only make about 10% of our money from the music and master use or 20% and the rest of it will come from touring and merch, publishing and possibly sync and other things. We’re not concerned with where the money comes from as long as it comes. Tommy Boy is known for building brands, from Queen Latifah and Ru Paul, to De La Soul and Afrika Bambaataa, Naughty by Nature, House of Pain, so many household names now that you know. When you mention the name, you can see them; like Digital Underground, when you close your eyes, an image of who they are comes up. Coolio … they all became significant brands, and that’s what we did. Tommy Boy is itself as a significant brand. We’re not just a record company. Our business always was building brands. How we used to make money was selling records; but we don’t see it as the way we can make money now. It’s one of the streams of revenue that we can make money from, but it’s no longer the most significant or even the second most significant way we’ll be making money. We can no longer be limited in how we see artists to the music domain. It’s more than the music. We have to work with the artist’s positioning.
So, back to the New Music seminar. As it’s harder for artists to break, and no labels are going to come to an artist just because they like the demo, that’s hard for artists to take. Artists don’t want to hear that. They’re spending all their time, because they’re musicians making a cool record. And that’s what they should do, but that’s only the very beginning of it. One of the things we identified in that three times as many people buy singles as a whole album, it probably doesn’t make any sense to make a whole album, or it’s a waste of time and money in the studio making an album when they’re just getting started, because every artist breaks with one song. And they might as well focus on finding that one song before they waste the money on the album.
Do you suggest EP’s then as a plausible alternative?
TS:
EP’s or even singles. As you build fans, if you’re touring – and every artist should be regardless of genre right now to build their fan base and also sell merch and actually make money – they should be touring all the time. You create music to satisfy your live audience. Once you have fans that are coming to your site, then you need to keep flowing new music to them on a regular basis to keep them engaged, and hopefully good music. You’re going to say, “I’m no longer an album every 18 months or two years. I’m a song every two months or a song every month. I’m a monthly publication or a bi-monthly publication.” You look at yourself as more of a periodical than as an album-making business. I think the album days are coming to an end. Unless you’re already established and you already have hundreds of thousands of fans, in which case the touring and album making might make sense. I just talked to one of the writers and producers for Black Eyed Peas, and they’re going out on tour right after the Grammys. They’re bringing out two tour buses that are studios, so they’ll be recording while they’re touring. I think that’s the new world, is that artists will do their shows and then they’ll go into their mobile recording studio and write and record. Now that recording equipment is so mobile, it’s easier and cheaper to do that, and the top artists are going to do that, and even the smaller artists are going to have to be writing on the road constantly. And whenever they’re in a place where there’s a studio, they may want to drop a track or they can record live tracks to perform and practice and rehearse and do live tracks and record those live tracks and make them available. The flow of music from artist to fan is going to be more important. It didn’t used to be important because there wasn’t the kind of 24-7 contact between artists and fans. So as you build your fans, they’re not going to be happy with one album every two years anymore. That’s not going to work. After three months, they’re off finding another artist that’s going to take your place. If you want to keep their interest, you have to keep at the top of their consciousness, and that requires new creative on a constant basis.
So at the seminar we talked about all of this. We talked about the new model, which is no longer based on records, it’s based on fans and the relationship between artists and fans, and how you monetize that relationship. We talked about the fan relationship pyramid. We have to look at our fans based on their levels of passion and their levels of spending. What kind of content we see delivered to our fans – whether it’s for money or for free – depends on their level of passion and their level of spending. So somebody that doesn’t want to spend any money – a tire kicker – probably shouldn’t get something first. They probably shouldn’t get exclusives. The exclusives should go to the most avid fans. That’s the new world. And there’s a science – we call it “fan migration science,” and we teach fan migration science at the seminar. How do you migrate a passive fan into an active fan? How do you capture fans? The new music business is about getting fans. That was always the business, but we – artists and labels – were always confused. We thought it was about selling records. Record sales were how we used to make money. It may not be how we make money now. But really how we made money from it is that fans bought our records. Passive fans bought the single, active fans bought the album, super active fans bought the album and went to all the shows, and bought the t-shirt. So we have to look at our audience in that way from now on.
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Check out the rest of this interview
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If you will be in the L.A. Area or willing to travel to the L.A. area you should check out the New Music Seminar on February 1st and 2nd. Readers of MusicianCoaching.com can get a two for one discount by going to www.newmusicseminar.biz. and entering the code “nmsla2”.
