With 2012 coming to a close, I wanted to call attention to some of the most interesting articles we’ve featured on the Musician Coaching site this past year. I chose these “Best of” highlights below not only because many were shared the most on Twitter, Facebook and the Web, but also because they hit some of the issues I feel artists and others in the music industry should be particularly focusing on as they develop their craft and build sustainable careers.

 

Everything You Need to Forget about the Music Industry

 

 

I have learned a lot of interesting things on my 20-year journey in the music business. But one of the biggest discoveries came to me as I was building this website and has continued over the past four years:  Why do so many people gloss over all the foundational work that is usually required to find great help? Why are people often so divorced from all the work they have to put in on their own to advance their careers and all the time they need to devote to developing their sound and playing shows (especially those poorly-attended ones at tiny venues that build character)? And why do so many think an executive will want to jump in and partner with them when music seems to be just a hobby for them and not a real, thought-out business?

 

As I mentioned in my article, “Everything You Need to Forget about the Music Industry, “I was watching something on the Science channel about the planets, and an astronomer was talking about an asteroid hitting the earth. He said, ‘There has been more money spent on movies about asteroids hitting the earth than money spent on preventing asteroids from hitting the earth.’”

 

Since I heard that statement, I haven’t ever looked at media – the field I’ve been focused on for my entire life – in the same way. And it made me think even more about the different stories that the media tells us about what it means to be “successful,” as musicians (and human beings), and how the way we compare ourselves to the media’s ideals impacts our own quest for success.

 

Using the example of the layout of VH1’s popular Behind the Music series, I pointed out how we are all told success stories that are based more often on the moments after a famous artist’s album comes out and that person becomes a huge celebrity by creating a genre changing piece of work or a huge commercial success. We are less often told about the reality of people everywhere that continue to work steadily and persistently and make a real living in music.

 

The article ended with this point:  “If you want to achieve your goals as a musician, you need to get really specific and write out a business plan. It doesn’t matter if you don’t know how to write a business plan or if you believe that it’s only for raising money or that it requires fancy number-crunching graphs. Truthfully, a business plan can start off as simply just visualizing where you want your music to take you in the next six months.”

 

As I said, I can’t write down a plan that will work for every artist, but I can offer a few guidelines if you are devoted to music for life and want to stop pursuing it as just a fun hobby:

 

1. Build a solid business foundation. Figure out how money is made in this industry and how publishing works. Register with ASCAP, BMI or SESAC and SoundExchange. Make sure you have a business entity established and trademark your name.
2. Get your marketing materials in order. You’re going to need at least a 4-song recording (and one that requires no apologies), a well-written bio, a logo, a professional photo and a video of you performing live (for an actual crowd). You’ll also need vanity URLs on social networks, a website and to make sure all your digital real estate is interconnected.
3. Set yourself up for the long haul. You need to engage in long-term planning if you want to work as a musician. Most “normal” businesses are not in the black for three, to five years, so why should a music business be any different? If you are truly in this for life, you should be investing in your business in a way that ensures you are set up to play and record music and get it to people at a moment’s notice over an extended period of time. This could mean building a home studio and getting a P.A. and a van. The point is, you’re going to have to plan multiple releases over a number of years and be prepared to play countless gigs. And you’re going to need to know how to accomplish this as cheaply and easily as possible. Don’t blow all your money on your first release, expecting it will propel you instantly to financial stability. Plan on truly playing and recording music on an on-going basis.
4. Build a community and diversify. The music, the money and “the hang” (who you seek out as collaborators and the other musicians with whom you surround yourself on a regular basis) determines which gigs you should take, even if they divert you from your original work – sideman work, apprenticeships, etc. Remember, even Hendrix was a sideman.
5. Think about B2C and B2B. It is also important to consider that everyone is talking about direct-to-fan in the digital age – an obvious, unfiltered Business to Consumer strategy (B2C). As they are building their communities, I’m of the opinion that many fledgling artists should also pursue Business to Business (B2B) relationships with like-minded artists. If you convince one band with a 50-person mailing list in another town that you are worth a damn, you can get your music in front of those people and start to break a new market if you’re willing to do the same promotion for them on a gig trade.

 

The confusion and frustration you may be feeling about your music career is just part of the process. (It’s just not part of the process that people really talk about!)

 

Becoming a Great Musician

 

 

In September, I had the pleasure of talking to Danny Barnes, a banjo player and a songwriter who has been a working musician for over 30 years. We discussed his long career in the music business and his views on the modern music climate. He also shared some advice for artists that want to successfully build their lives around music and become truly great at their craft.

 

Widely known as one of the world’s most innovative and versatile artists, Danny mixes non-traditional music like rock fusion and jazz with electronic percussion instruments, still rooted in the traditional bluegrass, country and folk music for which his instrument is known. A lifelong music “fanatic” in every sense of the word, he decided he would make a career in music at 10, when, deeply inspired by the many records his parents played at home, he began to diligently study his craft. Known for his positive and refreshingly-honest attitude towards being an artist in the modern music industry, he continues to dedicate himself to growth and further innovating his instrument by learning from and collaborating world-renowned master musicians, including Bela Fleck, Lyle Lovett, Nickel Creek, John Popper, Chuck Leavell and Dave Matthews. He puts out music through ATO Records.

 

Danny candidly shared his passion for music, his candid thoughts about the current music climate and where he believes artists should be focused. One of the most powerful things Danny said in his interview was, “It’s possible to mimic things closely. We can find someone down at the bus stop, get them a makeover, auto-tune them and make them look and sound a lot like a guy on TV. I think that’s distracting. The response that creative people should have to stimuli is to make something. Imitating somebody is not making something. I’m not saying you shouldn’t gather inspiration from people. But our response to being inspired should be to create something ourselves.”

 

Tracking Metrics for Musicians

 

 

I talked to Gregory Mead, co-Founder of MusicMetric, in early August. MusicMetric is a company that aggregates and analyzes all music-related trend information available on the Web for over 600,000 artists and over 10 million individual releases in real time throughout the world. As I mentioned in the interview, Musicmetric is also the first product I have ever openly recommended to musicians on my site. Greg helped develop the technology behind Musicmetric while earning his degree in computational physics at Imperial College London. At the time, he was working as a Music Editor for the major London student newspaper Felix and recognized the need for an efficient Web tool that would help his team of 30 music reviewers seek out new artists in London. Alongside Co-Founders Marie-Alicia Chang and Matt Jeffery, he launched Musicmetric in 2007 in an effort to create an easy way for those working in the music industry to track important music data and statistics. A fan of live music, he has also been involved in organizing live events throughout London.

 

Greg shared his background in music and technology and, more specifically, why metrics tracking and analysis is important for artists at all stages in their careers. He also shared information about how Musicmetric can help artists become more aware of how their music is being received and take informed steps to build a loyal fan base. He said, “There are three broad categories of the data we track:  file sharing; social media and online mentions, which of course involve analyzing text in reviews while crawling the Web … There are other music analytics services that attempt to focus only on the social media part, which we have in our product. But having the file-sharing data and the mentions feature is really important because it gives you a broader view of what is going on.”

 

Monetization, Myths and the Modern Artist

 

 

The past decade or so has been a particularly challenging time for artists. They can no longer just focus on making great music or rely on someone else to do all their marketing, promotion and business tasks for them. Now, social media and technology tools designed to help artists build intensely personal relationships with their fans and turn more people on to their art are necessary. Add to this the fact that the industry is changing faster than ever before, giving birth to entirely new business models and figuring out what to focus on in order to find long-term success can be a difficult task. How can you thrive in the shifting modern music climate?

 

In May, I got to catch up with Tom Silverman, the founder and head of TommyBoy Entertainment, as well as the principal executive of the New Music Seminar. Tom has graciously agreed to contribute quite often to the Musician Coaching website and honestly share his vast expertise and his views on the evolving industry. Throughout his amazing career, he has worked with and broken artists like De La Soul, Digital Underground, House of Pain, Queen Latifah and Afrika Bambaataa.

 

In the interview I entitled “Monetization, Myths and the Modern Artist,” Tom and I discussed what artists are going to need to do from a business and artistic perspective to be successful in the evolving industry:  “[One trend that's emerging] is monetizing attention. One of the things we’ve learned from Instagram, Facebook, Google and everything like that is that we’re in an attention-based economy:  Attention equals dollars now. If you look at the attention that’s garnered by the artists and music that the labels control, it seems like there should be a better way to monetize that attention. Labels are so focused on selling albums and secondarily, music, that they aren’t really focused on monetizing the attention and focus that those artists and that music create. If they created relationships with artists where they would manage and monetize the relationships artists have with fans and the impressions the artists and their music create in the world, the value of that would probably be 10-50-times greater than just selling records.”

Above all, Tom’s thoughts on the subject were positive. And as promised, he shared these positive thoughts at this year’s New Music Seminar, where we both spoke in June:  “I’m optimistic, though. And at the New Music Business Seminar this year, we plan to be optimistic – no whining and complaining. If you don’t have a way you think the business can be better or that artists can do better, get more exposure or make more money or do something better than has been done before – if you don’t have a way to improve things – stay home … At a lot of the other conferences, people talk about what a mess everything is, but, that’s not the way we want to look at it.”

 

Balance, from an Artist’s and Pro DJ’s Perspective

 

 

If you’re an independent artist without label support, juggling all the elements of your career by yourself, from marketing your music, to booking shows and seeking out new opportunities to connect to your fans is no easy task. If you’re confused – as so many artists are – by the many intricacies of the industry, you might feel as though you are spending more time on menial, business-related tasks than on your music.

 

In mid-April, I got to talk to New York City-based DJ, producer, remixer and music company owner MING (a.k.a. Aaron Albano) about his own multi-faceted experience in the business and how he has managed to stay balanced and focused on his art while seizing every opportunity to build critical relationships with fans and music industry professionals in order to continue to get to make a living pursuing his life’s passion. From the age of nine, MING trained as a classical and jazz guitarist and played in hair metal bands throughout high school. Because of his passion for production and interest in building a solid career in the music industry, he decided to pursue a degree in electrical engineering with a focus on audio at the University of Miami. He continued to fine-tune his production and DJ’ing skills in college and upon graduation, looking for a way to fund the development of his home studio, MING found work in the burgeoning Internet industry. During this time, MING met renowned musician and DJ FS and together they formed the duo Ming+FS, a collaboration which went onto produce four studio albums and over 30 singles. Eventually, he founded the record label Hood Famous Music. As an artist, MING is managed by Stephanie Lafera at Atom Empire, which counts huge artists such as Lady Gaga among its talent.

During our interview, MING stressed that artists in all genres need to stay forever focused on the music: “You always need to be working to get better at your craft. Try to work with as many people as possible. Have a point of view and a unique sound. Bring something new to the table … And learn how to collaborate. Just because you can do everything by yourself now doesn’t mean you should … The more people you can collaborate with, the better you will be as a musician, and the larger your fan base will be … [And] be honest with the music you’re making. It’s okay to make music that is not successful. But if you want to make music that you’re going to make your money from, you have to find the line between art and commerce and be able to ride that line comfortably. You have to be able to carve out a career where you’re making money from the art that you make. Otherwise, you can call yourself a professional musician, but you’re really just a hobbyist with an addiction.”

He added that DIY musicians need to proceed carefully and intelligently:  “Putting out your own record is all fine and good if you understand the business – if you have your social marketing down, have good networks and a good fan base, if you understand business and can manage money. You know what it’s like to run a record label, a touring business and a merch business. There’s a lot to understand. And most young musicians at 22 do not know how to do all that. They play to 50 people in their home town, have 100 Twitter followers, 50 people following them on Facebook and think people know who they are. From a global business perspective, you’re basically invisible at that point … I’m always telling young musicians that it’s not enough to make your own record and put it out on your own label. You haven’t been put through the system, and you haven’t been validated by fans or the other people who are going to help sell your records. You’re an army of one. Some of these deals you do in the beginning won’t be good. Make sure the deals you do in the beginning are short term or limited to a certain number of years. But it’s valuable to do records on larger labels and have other people validate your music.”

 

You can expect many more interviews and articles from some incredibly talented, knowledgeable folks coming up in 2013, so stay tuned. Here’s to a very happy and healthy New Year!

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 helped revive the New Music Seminar and is now one of its principal executives. He’s been kind enough to allow me to feature his candid thoughts about the changing music industry on the Musician Coaching site on several occasions. In January of this year, he shared some insights about what he termed “The Music Business Resurrection.”

 

After our conversation about “The Future of New Music Business Models,” Tom and I went onto talk about what artists are going to need to do from a business and artistic perspective to be successful in the evolving music climate. We also talked more about what is in store for artists attending the New Music Seminar – where we will both be speaking – in New York City, June 17-19.

 

Musician Coaching:

 

Thanks for continuing this conversation, Tom. We obviously hear a lot about artists that have achieved legend status, like Lady Gaga. The attention on her made Polaroid decide to give her a title and a stipend. They wanted to bask in the glow of her celebrity. But on a smaller level, can you identify anyone that does monetize the attention their music career has bought them?

 

TS:

 

Not really. We’ve talked about Vevo before. Vevo was really the first attempt by labels to monetize attention. All of Universal’s, Sony’s and EMI’s music videos are monetized by Vevo across all the platforms. They have a team that does the sales, and that team controls the flow of all that. That’s a good example of the labels using the monetization of attention model.

 

Musician Coaching:

 

What I don’t quite understand about Vevo is how their service involves synchronization licenses, but they haven’t paid a single independent publisher.

 

TS:

 

I don’t know about that. I’ve really just looking at the ideas surrounding labels getting into that business. All of these online technologies, for the most part, have value based on the amount of visitors they have; their monthly average users or weekly average users are how they value themselves. If you can get to “X” million, it’s worth “X” dollars. That’s why Huffington Post and Daily Candy sold for as much as they did. The value is in the eyeballs. That’s why they say we’re in an attention economy.

 

So, if you collect all the eyeballs that are affected by The Beatles’ songs, The Beach Boys catalog, all of Frank Sinatra and everyone else that still get played everywhere in audio and video formats and were controlled by Capitol and EMI, the value of Capitol and EMI could be monetized at a number much bigger than what Citibank sold them for – another zero, at least.

 

If you were a company like Instagram, you could say, “I had 30-million active users. And my 30-million active users monetized out to a billion dollars when I sold it to Facebook.” Obviously there were other factors involved, so there’s not necessarily a direct correlation there. But if EMI could monetize on a similar level, based on the amount of attention its collective, aggregate artist roster and catalog generated across all platforms – online, on the radio, in venues and any other place the music could be heard – those impressions  would be in the tens and hundreds of billions. But they can’t monetize them right now, because they only think of themselves as creating a music product and selling that product. If they were able to sell the attention, they’d be worth way more.

 

Musician Coaching:

 

I totally get it.

 

TS:

 

But the labels don’t see it. They still think they’re in the business of making and selling records. They need to say, “We make records and sell records to build brands and build attention … and then we sell the attention.” One of the ways they sell the attention is with records. But it’s not the only way. And based on the calculations that we currently have between 200- and 250-million people buying records, the business of selling records doesn’t have room to grow much more than that. Maybe it could double. And even if it doubled, it still wouldn’t be as big as it was in 1999, so it wouldn’t even be an interesting target. We have to come up with a paradigm shift that allows the business to monetize on a much bigger level.

 

That should be the lesson we learn from Larry Page and Sergey Brin, and from Mark Zuckerberg and all these other guys who figured out how to do that. It’s not just the technology, it’s the aggregation of attention. And now they’re selling the aggregation of attention. The fact that I can communicate with you on Facebook isn’t what they’re selling; they’re selling the ads to the eyeballs. And it’s the same thing with YouTube, with SEO and AdSense and all those other companies who are selling attention.

 

That’s why I applaud Vevo. I’m not saying it’s perfect. But it’s the first time the music business has said, “Let’s get into the business of monetizing attention.” I don’t even think they knew what they were doing when they did it. But if you look back at it historically, you can say, “Vevo was the first.” Let’s hope it’s not the last.

 

Musician Coaching:

 

It looks like Makers Studios is giving Vevo a run for its money.

 

TS:

 

Yes. Exactly. You get it. I read the description of your NMS talk – “Everything You Need to Forget about the Music Business” – at the seminar and I got very excited. It’s very similar to what my keynote is going to be. We’re almost exactly on the same page with what we’re talking about, and I can’t wait to hear it. Of the descriptions I’ve seen, it looks like you’ve picked the most interesting, new and provocative subject. And I haven’t shared what I’ll be talking about yet. But what I’m thinking about and you’re talking about are so close, it’s almost scary.

 

Musician Coaching:

 

Well, and I’m going to be talking about some positive things people can do, the things they can take into their own hands. But I’m also going to be talking to them about how there’s a really big disconnect. Mass media has sold us a lie. One of the things I’ve done to prepare is, I’ve watched VH-1 Behind the Music, and I’ve measured out exactly how much attention was paid to the different phases of artists’ career, particularly the developmental phase – when the artist is actually in the van or in the studio. That’s only about three percent.

 

The way we perceive things on television is interesting. If you’re watching Friends, you realize you’re watching Jennifer Aniston play a role. But what you might not understand is that a waitress can’t afford a three-bedroom apartment on Central Park West. So, there’s this peripheral information and lack thereof that trickles through to people. And so many people are so dismayed by the journey.

 

TS:

 

You mean people are dismayed because they have expectations that aren’t being met?

 

Musician Coaching:

 

They’ve come to believe that there is somebody out there to save them. There is so much data around passive music search terms, like “how to find a music manager,” “how do I find a booking agent,” “how to get a record deal.” And I knew this when I went to build my website several years ago, because I went and targeted all these people. And before I did research, I thought I knew all the right terms:  “music marketing and promotion;” “book your own tour;” “take charge of your career.” Nobody searches for that. 10- or 15-times over, people just want to be saved. And I think a lot of the reason is because we’re exposed to this false idea. The story, “They worked hard for 15 years, and then eventually, people started to care” is not interesting.

 

TS:

 

When you and I did that notorious interview a couple years ago that was so hotly contested on the Web, that was my point:  There were so many hobbyists out there that really were not interested in doing what it takes to take the Malcolm Gladwell road to fame, where you persist, work very hard, practice and hone your craft and redirect yourself until you get it right. They just wanted to send a demo to a label, and have the label roll up in a limo with a bag of money and have their career begin.

 

I don’t know if you were at the last seminar, but I said, “Anybody who has a CD, give me your CD now.” Then, I talked about what the odds would be of having their CD ever heard by anybody. And if it was heard, I discussed the odds that they would get a call. And if they got a call, I discussed the odds they would get signed . And if they did get signed, I talked about the odds of the record ever coming out. And then I talked about the odds of the first song being a hit if the record did come out. And if the second song came out, I talked about the odds of it being a hit and actually leading to a career. All the different things that could happen after they gave their CD to someone pointed to the fact that the odds of that CD turning into a career were only about five times greater than the odds of winning the lottery. And the lottery ticket only costs a buck.

 

So, I said, “Rather than waste any more time or money on your career, you should just buy lottery tickets, if you think you’re going to give someone a CD, and that’s going to help you get  where you’re trying to go.” And I gave them lottery tickets. I bought about 36 lottery tickets and gave everyone who gave me CDs a ticket.

 

That’s the mentality you’re talking about. Nobody’s searching for “how to book your own tour” or all that great Hypebot stuff that’s out there about how to do it yourself and build your audience. I hear all these stories of Hoodie Allen, Mac Miller and all these guys who are building it up for themselves, and I think, “These guys are the new heroes.” And we’re really going to be putting them up as the new heroes at the New Music Seminar. Hoodie Allen is going to be on the artist panel this year and maybe perform. Mac Miller’s team is coming in. We’re going to tell that story of the people who have persevered. And none of these people had a limo full of money show up at their doors. In fact, they still are controlling their own destiny. And as I mentioned before, we’re also doing a YouTube Innovators panel of people who broke off YouTube and are selling out venues and selling songs and doing it on their own. Because, these are the examples. I think people respond better to examples. When everybody reacted to that interview a couple years back, the big thing was “1,000 True Fans,” and it was all theoretical. But now it’s becoming real, because YouTube and all the other tools are really starting to work.

 

The point is, there are a lot of things that are going to help more people do this. Things like YouTube and Makers Studio are becoming important. The Collective has a whole department just signing people like this. And Sony/ATV has Larry Mills trying to sign everyone up for publishing who is on YouTube, because they’re seeing a new section of the business where they can really dig in. And nobody is doing it yet. In a minute, everyone will be doing it. It makes you wonder if YouTube will be dead in a few years because there are so many people filling it with crap. The model for YouTube now is still, “Cover, cover, cover, original.” You do a million covers, and if you’re good at doing covers, like someone like Karmin, you get picked up. But it begs the question:  Is Karmin going to be a star on Epic, or does Karmin work best on YouTube doing covers?

 

Musician Coaching:

 

I did an interview with a guy named David Choi, who had 90-million views. And it was mostly covers. But something took off. He was a guy with a Warner/Chapel publishing deal who has co-written a bunch of songs for people. He’s making a living at it. Does he have a chance to become an icon outside his niche? I have no idea. I’m very comfortable saying, “I don’t know” these days.

 

TS:

 

And it’s the same question you ask when you ask, “Is this American Idol finalist going to have a career just because they just because they were seen?”

 

I think you can count on one hand the people who have been on American Idol or any of the other shows in America that have built lasting careers. I think there are probably only two or three.

 

Musician Coaching:

 

This goes back to my days at Atlantic Records. I’ve told this story many times before, and it always has me scratching my head. Atlantic was mining the Southeast looking for the next Hootie & the Blowfish. They would sign a band, and the band stop everything, quit their jobs, wait, spend the advance money a little bit. And the publicist would come in and say, “You, cut your hair. You, wear leather pants. And everyone get shiny shirts.” And they’d re-master the same album, maybe put it out and stop all the momentum.

 

TS:

 

I’ve heard that’s what has happened to Karmin since she went to Epic. She stopped her regular communication with her fans on YouTube, because now she’s in the major label system. I think people think that once you “arrive” you can stop doing all the things you did before. But you can’t stop.

 

Musician Coaching:

 

The point I was making is that I rarely see it work for people when they get thrust into these situations where they are overnight sensations and suddenly get tons of exposure. A switch doesn’t just go on and allow you to stay.

 

I was lucky enough to work peripherally with Kid Rock. The guy had been building his career for twelve years, fan by fan. A label can’t replace that.

 

TS:

 

And he still thinks of his career that way. When he makes his records, he still thinks about the screaming guy in the balcony – the guy half-a-mile away from the stage who came to the show. He makes his music for him and tries to serve the fans. Because, he knows that’s why he is where he is. He’s not trying to serve radio or labels. He’s trying to serve his fans. That’s what you’re supposed to do. If you always follow that policy, I think you’ll always be successful. He’s very smart.

 

Not all artists are that smart. Many of them think their fans should serve them.

 

Musician Coaching:

 

I’ve watched a big, fat wallet try to replace development time. You can’t force or speed up artist development. It happens on its own terms. Patience has never been the major labels’ forte, particularly since they’ve had to report to their parent companies on a quarterly basis.

 

TS:

 

That’s true. And that’s not getting any better. Unfortunately, because the seeds they have to plant right now in order to make their business be ten times bigger in ten years, they can’t afford to plant, because they can’t fund it. They need to say, “We have to change our business model. And while it’s being changed to the new model, we have to support the old model.” And that’s going to be a cost center for five years, just like Spotify or Pandora will lose money for a couple years before they start really making money. But that’s the way it is when you’re transitioning into a business that didn’t exist before. You have to be willing to invest and wait.

 

I’m sure the process of inventing the iPod and iTunes probably cost Apple hundreds of millions of dollars if not more over time before it bore fruit. We only saw it coming out and being a really big thing. But they didn’t know it was going to be a big thing when they came out with the idea. There were a million things that could’ve gone wrong between labels, publishers and everything else. And it paid off. It’s the same thing with the iPhone and iPad. The cost of creating all those products, physically and from a licensing and programming perspective, before any revenue comes is hundreds of millions of dollars. And it takes years.

 

If the music business wants to become a business that is a $100-billion business, they will have to invest hundreds of millions of dollars over the next few years, and I’m not sure they’re willing to do that.

 

Musician Coaching:

 

Let’s hope somebody does.

 

TS:

 

I’m optimistic, though. And at the New Music Business Seminar this year, we plan to be optimistic – no whining and complaining. If you don’t have a way you think the business can be better or that artists can do better, get more exposure or make more money or do something better than has been done before – if you don’t have a way to improve things – stay home. This is not a whining session.

 

At a lot of the other conferences, people talk about what a mess everything is, but, that’s not the way we want to look at it. It’s the way it is. So, let’s get beyond that and say, “How do we get to Point B?” If “Point B” is a $100-billion business, how do we get from where we are, to that $100-billion point? What do we have to do in the U.S. and around the world? And what are some of the various ways we can get from where we are to where we need to be?

 

I have a bunch of ideas. But I want to hear what everyone else’s ideas are. That’s why we’re bringing people like you in, because you’ll have ideas, too. And in your talk, you’ll likely talk about these artists who are waiting for success to happen to them. Whether it was the new era or the old era, there were always people like that, and they never achieved success. The people who have always been successful go out and get it; they don’t wait for it to come to them.

 

I totally understand that frustration though. That’s why I changed the seminar this year. For the last five, we tried to cater to artists and give them the tools to do it themselves and lift themselves up out of obscurity and into success. But what we continue to find that some artists don’t necessarily care about that. All they want to do is give an A&R guy their CD.

 

Musician Coaching:

 

It’s amazing.

 

TS:

 

It is amazing. But I decided that rather than complain about it, we should just shift the model and make a bigger music business. Because, people need to stop their fear of cannibalization of the record business. They need to stop complaining about illegal downloading. The people who are stealing music probably never paid for it in the first place, and probably will never pay for it. Does illegal downloading have an impact? Sure. We might be able to get another 10 percent out of it. But who cares about another 10 percent? We need to figure out how we get 30-times more than what we have now.

 

That’s what I want to talk about at the seminar and beyond. While people are arguing about how to get rid of piracy, the music business has gotten 75-percent smaller in inflation-adjusted dollars. Obviously, the protectionist model is not working. It’s like winning the war on drugs: It doesn’t look like we’re winning.

 

Musician Coaching:

 

I hope we’re at a place sooner rather than later where those that have the power to change the system aren’t incentivized to keep it broken because they stand to make more money that way.

 

TS:

 

Well, but maybe they’ll just be dis-intermediated by companies like Makers Studio and The Collective. These companies are probably the biggest threats to labels that are out there. Anybody who thinks about managing and monetizing the artist-fan relationship as the thing you need to do is a threat. If the labels don’t get into that business, somebody else will, from a different angle. The labels will wake up one day and realize their industry has been disrupted, if they haven’t realized this already.

 

The New Music Seminar is really about how we can stop being disrupted and start being disruptors.

 

To find out more about this year’s conference, visit the New Music Seminar website. If you haven’t already signed up, you can get a 20% discount by using the code NMSNYMC2348 at registration

 

Be sure to also read the first part of this conversation with Tom Silverman, “The Future of New Music Business Models.”

Tom Silverman is the founder and 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 helped revive the New Music Seminar and is now one of its principal executives. He’s been kind enough to allow me to feature his candid thoughts about the changing music industry on the Musician Coaching site on several occasions. In January of this year, he shared some insights about what he termed “The Music Business Resurrection.”

 

 

As we gear up for the 2012 New Music Seminar in June, Tom talked to me about some of the ideas that will be shared at this year’s event. He also expressed his views on what artists, labels, publishers, technologists and everyone else involved in the industry should be doing if they want to grow and continue to find new and profitable opportunities.

 

Musician Coaching:

 

Thanks so much for taking some time, once again, to chat with me, Tom. What’s in store this year for everyone at the New Music Seminar?

 

TS:

 

The seminar has taken a big turn to taking a leadership role in driving vision for the music business and returning control of the conversation back to the creators. Technologists have controlled the conversation for at least five years now, and most of the conferences that exist now are sponsored by the technology companies. This one is sponsored by mostly creative companies, like SoundExchange. It’s actually the first SoundExchange Digital Broadcasting Summit. Last year, SoundExchange collected over $350 million and distributed it to labels and artists equally. It has become one of the biggest new sources of revenue for labels and artists in America. This year, the amount of money collected will be well over $400 million. So, we’re approaching half-a-billion dollars in digital broadcasting revenue. And that’s SiriusXM, CBS Interactive, Music Choice, iHeartRadio, all the webcasters. There are so many different people that contribute to that. But the biggest ones are Pandora and SiriusXM, though there are many more, and it’s a growing area as radio listening shifts from FM to online and smartphones.

 

BMI and SESAC are also sponsoring the Seminar, representing songwriters and the creative community. And there is a bigger emphasis on songwriters and publishers at this conference than at any of the past conferences. It’s much more business oriented, because the problems that are affecting the artists at the artist level have their root in the economics of the music business. And until the economics of the music business change, the lot of the artists themselves won’t change very much. We’re exploring all the new ways the business can start to be profitable again and trying to set new goals for what’s possible for the music business.

 

Musician Coaching:

 

And you, personally have an interesting world view. What does the new music business look like, in your opinion?

 

TS:

 

Well, I’ve done a little research using the RIAA gross sales numbers at retail, and they say that the music business is about $7 billion in America. But when you look at what labels get at net and remove the cost of goods sold and mechanical so everything is apples to apples, you’re really looking at about a $4-bilion business in America, which isn’t that big. In 1999, that number was double that, or more – somewhere between $8 and $9 billion, which is $14 billion at wholesale. And the world business was supposedly around $37 billion using the IFPI numbers. Now it’s down to around $17-$20 billion. And the U.S. share of that has declined from, at one point, 40 percent of that to now 25 percent or less.

 

What those numbers are indicating is that we have a lot of things that are changing. And I think we have to look at the business in a new way so we can expand what the business is and reach numbers we couldn’t reach before. When I say the economics of the business are upside down, I mean the risk that investors in music – and for the most part, the investors are labels – are taking is not commensurate with the return on that investment. When you have a high-risk investment, you expect a high reward. And unfortunately the reward for the winners – the people that invest in people like Adele, etc. – is not high enough to justify the losses and the risks they take on the others.

 

It’s a very difficult business considering its high risk level . Every time you sign an artist, there’s a huge chance that artist will fail. You have to look at it as more of a venture capital business. And with a venture capitalist business, you have high risk, but you also have high return. If you invested $100,000 in Instagram, everyone could do the math and find out what it meant when it got sold a few weeks ago. That’s not happening when you hit with someone like Adele. You’ve invested millions, and then when it sells 20-million units – and when that’s the only one of its kind in over a decade that’s done those kind of numbers – what’s the return on that? And then, often the artist comes back and says, “I want to renegotiate. I don’t want the same deal going forward” in spite of their contract. When a venture capitalist makes a deal, the venturer can’t go back to the venture capitalist and say, “I want to redo the deal.” But that’s what happens in our business. And the contracts only last for six or seven years, while the venture capital contracts last longer than that and cover everything, not just records.

 

You have to look at that and say, “How can we make this business more interesting to investors and drive money into the music business again that will trickle down to artists? How can we get more people to invest in artist development so that more artists will be able to grow and create music?” I think we’re starting to see how that can happen. And it’s not necessarily going to be tied to record sales. We’re all caught up in record sales, and people still talk about “the record business.” But at the New Music Seminar we strike the word “record” from it and replace it with “music.”

 

Musician Coaching:

 

I do remember that the first incarnation of the re-launched New Music Seminar I went to was very tech heavy. It was MySpace Music and TuneCore, which was a relatively new company. It was all these people providing technological solutions to age-old problems, and, in my opinion, there really was this overture of, “Anybody can do this now. The barrier to entry has been removed.” But that didn’t pan out.

 

If you’re doing something that’s more publisher and songwriter oriented, which topics of conversation are going to be the ones most in debate? What are you hoping your average musician will come away with this year?

 

TS:

 

We used to have 10-12 panels in the old days. We now have 22, and 20 intensives – the lectures and keynotes – on top of that. Plus, we’re doing a music festival for the first time, which will have about 150 artists performing in over 15 venues. All of that is new. The scope and the expanse of what we’re trying to do is double or triple of what we’ve ever tried to do before, both in terms of the music performances and the speakers. We’ll have 150 people speaking this time, and everyone’s focus will be on business.

 

And the focus won’t  all be on songwriters, because really we’re increasing the total number of movements we have by three times. So, we’re adding a lot of new movements to the ones we have had before. There will still be A&R, producers and artists movements. But we’re also going to go beyond that. For example, we have one on video innovators – artists that are breaking through YouTube. And that’s a good example of what we talked about at the first seminar. But it didn’t really start to happen in full force until last year, when Mac Miller entered at #1 with only 27 spins at radio. Benji Grinberg will talk about how Rostrum Records has been able to be successful and sell over 140,000 units the first week for an artist with only 27 spins at radio, but over 30-million views on YouTube.

 

There are a lot of new methods to generate revenue now that didn’t exist even a year or two ago. The monetization of YouTube, getting the CPM up, advertisers investing in the Web and that money trickling down to artists and their investors is a new area.

 

Musician Coaching:

 

Let me ask you some hot questions around that. There’s an issue with Vevo now, and it has a lot to do with branding.  Artists will come to me and ask, “How do I get on Vevo?” And it’s usually through the distributor. But every time I read about how that splits, there seems to be a publishing question mark there. Do you have any first-hand experience with that? Do you think Vevo is actually helping artists break?

 

TS:

 

Vevo is a way to drive the monetization of YouTube up higher. And I think Vevo was very important in showing people  you can get more than $10 CPM for music instead of $2, which is what the CPM was pre Vevo. They also spend a lot of time educating brands and advertising agencies on how that can all happen. And now Google is doing a much better job selling advertising as well.

 

So, I think what Vevo’s done has been really great for the business and will eventually trickle down and be great for artists. The majority of the stuff is the big stuff right now. And that’s not where these developing artists are making money. Mac Miller, Hoodie Allen – the most recent success – and Alex Day in the UK, who was #4 during Christmas week, were not Vevo artists. So, it’s not Vevo where artists are breaking. But it is Vevo that helped drive the revenue up. Alex Day makes more money from his ad share for his video views on YouTube than he makes from selling music – or at least as much. We’re seeing that trending in many places. And we’re going to see the revenue that artists are making off their share of plays increase. That’s promising.

 

But that’s not the answer I’m talking about. That’s not going to take our $4- or $7-billion business back to what it was in 1999, where they claimed it was $14.5 billion at retail. I’m looking for it to be $30 billion. How do we get it there when we’re sitting at $7 billion? How  do we quadruple the music business in terms of dollars? The way that’s going to happen is through models more like Cricket, where the Cricket offering is one that doesn’t generate Spotify-sized monthly revenue on a per-person basis to the artist, but it taps into the passive music buyer.

 

The number I’ve heard recently is that there are about 200-million music buyers in the world. And there are about seven-billion people in the world. So, if we can make that 200 million grow to 250 million, we can make a little bit more money. But that would only take the net world music business from $16 billion to $20 billion. It won’t take it back to its peak in 1999. It will just make it a little bigger. If we can get the people who are buying music to buy more music, maybe we can push it a little further than that. And if we can get them to spend a little more money, we might be able to take it even further than that.

 

But none of this will take us to a 100-billion-dollar worldwide business. The only way we’ll get there is by finding a way to monetize passives. Because, the passives outnumber music buyers – there are six billion passives vs. 200 million music buyers. There are six-billion activated cell phones in the world. And there are 1.2-billion smartphones activated now, which means smartphones that are actively being used, with active subscriptions that have been paid for. The trend everywhere is moving towards smartphones. The entire world is going to open up to that level of accessing music.

 

Cricket will have most of their phones within the next three or four years, include music as part of their offerings. You’ll get unlimited downloads to your phones as part of your subscription. You don’t have to pay or opt-in. So, if you want a song, you can get it. Of course, you can only get it on your phone and can’t do anything with it. That’s why it’s less expensive, and they only pay us less than three dollars a month for that subscription out of the $55 charge. That amount will add up. And there will be theoretically 10-, to 30-million people that might have phones in America that have music as part of them. But they won’t even feel like they’re paying for the music, because it will be so inexpensive that it will feel like free. But they will have access. And some people won’t use it at all, some people might download two or three songs, others might download a million. It doesn’t matter. We’ll be generating revenue from all of them, which will be new revenue for the music business.

 

Musician Coaching:

 

You mentioned there are about 250-million music purchasers out there.

 

TS:

 

The number I heard was 200 million. But I’d say it’s between 200 and 250 million. It’s a hard number to pin down, but no one thinks it’s higher than that. And I’m referring to people that have ever bought music in the last decade, worldwide.

 

Musician Coaching:

 

What’s daunting to me is that by my calculations – and I’ve been doing research on this as I’ve been preparing for my own talk at New Music Seminar – there are about 63-million musicians in the United States alone. Roughly one in five people are musicians. And this is based on the U.S. Census and a study NAMM did on the number of musicians per household. Mind you, it’s really next to impossible to calculate how many of those people are aspiring vs. how many of them are professional.

 

TS:

 

And I think those numbers include anyone who owns a musical instrument. For example, I have guitars but don’t play guitar anymore, so I would fall into that category.

 

Musician Coaching:

 

Yes. Clearly, those are people that own musical instruments too. Even if the number is a tenth of that, those are kind of long odds.

 

TS:

 

So, assume those are the people that buy music. What if those were the only people in America who buy music? Say 60-, 70- or maybe even 80-million people buy music, and another 120-million people around the music buy music. That’s your number right there. The rest are happy with the radio or just listen to whatever they hear around them.

 

I think that we in the music business are so passionate about music that we assume that everyone is as passionate as we are and has similar music-buying habits. But I don’t think that’s the case. If you want to step back far enough and help this business become a $100-billion business, you have to activate 3- or 4-billion people, even if it’s only at $1 per month. And then you’ll generate an extra $36 billion on top of $15 or $20 billion that’s there, and you’ll be in a $50- or $60-billion business, which compared to what we’re in now is four-times bigger.

 

The way the music business can really tap into significant revenues is going to be through mobile phone providers. That needs to be a big priority for us in the industry:  How do we expand the business by working with mobile phone companies to create systems that work for them and also work for us? I’m not saying that’s going to be easy, because dealing with publishers and labels never is. But there needs to be leadership on the label side trying to drive that.

 

Musician Coaching:

 

Do you think the label system is prepared for that kind of seismic shift?

 

TS:

 

Big time. More than ever before in our history. If you were going to tell somebody at Universal or Warner Bros., “I could make your catalog be worth three-times as much in 10 years, what’s that worth to you?”

 

They’d say, “What do I have to do?” If that means hiring specialists to work phone companies and mobile service providers in every territory in the world the way they work radio stations to get records on the air, that might be a good investment in the future. Or maybe that’s something that RIAA should be involved in. I’m not sure. Or maybe that’s something for the IFPI, instead of 100-percent protectionism. How can we grow the business?

 

SiriusXM  has 22-million subscriptions. And if it wasn’t for Detroit, they probably wouldn’t have a million or two million. It’s the car companies that are driving SiriusXM subscriptions. They understand that. We need to understand that as a business, we have to find a way to attach music to other things that can generate revenue for us that we’re not getting right now and monetize music much more fully than having to have sales be the sole driver, which is really a limiting factor.

 

Musician Coaching:

 

I have a couple questions. Spotify is a hot-button issue right now with a lot of people because royalty statements have been disappointing to artists.

 

TS:

 

Why are they disappointing? You’ve probably talked to a lot of artists about this, but I just don’t understand why artists feel any differently about Spotify revenues than they feel about CD sales or track downloads on iTunes. Why are these any different from any other kind of revenue they’ve gotten in the past?

 

Musician Coaching:

 

I guess a lot of artists are still married to the old model. I can’t speak to exactly why. But most artists I speak to through my site and otherwise seem disappointed by what they’re getting per play. And maybe that’s silly.

 

TS:

 

Are they getting more per play when they get played on FM radio? They don’t get anything from FM radio, because FM radio in America doesn’t pay any artists. Anything they get from a streaming service – even if it’s a penny –  is better than what they get from a play on a traditional radio station. So, finally all that SoundExchange money we’ve talked about is new revenue that is coming from digital broadcasters. If all broadcasting was digital broadcasting, that could be billions of dollars in new money.

 

You only have 500,000 – 600,000 subscribers – and we don’t know the exact numbers – on Spotify. It doesn’t have a million subscribers yet in America, so the revenues are going to still be small. But when that number gets big enough – somewhere between 11 and 15 million – the amount they collect should be about the same they receive from iTunes in America.

 

But if this is done through a label and the artist’s balance is unrecouped, that money is going to go against their unrecouped balance, and they won’t see it, just like they don’t see their money from CD or iTunes now. If an artist is in an unrecouped position, they won’t get paid no matter what happens. Because the investor has to get their money back before the artist can make money.

 

That’s what I don’t understand. No artist has been able to articulate to me what the problem is or where they see an issue. How is money from Spotify or any other subscription service different from money that comes from iTunes or from WalMart? They get their 15-percent of all of it after the investor gets recouped. So, they’re getting their percentage of the pie at the same level as they’re getting it everywhere else, except it’s based on streaming.

 

Musician Coaching:

 

It’s interesting when you look at it alongside what we’ve talked about with the future of the music business. What you’re really talking about is not only growing the business in terms of selling more music, but also growing the businesses and platforms that could be the delivery mechanisms for music in the future, such as mobile phone providers, car manufacturers, streaming music services, etc. That seems to be the evolving trend of the music business.

 

TS:

 

I think that’s one trend. Another is monetizing attention. One of the things we’ve learned from Instagram, Facebook, Google and everything like that is that we’re in an attention-based economy:  Attention equals dollars now. If you look at the attention that’s garnered by the artists and music that the labels control, it seems like there should be a better way to monetize that attention. Labels are so focused on selling albums and secondarily, music, that they aren’t really focused on monetizing the attention and focus that those artists and that music create. If they created relationships with artists where they would manage and monetize the relationships artists have with fans and the impressions the artists and their music create in the world, the value of that would probably be 10-50-times greater than just selling records.

 

For details about the upcoming seminar , which takes place June 17-19 in New York City, visit the official New Music Seminar website. If you haven’t already signed up, you can get a 20% discount by using the code NMSNYMC2348 at registration.

Also, stay tuned for more thoughts from Tom Silverman in the coming weeks.

 

Those of you who have been reading this blog for a long time may remember my 2010 interview with Tom Silverman that wound up being picked up by several larger periodicals.  Tom is the founder of TommyBoy records and one of the principal executives at the New Music Seminar.  He asked me to re-post one of his latest blog posts about where the music business is just over two years later.  I personally feel it’s premature to call the upward swings in some areas of the business a “resurrection” but I have enormous respect for what Tom built at TommyBoy and the work he continues to do with the New Music Seminar.  If nothing else, the statistics he presents below are very interesting.  The article below is unedited and written and compiled by Tom himself.

 

THE MUSIC BUSINESS RESURRECTION

As I sat and planned the program for the June 2012 New Music Seminar, it occurred to me that we are approaching the first anniversary of the music business resurrection.  After ten years of decline, the music business hit bottom in the second week of February 2010 and began to rise the week of February 14^th.  There have been many reports of the music business comeback and many have tried to figure out what was responsible for this upturn.   Some have credited Adele, others the shuttering of Limewire, still others the Walmart $5 dump bins.

 

Let’s look at the good news.

 

In 2003, there were virtually no single sales as the labels stopped manufacturing them to drive buyers to higher priced albums to get the song they wanted.  In 2004, iTunes changed all that and for the first time music lovers could buy not only the radio single, but also every track on the album separately for only 99 cents. Digital singles exploded, soon surpassing total album sales, physical and digital combined.

 

In 2010, digital single sales increased only 1.1% leading people to believe that tracks had peaked and might begin to decline.  2011 proved them wrong as singles grew 8.5%. Although this seems like a small number, due to the huge denominator, this represents growth of over 100 million singles in 2011.

 

Most of the 1.27 billion tracks that sold in 2011 were at the higher $1.29 price point showing the inelasticity of demand for digital singles even in the face of free illegal downloads and a half a year of Spotify plus Rhapsody, Mog and Rdio offering streaming competition. It is important to note that this growth did not come from current hits like Adele, Katy Perry or LMFAO but across the board especially from catalog.

 

More good news came from digital album sales where the growth rate increased from 13.3% in 2010 to 19.5% in 2011.

 

In unit sales, digital albums took the biggest jump since 2007 and the second biggest jump ever.

16.8 million more digital albums sold in 2011 than in 2010. 2011 was the first year that the increase in digital album sales exceeded the fall in CD sales. This is a significant benchmark that few seem to have noticed.

 

Good old CDs had quite an amazing year. In the face of the Borders chain closing and many other stores folding and CD SKUs shrinking within existing stores, we saw the smallest percentage shrinkage in CD sales since 2001.

 

Physical CD sales on the internet were actually up 17.7% in 2011 indicating an increasing desire for CDs at least online. With CD sales still running almost 69% of all album sales seven years into the iTunes era, it is clear that people still want physical CDs. If it were easier for record buyers to find the CDs they want in stores, there is no doubt that CD sales would be selling in far greater quantity.

 

More good news in the 60 year old 33 rpm vinyl LP album format where we saw a huge 37% increase in vinyl sales last year. The total sales are still under 4 million units (compared to 1.27 billion singles).

 

After hearing stories of the death of music acquisition from the “cloud camp,” music buying seems alive and well in all its forms.  Nielsen SoundScan counted 1.6 billion music transactions for the first time ever in 2011.

 

If the good news in music sales is not enough of an indication of the returning health of the music business, add to that the new revenue centers of music streaming.  In digital broadcasting where SoundExchange collects and distributes to artists and labels statutory fees, the industry has seen an enormous growth in new revenues.

 

In 2011, $95 million more dollars were collected by SoundExchange than in 2010 and conservative projections for 2012 show growth into the mid $400 billion mark. In 2011, SoundExchange collected almost the same amount from digital broadcasters as the traditional performing rights societies collected from all of the AM and FM radio stations for the songwriters and music publishers.

 

Other licensed streaming services with subscription models like Spotify, Mog, Rhapsody, Rdio and other subscription services added even more new revenue to the music business.

 

Although this graph tracks worldwide subscriber growth, Spotify’s U.S. launch in July shows great promise for significant new music revenues from the “access” model that appears to enhance rather than cannibalize music acquisition based on early results. This is comforting to a music industry that is always worried about a new format cannibalizing an older one.

 

The music business has clearly hit bottom and the resurrection is here.  After a decade of the “music web” expanding its reach, becoming easier, faster and more social, new music discovery channels are showing their impact in more music sales and more paid music access. To be fair, all the news was not positive in 2010.  The continued shrinkage of CD shelf space, the decline in mobile phone ringtone/ringback revenues and the failure of Beyond Oblivion, a promising idea tying connected devices to “feels like free” music access, were lowlights in an otherwise stellar year for the business of music.  The powerful launch of iHeartRadio, the long-awaited U.S.

launch and explosive growth of Spotify, the public offering of Pandora and their achievement of 120 million registered users, Sirius/XM reaching 21.9 million subscribers. Mog, Rhapsody, Rdio, Cricket/Muve all grew their music subscriber base, all not only driving more revenue to the business, but more engagement and discovery of music and spending especially in the over-30 demographic that had historically spends far less money on music than younger demographics.

 

YouTube and Vevo are beginning to generate significant revenues to the music business and also driving discovery and sales as well.  Mac Miller and Tyler the Creator were just two of the breakthrough YouTube driven hits proving YouTube’s ability to drive exposure as well as sales.

 

Smartphones reached 50% of all mobile phones in the U.S. and the recent CES Convention showed hundreds of new connected devices, and the rollout of connected automobiles all of which will drive more music access.

 

The 50’s saw the transition from 78’s to 33 rpm albums and 45 rpm singles that fueled a 30-growth period for music.  The cassette made music portable and stimulated additional growth.  The CD increased the perceived value of an album by 80% and ignited the biggest growth era in the history of the music business. A decade of adjustment is over and it is now clear that we are on the brink of the next big growth era of the music business.

 

On June 17-19, the New Music Seminar will explore the exciting future of the music business with the SoundExchange Digital Broadcasting Summit and the BMI Creative Conclave. The creative community and their label partners will meet the digital broadcasters, music bloggers, music technologists and all of the new music exposure and monetization players. Clear Channel CEO, Bob Pittman and Sean Parker will share their vision for the future as keynotes, as every sector of the evolving new music business convenes to discuss their perspectives for the exciting new future for the music business.

 

For most of us in the music business, this is probably the first time in a decade where we are feeling a new sense of optimism. Although unauthorized on-line music usage and distribution has not gone away, it is now time that the music industry begins to focus on expansion and positivity rather than fear and protectionism. Welcome to the resurrection. Have a nice day.

I wasn’t really expecting a part three to this article but it seems there was quite a bit of excitement about the statistics that Tom Silverman had mentioned in the first part of this interview.  Tom was kind enough to add more information.

I will add only this – that of all of the people I know who did really well for themselves in the old world of music- Tom Silverman is one of the only executives I have met who actually really cares about the future of the music business unrelated to getting a paycheck.  Thanks again for this Tom.

Please check out the New Music Seminar in Los Angeles 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”.

Tom Silverman:

In preparing for the February 2nd Los Angeles New Music Seminar, I wanted to learn more about how many new artists are breaking each year. After all, the New Music Seminar is dedicated to helping more new artists break.

First we had to determine the definition of breaking. At the New Music Seminar we identify the obscurity line arbitrarily as 10,000 albums sold in the year of release.  That is not a hard number, nor is it the only meter of success.  300 hard ticket sales for a headliner in multiple cities might be another definition.  25,000 paid single downloads might be another. I’m sure there are many more but 10,000 albums doesn’t sound as elusive as gold or platinum (those archaic arbiters of success) or even 50,000 which only a decade ago might have been considered below the obscurity threshold. Looking at the 1517 albums that were released in 2008 and sold more than 10,000 units in 2008 we find that only 225 of them were by artists that had surpassed 10,000 for the first time in their career (either by themselves or with another band).

The vast majority of these were released by significant indies (110) or majors (103). Last Friday, I thought that only 14 of those were self released artists or artists on start up labels. Further inspection disqualified two of them. One was a gospel record whose Bishop had exceeded 10,000 in the past under a slightly different name and the other was a Soundscan placeholder for a title distributed by Anderson Wholesale, the distributor for Walmart, that showed the title “TBD.”  We had thought it was a Dutch electronic artist called Anderson but alas, nay.

Who were these valiant artists?  A quick inspections indicated that beyond Bon Iver, the real indie artist success story of 2008, there were three hip hop artists, one that had financing of $10 a unit in marketing spend to sell under 30,000 units, another associated with the big indie hip hop powerhouse Tech N9ne and the last a gospel hip hop artist.  The rest were largely alternative rock artists, two had been contestants in America’s Got Talent or American Idol and a few others were on small labels with big budgets.

What does this say about the Chris Anderson “Long Tail” promise?  Clearly the ease of making and distributing music does not benefit “breaking” music.  Breaking music requires mass exposure which requires luck or money or both. I can say with great authority that less new music is breaking now in America than any other time in history.  Technology has not helped more great music rise to the top, it has inhibited it. I know this is a bold statement but it is true.

Perhaps the greatest challenge to all of the technologists that participate in the New Music Seminar is to correct that issue so that great music can rise to its true potential regardless of politics, power or money. I believe that the next decade will bring improvement to the music web that allow that to happen. In the meantime, artists can still make a very good living without selling 10,000 albums by careful cultivation of their fan relationships. This is another theme of the New Music Seminar…redefining the music business around the artist/fan relationship…how to manage it…how to monetize it.  Records are no longer currency in the next music business…fans are.

Here’s the list of the 12 artists that sold over 10,000 albums in 2008 for the first time.  Remember these are 12 albums out of 105,575 new album releases that year.

BON IVER
Record Label: Jagjaguwar (US/CAN)
Album: For Emma Forever Ago            103,112

TMI BOYZ
Record Label: TMI Entertainment
Album: Grindin’ For a Purpose                      29,119

CAS HALEY
Record Label: CaptainHooks, also Big Karma Records, a “Texas start up label”
Album: Cas Haley                   22,580

DUKE SPIRIT
Record Label: SHANGRILA
Album: Neptune                           19,403

EYES SET TO KILL
Record Label: BreakSilence Recordings
Album: Reach                            16,133

PROZAK
Record Label: Strange Music Inc./ DeadMan Productions Inc.
Album: Tales From the Sick                                14,929

SLIGH*CHRIS
Record Label: Brash Music
Album: Running Back To You                         14,785

REBEL SOULJAHZ
Record Label: GO Aloha Entertainment
Album: Nothing To Hide                                 14,262

BLIND PILOT
Record Label: Expunged Records,
Album: 3 Rounds & A Sound                                 11,281

MORNING BENDERS
Record Label: +1 Records Album: Talking Through Tin Cans                       11,201

STS9
Record Label:  1320 Records
Album: PEACEBLASTER                    10,601

TRIP LEE
Record Label: Reach Records
Album:20-20                   10,003

Continue on to the 4th and final part of this series…

This is part 2 of 2 of an interview with Tom Silverman the founder of Tommy Boy Entertainment and one of the main executives who has revived the New Music Seminar.  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.  If you missed part one you can read that here.

Musician Coaching:

When I was at the New York NMS I noticed that a lot of the people in attendance were those at the many companies that now provide artist services. It seems to be there are lots of artist services businesses popping up.  ReverbNation, Top Spin – there seem to be new ones every day. There are tons of services now where there never were before. I was wondering if you were fond of any of those companies and thought they had real value?

TS:

I am. I think they are replacing what labels and managers used to do or maybe never did, depending on what they’re doing. They’re also helping artists more simply bridge the gap between the online social world and search and all the things you’re talking about. It’s a complicated stew; you can be on 15 social sites, and there’s a question as to how important they are vs. the amount of time you spend, and how important the Web is to making your career go. I can’t think of many artists who owe their career to the Web.

When I think about the indie artists that are doing it themselves, like Sufjan Stevens or Bon Iver or this guy Corey Smith.. This is a guy from North Carolina who was a school teacher and about three years ago and his manager got him up to about a million dollars in revenues, then the next year he got him up to four million in revenues. Really, the game is how can you build your revenues, not how can you sell more records. You may not sell records at all. You may decide to give records away to get your revenues up. If your revenues go up, that’s what you care about. Tommy Boy is in the “how do we make more revenues” business and “how do we create a strategic plan to do that?” That’s what Tommy Boy has molted into. It’s kind of what we always did, but we just never really looked at it that way.

The New Music Seminar was created to identify what the goal is for everybody, including the ReverbNations or the TopSpins of the world.  What are they going to have to provide to artists?  When Spotify comes to America I am going to ask Daniel Ek (CEO & Founder of Spotify – who will be giving the Keynote at the NMS in L.A.) “What can Spotify do to help the developing artist?” Because the real goal of the New Music Seminar is to help developing artists so more artists can break through. We really have a big problem in our country right now in that so few artists are breaking through, with or without a label. The promise of the Internet was that all of us would be able to make great music and get it exposed. Chris Anderson’s “Long Tail” article said that all you have to do is be able to get that record out, and they’ll come. But that’s not working.

Musician Coaching:

I think part of the problem is that everybody did that.

TS:

Well, that’s what he said, “Everybody would do it.” That’s why it’s called the “long tail.” But when you have 105,000 albums in 2008 released and 17,000 of those releases only sold one copy, and 80,000 of them sold under 100 copies, it’s a pretty depressing scene. You can’t just build it and they will come. You have to do more than that. I was going to say before that Sufjan Stevens, Bon Iver and Corey Smith are selling a significant amount – above 10,000 units – a lot of which is at their shows, and they’re not active online. They’re not Twitterheads. They didn’t break from the Internet. They broke from touring, and they had a good story, and the good story spread like wildfire through traditional media like NPR.

Musician Coaching:  It’s funny actually, I’m friendly with Eric Garland at Big Champagne, and I interviewed him, and asked if there was any predictor to determine which kind of artist is most likely to get their music pirated, and he said, “Well, R&B crossover singles.” But he also said the biggest prediction is the more active you are online the more likely it is that your music will be pirated, which was upsetting.

TS:

Interesting. It’s upsetting to people that are making big investments in being online. I’ll tell you the one thing that works: if you’re great live and you bust your ass on the road, that works. And it’s the one thing that has always worked and your social network is at the show. You come to the show and everyone who comes is into the band, so they all have that in common and it’s a social network. But you can actually see them and talk to them and scream with them. There’s an excitement that happens at a gig that never happens online. The online thing is great for finding out about stuff, looking things up or for making purchases; but for exposing stuff, so far it’s been disappointing. That may not be true with webcasting – Last FM, Pandora and Slacker and some of the other big webcasters as they start to invoke discovery tools and more and more sophisticated discovery tools to suggest and discover new music get better and better. Maybe we can fix some of that, but when the Web was proposed for music ten years or twelve years ago, we all thought this would be the Golden Era and that there would be an Elvis that would break every three months, or some big act. There’d be a Lady Gaga every two weeks, but it’s not happening. It’s not happening at all. And Lady Gaga didn’t break off the Web. She broke by hard, hard work touring and doing promo shows and every place she could go we saw her. There was nowhere she wasn’t. They pushed and they pushed and put posters on the street – old analog shit. I’m sure they did the online stuff too. A lot of artists think if they do a big online push that’s enough, and it’s really not enough anymore. In fact, you could probably break without any online work at all; but you can’t probably break without any offline work at all. So that’s the big myth that’s being purported. You know where the investment money’s coming from in the music business now? It’s coming from venture capitalists that are investing in businesses like Spotify or any of those artist service businesses.  There must be half a billion dollars in online investment in the music business over the two years. That’s more than all the labels in the world have spent on A&R in the last five years combined – a lot more – and probably on marketing too. That’s where the money’s coming from, so they’re leading the press. So of course everybody thinks shit is selling because of the technology, but it’s not. That’s the hope, and where the investment’s been, but that’s not the reality. We’re really not seeing any evidence that stuff is breaking off the Web.

There are a lot of groups that are breaking because of a big write-up on Pitchfork that leads to maybe a usage on a TV show like The Hills or something like that. People see something on TV or MTV or something like that or hear some song on MTV. The combination of that plus touring might work. If radio and print are moving towards the Internet and they can get enough reach and frequency, which has been the challenge for them so far, like the Huffington Post or maybe you can say Pitchfork. There are Pitchfork bands that consider themselves Pitchfork bands. They’re not going gold and platinum, but they’re getting booked and they’re starting to break that obscurity line. I think the more powerful Pitchfork gets … I mean, Oprah wasn’t Oprah in the very beginning. It took her years to build an audience. Now she can talk about a book and that book goes into the Top 10 on the Best Seller list the next week. There’s not a lot of people that have that kind of juice online. In fact, I don’t think there’s anyone that has that kind of juice online yet. There will be something that everybody watches just like they watch on television online or that they look at that will move the needle substantially right now. Right now it’s still really early days for that.

And a lot of artists are really putting all their faith in that and focusing on online, but when you look at the numbers, the artists that are doing it are the ones that are doing the grinding on the road.

At the Seminar we want to talk to artists about if there’s 120,000 albums that come out in a year, how do they differentiate themselves from all of them? Because clearly it’s tough. There’s such a glut, and how do I break through the glut? The best way to break through the glut if you’re limited in funds – and everyone is – is to differentiate yourself. So we talk about how do we differentiate ourselves in every one of the four important aspects that define an artist:

the songs

the recording

the image & concept

the live show

The concept is really big.  It means- “what do you stand for?”

That’s why Susan Boyle sold more records in six weeks than anybody else in three years, and she wasn’t even American and had no radio play or anything. She had a story, and it was a compelling story. Anybody with a compelling story that can get that compelling story told.  It is a lot easier to get exposed with a story because everyone wants to talk about and write about a compelling story.  You have to have a good story.

The Live show is important too.  Your live show has to be great, because so many artists are breaking from the stage now. You’re much more likely to get exposure and get a buzz if you have an unbelievable live show that makes people talk than if you have an unbelievable record. Records are not going to get radio play, because the radio stations that are left are hardly playing anything, and there’s nobody listening, especially in the rock area.

I taught a class at FIT and somebody asked me to come and speak. There were 40 kids in the class, and I asked them, “How do you guys find out about new music? Do you listen to the radio?” And only four or five kids listened to the radio in that whole class. All the rest of them said online they find out about it some way or word of mouth. That’s with every genre. Still, you just said that pop and urban are still breaking on the radio, and those are the ones that Eric Garland at Big Champagne said people are downloading and not paying for. The biggest radio hits are the ones that are more pirated. Everybody talks about peer-to-peer being a great way to expose new music. It’s not a great way, because 90% of the files being traded on peer-to-peer are the hits. It would be a much different ratio if it was a discovery tool. People aren’t using it as a discovery tool. They’re trying to get the songs that are already exposed.

What we’re doing at the Seminar is saying, “Where should we go to get the exposure?”

Continue on to part 3 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 1^st and 2^nd.  Readers of MusicianCoaching.com can get a two for one discount by going to www.newmusicseminar.biz. and entering the code “nmsla2”.

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.

Musician Coaching:

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.

Musician Coaching:

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.

Musician Coaching:

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.

Musician Coaching:

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.

Musician Coaching:

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 1^st and 2^nd.  Readers of MusicianCoaching.com can get a two for one discount by going to www.newmusicseminar.biz. and entering the code “nmsla2”.