Future Of Music

My friend George Howard recently wrote a great article for Berklee’s Music Business Journal.  In it he explains how music marketers can connect more closely with the fans that matter as they try and propel their band forward.  Here is an excerpt from the article and solid advice for any marketeer.  The complete text can be found here.

The Life Cycle Curve

In order to find your audience you must consider several details. The first is to accept the fact that you cannot market to the majority; you can’t afford it, and even if you could you would fail because of issues related to frequency of contact with these gatekeepers (i.e. radio/press).

Take the Mavens and Early Adopters and focus on these two groups. The Mavens, a term popularized by Malcolm Gladwell in his book The Tipping Point, applies to people who actively and aggressively seek out new things. They are the ones who are not only the most connected to the information channels, but are also most predisposed to discover new things, and new channels as well.

These mavens have a personality type that generates deep satisfaction from not only the seeking out and discovery of new material, but also the sharing of this material. The first class of people with whom they will share are so-called Early Adopters.

These Early Adopters are one standard deviation closer to the majority than the Mavens, and thus there are more of them. However, while they will adopt new things more quickly, they are not typically at ground zero of discovery. If the mavens are the bloggers, the Early Adopters are the readers of these blogs, and — to a degree — the re-bloggers. Again, these Early Adopters are a more populated class, and thus their influence is potentially greater than the Mavens.

There is crossover between the two groups. The area of focus is detailed below:

In every product category there are Mavens and Early Adopters. Whether you are dealing with music or any other product or service, you must find a way to bring your product to both groups.

Pyschographic Modeling

In an era of interconnectivity, demographics and geographics, while still important, are less important than the habits, trends, personality of a customer; i.e. their psychographic profile. Finding your audience requires you to understand profoundly the psychographic profile of your customers. What do they look like, where do they shop, what type of food do they like, etc.?

Determining these factors allows you to create a “model” customer. This is the person who, if you could get your music to her, would deeply embrace it. Also, given the fact that she is a Maven/Early Adopter, she will likely share what she has discovered with her network. Significantly, defining this Model Customer allows you to determine where this customer is likely to congregate, and thus where you must bring your music.

The Straddle: Offline and Online

We do not make profound connections with products, services or people online. Profound connections occur offline — in person. The genius of Facebook, and why it has eclipsed networks such as MySpace, is that it represents a Straddle of offline and online; we upload pictures and detailed stories of our offline activity so that our friends and family can be aware of these offline experiences. In this manner, you must understand that technology is simply an accelerator of your offline activity. By locating the Mavens/Early Adopters within your psychographic landscape, and taking your music to them — in person — you greatly increase the odds of these people developing an emotional attachment to your work.

Architecture of Participation

One of our most primal urges is to share information; this is why babies make the massive cognitive leap to learn language skills. Your job, once the initial offline experience has been established, is to create an architecture of participation; a method for frictionless sharing of information so that those Mavens/Early Adopters who have discovered you offline can begin to share their discovery with their network (i.e. online).

This requires a series of steps related to value exchange. Your first task is to establish four things:

1. Your own site
2. A Facebook Fan Page
3. A Twitter Account
4. An email newsletter

Your Site

On your site you must present a value proposition that begins with exchanging some type of content for an email address. Email is your currency; the more of it you have, the more likely you will be to convert what is essentially a non-scarce resource (i.e. your music) into something of tangible value. Do not be fooled into thinking you can get away using a third-party site as “your” site. While, undeniably, service providers such as Reverb Nation and Bandcamp provide value, you do not own these sites, and fundamentally your participation does more to increase the value of these sites than increase your own value. This is not to say you cannot extract value from these third-party sites; however, this requires using them like Facebook, Twitter, and others, to drive potential customers to your own proprietary site.

Facebook

Your FB fan page, similarly, must also represent a value proposition. The value here relates to engagement. FB allows for easy engagement via its makeup. Consider contests, polls, short videos, or other ploys that will keep your fans not only engaged with you on FB, but will encourage them to direct those in their network to your FB fan page. Of course, you must use FB to direct customers to the value proposition that exists only on your site: a content-for-email exchange, and other site-specific offerings (chats with the artist, etc.).

Twitter

Twitter should be used to establish your voice and to direct people to your site. The establishment of the voice comes as much from your affiliations — who you link to, who you follow — as it does from your actual tweets. As above, use it to engage and to direct traffic to your site. Employ time-sensitive offers and offers only available to those who follow you on Twitter. The goal is to inter-connect these tools, and to leverage them to enhance the offline experience. In all mediums you must encourage and facilitate sharing. Your site must have a FB “Like” button and a share on Twitter so that whenever you post content, your constituents can share with their network.

Email Newsletters

The single best tool for conversion of fan to customer is email. While email is an increasingly ineffective tool for communication it still yields a higher return with respect to sales than any other tool.

Therefore it is imperative that you use your email newsletter wisely.

1. They must be short; highlight one and only one action. The total length should be less than 500 words.
2. They should be frequent; once a week on a regularly-scheduled basis.
3. They should have a call to action; tell the recipient what you want them to do: come to the site to get something, come to a show, etc.
4. They should be forwardable; ask your recipients to forward the email to someone they think will enjoy it.
5. They should have sharing functions embedded; allow people to Tweet, add to a FB status.
6. Make it easy for people to unsubscribe.

Don’t worry about overwhelming people with email blasts. If people are unsubscribing, they’re likely non-value adding “fans” any way. Instead, focus on presenting real, timely, share-able value to your current fans so that they have a tool to help you gain new ones.

Converting your Audience to Customers

It is an immutable law of business and nature that somewhere close to 80% of your activity (engagement, profit, etc.) will come from 20% of your constituents. This is referred to as the Pareto Principle or the 80/20 rule. This means that if you have 10,000 people on your email list something close to 2,000 of them will generate 80% of your total sales. The other 8,000 will be largely non-value adding.

The problem of course is that you won’t know which of the 10,000 are the true fans. Thus, you must continuously work to increase your overall amount of constituents. Rather than having 2,000 of 10,000 contributing, strive to have 20,000 of 100,000.  In order to sift through the layers of participation to find the most valuable customers, you must create a filter. Think in terms of a funnel. At the widest point of the funnel is the easiest level of engagement: a free song for an email address.

Summary: The Value of Psychographics

The key is to determine what you deeply care about; what your purpose is, what your values are. From there you can begin — via a psychographic analysis — to find fans that share these same values. At that point, your goal is to bring your music to them, and create the architecture for more participation. Straddle between an offline and an online engagement strategy, but use both.

Once you’ve aggregated these Mavens and Early adopters, you must begin converting them into both customers and evangelists. This is done by honoring the 80/20 rule and working to extract maximum value out of your loyal 20%. Always work to increase the overall pool of your fans.

By George Howard

George Howard was President of Rykodisc, is an original founder of Tunecore and  Assistant Professor and Executive in Residence in the College of Business Administration at Loyola University.

Believe it or not, the National Association of Broadcasters and the Recording Industry Association of America have announced that they want new digital  devices like cellphones, iPods and music players to be legally required to incorporate FM radio receivers.  This appears to be a twisted bargain to get the radio broadcasters to agree to pay performance royalties for radio airplay to the record companies, in exchange for propping up their business models via legislation.  How bizarre.

As reported in Arstechnica, “Congress should mandate that FM radio receivers be built into cell phones, PDAs, and other portable electronics.

Former Pink Floyd and T Rex manager Peter Jenner, now emeritus president of the International Music Managers’ Forum, talks online music, copyright and the future of the music industry.  It is very satisfying to see the ideas expressed in our Future of Music book becoming mainstream concepts in the industry.

>As physical sales decrease, how should the music industry be monetising its content?

Record companies believe that music is about selling bits of stuff to people in a retail environment. They always looked on the internet as a potentially huge retail environment and it’s actually a service environment. The record companies should be working out what services they can provide.

They should also be talking to ISPs instead of fighting them. The key thing is people are going to want music as part of what they get on their digital connections. The ISPs are going to have to invest more and more to develop better services, and in that context they will have to start charging for content, whether they charge for content directly with a meter or whether they bundle it or use advertising or sponsorship.

Another way to go would be to look at statutory licensing for different types of usage. It would be incredibly bureaucratic but it would be one way. So let people access whatever music they like and pay a set rate. The same with commercial businesses.

>Do record labels still have a role to play in the music industry?

Yes absolutely, particularly for investment and promotion and marketing. And they could become very good at licensing, at helping artists to develop their website. But they have to get away from this idea of control and instead become partners of the artists. Many of the record and film companies are very enamoured with the idea of control because it’s how their model has always worked, with in-house lawyers and copyright advisors. There is huge inertia in the way the industry licenses and administers content. We have to fight this.

>How have the sources of revenue in the music industry changed?

Until the CD came along I think artists overall got a better deal and more control and a better bite of the money. After they invented the CD the record companies increasingly fought back, decreasing artists’ revenue share and increasing their control. That’s just got worse with the advent of the internet because there is less money available. You used to be able to sell 5,000 albums, now that is incredibly hard so the industry has to look at digital options, but a lot of web services don’t pay properly. Google will pay you a share of the revenue you generate for them, but if you don’t make them money you don’t get money.

>Has social media changed the way bands are marketed and content is discovered?

Yes, but it has huge potential to do more. At the moment, because it isn’t licensable, it isn’t doing the job that it ought to be doing. But what it can do is alter the value chain. With less money available in the music business we have to instead look at what we do have. And what we have is lots of data on music fans. Marketing has always traditionally been more expensive than recording but we can cut these costs by using social sites and viral links. And maybe we can cut out advertising costs because acts can just directly email their fans.

>Can music-streaming services support the music industry?

They are good, but they don’t have all the music. I manage Billy Bragg and there are a hundred versions of his tracks online. I can get a recorded version but a lot of the times on these services there are no live versions. And globally there are billions of tracks so the problem remains of how people find a particular piece of music or if they like something how they find similar bands. People aren’t just looking to buy the music, they are looking to buy a service which is personal and recommends music and enables discovery and which saves them time. I’m not sure anyone is really offering this yet.

>Is there a future for physical music?

Yes, but its role in the industry will become less. Probably physical music, like CDs, will become very expensive and luxurious and they will be like hardback coffee table books and people will only buy maybe one or two a year. The music industry’s job is to make as much money as it can from a track or album, and that includes physical sales alongside digital sales, access services and anything else they can come up with.

>What do you think the music industry will look like in 10 years?

Probably very similar. But what we might look on as broadcasting income will hugely increase. Most revenues will come from users paying to access the content. You won’t notice that you are paying for recorded music so much.

I think the artists ought to be much more powerful, whether they will get it together is another matter. There will be record labels, but whether they will be labels that own content or just be agents I don’t know. They might be more like the Performing Rights Society and less like Universal.

Read the whole interview here from Sara Vizard at Strategy Eye

As we have seen, there are many different ways to make money in music today. In the past few years, much has been said and written about the 360 degree deal, where an artist/writer enters into a business partnership with a company and gives the company lots of rights to recordings, songs, merchandise, and touring, usually in exchange for a larger advance.

My advice to you is to make a 360 degree deal with yourself and find ways to generate revenue from your writing, performing, brand, activities, and interests that suit you and what you stand for. DO NOT license these rights away to any one company, even if it waives a huge advance in your face. You do not want to be dependent on any one entity for your livelihood, other than yourself. If you make the 360 degree deal with yourself, you can then selectively find the right partner to help you exploit the various revenue streams that you have by focusing on each stream individually to maximize its potential.

The other reason to make a 360 deal with yourself is that you want to integrate the marketing and promotional efforts across all revenue streams. The artist/writer and their manager should coordinate the marketing efforts to maximize revenue and to gain the broadest possible exposure from advertising, publicity, public relations, direct marketing, interactive marketing, etc.

The new 360 deal:

• Own your masters and publishing
• Purchase the services you need
• Use and integrated marketing approach
• Create multiple revenue opportunities
• Control your career

Learn more at Music Power Network

The music business of the past was driven by a relatively small number of people who controlled the distribution channels, the marketing channels (radio) and the financing available to artists and writers.  If you knew one of these mavens or could network your way to them, then you had a shot at success.  It was the dream of every artist to “get signed” by a major label and plug into the “star maker machinery”.

The Internet changed all of that in a matter of 10 years or less.  This disruptive force broke down the concentration of power from the hands of a few, to the hands of many.  These days music distribution is a commodity that one can have access to quite simply via CDBaby, Tunecore or a variety of other options.  Terrestrial radio, the marketing channel that broke all major artists of the last 60 years is no longer effective, and has been replaced by literally thousands of touch points available online including tastemakers like Pitchfork, sites like MySpace and Yahoo, social networking outlets like Twitter and Facebook, the search monster Google and countless websites, blogs and online media.

Today it is more important What You Know, than Who You Know.  This is a Major shift in strategy from the past and is the name of the game for achieving success in the future.

Here are two examples of the kinds of things you need to know.  One from the point of view of a structured approach to developing the skills and knowledge to help you succeed, and the other a real-world example of innovation at work in the hands of a savvy artist.

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From Celia Hirschman with On the Beat for station KCRW:

Today’s music business is not just about hustle, music knowledge and who you know.  Today, it’s also about digital prowess, online inventiveness and a fast Internet connection.

I worked my way up through the industry, learning as I went. I took numerous jobs in the business, each one teaching me more than I had known before.

My school of hard knocks earned me a lot of opportunity. But the lessons of today’s music business are not taught in the nightclubs, the record stores or the board rooms. Today’s music business actually requires hitting the books, academically. Many active music buyers are online. Reaching them requires sophisticated online marketing knowledge.

No better way to learn than from the professionals. The prestigious Berklee College of Music has built an online extension program. Their BerkleeMusic.com offers a number of interesting classes online to fill in experiential gaps.

A useful course is titled “Online Music Marketing with Topspin.” Topspin is the leading digital-music marketing and sales company. In this course, Berklee’s Michael King and Topspin’s CEO Ian Rogers have deconstructed the marketing matrix, providing a hands-on education in digital record marketing. Students learn how to build digital touch-points, optimize site visits, develop fan integration and build brands. It is a first class education in online music marketing.

It doesn’t hurt that the whole course studies the TopSpin platform, similar to how a course might focus on PhotoShop or Excel. Topspin has developed a robust program to maximize online visibility and sell through. Musicians and music companies around the world can participate and socialize in a private trusted community.

Listen to the KCRW radio show here.

Cudos to @atomzooey for developing a great course.

Read more on Direct to Fan Marketing at Mike King’s Blog.

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The Duo of Jack Conte and Natalie Dawn are the band Pomplamoose and they are generating huge YouTube interest and views with their VideoSong format. They got tens of millions of views in a very short time with this number increasing while you read this. The VideoSong format these two produce is very inviting and addictive, providing a glimpse into the process of recording and creating music.  The have combined a unique video format, with creative versions of popular cover songs and online distribution to reach tens of millions of people without any label support or significant marketing budget.  They have found a way to make music their full time career without performing live, by leveraging social media.

Listen to an audio interview with Jack Conte from CDBaby

http://cdbabypodcast.com/?p=877

Here is some excerpts from an interview I did with Rick Goetz from musiciancoaching.com

“I think it’s critical that you have your own website and drive traffic to your own website in any way imaginable, and that you set up ways to do business transactions on your websites. That can be collecting names, cell phone numbers, Twitter follows, selling product, building dialogue, communication, selling tickets and merch. That’s essential.

At Music Power Network and Berkleemusic we teach a lot of people DIY basics. Get your act together, get a website together, have a business partner that is going to help you create a strategy and deal with promotion and distribution and touring and publishing and your finances and the business aspects of your career so you can focus as much time as possible on creating art and getting better and practicing and becoming a better artist. I think that’s essential. Lots and lots of people I’ve seen – musicians, artists – have thought, “I’ll get online and Facebook and YouTube and get a bunch of friends and spend all my time blogging and tweeting.” But if they’re not working on your music, most of the time that other stuff doesn’t matter at all. If you’re not really great, nobody is really going to care.

It’s such a fine balance to strike between perfecting your art and being unique and different and having something to say and getting the word out. That’s the conundrum. We often counsel people that you have to have a business partner. At Berkleemusic we teach entrepreneurship, artist management, how to start your own business, how to run a business, how to market direct and use social media to market, what copyright law is all about, what contracts are all about, how to tour, how to make money, the realities of the different levels of touring and how you can get paid and use that to be a driver of your career.

It’s a huge ambition that we have here at Berklee to try and help create a healthy music industry going forward. If there isn’t a healthy music industry, none of us have jobs, none of our students have jobs and the whole thing goes down the toilet. We have to help people be free thinkers, entrepreneurs, to break the rules.

When we started the berkleemusic online school ten years ago there was no iPod, YouTube, Myspace, Facebook or Apple iTunes store. That all happened in the last ten years. So if you think about what’s going to happen in the next ten years, it’s going to be completely different and almost impossible to predict what’s going to happen. People that want to be in the industry have to be willing to accept that it’s going to constantly change for the foreseeable future. There is nothing you can be sure of, and the things that work today probably are not going to work tomorrow.

God willing, some kid is going to create the next big thing in music like Sean Fanning did with Napster or a new format or a new kind of virtual experience that is as good as a concert. Something like that is going to happen, and who knows what it is going to be?  It’s hard to predict.”

Read the whole interview here. Thanks Rick!

Studying music online with Berkleemusic from About.com

Question: Can you tell us a little bit about Berklee online, the program and your role there?

Answer: My role is I am the vice president of Berklee Media, which is the department of the college that runs Berkleemusic.com, which is the online school. We developed the school about 10 years ago, we started working on it – we have been up and running about 8 years. I run the team in charge of developing the online school: working with the faculty to develop the classes, working with the admissions team to enroll the students. We have a technical team, marketing team, operations team – it is a vertically integrated department of Berklee focusing on online education, distance education, primarily for an adult audience rather than a typical college age audience. Most of our students are adults working in the music industry or a little bit later in life have the resources to maybe have a home studio, or have some time to be active in a band, have some time to take some online course, have the money to take some online courses or are interested in pursuing a career in music.

Would you say the students tend to be more musicians or be more skewed towards people working on the industry side of things?

It is all of the above and more. The curriculum we have – we have a lot of music production courses and programs, so that is really all about creating music, recording it, mixing it, editing it, mastering it, using the software and tech that has been created to help produce and distribute music, so that is a lot of our market – people actively creating music. We also have music business courses, so people actively pursuing, say, they want to be manager or attorney or run some sort of a music business, market their bands, run a label, run a publishing company – there’s a lot of people like that.

We also teach guitar, keyboard, bass, percussion, vocals, so we have a lot of performers studying online, improving their skills, learning different instruments, learning both beginning level and advances instrument techniques, skills and chords and different styles of music and how to perform.

We also have songwriting courses, so people involved in writing for themselves or composing for film or television or composing for video games. We also have a lot of what I call core music courses – so music theory, harmony, ear training, site reading – basic core music courses for people who want to know the theory. Again, both beginning and advanced subjects there – how to write music, how to harmonize, and the theory behind music. We have courses in critical listening, so how to understand how music is put together, and when you’re listening to music, what you’re listening to – to both help people appreciate music more and to be better at creating it.

So you know, it’s not one type of student at all. People in all aspects of the music industry are studying online, and those are people who are working in the industry full time or part time or music is a very serious hobby for them, so they may have a job, like a doctor or lawyer, and music is their passion on the nights and weekends.

In terms of a student evaluating whether to attend Berklee on campus or online, do you think the online classes – with it being a lot of people already working in the industry – do you think it is an appropriate environment for a complete beginner, or would they be better served attending on campus? For a complete novice, young person wanting to learn – is online learning a good way for them to experience what Berklee has to offer, or would those students be netter off exploring campus opportunities?

Absolutely the online platform is appropriate for that kind of person – someone who wants to learn about the music business. We have a lot of people like that in the online school. It is really an issue of, if you are interested in a four year bachelor’s degree in music, and you are willing and able to come to Boston as an undergrad and you can be accepted into the college, then Berklee College itself can be the right place for you.

But many people just are not able to move to Boston or might not be able to get into the college, because there is an audition and interview process to get into the college. They might not be an 18 to 24 year old kind of just out of high school and looking to go to college student. The quality of the courses online are equivalent to what is taught on campus. We have some courses online that are not taught on campus that we have developed for our online audience, but by and large the programs are very, very similar. It just depends what you’re looking for and where you are in your life.

A question my readers email a lot to me – and they ask about Berklee – is: is a four year degree necessary, or could an online class give them the background they need to be competitive in the music industry?

I don’t think a single online course is going to make somebody competitive in the industry. We do offer certificate programs online. The certificate programs are designed for people to get a very well rounded education in certain areas – could be production, business, songwriting, guitar. If you were to take a certificate program, you are going to be better qualified for whatever career path you have identified. The difference is that the campus program is really a liberal arts college program. You’re getting a well rounded college degree, where online you can create and choose programs that are shorter and more specific to a certain area, but you are not going to get the same experience as you would get going to college for four years.

It is hard to answer that question without knowing the specifics of an individual and what they are trying to pursue. If you don’t have a college degree, I think a college degree is very important for your life. Many of the online students already have a degree from one place or another – they are just trying to sharpen their skills. It is hard to answer that question across the board for everyone.

Are there any new online classes that you are particularly excited about?

It is not necessarily about the new stuff. There are a lot of very compelling online courses available. Some are new and some of have been around for awhile. What I have found, and what we have worked on at Berklee Music, is that we have had the ability to recreate a lot of the curriculum as we have developed the online courses. In many cases, the courses delivered online are very, very fresh. The music business curriculum, we rewrote that to be very forward facing in terms of what is happening in the music industry today – how to create your own record company, publishing company, market yourself directly to fans, how to use new web based technologies – Twitter, Facebook, Nimbit, Topspin – to go direct to fans. A lot of that stuff is very, very fresh and oriented to where the industry is headed rather than the old models of labels and huge tours. Rather than the way the record industry was, it is about the way the record industry is.

The same is true in the production curriculum. We’ve had a chance to partner with many different companies in the industry and quite often you will take a course and get the software for free or at a reduced price, and not only do you get to learn how to do it but also the science behind it.

You talked about the classes being updated to reflect the future of music, and I know you wrote about a book the future of music (2005’s The Future of Music: Manifesto for the Digital Music Revolution), – can you talk a little bit about what you see happening now and some of the changes you’ve seen happening? What changes do you see that you think people are not aware of or aren’t embracing that you need to get on board with? For instance, let’s talk in terms of traditional record labels – are there things you think labels could be embracing more that they are shying away from now?

I think one of the fundamental changes and challenges facing labels now is the idea of being able to sell recorded music in significant volumes. That business is clearly under a lot of pressure. CD sales are at half of what they were at their peak and they continue to fall. Digital sales are interesting but they are not replacing CD sales. And digital sales online are certainly starting to level off after the growth of the last few years. So I think the idea that you can record music and distribute it and make money is not necessarily going to hold true forever. That is a huge challenge to any business that defines himself as a record label.

Quite possibly there won’t be any recording revenues available 10 years from now, or if they are available, they will be available in a totally different way. People will be purchasing music as part of a subscription service or a utility like your cable television or satellite radio, so that is a fundamental change in the music industry that you have to cope with. And you have to figure out a strategy for how are you going to make money in music if recorded music as an engine for you is no longer available.

If you look back in time, what we call the music industry is only about 70 or 80 years old, and it was largely driven by the radio, then vinyl recordings and cassettes and CDs. But 70 years ago, there wasn’t really a music industry based around recordings. Instead, it was based around live events and concerts and parties and that’s where you made money if you made money at all in music. I think in some respects we are going back to a model where recordings are not the primary source of revenue, and it is going to be more of the interaction with the audience and the experience that you create that fans can enjoy and you as a musician, you are more of an entertainer than you are of a, you know, go into a room and record some music and the record label sends you big checks – I think those days are over.

So, musicians – what do you think they should be focusing on? An up and coming musician trying to figure out which direction to go – what do you think they should be doing and what online tools should they be using?

First and foremost, you have to practice. You have to be great. You have to write incredible songs. You have to be a ridiculous performer. Your music has to be wonderful, and that is the first thing you have to focus on. If you don’t have that, your chances of success are extremely low. If you do have that, your chances of success get a little bit better. But you know, if you’re not great, you’re probably not going to have a career as a musician.

The second thing is to have a business partner. It could be somebody in the band, but more likely than not it is a manager or a business partner you work with who helps you manage your business, helps you figure out how you’re going to make money, helps get you in front of audiences and helps you promote yourself, so that if you’re going to try and distribute music digitally or tour or create videos and promote all of that, you have a partner to help you so you can focus on being a great artist and a great songwriter.

If you do those two things well, you increase you chances of success significantly. Your business partner then needs to embrace the web and communication technologies we have and figure out what is the strategy that you’re going to use as an artist. You know, are you a performer, primarily, or a songwriter primarily or a producer – what is your thing?

Once you establish what you are all about and what you represent and what your music is all about, then you can create goals that drive your business strategy. What does success look like for you? Where are you going to be happy? Are you going to be happy playing locally and having several thousand people aware of you and following and doing it that way, or is success to you a million dollars and touring the world and flying around in a jet and having all these fans adore you. You have to set your sites – and set them realistically – and have a business partner so you can focus on your art. If you have that, you know, you can probably have a good life and enjoy music as a job, music as a vocation, but you have to be realistic about what you’re trying to do.

Assuming someone decides they are a musician or an entertainer – should they be trying to sell music at all? Should they be making it freely available as a promotional tool to promote themselves as a performer?

I don’t think those are mutually exclusive choices. I think you can do both. You could use recorded music as a promotional tool. You can trade tracks for email addresses and cell phone numbers and relationships you build with your audience, but at the same time, you can also distribute music digitally using tools available from Nimbit or Topspin or ReverbNation. You don’t have to be iTunes, although a lot of people want to be on iTunes or Amazon or Rhapsody or some of the more high profile services in parts of the world.

So, I don’t think it is one or the other, but I think if you are willing to give some music away in order to build an audience or fan base, I think that is great, and it is almost expected these days. It doesn’t mean you won’t be able to sell any music, but if you can sell it digitally direct or you can sell recorded music at shows on CD or some other media, and you can keep most of that money yourself rather than giving it to Apple or giving it a label, that can be one of your sources of income. And then if you can write songs and get some publishing income coming in and you can tour and get some performing income coming in, you can build a nice musical life for yourself.

A lot of people do other things as well. You play on other people’s recordings, or you tour with different folks so you expand your audience, you create videos, you create music for videos, you create music for television, you create music all the cable programs and interactive games and online media. You can teach music, you can get involved in other art forms. A lot of people are trying to combine digital art and music and dance and music.

It is back to what I said before. What are you all about? What is your art about? What are you trying to say? Who are you trying to reach? How are you going to do that? How will you be unique? How are you going to compete against everyone else and their brother who wants to get that brass ring and be a rock star or a rapper or whatever? How are you going to be different and why are people going to even care about you? If you figure that stuff out, you have a bigger shot of pulling it off and being successful.

Are there any companies who stand out to you? Or does it depend on who you are trying to reach?

I think that the market place for music services and music products is very diverse and constantly changing and new things are coming up all the time. It is so hard to recommend one solution to someone in the vacuum without knowing what that artist is about or what they are trying to achieve.

On the other hand, there are some basic tools that you need to put together. You need a web presence. You should have your own website. If you are using MySpace or Facebook or YouTube or Twitter or any social media platform – that’s fine but that should be used to drive people to your website. At your website, you should be collecting information about you audience – email addresses, cell phone, physical addresses, what they like, what they bought, what they said about you – you want to collect that information. You don’t want to give it to Apple or MySpace. You want to have those relationships so that you can develop the relationships with that fan base over time.

So, you need a website and if you need a social tool to drive people to your website, you can use any of those companies – Nimbit, Topspin, ReverbNation, Bandzoolge – there’s a hundred of them. You need to decide what it is that you need, find the resources – there’s lots of things available – and put together your website. You can use touring tools to help you promote your tours so you create widgets that you put out on social networks – it is just constantly changing, and your business partner needs to pay attention to what is going on and put together the best set of tools for what you’re trying to achieve.

There’s a lot that marketers can learn from the marketing minds behind the entertainer Lady Gaga.

1. Give fans a name. Gaga doesn’t like the word “fan” so she calls them her “Little Monsters,” named after her album “The Fame Monster.” She even tattooed “Little Monsters” on her arm and tweeted the pic to fans professing love for them. Now fans are getting their own Little Monster tattoos. By giving the group a formal name, it gives fans a way to refer to each other. Fans feel like they are joining a special club.

2. Make it about something bigger than you. During her concert tour, Gaga recites a “Manifesto of Little Monsters” (text) (video). Although a bit cryptic, most Little Monsters see it as a dedication to them, that her fans have the power to make or break her.

3. Develop shared symbols. The official Little Monster greeting is the outstretched “monster claw” hand. As all Little Monsters know, the clawed hand is part of the choreography in the video of her song “Bad Romance.” Gaga tells the story of watching a fan in Boston greet another fan with the claw hand and that’s when she knew this was the Little Monster symbol. Even Oprah knows the Little Monster greeting.  Shared symbols allow fans to identify each other and connect.

4. Make your customers feel like rock stars. One staple of Gaga’s “Monster Ball” tour is to call a fan in the audience during the show. She dials the number onstage, the fan screams out, is located and they are put up on a big screen. While the rest of audience goes bananas, she invites the fan to have a drink with her after the show.

5. Leverage social media. Gaga has the requisite Facebook fan page (over 5 million fans) and Twitter ID (almost 3 million followers) but it’s how she uses them that drives loyalty. On Twitter, she tells fans what she is doing, such as tweeting them before she opened the Grammy Awards. She also tweeted to fans that she was buying them pizza for waiting overnight at an album signing.

From Church of the Customer Blog (thanks Debbie Cavalier)

You want a relationship with your fans? Why not  go to their houses and play.  No way to get to know people better than invading their homes and doing your thing right in the middle of their living rooms.  Right?

The future is all about breaking new ground and combining that with solid business models that you can predict and work with.  Here is a guest post from Fran Snyder on house concerts and what they should be a part of your future.

I encourage all of you to build on this model and create new experiences and interactions that create value and exchange between artists and their fans that cannot be digitized.

I would be very interested in your comments on this piece.

The Future of Music is Uncertain.

What we can confidently say, however, is that artists will benefit from increasing access to information, and systems/websites will develop to make that information useful, if not vital.

To find success with these new resources, I see two major limitations that artists must overcome. First, and almost instantly dismissed by todays artists, is the need to focus on fundamentals – namely, the ability to play and write great songs. The tsunami of social media and music advice is a relentless force pushing musicians away from their instruments. Before the recording, radio and tour budgets get out of hand, let’s go back to the woodshed – the one with no internet, the one that provides the solitude needed for a true artist to discover and develop their gifts. There is no substitute for great art.

The second limitation is a tired and unproductive definition of success. Artistic success is a muddy thing… not the shiny superstar image we all secretly (or overtly) harbor from decades of media brainwashing. You can be important, you can be happy, you can be filled with meaning from your work as a recording and touring artist. Rich and famous is much harder to accomplish, and many stars will tell you it’s not nearly as satisfying as it looks. Dig into your work. What about it makes you most happy?

I’m convinced that becoming a superstar is harder than it ever has been. I’m also convinced that for artists who focus on a different goal, there is a rising tide of new opportunities, and more chances to succeed than ever before. Let’s start with touring.

Small is the new big, and why house concerts could save touring artists.

House Concerts – Mozart was onto something.

Mozart was well known for performing “parlor concerts,” in the homes of rich patrons who would delight in the opportunity to show off their acquaintance with him. Things have changed, however, and you no longer need to be rich to have access to some of the finest talent available. Furthermore, many of these artists are genuinely interested in their fans, and enjoy an opportunity to connect in a way that rarely happens in traditional venues.

Breaking New Markets = Breaking the Bank

Most acts, regardless of talent, are lucky to draw 30-40 people when they play in a new area. The resources needed to get beyond those numbers are getting more expensive and less effective all the time. Publicity and radio promotion can cost many hundreds if not thousands of dollars per week, and these methods employ people to beg, bribe, or cajole overwhelmed media personnel (writers, DJs, music programmers) who can rarely make the returns worthwhile. Ask any act how many “butts in seats” result from a nice article in the paper. Few, if any. Likewise, airplay doesn’t yield much unless it is sustained. Posters and flyers? Don’t get me started.

It’s been universally accepted for years that touring is so important, that artists should be willing to do it at a financial loss. Furthermore, it’s often suggested that you play anywhere and everywhere, because you never know where a new fan (including one with some power to help in a significant way) will turn up. And if you return consistently, you’ll build an audience.

I say it’s nonsense.

Of course, if you are an artist on the road, not every gig is likely to be a part of your grand strategic plan. But it is wrong to start with the premise that you should play in rooms where people don’t pay attention, and where the financial prospects are gloomy at best. That mentality is a disservice not only to your music, but to professional artists everywhere.

Shame on us. For decades we’ve been teaching audiences that it’s perfectly O.K. to sit 5 feet away from a performer, and carry on conversations at the top of their lungs. Who started this? Has anyone built a lasting audience this way?

Play Rooms You Can Fill – Play Rooms Where You Can Connect.

Without a fat budget and a dedicated team of smart supporters, I believe the best way to build an audience is to play rooms
you can fill, and
that allow you to really connect in a personal or powerful way with the audience.

But where are the rooms you can sell out with 40 seats? Specifically, where are the ones that don’t have an espresso machine screaming during your ballads?

Shrinkage!

The potential audience for live music in traditional venues continues to shrink and fragment. People have more choices than ever for entertainment, and many of those choices increasingly keep them at home. Rentable and on-demand movies, xBox 360 and Wii, and the increasing variety and breadth of sports events and programming provide serious competition to the concert business.

In addition, despite the good they’ve done to society, stricter DUI laws have reduced the number of people who go out to listen to music, and smoking bans force “would-be listeners” out of the room during the show. We now have 200 capacity clubs who routinely have 50 people show up, and a majority of the audience spends half the night outside.
So venues have to diversify to stay in business.

Pool tables, televisions, electronic trivia – anything to bring in more bodies, sell more drinks, and stay in business. They have to do this, regardless of how it affects (distracts) from the core vision of the enterprise – putting on live music shows. Artists (who seemingly have no better option) gladly walk in, set up, and waste their evening playing for ungrateful, inattentive patrons, and force their true fans to watch a show while drunks are screaming about the latest touchdown.

And everyone accepts it. That’s life.

Wanted: Hundreds of Geniuses

The fact is, it takes a genius to run a music venue that can turn a profit (consistently) by presenting shows with audiences of less than 50 people. The economies of scale mean that running a club that is 50% smaller than before might only trim your overhead by 20%, all else being equal. The ones that do succeed often split the club (restaurant/venue) physically – by creating a separate room for the music. Eddie’s Attic, in Decatur Georgia is a good example of this, but has had its share of tough economic times.

The fact is, as audiences continue to fragment and dwindle, many clubs will go out of business unless they downsize or change what they are doing. Especially if they are not doing it well. Artists have long accepted second jobs or being broke as a way of life – some club owners have as well. This is not new, but is it necessary?

In the absence of geniuses, how can we have profitable concerts with an audience of 30-40 people? One way is to create an event that is so special that one person (the venue) is willing to let the other (the act) keep all the money. Who would do such a thing? A house concert host.

What is a House Concert?

It’s an invitation-only concert in someone’s home, presented by a host who does not profit from the event. Although there are many exceptions and variations from these guidelines, house concerts are usually…

• held indoors and on weekends
• attended by 20-50 people
• paid for by a $10-20 donation per guest (for the performer)
• known to include light snacks, beverages or a pot-luck dinner
• attended by the host’s friends, neighbors, co-workers, and maybe a few fans of the artist
• attended by a 25-60 age group
• performed by solo, duos and small groups
• performed with little to no amplification
• very intimate – the audiences sit close and are attentive
• performed as two, 40-minute sets with a 20 minute break
• stronger for artist’s merchandise sales than traditional venues
• booked without a financial guarantee (sometimes a modest guarantee to cover expenses)
• known to house and feed the artist for the night

The Growth of House Concerts

All over the world (but mostly in North America) music fans are discovering that putting on a house concert is a lot of fun, inexpensive, and a great way to entertain friends and acquaintances. They also get a kick out of having personal time with the artists, and knowing that they are playing a very important role in their careers. And thousands of these events happen every year.

Due to space considerations, these house concerts are more likely to help singer-songwriter acts and small ensembles, but the variety of genres and spaces available continues to grow. Jazz combos, instrumental acts, or any act that can comfortably fit in a living room might really enjoy performing in these intimate spaces.

Until we have enough geniuses to develop a commercial infrastructure for small, profitable concerts, house concerts will have to fill the void. In the meantime, small clubs owners, since they often lack the purchasing power to get A-List performers, should connect with these non-profit promoters to take advantage of block-booking opportunities and “double buys.” Even when they are in fairly close proximity, there is usually a very small overlap between house concert and club audiences. House concerts often draw people who don’t like late nights and driving downtown.

Are house concerts the perfect pill?

So far you would think so. But a house concert host can have just as much trouble building an audience. Some hosts have a natural ability to gather crowds (through personality, standing in the community,etc.) but some really have to work at promoting their events. Booking a “stiff” act or two can seriously damage your reputation as a host, and start a downward trend of the audience you’ve worked so hard to build. House concerts are subject to all the same “acts of God” and “acts of Playoffs” that traditional venues deal with.

The upside, however, is that even a modest turnout (15-20 people) can be very satisfying, profitable, and not leave the artist scrambling for a hotel at the end of the night. Many house concert hosts provide food and a guest room for the night – two of the biggest expenses of being on the road.

Rebuilding Our “Infrastructure”

House concerts are filling a key missing ingredient in the live music infrastructure. They provide the venue for artists who cannot draw the numbers necessary for a traditional “for profit” live music venue. This provides opportunities for niche artists, such as
great talents who are not famous* yet, or not famous anymore
great talents who aren’t chasing fame or major commercial success
world class performers who’s fame and market share are limited by the genre (i.e. folk) they inhabit
developing talent

* substitute “well-known” if you prefer.

In the absence of house concerts, these acts play in bars and coffeehouses, serving no particular purpose. They don’t make a living wage, and neither does the venue. They don’t fully express their art, because a distracted audience simply cannot participate fully in the show. These “concerts” are often another missed opportunity to do something smaller and more rewarding.

Never before in our history has there been so much talent available, yet so much of that talent is “stuck.” There are not enough venues where small successes are possible – places that are the necessary stepping stones for an artist building a regional or national fanbase.

Necessity is the mother of invention, and the development of new house concerts, by enthusiastic and savvy fans, is necessary – always has been. Just ask Mozart.

Fran Snyder is a touring singer-songwriter, and founder of Concerts In Your Home

Thanks Fran!

I encourage everyone to build on this model and create new experiences and interactions that create value and exchange between artists and their fans that cannot be digitized.

Over the past year I interviewed many successful people from all walks of the music business.  They talk about what is working for them, their artists and writers and how to get ahead in the music business today.

These are music producers, label A&R executives, music publishers, video gamers, music supervisors, entrepreneurs, entertainment attorneys, artist managers, music distributors, marketing executives, and music educators from Electronic Arts, Topspin, CD Baby, Nettwerk, Primary Wave, Newbury Comics, Berklee College of Music and NBC/Universal and many more. Learn from Ian Rogers, Ariel Hyatt, Terry McBride, Jill Sobule, Phil Ramone, Kelly Cha, Mike Dreese, Derek Sivers and others.  Enjoy.

See more at Music Power Network

From Hypebot.  It’s no secret that the amount of money artists are earning from recorded music is declining.  But by how much? And as digital sales replace physical and streaming music gains traction do the numbers shift in the artist’s favor?  Infographic created by David McCandless of Information Is Beautiful from a spreadsheet of data.

The entire music industry has been driven by new formats, new music and innovation over the past 70 years. This has been fueled with the passion to be a star and receive the adoration of millions.

Well, I think we might be seeing the beginning of a new music format. A format that engages audiences in experiencing and participating in the creative process in a way that is fun and unobtrusive. Insightful and funny. Playful and inspiring.  The VideoSong.

Jack Conte and Nataly Dawn are the band Pomplamoose and they are generating huge YouTube interest and views with their VideoSong format. They got tens of millions of views in a very short time with this number increasing while you read this. The VideoSong format these two produce is very inviting and addictive, providing a glimpse into the process of recording and creating music.

In the words of Jack Conte, “There’s no hidden sounds, there’s no lip-synching, there’s no overdubbing. What you see is what you hear.  Sometimes, there might be two or three Natalys harmonizing with herself, and then you’ll see those three videos juxtaposed together on the screen.

I love what they are doing here.  A glimpse into what it is to record a song and make things happen like this is so appealing.  Will Pamplamoose really be able to capitalize on their momentum?  We will see.  They are spokespeople for the YouTube’s Musicians Wanted program.  I bet their phone is ringing big time.

Is this the format for the future?  I don’t know.  What I really like is the accessibility and transparency in the creative and recording process that they bring foward.  If they can draw people in even further, that would be great.  They seem very open to audience interaction.

I hope they find a great manager because what they have is really compelling, really great raw talent.

I got this email from my friend Jill Sobule about inviting fans into the studio to watch them record.

“Hello feller fans and friends,

Wanna make a record with me? Want to see what it’s like in the studio? Wanna be a bad-ass and brag to your friends? Well…in Los Angeles on April 11th the amazing John Doe and I are each making recordings, w/ the same band, in the same day ! ! Not only would you create the good vibe–helping us get a great performance-but you would have a rare look behind the scenes, experiencing the recording process first hand, in the same room with us while we record. Does that sound good? We have a killer band, including Don Was on bass and Doug Pettibone on guitar. We’re paying for the studio & musicians by inviting fans to the session.”

Jill and John are inviting 40 fans to buy tickets to both participate and observe an exclusive recording session with Grammy-award winning producer, engineer, and mixer Dave Way on Sunday April 11th in Los Angeles. They have a couple of different paths to experiencing the studio with the artists:

ALL-DAY “MUSICIAN’S MUSICIAN” ACCESS ($200)
For recording engineers, DIY musicians or anyone that wants to see it from the ground up. Only 10 tickets are available.

HALF-DAY “CREATIVE PATRON” ACCESS ($125)

For aspiring producers, songwriters, amongst others. Only 15 tickets available.

WRAP-UP “MUSIC LOVERS” ACCESS ($75)

Here’s a level for the person who simply loves music. Only 15 tickets available.

It will be interesting to see how this turns out. Techdirt picked up on this as part of their Connect with Fans (CwF) and give them a Reason to Buy (RtB). CwF+RtB=$$$ experiment.  Interesting comments on this post from Techdirt.

As a musician in the 21st century, you need to learn how to define your expectations. Otherwise, how will you know when you have achieved your goal, or even what to aim for? For a project, for a tour, for your career, and for your life – what are you trying to accomplish?

Most people in the music business want to “make it,” but what does that really mean? What is making it for you? What does the finish line look like? How would you recognize making it? Do you want a record deal? What does that record deal look like? Do you want to sell a million CDs? Do you want a publishing deal? What does that publishing deal look like? Do you want your music played on Grey’s Anatomy or your songbook published by Hal Leonard?

Once you know what your expectations are, then you can plan accordingly and know what to shoot for. Is success for you playing huge stadiums? That would mean you have to make a plan and probably dedicate yourself to work full-time for many years to get there.

Or, is success for you to have a steady gig on weekends? This is more achievable and something you can do on a local level and perhaps as a part-time endeavor. Is recording a CD and selling 10,000 copies your definition of success? If so, you can create a plan to achieve that perhaps on a regional level.

Or, is success for you writing songs that other people play? That would require you to network with other musicians and focus on writing, publishing, and placing your songs. Or, is success for you recording an EP and playing it for your family?

What do you want to be? What does success look like for you? Be as specific as possible when setting your expectations. Don’t be vague because it won’t lead you anywhere and just breeds sloppy thinking. First, define exactly what you want to do, and then you can break it down and make a plan to do it.

Learn more at Music Power Network

If you’ve ever felt grateful for the list of titles and track lengths that appear when you pop a CD into your player, David Hyman’s Gracenote is the company to thank. It enters all that data so you don’t have to. After Hyman helped expand Gracenote from a tiny metadata venture into the world’s largest database of CD titles and track lists, Sony bought the company for $250 million in 2008. That delivered nice returns for early investors, including Jones and Simon. “I showed them a good time. Then I brought them to Mog,” says Hyman.

Now Hyman has a new vision: fusing portability, social networking and unlimited music streaming at a single site. Mog will deliver this in a new music medium–the smartphone–expected to soon overtake PCs as the prime gateway to the Web. In March Hyman unveiled Mog’s mobile app at the South by Southwest music conference in Austin. With a couple of commands a phone user can segue to a screen offering access to 7 million songs spanning a century. All this to chase an elusive dream: technologically uniting a fractured music market.

His backers are betting Hyman, can succeed in a business that has ruined many a provider of capital. A decade ago a dozen labels dominated an industry drawing $40 billion in annual revenue. It is now half that. Streaming services with cryptic names like Spotify and Pandora now vie for users who listen to music not on CDs but PCs. And what happened to that $20 billion? Some of it was lost to music pirates; some of it to newcomers like iTunes, which takes in $2 billion a year.

Digital disruption of the music industry seemed to offer plenty of entree for new music distributors. Offering its own player and music store, iTunes thrived. But MTV, Yahoo and AOL all tried, then abandoned, selling music online (they now mostly stream it for free). Squeezing profits from online listeners turned out to be dicier than imagined. Smaller operators like Pandora carved out a niche following among “passive listeners.” Type the name of a song into Pandora’s search engine and it instantly produces an entire station around the track. It does this by mapping songs using 400 characteristics, from melodies to orchestration. This musical fingerprint associates one composition with another.

Hyman’s brainchild is a clever hybrid inspired by scrappy competitors. Like Pandora, Mog’s slider bar can be moved to add artists similar to ones you like, building your own playlist. Like Microsoft’s Zune player, it delivers ultrahigh fidelity. Hyman has taken a page from Twitter, too, running feeds from like-minded music fans, allowing users to find new music through “social discovery.”

Can Hyman triumph where bigger brands have failed? He has one edge: Mog’s blog network. Hyman built it by hiring the former top ad salesman at mtv.com, Alex Brough, who integrated content from other blogs with RSS feeds onto the Mog site. Hyman sold ads against this content and split the revenue with bloggers. The site now hosts 1,000 of the largest online music blogs in the U.S. Hyman will tap into this network, mostly using ad inventory, to build Mog’s brand.

To win, Mog will have to score a steep trajectory of subscriptions at $10 per month ($5 more than his PC-based subscription). Mog will also have to deliver “interoperability.” That’s the means by which music in disparate locations, say your laptop and home office, can be married and live together in Mog’s “cloud” (servers back at headquarters). “We’ll be able to add what’s on your hard drive to your Web-based library, grab your playlists and combine all of this legacy data in one place, along with new music from your Mog subscription,” he promises. The streaming service that delivers the best such interoperability should be a big selling point to music junkies.

Of course, if you stop paying, your cloud vanishes. How will that go down with music lovers? “The hard part for people to swallow will be that they won’t own the music they pay to hear,” says Kevin Burden, mobile device practice director at ABI Research. “It’s like leasing a car. You don’t have upfront costs, and you get a new model every two to three years. There’s value to that, but you don’t own it.”

Mog’s competitors think it’s worth the risk. Rhapsody, Catch Media and Spotify all have licensing agreements from music publishers for cloud-based streaming. So does digital music service Lala, bought by Apple last year. Apple recently announced plans to move every iTunes user’s music collection to Apple’s cloud this year. Death of the music download may be at hand.

One burden Hyman shares with his peers is the cost of content. The labels charge up to half a penny per stream per subscriber. European music giant Spotify, now with 320,000 paid subscribers, wants to bring its free service to the American market, but the labels want to be paid more than Spotify can likely afford. That won’t stop Mog’s coming showdown with its larger competitor. Watch for war clouds soon in Europe, as Hyman challenges Spotify on its own turf this summer.

Read more about the difficult work of creating the river of music at Forbes here.