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Music Sales Predicted to go Up

Hypebot Passed Along This Study:
Global digital music revenues will more than double from $7.4 billion in 2010 to 20.1 billion by 2015, according to the new Digital Music Market Outlook by Companies And Markets. That's a compound annual growth rate of 22.1% over the period. Subscriptions will be the fastest growing segment, growing at a 60.8% CAGR to 2015.
There was never going to be a "music apocalypse" as predicted, just a change of business model.

Music is eternal.


How much control are you willing to trade for cash?

There's a tradeoff that must be made, and your choice will determine the ultimate strategy your band uses to achieve it's goals.

How much control are you willing to trade for cash?

Money isn't free.

If a label gives you $20,000 to record an album, you're not going to be able to change your genre midway through the recording sessions. No replacing the drums with a sitar, either. Likewise, if an angel investor funds your startup with $500,000, you can bet your life that she'll want to have a big say in how your business is run. That's how the whole shareholder thing works. Cash is exchanged for control.

The addition of cash to any transaction carries with it an expectation. Failure to meet that expectation is a breach of trust at best, and a catastrophic breach of contract at worst. Either way, it's not good.

So you must find a balance. How much control are you willing to trade for cash? Are you willing to give up publishing rights and royalties for a fully-funded album? Would you change the way you dressed on stage if it meant your next merch order was free? Would you adjust the style of singing your songs for a shot at a bigger show?

There's no right answer for everyone, this decision is personal. Your music might be perfectly served with a 40-60 split for rights in exchange for an album and you not having to deal with the "business" of your music. Your music might also be too niche or personal to attract investment, so total control might be your only option.

In business terms, are you aiming for a buyout (Label) or not?

The choice you make defines what strategies your band should use. More on this next week...


How Much Does it Cost to Make a Hit Song?

According to this NPR article on the Rhianna song "Man Down", it costs $1,000,000.
Some highlights:

-Pay to Play (aka Payola) never disappeared.
Majors labels are venture capital firms, and they need smash hits to cover all the money they've spent on their unsuccessful artists. And it's in the interest of radio to convince the music industry that it's THE kingmaker. "Court us, or suffer irrelevance!"

'Treating the radio guys nice' is a very fuzzy cost. It can mean taking the program directors of major market stations to nice dinners. It can mean flying your artist in to do a free show at a station in order to generate more spots on a radio playlist.

Former program director Paul Porter, who co-founded the media watchdog group Industry Ears, says it's not that record labels pay outright for a song. They pay to establish relationships so that when they are pushing a record, they will come first.

Porter says shortly after he started working as a programmer for BET about 10 years ago, he received $40,000.00 in hundred-dollar bills in a Fed-Ex envelope.

Current program directors told me this isn't happening anymore. They say their playlists are made through market research on what their listeners want to hear."
-If you're a DIY artist, radio is a waste of your time and money.

Radio plays what majors push, it's a symbiotic relationship (even though labels HATED radio initially and used the same arguements that level against today's music piracy). With competition for listener's ears from iPods, satellite radio and internet radio, advertising dollars in radio aren't what they used to be. The cash has to come from somewhere.

The return on investment for radio plays doesn't make sense for a DIY musician. You'd be throwing your money away at what is essentially bribes, when you could hire a manager or a publicist at a fraction of the cost and have a much bigger impact on your fan base through targeted marketing.

One caveat: Sometimes radio will play more independant music, but only once the listeners begin demanding to hear the music. It's cheaper and better to have your fans convince radio through their voice than you trying to convince radio through your wallet.Let's be fair to radio, though. If I could figure out a way to legally get $40 thousand dollars sent to me without any questions asked, I'd be all over that like mayo on a gas station tuna salad sandwich.

-The major labels are built on old economics.

Too much overhead.

Back when there were only a few major distribution channels in the 50s, you could reasonably count on huge acts selling tons of CDs because there weren't as many bands to choose from. Now that there's an infinite number of bands, the industry isn't concentrated anymore. You can't "gurantee" a hit even by throwing millions of dollars at it (the Rhianna song has been met with lukewarm reception and flagging profits). A fan doesn't have to have taste dictated by the masses anymore, hence the arrival of fantastic niche players in genres such as Gypsy Punk and Cello Rock.

Good for our ears, bad for majors.

-Throwing dollars at a mediocre song can only do so much.

Have you guys even listenered to her new song?

"rum pa pum pum pum"...

Come on now.

Music is about the music.


Spotfy is Beautiful

I've only had it for 24 hours and already I'm a raving convert. Spotify is the promise of cloud music delivered.

Has Spotify, as some have said, helped eradicate music piracy in Sweden? 
Lagerlöf: Yes it has. Or to clarify, it has eradicated music piracy almost on its own. Sweden was the home of Pirate Bay. They even had their own political party and made the prime minister in national television declare "Off course the youth shall be able to download music for free".
Three years later, The Pirate Bay is not mentioned by anyone anymore. Spotify is, on the other hand, mentioned by almost everyone - including the old Pirate bay fans. 
This did not happen because some new radical law or brutal police force were implemented. Neither because a confused prime minister changed his mind again and embraced the music industry. It all happened simply because the users found a new legal service that they actually thought was much better than the old Piracy one. Now, some time later, when they have
invested their time and effort in making playlists etc. and would like permanent and unlimited access to it - they are starting to pay for music. For the first time in their lives - music is worth paying for.
 That's the core of the issue. Piracy was faster, better, and easier than any legit offering, so it won. Now, for $5 a month I can hear anything I want instantly with no DRM or glitches.

Spotify is another reason I'm optimistic about the future of the music industry. I was giddier than a twilight fan at a premier when I first tried this service. It's intuitive, simple and it works.

It's a great time to be alive for a music fan.



The Atlantic did a killer piece that highlighted the trend towards band's using Anti-Marketing.

Short Version: Some indie bands are purposely obscuring their names, hiding their faces, and refusing interviews as a means of image-management.

Love it.

As I mentioned previously, speed of adoption is inversely correlated with longevity.

Buzz magnifies people's expectations, which in small doses is beneficial for a band. But if too much buzz is laid on, the gap between fan's expectations and the actual music is too wide, and the fan is left with a foul taste in their mouth.

In the same way the US Federal Reserve will adjust inflation rates to either stimulate growth or limit inflation, smart bands need to adjust how much hype gets pushed on them. Too little and the band's fan growth stagnates but too much and the band's fan base deflates. It's all about managing expectations.

From the article:
From that point on, there has to be enough substance to the group to sustain them through the post-hype phase. Look at Die Antwoord. The South African rave-rap duo baited the media for months with a lewd web art, bizarre videos, scarce information, and exotic promise. Once people learned that they were a satirical act helmed by Johannesburg performance artist Watkin Tudor Jones, who had released music under other personas in the past, excitement for the group largely vanished, right on time for their Interscope debut, $O$, to debut at 109 on the Billboard 200—a flop by major-label standards.

Anti-marketing is a valuable tactic. It's a pressure-release valve for when you feel that the press is going a little too far in their promotion of you. How to make the call when you're getting extravagant praise is the real challenge here. Intuition is all you've got here, and that's easily clouded by the ego getting all warm-fuzzy from the attention. In all likelihood you won't need this tactic though, since most artists don't get explosive hype storms.

Anti-marketing, like all tactics, needs to fit within the strategy of your art. Using a tactic that doesn't fit your strategy is not a good idea. Self-aggrandizing rappers probably don't have much use for anti-marketing. Bedroom produced indie-electro-pop is a different story.

Keep an eye on how much hype you get. Anti-marketing may one day be just the tool you need to keep buzz under control.


Sell out with me tonight

Hey guys, this is Tito, one of the guitarists from Derek’s band Onward We March. Derek and I started the band a few years ago and have always exchanged ideas on how to run the band as a business. We studied business in undergrad, and went on to get MBAs. Needless to say we talk a lot about the band in a business sense. I do all the booking, internet marketing schmoozing at bars, etc.

Derek reached to me a few weeks ago and asked if I would like to contribute to this here blog.

The other day I was at a bar having a conversation with someone I had just met. They had just listened to some of the new songs we had written. Throughout the conversation it became evident that we both came from very different schools of thought on music. I am a very selfish musician. I feel that art in itself should be very selfish. Write what you feel then deal with the business of it later. The other person came from a very consumer minded point of view. She started asking me about who we market to, what our target market was. This is a legit question. I should preface this by saying that most of my MBA courses were in marketing, so I get the importance of running a band as a business, but that question rubbed be the wrong way.

Now before you get all up in arms about a marketing major getting upset about a marketing question, think about the context. This person wasn’t talking to the MBA at that point and time, she was talking to the artist. A selfish artist at that. I told her that I don’t create my art with a specific audience in mind. If you think about the target market before you create your art you are compromising the integrity and sincerity of said piece and thus not creating an honest piece of art. Honesty, sincerity and integrity are vital to what I would call "real" art. I told her that we do in fact create a marketing plan for our music, but not until after our art is complete.

This is backwards from how most products come to fruition. Business identify a demand in the market place and try and create a product to fill that void. Businesses hope to sell out of that product and profit off of it.

I had an epiphany that night, selling out isn’t making signing to a label, playing huge concert halls, making a profit from your art or any of that. It’s putting your passion second to what someone else wants you to do.

Are you creating your art to a marketing plan? Or are you creating a marketing plan to fit your art?


Your Fans Love You (Fan Velocity)

Following up on a great article from last year, let's talk about some direct ways to improve your Fan Velocity.

-Make your artistic world fascinating.

Why did you create this song What was the creative process like? How did you come across this idea? What's the story behind your music?

People are hungry for stories that connect, amuse, or repulse. We live through stories. If a fan asks you "Tell me about your recent album." and all you have to say is 'It was kinda hard, but fun." you just lost an opportunity to get a fan more invested in your music. Why not explain a great story like "Well, the sound library the studio had was missing disks of sound effects, so we duct taped a mic to our legs and ran around a park at midnight screaming like a madman."

Cool story = people tell that cool story = more fans.

-Make it easy for fans to share your music.

Music sharing is inevitable. In five seconds a fan can find your music on The Pirate Bay and in five minutes they can have the album on their iPod. Customers have become to expect being able to hear music before they buy it, and effortlessly share music with friends. If your band freaks out Metallica-style over music sharing, all you'll do is turn off fans from your music.

Accept that your music will be shared. This is a good thing.

Music has always been about people sharing an experience. When we find music that affects us on an emotional level, we want to share that emotion with the people that we care about. Anyone who has to ride in a car with me will be exposed to a new band, like it or not. I'm built that way, haha.

Album sales won't provide the income stream they have in decades past. Most of your income now will come from other sources such as shows, merch, and licensing. As such, when a fan shares your music you're not losing much income. What you are getting, however, is a word of mouth recommendation for your music.

This is a good thing. You can't have super fans willing to shell out $20 for a limited edition vinyl of your album without them hearing and falling in love with your music first.

While you don't have to go as far as to upload all your music to bittorrent, making your music and art share-able will allow you to maximize the spread of your music. Upload a few tracks to youtube so anyone who hears about you from a friend or article can immediately give you a listen before your name is forgotten. Make sure fans can share/download your promo pics instead of putting them in a flash viewer that prevents this.

-Help fans connect with similar artists.

It's not a mistake that Pandora, 70000 tons of metal, and Bonnaroo are famous. Communities form for those with like interests. Artists that are similar to your style are allies not competition. Share great music you discover with your fans and play shows with relevant acts. Not only will joining up with a community help build relationships with your current fans for introducing them to other cool stuff, you'll gain many additional fans from the other bands' fanbase who will likely dig your work.

-Manage public relations.

Be kind to your fans. If a show gets cancelled, you'll want to give refunds or tickets to your next show. Yes, it's painful to have to eat a big monetary loss when you don't "have" to, but the way you treat your fans is how they're going to remember you and, more importantly, how they're going to color their impressions of your music.

One of my favorite examplesof great PR is from one of my personal favorite hip hop artists, P.O.S. I was stuck in a huge line outside of a show that formed because the venue's computer was broken, so every check-in was manual, regardless of whether you already had a ticket or not. Even worse, the venue insisted on running the show at normal time, so half of the audience was outside waiting when the opening act went on.

So Stef (P.O.S.) walked out of the venue and started chatting with the people in the line. Nothing fancy, just saying hi and talking about music to pass the time while things got under control. He absolutely didn't have to do this, as many musicians hide in the green room until the show, but it was classy how he was talking with the check in guy trying to see how he could help his fans get in faster.

We remember little interactions like that.

That's how lifetime fans are born.