Music Business and Trend-Mongering

While I’m preparing the agenda for the online music business chats I’m hosting tonight (discussion items so far: the effect Apple’s variable pricing has on publisher’s income, Sarkozy’s thoughts on the three strikes rule, direct to fan marketing techniques, and more), I thought to drop a quick note here to say that our next term here at Berkleemusic begins this Monday. There’s little I like more than to talk about music and the music industry, and I’m lucky for the opportunity to do that with 19 other folks from around the world on a weekly basis. If anyone is interested about what studying music business online is like, I’d be happy to give you some background. Direct message me here: www.twitter.com/atomzooey

Great post from Amanda Palmer of the Dresdon Dolls on using online media to connecting directly with fans and make $$$. Love the creativity here…

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From: Amanda Palmer
Subject: twitter power, or “how an indie musician can make $19,000 in 10 hours using twitter”

this story has just been blowing people’s minds so i figures i should write it down.

1.
FRIDAY NIGHT LOSERS T-SHIRT, $11,000

about a month ago, i was at home on a friday night (loser that i often am when i’m not touring, i almost never go out) and was, of course, on my mac, shifting between emails, links and occasionally doing some dishes and packing for a trip the next day. just a usual friday-night-rock-star-multi-tasking extravaganza.

i twitter whenever i’m online, i love the way it gives me a direct line of communication with my fans and friends.

i had already seen the power of twitter while touring…using twitter i’d gathered crowds of sometimes 200 fans with a DAY’S notice to come out and meet me in public spaces (parks, mostly) where i would play ukulele, sign, hug, take pictures, eat cake, and generally hang out and connect. this was especially helpful in the cities where we’d been unable to book all-ages gigs and there were crushed teenagers who were really grateful to have a shot at connecting with me & the community of amanda/dolls fans.

i’d also been using twitter to organize ACTUAL last-minute gigs…i twittered a secret gig in LA one morning and about 350 folks showed up 5 hours later at a warehouse space….i played piano, filmed by current.tv, and then (different camera crew) did an interview with afterellen.com.
the important thing to undertsand here is that the fans were never part of the plan..,i basically just INVITED my fans to a press day, the press didnt’ plan it…i did.
i was going to be playing in an empty room and doing q&a with afterellen on a coach with only the camera watching.
it was like….why not tell people and do this in a warehouse instead of a hotel lobby or a blank studio? so i did.

it cost me almost nothing. the fans were psyched.

but back to the bigger, cooler story….

so there i am, alone on friday night and i make a joke on twitter (which goes out to whichever of my 30,000 followers are online):

“i hereby call THE LOSERS OF FRIDAY NIGHT ON THEIR COMPUTERS to ORDER, motherfucker.”
9:15 PM May 15th from web

one thing led to another, and the next thing you know there were thousands of us and we’d become the #1 topic trend on twitter.
zoe keating described it as a “virtual flash mob”.

the way twitter works (if you don’t have it) is that certain topics can include a hashtag (#) and if a gazillion people start making posts that include that hashtag, the topic will zoom up the charts of what people are currently discussing. it’s a cool feature.

so anyway, there we were, virtually hanging out on twitter on a friday night. very pleased with ourselves for being such a large group, and cracking jokes.

how do you “hang out” on the internet? well, we collectively came up with a list of things that the government should do for us (free government-issued sweatpants, pizza and ponies, no tax on coffee), AND created a t-shirt.
thank god my web guy sean was awake and being a loser with me on friday night because he throw up the webpage WHILE we were having our twitter party and people started ordering the shirts - that i designed in SHARPIE in realtime) and a slogan that someone suggested: “DON’T STAND UP FOR WHAT’S RIGHT, STAY IN FOR WHAT’S WRONG”. neil gaiman and wil wheaton joined our party. the fdnas felt super-special.

by the end of the night, we’d sold 200 shirts off the quickie site (paypal only) that sean had set up.
i blogged the whole story the next day and in total, in the matter of a few days, we sold over 400 shirts, for $25/ea.

we ended up grossing OVER $11,000 on the shirts.
my assistant beth had the shirts printed up ASAP and mailed them from her apartment.

total made on twitter in two hours = $11,000.
total made from my huge-ass ben-folds produced-major-label solo album this year = $0

2.
WEBCAST AUCTION, $6000

a few nights after that, i blogged and twittered, announcing a “webcast auction” from my apartment.
it went from 6 pm - 9 pm, my assitant beth sat at my side and kept her eyes on incoming bids and twitter feed.
while we hocked weird goods, i sang songs and answered questions from fans. we wore kimonos and drank wine. it was a blast.

people on twitter who were tuned in re-tweeted to other fans. the word spread that it was a fun place to be and watch.
we had, at peak, about 2000 people watching the webcast.

at the suggestion of a fan early in the webcastm anyone could, on demand, send us $20 via paypal and we would chew,
sign and mail them a postcard. we sold about 70, and we read all those names at the end of the webcast and thanked those
people for supporting us. here’s how the sales broke down:

all the items were signed by moi and hand-packed by beth and kayla._ the items and highest bidders were as follows:_ hilary, ukulele used on the european tour: $640 _jake, “guitar hero” plastic guitar controller used in album promo shoot: $250_ lary b, copy neo2 magazine, plus two post-war trade slap-bracelets & a crime-photo set: $230_ devi, glass dildo, with subtley-sordid backstory: $560 _liz b., “hipsters ruin everything” t-shirt, made by blake (get your very own here!!!!): $155.55_shannon m., my bill bryson book, a short history of neary everything: $280_ nikki, huge metal “the establishment” sign, used at rothbury festival for the circus tent i curated: $450 _j.r., purple velvet “A” dress used in the dresden dolls coin-operated boy video shoot: $400_ jessie & alan: who killed amanda palmer vinyl: $100_ nikki: wine bottle, auctioned BY REQUEST!!! $320 _shannon w., torn-to-shit vintage stockings used in the who killed amanda palmer/ michael pope video series: $200 _jodi,
school-note-book break-up letter, written to amanda from jonas woolverton in 7th grade (i still haven’t emailed him about that….): $250_ daryl, ANOTHER wine bottle, by request, that we had LYING AROUND: $320
and…………..
reto emailed, having barely missed the wine bottle, and asked us to send him “something funny” for $129.99. we sent a heath ledger statuette.

total made on twitter in 3 hours, including the postcards, was over $6000.
again, total made on my major-label solo album this year: $0

3.
TWITTER DONATION-ONLY GIG, $1800

a few days later, i twittered a guest-list only event in a recording studio in boston, to take place a week later.
the gig lasted about 5 hours, all told, with soundcheck and signing. i took mostly requests and we had a grand old time.
first come, first served. the first 200 people to ask got in, for free. i asked for donations and made about $2200 in cash.
i gave $400 back to the studio for the space and the help. we sold some weird merch. i think we should call it an even 2k.

total made at last-minute secret twitter gig, in about 5 hours = $2000
major-label record blah blah blah = $0

…..and for fun, and to thank my fans for being awesome, i’ve been doing some twitter perfomance art, including answering their questions by magic-markering my body until it’s covered, and displaying time-lapse make-up application advice….but that’s another story.

TOTAL MADE THIS MONTH USING TWITTER = $19,000
TOTAL MADE FROM 30,000 RECORD SALES = ABSOLUTELY NOTHING.

turn on, tune in, get dropped!!!!!

love,
amanda fucking palmer
http://www.amandapalmer.net
http://www.dresdendolls.com

p.s.
if you want to read the full blogs and see the pictures from the #LOFNOTC events, i blogged here:

1. the friday night that started it all:
http://blog.amandapalmer.net/post/111667948/twitter-the-beautiful-losers-lofnotc

2. the webcast and magic-marker/make-up mayhem:
http://blog.amandapalmer.net/post/127401792/wasnt-this-supposed-to-be-my-fucking-week-off

Love this idea! Quick recordings with an immediate payout for fans over the course of one week. I’d subscribe to this effort for my favorite artists…

Via Pitchfork:

“When most of us have extra spare time on our hands, we end up zoning out in front of “Daisy of Love” reruns or rereading Watchmen for the billionth time. Beck, on the other hand, challenges himself to record cover versions of entire albums as quickly as possible. Different strokes, I guess.

Over the next month, Beck will be overhauling his website, and one of the features will be something called Record Club, in which Beck ropes in various musician friends to record an entire album in a day. For the purposes of scrappy immediacy, nobody will rehearse or arrange anything beforehand.

After that day of furious recording, Beck will slowly let the record out into the world via his website (as well as the websites of the other musicians involved), uploading a new song once a week. He’ll kick this party off with The Velvet Underground and Nico. That’s an ambitious start! Will Beck attempt the Nico vocal parts himself? We’ll find out!

Future Record Clubs will involve friends-of-Beck like Devendra Banhart, MGMT, Jamie Lidell, and producer Nigel Godrich. Here’s hoping they give 8Ball & MJG’s In Our Lifetime a shot.”

I recommend you watch this outstanding presentation from Techdirt’s Michael Masnick on Trent Reznor’s online marketing techniques.

Key points: engage your fans directly, provide variable products and pricing (including a hi-end deluxe package), use free music as a way to collect fan email addresses, and create an ongoing connection with your fans both online and offline.

Also check out the great ways (via YouTube, Flickr, and fan remixes) that Trent is working to get his fans to interact directly with him via his Web site, and his innovative usage of BitTorrent technology.

Some good examples of bands that have NOT had major label support in the past using these same techniques as well.

Note: Trent and several of the other artists that are mentioned in this presentation are using Topspin’s software. Our online course, Marketing your Music with Topspin, is coming out this September.

Leadership Music Digital Summit 2009 - Entire Mike Masnick keynote presentation, 3/25/09 from Leadership Music Digital Summit on Vimeo.

A great multi-instrumentalist and songwriter who will be missed.

Dear Steven Van Zandt,

I just read your interview in CNN, and I wanted to offer an alternative view to your thoughts, particularly related to this quote: “The reason nobody wants to talk about it is because it mostly sucks! Who are we kidding here? Nobody’s buying records? Because they suck!”

You also suggest that if bands learned more cover songs and listened to more “great records” (i.e. classic records) the record industry would be saved, which I think it is a slightly myopic view of what is happening in the business. I think you are missing two key points:

1. THERE IS AN AMAZING AMOUNT OF GREAT MUSIC OUT THERE, but I think you are looking in the wrong places for it. I suggest you take a look at eMusic – the largest online retailer for independent music. Find an artist you like, look at recommendations by eMusic and other consumers, and you can easily fall down the rabbit hole for hours experimenting with new, and in many cases, amazing music you have never heard before. Like Psych Rock? Check out Wooden Shjips. Sign up for newsletters from forward thinking physical retailers like Other Music, a store run by music geniuses who can connect the music dots between Grizzly Bear and Erlend Øye in three steps or less. And of course there are dozens of music blogs, from aggregators like the Hype Machine, live music session and editorial blogs like Daytrotter, old school outlets like Pitchforkmedia, and a million in between. Not to mention the myriad of online radio stations that are not hamstrung by the tight-playlists the consolidated commercial radio business has given us over the past 10 years. Widen your net, Steven, and you’ll find tons of music that will knock your socks off.

2. THE OLD MODEL OF A PHYSICAL RECORD-BASED MUSIC ECONOMY IS DEAD. It is not coming back. Dead. Dead. Dead. You can have a million bands covering “Working on a Dream” for a million years and you will not bring traditional physical record sales anywhere close to where they were at their height in 2000. The infrastructure has shifted forever. Some details you should consider:

Less Outlets for Traditional Music: Tower Records shut down their U.S. operation in 2006; Circuit City (9th largest music retailer in 2008) ceased operations in 2009; Virgin Megastore announced in 2009 that they will close all of their U.S. stores; Borders (the 6th largest retailer of music) has cut back their in-store floor space by 30% to 7% of their total floor space; and Transworld closed 101 stores in 2008, after losing $69 million dollars, including a 24% drop in total sales during the nine weeks leading up to the end of the year – traditionally the best music retail time of year. Taken together, there are simply less outlets and less floor space available to the labels to merchandise and sell their music. It is not a matter of buyers not taking in records because “they suck.” The space that had existed for music is now filled with DVDs and other media, or is gone.

Consolidated Commercial Radio is Ineffective: The number of artists that terrestrial radio “breaks,” in terms of converting radio play to mechanical royalty sales is smaller with each passing year. Although radio is still the primary method that folks hear about new music (49% of consumers list radio as the #1 way they find new music, according to a 2008 Edison Media Research survey), radio is quickly losing ground to the Internet, with 25% of consumers hearing about new music online.

The Replacement Cycle: Technological innovations have been shaping how, where, and when folks listen to (and purchase) music for years, beginning with improved production processes with vinyl, and then moving onto 8-track, cassette, CD, and finally digital music. Along the way, major labels have been able to monetize these technological innovations through a process called the replacement cycle – basically a repackaging of existing content in the newest format.

With consumers being able to convert files to digital themselves from existing CDs (not to mention sharing digital files for free online), the labels have been unable to find a way to monetize this format shift effectively. The end of the replacement cycle, coupled with the complete decentralization of the industry brought on by the Internet and the change in consumer habits, makes for a very tough time for the record business.

I know it’s a tough to find new music, particularly when you are on tour. Perhaps you don’t have regular access to the Internet. But I assure you; the issue is not that that music sucks. Spend some time doing your research on finding new bands, find some tastemakers you can depend on to turn you onto new music. The old industry that you grew up with is gone; but the phoenix is rising from the ashes with new models and new revenue streams. Whatever you do, please don’t blame what is happening on a lack of good music – it really makes you sound out of touch.

Mike

“Talking gross numbers that come directly to the band, we have made more money already than we have on the last record in four years,” said Mathieu Drouin, the band’s co-manager.

Great piece in the L.A. Times today on Metric. The band is forgoing a traditional record deal and focusing on alternative income sources and direct to fan sales and marketing techniques for their most recent release “Fantasties.” Direct to fan has been a proven model for megastars like Radiohead and Trent Reznor, and it’s encouraging to see a “middle class” musician (Metric’s 2005 release “Live It Out,” sold 45,000 copies) having success using a similar template.

Some takeaways from the effort:

1) Without the distribution fee and record royalties that a major label and distributor would charge, Metric is able to net $.77 per iTunes track as opposed to something closer to the $.22 per track a label would pay (this figure includes international downloads, which could pay the artist more than the US standard of $.70 per track by going direct)
2) As distribution follows marketing, Metric has hooked up with Topspin to handle the online direct to fan marketing and sales efforts. Take a look at their Website, here. Fantastic way to leverage “free” to acquire names for the mailing list, they have an active blog area, and most importantly, they are engaging in variable product and pricing which everyone from the hard core fan to the curious potential fan can engage in. Again, because the band is selling direct, their profit margin is much higher. Metric sold out of an initial allotment of 500 deluxe packages in 48 hours, said Drouin, who estimated a profit of $13 to $15 per unit. “We can never offer a fan that much value at that price if we had to go through a record company, distributor and a retailer. We cut out three rungs.”
3) The band made the entire record available for free as a stream a month before release, creating widgets that could be embedded in fans Websites (provided by Topspin). Folks were able to become familiar with the new record, they liked what they heard, and they paid for the record when it was released commercially. This is the “emotional connection” theory in action.
4) The band worked with independent distributor Redeye for the physical CD. Because Metric has a track record and had analytics that proved people were into the record, Redeye had an easier time shipping the record to physical independent record stores.
5) Canada supports the arts. The Foundation to Assist Canadian Talent on Recordings provided the band with $50,000 to cover recording costs, as well as a smaller federal grant.

Major labels are traditionally known for A) financing, B) marketing, C) distribution. I think Metric is a great example of a band that not only accomplishing all of these things outside of the traditional model, but is making more money because of it. Check out a cool Elliott Smith cover by the band:

It’s not all that surprising to read that some folks are making a killing from building apps for the iPhone. As of January ’09, over 500 million apps have been downloaded, and seeing that Apple takes a 30% cut on all apps (same as their fee for sales of music on iTunes), developers are taking in 70% of the revenue of these 500 million downloads. What IS interesting to me is the marketing behind these apps, and in particular, the way that some developers are using the concept of free to generate interest in their product.

The New York Times ran an article last week on Ethan Nicholas, the guy who built iShoot, an app that has generated $800,000 in sales in five months. Take a look at how his sales progressed:

“After the project was finished, Mr. Nicholas sent it to Apple for approval, quickly granted, and iShoot was released into the online Apple store on Oct. 19.

In January, he released a free version of the game with fewer features, hoping to spark sales of the paid version. It worked: iShoot Lite has been downloaded more than 2 million times, and many people have upgraded to the paid version, which now costs $2.99. On its peak day — Jan. 11 — iShoot sold nearly 17,000 copies, which meant a $35,000 day’s take for Mr. Nicholas.”

Obviously, this is an extreme example of what can happen financially for app developers, but I do think that some comparisons can be made to musicians looking to generate interest in their music online. My friend John Snyder, who runs Artists House Music, once told me “the curse of the developing artist is anonymity, not piracy.” I do believe that some form of “free” makes sense for most artists; be it a download card distributed at live shows, select music available for free on your site (perhaps in exchange for an email address), live shows for download, etc.

Traditional one-size-fits-all physical retailers are failing – Virgin, Transworld, and Borders have all either closed up shop in the US, drastically cut back on music floor space, or are taking massive financial hits. I think a large part of the future of sales in the music business is online direct to fan relationships (with supporting offline components), where artists cultivate more extensive relationships with their fans, and in the process more effectively monetize traditional and non-traditional sales options. I think some part of “free” works to engage your existing fanbase, as well as turn casual fans into hard-core supporters.

Andrew Dubber has some good thoughts on the topic of free as well. Take a look at his post on “Why Give Away Music For Free.”

There’s no debating that the Phish organization were marketing geniuses when it came to building and nurturing their community and creating a brand that hundreds of thousand of kids identified with. How many bands do you know that can put together a festival in upstate Maine that can draw enough people to be the largest city in the state for the weekend, complete with their own radio station?

Distinctive artwork has always been a key component for Phish’s branding efforts, starting with the cover art of their first record, Junta. Jim Pollock, a college friend of the band, has been the driving force behind the band’s artwork since the mid 80s – creating album covers, t-shirt designs, stickers, and perhaps most importantly, the bands limited edition, signed and numbered tour posters.

Jim’s most recent work for Phish was his limited run of posters for the bands first dates in four years, at Hampton, Virginia. Take a look at the video below detailing Jim’s time-intensive process for creating his linoleum cut prints. Phish’s connection with Jim is a wonderful example of creative musicians aligning themselves with a creative artist to provide their fans with a more rich and engaging experience.

Phish artist Jim Pollock’s Hampton 2009 concert poster from Jason Kaczorowski on Vimeo.

The live events at SXSW are amazing. Because of the limited time allotted to most bands (which I think encourages bands to “pull out all the stops”), and the fact that the barrier of entry is pretty high, you’d be hard pressed to find another convention anywhere in the world with as much concentrated talent in one location.

Complementing the live music scene at SXSW are panels held throughout the week at the convention center. From Jim Griffin talking about his Choruss idea, to Ian Rogers moderating a panel on “Making a 360 Deal with Yourself,” the overall theme of the panels I attended this year revolved around the ways that artists and music business companies can identify and optimize alternative revenue models as the music business shifts away from traditional record sales. Music licensing, while nothing new, is a hot topic right now among content owners (songwriters, labels), managers, and artists. Licensing offers the possibility of incredible visibility to artists, and depending on usage, it could also provide a fairly solid revenue stream.

Here is my takeaway from the “Placing Your Music in Film and TV” panel with Jennifer Czeisler (VP Licensing, Sub Pop Records), Marianne Goode (VP Music, Lifetime Networks), Season Kent (Music Supervisor, Relativity Media LLC) Alexandra Patsavas (Owner, Chop Shop Music), Alicen Schneider (VP Music Creative Svcs, NBC Universal TV Music), and Madonna Wade-Reed (Music Supervisor, Whoopsie Daisy):

It’s a Good Time to License Independent Music

The panelists all agreed that it was a fantastic time for independent artists to look for licensing deals, simply because of economics. Producers are more open to indie music, as A) indie music is typically cheaper to license, and B) many producers consider themselves tastemakers, and want to be known for breaking bands. Alicen Schneider spoke about the fact that 75% of the music used by NBC is now independent music.

How Much Can Artists Expect to Get Paid?

There is a wide range in the amount of money artists can expect to get paid from a licensed track, much of which depends on usage. Variables include the length of the use, the thematic placement (is the song in the credits or in the background of a scene?), the budget of the production, if the song is for a one-time use or used as a recurring part of the promo for the production, and more. The more that is requested of the song, the more the song will be worth. It’s important to also note that when a song is used in TV or film, two licenses are needed: a synchronization license from the copyright owner of the music, as well as master recording license from the copyright owner of the sound recording. These are two separate agreements, and typically, artists that control both their master rights as well as their publishing will do “All in” deals that cover both “sides” of the composition. According to Jennifer from SubPop, artists can expect to receive anywhere from $1,500 to $15,000 for the master rights alone for one-time placements.

Dos and Don’t: Rules for Submissions

Similar to traditional press, blog, or radio outreach, there are specific rules that artists should follow when pitching supervisors. Once you find the name of a specific supervisor that you want to target (the Music Business Registry is a good option for finding contact info), your package should follow these guidelines:

1) Although they take Mp3 files in emails, supervisors still primarily work with full art CDs. They prefer their music in proper jewel cases with a spine that lists the artists name and title. Madonna from Whoopsie Daisy (who has worked on “Smallville,” “One Tree Hill,” “Alias,” and “Felicity,” and others) said that she receives upwards of 150 submissions a week, many of which she files away. Artists have to make it as easy as possible for them to file your music, and find it later.
2) If you are burning a CD, be sure you have added all the track info to the individual songs (particularly artist and song names). If a supervisor burns your music into iTunes, you don’t want to be in their library as “Track 2.”
3) Clearance problems are always an issue. Make the publishing and master info as prominent as possible, especially if you control both.
4) Be sure you are targeting the right show. Supervisors hate emails that ask: “What are you looking for?” Know your show’s demo, and send them appropriate music.
5) Do Not Call. Supervisors have no time to spend on the phone. Quick email reminders are appropriate. Successful pitches are those that do not expect anything, and do not put too much pressure on the supervisor. Keeping in front of them is great; stalking them is not.
6) Do not ask them for opinions on your music. Supervisors are not A&R reps. Good music will stand out and get placed at some point.

Use Songpluggers

All supervisors have a trusted stable of songpluggers that they can go to in a pinch. Songpluggers (or independent licensing companies) have relationships with all the supervisors in LA, know what their taste is in music, and can provide cleared music to them, which they can run with immediately. Indie artists should look into building a relationship with licensing companies that have these direct connections with the supervisors. However – do your homework on them. Like any promo area in the industry, there tends to be some false claims and embellishments. Learn more about songpluggers here.

Music Licensing is Insanely Competitive

The labels are keenly aware of the importance of music licensing. Alicen Schneider related a story about Dave Matthews’ label sending Dave himself to play a one-on-one concert for her to showcase some of his new license-friendly music. But the bottom line is that if artists can find fans of their music in the supervisor, (or sometimes even a key actor, as was the situation with Death Cab for Cutie and their placements in the O.C.), indie bands have as much of a chance as a major label artist (if not more, with the smaller budgets) with success in music licensing.