A few folks asked that I post the funding presentation that I gave at NAMM this year. There’s three parts to this presentation: what you need to have in place before you start your campaign, traditional funding options, and some forward thinking newer options.

For developing, unsigned artists, there can certainly be a bit of a “Catch 22″ when it comes to funding the activities they need to find their core fanbase, engage with this fanbase, and ultimately monetize this fanbase. How does a developing artist fund the marketing initiatives necessary to generate a core fanbase, without having a fanbase to tap into? It’s something we talk a lot about in the courses I teach at Berklee.

For developing musicians, it’s important to consider the fact that without the ability to speak with fans in a direct way online, your opportunities for monetization are limited. The collection of permission-based fan contact info, through an email address, a Twitter follower, a YouTube subscriber, a Pinterest follower, a Facebook fan, and other existing and not-yet-existing services is a necessity before starting any extensive funding initiatives.

For established or legacy artists who have a dedicated, engaged, and growing fan base – and are communicating with that fan base regularly – generating funding can be a bit smoother.  Continued awareness, acquisition, and engagement is still necessary, of course, but the opportunities to engage in creative forms of funding increase exponentially if you have a base to communicate with.

Frank Zappa and the Zappa Family Trust have pushed the boundaries, creatively and entrepreneurially, for years.  Little known fact: Frank Zappa introduced a proposal for a subscription-based digital distribution service in 1983!  Recently, the Zappa Family Trust launched a new fan-focused initiative to coincide with the release of a new Vault live recording: All Roxy, No Elsewhere –  76 minutes of never-before-released Frank Zappa master recordings from the Roxy Performances of December 9th and 10th, 1973.

The ZFT is providing 1000 licenses (Roxy by Proxy) to Zappa fans for the purpose of manufacturing and distributing All Roxy, No Elsewhere on their own.  This license, in Gail Zappa’s words, provides fan with the ability to:

 “…make as many copies of the record as you can possibly distribute – AND except for reporting to us your sales & customers (just like any other record distributor) and paying us the publishing, YOU keep the money. AND you get to collect royalties from what is sold at Barfko-Swill AND you will also be entitled to a special wholesale price available to the OLAZRBPDs (Officially Licensed Authorized Zappa ROXY BY PROXY Distributor) exclusively.”

The revenue generated from these licenses (available at $1000 a piece) will go towards raising funds to cover the expenses related to releasing The Roxy Performances – The Movie in time for the 40th anniversary of the shows.

I think the Roxy by Proxy idea is interesting for a couple of reasons:

1. This is a great example and a creative implementation of Clay Shirky’s “Pool of Participators” idea, outlined in his book Cognitive Surplus.  Engaged fans want to use some of their free time to help artists that they love – they just need a platform to do so. More from Clay on that idea, here.
2. It has the potential to build trust within the Zappa fan community.  The ZFT will be working directly with fans on marketing collateral, distribution minutia, royalty payments, and more.  While this could become a complete nightmare scenario for fans as well as the ZFT, it could also open the doors for a more transparent and mutually beneficial relationship.  Guster, for example, build huge trust within their community in the early days with their “rep program,” where the band would send their fans CDs to sell on spec, with the fans sending the band checks for any sales after the fact.

Full Details on Roxy By Proxy here.

I’m a jazz guy, and although I spend a fair amount of time in the vaults of Verve, Riverside, Columbia, and many others, my first love is Blue Note.  The relationship started when I heard Stanley Turrentine’s Up at Minton’s in the early 90s. Stanley himself is impressive, but Up at Minton’s turned me on to the reason that I picked up the guitar – Stanley’s sideman on the recording, Grant Green.  Green was a session player on Stanley’s record, and after seeing his name on the back cover of the record, I dove down deep into his catalog, which turned me onto a wealth of other players, like “Baby Face” Willette, Big John Patton, Hank Mobley, Lou Donaldson and many more. It all started with Stanley, but the collaborative nature of jazz, coupled with the sideman information on the back of all the records, enabled me to dig in deep to a catalog that rarely disappoints.

Back in the day, this discovery process was mostly a physical endeavor.  I would take the Red Line to Harvard Square, and make a loop through all the areas record stores, starting at Mystery Train, then onto Second Coming, over to Looney Tunes, Tower, and finishing up at Newbury Comics. Excellent way to spend a Sunday.

Of course, physical retail has constricted since then, and while there are a lot of positive attributes associated with the convenience of digital music, one thing that has not been replicated particularly well online has been the discovery process.  I have trusted sources and curators that help, but there are few online options that replicate the experience of walking into a store like Mystery Train, finding an amazing record with a little known sideman, and heading down the path of discovery for a brand new artist.  This is the fundamental reason I like the Blue Note Spotify app so much.  It is the best option for replicating this discovery process that I loved so much back in the day.

Walter Gross is the Senior Director of Digital Marketing at EMI, as well as a 1993 Berklee Grad in Jazz Composition.  Walter spearheaded the development and execution of the Blue Note app on Spotify, and I spoke to him a couple weeks back about the creation process, what he was trying to accomplish with the app, and the opportunities that Spotify’s API offers technologists.

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Mike King: What did you want to accomplish with the Blue Note Spotify app?

Walter Gross: There was a small group at EMI that wanted to give this app a try, including myself.  I’m a Blue Note freak, and I remember being in a Berklee course with Jackie Beard [Professor in the Woodwinds dept] in 1994, and listening to a Joe Henderson Blue Note record, and having the classroom asking questions like: who is this player? When the record was recorded? Who else is playing on this record?   Experiences like that really played into the main reason we developed this app.  I was reminded of that moment, and I wanted to try and replicate something close to thumbing through a record collection, or the bins at a record store, with this app.  When we started talking about creating the Blue Note app, I immediately thought of what I loved about discovery in the past, and how I could structure the data in a similar way to replicate this process. There are a lot of improvements that can be made to the online discovery process, overall.  If you look for John Coltrane’s catalog online, for example, it’s a mess.  Nothing tells a story or takes you on a journey.  It’s like a jungle out there, totally convoluted.

MK: Can you talk more specifically about the process of building the app?

WG: Well, the idea really was in how to tell a story with finely tuned and structured data.  I started talking to developers, and found a company that we really liked in the U.K. called Retrofuzz.  They had done some apps that I was impressed with, and we decided to move ahead with them.  I had heard a lot of stories about how meticulous Spotify was from a development standpoint, and I wanted to use a developer that had been through the process already. It was important for me to move through the development process as smoothly as possible.  I went to Retrofuzz with a problem set covering 73 years of music, and I laid out all the data points I wanted to cover: artists, instrumentation, recording dates, and the ability to tag releases by simple genres.  It was important to me that we kept it all simple, as I didn’t want too many jumping off points, and I didn’t want to pigeon hole artists.

The other thing I asked Retrofuzz to do was to override some of the incorrect cover art in Spotify.  With old recordings, where records have been re-licensed, many times the album cover is not the right, or original, one.  I wanted the experience in the app to be as authentic as possible, so we created a way to override any incorrect album covers in Spotify, and replace them with the original vintage covers.

With this app, the whole thing really is a very specific look at the artist’s output on the Blue Note label.  Of course with the merger of EMI and Universal, it’s possible to include the Verve and Impulse catalogs into the app, but we wanted this to be just about Blue Note. We wanted this to be accurate for purists, which there are many of in this genre.  For example, Cannonball Adderley has only one record on Blue Note, but many on Capitol. Our label-focused approach gives us the ability to put a long tail look at this thing, too.  We can tell the Pacific Jazz and Capitol Jazz story at some point, for example. Michael Cuscuna was also a big inspiration.  Michael is one of the foremost experts on the Blue Note catalog, and we wanted the type of detail that he would think was appreciate.  We actually used his discography as a resource for plugging in a lot of the data.

 MK: As a discovery vehicle, the app is outrageous.  I’m a big fan of the label, and I’m surprised with how much I didn’t know about the catalog.  I’m constantly going down a different rabbit hole around some of the sidemen on these records, and being turned onto releases I had no idea existed. It must have been a serious process getting all this information into the app. What was that like?

WG: It was definitely a time consuming process to create that experience. When Retrofuzz finished building the CMS, I spent a full month plugging all the appropriate information in, all by hand.  Our team had to set up the full artist info, like the first and final recording dates, sideman info, and so on. During this process, I had my wife yelling at me for spending so much time on it, and I had to say, “Trust me, this will be really cool!”  I ended up bringing in some pf the rest of my EMI Digital Marketing team to input the data at one point. The problem there was that because I knew the info topically, I could blast through setting everything up quickly using Michael Cuscuna’s book to see correct sideman and instruments, but for the folks I brought in who were not particularly familiar with jazz and the catalog, it was a slow and painful process. Should this be a this groove or tradition release? Is that an alto or tenor sax on this record?  This was the sort of thing I knew intuitively, but for the folks I brought in, it was really tough. I actually used All Music and Wikipedia in the background as resources to double check everything, and in fact, all the bios are pulled from All Music.

MK: Is the entire Blue Note catalog available in the Spotify app?

WG: No, not all of the records are up on Spotify, and a lot of that is because of licensing issues.  For example, some records are not available from a licensing standpoint in U.S., and for us, we need to look at the ones that can be cleared quickly going forward.  There are a couple of inconsistencies that we have to work on, too.  Some records simply never became fully finalized in the US, even though we have a worldwide clearance.  It could have been a simple issue of the person setting up the licensing left the company, or forgot. There are some glaring omissions that we need to focus on, like Joe Lovano and John Scofield.

MK: Are you approaching this app as a potential revenue generating opportunity, or is this simply about awareness of the catalog?

WG: There is no one looking at this app saying “well, here’s comes the money!” right now, but I can say that this could change with the scale.  The analytics associated with engagement and usage far exceed our expectations.  We just launched the app, and right now we are getting around 16,000 visits a day, and the average use time is over three hours.  That’s amazing engagement.  I think that as this adoption grows, the app could drive revenue.  Right now it’s definitely an awareness tool, and a great opportunity to put the Blue Note brand and catalog back into the forefront. There are some really good things happening with the label right now.  Don Was is now involved as the President of the label, and he is driving A&R.  He came in last fall, and he brings great energy to what we are doing.

MK: Are you leveraging the work that Retrofuzz did for the CMS in other ways?

WG: We are.  Retrofuzz built a really amazing database,  and we are actually in the process of refining the Blue Note web site to be driven by this data base. The Spotify app will inform the Blue Note web site and we’re planning using the same CMS to power Bluenote.com.

MK: What’s your favorite part of the app?

WG: I’m a fan of the Blue Break Beats section. This is the area where we pull in content illustrating who sampled what in the Blue Note catalog.  When we were conceptualizing the app, I had an epiphany:  there has to be data out there that shows every sample from a Blue Note record, and where that sample occurs. There’s a great site out there called “Who Sampled,” and I ended up connecting with them and letting them know what I was looking for.  They came back with hundreds of Blue Note samples, and we integrated all of this into the data structure.  Everyone from Jay Z, to Madonna, to 90s hip-hop artists have sampled the catalog, and we structured the Blue Break Beats area to align the original recording and the sample side by side.  For me, it’s simply another great discovery tool, and I think the usage in the app is so high because there are so many ways to discover music within this app.  It really illustrated the possibilities of how music discovery can be in an online environment.

You know, Spotify loves the app, too.  They recognize that this steps the bar up, and they expect folks to improve upon this concept to offer more opportunities for deep music discovery.  For me, it’s nice to be part of a game changing development. I’ve done a lot in my professional career, but nothing has gotten the press or accolades that this app has gotten.  It’s a pretty neat thing to be involved with.

You might know Rachael Yamagata as a performer who’s toured with The Swell Season, Sara Bareilles, Adam Cohen, and opened for David Gray solo at Madison Square Garden.  You might also know her as a songwriter whose collaborated with Jason Mraz, Mandy Moore, Dan Wilson, Katherine McPhee, and sang on recordings by Rhett Miller, Bright Eyes, Dave Matthews, Ray LaMontagne and Ryan Adams.  Rachael has put out three full length records both on and off major labels, and this past summer she enrolled in Berkleemusic’s Online Music Marketing with Topspin course. Berkleemusic’s fall 2012 term begins on September 24th.

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Mike King:  We’re ten weeks into the online course. What has your experience been like so far?

Rachael Yamagata: It’s been so good – I feel like if I had been this engaged in college I would have done much better!  I’m super into it. There’s a bunch of people in the class that are coming from a tech background, and a variety of other musicians in there that provide great perspectives on marketing. It makes the weekly live discussions so interesting, and the material the students are posting is great.  I’m all about it.

Before I took the class, I was trying to educate myself by watching YouTube videos of different online music marketing conferences.  This course is a great master class overview on exactly what I was searching for, and it’s all super fascinating to me.  I’ve had such a roller coaster ride in industry, and there have been times where I have been completely unaware of all of the new technologies or campaign ideas or where the money is going, and not really knowing the ins and outs or whys as much as I should have. I think a lot of artists are encouraged to not worry about it; they are encouraged to keep the creative and business side of the music business separate. I love the idea of looking at music as a purely creative endeavor, but I’ve had enough years in the business to know that it has ultimately been a disservice to me to not understand how the marketing and business works.  It really changes fundamental business decisions. Having a team is great, but building up your own education is only going to help you.

MK: How did you find out about the course?

RY: My friend Kevin Salem. He’s my mentor and producer, and he’s been involved in music for 30 years. He’s seen me since the birth of career, and witnessed my experiences on two major labels to becoming independent. He’s seen all the transitions of my career, from playing for five people to playing for 1000 people.

He’s a DIY sort of guy when it comes to the business of music, and he was talking about Topspin as a great way to engage with fans, and was talking about the whole DTF idea, all terms I was sort of aware of, but because he suggested it I paid attention.  I researched what Topspin was, and who uses it, and came upon the class in my research.

I released an indie record last year, my first one working as my own label.  My team for that round was guided by management, MRI Distribution and RED.  They did a fabulous job, but to extend my experience for future releases, particularly with DTF, I wanted to learn how Topspin could help. The technology associated with Topspin can be overwhelming at first, and I was concerned about whether or not I was qualified to even take the Topspin course. I have a great philosophical background and I have a lot of experience, but I was frightened of the tech part. So I reached out to the student advisors at Berkleemusic, and ultimately just took a chance, and I’m so glad I did. If I hadn’t enrolled, I’d probably still be sitting here fishing for tips on the Internet. It’s so much more of a class than I thought it would be.

MK: How so?

RY: First, it’s a great overview of the industry in general.  The course bridges terms on the technology side, on the marketing side, and on the direct to fan side.  It really brings it all together.  Each lesson is totally focused on a particular area of marketing or business.  For example – we have discussions on areas outside of DTF marketing, like third party online retail, and we talk about things like the pros and cons of Spotify. The focus areas are things all artists should think about. You also get the ability to have educated dialogue with your classmates and your instructor about the things that affect all artists. There are so many tools now to help expand your fan base. It’s huge

Every label, or manager, or advisor, in whatever way, they all have their own system for working.  There is the old school way, and then there are the new Amanda Palmers of the world.  There are varied options for moving forward in your career. This is an objective course, and it shows you how things are changing, and why some things have failed. It also shows you the potential options for the future, and let’s you decide what is best for your own career.  The course does not have you adapt to a particular ‘one size fits all’ philosophy, as that is out dated. I find it all very empowering.

I’m working on my Spinshop online store right now, and I’m excited to have an outlet for creative releases that go beyond just the record download.  With a new knowledge of things like data tracking, merch margins, and specifics about my fan base, I can create bundles of offerings that I think will be more in tune with what my fans are craving from me.  To be able to turn my website into a supportive business platform in this way will offer more funding for things like touring and future releases.  Also, compiling things like geographical data on my fan base allows me to get a better handle on places I should be touring that I may have missed.  Again, the bird’s eye overview on your fan reach that you start to get by taking this course allows you to coordinate all sorts of campaign ideas with each other.  You learn how to see what’s working and what isn’t, and get the tools to make smarter decisions all around.

MK: Can you talk about your instructor, Chandler Coyle?

RY: Chandler is so knowledgeable about technology, and how you can use technology to work for you to do something.  Also, his overview on the broader campaign concepts is awesome.  His insights on the assignments are super thorough, and he’s always making suggestions about things I may have missed. He does a great job of adding daily updates, and because of the articles that he is posting, I am now following some really fascinating tech folks.  Coming from a place where music technology has scared me, it’s great.  I am so interested in it now.  He’s really good in showing you how technology is used effectively in the music business, and he does a great job of bringing it all forward. I think he’s been supportive of me too because I have been so engaged in the course.  He’s always willing to expand on things.

Chandler provides a constant influx of great ideas, and I think it’s really good to have somebody acting as a moderator in the course. Having someone to tie these things together is invaluable.  He’s great at bringing ideas down to earth.

MK: Can you give me a quick example of something that’s changed for you since you took the course?

RY: Sure.  There was a morning a couple weeks back where I wanted to create an email for media widget.  I’ve never pictured myself sitting back making widgets, but I built one pretty quickly, and I was able to get 100 new fans in an hour, on a Saturday.  I couldn’t believe that I had just made something like that, and received that kind of response.  The direct gratification is so important for an artist like me. I’ve always had webmasters, and I would have to wait two days to upload something.  To be able to pull something off on my own is awesome.  In the future, I can assign this sort of thing to someone else, if I want, but now I know the specifics about how it all works, and what can be done.

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Grizzly Bear was blowing up my Twitter feed this weekend after asking the question: what’s up with Spotify’s payment model?  It’s not an uncommon question lately, likely due to the fact that no one can seem to pinpoint how exactly the service pays artists.  Grizzly Bear themselves claim to get about $.001 per stream, David Harrell from Digital Audio Insider averages closer to $.004 per stream over the past three years, and this infographic, which circulated widely a while back, indicates that artists on a label are paid $.00029 per stream.  So, what’s the deal?

The confusion is warranted – the interactive streaming payment model that Spotify, Rdio, MOG and Rhapsody use is less transparent than the permanent digital download model that iTunes employs, for example. The payments are variable, and payments are made to labels who distribute to their artists directly, which further obfuscates the process.  That being said, the subscription based interactive streaming model will likely continue to play a growing part in the future of music consumption.  As the most recent 2011 RIAA Year-End Shipment Statistics outline, subscription services were up 18.9% in volume from 2010, and up 13.5% in revenue. Small numbers compared with CD and permanent digital download (MP3) revenue and units shipped, but impressive when you consider that one of the major interactive streaming companies, Spotify, has only been active in the US since July of 2011. As we move towards a world where interactively streaming music will be one of the many growing options that consumers will choose to listen to music, it makes sense to understand how the financial process behind subscription interactive streaming works.

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I’ve known D.A. Wallach for several years, after first interviewing him for my Online Music Marketing with Topspin course.  In addition to being the lead vocalist and songwriter in Chester French, D.A. works with Spotify as their “Artist in Residence.”   Below is a transcript of a conversation I had with D.A. about Spotify’s payment process.

Mike King: I feel like there’s a disconnect between artists and Spotify in regards to the mechanics behind Spotify’s payments.  There’s a lot of discussion about the deals that Spotify has with the major labels, and how the payments to indie artists vs. the payments to major labels is lopsided. Is there any difference between the payments Spotify makes to the majors, and the payments Spotify makes to indie labels or indie artist services like TuneCore or Cd Baby?

D.A. Wallach: We treat payments to indies and major labels the same way.  Let’s take a step back first and talk about some of the basics with the service.  We make money in two ways.  We make money through advertising to free users, who have access to Spotify only on computer.  The service is interrupted by ads, and the functionality is a lot like YouTube.  There is no mobile option for free ad-supported users, either.  Second, we generate revenue from selling subscriptions.  In the U.S., a subscription is $120 a year.  In the U.K. it is ₤120 a year, and in the E.U, it is €120 a year.

We aggregate all of this revenue from these two streams, and distribute back 70% in royalties based on a pro rata share in accordance with the popularity of a piece of music.  For example, if one of your songs has been streamed 1% of the total number of streams in a month, you will get 1% of the 70% of royalties we pay out to rights holders.  We pay this out to whomever owns the music.  If you are going through TuneCore, we’ll pay them directly, and because TuneCore takes no percentage on the revenue, whatever we pay TuneCore on behalf of the artist goes directly to the artist.  If you are signed to a label, we’ll pay the label, who is then responsible for paying the artist based on the contract the label has with the artist.

MK: Can you talk a little bit more about the revenue split between publishers and master rights holders?  How is the 70% of revenue you pay out split between publishing and the master side?

D.A.: With the publishing side, it’s a bit of a complicated formula. The rates are statutory, and have been negotiated with the PROs.  [NOTE: A good starting point to understanding how the interactive streaming services pay publishing royalties is this article from The Future of Music Coalition. Boiled down to basics, interactive streaming services pay a mechanical royalty rate of 10.5% on the revenue they generate, MINUS any amounts for performance royalties. In other words, services like Rhapsody and Spotify are subject to both a mechanical and performance royalty, but the entire compensation for songwriters and publishers from any limited download or interactive streaming site is "capped" at 10.5% of the site's revenue.]  In the U.S., we use Harry Fox as our service provider, and they do the distribution to the publishers.

MK: So there are no differences between what you pay a major label and what you pay an indie label?

D.A.: We have thousands of deals with all sorts of entities including distributors like the Orchard and TuneCore, the majors like UMG, and thousands of other independents.  The basic principle of the deals and the rough numbers are within a small margin in all of these deals. At the end of the day, the indie artist is not at a disadvantage compared to a major label artist, and we feel that all artists are being compensated fairly.

MK: Why do you think that there is so much confusion about how Spotify pays artists, and a general concern from artists about the payments they are seeing?

D.A.: I think there are three answers to this question.  First, we’re not a big company.  We have four million subscribers, and 15 million active users at the moment.  These are satisfying numbers but they are not staggering numbers.  We’ve paid out a good amount in royalties so far, close to $200 million dollars.  I think that people are comparing what we are doing to iTunes, which is not a legitimate comparison.  iTunes is orders of magnitude larger than we are.  People are expecting to see iTunes numbers, but we’re not there yet.  The second answer is that people need to transition from unit-based thinking to consumption-based thinking in terms of royalties.  We feel the metric of success should be based on how many people are listening to your music over a period of years, as opposed to looking at how many units are shipping in one week.  People are used to seeing big numbers from a unit-based model, but that’s really front loading what is happening. Comparing iTunes sales with Spotify payments over a two month period of time is not a great way to look at things.  What we are trying to create is a system in which you earn royalties forever for good music, and the time horizon is simply different than what folks are familiar with now. One can actually think about a download sale as a down payment on all future listening that a fan will do. If you took the effective per play rate that I’ve paid for every time I’ve listened to my Dark Side of The Moon CD, it would be trivial compared to what I’d have generated if I’d done all that listening on Spotify. The third answer is that it’s a confusing model since it is unfamiliar.  There is no fixed play rate, and as we grow, our royalty base constantly expands, driving higher and higher royalty payments. There is also confusion that arises from the fact that we pay royalties (just like iTunes, by the way) to whomever owns the music. In the case of a band on a label, the label generally mediates the accounting of those royalties. My band was on UMG, and when I look at my statement, as one example, it’s confusing. I personally hope that the conversations about Spotify royalties actually lead to efforts at increasing transparency in the entire digital music system. We’re very proud of the hundreds of millions in royalties that we’ve been able to pay out to the creative community, and we want the flows of revenue to be clear to artists.

MK: So to reiterate, as Spotify grows, the pool of revenue will increase, and the royalty rate will increase for rights holders.

D.A.: Yes, the larger Spotify gets, the larger the royalty rates should be. The royalty rates we’ve paid out have been growing at an exponential rate, and we expect this to continue.  If we can get to the scale of Netflix – which has 20 million subscribers – we estimate we’d be paying out to artists what iTunes is paying out on a year to year basis. This is a simple calculation based on the average download consumer spending $60 a year with iTunes, and the average premium subscriber paying $120 a year with Spotify.

MK: Do you think that Spotify is cannibalizing other revenue streams, such a downloads or physical sales?

D.A.: In no market where we exist has there been any data illustrating a downturn in physical or digital sales.  Many labels view us as an extra check, as a purely additive income stream, and I think this is an accurate way to think about what we are doing.  Our main demographic is 18-29 year olds, and in many ways, this is a generation who has never paid anything for music.  They grew up with P2P services, and most of these folks are paying for music for the first time in their lives.  It’s found money for artists and rights holders. On an individual artist level, we’re paying out royalties of $200-300 thousand dollars a month for some of the biggest acts.  The bottom line for us is that we have paid out nearly $200 million in royalties and we feel we are making a real contribution back to the music business. Not all artists are earning big checks, but this reflects a small user base and their relative level of popularity. It is also true that if not a lot of people buy your album on Amazon or iTunes, you won’t be seeing massive payments, either. That being said, we are a newcomer to the market, we’re making huge strides, and it will only get better.

We’ve interviewed a crew of new folks for these updates including some of my favorite musicians – Erin McKeown and Rachael Yamagata. I also interviewed Benji Rogers, who is the CEO of PledgeMusic.

Check out part of the interview I did with Benji, where he talks about the shared characteristics of successful campaigns launched on PledgeMusic.

I’ve known Amy and Nick from back in the day (Amy took some courses with me), and I think they are a good example of artists working really hard to gain visibility, build leverage, and then use this leverage to forward their career. In their case, this meant working with a major label.

I interviewed Karmin a few weeks back about their path to success, which included a lot of DTF best practices. Check out the interview here:

I love this juxtaposition with the original bicycle musician, Frank Zappa, in 1963:

As usual, Frank Zappa ahead of his time.

The marketing courses that I teach, as well as all the other online music courses at Berkleemusic, start this Monday, April 2.

Here’s the rest of what I said, which didn’t make the piece:

American Songwriter: 2011 is over. I just recorded the best song I ever wrote. What’s the new model for getting my music heard? What to do with my demo?
Do I post my music on Facebook, or is there a better place for music?

Mike King: This is a long answer. I think there are really so many paths and so many options for musicians now to get their music heard. That’s both a blessing and a curse. I think the key is to think about this from a consumer, or fan standpoint. For consumers, there has never been a better time to listen to music. It’s everywhere. The floodgates are open, and if I want to check out practically anything I can do so in a matter of seconds.

I think the tricky thing, and something that a lot of folks are trying to figure out, is curation. Although larger gatekeeper-based vehicles still do have an effect at exposing folks to music, like commercial radio exposing folks to pop music, I think that for the most part consumers are moving towards niches, and are finding new music through trusted sources within these niches. For example, there are some rooms on Turntable.fm, and some DJs, that I totally trust to turn me onto new music. In one of the soul/funk rooms I’m part of, one of my favorite DJs is also a musician, and occasionally he “spins” his own music – which I love. So for me, that DJ is a trusted source, and that is where I am finding some of my new music. Same thing for blogs. A site out of LA named Rollo and Grady has the exact same taste in music as I do, and I have been turned on to some great music there. The other way I find new music is by providing my contact info to artists that I love, and I let them deliver new music to me. For example, I found a band Fanfarlo a couple years back, and because I gave them my email address, I am among the first to get new music from that band prior to release, and then can be one of the first to purchase when a new record is out.

All of this should filter into how bands release their music, and their plan for getting heard. I think that everything in a marketing plan should be integrated, and there are a lot of moving pieces that include live events, press, online retail, your own site, PR, and more, but from an overview standpoint, I think that realizing that A) fans are more niche based and look to certain outlets to curate music for them, and B) it’s possible to connect directly with fans to deliver music to them, are both key. I would approach both of these areas separately, using some of the developing marketing / technology tools and best practices. Starting by identifying who you think your core fans are, and then looking at pitching the niche outlets where they hang out is a good first step. I think that acquisition is also extremely important for all artists, and I suggest using email for media widgets from Topspin, Official.fm, SoundCloud or other marketing/technology companies to help retain a permission based contact for future communication and up sell. I also think that optimizing your site for the search engines, and making your site an awareness and conversion engine by providing media in exchange for an email address is a best practice, too.

Finally, I think you have to develop a content plan for your release. This is something that I think Metric did a great job with for their last record, Fantasies. Metric sketched out what type of media (single, acoustic version, live version, demo versions) they were going to release on their site and through widgets on third party sites prior to the release of their full length. This allowed them to acquire email addresses prior to the pre-release of their record. They were then able to reach out to these folks across the full timeline of the record release, and engage with them, make them aware of what they were doing, and also provide them with the opportunity to buy. I think that Facebook, Twitter, Instagram, Thisismyjam.com, Turntable.fm, YouTube, and more could all fit into your plan, but I think having a plan is key.

American Songwriter: If I do post it for free, will anyone want to buy it?

Mike King: The short answer is that case studies, examples, students experiences, and data I have seen say yes, but I think the long answer is more nuanced. My personal opinion is that artists have to think about sales differently. I think artists have to romance new fans a bit – it’s really kind of like dating. I don’t think going in for the kill immediately makes for the best long-term relationship, you know? I mean, I suppose sometimes that works, but I think a better option for retaining a fan for years, which is much less expensive than finding new fans for every record, is to treat your fans respectfully, offer then what they want, provide them with some free gifts, communicate with them regularly and effectively, and then offer options for monetization. Again, not so different than any other relationship you might have in your personal life. This is the difference – artists now have an option to provide music for free, and engage with their fans in ways that was not quite possible before. I think the new technology / marketing companies that have emerged to foster this relationship have been really helpful.

But to say it simply – I think that providing free music is key to building up your larger community, and I think that in terms of sales, you are going to want to sell a variety of items to your fans from your own site, with the idea that you can sell items that are more personal, and not available in traditional retail. Talk to any of the third party direct to fan companies like Topspin, Nimbit, Pledge Music – they will all tell you that the average revenue per sale is over $20. This is because artists have this relationship that they have built with fans, and they are monetizing much more than a single song on iTunes.

American Songwriter: Should I sell it on iTunes, CDBaby, Spotify? What sort of cut will I get?

Mike King: Yes, absolutely. There are folks that only buy music on iTunes, and are not interested in buying from an artist directly. I think for some larger artists, the volume they see from third party sales on iTunes is much greater than what they will see on their own site, but I think that the margin has the potential to be much greater by selling from your own site. In terms of the cut, every service is different. iTunes takes 30%, and if you use CD Baby as a distributor, they are going to take a 9% fee, too. So for a $.99 cent sale on iTunes, an artist would see about $.63 if they were using CD Baby. TuneCore takes no fee on sales, but has an annual fee for distribution. I consider Spotify now as more of a way for folks to discover music, not unlike radio, and I think that artists have to be there. They certainly don’t pay artists anywhere close to what iTunes pays, but I tend to think that is more because of the deals the labels / distributors made with Spotify than it is an inherent problem with the service itself. I am optimistic that as the service, and other streaming services grow, we’ll see better deals, and larger payments to artists. But I think worse than the lower payments from these streaming services is being anonymous. I have Spotify and Rdio open all day long, and if I hear or read about a new band, I have the option of immediately looking these artists up on a streaming service to check out the whole record. If I fall in love with it, I’ll then check out their site, perhaps download something interesting, and the relationship between the band and me starts. The band now has a direct, permission –based contact with me, and can up sell me on live events or other items. This all starts on Spotify. If I didn’t see the band on a streaming service, I am likely to move on and find some other music to listen to.

American Songwriter: What if only ten people buy it? Will I still get digital royalties? Via Soundchange? How do I protect my recordings?

Mike King: There’s a lot of confusion around how digital royalties work. SoundExchange collects and distributes royalties from statutory licenses, including digital cable and satellite television services, non-interactive webcasters like Pandora, and satellite radio services like Sirius XM. SoundExchange only covers performance rights, and doesn’t collect for downloads, interactive services (like Spotify, Rdio, Mog, Rhapsody), or traditional radio or TV. It really depends on where the “sale” originates to determine how much you will be paid. So, 10 sales on iTunes will pay you much more than 10 listens on Pandora or Spotify, and 10 sales off of your own site has the potential to pay you much more than all of these services. In terms of protection, copyright exists as soon as you have a tangible version of your music, such as sheet music and/or CDs. In the US, you can register the copyright to your music here: www.copyright.gov/eco. I also think that Creative Commons, which sits on top of copyright and reserves some rights, can also be a positive thing for artists who are interested in allowing their fans to participate in their work via remix contests or other forms of “participatory culture,” as Clay Shirky would say.

American Songwriter: Next, how do I get people in the industry to hear it, so I can get a record deal or have it placed in a commercial?

Mike King: You have to build up leverage. I think you can look at some recent success stories to see how other folks have done it, but all paths are different. For the most part, a label is not going to care about you unless you have leverage – unless they see that you have a base of fans that you can leverage to sell your music. Things are much harder for labels now, and while I think some labels can be great for artists, I think that artists should really consider building up their own base, hopefully with a smart in-house team. Once they have some leverage, then can then determine if they want to keep things in-house, or partner with a label. I think Karmin is a good example. Amy, Nick, and their manager Nils focused on creating great content on YouTube for years. They slowly built their base through some really great cover songs, and then did a cover of Chris Brown’s “Look at Me Now,” which exploded with over 30 million views on YouTube in a couple months. They got on the Ellen show, they were featured on Ryan Seacrest show, and built up a huge following on Twitter, Facebook, and via email. This is leverage. The labels saw this, and Karmin had deals with all of the majors on the table in the course of a few weeks. They ended up signing to LA Reid’s Epic sub label on Sony. All paths are different, but I think leverage is a component to whatever you do.

American Songwriter: The response has been great but I haven’t been signed or picked up for a commercial — what’s my next move? Tour? Hire PR?

Mike King: It’s different for everyone. Getting in a commercial is great, but if you are having problems with getting folks interested, perhaps you have to look critically at yourself and see what you can change or do better. There are so many data points musicians can analyze these days, supplied by companies like Next Big Sound, Google, Topspin, and many others. If you are not building up a base online through strategic release of content, if you are not generating interest on your site, if you are not seeing an increase of fans at your live show, I think it makes sense to look at what you are doing from a holistic standpoint. Perhaps your music isn’t there yet. Maybe your live show isn’t quite right. Perhaps you’re marketing to the wrong people. Data can help you to see what is working and what isn’t, and I think you can iterate your campaign and your approach. Also, I think that not everyone is going to make music their full time career. Steve Albini has a good quote that I think is accurate: “Not everyone can become a professional artist. Maintain a realistic perspective on your art that allows you to enjoy doing it.”