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MUSIC MARKETING & STRATEGY ARE NEEDED FOR GREAT TUNES

This morning, I had coffee with Dave Delaney at a Nashville coffee house called Crema. The place was unexpectedly packed. It had been open for a few years. The coffee was consistently great. What had changed to explode their business? A new office building opened across the street.

This morning, I heard an interview by Warren Littlefield about his new book Top Of The Rock. He talked about how Cheers was the lowest rated show in its first year. He talked about how Seinfeld struggled to find an audience in its first year. What had changed to make those shows explode? They scheduled them with other hit shows to give them proper visibility.

This morning, I read a Lefsetz blog post saying great music doesn’t need social networking to be big. To quote Bob, “You just have to make great music.”

Which one of these stories doesn’t belong?

Let’s pare down to the truth. Believing you don’t need to music marketing at any level of quality is ridiculous. Thinking that releasing songs in certain places at certain times is not a key idea is to live blindly. With so many choices, marketing and strategy is an essential part of any successful song. Social networking just happens to be the easiest and cheapest way to do it today. But if you choose not to tweet, be prepared to spend big in other places. Even if you’re fantastic.

At the same time, you do need to read the tea leaves to know and believe that what you created was great. NBC stood by Cheers because they knew it was great material that needed to be seen. Crema makes great coffee to accommodate the new office workers. If it’s not great, no amount of marketing, strategy or luck will change the equation.

Believing you can become successful just by existing is the worst decision one can possibly make. There are far more examples of long-lasting hit entertainment due to savvy marketing and strategic placement than examples of entertainment hits that “just happened”. Think all you need to do is make great music? Play the lottery. Think you need to put in hard, strategic work to find success? You’ve got a shot.

ATTENTION DEFICIT DISORDER

Your music is having difficulty being heard because you can’t get people’s attention. This is not a new idea, but it’s one whose problem grows exponentially daily. A few things popped in the blogosphere this week that emphasized the industry should be figuring out how to combat people’s ADD more than anything.

First, in an interview on evolver.fm, long time music blogger Sean Adams bemoaned the slow death of MP3 blogs. While bloggers took over gatekeeper influence from publications like Rolling Stone in the 2000s, these same people are finding their influence waning as people’s individual social feeds are influencing their circles. That may not be an issue for some, but for new artists looking to break, it becomes a problem. As Adams points out, he used to hammer away at an artists’ importance until the audience catches on. Social feeds, on the other hand, are only focused on talking about things that are shiny and new. As he says so eloquently, “I’d argue that an obsession with the new has been more damaging to music than piracy.” That’s a classic symptom of anyone with ADD.

This led to a reminder by Disc & D.A.T. publisher Steve Meyer of a quote made 2 weeks ago by Rio Caraeff, the CEO of VEVO. He said, “Piracy is a bit like the war on drugs, it’s an unwinnable war…but I think the solution is to provide access to entertainment to as many people as possible, through a variety of different models.” While it’s always refreshing to hear that fighting piracy is a waste of time, the solution offered is not ideal either. Providing wide access, which has been growing, seems like a great thing for many. However, this just leads to further difficulties for those looking to break in. With wider access comes larger difficulties in discoverability. Most people, faced with too many entertainment choices, will just default to what is safe or what they know. Couple this access with Sean Adams’ observation, and we just create a constant ADD assault where no new music sticks.

This assault was felt by many thru industry blogger Bob Lefsetz. After commenting on an unsigned artist that actually got his attention, he got assaulted with many more unsigned artists that led him to berate people for sending him their music. This didn’t sit well with many, including my artist friend Syd who asked, “If Bob Lefsetz isn’t listening, who is?” Syd says it’s Bob’s obligation to listen to music, where I believe it’s the artist’s obligation to effectively command attention. Whose issue is it when Bob’s ADD kicks in with the onslaught of requests?

Whatever the communication method, I always respond to the ones who commanded my attention, who breaks thru my personal ADD tendencies. Berating a gatekeeper or listener for not listening is not their fault, it’s your fault. It’s your job to figure out how to get someone to see you and keep them engaged. It is certainly harder, but that just means you have to work smarter. Bob got slammed with artist emails in the last 48 hours. Do you know how many people reached out to him via Twitter to listen to their music in that same time? One. That’s right. Only one. That doesn’t guarantee Bob will hear the music either, but I think I’ll more likely be seen when I’m the only one doing it instead of following the herd.

And whether you agree with any of the above or not, it doesn’t matter. I’m over 500 words in and I’ve got your attention. Enough to mention I help solve many of these attention problems with my latest book Hack Your Hit. I did it by providing worthwhile content. I promoted it solely by placing it on my Twitter and Facebook feeds. You didn’t have to come here. You certainly didn’t have to read this far. To Bob’s point, I didn’t force this upon you. You came to me. And I thank you for it.

To further thank you, I want to hear your stories of how you successfully got attention. Email me your stories in 150 words or less to jay futurehitdna com. In a couple of weeks, I will pick the 5 stories that got my attention the most and post them on this blog. Each of the selected stories will get an autographed copy of my new book Hack Your Hit and a free DigSin T-shirt (that’s my label that gives its music away for free if you didn’t know).

ADD is a fact of life now in so many aspects of daily life. It’s not pleasant, but it’s reality. To understand that the music fan likely suffers from it is to figure out the best way to work against it. Ignoring it as a hurdle to success just guarantees you’ll trip over it and fall on your face. I look forward to reading your successes and seeing how well you command my attention.

YOU CAN MAKE MONEY FROM MUSIC

“I always find it baffling when artists say that they have to tour all the time or they wouldn’t be making money, when I’m sitting here making my own music and videos and earning enough off both those things to live (in fact the money I earn from either of those would be alone sufficient to live), so I have to conclude that they’re doing it wrong. Either they have unnecessarily extravagant lifestyles or they’re just stuck in a shit deal. The music industry’s very strange. That’s why I’d like to change it :)” – Alex Day

Alex Day is a UK artist who cracked the Top 5 last December without any record company or management team. He’s sold over 100,000 singles on his own. His search activity is at a level that nearly rivals buzz band Alabama Shakes. In our recent conversations, we discussed SxSW and why he doesn’t need to perform live. The quote above came from that chat. His experience is certainly proving that you CAN make money with recorded music. You can do it by yourself. It’s not about just one path.

His new video, “Lady Godiva”, has gotten over 300,000 views in less than a week. The top YouTube result for Alabama Shakes got that much in 6 months. It’s not that one artist is better than another. It’s that you can make your success as long as you focus on what you’re good at.

And what did YOU do last week?

KIDS BUYING MUSIC AGAIN? IS THAT POSSIBLE?

Believe it or not, young adults may actually be on a path towards ever increasing purchases of recorded music. Instinct might suggest otherwise. Yet I realized this week that some music business history combined with general business practices can show us that we are headed towards years of sales increases that have nothing to do with piracy or even the quality of music.

Several things this week sparked this notion. First was respected industry analyst Russ Crupnick’s report that music sales were heading up and piracy traffic was decreasing. These figures were then debated with Sandy Pearlman, a great producer and now Professor at McGill University where I spoke this week. Sandy contended that the piracy figure is much higher, and cites his anecdotal evidence of most students he teaches being active pirates who use difficult-to-track “darknets”. This was reiterated in Steve Meyer’s Disc and DAT newsletter today.

Then, I went to an A2IM (American Association of Independent Music) event in Nashville where my friend Tom Silverman, the founder of Tommy Boy Records, spoke. In his speech about the state of the industry, he reminded the audience that most casual music purchasers do not think like us music fans. This was part of my argument to Sandy. Piracy may indeed be in darker corners, but sales figures are undeniably growing. Adele might have had an outsize impact, but other tracks and albums are selling in sizable numbers. But I wondered: are we asking the right question?

Freakonomics was a successful book a few years ago where Steven Levitt and Stephen Dubner proved that certain events and statistics were actually the result of heretofore unrealized events. One chapter that got a lot of attention was dissecting how the legalization of abortion may actually be responsible for the drop in crime two decades later. Many children who would’ve grown up neglected and then become criminals were suddenly not being born. 18 years later, when they would’ve been “of age” to commit crimes, they existed in fewer numbers.

So maybe we can ask ourselves where the music business is headed “freakonomically”. Is there an additional factor contributing to music sales that we aren’t looking at? For example, why do Happy Meals exist? McDonald’s barely makes a profit on them, but they sell them to bring the parents in. Parents buy the more profitable meal, and the kid gets trained to think of McDonald’s as a place to get a comforting meal. So over a decade after getting Happy Meals, when kids have independence, they regularly show up to eat at McDonald’s with their friends eating more profitable items.

So what does the record business use as a Happy Meal? For years, it was the 45 RPM single. They made very little profit from these sales, but it established kids to become album buyers years later. If they needed to buy a single with their pocket change every month at 10 years old, then they’d have a desire to buy an album with their real money at 20 years old.

Music business consolidation in the nineties resulted in maximizing profitability as the main focus. Since CDs were more profitable, labels drove more people to buy them. If they eliminated singles, or the ability to just buy the hit, people would buy more CDs. Somewhere in the mid-nineties (around 1994 or 1995), record companies adopted various policies to stop making singles. First, they used singles to get to a peak Billboard chart position and then they stopped pressing that song. Then, they just stopped making singles altogether. This did lead to more CD sales, but at what cost?

So imagine yourself as a 10 year old new record consumer in 1994. You have 2 dollars in your pocket and want to buy your favorite pop hit, but it’s not available unless you spent 15 bucks on a CD. If you spent several years going into a store and constantly finding you didn’t have enough money to buy your favorite tune, you’d just stop going into the store. Why bother, right?

Well, cut to 2000 and that 10 year old kid is now 16 years old. He has grown up with the expectation that he can’t afford music. Then, you put Napster in front of this kid. It becomes the dominant method for his music consumption not just because it was free. It’s also because he never had a buying habit going into it. If someone is never taught to buy at a young age, how are they ever going to see the value in purchasing?

Now let’s look at the start of iTunes. Not really the “start” start. When iTunes was introduced, it was Mac-only and had a limited audience. It was when iTunes was introduced to the PC that sales really started to take off. That occurred in October 2003, which led to a lot of kids finally getting an iPod for Christmas that year.

So let’s follow the pattern. The 10 year old kid who gets the iPod for Christmas in 2003 now enters 2004 a few days later where he looks at iTunes all the time. Which has a store. Which mom & dad helped foster by buying iTunes gift cards for them. Which meant they would go and actually make purchases of singles. And they could easily throw in a couple of their own dollars towards it as well, since the kid could afford 99 cents. Thereby starting a habit of music purchasing.

So cut to 2011 and that 10 year old kid is now 17 years old with a habit of buying tracks. Do they steal tracks too? Do they burn and swap tracks with their friends too? Yes, let’s not be naive here. When I was that age, I probably copied 4 albums for every one that I bought. So did all my friends. But I still bought because I had that habit. So does the 17 year old of today.

I don’t have hard evidence to back this up. I’m just theorizing here. If this is true, though, then the uptick in sales from 2011 and so far in 2012 aren’t flukes. Piracy hasn’t stopped, because as Sandy rightfully argued, “darknets” are easily found. Adele might be an outlier release, but there are a lot of singles selling 4 & 5 million copies right behind her.

However, there is a real possibility that we just missed training kids to buy our product. We shouldn’t be blinded to the passionate music fans we talk to daily. Talk to those young adults for whom music is not their life focus, and they are buying music regularly. If iTunes got them back in this habit, we should look forward to them as buyers for many years to come.

AN “INTRO” TO COUNTRY MUSIC’S ISSUES

Last week in Nashville, the Country Radio Seminar took place. This yearly affair is where executives from the Country Music business meet with executives from the Country Radio business. I’ve been a part of this conference many times in the past 15 years. In full disclosure, I’ve also spent time serving on both the agenda committee as well as the marketing committee. I did not attend this year as I’ve shifted my business focus to my multi-genre label DigSin. Given what I read about the discussions there, I wish I’d have stopped by. It seems the normal labels vs. radio discussions took a new turn that has a high likelihood of stagnating the country music business at a time it needs to move forward.

Regular readers of my blog and my book Futurehit.DNA know that I’ve been a big proponent of short intros. I’ve regularly shown that songs where vocals start in under 7 seconds have a greater chance of succeeding. Country music hits have had longer intros in the past few years than pop music, but that’s mostly because they make few songs with short intros. However, per capita, those short intro songs tend to do better. Taylor Swift’s biggest selling single last year was the zero-second intro “Mean”. 2 of the top 5 selling Country singles of last year had vocals start less than 5 seconds in. One of those songs (Luke Bryan’s “Country Girl”) didn’t reach #1, which means it outsold 90% of the songs that did.

Radio, on the other hand, is asking for the intros to get longer, which in my opinion doesn’t benefit record labels. In a panel about PPM (Portable People Meter), two respected Country music programming leaders asked for songs to have longer intros, which was met with applause from the audience. Their reasoning is that their research shows this will enable them to have more content on the station without stopping the music, thereby keeping ratings up. This may serve radio’s purpose well, but it will harm sales, which affects the quality of new product that radio receives. It won’t appear that way. Since radio still remains the top sales driver for Country music, long intro songs will be amongst the top sellers. But I would guess that the inability for these songs to successfully find new audiences on the internet will likely result in a Country sales dip overall while other genres grow in popularity. This may mistakenly be a sign that the genre is not as popular, but I would contend that it would be radio’s reluctance to play songs that fit into modern listening habits.

But once record labels give radio what they want, then the labels put forth an agenda that doesn’t benefit radio. In another panel entitled “Are These Country People Freakin Nuts?”, the VP of Programming for CBS Radio, Mark Adams, called the labels to task for choreographing the #1 hits. “It’s label manipulation,” Adams said. “It has no bearing on reality.” Without getting into details, he’s right. The impact a #1 record has on songwriters and the touring business, not to mention egos, makes the act of what gets there less about what’s truly popular and more about what math formula results show which station needs the most persuasion. I regularly see #1 records outsold by lesser charting records. In fact, one of the Top 5 selling Country songs of 2010 didn’t even make the Top 10 at radio. I don’t want to diminish the importance of a #1 song, but if radio were given looser reins there might be fewer #1s with longer stays at the top, but radio’s ratings might go up with airplay that better reflects what the audience is feeling.

The need for Music Row creators to embrace digital has never been more important. The song that’s tracked today, given the pace of the chart, has an outside chance of being at the top a year from now, but most likely later than that. Additionally, the Country music audience is only going to be further defined by its digital exposure. As Capitol/EMI Records president Mike Dungan said last week (and reported in the Radio-Info newsletter), “Pandora is showing up bigger in our own research among fans of country music.” This will only be a larger slice in 2013. To stay stuck in production and arrangement techniques from the previous decade will only make it that much harder for the format to thrive.

Conflicting goals between radio and record companies are nothing new. Yet in the nineties and parts of the last decade, there was enough money going around that the struggles were mere quibbles while cash rolled in on both sides. Now, both sides are squeezed for revenue which means they both dig in their heels. At a time when they need to be finding common ground for both of their businesses, instead we get a power struggle where neither side maximizes their potential.

Knowing the players like I do, I don’t reasonably expect any solutions I suggest will be enacted. However, some give and take on both sides could lead to drastic improvements. Rather than demanding longer intros, radio should creatively figure out how to make their format more entertaining with music that can successfully play on multiple platforms. Subsequently, labels should be pushing to “convert” to bigger airplay only the songs that might last for a generation or so. The net result could be a more energetic sounding station that’s filled with true hits. The PPM rating “lost” due to a short intro will be more than made up for with a song that truly deserves to reside in power rotation.

Allowing for this give-and-take will then likely make more digital-friendly Country songs a chance to become successful. The two elements working in tandem should result in higher sales and revenue overall for the format. Knowing the entrenched interests like I do, the more likely scenario is that the status quo will remain for awhile. I truly hope that more artists, producers and songwriters follow those who are breaking the mold and push for music that is strong across all platforms. Otherwise, presumed successes for the format today might actually lead to an empty bank account tomorrow.

IT’S NOT SPOTIFY’S FAULT, PT. 2

The debate on Spotify has continued in recent weeks as mainstream press has been covering the fact that big artists like Adele and Coldplay are holding back their releases since they believe it cuts into sales. For their part, a Spotify spokeswoman says there’s “not a shred of evidence that holding back downloads cannibalizes downloads”. There’s probably not enough evidence yet to support either argument convincingly, but it’s not the real issue. To find that, we need to step back for a second to look at the business from 30,000 feet.

I’m a big fan of the book The Curse Of The Mogul. Authors Jonathan A. Knee, Bruce C. Greenwald and Ava Seave discuss the historical facts of disruption on many businesses and how it relates to the modern entertainment business. One important idea is that when the walls of distribution come down, with access comes devaluation. In recent weeks, I’ve come to fully embrace this as the root cause behind artists’ displeasure at perceived royalty rates.

The first clue came in a recent Businessweek article where three anonymous music executives said the average person spends $60 a year on iTunes. Since Spotify and other subscription services charge $10 a month, this means the revenue per consumer should double. Sounds like great news for the music business. While I know that the “average” won’t literally double, let’s just go with it for the sake of this example, and keep in mind that what I’ll outline is therefore a “best case” scenario.

If the average person is spending $60 a year on iTunes, it stands to reason that they are spending it on a minimum of 4 artists (4 albums x $15 price tag for deluxe albums) and a maximum of 87 artists (87 singles x $.69 discount price). Realistically, most people will be smack in the middle having bought a couple of regular $9.99 albums and a few singles at the $1.29 premium. If narrowed down to a month, on average the most someone would spend money on is 7 artists.

But how do we know how many artists get heard on Spotify? Well, we can make an educated guess by looking at the Facebook streams of playlists. This is admittedly unscientific, but will highlight the issue nevertheless. I examined what 10 random Facebook friends of mine listened to on a variety of subscription services. They ran the gamut from one person who listened to only one album to someone who listened to over 400 songs, which included albums, singles and playlists. What I found is that the average person listened to 3 songs per artist.

Data on how much people are listening to subscription services on a monthly basis is not available enough to get an exact reliable statistic. However, looking both anecdotally online and from my own personal knowledge, the average person is likely listening to 10-15 hours a month. Using this statistic, we can deduce that people are listening to somewhere between 40 artists (120 songs (5 minute song average x 10 hours) divided by 3 songs per artist) and 100 artists (300 songs (3 minute song average x 15 hours) divided by 3 songs per artist) per month.

In an iTunes world, the average person consumes music by, at most, 7 artists a month. In a Spotify world, the average person consumes music by, at least 40 artists a month. So in the best case scenario, even though the dollar pool has increased by 2x, the number of artists the payouts are distributed to has increased by nearly 6x. Given that this is the best case scenario, the figure is almost certainly higher than that. In a dollars and cent perspective, while the average artist grossed as little as 69 cents per person in iTunes revenue, the average artist probably grosses no more than 25 cents in subscription revenue.

The reality is that the very thing that gives indie artists access to subscription distribution is what is keeping the royalty rate low for everyone. The pool to increase payouts per artists not only doesn’t exist, it CAN’T exist without raising the price of subscription to a price-prohibitive rate of $50/month or higher. The only other potential solution would be to create a service that excluded access to many artists to allow existing artists to obtain a larger chunk of the royalty pie. This would give services a gatekeeper role not unlike current physical music retailers. Many artists would certainly complain because they were kept out, but the ones that did get in would be happier with a more reasonable rate.

As a new independent label owner, I actually welcome all the artists and labels keeping themselves off Spotify. It actually allows for an opportunity for us that are on these services to command a larger slice of the royalty pie. However, don’t think of Spotify as being cheapskates. The truth is that as an unknown artist, if you want access to the big game, you must understand that until you’re popular that it comes at a (lower) price.

MEGAUPLOAD: SAMPLES OR SINGING?

The insider music biz controversy this week involves the Megaupload song.  This is a song created by the popular crowd file-sharing site that features some musical celebs endorsing the service.  This is controversial because it’s widely known that there are often many files on the site that are pirated.

Universal Music Group (UMG) ordered YouTube to pull the video over copyright restrictions because its artists were performing on it without their permission.  Megaupload claimed they had all the footage cleared and threatened to sue UMG.  Recently, the video came back on YouTube after they sided with Megaupload on the ownership. Watch the video for yourself here:

Now, I’m not here to debate the ethics of Megaupload nor whether UMG overreached in their takedown relationship with YouTube. What interests me is that this may actually turn into an interesting case on sampling and at what point a sample turns into a song.

At this point, given what is known publicly, I’m going to make some assumptions that I don’t have confirmation of. It appears that Megaupload was able to get interviews with celebs including Kim Kardashian, Serena Williams and Kanye West where they endorse the site. Given the pushback that Megaupload gave to UMG, I assume that these interviewees signed artist release forms that gave the site permission to use that footage in promotional videos without further compensation. These are standard agreements for artists to sign in these situations. UMG generally has control over the usage of the artist when they are singing/performing, but not over interview footage. As such, Megaupload would likely be correct in their assertion of ownership.

However, some of the interview samples were altered to fit rhythmically and musically to the instrumental backing track. In my opinion, this would include Will.I.Am’s appearance at the beginning as well as Chris Brown, Diddy & Lil’ Jon’s appearance at the bridge. While spoken word has been altered to fit a musical composition for decades now (groundbreaking group Tackhead first comes to mind), this is the first instance I can think of where interview footage of major musical artists privately-owned by a company was altered into a musical composition. This opens up a Pandora’s box of questions:

If the broad clearances for interview footage do allow for alterations into musical compositions, might many media outlets (such as Entertainment Tonight or CNN) now be able to create songs from stars without further compensation to said stars?

If it could be determined that these sampled portions are part of the musical composition, wouldn’t the artists (Will.I.Am, etc.) be entitled to songwriting credit? As such, wouldn’t they be able to block the song since they would have to approve first use? I would doubt that Megaupload had clearance so broad to allow for blanket first use permission prior to creation of a musical composition. If the artist would receive songwriting credit, then presumably they would profit from the YouTube exploitation as well.

If these portions are indeed to be found as musical works, wouldn’t UMG’s takedown claim prove to be true as their exclusive contracts with their artists would supersede the artist’s own signature with Megaupload? If they are not musical works, can we expect a rash of altered samples of speech by musical artists to become legal for stream and sale? And if so, how would payments work given the above questions regarding songwriting credit/royalties?

Will this change the dynamic of the artist release agreements all major media outlets utilize? Will they now have to be altered to give the artists some comfort that the footage would not be used for musical compositions?

Sampling in general has been a game of testing the limits ever since it was first implemented in the music business. I’m not really taking a position either way on this issue because I get the value in both sides of the argument. What will be interesting is the outcome as I presume it will have some lasting impact on songs to follow.

I know there are many sampling and free speech experts who read this blog and have far more expertise than I do on this subject. What are your thoughts?

UPDATE (12-19-11): Today, the agreement form with Will.I.Am leaked online and can be found here. The language is typically broad and standard. While I’m not a lawyer, there is certainly reason to side with Megaupload because the language is so broad to cover all the examples mentioned above. If so, then they’ve screwed the pooch for themselves and others as now you’ll likely see many music biz pros taking a fresh look at these agreements and refusing many of these reaches. Of course, there’s a confidentiality clause that’s obviously now been breached. I would presume Will.I.Am did not do the breaching, so could that now make the agreement null and void?