Thursday, July 29, 2010

Not Enough Professionals - Not Enough Gigs

It's always been tough making a living playing music, but statistically it's more difficult than ever. This is no surprise to anyone active in the industry these days but now we have some verifiable facts thanks to the US Bureau of Labor Statistics. The chart on the left indicates the number of people who now identify themselves as professional musicians, and how that correlates with decreased sales of music.

Is anyone surprised that fewer people than ever think of themselves as pro musicians? You shouldn't be. The club infrastructure in the US (where musicians perfect their chops and traditionally are able to make a living in the "farm team" before becoming a recording artist) has been completely gutted. Once upon a time you could find a place to play almost every night of the week, regardless of where how good you were. Now that doesn't even happen for many hit artists with multiple hits under their belt.

And that's a big reason why the state of music is what it is today. Yes, we've had huge technological changes in music that have made a big impact on the state of music, but one key element of music that can never be replaced for a musician is a gig. You can't develop your craft unless you perform in front of people - a lot. You've got to get in your 10,000 hours, as Malcolm Gladwell states in his best-selling book Outliers: The Story of Success. Why do you think The Beatles were so great? Play 6 sets a night for a couple of months and just see where your chops are.

Unfortunately, there seems to be no immediate answer to the lack of gigs. Just don't expect anything new in music until things turn around.
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Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Wednesday, July 28, 2010

The 90/10 Rule

There's a common rule-of-thumb in business that states that 80 percent of your business comes from 20 percent of your customers (actually called the Pareto Principle). This usually rings true in that in most businesses you have you major customers who bring in most of your revenue, and all your other customers that supplies the rest. If you're in a subscription or mass marketing business where your collecting funds from thousands or even millions of customers (like online), you can still break it down to 80/20 where 80 percent of your business comes from a certain category of users.

The music business was always thought to work on the 80/20 rule as well, but lately there's been a general change of outlook about those numbers. In fact, many music marketers now feel that 90 percent of an artist's income (especially an indie artist) comes from only 10 percent of their fans.

The thinking in the 90/10 rule is that superfans (sometimes called uber-fans or your "tribe") are so passionate that they're purchase just about anything the artist offers for sale, and as a result the income is skewed more heavily in their direction than in other businesses.

There's at least some empirical evidence that 90/10 is indeed true, which means that for an artist to really break big, he has to move those numbers closer to the traditional 80/20 split. A superstar artist has to move those numbers even more. This is how it breaks out:

90% - income from tribe/superfan/uberfan (and anything else you want to call them)
10% - income from casual fans

80% - income from tribe/superfan/uberfan
20% - income from casual fans

less than 80% - income from tribe/superfan/uberfan
more than 20% - income from casual fans

Once an artist establishes himself with a fanbase, regardless how small, the marketing goal from that point is always trying to move the 90/10 split closer to 50/50.
Follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Tuesday, July 27, 2010

Music Publishers And The 360 Deal

As everyone connected to the music business knows these days, record labels are demanding 360 deals with all of their new signings. Just in case you're not sure, a 360 deal is one where the record label owns a piece of all your income streams, including revenue from touring and merchandise.

Now you might think, "Why should I give them part of anything other than the part that they're supposedly good at - selling recorded music?", and you'd be right. It's pretty outrageous to pay anyone who can't make a real contribution to the success of a revenue stream. A 360 deal in essence gives a label the same control as a manager has, or at least the same fees, but since they're not even that good at their core business of selling music anymore, why should you give them part of something that have no experience in?

But now it turns out that major publishers want to get in on the act too, and are demanding their own 360 deals.

At one of the recent monthly Association of Independent Music Publishers (AIMP) luncheon at LA's House Of Blues, a panel of publishing business affairs execs told the audience that music publishers are now demanding additional rights that amount to major label 360 deals when signing new artists.

The reason why the major labels want (even need) 360 deals is because CD sales are in the toilet, and downloads don't make enough (and even those sales are flat) to compensate. They have to make up for the loss of income somehow, and taking additional rights from the artist is the only way (so they seem to think).

So it is with publishing. Until recently publishing escaped much of the turmoil of the music industry. Mechanical royalties (the royalty when a CD or download is purchased) have dropped, but performance royalties (when a song is played on the radio, television or in a film) have gone up as more and more television channels came on line. But now that income has dropped as well as just about every broadcast entity is paying less for music, so publishers are also trying to make up the lost income.

What's an artist to do? If the label, the publisher, the manager, and maybe an attorney have a piece of all of your income streams, there's not much left.

All the more reason for the DIY approach that's now possible in Music 3.0. That's the only way that you can put yourself in a position not to have to take a 360 deal of any kind. Any kind of success that you generate increases your bargaining power. It's no longer just another way to do it, it's now a necessity.

Follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Monday, July 26, 2010

The Ultimate Chart

One of the problems with today's music charts is the fact that they utilize the sales numbers to determine chart position. While has been the primary way of doing it for years, it's certainly a less valid methodology that it was in the past before Internet metrics were available.

But now that we do have multiple online metrics, what exactly should be used to determine chart position? Internet music measurement company Big Champagne thinks they have the answer with a chart that takes a combination of traditional sales, airplay, audio and video streaming, plus fans, friends and followers from various social networks. It's called the Ultimate Chart and it measures everything except illegal downloads, which is Big Champagnes core business so it's charted separately.

The Ultimate Chart currently only looks at the top 100 artists, so you'll only see label acts and those that have a high profile, but Big Champagne is said to be working on the Ultimate Independent and DIY chart as well for those up and comers. In the meantime, an interesting blog called We Are Hunted has a chart that measures chatter and blogging for indie acts.
Follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Sunday, July 25, 2010

Engagement, Not Just Awareness

There have been a number of articles in the past couple of weeks that have touched on the subject of how important fan engagement is, as opposed to simple awareness. Let me elaborate.

Awareness is when someone knows the name of the artist or band (or company or brand). This is what advertising or PR tries to do - build awareness. But just because someone knows about you, it doesn't automatically mean that person will become a fan. For that to happen, everything must go to the next level, which is engagement.

Engagement is the act of getting someone to respond. This could mean something as simple as listening to a song, watching a video or reading an email, which is all well and good, but true engagement really takes things to the next level. That means really turning the person into a fan by motivating them enough to physically do something, like go to a concert or buy a download, CD or a piece of merchandise. Even just talking to their friends about you is an excellent example of fan engagement, since nothing spreads the word like direct communication.

So how do you change awareness into engagement? 

First understand that awareness is built by a mass-marketing campaign. It's a shotgun approach that's meant to cover as many people as possible. This might be a good first step, but it also might mean a lot of effort and money spent on building awareness with people who will never be your fans in the first place, and therefore never engage. If you're a rap artist, there's no point building your awareness with someone who loves country music (unless your music is connected with country in some way).

Engagement is all about targeting. It's finding the people who are most likely to respond and concentrating on them. How? 

By watching the metrics from apps like Google Analytics or StatCounter, but also from the more empirical data on a personal level like reading emails or blog responses or even speaking directly to fans. 

Once you'e found that potential fan base, the next step is content, content, and more content -  songs, shows, videos, and regular (but not too regular) communication. Contests, surveys, and give-aways are excellent ways of engaging because you engage fans by giving them something to engage. The deeper the connection to your fans, the more engagement.

Above all, remember that engagement is what you're actually trying to achieve because a career can't be had from awareness alone.
Follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.


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