6 Reasons Why Music Entrepreneurs Fail

Recently Digital Music News posted a great list of 14 reasons why music entrepreneurs fail. You should read that article, but here's my take on some of the article's points. Music entrepreneurs fail because:

1. They think people will pay for something they can get for free. When it comes to music, people pay for convenience in relation to what they listen to. Vinyl was more convenient than shellac because it didn't break as easily. Cassettes were better than vinyl because they were portable. CD's were better than cassettes because they were random access. MP3s were better than CDs because they were even more portable and you didn't have to pay for songs you didn't want. Streaming is more convenient than MP3s because you don't fill up your hard drive and don't have to pay for it. In other words, it's pretty easy to listen to whatever song you want for free now, why should you pay anything if there's not a compelling reason? Saying that, "An artist should get paid for their work," falls on the deaf ears of the public.

2. They overestimate people's love for artists. People that love music don't necessarily love the artists that make it, unless you're talking about teenage girls. Most people don't care if the artist can pay rent or not.

3. They still think piracy's a problem. When was the last time you read anything about piracy in the news? Streaming killed it dead. There's no need to steal something that you can get for free.

4. They underestimate the importance of music licensing. Getting music licenses is a difficult and costly process and it's not getting any easier as record labels become more digital savvy.

5. They think musicians, artists or music consumers want to do something that they really don't care about. The latest fad is online collaboration. Ask any musician which he'd rather do - play in the same room with real live musicians, or play with them over the Internet. One is considerably more fun than the other.

6. They think their social platform will revolutionize music. Social media is important for today's artist, and Facebook and Twitter are making it increasingly difficult to use those platforms as promotional tools, but a new startup with shallow pockets and few users provides little when it comes to helping artists reach their audience or build a new one. Besides there's so much more that an artist needs to be successful beyond social (branding for one, the good old fashioned basics of your website and mailing list for another). Providing just some of the tools isn't enough.

For more on that last point, go to Social Media Promotion for Musicians, a guidebook for using all your online resources to increase your audience.

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9 New Rules For Making Music In Today’s Online World

The music world we live in today is decidedly different from that of only five years ago, let alone a few decades. Where once the entire business was based around physical sales, today its more about aggregating multiple revenue streams for both the artist and the record label. Here’s a set of 9 rules that have been excerpted from my book Music 4.0: A Survival Guide For Making Music In The Internet Age that all artists need to at least be aware of if they want to succeed in our current music environment.

1. It’s all about scale. It’s not the sales, it’s the number of YouTube views you have. A hit that sells only 50,000 combined units (physical and digital) may have 50 million YouTube views. Once upon a time, this would’ve been deemed a failure, today, it’s a success. Views don’t equal sales, and vice-versa.

2. There will be fewer digital distributors in the future. It’s an expensive business to enter and maintain, so in the near future there will be a shakeout that will leave far fewer digital competitors, and fewer places to distribute your music. Don’t be shocked when you wake up one day to find the landscape of online music to be very much consolidated in a way similar to what happened with the major record labels.

3. It’s all about what you can do for other people. Promoters, agents, and club owners are dying to book you if they know you’ll make them money. Record labels (especially the majors) are dying to sign you if you have have an audience they can sell to. Managers will want to sign you if you have a line around the block waiting to see you. If you can’t do any of the above, your chances of success decrease substantially.

4. Money often comes late. It may not seem like it, but real success is slow, and even in this social media world, you still grow your audience one fan at a time. The longer it takes, the more likely you’ll have a longer career. An overnight sensation usually means you’ll also be forgotten overnight. This is one thing that hasn’t changed much through the years.

5. Major labels want radio hits. They want an easy sell, so unless you create music that can get on the radio immediately, a major label most likely won’t be interested. This is what they do and they do it well, so if that’s your goal, you must give them what they want. Once again, this hasn’t changed much through the years. Read more on Forbes.

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The 5 Top Facebook Music Apps

While Facebook seems increasingly to be an adult network of anyone over age 25, it still has over a billion users worldwide, and a number of them frequently listen to music on the service. The analytics site MetricsMonk determined that the top 10 Facebook music apps have around 74 million active monthly users, which is around 33% more than last year. Here are the top 5:

1. Spotify - 33 million
2. Pandora - 8 million
3. Soundcloud - 7.8
4. Deezer - 7.8 million
5. iHeartRadio - 4 million

The big winner here is Spotify, as it almost doubled its users from last year, while Pandora ominously shed users by more than half. The big trend though, seemed to be towards services like Songza and 8Track that provided more personalized streaming, although none of those services even remotely challenges Spotify at this time.

That said, the latest numbers (as of May 1, 2013) state that there are over 1.13 billion active monthly users of Facebook. If less than a tenth of them get their music through the service, then these numbers may not be anything to get excited about. Yes, they're increasing, but there doesn't seem to be a challenge to the standalone streaming services by Facebook in the cards anytime soon.

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The World Of Online Music

I just had a good look at a report from GrovoLabs called The World Of Online Music that was a real eye-opener. The report was from January, but shouldn't be too far out of date a couple months down the line. Here's what it says:

There are a lot of music services around the world. Some cover a lot more countries than others. The big ones are:

Emusic - 27 countries
iTunes - 23
YouTube - 21
Vodafone - 17
7Digital - 16
Spotify - 12
Last.FM - 10
Amazon - 6
Deezer - 4
Pandora - 1
Rhapsody - 1

What's interesting here is that Pandora and Rhapsody still only cover the United States, while Amazon is still very limited as a distributor.

Some other things that came from the study are:

• 16.5% of all Internet users in the US purchase digital music.
• Globally, 17% of all users legally download music.
• More than 3 times as many people regularly visit streaming music sites rather than download sites.
• iTunes now has over 20 million tracks for sale, but Spotify has 15 million and Rdio has 12 million. Grooveshark can access 15 million as well.

What's the upshot? The tipping point from download to streaming is coming, but it might not be as near as predicted. That said, "Why own when you can rent?", will eventually become the motto of most online music consumers.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should 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.

A Comparison Of Online Music Distributors

Here's an interesting chart that I found (my apologies, but I can't remember where) that provides a nice overview of some of the popular online music distribution services. With all the hoopla over Tunecore recently raising their prices, it's interesting to see that they're really not that out of line when you look at a side by side comparison.

So which one should you choose? Price isn't always the most important element of your decision. Things like free UPC codes and which stores and subscription services they service are also important. Ultimately, the general feel of the distributor and their user interface may have more of an affect on your decision than anything, so make sure you check them all out before making your choice.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for daily discussion of music, recording, and production tips and tricks.

The Cost Of Buying A Song

You have a lot of choices as to which online distributor to use to distribute your music, but you're going to make more money on iTunes than anywhere else simply because they charge more.

As the chart on the left shows, of the 6 most prominent music download distribution sites, it costs the consumer more to buy 10 albums from iTunes than any other site as reported by Ed Bott on ZDNet.

But despite the better deals from other distributors, iTunes still holds a commanding lead in market share, with 69%. That used to be because iTunes had the largest selection, but that's no longer true. According to eMarketer in a January report of this year, iTunes had  roughly 11 million tracks in its catalog, Amazon 10 million and Lala offered 8 million (Lala is now owned by Apple). Rhapsody, eMusic, and the Zune Marketplace each have 6 million tracks to choose from.

Even though iTunes holds the lead in market share, that doesn't mean you should discount the other distributors. It's likely that iTunes will continue to lead in the near future, but you may see the others begin to catch up as consumers become aware of their benefits. Cdbaby and Tunecore are still your best bets when planning your distribution campaigns, since it's the easiest way to reach every distributor, both online and with physical goods.

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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.