Gaming The System

The sales charts of the music business has always had someone gaming them.  It never gets old and it never goes away, no matter the attempt to stem the tide. Want some examples?

From the 50's through the 80's, a record label would pay off record store clerks to lie about the sales of a particular record when Billboard called in order to get a more favorable chart position. This ended with the institution of Soundscan, which entered the purchase based upon the bar code of the record at the point of sale.

Then the labels would pay off radio station program directors to put a song in heavy rotation. More airplay meant more sales and also meant the song would rank higher on the sales and airplay charts, thereby influencing more airplay and sales. This was the the dreaded "payola" and was eventually declared illegal. The labels got around it by paying third party promotion companies to do their dirty work.

Then the labels began to ship large quantities of a record they wanted to be a hit on consignment to dealers. They'd declare to the press that it "shipped platinum (over a million)", which again would influence programmers, distributors, one-stops and even the charts. This ended when reports started to come in from the dealers about shipping unsold records back in platinum as well. Everyone wised up to listening to sales figures from a label.

Music 3.0 is hardly immune to being manipulated, starting with artists and groups gaming their MySpace accounts by inflating their friend counts by using 3rd party "friend finder" apps, and using bots to inflate the number of plays their songs got.

Now comes the interesting case of Boston rapper Sam Adams, who came out of nowhere to hit #1 on the iTunes charts by selling over 20,000 downloads of his single "Driving Me Crazy" in one week. Sensing there's some trickery afoot, a number of journalists and pundits (like Bob Lefsetz) have questioned the sales. Now comes some informed speculation by Jay Frank, author of the book FutureHit.DNA and the blog of the same name. Jay believes that Sam Adams or people close to him bought the majority of these downloads themselves. He comes to that conclusion by analyzing the sales figures between iTunes and Amazon, Google search data, similar artist recommendations, file trading, and the song itself. It's an interesting bit of detective work that you can read for yourself. For the record, Adams recently presented a 3500 page document showing all the sales as evidence that the sales were legit, but Frank doesn't buy it.

This is just another example of trying to game the system, but in Music 3.0, it's by the artists instead of the record labels like before. The thing to remember if you ever consider trying it is that now there's always plenty of forensic evidence to sniff it out quickly. Get your friends and plays the old fashioned way - earn them.

How To Gain 200 Fans A Week

I recently clipped an article by Brian Mazzaferri of the band I Fight Dragons that discusses how the band gained 200 new fans a week. Unfortunately, the link to the full article is now dead, but I did manage to save some of the more valid points. Here they are with my comments following.

1. Give your music away, but don’t throw it away.

We’ve given away a free digital copy of our debut EP to everyone who signs up for our email list.  For people who don’t know us, it’s a free and easy way to learn about our music for free.  And then we’ve got their ear.  Note, this is VERY different to just posting it online for free download.  The price may seem the same, but the result is 100% different, because we now have a foot in the proverbial door.

They're following one of the golden rules of the Internet - you've got to give something to get something. In this case, what they really doing is harvesting email addresses, which is vital to their strategy of getting new fans. Even if the track that was downloaded doesn't interest the potential fan, they have a chance to grab them at least one more time because they have the email address.

2. Regularly give away stuff that’s way too good to give away.

Next, we send an email to our list every Monday at 11AM (for the most part).  More weeks than not, that email contains free music.  And not just some off-the-cuff track, it’s a track that is up to our personal standards, which I’d like to think are very high.  In holding ourselves to that standard, we give our fans something new that they really want to show their friends.  And when the next new track goes out, the new converts get to become the evangelists.  But they need new music to do that, and not just any new music, YOUR BEST new music.

Of course, giving something really good away to get a customer has been a sales strategy probably since the beginning of sales, but many artists see their music as so valuable that they're afraid to let it go. Maybe it is and maybe it isn't, the fan will decide, but the fact that they're willing to part with what they consider their best to convert fans means that many of those fans will become purchasers at some time down the road.

The other thing important here is that staying in touch via a newsletter is a vital communication link with the fan. It's inexpensive, the fan feels good about receiving it (most times), and it's a controlled message. This is the reason why you want to harvest all those friend and follower addresses from social networks.

3. Be real, be available, and be involved.

This seems like a no-brainer, but it actually takes a LOT of work.  We’re on Twitter, MySpace, Facebook, YouTube, our Blog, and TheSixtyOne every day, talking with people and being involved in conversations.  I’m NOT talking about one-way, blast-yourself-out-there stuff like MySpace adding.  I’m talking about joining in conversations on Twitter that you have something to add to.  About commenting earnestly on music you like.  About joining a community, not trumpeting your own message.

Yes, it sure does take a lot of work, and that's why you must have a strategy in order to take full advantage of social media in an efficient way. It's too easy to spend all of your time communicating, then be so burned out that there's no longer time for the main event - the music. We'll cover social media management strategies in a future post.

8 Principles Of Fan Communication

Staying in touch with your fans is probably about the most important thing an artist can do these days, but the way it's done is equally as important. In an excerpt from the Music 3.0 Internet Music Guidebook, here are 8 principles of fan communication.

1 - Talk to your fans, not at them. Don’t try to sell them, but keep them informed. Anything that reads like ad copy might be counterproductive. Always treat them with respect and never talk down to them.

2 - Engage in communication. Communication is a two-way street. Fans want to know that they’re being listened to. You don’t have to answer every email, but you have to acknowledge that you heard it. The more questions you ask, polls you supply and advice you seek, the more the fan feels connected to you.

3 - Keep your promises. If you say you’re going to do something, do it in a timely fashion. Don’t let the fans wait. If you promise you’re going to email a link and post a song, sooner is always better.

4 - Stay engaged. Even if you’re only sending something simple like a link, take the time to engage the fan. Tell her about upcoming gigs, events or releases. Take a poll. Ask for advice. This is a great opportunity for communication, so take advantage of it.

5 - Utilize pre-orders. If you have a a release coming soon, take pre-orders as soon as you announce it, even it’s free. It’s best to get people to act while the interest is high, plus it gives the fan something to look forward to. To motivate the fan for a pre-order, it sometimes helps to include exclusive content or merchandise.

6 - Appearance means a lot. Style counts when talking to fans. Make sure everything looks good and is readable. Spelling or grammar mistakes reflect badly on you. Try to keep it simple but stylish, but it you or your team don’t have the design chops to make it look good, it’s better to just keep it simple and readable.

7 - Cater to uber fans. All of the members of your tribe are passionate, but some are more passionate than others. Fans have different needs and wants and it’s to everyone’s benefit if you can cater to them all. Try to always include a premium or deluxe tier for every offering such as a free T-shirt or backstage pass as a reward for posting, a free ticket to an upcoming show, signed artwork, extra songs, anything to satiate the uber fan’s interest.

8 - Give them a choice. Give fans numerous ways to opt-in since not everyone wants to receive their information, or the type of information, the same way. Ask if they would rather receive info by email, SMS or even snail mail. Ask if they’d like to receive info on upcoming shows, song releases, video content, or contests. And ask how often they’d like be contacted.

Follow these 8 principles and your communication with your fans will remain both smooth and profitable.

The Costs Of Breaking An Act

Want to know how much it costs to break an act on a major label? How about a cool $1 million, according to a report from UK's IFPI. Advances, recording, marketing and promotion are the largest part of that figure. According to that same report, record labels around the world invest up to $5 billion a year on talent alone.

The IFPI also states that there are currently more than 4,000 artists on major label rosters, 25% of them signed over the past year, with 30% of all revenues plowed back into marketing and 16% spent on A&R and R&D.

The entire world-wide music sector, which includes radio, publishing, audio equipment and live revenue, is estimated to generate $160 billion annually, and employs more than two million people.

The music industry is having it's problems for sure, but it's still huge. There's a lot of money out there, but just like water, it's seeping into places it's not been before and finding a new level. What scares everyone that's been entrenched for a while is the way the balance of power is changing. But that's a good thing as the industry certainly needs a reshaping.

Music has gone stale. How much of it will be played 10 years from now? Probably not much. That $5 billion (yes, with a "b") that's being spent on talent is being spent on chasing the last hit and the next pretty face rather than developing true artists and innovators like the way it was done when music was vital and culturally significant.

That $1 mil to break an act is being spent on a legacy promotion system that returns so little for such a large investment, because the entire music eco-system is undergoing a change - some sectors more rapidly than others.

Lest I sound like I have it out for record labels in general, I understand that there remains a need for them, perhaps now more than ever before. An artist can only take the Do It Yourself route so far before he needs the infrastructure than only a label can provide to take things to the next level.

But the way business is done in 2010 should be way different than in 2000, and the label of today must become the label of the future - the one that understands Music 3.0 and the synergy of the artist and his fans - if it expects to survive.

I'm still waiting for a new label with some innovative ideas and fresh blood to take the industry by storm. Maybe tomorrow.

The Music Industry And Legal File Sharing

The music industry is still sticking to the old CD paradigm and apparently will go kicking and screaming into Music 3.0. The Telegraph recently ran an interesting article regarding a recent survey that exposed some major flaws in the current strategy of the majors.

Before we get to the numbers in the survey, the conclusion was that the best way for the music industry to combat online piracy was to promote legal online sales, something that the industry so far has failed to do. These numbers are startling:

• Of the almost 2000 people surveyed in the UK, 4 in 10 couldn't name a single online music service (there are about 20)

• 9 out of 10 consumers that are aware of online music services are only aware of 2: iTunes and Amazon.

• The IFPI (the UK music trade organization that's the equivalent to the US RIAA) estimates that 95% of music downloaded last year was illegal, a figure that seems way high to me, but whatever the real figure is, it's certainly high.

Now the reality is that the CD is still pretty profitable when a sale actually occurs, a lot more so than the single song download that predominates today, and even though CD sales are down some 55% since 2000, it's still a really big business that won't go away soon. Yes, I know, CD's are dying, they're old technology, they're not hip, etc., but they're still sold in huge numbers, so the last thing the music establishment wants to do is to hasten it down the road out of town.

The other thing is that the major labels generally hate the fact that they've lost the battle of distribution to a computer company, namely Apple, which still calls the shots on pricing. I have a feeling that some of the people that run the majors would rather drink tainted milk than give in to Steve Jobs again, so the idea of sending business his way probably makes them wretch just as much.

I'm not sure how much merit the idea of promoting legal file sharing to prevent piracy really has though, since the 40% who couldn't name a single online service probably aren't computer hip enough to illegally download either. But sooner or later, it will behoove the record industry to finally promote online music, so it might as well be sooner.

5 Tips For Building Your Email List

Your email list is a major component for marketing to your fanbase. It's widely overlooked since most artists believe that their Facebook friends and Twitter followers are enough, but you email list allows you to reach out and personally connect with the fans and control you message while you're doing it.

A well thought out email blast allows you to do the following:

1) Engage your fan on a more 1 to 1 basis
2) Design the communication without the constraints of a social network
3) Add a call-to-action

This makes it easier to inform, market and sell to your fan in a manner that the true fan (superfan, uberfan, Tribal member - whatever you want to call them) enjoys, if you do it well.

Here's a short video about the best way to harvest those valuable email addresses.

The State Of The Internet Video

Here's an excellent video that's a fun watch that depicts the current state of the Internet. Get ready for some staggering numbers.



JESS3 / The State of The Internet from JESS3 on Vimeo.

Management Secrets Of The Grateful Dead

It's quite popular to believe that the hippie movement of the 60's was only about sex, drugs and rock and roll, but you'd be surprised that many of the core principles of social networking and Music 3.0 were promoted back then by the pied pipers of that movement - the Grateful Dead.

Indeed, it's now believed that the Dead were visionaries in providing what we today call "customer value," social networking (but real human social networking), and strategic planning that might rival that of today's MBA's, this according to a recent article in The Atlantic.

The band has just donated their 40 years of archives to University of California Santa Cruz, primarily because one of its professors, Frederic Lieberman, is a Dead scholar and teaches a course about them at the school. But if you think that's a curious musing at a notedly eccentric college campus, think again. Even an organization as esteemed as The New York Historical Society will open an exhibit of the Dead's archive's this week, and more and more universities around the country are instituting Dead courses of their own.

So what of the band's business vision? They were smart enough to incorporate early on, then established a board of directors with a rotating CEO position, something that many corporations could learn from today. And it wasn't just the band members who were on the board. All the members of their organization, including the road crew, were made an integral part of the company.

They were one of the first bands to understand the value of merchandising and founded a sales and licensing division that was not afraid to sue anyone who violated their copyrights. And they were one of the first acts to permit fans to tape their shows, understanding that fans sharing tapes would widen their audience, just as digitally pirated music does today. As a result, the Grateful Dead eventually became one of the most profitable musical acts of all time, despite having relatively meager album sales compared to those of their contemporaries.

Never in my wildest dreams did I ever think that the business techniques of the Dead would be considered hip, but yet, here we are.

15 Biggest Baby-Boomer Brands

If you ever wonder why so much advertising money is spent on teen buyers instead of the demographic that actually has some money to spend (baby-boomers), the answer is that once you've established a buying pattern, you'll continue to buy that product for life.

That's why Judann Pollack's recent article in Ad Age regarding the 15 biggest baby-boomer brands is so interesting. All the products came of age just as the boomers did, and the boomers have never strayed since. I'm surprised at a few of these, and even more surprised at their ranking, but having lived through that era I can understand the choices.

15 Biggest Baby-Boomer Brands

1) Levi's

2) Harley Davidson

3) Volkswagen

4) Slinky

5) Noxzema

6) The Beatles

7) L'eggs

8) Pepsi

9) Absolut Vodka

10) Saturday Night Live

11) Facebook

12) Fry Boots

13) Coach Bags

14) Club Med

15) Clairol

My Music 3.0 Interview on Musician's Cooler

Dave Jackson of Musician's Cooler was kind enough to interview me for his podcast regarding my Music 3.0 Internet music guidebook.

To hear all about the different stages of the music business, social media management, and measuring your online success, check out the podcast.

Click on the podcast link right above the picture of the book.

Thanks, Dave!

Dismal Returns For Streaming

You'd think that a song popular enough to get tens of thousands, hundreds of thousands, or even millions of plays would generate some substantial income for the performer. You sell in substantial mass and get compensated accordingly. That's not the case, according to Billboard's annual Money Makers report.

It seems that the income to the artists from all those streams are shockingly low. Of the top 100 musical money makers of 2009, only 10 made more than $2,000 from interactive streams, with Beyonce topping the list with a mere $5,000!

What's more, only 25 artists made more than $1,000 from on-demand streams, with Michael Jackson topping the list with $10,000 (these figures are US only and don't include publishing).

But there's still some real money in digital album download sales. 13 artists generated sales of over $200,000, again led by The King Of Pop with $800,000, and another 26 made more than $100k. And single track sales pulled in the kind of money you'd expect a pop star to generate. 3 acts generated more than $1 million in digital track sales, with Lady Gaga leading the pack, and 33 others made at least $100k from digital single track download sales.

Streams from subscription services like Rhapsody actually paid off a little though, with 26 earning more than $100,000, led by Nickelback, Michael Jackson, and Taylor Swift.


So what does this all mean? Even though we think we've figured out how to monetize music in Music 3.0, it's still a moving target. There are still many holes in the system, with the artists still taking the brunt of any shortfalls that occur. Because even if subscription music takes hold in a big way and the income stream of the industry takes a big leap forward, there's still no guarantee that the money will find it's way into the artist's pocketbook.

Piracy And Copyrights 2010

  My buddy Richard Feldman, who's president of the American Independent Music Publishers (AIMP), a Grammy-winner producer and songwriter, and owner of Artist First publishing, wrote an interesting post on the AIMP blog the other day.

Richard takes a look at the current state of music copyright and music piracy and has some interesting numbers that can be downright scary or hopeful, depending upon your outlook for the business. Among the numbers:

• Illegal P2P trading is estimated to be close to 90 million files per year, according to the IFPI's 2009 report.

• Worldwide music sales for 2009 were $16 billion, again from the same IFPI report.

• If just 10% of illegally traded songs per year were monetized (that adds up to 9 billion songs per year), $6.75 billion additional dollars could be injected into the industry if the income from song were 75 cents.

• The technology doesn't exist to actually catch someone in the act of illegal file sharing (this was a surprise).

Digital piracy is not the only reason that the music business is in trouble these days, but if only a portion is converted to real sales, the music industry could change almost overnight. Check out Richard's post at the AIMP blog.