Music Industry Trends For 2011

Here's a post that I wrote for the great Hypebot blog earlier in the week regarding what I see as some of the music industry trends that we'll see in 2011. For those of you who don't read Hypebot (you really should because it's a great music industry blog), I thought it would be a good idea to repost it here.

I'd really like to thank Bruce and Kyle at Hypebot for all their support this year. They've been a great proponent of my Music 3.0 guidebook, and have frequently posted excerpts from it, for which I am much appreciative.
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As I see it, there will be several important trends in 2011, but they’ll all be mostly a continuation of what we’ve seen in 2010.

1) The most important trend for 2011 will be realism.

*  The realism that DIY takes a lot of work and the rewards aren’t as great as in the heyday of the major labels. Musicians and artists will begin to see success in a different way as making a living replaces stardom as the big score.

*  The realism that social networking has limitations, and traditional marketing and promotion can’t be abandoned. You still need both for effective branding and marketing.

*  The realism that the touring market is not nearly the goldmine that it once was during better economic times. Fewer venues, less money and more competition makes gigging more difficult than ever. That being said, look for this to loosen up a bit towards the end of the year as the economy rebounds.

*  And the realism that some things in the music business never change. You still need talent, some great songs, lots of hard work, and a little luck to make your mark.

Other trends for 2011 include:

2) The major labels lose even more influence, but don't go away. They'll always be needed for what they do best - taking a successful artist and making them a superstar.

3) A new generation of record label will emerge, helmed by music entrepreneurs like those in the 50's and 60's. These entrepreneurs are part of their audience, love the same music, and are as far away from corporate execs as you can get.

4) The album continues to lose ground. It’s no longer a total listening experience, so the listening consumer cherry-picks the best songs as a result. This trend will eventually reverse, but not in 2011.

5) Music subscription will finally reach critical mass as consumers realize its benefits and more services become available (iTunes subscription perhaps?).

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When 2.5 Million Twitter Followers Doesn't Result In Sales

Soulja Boy is one of the most prolific Twitter users of any music celebrity. It's nothing for him to tweet 15 to 20 times a day, and sometimes as many as 70! As a result, he's amassed over 2.5 Twitter followers, an impressive amount by any stretch of the imagination, and a is study in fan communication.

While this has helped Soulja Boy sell singles ("Crank Dat (Soulja Boy)" is the 14th best selling download of all time at 4.5 million), his massive Twitter following hasn't helped when it comes to album sales. In its first week after release he sold only 13,000 (11k physical and 2k digital) of his new album "DeAndre Way."

SB appeared to do everything right in terms of promotion. He kept his fans engaged, tweeted daily about the album's availability, and included an iTunes link. Yet even his first single from the album, "Pretty Boy Swag," sold below expectations, although at 590,000 downloads, it seems pretty good to me.

So what went wrong? Here's what I think.

1) As I discussed in my post last week, "6 Reasons Why The Album Format Died," it's likely that Soulja Boy's audience does not buy albums, even from someone they like.

2) Could it be that the audience just doesn't like Soulja Boy's new music? We've seen time and time again, that all the promotion and fan engagement in the world just won't sell something that no one wants.

3) Could SB be the flavor of the month, and the month is over? This is what happens to big label singles artists. It's extremely difficult to build a lasting fan base because you're only hot until the next fad appears on the scene.

All that being said, almost 600,000 downloads is nothing to sneeze at, expectations or not. I wouldn't weep for the guy just yet.

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Pink Floyd Defeats EMI In Court

EMI keeps getting kicked in the ear in court, as it loses yet another legal battle, this one with Pink Floyd. Actually, the company suffered two setbacks. The Floyd had sued EMI over an alleged $15.7 million in unpaid royalties from 2002 to 2007, but the court also ruled in their favor in another matter that had much larger implications.

Music Week reports that the court recognized the band's 1999 contract which specified that EMI could only sell Pink Floyd music as albums are also covered digital downloads. In other words, it prevents EMI from selling individual Floyd tracks online, which would be a potential financial windfall when the company needs it most.

That being said, it's also been reported that EMI may be put out of its corporate misery any day now, with creditor Citibank taking it back to sell off the parts in the hopes of covering some of the debt. The latest buzz has BMG Rights Management making off with EMI Publishing and Warner Music Group ending up with the catalog rich record group.

On one hand, it's such a shame that such a storied company could meet such an inglorious end. On the other, this is a case of over-reaching greed reaping a sad reward for EMI owner Terra Firma.

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10 Music Sales Tips

Here's another excerpt from Music 3.0: A Survival Guide For Making Music In The Internet Age. This time it's from Chapter 5 about the new distribution methods of the M30 age, and some appropriate sales tips.
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Here are 10 sales tips to always keep in mind.

1) Ask for the purchase. Never forget that, even though you’re selling yourself, you’re still in sales.

2) Sell a package. With a ticket you get a CD, with a CD you get a T-shirt, with a T-shirt you get a ticket. The idea is to make each purchase something with added value.

3) Sell merchandise at as an affordable price as possible. Until you’re a star, you should be more concerned about visibility and branding than revenue. If you want to spread the word, price it cheaper.

4) There are other things to sell besides CD’s and T-shirts. Hats, a song book, a tour picture book, beach towels - get creative but choose well. Too many choices may actually reduce sales from buyer confusion. You can now sell a variety of branded merchandise with no upfront costs using CafePress.com or Zazzle.com.

5) Begin promotion as soon as possible. It allows time for the viral buzz (aka free promotion) to build and ensures you’ll get you a larger share of your fan’s discretionary spending.

6) Capture the name, email address and zip code from anyone who makes a purchase, particularly ticket buyers.

7) Always give your customer more than he expected. By giving them something for free that they did not expect, you keep them coming back for more.

8) Give it away and sell it at the same time. In the M1.0 to 2.5 days, you used to give away a free track to sell other merchandise like the album.  Now, if you give away a track, that track actually sells more.

9) The best items to sell are the ones that are the most scarce. Autographed items, special boxed sets, limited edition vinyl that’s numbered - all these items are more valuable because of their scarcity. If the items are abundant, price them cheaper. If the items are scarce, don’t be afraid to price them higher.

10) Sell your brand. You, the artist, are your own brand. Remember that everything you do sells that brand, even if it doesn’t result in a sale. Just the fact that people are paying attention can result in a sale and revenue down the road.

For more sales, promotion and marketing tips, see the Music 3.0 guidebook.

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6 Reasons Why The Album Format Died

I think it's safe to say that we're at the end of the "album age," and although the format will hold on for a while, it's clearly waning in popularity. I've given this a lot of thought and have come up with what I think are the reasons, but be aware, they're not all exactly what the popular wisdom assumes. So let's begin with the 6 reasons why the album format has, for all intents and purposes, died.

1) It was a visual experience. The album format in the vinyl record age had the advantage of that wonderful piece of cardboard known as the album jacket. The album jacket contained the cover art (still found on CDs), and most importantly, the liner notes on the back, which we'll get to in a second. But one thing that everyone either forgets or has never experienced is the fact that millions of albums were purchased completely on impulse because of the album artwork alone!

It may be hard to believe, but it was quite common to come across an album cover that was so cool that you'd buy it without knowing a thing about the artist. Sometimes it would be a total loser, but you still had the liner notes to read, and occasionally that would still make it a worthwhile purchase.

2) It was an informational experience too. Those of you too young to have experienced this don't know how much the liner notes meant to nearly everyone who bought an album (the picture on the left gives you an idea how extensive they could be). You could spend hours reading a well-written gatefold jacket, checking out every credit, wondering just where these exotic studios were (Smoketree Ranch in Malibu was the one that always intrigued me the most as a kid), and generally just soaking up any info you could about the artist. Of course, this was way, way before the Internet, so the liner notes were sometimes the only place to find any of info on the artist at all.

To say the least, the visuals and information along with the music made buying an album a total experience that today's album doesn't some close to.

3) The demise of the record stores. Once again, this may seem hard to believe but nearly every community had someplace that sold records, even if it didn't have a record store. There was an entire network set up to supply records to department stores, supermarkets, even diners. You couldn't help but to run into someplace selling records during the course of a day.

But the record store was the place to not only buy music, but to spend hours browsing. Why? Because of the cover art and liner notes. You'd peel through a bin of records, stopping every so often to look at an intriguing cover, which made you want to read the liner notes, and maybe even buy the album as a result.

But the record store was also the best place for word of mouth. The people that worked the record stores always knew what was hot, what was underground but about to pop, and what was overhyped. You could go into a store and ask a clerk, "What's really good?" and he'd give you 10 choices, most of which were pretty high quality. This is something that the music industry is still looking for today online. Now we call it "music discovery" and VC's still throw big money at anyone who claims to have an app.

4) The price. Albums used to be a bargain. A 45 RPM single used to cost anywhere from $.99 to $1.29 (ironically what a download costs today, except you got two songs then), but an album started at only $3.98, before prices gradually began to increase. Either way, in the beginning the album was a no brainer even for a kid on a tight allowance. For the longest time, the album was priced at $8.98, before it was discounted, which was still a bargain.

The greed started in the early 80's as the major record labels were taken over by multi-national companies, the attorneys and accountants ruled, and the prices of the album began to rise - first with what they called "superstar pricing," which tacked on an extra dollar for a superstar act (Tom Petty sued his label keep the price at $8.98, a gesture that would be very unlikely today by a big music act).

5) The CD. Then came the CD, and the business went to hell in hand basket. The packaging was different, so the jacket was no longer needed, and as a result, the cover art became less important, and you couldn't really do extensive liner notes because the print would be too small to read. Then the record labels really got greedy, charging outlandish prices (called "technology charges") on a product that eventually cost them less than the vinyl records they previously were making. In fact, prices soared to $19.95 for a front line artist's CD. If you bought one of these and weren't completely and totally satisfied, you were pissed, since dropping a deuce on anything was a real commitment.

And of course, there were no more impulse buys anymore because the artwork behind a 5 inch piece of plastic just doesn't have the same impact as on a 12 inch piece of cardboard.

6) Too much filler. Most vinyl albums are between 35 and 45 minutes long. This was out of necessity because of the physics of a record. Make it any longer and it starts to get noisy, the frequency response suffers, and it won't be as loud. But 40 minutes or so turns out to be the perfect amount of time for listening. There's a time commitment you have to make, but it's well within reason, especially if you like the music.

A CD is capable of containing a bit more than 73 minutes of music. Unfortunately, artists began to think that it was a really good idea to put all the garbage that they normally would've tossed from a vinyl record, and put it all on their CD. Now instead of having 40 minutes of great music, we had 55 minutes of mediocrity. Even if the artist had some great songs, it was frequently buried under another 50 minutes of crap. Now not only was the fan paying more money, but she was paying more money for less quality. Something had to give.

Which is just about the time MP3's and Napster came on the scene, which eventually helped push the music business from an album business into the singles business that it has now become. Ironically, popular music started with as a singles business, to whence it now returns.

It's easy to say that online music slayed the album, but it was only the final dagger after 6 long swords.

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The Music Industry's Biggest Blunts

Paul Resnikoff's Digital Music News had a great story the other day entitled "The Music Industry's Biggest Blunts 2000-2010" where he used the analogy of some of the industry's highconcepts to passing around a joint. It's a fun read, very poignant, and in some cases, hits really close to home.
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Why do we play this game?  It seems that in times of digital disruption, the music industry has had this strange tendency to cling to potential saviors, almost all of which disappoint.  The major labels are masters at this, though this goes far beyond the Big Four.  And, it makes you wonder whether the same blue-sky, save-the-industry mentalities are currently driving areas like cloud-based models, DIY distribution, and  'middle-class artist' concepts.     

But what are the biggest blunts this industry has smoked so far?  

(1) The a-la-carte download. Remember when Steve Jobs was praised for 'saving the music industry' by simplifying music purchasing?  These days, he's mostly praised for making billions for Apple and tripling Wall Street investments, not for enriching musicians or labels.  And the a-la-carte, variably-priced download is hitting its plateau.

(2) The ringtone. In hindsight, this was a billion-dollar hulu hoop, but labels, mobile startups, rappers, and everyone in-between were pegging serious fortunes on the ringer.  These days, there's still some scratch, but mobile entertainment is a totally different - and tough-to-monetize - space.  

(3) Mobile Music. That is, controlled, walled-garden environments that would force fans to pay.  That is, before the phone became smart, and totally connected to the PC.  

(4) Subscription services. There was a time when services like Napster and Rhapsody were viewed not only as saviors, but potential multipliers of broader industry revenue.  These days, both are currently swimming in niche waters, and publications like Digital Music News have been accused of smoking another spliff called Spotify. 

(5) 360-degree deals. Not sure if this is as much a blunt, or merely some diversified resin to keep the party going. 

(6) Branding and sync licensing. Everyone wants a branding deal, and music supervisors are chasing every last sync possibility.  But it seems that this area is best viewed as a revenue enhancement, not a revenue replacement, and a rush of creative supply is only driving down potential payouts.

(7) MySpace Music. Sort of a mandatory parking spot for bands, but the monetization part never quite ramped.  

(8) Ad-supported music services. One word: Spiralfrog.

(9) Publishing. Once upon a time, publishing was viewed as a rock in the storm.  The only problem was, this rock wasn't that big compared to recordings - nor was its fate truly independent.  Instead, publishing is getting dragged by mechanicals, sinking syncs, and broader economic malaise.  And these days, most publishers are thrilled with flat financials.

(10) Touring. This is where the real money was!  Except, bands taking this advice often found themselves struggling to fill clubs, earn gas money, and create meaningful revenues.  Not only that, everyone was getting the same memo.  Meanwhile, for big fish like Live Nation, sagging attendance is currently creating serious revenue problems.  

(11) Licensed P2P. If only the industry had licensed Napster!  But modern-day attempts like Mashboxx, Peer Impact, Choruss, and whatever Virgin Media was trying may have been too little, too late.

(12) DIY Distribution. The hangover is just starting on this one, but the dogma surrounding direct-to-fan distribution remains deafening at times.  Meanwhile, DIY bands are struggling against some serious challenges, including a huge glut of competing content, distracted music fans, and tough monetization models.  This is a blunt in progress...

(13) DRM. Thankfully, this stopped getting passed around a few years ago!  (thanks Larry Miller for adding this one...) 

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The People That Use Twitter

Twitter is a phenomena the media likes to tell us is the latest trend, but in reality it's still bubbling under the mainstream. Want proof? Check out this chart regarding Twitter's demographic use.

Some of the groups who are notable for their relatively high levels of Twitter use include:

• Young adults – Internet users ages 18-29 are significantly more likely to use Twitter than older adults.
• African-Americans and Latinos – Minority internet users are more than twice as likely to use Twitter as are white internet users.
• Urbanites – Urban residents are roughly twice as likely to use Twitter as rural dwellers.

There's been some discussions in recent weeks whether Twitter has peaked. I don't believe so, and still believe that it's a viable promotional and communications tool with some room for growth. I'm a big fan of Twitter and have personally seen this and my Big Picture production blog grow by over 100% since I've been using it as a promotional tool.  If you're not using it, what are you waiting for?

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10 Low-Cost Hi-Tech Promotion Ideas

It's about time for another book excerpt, so here's one from Chapter 4 of Music 3.0: A Survival Guide To Making Music In The Internet Age. This one outlines 10 ways that you can promote yourself without spending much money.
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Never leave promotion to someone else. You always must be actively involved in at least an oversight level to be sure that not only are you getting promoted, but that it’s something that’s beneficial to your image as an artist. This even includes having a publicist, since she takes the cues from you. Especially don’t depend upon a record label, particularly in these days where so few people do so many jobs. It’s up to you to develop the strategy or it might not get developed at all.

That being said, here are a number of very low-cost M30 ideas that you can do to get your promotion started.

1) Set up both a MySpace and Facebook page, then be sure to stay active. It won’t do you much good if you just set it up and never update it. The only way it’s worth your fans visiting is if you remain keep the updates coming as often as possible.

2) Every time a friend request is exchanged between yourself and another MySpace or Facebook user, send them a note back thanking them and ask if you can include them in your group of friends outside of MySpace or Facebook. Ask them to “Please reply with your email address if that’s OK.”  This is a great way to build your tribe, but make sure they can easily opt-out if it’s not their cup of tea. It’s not too beneficial to have all those MySpace and Facebook friends if you can’t contact them outside of those sites.

3) Always have a “Press” section on your website that contains:

   * high resolution color and black and white photos 

   * logos

   * biography

   * quotes from the media

   * links to any interviews

   * scans of just 3 or 4 of your best press clippings

   * scan of a promo flyer and poster

   * web ready graphics and banners

Having any of these tools easily available will increase the chances of getting media coverage. It’s a fact that the easier you can make it for a writer or an editor, the more likely you’ll get covered.

4) Backlinks are important. Anytime you are mentioned in a club listing, on the site of a band you’re playing with, or anything else, make sure that it links back to your site.  People won’t do this automatically, so make it standard operating procedure to ask.

5) Encourage fans to tag you and your content on sites like Flickr, blogs, Digg and Stubleupon, then make that data available on your site. 

6) Even though you may have a presence on MySpace and Facebook, you still need a website. It’s still the best place to gather your tribe and communicate with them. Make sure that you follow Figure 4.7 for the best website experience for your fans.

7) Engage your fans.  Ask them questions. Polls and surveys are free (that magic word again) and easy to set up with sites like PollDaddy and Surveymonkey.

8) Develop a press release mailing list of music writers and editors from any local and regional newspaper, magazines, specialty papers, radio stations, on-line radio station, music blogs (especially) that covers the type of music that you play (later you can do national and international when you grow into it). Remember that it doesn’t do you much good to send something to a magazine that specializes in metal if you’re a folk singer so don’t even think about anything out of your genre. Once the list is complete, send out a short email for any major gig, event, or song release, but don’t make it too frequent or you won’t be covered - ever.  Include links to your website and an offer for a free press pass to a show. About once a month is a good frequency. If you get a mention, be sure to send an email or even a hand-written note to say thank you.

9) Create your own YouTube channel. Make sure to post new videos frequently and encourage fans to post as well.

10) Create a special “Insider” email list for a few fans, key media, tastemakers and bloggers for pre-announcements who love to know things first…and like to tell others.

There are a more excellent tips on marketing, promotion and sales in the Music 3.0 guidebook.

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Singer-Songwriter Meets A Suit

Here's another of those hilarious animations that illustrate an all-too-real situation in the music business, this time showing the interaction between a female singer-songwriter and a record label suit. For those of you new to the music business, you'll be shocked that everything you've heard can be true. For those of you who have been around for a while, it will be all too familiar.

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The Hypocrisy Of EMI Using Rapidshare

The major labels and their lapdog association the RIAA have been relentlessly suing their customers for a number of years now, which just about everyone but the labels themselves have seen to be a futile and unjust effort. Sure, digital piracy takes revenue from the labels, artists, publishers and songwriters, and in a perfect world that wouldn't happen, but we live in a reality where music files are easily shared.

In fact, there's a theory that has some merit that says the more your music is stolen, the more you sell. Obviously the major labels don't share in this outlook. Or do they?

Now comes word that a number of emails obtained by MP3tunes.com's Michael Robertson (and founder of the original MP3.com) indicate that EMI used Rapidshare (a major source of illegal file sharing) to distribute their own copyrighted material in an effort to establish a viral marketing campaign. In other words, they illegally distributed their own music!

This is truly a blockbuster story in that it completely undermines the RIAA's premise that illegal file sharing is bad for business. After all, if it were that bad, then why would a label hope to start a viral buzz by doing it?

According to an article by Emil Petrolinski for Techspot.com:

In court, EMI is accusing MP3tunes of allowing illegal music downloads. The stance now appears to be highly hypocritical. The company distributed its music via file sharing websites and then sued users for downloading their music without paying. It has come to light that EMI employs a team of advertising people, artists, and agents who have placed together so many free music downloads on the Internet that EMI itself has trouble distinguishing between authorized and unauthorized links. It's thus no surprise that Robertson wants the 41-page lawsuit dismissed. The case could be closed as soon as January 2011.

This blockbuster revelation has flown somewhat under the radar, but could have massive ramifications for the RIAA, the major record labels, and the many lawsuits that they now have in progress. Let's see how it plays out.

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I'm With The "Brand"

It seems that as a music star becomes more popular, so too does their desire to cash in on their fame through non-musical business moves. Then is so opposed to the spirit of what a popular musician used to be that it leaves those of us from that era more and more incredulous. UK paper The Independent just did a nice article on the subject and here are some of the examples that they came up with.

• Rap star Kanye West has his own internet search engine (it's called Search With Kanye West).

• Aerosmith guitarist Joe Perry has his own line of "hot sauce".

• The R&B singer Usher teamed up with Mastercard to launch a range of credit cards.

• Justin Bieber has, curiously for a 16-year-old boy, his own line of nail polish called "One Less Lonely Girl".

• Madonna opened the Hard Candy Fitness centre in Mexico City, the first of what she hopes will be a worldwide chain of "first class" gyms.

• Lady Gaga has released her own range of Heartbeat headphones.

• Jennifer Lopez sold the first pictures of her twins Emme and Max to People magazine for a reported $6 million.

• Beyoncé is now focusing on her clothing ranges, House of Dereon and I Am Sasha Fierce.

• Jay-Z has non-musical business opportunities including the clothing label Rocawear and the New York nightclub 40/40.

• 50 Cent, Eminem and P Diddy all have their own clothing ranges, while P Diddy has also carved out an extra source of income for himself in promoting the vodka brand Cîroc.

• The popular Guitar Hero game now has Metallica and Aerosmith versions, while stars such as Ozzy Osbourne (who made himself into a product with a reality TV show about his home life) are playable characters.

• X-Factor winner Leona Lewis was signed up by the game Final Fantasy XIII, where she appeared in advertisements for the product and allowed one of her songs to be used in the game.

• Last year, pop star Katy Perry said: "I have a job, I know my responsibility and I'm always trying to take it to the next level ... most of these bitches just hawk breath mints or shoes. No offence to them, but maybe I'll hawk shoes later in life." She seemed to have forgotten all that, however, when she debuted her own perfume, Purr, last month.

Once again, celebrity seems to mean more these people than being an artist.

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College Radio On The Brink

For many years, college radio has been the beacon of hope shining brightly across the wasteland that is commercial radio. As radio has become more and more homogenized thanks to group ownership and consultant-led playlists (see my past posts entitled Why Traditional Radio Is No Longer A Factor and Online Radio's Takeover), the only place for indie acts to break has been the local college radio station.

But now college radio sadly faces extinction as more and more colleges either close them down or sell them off. This is due to a number of reasons:

1) Fewer on-campus listeners. Students just don't listen to radio anymore, opting to discover their music online. Ironically, most of a college radio's listenership is off-campus. That being said, the college broadcast courses will remain in place as university radio stations move to the Web.

2) Budgetary shortfalls. Thanks to the recession, college administrators everywhere are faced with the prospect of making cuts, and frequently the first item to get the axe is the radio station, especially if it can be sold off.

Realistically though, college radio had been infiltrated by big business more than a decade ago after record labels discovered that it was the last bastion of open playlists. That being said, at least the consultants (the reason for crappy radio, in my opinion) have been kept out of it, hence the continuing local flavor that each remaining station maintains.

Just like the music business, radio isn't what it once was and probably never will be again. In the end, it probably won't matter much if college radio ceases to exist. It's a new age, so the sooner we let the new wave of communications wash over us, the better.

Check out a great article on college radio from a recent New York Times.

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