Thursday, August 25, 2011

14 Rules For The New Music Industry

advice image from Bobby Owsinski's Music 3.0 blog
I came across this post on the Tuncore blog recently entitled "New Rules For The Music Industry." It doesn't encapsulate the entirety of Music 3.0, but does get most of the points.

1) STOP ASKING FOR BIG ADVANCES – Understand that the economics of the business have changed for both the artists and the labels.  The goal for artists and labels must be the same: create sustainable working relationships for both parties.  Disproportionate advances only add tension (economic and otherwise) to an already tense dynamic. Create financial working relationships based on realistic expectations of ROI.

2) EDUCATE YOURSELF – It’s no longer acceptable (or charming) to be the un-informed artist who doesn’t know the difference between a mechanical royalty and a mechanic.  You can’t claim that you’ve been taken advantage of by anyone at this point; the information you need is out there, and it’s not that hard to find.  Learn it, once you have this knowledge you can then make informed decisions and decide if the other entity is doing its job.  Not to mention, the labels etc already know this info and so should you.

3) TAKE RESPONSIBILITY – Stating that there is any person or thing standing in the way of you and success is a cop out.  No longer can you say, “If only my records were in stores, people would buy them,” or, “If only people could hear my music they would love it.”  The gatekeepers have vanished; the gates are open…go through them.

4) TAKE ACTION – Waiting for a booking agent before you tour? Waiting for a producer before you make a recording? Waiting for a label before you distribute or promote your music?  Guess what, someone else isn’t waiting for anyone, and he or she is leaving you in the dust.  The worst thing you can do is nothing.

5) SELL – Get over the fact that you’re the artist, and asking people for money in exchange for your art is awkward.  The reality is that if your work is good, people will want to compensate you for it. You must not only give them the opportunity to do so, but make it easy for them.  Be clear and transparent, and tell your customers that your music is valuable, and that if they want to ensure that you are able to keep creating the music that they enjoy, that they must pay for it. Then give them a wide variety of things to buy at different prices.

6) GIVE WITHOUT ASKING FOR ANYTHING IN RETURN – It’s not all selling, of course, and we are all in this together.  Look for ways to help other artists. Share information, share resources.  This is not a zero-sum game; the overall pie can expand, and we will all benefit proportionately when it does.

7) DEMAND ANSWERS – if you don’t understand something, ask.  If the person you ask can’t give you a clear, understandable answer then he or she is either clueless or trying to hide something.   Demand a clear, understandable answer or walk away from the deal.

8)  MARKETING DOES NOT ALWAYS EQUAL SUCCESS – The major labels spent hundreds of millions of dollars marketing and promoting bands.  Only 2% of them succeeded, the other 98% were deemed failures.  If marketing = success, they would have had a 100% hit ratio.  The reason an artist succeeds is because the music caused reaction.

9) LEAD TIME FOR STREET DATES MATTER LESS – It’s not like the old days where you only had a limited time for prime real estate in a retail store and if the CDs did not sell they would be returned.  In the new model you can release music today, and market later, with little detrimental impact.

10) IT’S ABOUT A CONSTANT STREAM OF MUSIC AND MEDIA, NOT A ONCE A YEAR ALBUM RELEASE ­  – The new world moves fast.   The best strategy is to roll out songs, videos, pictures, blog postings, tweets and anything else you can think of on a constant basis.  This keeps your fans engaged and stops you from losing momentum and going stale.

11) IT’S GLOBAL – The new music industry is a global one.  At the click of a button your music is available to buy, share, stream and download around the world.  Keep this in mind when you think about where your money is being held, generated and how to get it.

12) YOU ARE NOT POWERLESS – Music is not food, shelter or clothing, but everyone likes it and needs it.  The music industry currently generates around $30 billion dollars a year.  The entities and people getting this money is shifting from the legacy companies to you.  Within another five years the collective power of you will be bigger than any of them.  You have the power to change things, and you already are.

As just one example, in the past two years, TuneCore Artists have earned over $170 million in gross music sales and have sold over 400 million songs by paid download or stream.  TuneCore Songwriters have earned over another $120 million dollars.
As you sell more, they sell less.

13) DEFINE YOUR GOALS – Know what it is you are tying to accomplish.  Are you looking to be the next Vanilla Ice or just sell some music without touring?  Is your goal corporate sponsorships or having others cover your songs?  Whatever it may be, have a goal in mind and then work towards accomplishing that objective.  With that one conquered, you can move on to the next.

14) DON’T EXPECT SOMETHING FOR NOTHING - It’s going to take work to make things happen.  Either you need to do the work or you must hire someone else to do part, or all of it, for you.  If you understand your rights, how money is made, and how much you should make, you can make educated decisions.
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Check out my Big Picture blog for daily discussion of music, recording, and production tips and tricks.

Wednesday, August 24, 2011

The Music Industry Loses A Big One

gavel image from Bobby Owsinski's Music 3.0 blog
The "music industry" (also known as the major record labels and publishers) needs revenue. Everywhere they look the income pie is shrinking, and they're desperately trying to staunch the financial bleeding. One way they had hoped that would happen is to have the owners of the so-called "digital music lockers" pay them a license fee when a user uploads their music to the locker (also called "the cloud").

But neither Amazon nor Google went for that proposition, taking the bold step to wait and see what would happen in a test case of EMI (and 14 music publishers) versus MP3tunes is the brainchild of Michael Robertson, the creator of the original thorn in the side of the music business -, one of the companies that started the digital revolution in the first place. The site beat Amazon and Google into the music locker business, allowing the user to store all of their songs in their own virtual locker in the cloud so he/she could stream the music to any of their digital music devices at any time and not have to have all of their songs stored on that device.

In a lawsuit that has major industry ramifications, EMI wanted to get paid if any of their songs were loaded onto MP3tunes. What's more, they asked that MP3tunes effectively police their users to determine if any of the songs were stolen, then make them take them down.

In a ruling yesterday (August 23, 2011), Manhattan district judge William Pauley ruled that MP3tunes (and as a result, any other music locker) is not responsible for what their users upload, clearing the way for people to mix songs they have bought with those that have been offered for free on the internet without worry of having to pay a license fee.

The one stipulation in the ruling is that if a copyright holder finds that a user has uploaded pirated content, the locker company must take down those songs if they're notified.

OK, let's look at the winners and losers here.

The Winners
MP3tunes, Amazon, Google Music, any digital music locker - They don't have to pay a license fee to the labels, and they don't have to police their customers.

The user - They can store their music in the cloud without having to worry about being asked to pay a fee for music they can't prove they own.

The Losers
Music Publishers/Record Labels - They lost a potential major income stream.

Songwriters - Likewise.

Artists - They were bound to make something from that income stream, although probably a pittance of the total amount.

We all seem to leap for joy when the middle man takes a beating, but usually that also means that the creators are taking one too. Virtual music lockers threaten to become the next big thing in music and we'll see if that actually comes to pass by the end of the year or so, but that won't mean much for the real people that need the help - the ones that make the music.
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Tuesday, August 23, 2011

4 Tips For More Targeted Press Releases

News image from Bobby Owsinski's Music 3.0 blog
While it can be argued that press releases are a tool of the past, bloggers and journalists still find them to be very useful. There's nothing better at delivering a short, pointed story about a product or event, and they're great for archival purposes on websites. Regardless of the medium, a press release has to be targeted to a potential outlet to get it into the hands of someone who might find it useful. Here are some tips from an article in regarding targeted press releases.

What’s the news? Part of crafting a quality press release is having a clear sense of what exactly the big news is. Your press release should focus on the most newsworthy element of your announcement with supporting details (including multimedia links) that clearly lay out why this news is significant. If you have a good story with good visuals, a press release can be quick, succinct, and to the point; all things that make everyone’s job easier. Journalism 101: Don’t bury the lede.

And, keep in mind, audiences are now able to search and find your press releases online. So making them consumer-ready — clear, interesting, and shareable — is also important.

Update your media list. Staff changes in the media are happening at a rapid clip. Before you send out your release, take another look at the list to be sure the reporters you’re targeting still cover the beats that are relevant to your story.

Proof, edit, and proof some more. Many press releases go out with poor grammar and unclear sentences that make it difficult to decipher what the heck you’re talking about. PR Daily, which has frequent grammar stories, and the AP Stylebook are just two of the sites out there that can help you clean up your writing. Reporters don’t have time to crack a code to understand what you’re saying.

Understand that the news you’re announcing isn’t for everyone. If you follow tip number one, it should be clear who would be most keen on the news you’re announcing. While it would be nice for tons of reporters and bloggers to report on your client’s news, there may only be a small number of reporters who will actually do so. Sending your release to a select list of reporters or bloggers is a more efficient use of your time than sending it to the The New York Times when that clearly won’t happen.
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Monday, August 22, 2011

Sell A Million, Make Zilch - Part 3

Courtney Love image from Bobby Owsinski's Music 3.0 blog
I've been giving examples of how recording contracts are stacked against you in recent weeks (other articles here and here), and here's yet another good example that comes from none other than Courtney Love. Like her or her music or not, in this Salon rant she is extremely cogent and describes what happened after her very brief flash of music stardom. Oh, and by the way, it's from 2000, but the basic premise still holds today.

"Today I want to talk about piracy and music. What is piracy? Piracy is the act of stealing an artist's work without any intention of paying for it. I'm not talking about Napster-type software.
I'm talking about major label recording contracts.

I want to start with a story about rock bands and record companies, and do some recording-contract math:
This story is about a bidding-war band that gets a huge deal with a 20 percent royalty rate and a million-dollar advance. (No bidding-war band ever got a 20 percent royalty, but whatever.) This is my "funny" math based on some reality and I just want to qualify it by saying I'm positive it's better math than what Edgar Bronfman Jr. [the president and CEO of Seagram, which owns Polygram] would provide.

What happens to that million dollars?

They spend half a million to record their album. That leaves the band with $500,000. They pay $100,000 to their manager for 20 percent commission. They pay $25,000 each to their lawyer and business manager.

That leaves $350,000 for the four band members to split. After $170,000 in taxes, there's $180,000 left. That comes out to $45,000 per person.

That's $45,000 to live on for a year until the record gets released.

The record is a big hit and sells a million copies. (How a bidding-war band sells a million copies of its debut record is another rant entirely, but it's based on any basic civics-class knowledge that any of us have about cartels. Put simply, the antitrust laws in this country are basically a joke, protecting us just enough to not have to re-name our park service the Phillip Morris National Park Service.)

So, this band releases two singles and makes two videos. The two videos cost a million dollars to make and 50 percent of the video production costs are recouped out of the band's royalties.

The band gets $200,000 in tour support, which is 100 percent recoupable.

The record company spends $300,000 on independent radio promotion. You have to pay independent promotion to get your song on the radio; independent promotion is a system where the record companies use middlemen so they can pretend not to know that radio stations -- the unified broadcast system -- are getting paid to play their records.

All of those independent promotion costs are charged to the band.

Since the original million-dollar advance is also recoupable, the band owes $2 million to the record company.

If all of the million records are sold at full price with no discounts or record clubs, the band earns $2 million in royalties, since their 20 percent royalty works out to $2 a record.

Two million dollars in royalties minus $2 million in recoupable expenses equals ... zero!

How much does the record company make?
They grossed $11 million.

It costs $500,000 to manufacture the CDs and they advanced the band $1 million. Plus there were $1 million in video costs, $300,000 in radio promotion and $200,000 in tour support.
The company also paid $750,000 in music publishing royalties.

They spent $2.2 million on marketing. That's mostly retail advertising, but marketing also pays for those huge posters of Marilyn Manson in Times Square and the street scouts who drive around in vans handing out black Korn T-shirts and backwards baseball caps. Not to mention trips to Scores and cash for tips for all and sundry.

Add it up and the record company has spent about $4.4 million.
So their profit is $6.6 million; the band may as well be working at a 7-Eleven.

Of course, they had fun. Hearing yourself on the radio, selling records, getting new fans and being on TV is great, but now the band doesn't have enough money to pay the rent and nobody has any credit.

Worst of all, after all this, the band owns none of its work ... they can pay the mortgage forever but they'll never own the house. Like I said: Sharecropping. Our media says, "Boo hoo, poor pop stars, they had a nice ride. Fuck them for speaking up"; but I say this dialogue is imperative. And cynical media people, who are more fascinated with celebrity than most celebrities, need to reacquaint themselves with their value systems.

When you look at the legal line on a CD, it says copyright 1976 Atlantic Records or copyright 1996 RCA Records. When you look at a book, though, it'll say something like copyright 1999 Susan Faludi, or David Foster Wallace. Authors own their books and license them to publishers. When the contract runs out, writers gets their books back. But record companies own our copyrights forever.

The system's set up so almost nobody gets paid."

There's more to the article. Read it in its entirety here.
You should follow me on Twitter for daily news and updates on production and the music business.

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Sunday, August 21, 2011

Why Your Trademark Is So Important

Here's an excellent video from entertainment attorney Marty Frascogna all about trademarks. In it he describes exactly what is a trademark, why bands need a trademark, how to get a trademark, and even better, how to use it as leverage with a label or merch vendor. It's a great explanation of a difficult subject that's easy to understand, and an important aspect to doing business in the new world of Music 3.0.

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.


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