Thursday, January 16, 2014

Is Verizon's Victory A Streaming Music Killer?

Net Neutrality image from Bobby Owsinski's Music 3.0 blog
Until yesterday I was hopeful about the future of the music business. Today not so much. All the indicators and predictions showed the growth of music streaming to not only offset the decrease in download sales, but even some long lost CD sales as well. There was actually hope for a recovery, and a real chance to see some much needed growth. Now the future is uncertain.

That's all because of Verizon’s court victory in the U.S. Court of Appeals against the Federal Communication Commission’s so-called Net Neutrality law, which required Internet Service Providers to treat all Internet traffic equally. That seems innocent enough on its surface, but without that law in place, ISPs can now charge extra for either high-bandwidth or speedier delivery. This affects streaming media companies like Netfilx that specialize in video (especially), but can also affect just about every streaming music provider as well.

Streaming music is an extremely low margin business to begin with. Between paying huge licensing fee advances to the music labels, there’s the cost of paying the copyright holder and publisher, as well as bandwidth, storage, and marketing costs. None of the major players make money right now, as they all jockey for position as they hope the future economy of scale will bring a large enough market to break into the black. Sure there’s advertising and subscription income right now, but that’s still slowly creeping up to the break-even point.

As a result, companies like Pandora and Spotify that are just hanging on hoping that the costs stay static while the user base grows. That’s all well and good, since the majority of music consumers are still virgin territory, having not experienced streaming or not yet made a choice of a preferred service. New services like Beats Music (set to launch next week), YouTube Music (set to launch “soon”), and Slacker (set the enter the US market “soon”) see the space wide open, while Pandora and Spotify have big leads in market share at the moment, but we’re still early in the game. Read more on Forbes.

You should follow me on Twitter and Facebook 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, January 14, 2014

How Not Having A Website Can Cost Your Band Money

Click To Website image from Bobby Owsinski's Music 3.0 blog
Many artists and bands don't believe that they need a website any longer and choose to rely on social media for their entire online presence. This can prove to be a fatal strategy, as outlined by this excerpt from my Social Media Promotion For Musicians book. In this excerpt you'll see 3 scenarios where not having a website cost a band or artist fans, sales and even a career.

"Unfortunately, a website many times gets overlooked as an integral piece of your digital promotional life because there are so many other places that you can use as your online focal point. Having a Facebook page or Tumblr blog, or relying on another social network as your online central focus has a number of potential flaws, not the least is control of your message. Let’s look at three scenarios where relying on a social media site as your main contact point can prove disastrous.
  • Scenario #1: Our first scenario is a real-life example of a band I’ll hypothetically call “The Unknowns,” since one of the band members asked me not to reveal their true name. During the heyday of MySpace around 2004 the band was hot and eventually developed a following of over 900,000. This led to a number of record labels becoming interested (remember that they sign you for your audience, not your music), with the band eventually signing a big deal with one of the largest major labels at the time. The label immediately told the band to suspend their MySpace account because “we can do all that better in-house than you can.” In typical record company fashion, the label ultimately did very little for the band’s online presence. They did create a new slicker label-managed MySpace account, but they were not able to transfer any of the band’s previous followers, thus leaving them with a presence that was far less than they had before they were signed. Of course, when The Unknown’s album was released they had no way to alert those 900,000 followers since they didn’t have any of their email addresses, and they didn’t even have a website where their fans could go in order to discover the latest news about them. Needless to say, the album bombed and the band was dropped from the label. They never recovered that massive fan base that they had before they were signed.
The moral of the story is that if they had redirected those fans from their MySpace account to their website in order to harvest at least some of the email addresses, things might’ve turned out a lot differently, since they could have alerted their fans when the album was released. And that’s the problem with relying on an external site that you don’t control as your focal point online.

It's too easy for today's artist who only dabbles in social networking to get complacent and comfortable with the abilities of a single social network, but that can spell disaster for maintaining your fan base if you're not careful. As those artists who formerly depended upon MySpace now know, what's hot today can be ice cold tomorrow. But other negative scenarios also exist that can be far worse than the network falling out of favor.

This scenario was recently played out again early 2013 in a slightly different manner when MySpace relaunched an updated version of their site. Every single artist lost all of their followers, and every MySpace user lost their previous settings, and any affiliation with the artists they were following. All users had to reregister again, and all artists, regardless of how popular they were (even owner Justin Timberlake), started all over again with zero followers!
  • Scenario #2: Let's say that you've cultivated a huge following on Facebook. What would happen if Facebook was purchased by EXXON (highly unlikely, but let’s pretend), who decides that all it wants is the underlying technology of the network, and shuts the rest down? If you didn't capture the email addresses of all your followers, you'd lose them to the nothingness of cyberspace. Don't laugh - a scenario like this could happen, but most likely on another smaller network.
  • Scenario #3: What would happen if Facebook (I'm picking on them because they're the big dog on the social block) changes its terms of service, and now charges you $.25 for every fan past 100? If you're lucky enough to have 8,000 fans, it's going to cost you $2,000 to continue. Or what if they decided to limit everyone's fan connections to 100? Actually, something similar now happens in that you’re unable to access that large fan base that you've worked so hard to develop unless you pay.
The point of all of the above scenarios is that when you depend on a social network for your online presence, you’re ceding control to an unknown, unseen force that can change it’s will at any time with no regard to your online well-being. That's why it's imperative that you don’t count on a single social network for your total online presence or even your social media presence. If you rely on an external network, sooner or later you're going to get burnt. It's the nature of the Internet to constantly change, and it's too early to get a feel for the life span of even of the largest sites and networks. 

Just to illustrate the volatile nature of social networks, in 2005 MySpace was the most visited social network online with 100 million users. A mere five years later and it had dropped below 25 million, yet has recently doubled that number and is growing again. What this means is that you must pick and choose the social networks that you participate in wisely, and always engage in a number of networks in case one suddenly falls out of favor.

You can read additional excerpts from Social Media Promotion For Musicians and my other books on the excerpt section of

Follow me on Forbes for some insights on the new music business.

You should follow me on Twitter and Facebook 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, January 13, 2014

The Best Way To Boost Your Album Sales

The Everly Brothers image from Bobby Owsinski's Music 3.0 blog
It's a sad commentary when the best way to boost you iTunes sales if you're already famous is to pass away. This is what happened to the Everly Brothers catalog after the passing of Phil Everly recently.

Everly Brothers albums were up a whopping 455% last week, according to Nielsen SoundScan, and their individual songs were up 696%.

Now to put that into perspective, that meant that only 5,000 albums total were purchased!

The biggest seller being "The Very Best of the Everly Brothers," which moved 2,000 copies. It actually made #8 on the Country Catalog Albums chart with this number. Their top selling single was "All I Have To Do Is Dream," which was up by 490%, but that just meant 4,000 total downloads.

This is just another point that sales are not what they used to be, and probably won't be in the future.

Follow me on Forbes for some insights on the new music business.

You should follow me on Twitter and Facebook 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, January 12, 2014

The Music Industry Moves Kicking and Screaming Into A Streaming World

Streaming Music image from Bobby Owsinski's Music 3.0 blog
One thing about the music industry is that it likes to be comfortable. Life was so easy for about 50 years as the way business was conducted hardly ever changed. The label found an act, made a record, sold it to retail and promoted it through radio. Publishers and songwriters went to the mailbox and collected their checks. Boy, are those days over.

Just about the time the industry was getting used to digital downloads as the center of its financial universe, the business model is changing once again as streaming becomes the consumption method of choice for music lovers everywhere. The genie’s out of the bottle, the cows are out the barn, and the music files are off the hard drive.

Nielsen SoundScan’s numbers for 2013 now show that streaming was up 32 percent, while digital download sales were down about 6 percent. Folks, from this point on this disparity will continue to grow, and by leaps and bounds I might add, and you can take that to the bank.

Once again, let’s state the obvious - people prefer convenience when it comes to technology, and streaming is so much more convenient than any other type of music consumption method that there’s no contest. You’re going to see streaming explode for real in 2014, and those SoundScan numbers are going to look tiny when we look back this time next year. Read more on Forbes.

You should follow me on Twitter and Facebook 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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