Top 13 Things Discovered In The New Digital World

If you've never read Paul Resnikoff's Digital Music News, then it's something worth checking out. Paul's a great writer and reporter with some pretty good industry sources, so he always has the latest details on the digital music world's breaking news. He's insightful too, and often offers an extremely cogent insight on the the digital music world's troubling trends as he sees them. Here's a post from the other day that I thought was particularly on the mark.
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The Top 13 Things We've Discovered In the Digital New World...

Here are the top lessons the music industry has 'discovered' in the early days of this 'digital new world'.  

(1) It's really, really hard to sell music to fans online. Whether the iTunes Store or Rdio, getting fans to allocate even modest amounts of their income to music is an extremely difficult challenge. Competing with free has proven a hard game indeed.

(2) But it's not as hard to engage fans, as long as they're not paying. In fact, they love music more than ever! Welcome to the Digital New World riddle.

(3) DRM is an awful idea, at least for downloads. Other platforms like YouTube, subscription services, and streaming radio are still fair game.

(4) Sound quality doesn't matter. At least to most fans. That would explain why few have complaints with MP3s, though Jimmy Iovine and T. Bone Burnett have serious problems with the fidelity freefall.

(5) An official release date means very little. Almost everything is leaked in advance, and even half-baked copies find their way online long before a scheduled drop. 

(6) Licensing content is a great way to squander an investment. VCs are largely out of this game, though others are still slogging through horrific licensing processes and nosebleed costs (ie, Spotify).  Or, running the red light and dealing with the consequences (ie, Grooveshark).

(7) Email addresses are more important than Facebook, Twitter and MySpace connections. Or, at least that's what pros like Ian Rogers (of Topspin) are saying. Sounds a bit counterintuitive, but according to what rulebook?

(8) If you're hot right now, just wait 5 minutes. Attention spans are shorter than ever, and fan relationships with bands can be fickle and short-lived. 

(9) Direct-to-fan distribution is a seriously double-edged sword. Sure, you can create powerful direct-to-fan relationships, but so can millions of other bands. Welcome to the horrific content glut that results from digital democracy.

(10) There's an app for that. Good luck selling ringtones or OTA downloads on a mobile device. But those that understand app culture have done well, including Tapulous, Smule, and T-Pain. 

(11) 360-degree deals can really kill your musical mojo. We're just starting to see some of the problems associated with these label land grabs. Smart artists like Arcade Fire and Metric are rolling their own multi-national deals, though sometimes the 360-degree paycheck is worth the handcuffs.

(12) Digital disruption is not just for record labels. Nearly every other sector - including publishing and touring - are also trudging through tough transitions.

(13) The music is still the most important thing. Artists over-dialed into their Twitter followings and play counts are often missing the most important part of the equation.

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The New Marketing Trifecta

Here's a great chart that illustrates what's become known as the new "marketing trifecta" in the Music 3.0 age.

If you read this blog often then you know that I'm a big proponent of developing and nurturing an email list, which is outlined as one of the spokes of the trifecta by this graphic. If you're not involved in social media (the second spoke) than you're missing a huge opportunity to connect with new fans and existing ones. And since everyone has a cell phone these days (the third spoke), how can you not use it as a marketing tool?

Here are a few interesting items from the graphic:

• 97% of all households use email 
• 66% of all marketers now use social media as part of their overall campaign strategy
• 75% of all households connected to the Internet use some form of social media
• 91% of email campaigns also use Facebook as part of their campaign, 83.9% on Twitter, 48% Linkedin, 34.3% YouTube, and 3.7% Foursquare
• There are 285 million mobile devices in use in the United States (that's over 91% of the population) and 70 million of those are Smartphones

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The Music Industry Loses a Big Case

The music industry (which amounts to the major record labels) has long wanted your local ISP (Internet Service Provider) to bear the brunt of what amounted to their failings. For instance, the industry wants the ISPs to do their enforcing by cutting off the service of any subscriber involved in the industry's definition of piracy. They also want the ISPs to collect a tax on every subscriber to pay for their estimated loses to piracy, a practice that the services continue to resist.

Now comes word that a giant Irish ISP called UPC has won a landmark legal case against all four major music labels that may be a precedent for similar action here in the US. Warner Music, Universal Music, Sony BMG and EMI Records wanted to force UPC to implement a "three strikes" (the third time your caught you're cut off) system to combat copyright-infringing, music file-sharing Internet users subscribed to the ISP.

The Irish High Court has ruled that the laws that forced the ISPs to identify and cut off service to their customers were not enforceable in Ireland.

Although the court agreed that illegal downloading was bad for the record label's business and "ruins the ability of a generation of creative people in Ireland, and elsewhere, to establish a viable living,"any kind of forced enforcement by an ISP was not provided for in Irish law. The court ruling did leave some wiggle room for all involved though, but any changes must still come from a change in Irish law.

Although the labels have not been able to force a similar kind of enforcement in the US, RIAA lobbyists are furiously working behind the scenes to get new legislation passed. Luckily, there's a lot more pressing issues on congressional plates these days.

You can read more on the story here.

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New Survey Predicts Radio's Future

A new study by Edison Research called "The American Youth Study 2010" examined the media and technology habits of 12 to 24 year olds in the US. The first part of the study looked at music discovery and consumption habits of this group and is titled "Radio's Future."

Here are a few of the significant findings:

1) 12-24 year-old Americans reported Internet usage of two hours and fifty-two minutes per day, roughly triple this age group's reported usage from 2000 (59 minutes).


2) Radio continues to be the medium most often used for music discovery, with 51% of 12-24 year-olds reporting that they "frequently" find out about new music by listening to the radio. Other significant sources include friends (46%), YouTube (31%) and social networking sites (16%).


3) 20% of 12-24s have listened to Pandora in the last month, with 13% indicating usage in the past week. By comparison, 6% of 12-24s indicated they have listened to online streams from terrestrial AM/FM stations in the past week.


4) More than four in five 12-24s own a mobile phone in 2010 (up from only 29% in 2000), and these young Americans are using these phones as media convergence devices. 50% of younger mobile phone users have played games on their phones, 45% have accessed social networking sites, and 40% have used their phones to listen to music stored on their phones.


6) Music tastes have shifted among 12-24s over the past decade: those radio listeners who indicated that Top 40/Pop stations were their favorite have more than doubled, while Alternative Rock stations were selected by half as many listeners in 2010 as in 2000.


7) Today's 22-34s have significantly changed their media consumption habits since the first study in this series 10 years ago. In 2000, 44% of 12-24s most often began their day by listening to the radio. Today, radio continues to lead, with 29% of that same cohort (today's 22-34 year-olds) reporting that radio is the medium they use most in the morning, while Television (25%) and the Internet (23%) have gained significantly.

Providing that none of this data is skewed (no guarantee there), radio is currently listened to more, and has a greater influence, than anyone thought. Not only that, the type of music being listening to by the group (Top 40) is a surprise. All that being said, I'd like to read the entire survey myself before drawing too many conclusions, but the points above sure are interesting.

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9 Reasons Why People Don't Buy Downloads

We all have our theories as to why consumers buy, or don't buy, digital downloads. Most of us are guessing or going by a gut feeling, but occasionally we hear from someone that has some real data that confirms our assumptions. At the Digital Music Forum West in Los Angeles last Wednesday, NPD Group analyst Russ Crupnick gave these 9 reasons during his presentation:

1) People listen to AM/FM radio instead

2) They prefer to own the physical CD

3) They're spending less on entertainment

4) They don't listen to music on their computer

5) They're satisfied with their collection

6) They don't spend as much time listening to music

7) They don't own a portable digital music player

8) They don't feel comfortable using their credit card online

9) They don't think that downloads are a good value, their afraid of spyware/viruses, downloads are too expensive, or they have no time to learn about new music (that seems like 4 reasons to me).

All that being said, Crupnick also noted that among the 13-25 set, price and access to shared music files rank higher than the rest of the population.

There's not much mystery here except for the order (number 2 seems too high to me), but now there seems to be some quantifiable evidence to what we all thought.

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If Only The Industry Listened To Him

Jac Holzman is an old-school record label exec, having founded the venerable Elektra Records (home to rock luminaries like The Doors, Queen Carly Simon and The Stooges) as well as being an early influence on what eventually became MTV. You'd think that someone who's been in the label boardroom longer than most of today's tech whizzes have been alive would be decidedly out of touch, but Jac is more tuned to the cutting edge than almost anyone in the industry.

Listen for yourself on this brief interview with the man himself.

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5 Reasons Why Indie Artists Fail

Jolin Gomez wrote a good article for the Music Industry Report about the 10 reasons why indie artists fail that I thought was worth expounding upon. Here are 5 of his reasons, followed by my comments in italics.

The reason why most indie artist's fail is because:

1. You do not study the music business: This means not understanding the different elements of the business and how they work together. There are a lot of ways to break as an artist, but you've got to know what they are in order to exploit them.

2. You do not write songs seriously: Songwriting is the first and foremost task of any indie artist. Until you can write songs, you won't be taken seriously as an artist.

3. You have no originality or creativity: If you sound just like someone else, you've already lost. If people tell you that you sound just like U2 or Beyonce, it's time to go back to the drawing board. The world already has them as artists. They need something new.

4. You do not have enough live experience: It's difficult to hone your chops unless you play in front of people - a lot. It's not easy to do that these days with fewer and fewer venues available, but remember that most of your income will probably come from playing live. If you're not good at it, it's less likely that you'll succeed.

5. Lack of professionalism: Professionalism means great attitude towards work. Overall, the way you treat the music business as a serious business, or how you approach and deal with relationships makes you a professional. Nothing scares away professionals like managers, agents, promoters, producers and label execs like an unprofessional artist. They expect a certain level of professionalism, and if they don't find it in an artist, they move on regardless of how talented the artist might me. The hassle factor is just too great.

Click here to read the original post.

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Soundgarden's Game Gamble

To most established musical acts, licensing songs to a game is strictly an ancillary revenue stream. That might change now that Soundgarden has sold over a million copies of their new "Telephantasm" greatest hits album that was bundled with the new "Guitar Hero: Warriors of Rock" game.

This is the first time that a new album was released with a game before the physical CD release, and it went platinum (1,000,000 units sold) thanks to a new type of certification from the RIAA that recognizes game sales as part of the overall sales picture.

After a one week exclusive with Guitar Hero, the CD and downloadable album was released on October 5th. It will be interesting to assess the sales of the standalone album to see how the game impacts the stales.

While the music game fad has worn off, there are still enough players that are interested in both Guitar Hero and Soundgarden to register some big sales.

While this certainly isn't a path that a new artist can take, it does indicate that the album sales landscape has changed significantly, and every avenue must be explored even for established artists.

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The Reality Of Tweets

Online marketing firm Sysomos recently performed a survey on tweets from the last two months and found found some interesting points:

1) There were over 1.2 billion tweets during the two month period.

2) Only 29% of those tweets generated a reaction.

3) 92% of retweets happen within the first hour, 1.6% happen in the second hour, and less than 1% in the third hour.

4) 85% of tweets have only a single reply, 10.7% attract a reply to the original reply, and only 1.5% are three levels deep.

What does this data tell you? Just like any kind of content, the popularity depends on the quality. If you tweet crap, don't expect it to be read or for it to go viral. If you really have something to say, it still might not go viral, but at least you have a chance.

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4 Rules For Crowdfunding

Crowdfunding is becoming a popular way to finance a recording project, thanks to sites like Kickstarter, MyBandStock, indiegogo, Rockethub and Sellaband, among others. Regardless of which site you use, the idea is the same - it allows your fans to pool their money in order to fund your project.

If crowdfunding is something that you'd like to pursue, here are 4 rules to help your campaign be successful.

1) Choose an attainable goal amount. Everybody would like a $100,000 budget to work with, but unless you have a large fan base to begin with, you're probably dreaming if you think you can raise that amount. Even a once-huge selling band like Public Enemy had to cut their goal from $250k to $75k, so be realistic in both what you need and what you can raise.

2) Concentrate on low price points. Kickstarter's data indicates that $50 is the optimum investment point, closely followed by $25. While most artists also include amount in the thousands as well, don't count on these being filled.

3) Make sure the investment reward is sufficient. Remember that you're not getting a donation, it's an investment and your investors will expect something in return. Check out this list of incentives from Hind as an example. Of course, one of the most brilliant list of incentives comes from Josh Freese (Perfect Circle,  Nine Inch Nails, Devo, Weezer). A lot of it was meant to be funny for promotion's sake, but people took him up on it anyway.

4) Keep the campaign short. Kickstarter has found that the optimum campaign is 30 days, with longer campaigns performing significantly worse. The biggest periods of investment come right in the beginning and right before it closes, with everything in the middle a somewhat "dead period." If that's the case, you might as well make the campaign short since there's no advantage to dragging it out.

Kickstarter has some great additional info and data on a recent blog post that's also worth checking out.

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Split Gigs

As I've said so often on this blog, getting gigs is one of the hardest things for an artist or band to do. Once upon a time, there seemed to be a club on every corner and most of them had live music, but obviously that's no longer the case, so the competition for every date and time slot is fierce.

If you're playing in showcase clubs where you only play a single show, a way to expand your reach into another territory is to trade gigs with another band. This is where you each book a local show, but you trade them so each band gets to play in a new venue. The problem is, it's not always easy to find another band to trade gigs with.

Now comes a service called Split Gigs, a social network that helps bands, musicians and dj's find gigs to play. The site enables bands to connect with one another to exchange gig possibilities, and according to the site, even book a tour.

While this idea can work, be aware that you run the risk of incurring the wrath of the club owner or promoter if the band you're trading with doesn't bring a crowd (which won't happen since probably no one knows them), so it might not something that can be done often. Then again, if you can arrange for the other band to share the same bill on an opening slot and then vice versa, that could work well as long as the promoter agrees to it.

Check out the trailer for SplitGigs.

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What Is A Brand?

One of the things that an artist or band hears a lot these days is the need to promote "your brand" in order to get ahead in Music 3.0. That's all well and good, but it's hard to promote your brand unless you know exactly what a brand is. So what exactly is a brand? Here's a quote from the Music 3.0 Internet music guidebook that describes it perfectly:

A brand is a promise of quality and consistency. No matter where in the world you go for a McDonald’s hamburger, you know what to expect. No matter what product you purchase from Apple, you can expect sleek high-tech design and an easy to understand user interface. Brand management is protecting the image of the brand and carefully selecting how to best exploit it.

For an artist, that means a consistency of persona, and usually a consistency of sound. Regardless of what genre of music the artist delves into, the feel is the same and you can tell it's the artist. Madonna has changed directions many times during her career but her brand remained consistent. Here persona remained the same even as she changed to and from the "material girl." The Beatles tried a wide variety of directions but you never once questioned who you were listening to. It was always fresh and exciting, but distinctly them.

On the other hand, Neil Young almost killed his career with an electronic album called "Trans" that alienated all but his hardiest fans, and the well-respected Chris Cornell may have done irreparable harm to his long-term career with his recent album with Timbaland ("Scream") even though it was the highest charting of his career. Why did this happen? For both artists, the album no longer "felt" like them. Both Young and Cornell built their careers on organic music played with a band, and as soon as their music became regimented and mechanical, they lost their brands. After Trans, Young returned to his roots and slowly built his brand back to superstar level, but it's too soon to know what will happen with Cornell.

How do you determine what your brand is? It's easier said than done.

In order for an artist to successfully promote their brand, they must have a great sense of self-knowing. You must know who you are, where you came from, and where you're going. You must know what you like and don't like, and what you stand for and why. And you must have an inherent feel for your sound and what works for you.

And that differentiates a superstar from a star, and a star from some who wants it really badly but never seems to get that big break.

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