Apple's Cloud Music Service A Mirage?

Yesterday I wrote about the likelihood of Apple debuting a cloud-based service in the near future. Today comes word from Cnet that's might not be the kind of service that Apple has planned after all.

If your not familiar with the term "cloud," it means online storage. An iTunes cloud service would allow you to put all of your music online instead of keeping a copy on each device. That means that you can access it from your computer, your phone, or iPad, or anything else connected to the Internet.

But the problem is that a new service would require a new license for the songs from the major and indie labels, and Apple still hasn't even begun negotiations, which means that we won't see the envisioned cloud service anytime soon. Negotiations with one label takes months and months, let alone with all four majors. We'd be lucky to see it in a year.

So why is Apple building a huge new server farm (they call it the "Orchard") in North Carolina?

The speculation is that Apple isn't looking to launch a cloud music service at all. It's for video.

If this is the case, here's how I see it.

• 1) Apple is going after YouTube. Why else build a server farm for video?

• 2) Apple will launch a music subscription service earlier than anyone expected. If the cloud music service isn't an interim step to subscription, that means they're going right to subscription, right?

All this means it should make for a very interesting year of Apple watching.

P.S. It's been reported this morning that Apple has added cloud streaming to its MobileMe iDisk app. It has some limitations though, since it appears to be limited to Apple products, and doesn't support automatic uploads as you add songs to iTunes, playlists or album cover artwork. This shouldn't be considered a cloud music service, just an iDisk improvement, but it can be construed as Apple testing the waters before a full product introduction.

The plot twists and thickens yet again.

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Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Interesting July Music Stats

Digital music information and strategy company Music Alley puts together an interesting monthly report called NumberCrunch that includes some interesting statistics culled from information sources like NPD, Forrester and Neilsen/Soundscan. Here are a few points that I found interesting (my comments in italics).

• In the first half of 2010, digital album sales grew by 12.7% to 42.2 million units. If the album was supposed to be a dying format, why does it have a healthy growth of almost 13%?

• Digital albums now account for 27.4% of all US album sales. That means that the market for albums is still about 160 million, of which about 120 million are still CDs. The CD may be dying, but there's still plenty of sales life left in it according to these numbers.

• According to media analyst NPD, 7 to 8 million iTunes users in the US would be interested in paying at least $10 a month for cloud-based iTunes services to access their music libraries across multiple platforms. You can bet that Apple will be rolling this out by the end of the year or beginning of next, since they already have the infrastructure in place.

• 13 to 15 million iTunes users would be interested if the service was free. Doubtful that will happen though, unless the service can be monetized in some other way. 

• Analyst Russ Crupnick claims that the potential market for a paid subscription-based iTunes would be $1 billion in it's first year alone, which is about 2/3rds of what its present pay-per-download model. This is the 800 pound gorilla in the room. Almost everyone believes that if Apple pulls the subscription trigger, subscription will become accepted by the consumer almost overnight. But when will it happen? Probably not until well after their cloud service comes into being.

• Home computers accounted for 41.6% of digital music consumption in Q3 of 2009, followed by MP3 players at 32/5%, mobile phones by 12.1% and home streaming devices by 11.1%. That must mean that most people consume most of their music at work.

• Only 23% of people said they listened to music on both their computer and MP3 player, 9% on computer and mobile phone, and 5% on all four platforms. This could be a bad sign for a cloud-based service, as most people won't have any use for it.

• 63% of the people listening to music on their phones are 18 to 24 years old. Is this figure really any surprise to anyone?

I think the most interesting thing about these figures is that the conclusions have been holding steady for quite some time now. Let's see what next month brings.

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Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Cassettes Making A Comeback?

According to an article in the Sunday LA Times, the lowly audio-cassette tape is making a comeback of sorts. The article states that there are a few record labels like Kill/Hurt, Not Not Fun, Bridgetown Records and Burger Records that use cassettes as a promotional tool of sorts, and actually sell out of short runs!

We all thought that cassettes were history and according to Soundscan, only 34,000 were soldin 2009, but it seems like there's enough of an appetite for new product, and there are enough tape machines still out there that work to constitute a market. In fact, M2 Communications (where Burger Records get their tapes duplicated at) state that they're currently duplicating being 6,000 and 10,000 a month.

The key to making this work is pricing - $6 per unit. Of course, short runs of only 250 (usually at a buck a copy cost) makes the outlay and the risk small, and also make it an exclusive piece of merch for the true fan.

Cassettes are actually not that bad a distribution medium in terms of reproduction quality. Sure, when they first came out in the late 60's the quality was pretty poor, but by the end of their reign the playback quality was surprisingly good. I remember taking a tour of a record pressing and tape duplicator and hearing some tapes off the line played back in the QC department and being shocked how good they sounded. The key, of course, was that their playback deck was aligned weekly, something that never happened in consumer decks.

While the return of the cassette tape is a short-lived fad that will be nothing but a sales blip (if that), it is a good example of thinking outside the box in terms of marketing. It also goes to show that in Music 3.0 almost anything works, even if it's low tech.

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Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Not Enough Professionals - Not Enough Gigs

It's always been tough making a living playing music, but statistically it's more difficult than ever. This is no surprise to anyone active in the industry these days but now we have some verifiable facts thanks to the US Bureau of Labor Statistics. The chart on the left indicates the number of people who now identify themselves as professional musicians, and how that correlates with decreased sales of music.

Is anyone surprised that fewer people than ever think of themselves as pro musicians? You shouldn't be. The club infrastructure in the US (where musicians perfect their chops and traditionally are able to make a living in the "farm team" before becoming a recording artist) has been completely gutted. Once upon a time you could find a place to play almost every night of the week, regardless of where how good you were. Now that doesn't even happen for many hit artists with multiple hits under their belt.

And that's a big reason why the state of music is what it is today. Yes, we've had huge technological changes in music that have made a big impact on the state of music, but one key element of music that can never be replaced for a musician is a gig. You can't develop your craft unless you perform in front of people - a lot. You've got to get in your 10,000 hours, as Malcolm Gladwell states in his best-selling book Outliers: The Story of Success. Why do you think The Beatles were so great? Play 6 sets a night for a couple of months and just see where your chops are.

Unfortunately, there seems to be no immediate answer to the lack of gigs. Just don't expect anything new in music until things turn around.

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Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

The 90/10 Rule

There's a common rule-of-thumb in business that states that 80 percent of your business comes from 20 percent of your customers (actually called the Pareto Principle). This usually rings true in that in most businesses you have you major customers who bring in most of your revenue, and all your other customers that supplies the rest. If you're in a subscription or mass marketing business where your collecting funds from thousands or even millions of customers (like online), you can still break it down to 80/20 where 80 percent of your business comes from a certain category of users.

The music business was always thought to work on the 80/20 rule as well, but lately there's been a general change of outlook about those numbers. In fact, many music marketers now feel that 90 percent of an artist's income (especially an indie artist) comes from only 10 percent of their fans.

The thinking in the 90/10 rule is that superfans (sometimes called uber-fans or your "tribe") are so passionate that they're purchase just about anything the artist offers for sale, and as a result the income is skewed more heavily in their direction than in other businesses.

There's at least some empirical evidence that 90/10 is indeed true, which means that for an artist to really break big, he has to move those numbers closer to the traditional 80/20 split. A superstar artist has to move those numbers even more. This is how it breaks out:

INDIE NICHE ARTIST
90% - income from tribe/superfan/uberfan (and anything else you want to call them)
10% - income from casual fans

MASS MARKET ARTIST
80% - income from tribe/superfan/uberfan
20% - income from casual fans

SUPERSTAR ARTIST
less than 80% - income from tribe/superfan/uberfan

more than 20% - income from casual fans

Once an artist establishes himself with a fanbase, regardless how small, the marketing goal from that point is always trying to move the 90/10 split closer to 50/50.

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Music Publishers And The 360 Deal

As everyone connected to the music business knows these days, record labels are demanding 360 deals with all of their new signings. Just in case you're not sure, a 360 deal is one where the record label owns a piece of all your income streams, including revenue from touring and merchandise.

Now you might think, "Why should I give them part of anything other than the part that they're supposedly good at - selling recorded music?", and you'd be right. It's pretty outrageous to pay anyone who can't make a real contribution to the success of a revenue stream. A 360 deal in essence gives a label the same control as a manager has, or at least the same fees, but since they're not even that good at their core business of selling music anymore, why should you give them part of something that have no experience in?

But now it turns out that major publishers want to get in on the act too, and are demanding their own 360 deals.

At one of the recent monthly Association of Independent Music Publishers (AIMP) luncheon at LA's House Of Blues, a panel of publishing business affairs execs told the audience that music publishers are now demanding additional rights that amount to major label 360 deals when signing new artists.


The reason why the major labels want (even need) 360 deals is because CD sales are in the toilet, and downloads don't make enough (and even those sales are flat) to compensate. They have to make up for the loss of income somehow, and taking additional rights from the artist is the only way (so they seem to think).

So it is with publishing. Until recently publishing escaped much of the turmoil of the music industry. Mechanical royalties (the royalty when a CD or download is purchased) have dropped, but performance royalties (when a song is played on the radio, television or in a film) have gone up as more and more television channels came on line. But now that income has dropped as well as just about every broadcast entity is paying less for music, so publishers are also trying to make up the lost income.

What's an artist to do? If the label, the publisher, the manager, and maybe an attorney have a piece of all of your income streams, there's not much left.

All the more reason for the DIY approach that's now possible in Music 3.0. That's the only way that you can put yourself in a position not to have to take a 360 deal of any kind. Any kind of success that you generate increases your bargaining power. It's no longer just another way to do it, it's now a necessity.

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Follow me on Twitter 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.

The Ultimate Chart

One of the problems with today's music charts is the fact that they utilize the sales numbers to determine chart position. While has been the primary way of doing it for years, it's certainly a less valid methodology that it was in the past before Internet metrics were available.

But now that we do have multiple online metrics, what exactly should be used to determine chart position? Internet music measurement company Big Champagne thinks they have the answer with a chart that takes a combination of traditional sales, airplay, audio and video streaming, plus fans, friends and followers from various social networks. It's called the Ultimate Chart and it measures everything except illegal downloads, which is Big Champagnes core business so it's charted separately.

The Ultimate Chart currently only looks at the top 100 artists, so you'll only see label acts and those that have a high profile, but Big Champagne is said to be working on the Ultimate Independent and DIY chart as well for those up and comers. In the meantime, an interesting blog called We Are Hunted has a chart that measures chatter and blogging for indie acts.

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Follow me on Twitter 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.

Engagement, Not Just Awareness

There have been a number of articles in the past couple of weeks that have touched on the subject of how important fan engagement is, as opposed to simple awareness. Let me elaborate.

Awareness is when someone knows the name of the artist or band (or company or brand). This is what advertising or PR tries to do - build awareness. But just because someone knows about you, it doesn't automatically mean that person will become a fan. For that to happen, everything must go to the next level, which is engagement.

Engagement is the act of getting someone to respond. This could mean something as simple as listening to a song, watching a video or reading an email, which is all well and good, but true engagement really takes things to the next level. That means really turning the person into a fan by motivating them enough to physically do something, like go to a concert or buy a download, CD or a piece of merchandise. Even just talking to their friends about you is an excellent example of fan engagement, since nothing spreads the word like direct communication.

So how do you change awareness into engagement? 

First understand that awareness is built by a mass-marketing campaign. It's a shotgun approach that's meant to cover as many people as possible. This might be a good first step, but it also might mean a lot of effort and money spent on building awareness with people who will never be your fans in the first place, and therefore never engage. If you're a rap artist, there's no point building your awareness with someone who loves country music (unless your music is connected with country in some way).

Engagement is all about targeting. It's finding the people who are most likely to respond and concentrating on them. How? 

By watching the metrics from apps like Google Analytics or StatCounter, but also from the more empirical data on a personal level like reading emails or blog responses or even speaking directly to fans. 

Once you'e found that potential fan base, the next step is content, content, and more content -  songs, shows, videos, and regular (but not too regular) communication. Contests, surveys, and give-aways are excellent ways of engaging because you engage fans by giving them something to engage. The deeper the connection to your fans, the more engagement.

Above all, remember that engagement is what you're actually trying to achieve because a career can't be had from awareness alone.

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Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

How To Check Your Backlinks

One of the best pieces of information you can have is exactly who is linking to your site. Backlinks are one of the best ways to move up in search engine ranking, so the more you have, the better. It's also great to know exactly what people are saying about you as well. Here are a couple of cool ways that you can  check those backlinks.

First, let's go to Google. Go to the query window and type "links:yoursite.com" (excluding the quotes) and you'll see all some of the backlinks to your site. Here's an example for my main bobbyowsinski.com site below.

This isn't perfect because it doesn't show all the links to your site by Google's own admission (not sure why), but it does give you an idea of who likes you enough to backlink to you.

Yahoo also has a nice backlink checker called Site Explorer. Simply plug in your site on the top left as shown below. After you hit the "Explore URL" button, click on the second button right below "Results" as outlined. There's all your links! I've cut mine off at 9 here, but you get the idea.

Enjoy exploring your backlinks.

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Follow me on Twitter 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.

Top Earning Musicians Of 2010

Every year Forbes magazine releases their top 10 best earning musicians. The chart runs from July 1 2009 to June 30, 2010, which ends up being important as you'll see. Keep in mind that the Forbes figures are NET, not gross amounts.

1. U2, $130 million (the cancelation of their North American tour was mostly after the end date)
2. AC/DC, $114 million
3. Beyonce, $87 million
4. Bruce Springsteen, $70 million
5. Britney Spears, $64 million
6. Jay-Z, $63 million
7. Lady GaGa, $62 million
8. Madonna, $58 million
9. Kenny Chesney, $50 million
10. Black-Eyed Peas, Coldplay and Toby Keith (tied), $48 million

Here are some interesting notes about the list:

1) Most of the income is from touring, which should be of no surprise if you read this blog with any regularity.

2) A third of the list is under age 30, so it's not all about dinosaurs anymore.

3) 40% of the list are women, and it could have been higher if the period would've have lasted a little longer, since Pink would've made the list.

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Follow me on Twitter 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.

A New Marketing And Distribution Idea Twist

Here's a new twist on an older music distribution and marketing idea. Garage-pop band Killola is joining forces with digital concert distributor Aderra to create USB Dogtags as a way to sell unique merch items to their fans and provide the group with a another way to instantly connect with them. How? Fans who purchase the $40 Dogtag not only receive the band’s new album, but also their previous two on the same flash drive.

But here's the new angle. Fans plug the USB drive into their computer to receive exclusive updates from the band including new songs, remixes, live recordings, music videos and photos, which is also the basic idea of the different digital album formats like MusicDNA, CMX and Cocktail, which I talked about last year on my Big Picture blog. It's a great way to utilize the Music 3.0 connection with the fans that have a Dogtag, and for them to connect back.

So the basic premise is pretty good if you already have fans. If you're a new band however, you're better off just giving the things away to try to establish that fanbase. One of the cool things about providing music on a USB drive is that hardly anyone ever turns one down, since they're pretty useful whether you want the music or not.

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Follow me on Twitter 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.

Another Take On How Music Videos Have Hurt Music

We all know that music videos were responsible for changing the primary emphasis of most record labels from artist development to image development, but it seems that there's more to it than that.

In an interesting email to music industry gadfly Bob Lefsetz, former MTV exec Bob Wilson (who was also the founder of the now defunct industry trade magazine Radio & Records), talks about some of the research that the network did when it first began in the 80's. Among the surprising items they found that appear to have had a profound effect upon current music:

• Music is personal and a song means different things to different people (although we intuitively knew that already). When you put visuals to a song, the visuals over-power the personal meaning and everyone "sees" the same thing, which also de-personalizes the music.

• This visualization of music makes songs burn out much faster than just hearing them.

• Live performances are perceived differently since the mind sees them as "events."

• It usually takes 5 to 6 times for a person to hear a song and like it enough to buy it.

• "MTV doesn't play videos any more and the Internet has moved in to replace the new music void for those that crave new music. Things have changed but the way the brain takes it all in remains the same. The Internet allows a person to hear a song as many times as they want - whenever they want -- which should reduce the time to the purchase cycle -- especially when they can purchase and download the song they like from the source they are listening to it on..rather than have to make a trip to a record store. I think it will take some time and more research to monitor this but as you say - the model is changing."

Wilson goes on to say, "I believe history will prove the MTV period to be the beginning of the end of what music used to be to each of us." We already knew that, but perhaps we didn't really know the reason why.

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Follow me on Twitter 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.