Music 3.0 Music Industry Blog

Thursday, June 16, 2011

The Lesson Behind Rebecca Black Pulling "Friday" From YouTube

Today comes the news that Rebecca Black’s “Friday” video is no longer available on YouTube. No great loss there, but what is intriguing is that apparently the video was pulled due to a copyright claim filed by Rebecca Black herself. While it’s not exactly clear what's behind this, the video had amassed 167,370,534 views before it was taken down.

The second interesting piece to this is that ARK Music Factory, the company that produced the song and video, had experimented with a $2.99 YouTube rental earlier this week. From a sales perspective, this was about 150 million views too late, but that's not the point. Regardless if you like or abhor the song, there's a bigger lesson here.

Just a little background: Rebecca's mother paid ARK Music Factory $2,000 to produce the song and video. As these things go, no one expected anything other than a vanity release with a few thousand views if she was lucky. Much to everyone's surprise, the video blew up, went viral and was quite the rage for about a month or so, although more for the general awefullness (is that a word?) of the song and video than anything else.

Now here's where the business part of it gets intriguing. If ARK/Rebecca had the presence of mind to set up as a YouTube affiliate after they saw it blowing up, it's possible that about $100,000 could have generated from adverts (which is a pittance for 150 million of anything). It's also rumored that there was about 300,000 digital sales of the song (although there's no way to verify that), which would've brought in about another $200k. The big question is - who got the money?

This is where the lesson comes in. Was the $2000 Rebecca's mom paid ARK a buy-out? If so, what did it buy out? Who owned the song? Who owned the publishing? Was there even a contract that stipulated any of this? Did ARK or the Black's try to get around a signed agreement?

Without knowing any of the details, on the surface it seems like ARK wanted to generate some last minute revenue so they slapped a $2.99 rental on. The Blacks, unhappy with their end of the payout, retaliated by filing a copyright claim to take the song down. YouTube doesn't necessarily care who owns the rights; all it cares about was that someone claimed copyright infringement, so they play it safe by taking action, so the song came down.

So the lesson? This is a highly unlikely scenario that probably won't be repeated for a long time (at least in this fashion), but it's always, always, always best to have these things worked out ahead of time just in case some unforeseen success occurs. Establishing ownership of any intellectual property up front is by far the least painful scenario in any creative venture - even one as far fetched as Rebecca Black's "Friday." You've been warned.

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Wednesday, June 15, 2011

Should Lip-Syncing Videos Be Illegal?

One of the things that non-musicians love to do is make videos where they lip-synch to their favorite song. And it's not just kids either; there may be as many 30 year olds as 8 year olds doing it. While this all may seem innocent enough, it's actually a copyright violation, and the new U.S. Senate bill 978 would toughen the copyright laws and make it illegal to upload lip-synced videos.

Just as an example, this kid has over 40 million views for his lip-sync of Katy Perry's "Teenage Dream."

Up until now most record labels would let a lip-sync like this one slide or at worst issue a take-down notice where YouTube or the posting service would delete it. However, the new bill would take the penalty a new level, like up to five years in prison, even if you're not making any money!

There are several schools of thought on this:

* From the record label: "This is a copyright violation. They're illegally using our song without paying us."

* From the Music 3.0 artist: "This is great promotion. Fans like my song enough to make like they're singing it."

* From the fan: "I'm just having a little fun. I'm not making any money on this and I'm not hurting anybody."

Which one do you agree with?

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Tuesday, June 14, 2011

Don't Forget Transaction Costs

Recently I had a discussion with a friend about exactly where the money goes when iTunes takes their fee from a sale. For each $0.99 song, it's estimated that Apple pays $0.70 to the major labels (which is over 85 percent of their sales), and $0.60 to $0.65 to independent labels. This means that the average price per song is approximately $0.69, of which Apple keeps about 30 cents from every sale.

This might seem like a huge amount but what everyone forgets is that this isn't pure profit; Apple has costs too. There are network fees, transaction fees, and general administrative expenses associated with operating the iTunes Store. It's believed that the network fee is about $0.05 per song, which includes the delivery fee and the hardware and software to facilitate delivery, and the operating expenses are a little less than $0.05 per song, based on the relatively small number of Apple employees that are believed to work on iTunes.

That leaves the biggest and most overlooked cost of all - the transaction cost. This is the amount that the bank charges for the privilege of using a credit card. It's believed that when iTunes first started this cost was as high as 24 cents per sale, which left Apple with a mere penny or two of profit for every sale. It's now believed that they've brought this cost down to about a dime, which still leaves a profit of about 10% (or 10 cents) on every sale, which is far below what the perception is.

The point of all this is that transaction costs are frequently overlooked when doing business, and they are the secret expense that eats your profit. If you take credit cards for merch and music, I guarantee that's it's costing you way more than what a giant like Apple can arrange.

All credit cards charge you multiple fees. First of all, there's a monthly transaction that's a minimum of $20 (usually more), a "gateway" fee of between $5 and $20, and a monthly minimum transaction total. Slip below that total and you're charged a penalty.

Then there's the transaction costs per sale, which can go from $.20 to as high as $.35 (it's usually higher for an Internet transaction), plus a charge of between 1.5 and 3% of the total of the sale. Add all that up and it means that if you only make a dozen or so song sales a month, you've actually lost money. Even if you've met your monthly minimum, you still may be only making less than half of a $1 sale thanks to the transaction costs involved.

Hopefully these transaction costs will soon come under control as micropayment fees become more widely available. This is were the traditional bank costs are bypassed, and only a small fixed fee per transaction is paid. Paypal has recently instituted a system of micropayments, and I've written about more about other possibilities in other blog posts. Check out my recent post of Square for a good example of this type of fixed transaction fee.

So be aware of your transaction costs in order to be sure that you're earning exactly what you think.

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Monday, June 13, 2011

Has Facebook Peaked?

Facebook is supposedly getting ready to go public in early 2012, but it can't come soon enough if the numbers from Inside Facebook are correct. It appears that even though world-wide Facebook numbers are surging towards 700 million users, the numbers are dropping in the US and Canada.

It seems that the United States recently lost nearly 6 million users, falling from 155.2 million at the start of May to 149.4 million at the end of it, which is the first time the country has lost users in the past year. Canada also fell significantly, by 1.52 million down to 16.6 million, but the United Kingdom, Norway and Russia also all posted losses of more than 100,000.

All of these countries were first adopters of the social network, and could also be the first to shed users to another network (just what is not apparent yet). The site notes that by the time Facebook reaches around 50% of the total population in a given country, growth generally slows to a halt, which is what's apparently happening. As you can see from the chart on the left, there were a number of countries that gained users, but these were all developing countries.

What does this mean? Facebook isn't going away anytime soon, but there are some people that either can't see the point or just plain don't like it. That's always been the case, it's just that it's been a little more so last month. If we see the numbers trend like this for a few more months then we'll know something big is happening, but for now, it's Facebook business as usual.

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Sunday, June 12, 2011

10 Ways Musicians Can Use QR Codes

It took some time but QR codes look like they're finally catching on. If you don't know what a QR code is, it's the symbol on the left, and it's actually an analog web link. Just scan it with you phone or iPad and you're sent automatically to the webpage.

Recently Bruce Houghton over at the great Hypebot blog posted the 10 creative ways that musicians can use QR codes. The original article is here.

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Inspired by Clyde Smith's Guide To QR Codes For Musicians, I wondered about how indie musicians might use these scanable graphics that link the offline and online worlds. Marketer and artist Erica Glaser had already created a strong list of 50 creative uses for QR codes that's geared to filmmakers and visual artists as much as musicians, but she provided the spark that led to my own list of 10 Creative Ways Musicians Can Use QR Codes:

Connect a gig poster with a place to buy tickets
Connect posters to a video or track that "sells" the band
Connect your t-shirt to your web site
Connect a t-shirt or poster to a free download
Connect a poster to your online store with a discount
Connect a poster to your Facebook page
Connect signage on stage and merch table to mobile firendly site with email signup
Connect your CD cover to an email signup
Connect a CD cover to bonus content
Offer a free track to retailers who include you name and a QR code connecting to a tweet-for or email-for-track landing page

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Thursday, June 9, 2011

Music Distributor Rankings

Ever wonder which online music distributor is the most influential? Of course we know that's iTunes, but it's a big world out there and you'd be surprised all the other services that have huge customer bases. Here's an overview from Digital Music News regarding the state of music monetization.
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These are the stats we've been able to confirm; please share if you've got more numbers.

(1) iTunes
* Paid Song Downloads: 15 billion, cumulative since mid-2003 (source: Apple, shared this week.)
* Broader Story: Annual gain-rate of about 4 billion; iCloud $25 annual subscriptions start this fall.

(2) Spotify
* Paying Subscribers: 1,000,000+ (per Spotify, as shared early March, 2011)
* Subscriber Mix: Roughly 10 percent are paying; Spotify says the number is closer to 15 percent when measured by active users. Within paid tiers, 90% appear to be paying full premiums (source: Digital Music News, citing statements and information from European partner sources)
* Royalty Payouts: 43 million euros ($58.5 million) in 2010 (source: Spotify, shared with ballade.no earlier this year).

(3) Sirius XM Radio
* Paying Subscribers: 20.6 million (per first quarter company disclosures). Ranking: Sirius is the third largest entertainment-related subscription service in terms of subscribers, trailing Netflix and Comcast.

(4) Pandora
* Registered users: 90+ million (per SEC filings, June 2nd.) Of note: Subscription and other premium payments accounted for 13.6 of total revenues, according to February disclosures. Pandora has counted more than 10 billion thumbs, though they are not yet profitable (as of April, 2011).

(5) Rhapsody
* Paying Subscribers: 750,000 (per Rhapsody president John Irwin, January 20th). Of note: Increase of 100,000 since April, 2010; awaiting half-year updates (company is preparing to announce a major increase, according to conversations with the company).

(6) Slacker
* Paying Subscribers: 'Well past 300,000' and growing (source: Slacker, to Digital Music News on Wednesday.)

(7) eMusic
* Paying Subscribers: 400,000 (per eMusic disclosures to Digital Music News, November 15th). Of note: Zero subscriber growth since 2007.

(8) Rdio
* Paying Subscribers: Company will not disclose to Digital Music News.

(9) MOG
* Paying Subscribers: Company will not disclose to Digital Music News.

(10) Vodafone UK
* 100,000 paying music subscribers (per Vodafone content services director Lee Epting at MidemNet 2011). Of note: Global goal is 1 million by 2012.

(11) Napster
* Paying Subscribers: 760,000 as of the Best Buy purchase (May, 2008). Current number unknown, likely smaller.

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Wednesday, June 8, 2011

3 Ways To Screen Your Followers

When it comes to social networking, not all fans are created equal. Some are stalkers, some only want to build a large friend list and could care less about you, some will never use the service after the first week, and others want things from you that go above and beyond the typical follower relationship. That's why you have to screen your Facebook Friend requests when possible. After a couple of, shall we say, unsavory experiences, here's what I do.

1. Ask yourself "How Do I Know You?" Even if you have 25 mutual Facebook friends, there has to be something more to be sure the connection is right for both of you. Unless there's a referral from a a most trusted friend, I automatically go to step 2.

2. Check out the bio, photos and posts. I always look at someone's bio first to see if he or she is in the music business or some other business that I'm in. If I can't tell from that, then I move on to the photos. If I see something like the person on stage or in the studio, you're in. If there's nothing to indicate we have a connection of some sort, then I move on to the posts. Again, if you have some posts that indicate we have a professional connection in some way, you're in. If all I see are posts about your personal life, you're not.

About the worst thing is someone who has no history of posts, won't let me see their info unless we become friends, or only has some goofy profile picture that tells me nothing about you. Next!

3. Keep it professional. If you're using social networks as a promotional tool, you've got to keep your posts professional for the most part. It's okay to post something personal, and your fans certainly want that, but never get too intimate regardless of how tempted you may be. A certain congressman just found that out the hard way.

It goes the same for your fans. If someone is coming on too strong, it's time to unfriend them. If a "friend" is coming into town and wants to meet, check them out thoroughly first. No background info, no coffee or lunch!

While we're on it, let me give you a few criteria I use when people email me to ask for help. I love to help people and I'm always there for anyone that asks, but there are a few times when I hedge a bit. The main one is "I'm doing a project for school and......." and suddenly there are 20 questions, or only one that's so broad it can take an hour to write a reply. I'm not going to write your paper for you unfortunately. Usually what I say is, "This is too complicated to write in an email. Here's my number and the best time to call. I'll tell you all you want to know then." I figure that in 15 minutes on the phone I can be a lot more helpful than taking an hour out of my day to write a reply that might not answer the question properly. It's funny though, people rarely call. Once again, I'd love to help, but I'm not going to write your paper for you.

So this is the criteria I use for accepting Facebook friends, which I've found to work very well. If I haven't accepted your Friend Request, now you know why.

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Tuesday, June 7, 2011

8 Essential Facebook Promotion Tips

Jennifer Moire wrote a great post on the essential Hypebot blog a while back that outlined the 8 tricks for publicists using Facebook. I changed the title because I think that it applies to anyone promoting on Facebook, not only publicists, but the body of the post is the same. This is some really valuable info that can be useful immediately if you use Facebook as a promotional tool (which you should be doing).
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A rash of recent social media conferences inspired us to compile these tips to help public relations professionals get the most out of the social media site.

Thursday is the best day of the week to get the most visibility for a Facebook post.

Release major stories in the early morning. If you post between 11 a.m. to 4 p.m. EST, you risk your content getting pushed down by news feeds and other traffic.

When sharing stories, include the full link on Facebook — that’s 300 percent more likely to get clicked on than any shortened address.

Use both the like and send Facebook buttons on your site.

Want the secret behind making it into your friends’ “top news” feed? It’s based on an algorithm known as Edge Rank. Use words like “today,” and “limited-time only,” to increase its Edge Rank.

According to a recent study from Pew Research Center’s Project for Excellence in Journalism, Facebook is among the leading drivers of traffic to 21 news web sites. So when sharing a good media story, don’t forget to leverage the leading social network.

Want to know which words are most “shareable” on Facebook? Try words like “best,” “most,” and those that explain, such as “why,” and “how.”

Facebook may be a better platform for making a video go viral than other social media platforms, probably because the site makes it easy to embed multimedia content into a post.

There's a lot of great information available via the links, so take a look at those as well.

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Monday, June 6, 2011

The Booking Info Section Of Your Website

Dave Cool posted an interesting article over on musicthinktank.com the other day about "How To Get A Booking Agent To Book Your Band." While all the information is good, I especially liked the part about adding a section on your website called "Booking Info" or "Book My Band."

As I've advocated here and in my Music 3.0 book many times, your website should be the center of your online universe, with all social media pointing back to it. That doesn't mean it should be for fans only, there's a B2B (business to business) element to it as well, and that's providing an agent or promoter all the info and tools needed to make a decision on whether to book you or not. Here's what the article suggested.
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If you’re generating some buzz in your local scene, make sure that if an agent does check out your band that you have the right information on your website for them to see. Create a “Book My Band” section on your website, which would be similar to an online press kit, but it would include things like:

Statistics about the # of newsletter subscribers you have, Facebook fans and Twitter followers
Average attendance for your shows: are you regularly selling out 50-seat venues? 100-seat venues? Put that information somewhere on the page.
Mention which markets you play in
Have a photo gallery with lots of good quality live pics (any photos that include crowds in packed venues are a bonus)
Post good quality live videos (good video quality, good audio quality, packed rooms, minimal talking. Audience sing-a-longs are a bonus!)
Stage plot
Set list
Quotes from media that mention your live show
Quotes from venue bookers
Quotes from fans about your live shows

Other than that, you should always blog about your live shows. Talk about the turnout, the crowd reaction, and post plenty of pics and live video whenever you can. All of this will help create the impression that you’re a hard-working band that takes their live shows seriously.

Read the entire article at musicthinktank.com.

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Sunday, June 5, 2011

7 Ways To Sell More Merch

Mike Venti recently wrote a great article on weallmakemusic.com entitled 7 Ways To Sell More Merch. In it he has some excellent suggestions to increase your merch sales, which is one of the keys to surviving in this Music 3.0 age we live in. Here are 5 of the 7 ways from the article. You can read the entire article here.
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Location, Location, Location
The visibility of your table makes all the difference. If you’re set up in a dark, shadowy corner of the club, not nearly as much foot traffic will make its way to your table. Many concert goers may miss it entirely. For maximum effect, have your table in a well lit, high traffic area. Be sure to make sure your table’s placement by is alright with them. If you can set up by the venue’s entrance/exit, for example, everybody will have to walk by it at least twice that night.

Convenience
Just because somebody’s spent all their cash on drinks doesn’t mean you should miss out on a sale.
Make sure that you can process credit cards, either with an old-fashioned swiper or through digital card readers on your smartphone.

Great Deals
Nobody can pass up a great deal, so make sure your to bundle your merch in ways that seem like a bargain. Instead of selling a CD for $10 and a T-shirt for $20, sell them together for $25.

Signage
You should have a sign (or signs) with your all your prices. That sign should be written in print large enough that it’s legible from a few feet away. Introverted people and browsers like to see all the pricing information without having to strike up a conversation with the merch person. If you’re fortunate enough to have a very busy table, visible prices also help your merch person focus on selling rather than reciting prices over and over again.

Freebies
Offering free stickers, guitar picks, buttons and other small promotional items is a great way to encourage people to gather around your merch table and make it stand out. Large crowds naturally help attract even more people over to your table, giving you the opportunity to make even more sales.

Read the entire article on weallmakemusic.com.

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Thursday, June 2, 2011

Prince And Gaga Prove The New Music Business Model

By now I'm sure that everyone's heard about Lady Gaga selling 1.1 million copies of her "Born This Way" album last week. On the surface this seems like a huge number, especially for an artist these days, but there's more here than meets the eye.

First of all, the digital sales were about 660,000, but 440,000 of them came from Amazon's two day $.99 promotion. This set a one-week SoundScan record for most digital sales, and became the eighth best-selling U.S. digital album of all time. But the significant thing here is the price, 99 cents, which we'll get to in a minute.

Next in the news was the fact that Prince just ended his 19 day run playing the Forum in Los Angeles. What's significant here is that the majority of the tickets in the 18,000 seat venue were priced at only $25.

Why is that important? Because it shows a new trend in the entertainment business were price is a motivating factor in purchases.

Way back before music became the commodity that it is today, everyone felt they got a fair value when purchasing either an album or a concert ticket. The price was cheap enough that if you bought something that you didn't like, you didn't feel ripped off or filled with buyer's remorse. It was easy enough to buy the next album or a ticket to the concert without feeling it in your pocketbook too much.

Of course all this changed when Wall Street became involved in the music business after it smelled big money in the 80's. The prices for premium artist's CD's were double what consumers were used to paying for vinyl records, so if you bought one that you didn't like or only had one good song on it, you indeed felt the financial pain of a near worthless purchase.

Likewise for concerts. It was nothing for a music fan to go to several concerts a month during that era. They were cheap enough that you didn't feel like you'd have to miss lunch for the next two weeks to pay for it, and you felt comfortable about spending money to see a new unfamiliar act.

Of course that all changed when the price of tickets, concessions, parking and service charges went to the sky. Music lover's buying habits slowed to only a show or two a year instead of every month. In it's greed, the industry tried to milk every single dime from the consumer at the expense of a making them a returning customer.

With Gaga signing on for the Amazon promotion, it proves that consumers are more price conscious than ever with music, and will buy in large number if the price is right. With Prince lowering the ticket price to $25, and doing a good business in doing so, it proves that people will still show up if the price is right.

Although the numbers are unofficial, it seems that prince sold as few as 6,000 seats on some nights, but that's still enough to make money since both his and the venue's overhead was amortized over the number of dates played. Gaga still sold more than 500,000 albums at $13 to 16, despite the 99 cent promotion (although her number have steeply fallen since), once again proving that online, the more you give it away (or almost give it away), the more you sell.

It's about time that the industry learns that price is a barrier to sales. It's hard to believe they didn't know that in the first place.

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Wednesday, June 1, 2011

Making "Like" More Likeable

Danny Sullivan wrote an interesting post on Mashable recently about how Facebook "Likes" can help website and blog traffic. For example, Facebook says Like buttons get 3 to 5 times more clicks if:

Versions that show thumbnails of friends are used.
They allow people to add comments.
If they appear at both the top and bottom of articles.
If they appear near visual content like videos or graphics.

Facebook also stied that video site Metacafe placed a Like button above its videos, in addition to being below, as the arrows point to in this screenshot:

After doing this, use of the Like button and traffic from Facebook increased. Facebook reports that:

The number of daily likes more than tripled, going from an average of 2,000 likes per day to over 7,000 likes.
Daily referral traffic from Facebook to Metacafe doubled, going from about 60,00 to 120,000.
Total Facebook actions (likes, shares, comments) rose to 20,000 per day.

The "Like" button is becoming more and more important in social networking, so it's worth incorporating into all of your online presence, if possible.

Read the entire article here.

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Thursday, June 16, 2011

The Lesson Behind Rebecca Black Pulling "Friday" From YouTube

Wednesday, June 15, 2011

Should Lip-Syncing Videos Be Illegal?

Tuesday, June 14, 2011

Don't Forget Transaction Costs

Monday, June 13, 2011

Has Facebook Peaked?

Sunday, June 12, 2011

10 Ways Musicians Can Use QR Codes

Thursday, June 9, 2011

Music Distributor Rankings

Wednesday, June 8, 2011

3 Ways To Screen Your Followers

Tuesday, June 7, 2011

8 Essential Facebook Promotion Tips

Monday, June 6, 2011

The Booking Info Section Of Your Website

Sunday, June 5, 2011

7 Ways To Sell More Merch

Thursday, June 2, 2011

Prince And Gaga Prove The New Music Business Model

Wednesday, June 1, 2011

Making "Like" More Likeable

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