State of the Music Industry

Great video on the Music Industry!

http://youtu.be/y2q5L8kUOtA

Lessons from the Industry Formerly Known as "The Record Business"

by James Barton and Brian Message

A record company's value used to be measured by the acquisition, protection, and exploitation of copyrights. Exploiting those copyrights by selling songs is an easy business model to understand and used to be the foundation of a very healthy global industry. Historically, the record business was the heart of the music industry. Sell a lot of records and you were a successful business. And artists also succeeded through record sales: they became household names when they had sold a lot of records.

From the business perspective, artists and songs could be viewed as interchangeable commodities. If any given artist failed to deliver hits, another waited in the wings to take their place. This impersonal approach allowed the music industry to grow extremely profitable by simply selling "product."

But the sale of recorded music has taken a battering over the last decade, and it's no longer smart to judge an artist's commercial viability on record sales alone — not least when there is a new generation who questions the need to pay for recorded music at all. For many artists and their managers, record sales are now just one of many revenue streams and one of a number of factors with which to judge success.

Despite this dramatic change in the marketplace, many struggle with the concept of uncoupling success from record sales. It doesn't help that most measures — the charts by which many fans learn about new music — are still based on this notion. For emerging artists this is particularly precarious, since careers are too often ended early if a first set of recordings fail to sell.

So how should a "content producer" behave in this new environment? And what lessons can we learn from this new model of value? Here are the two keys:

1. Do not treat artists as commodities
2. Value the artist-fan relationship as highly as traditional rights

Smart managers realize every artist is a standalone business that generates income from multiple revenue streams. A manager's job is to create those businesses and run them well. This requires thinking globally and being agnostic about which revenue stream or territory is the most important. As long as those channels can deliver the aesthetic the artist wants and make a profit, the business is a success.

But the business of relationship building is not a quick one. Artists have to earn the respect of fans, convert that respect into trust, and, eventually, convert that trust into faith. Building communities takes time, and it can only be achieved over the long-term. In this model, artists can no longer be treated as interchangeable hit makers.

The key to artist-management success is identifying talent early and developing it cost-effectively over a long period of time. Artists — and their art — are the only real assets. The systems and structures that surround them should be treated as a means to maximize the commercial value of each artist. As such, the traditional music industry — be that companies that make and distribute records, publishers who collect performance royalties and create sync opportunities, concert promoters, or merchandisers — should be regarded primarily as service providers to artists.

As the digital age gathers pace, managers must engage in the shaping of the music landscape. That landscape is still plagued by a mindset that regards copyright as an instrument of control (which further limits commercial exploitation to traditional models) rather than as a remuneration right that can generate revenue wherever a market may be. The future is about accepting consumer behavior and looking for as many ways as possible to monetize it.

In addition, managers must also simplify the complex structures of the industry and create healthy businesses based on monetizing the behavior of consumers and those businesses that wish to use creators' works for their own profit. Without a simpler, better structured digital market, the direct artist-to-fan business will struggle to grow. Moreover, it will undermine the modern-day manager's opportunities to improve their artists' business.

Managers must also figure out alternative investment for artist businesses. Traditionally, it was the record business that invested in new talent. Restricting investment to direct rights exploitation keeps the emphasis on making money from record sales, which keeps the "investment risk" for would-be investors high. A viable alternative would be a market for investors to put their money into artists' whole businesses, where artists retain rights and investors participate in all the profits.

The music industry was the first of the creative industries to be affected by the disruptive nature of the internet. But it's not all bad news. Disintermediation has forced a focus on talented individuals who produce great art. One of the jobs of their managers is to create an environment that allows them to do so. Ways of collecting fans and connecting them to artists are ever changing, but by embracing new technology opportunities, creative businesses will flourish. Other content producers take note.

This post originally appeared on BMA on December 20, 2005.
“There are amazing women musicians out there. But the industry signs acts based on marketing. It’s definitely a loop. There aren’t women out there doing well, because they haven’t been signed, so (the record) industry doesn’t sign any more, figuring they won’t do well.” - Jason Mraz

The explosion of music downloads in the late 1990s cut deeply into the cash coffers of record labels. As a result, record executives decided to cut back on promoting ‘unproven’ artists, and went from focusing on talented female artists, to looking for a marketing vehicle. Out with Lilith Fair, in with Newlyweds: Nick and Jessica. So as Gen Y helps prompt a change in the country’s musical tastes, this poses a very tough question for female artists whose last name isn’t Spears or Simpson: Do they try to reinvent themselves like Jewel did, or forge forward relying on their talent to win them fans?
And this isn’t a problem reserved for undiscovered artists. Some of Jewel’s contemporaries such as Sheryl Crow and Alanis have seen their album sales slide since their Lilith days. Many of today’s labels see a woman onstage with a guitar in her hands as a ‘marketing risk’. But musicians don’t have to reinvent themselves every few years simply because tastes temporarily change.

A perfect example is Sarah McLachlan. Her music is basically the same today as it was in 1989 when she released her first album, Touch. Touch sold over 500,000 copies, while Afterglow, which is her fifth and latest album of new material, currently has over 2 million in sales.

The best way for Jewel and other female rockers in her position to re-establish a strong bond with their fans could be, you guessed it, the internet. There are so many ways to reach out directly to fans. Artists can tap fan sites, mailing lists, MySpace, anything. Blogs are another obvious way for artists to reach their fans. Such viral efforts are already being used to launch the careers of female artists such as Missy Higgins, they could easily work for established stars. These moves are authetic, and fans will respond to any musician that reaches out to them in such a personal way.

While the current music climate has put a temporary crunch on some female artists, the ultimate loser here could be the record labels themselves. As the record companies make it harder and harder for emerging and existing female artists to make a name for themselves, these musicians are looking for other outlets to promote themselves. And the risk that labels run is, once these acts find a way to circumvent the current system, will they ever return?

“The major label system is broken, but I’m not crying. It couldn’t happen to a nicer bunch of people.” said Carla DiSantis, editor of the magazine ROCKRGRL.

True Blue Fan (TBF)

Many artist & their bands can sing & play, but, they are amazed (sometimes mad) when the audiences fail to connect with them.  Artist and bands work on perfecting their play list of songs to sound like the studio version or the 'cover' version they hear. On stage, it's entertainment time!  If I go see a movie and it doesn't entertain, connect, excite me, then most of the time I actually take short naps.  Most artist/band never think about changing up a song to allow it to 'CONNECT' with their audience. And, if you don't connect and create special moments of memory, then, in most cases you will not have won over new fans & you certainly will not have what every artist should strive to have and that is:  TRUE BLUE FANS!  Yes, that is a KSE exclusive.  TRUE BLUE FAN OR TBF IS WHAT EVERY ARTIST MUST HAVE to create longevity as an INDIE touring band.  TBF are those people that will become the most important part of your TEAM.  In short, they are the ones that will show up for your shows with new fans & they are the ones that will buy tickets, merchandise, and leave tips in your tip jar.  As we all know most young inexperienced bands can only tour if they can meet expenses.

Developing into an entertainer takes time, much practice, money, and developing TRUE BLUE FANS!  It's like going from grade school, Jr. High, High School to getting your Bachelors, Masters and your PhD.  After you have completed those degrees, you need continuing updates and training....All Roads that lead to the STAGE must be incrementally improved each year, but, only after an artist has mastered all the baseline stages.  Once this is accomplished, an artist/band will forever be developing their passion for creative performances that make connecting memorial moments that last with their new fans that will change into TBF.