“THE COST OF ACQUIRING A FAN”

Last day i received an email by Music Xray, an interesting platform who every week targets listeners for evaluating how they perceive the songs suggested. In the most of the cases it promotes major artists whose tracks are potential singles eventough still not huge in terms of popularity and listenings. The process starts with targeting a certain number of audience (40 – 60) and the final aim is to turn the participants into fans of the artist/band while providing a calculation related to the ratio of people following the artist. Thank’s to a click, they are added to the mailing list and considered “acquired fans”. However, the statistic takes into account also people who doesn’t click the song. The cost of acquired fan is $0,66 if just one of two users is following the songwriter, that’s because the platform charges him 0.33 for each potential fan and in exchange the artist will be given his email address and link for facebook profile. Once again is another tool for improving the realtionship between the two and it’s very useful for evaluating how fast a certain artist is able to acquire fans, in comparison with other competitors of the same music cathegory. In addition, the listeners are targeted regarding their tastes and the style preferred. Finally all that is measured will be the level of engagement and this is necessary for adding value to the music.

http://blog.musicxray.com/fan-appeal-stack-major-artists-easy/

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MySpace Plans to Pull Out all the STOPS!!

As I talked about in my post in September, Myspace is ready to relaunch. They plan to come back and dominate all of online music. If I were them I would too!

Interactive Media Holdings along with Justin Timberlake bought MySpace for 35 million. They have been slowly but surely revealing new ideas and concepts for the newly designed MySpace. First, a video of the layout and the shocking announcement that all old users and pages would be deleted once the site was revamped. 

According to a leaked investment presentation Myspace is seeking to raise an extra $50 million in order for the relaunch to be seen as a direct competitor in the digital music streaming industry. This would be pitting it head to head with popular streaming leaders like Spotify. Who actually received a $100 million boost from investors at Coca Cola. 

MySpace has many  advantages over its competitors. Its been stated that Myspace has the largest single library of songs, at 42 million, while Spotify’s library has around 18 million songs. MySpace also has access to over 5 million users (artist). 

 

One big difference in MySpace is royalties. Which is a big deal, as we see in the recent dispute with Pandora. The type of royalties Spotify pays is On Demand to record labels. And pay close to 7c for viewing . While MySpace has millions of songs of unsigned artist. They will nearly have to pay 1c a hour viewing. 

“Myspace believes that it has a significant cost advantage with respect to the music streaming costs compared to Spotify and Pandora because of their proprietary 27 million song library from unsigned artists, which accounts for around 50% of songs plays on Myspace and has a zero cost basis.”

 

Although MySpace will no longer have the older format they plan to revamp and really be friendly to all artist… Musicians, painters, etc. They will have a main focus on music to stay true to their original beliefs and values.

Does this look promising? Myspace Working On Spotify Killer With World’s Largest Library Of Songs

 

~TreG 

THINKBAND 8: Meet Charlie Parra, the guitar (and social media) wizard.

There’s a lot of unsigned guitar enthusiasts out there with millions of Youtube views, but just a few get the following in say, less than 3 years:

  • Endorsement of one of the most important guitar makers: Kramer Guitars (yes, the guitar brand that Eddie Van Halen used in his early recordings).
  • Endorsement of Laney Amplifiers.
  • Endorsement of EMG pickups (Metallica’s choice)
  • Sign to a major label and start a world tour with one of Canada’s most promising bands: Kobra and the Lotus (discovered by Gene Simmons).
  • Get sold out gigs in USA, Canada and Europe.

This is the story of Charlie Parra, a peruvian guitar player that did all of the above on his own, without a manager but with clear goals.

His strategy was based in engaging his music through social media on a regular basis. Also, his competitive advantage was the skill to play a cover song of almost every style (from Lady Gaga to classical to Peruvian cumbia) but transforming it into metal shredding. Then his solo album was released and was available in almost every music streaming service, iTunes and promo videos for every song with huge success.

Creation, performance, distribution and marketing strategies. All done by a guy that picked up the guitar for the first time because his school psychologist told him that it would help his “lack of concentration issues”.

Simon Cowell

Since my blogs have been focused on X Factor, it’s only fitting to write about the man behind the show.

Simon Cowell’s earnings as of May 2012, according to Forbes was $90 million! That makes him 9th in the money rankings, behind heavyweights like Oprah at no. 1, Michael Bay at 2, Steven Spielberg at 3, Jerry Bruckheimer at 4, Dr. Dre at 5, Tyler Perry at 6, Howard Stern at 7, and James Patterson at 8. What surprised me was that he is ahead of people like George Lucas and Donald Trump. I knew Simon had money but I didn’t think he was up in the top 10! He comes in at no. 18 on the celebrity 100, no.19 in TV/ radio, 28 in press, 79 in social and 84 in web.

Simon got his break into the music industry as an A&R through his dad’s connections (his dad was a music industry executive at EMI). He has created his wealth through television mainly. His time as a judge on American Idol helped him break into the US where he was known for his bluntness and insults. He started his X Factor franchise which has spread across the world and has signed chart-topping acts such as Leona Lewis and One Direction. His other show Britain’s Got Talent has generated other Got Talent shows and the show found acts like Susan Boyle who made a global impact. He also has numerous other shows. All of the acts from his shows are signed to his label Syco which is affiliated with Sony BMG.

Simon Cowell can smell money from a mile away. Where he sees an opportunity he jumps right in and makes a “killing.” He milks that particular project (or cow) until there is absolutely nothing left (e.g. X Factor UK, it really is dying). His most recent project is the Sony X headphones, yes, Simon Cowell has turned his hand to the consumer electronic market. This range of headphones has been seen at every possible opportunity during the X Factor USA shows and they are the official headphone partners of the talent show. His reason for making headphones is simply because he wanted something better than what is in the market today, as if there aren’t enough celebrities making headphones!

Another deal that he stuck is the partnership with Pepsi. Pepsi recently announced that it will be offering the X Factor USA winner a $5million Syco record deal AND a Grammy ad video!! This video will debut during the 2013 Grammy Awards which is the perfect opportunity to launch an artist’s career, on one of the biggest nights in the music calendar. Last years winner (Melanie Amaro) starred in a Pepsi commercial for the Super Bowl which was big but this is not only big but better as it’s music’s biggest night and introduces you to the whose who in music. Pepsi is one of music’s most powerful brands second only to Coca-Cola on Billboard’s 2012 Maximum Exposure chart which ranks the 75 most effective platforms in music discovery (something I will be writing about in my next blog). Pepsi have invested $60 million in X Factor marketing support alone.

Although X Factor UK numbers are dwindling week by week, his American version has been renewed for another season by Fox. It looks like Simon will be laughing all the way to the bank for a few more years.

Sources:

http://www.forbes.com/profile/simon-cowell/

http://www.billboard.biz/bbbiz/industry/branding/exclusive-pepsi-offering-new-x-factor-winner-1007994942.story#6iyFIe7dSX7hOgox.99

 

 

More Windowing

This post is a follow up to Windows and Other Transparent Ideas – a post where I talked about an emerging trend among some pretty big names in the industry. ‘Windowing’ is essentially the process of withholding an album from streaming services with the assumption that they threaten album sales. Turns out the ‘monkey see monkey do’ saying can sadly be applied to this scenario. The sadder truth is that it might actually be working a little bit, and the saddest truth is that even a little bit, is a lot in todays music market.

With the addition of Taylor Swifts’ “Red” and Rihanna’s (ironically named) “Unapologetic” to the list of artists partaking in windowing it is definitely bringing some attention to the idea. And this is definitely a problem for Spotify. Especially since both of these MASTERPIECES OF ARTISTIC AND MUSICAL CREATION debuted at number one on billboard.

GOOD GOD WHY AM I IN THIS INDUSTRY? To hell with you and your shitty music! Actually I’m going to go off on a little tangent because this little bit of research pissed me off. If you want to save this industry, think LONG TERM INVESTMENTS and Artist Development! Enough with the plug acts pumping out bullshit that expires in ‘coolness’ after the first weekend. That is unsustainable simply because you can’t forever rely on the demographic of 15 year old white girls who hate their fathers to keep your industry alive.

Record companies NEED to start investing in artist development again. Create an act that someone can grow up with and follow and support through decades. I repeat. LONG TERM INVESTMENTS. Let the act grow, who gives a shit if the first four albums don’t make a profit? If the band is growing you have something great in the works. Cleavage is nice but the porn industry is better than you at it. Sell music, not tits. For the love of sanity somebody make me CEO of Universal Music Group. The first thing I’d do is dump all these horseshit one-week-of-selling-sex acts and tell Vivendi SA to kiss my ass. Then I’d put some money into A&R and tell them to think Bruce Springsteen, and Prince, and Red Hot Chili Peppers. Or any act that doesn’t need the help of 10 million other hired songwriters to make albums. Then I’d push album after album OF GOOD MUSIC out and down the throats of people until they LOVE it with all their hearts and souls so that on their 50th birthdays the artists they loved growing up are still kicking ass and releasing albums years and years later. This industry is a damned circus.

Anyways, back to my original topic, here are some reasons why windowing is an ugly mess.

1.) You are giving a substantial number of your fans a big middle finger to the face. Specifically your fans that are paying members of Spotify or other streaming services.

2.) Fans are giving the middle finger right back. “Unapologetic” is already the most pirated work of music on Pirate Bay. See for yourself, and hell, why not pirate that shit while your there. http://thepiratebay.se/top/101

3.) Restricting access to your recorded music is detrimental to your popularity. Honestly, in this day and age what is important is that your name is out there. That is how to gain fans and that is how to attract fans to live music and just as importantly that is how to keep your music alive.

4.) If this becomes a trend it will no doubt destroy Spotify because honestly if my favorite artists all start doing this I’m going to start wondering if my ten bucks a month to Spotify are worth it. Furthermore, If Spotify goes down the tubes I will bet all my Bruce Springsteen albums that iTunes sales won’t be significantly affected, but that the traffic on Pirate bay will explode.

Whatever, you know what I don’t even care. My rant was longer than what the post is actually about, but still, you’re now up to date on the windowing world, AND you have my opinion on it. Along with the rant that’s like a three in one, so give me a break.

Phillip Richard

Sources:

http://www.calgaryherald.com/entertainment/music/Rihanna+scores+first+album+with+Unapologetic/7621421/story.html

http://www.allvoices.com/contributed-news/13485692-rihanna-taylor-swift-refuse-spotify

Gangnam Style : First video to reach 1,000,000,000 on youtube?!?

Gangnam Style is now officially the most viewed video on youtube. As I am writing this post, there is a war of comments happening on youtube between Gangnamstylers and Beliebers… Apparently Psy just passed Bieber somewhere around 803 million today. Hold on a second, last time I check this video a few weeks ago I thought it was around 500 million. How did Gangnam Style grow so fast? Is it really going to be the first video to reach 1,000,000,000 views?!? Let’s take a look at the charts of the top 3 most viewed videos on youtube.

3rd with 624,277,481 : Jennifer Lopez – On The Floor ft. Pitbull

Image

Amazing score with over 600,000,000 for Jennifer Lopez but this video is 1 year and 8 months old. It will still take about a year to reach a billion.

2nd with 803,697,418 : Justin Bieber – Baby ft. Ludacris

Image

This video is 2 years and 9 months old. We can see that the curves of Lopez and Bieber are pretty similar and slowly decreasing.

1st with 805,158,668 : Psy – Gangnam style (강남스타일) M/V

Image

This video however is only 4 months old! After going through an amazing rise of views in August, this curve is heading straight to 1 billion! Psy is getting roughly 9,000,000 views per day with his hit song. If that rate remains constant, he will reach a billion views in less than 1 month. Actually when I started writing this post about 2 hours ago he was around 803 million, and now when I’m ending this post he’s around 805 million. This world is crazy. Some people say that Psy will be a one hit wonder. Well with this world record he’s about to reach, it’s going to be a while before we forget him…

Are we at a stage where Asian music is going to become internationally more popular than western music?

Spotify projected to lose (only) $40 million in 2012

A confidential industry source has leaked information to techcrunch.com writer Eric Eldon that Spotify’s financial figures in 2012 are suggesting that things may be looking brighter than expected for the company in the future – As covered in a recent post of mine, the service reported a loss of $60 million in 2011 from total revenue of $244 million due to large operating costs and other expenditures.  The source has claimed that in just the first six months of 2012, the streaming service made $200 million in total revenue, with a projected end of the year revenue to clock in around $500 million, if current trends continue.  Due to high licensing fees and other operating costs, the source suggested the company will likely post a loss of $40 million in 2012 at the end of the year.

Losing $20 million less than the previous year sounds good, right?  Prehaps to you and me, it’s not great news, however the company has received another round of funding to fuel ongoing growth and to cover losses, amounting to more than $100 million.  The question it comes down to is whether or not the service can obtain enough paying users to make the service a sustainable, healthy company for the long term.  Some argue that the future release of the browser-based version of the service could increase it’s user base, however growing competition from ambitious and expanding companies like Deezer, Rdio and WiMP make the glass look half empty.

Do you think Spotify has what it takes to post a positive net income by 2017?

Cloud Wars Heat Up

Storing music on a cloud is not a new thing – Apple entered the market over a year ago by releasing iMatch –  Music in the consumer’s current library is scanned, and any songs available in the iTunes Store is added to the consumers iCloud.  Then consumers can stream their music from the iCloud to any of their iOS devices – for a price of $24.99/year

Google Play recently announced it’s new matching feature with essentially the same offer, with a major exception –

The service is Free.

Google Play limits you to upload 20,000 songs to the service for free plus songs bought in the Google Play store, whereas iMatch’s offer is 25,000 songs plus songs purchased in the iTunes store.  Regardless, the difference of 5,000 songs seems hardly of importance when factoring the price structure of each.  iMatch’s fee and limited nature makes it a hard choice to select in light of Google Play’s offer.  It seams Apple will have to make some changes if it wants to stay competitive in this market.

CDs, the Zombies of the Music Industry

No matter how hard we try to kill it, it just doesn’t stay down

If you were born in the early 90’s or the late 80’s, it’s very possible you have the option to list that you’ve got both a collection of CD’s at home and a lot of digital downloads on your computer.  Chances are that if you’re reading this blog, you’re very into music and it possibly broadens the chances of this being the case.  What’s most unique about the late 80’s and 90’s generation is that, with our growing up to see the rise of digital, we have developed very strong opinions on whether to accept or reject the digital format versus the CD format.

In case you were saying “It doesn’t matter, CD’s are dead now,” well, I have a refreshing and shocking statistic for you.  In the United States as of 2011, CD sales were still more than 66% of purchased music over digital downloads, which were only a bit over 30%.  1% of music purchased is in vinyl (sorry my hip friends, it’s just that Vinyl is only for the die-hards these days).  Strangely enough though, in the first quarter of 2012 in the United Kingdom, digital sales actually out performed CD sales (an article I read credits Adele’s success and XL records to be part of the reason for this).  So, why are America and the UK’s takes on CD’s so different?

I didn’t understand this until I came to Spain to study abroad (I’m from the United States).  There wasn’t a single record store I could find, which is insane because the US still has record stores here and there.  Eventually, I found out that the general department store has a decent music section.  I found the album I was looking for, but amazingly enough, it was 20 euros!

If you live in Europe and you think that’s ridiculous, think about my take on it.  In the United States, the cost of an album on iTunes is usually a dollar more or less than a physical CD.  It’s roughly $9.99 per album, maybe more depending on deluxe or whether it’s a huge amount of songs.  At that point, you might as well just not be lazy and walk down to your local Newbury Comics/Rasputnam/(insert indie CD store that still somehow exists), and buy the album in CD format for the same price; but the exception here is that you get a nice physical booklet along with it, lyrics, and some physical artwork to use.  Don’t get me wrong, I’m not saying CDs are an obvious choice here, it’s just that in the US it seems a bit more cost efficient to get more for what you pay for.  In Europe, the few times I have been to France, Spain, and England, the CD prices are far more expensive than the cost of downloading things digitally.  From what I hear from Japanese friends, the records there don’t come cheap either.

For this reason, I say that the United States will probably not adapt to going fully digital as fast as the rest of the world will.  It just doesn’t seem possible when prices are very close with each other.  For the rest of the world, I do believe that digital will be making its take over within the decade, especially with the statistic from the beginning of this year.  However, with major labels still running the business, I feel that the physical CD will always have its place in the business.  The major label has always had distribution as one of its largest advantages: they will not leave behind the CD format so easily as it is still considered a partial advantage especially in a place like the United States.  It’s also a possible part of the reason why it’s so hard to break through in the United States.

Therefore, in a way, we could say that the relationship to CDs in the market and major record labels (pardon me, Entertainment Groups) are completely direct proportions, with independent music and digital being the other direct proportion as well.  This is made clear with Adele and XL Records: I’ll place bets that the rise of digital in the UK earlier this year has something to do with two of Adele’s albums placing in the top 10 albums sold in the year.

Personally, I love CD’s, but I’ve come to accept that their time is running out.  What do you think?

http://www.digitalmusicnews.com/permalink/2012/120104twothirds

http://www.hollywoodreporter.com/news/uk-digital-music-sales-first-quarter-332180

Lawyers in the Music Industry

Seeing as we missed this class due to the Mama Event, (a great cause no doubt) I figured I’d take matters into my own hands and learn/blog about something I’m personally interested in. Maybe those of us who were in Paris can get the gist of what we missed.

First things first. Not common to popular belief, lawyers are wonderful, compassionate and charitable people in the music industry. I’m not very good at being sarcastic in writing yet but nonetheless, I suppose that could be true if personal incentives aren’t taken into consideration. Unfortunately, we live in a time where these bastards are truly needed in practically every aspect of an artists career, (and anyone else in the industry for that matter) and boy do they know it. I say unfortunately because this makes them extremely valuable and necessary and it always sucks to be that dependent on something. Even so,  what is always important to remember is that the lawyer works for the artist, not the other way around.

With that out of the way, the point is that hopefully after reading this you won’t be able to justify their existence, but rather you will definitely be able to understand their purpose. How’s that? Off we go!

What does a lawyer do?

The most obvious role of the lawyer is to be involved anywhere that an artist is potentially generating income. And anywhere an artist is potentially generating income, there will be a contract or an agreement needed. And when a contract or an agreement is needed a lawyer should be involved. So as you can see from the lovely circle of reasoning here, they exist because they are needed and they are needed because they exist.

Other than negotiating contracts and working with you and literally every other member of your team they (the good ones) also act as reliable A&R persons for labels. Lawyers are involved with everyone in the industry, so they know everyone in the industry, and that means they have some clout that, in the early stages at least, the artist probably doesn’t. A good lawyer promotes the acts that he/she truly believes in, to the labels and actually wants them to be successful. Why do they do this? Quite simply because the more successful the artist, the more successful the lawyer.  In other words they want the artist to do good, so they can make more money from them. Labels know this so it is easy for them to seriously consider the acts recommended by lawyers. Lawyers won’t just submit any shitty band to a label because that devalues their judgement in the eyes of the label. If a lawyer only submits artists that truly have potential, the label will love them and take every recommendation seriously.

The lawyer can also play an active role in putting together an artists’ business team which brings us to the next point.

When is a lawyer necessary?

Many people think (at least I did) that lawyers don’t come into play until much later down the road in an artists career but that isn’t necessarily the case. Lawyers can be an important member of the band’s team during it’s initial formation (so basically, when the band should be dealing with the band agreement).

Furthermore, since lawyers have so many connections it is often the case that a band hires a lawyer before they even have a manager, let alone any other member of their team. Hiring a lawyer before agreements with these members even exist makes sense because a lot of the time it can be the lawyer that finds the manager, agent, business manager, and so on for the artist in the first place. Look at it this way, an ethical label won’t let an artist sign without a lawyer. Even if you have a manager, but no lawyer, they won’t sign you. And if they do they are probably assholes that are trying to take advantage of you in a deal, so be wary of that if you are an artist.

Alright, we have established that it can be a good idea for an artist to hire a lawyer early in their careers. But good lawyers have the power to be selective. So in a weird way in order for the artist to have a good lawyer, they need to deserve one. Because of the role that lawyers play in A&R the good lawyer must be interested in the band, as I mentioned earlier, he/she must believe in the bands potential and work ethic. This means that once the artist has some stable ground under them in terms of songs written, demos recorded, and a small promo package, it can be a great time to get a great lawyer. I know this sounds contradicting to the statement of getting them as early as the band agreement, but you can always hire a lawyer on an hourly basis to deal with the band agreement, and have no other involvement with the band until the band feels they are ready enough to go for a great lawyer, or at least hire one full time.

How can an artist find a great lawyer?

The simple answer is look for one. Talk to local bands that seem to have their shit together. Find a band that you like and look inside their album to find a name that has ‘Esq.’ after it. Look for them online as there are several legal directories available. Most importantly, interview them. Ask them what experience they have in the music industry specifically, and if they foresee any conflicts of interest with other clients. Finally ask them how, and how much they bill you. Which leads us to the final part.

How does a lawyer get paid?

This is one aspect where they can get just as creative as any of the artists they are signing! I’ll briefly and simply try to outline the four main ways they like to take their money.

Hourly – usually $150-$600 per hour. The extremely expensive ones are usually only dealing with big acts and even bigger labels.

Percentage – 5%-10% of income generated from the deal they worked on/negotiated. When dealing with percentages the lawyer takes the money from the net artist share, not the gross money received. ***This type of billing is very common. It can technically be paid by the label through the artists’ personal advance; which makes it recoupable against artist royalties.

Hybrid – At first they charge a (relatively) low hourly fee and then take a percentage later once things get going. I recommend this way ideally, for a beginning act.

Value-Billing – This one is pretty abstract. It is based on this: the more “value” the lawyer helped you get in a deal, the more they get paid.

At they end of the day it all comes down to the fact that the more money the artist is making, the more money the lawyer is making.

Final Note

It is in the best interest of the artist to have the same lawyer for as much of their career as possible. You get to know them and yes, can eventually build trust. As an artist always remember the lawyer works for you, and at the end of the day they can be the only ones who can save your ass. Anyways, I hope you learned something from this post.

Love them or hate them, lawyers are not going anywhere fast and they play a massive and distinctly important role in the careers of anyone and everyone involved in the music industry.

Phillip Richard

Sources and Further Reading:

All you need to know about the music industry by Donald Passman.

http://d83mezhuhqi17.cloudfront.net/76/05/57/3956967?Expires=1353662961&Signature=Eln4vmkeSHIlfD8LGdxv6-wMGOsp5oPLPx8~HiqDkeB23z3gr-N9IezlzFsklm~7KWDuhFofBXb9tlqcKhMt~5~DwzUZk8DYQiArSX76FQ3RMaQzjDFnPSlxSe38weiJJc6-csCUPw-EEdS70rARvE~r8CrWigGqlmfXpH-D3YQ_&Key-Pair-Id=APKAIVZN4AJ762UIENTQ