Next Steps: The Future of Twitter in the Music Industry

As cited today by The New York Times, Twitter and Billboard have now teamed up to release a real-time music chart, based on consumer twitter data. This seems to follow in-line with the recent steps taken by Twitter’s increasingly active stake within the music industry. These can be characterized by the deal with the music label / content company 300 and more recently the removal of #music app from Apple’s iTunes store. Twitter has seemed to realign it’s interests to become an imperative player within the music industry.

Key Takeaways:

Usable Metrics and Time Decay: A new shift towards a real-time based music chart places further emphasis on artist’s use of Twitter as a viable means of conversation and visibility. One of the largest issue’s with sharing over twitter is ‘time decay’, depending on the number of users one follows, a ‘tweet’ or ‘retweet’ can appear in any given user’s feed for a variable period of time.

The trending topics sidebar ( although geo-located ) is too holistic in terms of music visibility/ discovery (often only unattainable through unreplicatable events, usually based on an artist or act’s size – see Beyonce ). That being said, if the chart’s are geo-based, there will most likely be a high level of artist repeatability, but may allow for some variability ( hopefully an up-and-coming localized act ). Therefore, it may also spawn greater analytical tools for artists to make adaptations to their outreach / social marketing campaigns.

The removal #music & the marking of a new age: I wouldn’t be surprised with if the missteps associated with Twitter’s #music that popular thought has shifted towards a more integrated user-interface. It would seem that a real-time chart would also lead towards direct purchasing power for twitter users. If your fans are already there, then why would you send them somewhere else?

Have some thoughts? Leave them in the comment section below.

Thanks for the read!

Behind the Scenes: Disrupción Records Logo Design

The goal of this project was to create a visual identity that coherently connects with the representation of disruption as a brand and its meaning positionally over time. As such, the logo is representative of sources of disruption as it relates to art, the region and Berklee College of Music.

 

To begin, the typeface used is ‘Helvetica’ the selection was inspired by it’s use and development by Max Miedinger and Eduard Hoffmann to mark the transition into the Swiss modernist movement.

 

The composition of the design was based on a photograph by Alberto Hildago used by the Berklee College Commissions WSDG (Walters-Storyk Design Group) for Major Projects. The kerning of the typeface and use of negative space was utilized to highlight the major architectural features of the Palau, as it is both a significant feature of the Valencian region and a holistic representative of a larger artistic community and visual vocal point of the Berklee campus.

 

Additionally, Black & White were chosen to build off of the clarity associated with the use of ‘Helvetica’ as a typeface, while the characters ‘A’ and ‘D’ were used as a means of highlighting the architectural features. However, in an effort to avoid any inferences associated with the use of the upper case characters AD or it’s acromial meaning (anno domini), a lower case character ‘d’ was selected as a substitution. Although the region has a rich Christian heritage and it coincides with the theme of disruption, I felt as though it did not communicate the values associated with the diverse student group and apolitical environment present within the institution.

 

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Reposted from www.tylerbudd.com

The Industry from an Artist and their Manager’s Perspective Pt. 1: The Artist

Last friday at our weekly music business forum we were visited by Cindy Castillo an artist manager and founder of GIGnTIK an artist management company.  Joined by Miss Caffeina, one of the bands she currently manages they all had a lot of insight on how to be successful within the spanish music industry. This weeks post will focus on Miss Caffeina’s insight and next weeks post will be on their managers perspective. So let’s start with Miss Caffeina:

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The band were very opinionated on how to succeed in the industry with the following quotes being a couple of standouts;

“Artists need to understand the business in order to success in Spain specifically.  They need to be interested in how the business works”

I found this very relevant but not only for Spanish artists, I think its a great thing for a band to understand the ins and outs of the way the industry works in their specific market in order to make the best out of their situation.   In the case of Miss Caffeina they are very involved in their business with one of the band members creating a adaptable tour budget that to track the bands revenue streams. I found that very commendable and think that artists should be as interested in their business as Miss Caffeina is.  Their manager Cindy Castillo even noted that the reason they have been so successful is because of the bands insight on the inner working of the industry.  We’ve seen recent stories where artist ended up suffering because of their lack of awareness in the industry, for example Rihanna and the recent revelation that she almost went broke in 2009 .  In relation to this topic the band also discussed how important it was for an artist to think of people in the industry as their enemies when first entering the music industry in order to ensure some type of success and security . Miss Caffeina talked about having their guards up so that people didn’t take advantage of them and that again I think is an important characteristic to have in order to be a successful artists in any industry. The band also went into detail about the way they maneuver between working both the commercial and the independent music markets present in Spain.  Specifying that they try to appeal to commercial radio while keeping an independent integrity when touring live.  I was a little skeptical and confused by how they leverage trying to work within both markets especially when they came across as more of a commercial band after hearing them perform a couple of their songs.  But this strategy seems to be working and in a market that is difficult to proposer in due to current economic and internal industry factors.

Check out some of the bands material below!

Why invest in Culture?

The answer seems obvious: an educated and cultured society understands, respects and coexists better.  We might even say that culture is the path to a healthy, well-adjusted and happy society. If we take a closer look at music, the benefits shoot up. Not only does music stimulate the brain, isolate stress and strengthen one’s health, but it also helps to work at a full capacity, sleep better and be optimistic, working as an emotional medicine. Should these advantages not be enough to convince someone about the importance of investing in culture, lets take a look at the economic benefits.

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Based on the French notion of the Parable of the Tuileries, there are three economic principles we should know about and understand.

The first is the concept of Positive Externalities, meaning a benefit that results from an activity and that affects an otherwise uninvolved party who did not choose to incur that benefit. There are activities which basically affect others in a positive way, so the benefit to the individual or firm is less than the benefit to society. An example would be France’s cultural image and how it is perceived by the world. This causes a call-effect of investment from other parts of the world, as well as tourists who are attracted and keep consuming more. Although things in Spain are changing due to economic cutbacks, the amount of music festivals Spain has to offer can still be taken as an example of positive externality.

The second principle is the multiplier effect of culture-based investment. Investing in music obviously benefits musicians, technicians, venues, record labels and many other players in the music business. However, if we take a step further we’ll notice how other industries are also taking advantage of these investments.  Just imagine a Friday night: You take a cab to go to a concert, but first dinner at your favourite restaurant. You arrive and buy the concert ticket but before entering the venue you have a beer or two. When the concert’s over, you’re so excited you buy the band’s t-shirt and album, have the last drink at another bar and take another cab home. Next morning you wake up, run to the drugstore and buy some Ibuprofen. Music has just generated benefits for different sectors which at first, had nothing to do with the music industry.

diminishing_marginal_utility

Last but not least, there is an inspiring and unique principle known as  Diminishing Marginal Utility. What does this actually mean? Lets start by explaining each term. Utility is what consumers obtain –value– when consuming products or services, and by marginal we understand the gain from the last unit. Marginal Utility is therefore what the consumer gains when consuming the last unit. A Diminishing Marginal Utility should now start making sense.  The first unit of consumption of a good or service yields more utility, more satisfaction than the second and subsequent units, with a continuing reduction for greater amounts. Consumers normally get a positive utility when they purchase and consume a good or service, although this satisfying feeling decreases each time as the consumer becomes bored of the product.

diminishing-marginal-utility

You’ll probably understand it better with a real life example. Imagine if you eat paella –or something you really like– every single day: on the first day your level of satisfaction would be really high, and so would the second and third. Now imagine how you would feel ten days later, ten days eating just paella. You would probably still like the good (paella) whereas the level of satisfaction decreased. You wouldn’t enjoy it as much, would you? Now think about a whole year eating paella… The level of satisfaction might even become negative!

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Nowadays, this theory can be applied to almost every product. Remember, almost! All forms of culture, and specially music, have the magic quality of generating the opposite effect.  The more you listen to music you like, the greater the pleasure, generating a desire to consume other types of music and leading to a never-ending cycle. We’ll be more passionate about music each time, broadening our music preferences.

Debussy’s Clair de Lune has been playing in my parents house since I can remember. Probably, the first time I heard it I didn’t pay much attention, or none at all! But after listening to it several times and seeing my mum perform it, I really started appreciating its value. Now, each time I listen to it I get goose bumps. In other words, Clair de Lune provides me with more satisfaction each time I consume it.

Maybe now we understand why the main affected by cultural cuts is, in fact, society.

Just in case you still don’t understand why investing in culture is important, take a look at this video about the Parable of the Tuileries.

Parable of the Tuileries

By the way, tell me about your song, the one which will move you more each time you listen to it!

Business Matters: Spotify UK Shows That the Freemium Model Is Not ‘Unsustainable’

ottobre 09, 2012   |   By Glenn Peoples (@BillboardGlenn), Nashville

A business model that pays rights holders nearly every dollar, euro or pound generated is clearly not sustainable. This fact is obvious to Billboard readers as well as a digital service’s management and the company’s investors.

Last week I wrote about Spotify’s financial statements posted at PrivCo, a website that posts the financial statements of privately held firms. My first impression was that PrivCo’s numbers looked off. After PrivCo’s CEO sent me a link to the full financials and walked me through the numbers, I better understand how the numbers line up — but I don’t agree with his negative assessment.

Spotify is indeed losing money, but I don’t think its business model is unsustainable.

The difficult with assessing Spotify’s prospects is that its financial statements tell many stories at once instead of one single story. Because the service operates in many different markets and launched at different times, Spotify is effectively many companies within a company. And each of those companies has a business model that apparently needs time to develop.

Spotify operates a freemium business model that offers free, ad-supported listening in the hopes of luring paid subscribers. The model is a leap of faith. Spotify is on the hook for the free streams whether or not it monetizes them. It hopes people will sign up for the paid subscriptions. Labels and publishers hope, too.

But the model has attracted investors in spite of its critics. According to the financials posted at PrivCo, Spotify ended 2011 with cash and cash equivalents of €104,271,498 ($135 million), up from €47,251,972 ($62.6 million) in 2010 and €2,083,601 ($2.99 million) in 2009.

More money is reportedly on its way. The company is said to be near a $400 million round of funding that would value the company at $4 billion.

Paris-based Deezer, which operates the same freemium business model, just raised $130 million in a round led by Access Industries, the owner of Warner Music Group. Deezer now has 2 million subscribers to Spotify’s 4 million subscribers.

There should be a natural lag time in the success of a freemium business model. When Spotify enters a new market, it has a relatively high number of free listeners, a relatively low number of marketing partnerships and a relatively immature advertising sales force.

The model itself suggests a lag will occur. Free listening is used to encourage people to try the service before becoming subscriber. The more people use the Spotify, the more people share listening on social media, the more likely they are to eventually subscribe.

If we could see Spotify’s financial results from just one country, we could isolate its business model and reduce the noise from other markets. Financial results from one country might show this lag. Financial results for the entire company show more than a dozen lags happening at different times.

Indeed, proof of the lag time can be seen in the UK. As Billboard.biz reported in September,Spotify reported a net loss of only £2.1 million in the UK in 2011. Clearly the launch in the U.S. in the summer of 2011 weighed heavily on the financials of the company.

Financial statements for 2011 found online show Spotify Ltd., the UK subsidiary, posted a £2.06 million loss in 2011 after posting a net operating loss of £26.5 million in 2010. Revenue grew 51.1% to £95.5 million from £63.2 million. (Due to an intracompany sale of intangible property, Spotify Ltd. actually turned a net profit in 2011.)

The key evidence of the freemium model’s lag time appears to be Spotify Ltd’s improved cost of sales, which represents royalties paid to rights holders. The UK subsidiary’s cost of sales dropped to 85.7% in 2011 from 102.6% in 2010. In other words, Spotify Ltd. paid rights holders about 1.03 for every pound it generated in 2010 but paid out only 85 pence from every pound it generated in 2011.

Another key factor was the improvement in subscriber growth. Subscriptions accounted for 84.8% of revenue growth in 2011 and grew as a percent of revenue from 71.3% in 2010 to 75.9% in 2011. The company obviously got better at converting free listening into paid listening and using partners – such as Virgin Media – to bundle the Spotify with broadband service.

These two factors show the freemium model has potential but will experience a lag as cost of sales becomes manageable and the lure of the freemium model takes time to positively impact subscriber counts.

The key is cost of sales. When Spotify Ltd improved cost of sales by 16.9 percentage points in 2011, it gave itself an additional £16.1 million to cover costs. By lowering costs of sales again in 2012 – through better monetization of free users and better conversion to subscribers – Spotify Ltd. will generate even more gross margin. At its current pace, Spotify Ltd. should be able to turn an operating profit in 2012.

When Spotify US will turn an operating profit is another story. It goes without saying that the Spotify launched in 2008 in the U.K. would have a far better cost of sales last year than the service that launched in the U.S. in July. A large market such as the U.S. will require years of hard work.

Every market is different. In Sweden, for example, Spotify helped streaming services account for 89% of all digital revenue in the first half of 2012, according to the Swedish Recording Industry Association. But nothing is mentioned about Spotify’s inability to resuscitate a moribund Spanish digital recorded music market that ranked five places behind Sweden — #9 vs. #14 – even though Spain has population five times greater.

The freemium model might not work in Spain right now. Not much is working in Spain right now. Even a workable business model has to deal with difficult exogenous factors such as social norms and economic malaise. But the 2011 financials for Spotify UK show that a freemium model can work over time.

THINKBAND 2: Be a 121 musician and start making money NOW.

If you liked the idea of TICKSTAGE from my last post (https://intermediaries.wordpress.com/2012/09/28/thinkband-open-think-tank-for-the-music-industry) but thought that it would be only possible to reach for rich investors or wealthy entrepreneurs well, this time I’ll be discussing about a very simple idea, affordable for most musicians: 121 strategy to sell your music directly to your client’s needs.

But let’s focus on the problem set first:

PROBLEM

Bands aren’t making (enough) money. The times of playing in big arenas are part of the past. And we all think: wouldn’t it be nice to receive a fair amount of money just like any other job? But wait, what if you start working with your band as a real job? For example, freelance designers work their $·”$ses off to get paid, and they usually start making projects for their friends, relatives and network in general. Now, what if people pay for something they really, really want to hear from you? If you have a band with very TALENTED musicians on board continue reading, if you are not sure GET some good musicians first and continue reading…

IDEA

Some basics to get birth to the idea: people love seeing themselves in multimedia content that is RELEVANT for them, some of these contents are special occasions as birthdays, weddings, welcome parties, you name it. That is no other than creating EXPERIENCE. Now, everyone is talking about brand experience but just a few brands had been able to develop 121 marketing, with name and surname products or campaigns on it. BUT, actually musicians can do it in a very clever, creative way.
So here’s the idea: make your friends your first clients, pick 5 of them and charge $50 to make the song they NEED to accomplish something, for example a guy that wants to apologize to her girlfriend but doesn’t know how, or a girl that just wants to say something but is not sure about how to say it, or even a couple that want to make their recently born baby a very special song. You new clients will have the right to pick the subject and MAYBE some lines for the lyrics, the music should be ENTIRELY yours and your friends should know about it, obviously they have to like the kind of music you are doing. Then you can make multimedia content in Youtube (about 1 day of work with iMovie and some photos or videoclips your clients can facilitate) and the people for whom you made it will take care of getting it viral: they will share it everywhere with everyone.

RESULTS

Now you made $250 for this experiment. In worst cases you’ll feel it’s not your thing but still earned some cash to get new lovely gear. In best cases you’ll find that more and more people is getting into your proposal of custom made music (thanks to viral factors) and you’ll have a lot of work and nice amount of money by the end of the month, that is what it’s all about right?

Note: his is a think tank post series to get your mind outside the box, not a secret formula. This ideas MAY work if you develop them with ideas of your own.

THINKBAND: OPEN THINK TANK FOR THE MUSIC INDUSTRY.

This post series will discuss some ideas to help musicians, music entrepreneurs and managers think outside of the box and take creativity as their main tool. The first post will present is a business idea I had 2 weeks ago that I’d like to share.

TICKSTAGE: YOUR TICKET TO PLAY ONSTAGE

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Problem: musicians beg to play live when they are starting out, even if they have a high quality as performers there are some facts they have to deal when trying to get a deal with a venue:

1-    High costs of a personal manager and booking agent.

2-    No contacts or known network to make a deal with a venue.

3-    Dissonance with the music the venue they are trying to reach (ex: a punk band playing in a jazz club)

4-    No strategic plan on touring, just isolated gigs.

So here’s the idea: create a web portal designed to give musicians the change to play live WHERE they want, WHEN they want and WITH whom they want (5 acts per night), the mechanic is similar to Groupon. Musician’s can register for free on TICKSTAGE and look up for venues to play for a minimum rate (small bands $300) or (mid sized bands ($500), they can filter the area they want to play, the preferred style of music and the day they want to play, charges can apply depending on the day chosen (weekend, holidays, etc).

Also, they can taylor make a TOUR PLAN for a flat rate, strategic planning for this service is free when signing for 10 or more gigs (ex: local tour, 10 concerts for $2000, the band will have $1000 in return from TICKSTAGE if the past concerts had 50% of positive reviews from the venues).

TICKSTAGE can start by building a 50+ database with local venues, first local, then regional, then global. These venues will benefit by getting their night spaced filled up every day, with the band’s payment in advance. The venues could have the right to pre-select each band without having to actually listen then, TICKSTAGE could confirm the band’s quality by giving 4 or 5 stars, 3 stars or less will depend on the venue’s taste. 90% of the band’s payment will go to the venues, while 10% will go to TICKSTAGE.

COMPETITORS

–       Reverbnation/live nation: just promotion, not real deals with venues.

–       Nuevostage: the most similar, but “only a few” get to play, and just in empty spaces (probably w/no people as well –too early, too late-).

–       Girando por Salas: supports bands that want to play live, but it’s contest-based, just a FEW get the chance to play live.

–       Bands in town: just informative, descriptive, no interaction for bands, just for fans (no room for beginners)

Some basic SWOT to consider:

Strenghts: unique service

Opportunities: thousands of unsigned artists/venues (make exclusivity contracts with them)… hundreds of opinion leaders.

Weakness: initial investment

Threats: big companies could copy this model without giving EVERY band the chance to freely play live wherever they want.

Investors invited…