Music Marketing

I was sad to learn that Estelle Bennett, one of the original Ronettes, died last week. I share Brian Wilson’s opinion that “Be My Baby” is one of the best pop songs ever recorded.

Here’s a good clip:

I’ve been disappointed by the Grammy awards the past couple years, but last night was probably the best Grammy award performances I have seen in a while. I thought Paul McCartney; MIA, Jay-Z, T.I., Kanye West and Lil Wayne; Plant and Krauss; and the tribute at the end for Bo Diddley were all great. But my favorite performance of the night was Radiohead. Check them out with the USC marching band:

This band never fails to impress me.

**UPDATE: Dumb move to remove this video from YouTube, NARAS. The best content you have had for years and you make sure no one can see it, share it, and get excited about next years show. I suggest you take a good look at your online marketing plans – it’s not all about control anymore. Very disappointing.

There’s been a lot of attention on Guitar Player and Rock Band as promotional outlets and revenue sources for (mostly established) bands. But hearing “Don’t Stop Believin’” on Sirus/XM’s “80s on 8” this past weekend on Jet Blue made me remember that bands scoring placements in video games goes WAY back.

Does anyone else remember the Journey Escape game for the Atari 2600?

The premise of the game:

You must lead all 5 members of Journey through waves of pesky characters and backstage obstacles to the Scarab Escape Vehicle before time runs out. You must also protect $50,000 in concert cash from grasping groupies, photographers, and promoters.

All Journey Band Members – drummer Steve Smith, keyboard player Jonathan Cain, bass player Ross Valory, lead guitarist Neal Schon, and lead singer Steve Perry, are counting on you to lead them to their escape vehicle. It won’t be easy. As Journey says, “Some will win, some will lose…”

The point structure was equally awesome:

At the start of the game, you will have $50,000 and 60 units of time. Each time you get stopped by a groupie, photographer or promoter you will lose some of your money. For example, contacting a groupie will result in a loss of $300, a photographer $600 and a promoter $2,000. Each time you contact a Manager, you will gain a bonus of $9,900.

If you make it to your escape vehicle before your time runs out, any extra time will be applied to the next band member. If you manage to get all five band members into the escape vehicle with time to spare, the extra time will be converted to a bonus of $100 for each unit of time saved.

I must have heard “Don’t Stop Believin’” 1000 times while playing this game. Perhaps this is one of the reasons that the song is the best selling catalog track in iTunes history, with 2 million copies sold to date?

Witness the magic:

I think one of the under reported consequences of Apple’s decision earlier this month to drop DRM from their files and to offer variable pricing is that the labels, via Apple, have extended something that has essentially been missing from the record industry for several years – the replacement cycle.

The music replacement cycle, where music consumers upgrade from less convenient carriers of music to more convenient models (think vinyl ->8-track ->Cassette ->CD ->mp3), was a main driver of the record business economy throughout the late 80s and 90s, and a major part of the reason that labels started floundering in the early part of this century. There are few things more convenient than digital music, and although there are other ongoing efforts to kick-start a new format (like those crazy slot music devices), nothing has come along yet to really get folks to repurchase their digital catalog. Which is what makes the $.30 upgrade by iTunes so interesting.

There have been over 5 billion DRM iTunes tracks sold over the past 6 years. iTunes is offering anyone who has purchased a DRM download to replace their track for a new, higher quality, DRM free download for $.30 each. If ?uestlove from the Roots is any indication (he twittered that he is converting his entire collection of 6000 iTunes DRM tracks), this could be a pretty significant revenue stream and a semi-serious revival of the replacement cycle. Although I think it’s unlikely that continuous upgrades to digital will keep this kind of replacement cycle happening (but who knows?), It’s interesting to see the labels leverage their new, happier, variable pricing relationship with Apple in this way. The good news is that indie artists working with a low cost distributor like CD Baby will get about .18 per upgrade (CD Baby takes a 9% cut from the 20 cents, paying 18.2 cents to artists).

Tough to get much out of this entertaining interview. Learn more about Lessig’s thoughts on copyright and the free licenses and other legal tools that his Creative Commons entity provides to mark creative work with the freedom the creator wants it to carry, here.

It just got a whole lot harder for online music retailers to compete with iTunes. Although I stop purchasing music from iTunes years ago to buy only DRM-free music (I settled on a monthly subscription with eMusic – which will still be my jam for more obscure left-of-the-dial music for the time being), the announcement by Apple on Tuesday that they are immediately dropping DRM (Digital Rights Management) from 8 million tracks changes things slightly.

Here’s what this announcement means to me:

A) Labels are continuing to relinquish more control over their product (which is a good thing).
B) It’s likely that iTunes market share will increase over and above their already commanding 70%+ of the legal online download market (which is not a good thing for competition).
C) Other players (like the leap year bug plagued Zune) will be able to play music from the Apple store (but only after it is converted from AAC to MP3, which iTunes can do, but is not ideal).

The truth is, aside from folks that are deep in the music business, how many consumers are really going to notice a difference? Do many casual music fans with an iPod know that iTunes had DRM files to start with?

Overall, the fact that Apple is removing DRM is definitely a step forward for the music industry. But I do tend to think that the real game changer for online music will be some sort of collective licensing model along the lines of what the EFF proposes. According to the IFPI, the ratio of unlicensed tracks downloaded to legal tracks sold is about 20 to 1. There are extreme opinions on both sides of the very complex collective licensing model discussion, but finding a way to monetize this traffic in a way that positively affects artists will have a much greater impact to the music industry than Apple’s DRM announcement. Baby steps!

Warner’s demand that thousands of videos featuring their music be removed from YouTube gives artists another reason to think twice about signing with a major label. Two years ago, all four major labels signed a licensing agreement with YouTube that provides them with a per-stream fee for each video viewed (whether it is a video created by the majors, or one which is user generated), as well as a share of YouTube’s advertising revenue.

The existing deal is nothing to sneeze at. While it is unclear how much revenue Warner has taken in from YouTube, Universal has brought in “tens of millions of dollars” from their relationship with YouTube, according to Rio Caraeff, executive vice president of Universal Music Group’s eLabs. The problem is that Warner Music is not seeing the forest for the trees. In their quest to max out all their possible revenue streams, Warner is overlooking the fact that their music business is built on the backs of artists who need this connection with their fans to grow their base and further their career. Inserting a barrier into this process, where fans cannot add the music of their favorite artists to their homemade videos, or send around a new video to their friends, is not a good way to draw in new fans. And again, unlike traditional marketing outlets like commercial radio, YouTube is an emerging revenue stream as well. “It’s growing tremendously,” says Caraeff. “It’s up almost 80 percent for us year-over-year in the U.S. in terms of our revenue from this category.”

As Amanda Palmer from the Dresden Dolls writes on her blog “it’s abSURD. they are looking for money in a totally backwards way. money that, i should point out, i would NEVER see as an artist. if they got their way and youtube decided to give them a larger revenue share of the videos, it’s very unlikely it would ever make it’s way into the artists’ bank accounts.
i loved my videos. now they are gone. why is life so hard? did i mention that being on a major label is starting to seem like…..not such a grand idea?”

Some really interesting comments in the NYT article this afternoon on Atlantic Records statement that their digital sales are surpassing their CD sales. What really struck me was how Atlantic is going about increasing their digital sales. Good quote here:

“I think we’ve figured it out,” said Julie Greenwald, president of Atlantic Records. “It used to be that you could connect five dots and sell a million records. Now there are 20 dots you can connect to sell a million records.”

I really think the same can be said for developing artists. A common thread in my course (as well as the other business courses that we’re teaching here online) is that diversifying your revenue streams and engaging in niche marketing is a big part of making it work for musicians these days. Check out what Atlantic is doing:

Replacing compact disc sales are small bits of revenue from many sources: Atlantic Records’ digital sales include ring tones, ringbacks, satellite radio, iTunes sales and subscription services. At the same time, record labels — Atlantic included — are spending less money to market artists. In the pre-Internet days, said Ms. Greenwald, “we were so flush, we did everything in the name of promotion.” Among the cutbacks are less spending to produce videos and to support publicity tours when a new album is released.

The same principles can be (must be) applied to developing artists. Get your music out to Pandora (who accept indie submissions), start selling ringtones, start selling merch off of your own site, use TuneCore or CD Baby to get your music up on iTunes. Be aggressive with your outreach, and targeted with your outlets.

It only takes a couple hours for a musician to get started with basic online marketing. Setting up an account with MySpace, Facebook, Twitter, uStream, Flickr, Reverbnation, OurStage, Fanbridge, and the dozens of other options is simple, and an excellent first step. But I tend to think that some bands lose sight of the fact that online marketing is not an end on to itself. The most effective online marketing campaigns support the physical marketing efforts as well.

Two examples from this week:

1) Don Bartlett, manager of Joe Pug (via the Lefsetz letter):

“We decided to put an offer up on Joe’s website and MySpace. We told any fan that if they knew anyone who might be interested in Joe’s music that they could send us an email and we send them as many copies of a two-song sampler CD as they wanted. Free. We even cover the postage. To keep costs down, we invested in a cd publishing system that burns and prints them robotically. Each CD has two songs, contact info, MySpace, and a reminder that the full cd was at iTunes. If someone lived near a place where a show was scheduled, we printed that show info on there as well. People requested as few as 2 and as many as 50. We sent all of them. Requests continued to pour in, and the more we sent out the faster the new requests came in. We’re at the point now where we get about 15 a day. Joe writes a thank you in each and every one. And almost instantly, sales took off. [Show] attendance jumped noticeably and MySpace/website action began a steady upward arc. More importantly, we built an incredible database of his most hardcore fans. And after receiving a mailbox full of cds for free, they are willing to do anything to help forward the cause. And it is the ultimate in target marketing…you have people who already like your music passing it on to their friends, whose tastes they presumably know.”

2) Rock/Jam band Umphrey’s McGee

The band is organizing an online pre-sale campaign that gives their fans a reason to encourage others to buy the record pre-sale. They’re announcing it on their Website, as well as using banner ads on their social networking properties. Here are the details from their site:

Much like an Umphrey’s show, no one is exactly sure what will happen with Mantis, the upcoming release from Umphrey’s McGee. The more fans that pre-order the release, the more bonus content we’ll unlock for everyone. We are leaving the amount of additional content and the makeup of some of that content entirely up to you. There are 8 total levels of material that could be unlocked containing over 45 unique & unreleased audio tracks, including behind-the-scenes perspectives, videos, and plenty of quirky surprises. Bonus Material Part I available EXCLUSIVELY to those who pre-order.

Great to see both of these bands nailing the online campaign to affect tangible change offline and facilitate a personal connection directly with their fans.

I talk a lot in my course about the fact that touring “kickstarts” (I need a better phrase here, I think, one that does not make me thing of Mötley Crüe every time I write it) all the other marketing efforts: press, retail, merch, radio (some form), and Internet. It not only gives press a reason to write about you, a reason for radio to spin your record, and retail a reason to stock your music, but it’s the best way to forge that all important “emotional connection” with your fanbase.

My friend and colleague George Howard talks about the importance of having a foot in both the online and the physical marketing realm (he calls it the Straddle). I think uStream does a great job of providing a platform to accomplish this (in terms of bringing what you do offline, online) via their free webcasting tool at www.ustream.com. Similar to the most successful online ventures, uStream is extremely user friendly. The setup is simple: once you create an account, you can embed their video player on your site, use your webcam or plug in a firewire camera to film your live event, let folks know about the show through the scheduling tools on your uStream page, and you are off to the races. You can record and archive past live events as well. All for free.

uStream has some community based features that allows fans who are watching your Webcast to chat in real time with one another (hopefully positively) about your show. Superfans can embed the player in any social networking site, too. Take a look at the player in action www.rendtheheavens.com