Music Marketing

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

One of the best “viral” emails I have seen since Bob Dylan’s Greatest Hits email campaign.

Of course giving away a free record is nothing new – huge bands who’ve had major label support throughout their careers (Radiohead, Prince, Nine Inch Nails, etc) have the luxury of releasing free music to their massive fanbases with the understanding that doing so will fill the seats in the stadiums when they are on tour. But how does a band capitalize on free music when they don’t have this built in community, when they are not a household name?

Although Mercury Rev was signed to Columbia for their first two records, the bulk of their material was released by then-independent V2 (Richard Branson’s post-Virgin label). The band has fluttered close to mainstream success (1998’s Deserter Songs is a masterpiece), but has remained an indie favorite playing mostly mid-sized venues in the US.

Indie Label Yep Rock (who signed Mercury Rev for their latest, Snowflake Midnight) has put together a great plan to leverage free music to build up the bands fanbase, and draw interest to their new release. Promotion for the new record draws folks back to their Website (not their Myspace!), where the band is giving away Snowflake Midnight’s companion release Strange Attractor, another full length record. Folks that sign up for the Mercury Rev mailing list get a link to download Strange Attractor as a high quality DRM-free mp3 that can be played on any device. The free release became available on the same day as their paid release hit the stores.

I think this is good marketing: they’re providing a value add for old fans, giving new fans a reason to get on board, and most importantly, collecting a ton of email addresses that they can use down the line to announce tour dates, sell merch, sell tickets etc. And the fact that they are providing music that people can own outright, share, play at parties etc is huge. The fans are part of the action, and are playing a part in making the release of the proper record a true event (via word of mouth). There is SO much music out there, that it is easy for folks to get distracted. Bands need to take special care in keeping their existing fanbase interested, providing incentives for potential new fans, and above all continuing to build their community.

One needs only to take a walk down Boylston Street pass the new Apple store at 8AM to see how important word of mouth is to Apple and their new iPhone. Apple is legendary for their marketing (customer service is another thing – I waited close to an hour last week to get an iPhone, in which time Apple was only able to service ONE person). Their integrated marketing campaigns are amazing, from the traditional print, packaging, television, and branding components; to their forward thinking viral and word of mouth campaigns.

To get a large group of people to evangelize about your product or service is the end goal of any marketing campaign, and it’s something that my friend Dave Balter knows a lot about. In 2002, Dave founded BzzAgent, a word of mouth media company that currently coordinates 450,000 volunteer “agents” in the US, Canada, and the U.K.. Dave recently wrote and self-published his second book on Word of Mouth marketing, creatively titled “The Word of Mouth Manual Volume II.” It’s a great read, illustrated with examples from the Grateful Dead, Crocs, and of course, Apple. The book is for sale for $45 on Amazon, but Dave’s provided the book to a few folks for free, as a PDF download, available here. If you’ve ever been curious about how or why word of mouth marketing works, or how to get folks to start talking about your own product, I recommend you check it out.

Radiohead and I share a couple of things in common. We both love Bill Hicks (Paul Kolderie got me backstage in 2002 where I got to talk to Jonny Greenwood about Bill), but more importantly we are both interested in user-generated content. I really liked the “Nude” remix idea where different “stems” of the song (vocals, drums, guitar etc) could be downloaded, remixed, and then entered into a contest on http://radioheadremix.com. Although some folks have a problem with buying the stems from iTunes at $.99 each, I think it’s a great visibility vehicle for the band as well as a wonderful way to interact with their community. Radiohead even provides folks with a widget to add to their Facebook profile, MySpace page or website. Marketing ploy? Yes. Creative promotion that is effective at engaging folks? Yes.

Following up on this, aniBoom is now in the semi-final stage of their In Rainbows Animated Music Video Contest. The contest invites folks to create animated videos to In Rainbows tracks, with the winner of the competition (who will be chosen by Radiohead themselves) receiving a $10,000 cash prize and a shot at having their video air on the Cartoon Network’s [adult Swim]. Below are some of my favorite semi-finalists:

Viva user generated content!

watch more at aniBoom

watch more at aniBoom

watch more at aniBoom

watch more at aniBoom

Whew. Just got back from one of the largest music conferences in the world – SXSW (South By South West) in Austin, TX. It’s like a musical wonderland down there. I was floored by Earthless, These are Powers, A Place to Bury Strangers, Chuck Prophet, Mark Kozelek, Brad Barr, The Peasantry, and in particular, Monotonix, which might have put on one of the most ridiculous/riveting performance I have ever seen. Check them out:

I suppose that seeing good music at SXSW is a given, but now that I am back and catching up with my RSS feeds and emails, it’s a little surprising for me to see that some folks have an opinion that SXSW is a waste of time for bands, the business has changed in such a way that the industry folks in attendance don’t make a difference anymore, and that the conference is so crowded there is little chance that bands can make any impact anyway.

To me, that’s a bit of a close-minded and jaded way to look at things.

It might be true that the major label A&R folks that are at SXSW are interested in locking bands into 360 deals that are likely not in the best interest of artists. But from a promotional and business standpoint, there are fantastic opportunities. We all know the Internet has changed everything about the business – sales, distribution, and how music is discovered. Commercial radio has fizzled as a means to expose folks to new music, having been replaced by blogs and online music communities. And the blogs have been in full effect at SXSW. Sean Moeller runs a tremendous music blog/site called Daytrotter, and he’s been holed up at Big Orange Studios in Austin the whole week recording exclusive live sets and interviews with folks like Peter Bjorn, from Peter Bjorn and John, Kaki King, and Johnathan Rice. The notion that there is too much competition at SXSW is discounted by that fact that the Internet allows the new breed of tastemakers to bring SXSW to you. All it takes is one blogger writing about your performance to make an impact on hundreds or thousands of folks immediately, both through editorial and multimedia content.

It always comes back to the music. If your music kills and you work hard, good things will happen. Berklee put on a show on Friday afternoon at Friends on 6th street, where my good friend and Berklee alum Brad Barr performed. Brad played a beautiful Townes Van Zandt-inspired set (to my ears) of original music. Directly after the show, Brad was approached to play a solo set at the High Sierra Music Festival in California next year, as well as an opportunity to play Middlebury College. Cory Brown, the founder of artist-friendly Absolutely Kosher records, was in attendance too, rocking out to The Peasantry. It’s tough for me to see how these things could be viewed as anything but positive for Brad and The Peasantry.

Barry Kelly, Dave Franz, and myself shot some video interviews with heavy hitter forward thinking industry folks while we were down in Austin. I’ll post a link when we have the piece edited all together.

In addition to Music Marketing 201, I’m also teaching Dave Kusek’s Future of Music course. The first lesson in the course looks at the difference between the music business and the record business (there’s a big difference, of course), what a major/independent label offer musicians, the importance of touring and merch, and an overview of publishing.

Part of the first assignment in the course has students evaluate a hypothetical situation involving a songwriter that is beginning to have some success, and is now being courted by a major. The question: should this artist take the major label deal?

It’s a pretty broad question in theory, and one that requires a lot of questions in return. What are the terms of the deal? Is this a 360 deal that will require this artist to relinquish control (financially and creatively) of merchandise, touring income, publishing? Does this artist feel that a major label can effectively do things that the artist cannot do for him/herself?

From a critical thinking standpoint, all the above (and more) should be considered (by a lawyer, if possible). But from a knee-jerk standpoint, my first thought is to walk away. Consider these two news releases from last week. The first is from London’s Guardian paper:

“EMI, bought by Guy Hands’ Terra Firma group last year, confirmed today that worldwide headcount will be cut by between 1,500 and 2,000 as it slashes costs.

Confirming EMI insiders’ fears, the company said ahead of staff briefings this morning that it was launching ‘a series of wide-ranging initiatives within its recorded music division to enable the group to become the world’s most innovative, artist friendly and consumer-focused music company.”

On the flip side, there continue to be interesting ideas popping up on how artists can run their own label. Take a look at this company, called Slice The Pie. The company enables artists to connect with financers who want to invest in music. It looks to me like the company is in its infant stages, but it is definitely an interesting idea.

I’ve worked at labels. And while I think that a small tightly run forward-thinking label can survive and prosper in this environment (Stone’s Throw is one of my favorite examples at the moment), I still think the majors are a ways off from being even remotely close to navigating the current environment. I think times are going to continue to get worse for the majors before they get better, and the resources available to independent musicians are going to continue to improve.