EXCLUSIVE: INTERVIEW WITH DIY ARTIST SHMU
Music
SURVIVAL STRATIGIES FOR EMERGING ARTISTS
Chris Anderson’s
Journey into The Long Tail
BY DAVID BYRNE
The Theoretical Deal Spectrum
If Diy is Killing You Read This...
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FEBRUARY 2013
CONTENTS
F
A Look at the Theoretical Deal Spectrum for Upcoming Artists With more control comes more responsibility but also more opportunities Profit Sharing Deals
License Deals
Just Distribution Deals
Standard Deal
More Corporate Investment
Less Corporate Investment
...But for most bands the
sweet spot
is somewhere in the middle
Equity Deals / 360 Deals DIY All The Way
More Control
Less Control
FEATURES
The Dream: DIY your way into a decent funding situation: with enough fans, respect and leverage to develop a mutually beneficial relationship with a corporation, label or sponsor.
THE THEORETICAL DEAL SPECTRUM p.35
What Successful Musicians and Managers Know in 2012 Revenue producers greatest to least:
*blerb
1 Touring
2 Merchandise 3 Licensing 4 Recorded 5 Publishing music royalties
The Majority of DIY Artists Juggle Multiple Roles “Musicians are musicians because they play music, not because they love accounting or managing Facebook pages. But in the current climate, artists are now forced to play more roles than ever.”
1594 1600
1400
1400 1200
983 817
1000
- Paul Resnikoff
800
THE LONG TAIL p.10
INTERVIEW WITH DIY ARTIST SHMU p.24
600
388
SURVIVAL STRATEGIES FOR EMERGING ARTISTS p. 29 400
130
200 0
1 role
2 roles
3 roles
4 roles
5 roles
6 roles
41
18
7roles
8 roles
- Future of Music Coalition 2012
Forget Conventional Cleaning.
IF DIY IS KILLING YOU READ THIS p.38
DYSON VACUUM p.40 m
EDITORS LETTER/ ABOUT THIS EDITION CONTRIBUTORS p.06 p.09 005
Contributors
Chris Anderson is an American author. He was with The Economist for seven years, then joining WIRED magazine in 2001 where he was the editor-inchief until 2012. He is known for his 2004 article entitled The Long Tail; which he later expanded into the 2006 book, The Long Tail: Why the Future of Business Is Selling Less of More. He is the co founder and chairman of 3DRobotics, a robotic manufacturing company.
006
Multi-instrumentalist/singer Shmu — otherwise known as Sam Chown or the percussion half of Austin synth-prog duo Zorch — is about to make his solo debut in June with Discipline / Communication. Compared to the manic sensibilities of Zorch, Shmu brings a more chilled-out vibe with elements of pop and shoegaze, opting for some serious grooves rather than spacey synths.
Paul Resnikoff is the founder and publisher of Digital Music News, a premier industry source for news, information, and analysis. Digital Music News has quickly grown from its humble roots as a small, executive news service to the most widely read information source in the field. Prior to starting Digital Music News, Paul Resnikoff headed the digital music initiative at internet portal Lycos. In that role, Resnikoff managed relationships with several major labels, including the former BMG and Sony Music Entertainment. Resnikoff started out at Epic Records (Sony Music Entertainment) in New York, specifically within international and eventually worldwide
marketing. David Byrne’s impressive output over the past four decades reaches far beyond his work as a musician, most famously in Talking Heads and in numerous solo albums and collaborations. He is also a deep thinker on topics ranging from cities to bicycle advocacy to urban studies to art, neuroscience, architecture, and politics.
An event celebrating a futureforward city, exceptional talent-huband global centre of business and innovation
The east Wintergarden Canary Wharf Tuesday November 20, 2012 For further information visit www.future-london.com or contact WIRED at: event@future-london.com
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Credits Editor-in-Chif Emily Dalton Art Director Emily Dalton Managing Editor Noah Schwartz Contributors: Chris Anderson Sam Chown Paul Resnikoff David Byrne Curated by Emily Dalton Photography - Ben Aqua Pictures: Deviant Art Flicker Copy Right Free Wallpaper Graphics by Emily Dalton Articals from: Wired Magagine Issue 12.10 & 16.01 Flabmag.com July 1st 2012 Digitalmusicnews.com May 1st 2012 emilydalton.ca
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From the Editor In this issue of Wired, we are diving deep into the DIY music revolution. The DIY music revolution has been facilitated by the internet and resulted in a dramatic shift in the music industry. The dream for modern musicians is this: DIY your way into a decent funding situation, with enough fans, respect and leverage to develop a mutually beneficial relationship with a corporation, label or sponsor. There are countless new platforms that artists can use with this goal in mind. There is file sharing, digital music stores, the modern copyright system, modern digital distribution, crowdsourcing and funding, social networks, online promotion and advertising. Create a album or song on a laptop using a digital audio workstation. Put the music on the web in several places such as Bandcamp, the iTunes music store, Facebook and Sonicbids. Email popular music blogs, post on Reddit and try to get some attention. If there is any money do some advertising, hire a PR person and a lawyer you trust. An artist cannot engage in all of these activities, they must find the proper balance between using these platforms and creating their art. The DIY music revolution is idealism, energy and creativity but it is often debt ridden and not a life of luxury. DIY is scraping by for money and living, a bootstrap lifestyle. DIY can be very painful financially and for body and soul. In this issue Chris Anderson explores the causes of DIY. Talking Heads frontman David Byrne explains the new business models. Paul Resnikoff investigates the perils and pitfalls and we interview an artist on the front lines, Austin Texas based Shmu. Dive into the new music revolution, sit back and get Wired.
Emily Dalton emilydalton.ca
009
The Long Tail
Forget squeezing millions from a few megahits at the top of the charts. The future of entertainment is in the millions of niche markets at the shallow end of the bitstream. By Chris Anderson
In 1988, a British mountain climber named Joe Simpson wrote a book called Touching the Void, a harrowing account of near death in the Peruvian Andes. It got good reviews but, only a modest successz, it was soon forgotten. Then, a decade later, a strange thing happened. Jon Krakauer wrote Into Thin Air, another book about a mountain-climbing tragedy, which became a publishing sensation. Suddenly Touching the Void started to sell again. Random House rushed out a new edition to keep up with demand. Booksellers began to promote it next to their Into Thin Air displays, and sales rose further. A revised paperback edition, which came out in January, spent 14 weeks on the New York Times bestseller list. That same month, IFC Films released a docudrama of the story to critical acclaim. Now Touching the Void outsells Into Thin Air more than two to one. What happened? In short, Amazon.com recommendations. The online bookseller’s software noted patterns in buying behavior and suggested that readers who liked Into Thin Air would also like Touching the Void. People took
010
the suggestion, agreed wholeheartedly, wrote rhapsodic reviews. More sales, more algorithmfueled recommendations, and the positive feedback
is going to be radically different from today’s
mass market. If the 20th- century entertainment
industry was about hits, the 21st will be equally
loop kicked in.
about misses.
Particularly notable is that when Krakauer’s book
For too long we’ve been suffering the tyranny
hit shelves, Simpson’s was nearly out of print. A
of lowest-common-denominator fare, subjected
few years ago, readers of Krakauer would never
to brain-dead summer blockbusters and
even have learned about Simpson’s book - and
manufactured pop. Why? Economics. Many of
if they had, they wouldn’t have been able to find
our assumptions about popular taste are actually
it. Amazon changed that. It created the Touching
artifacts of poor supply-and-demand matching - a
the Void phenomenon by combining infinite shelf
market response to inefficient distribution.
space with real-time information about buying trends and public opinion. The result: rising demand for an obscure book.
The main problem, if that’s the word, is that we live in the physical world and, until recently, most of our entertainment media did, too. But
This is not just a virtue of online booksellers; it is
that world puts two dramatic limitations on our
an example of an entirely new economic model
entertainment.
for the media and entertainment industries, one that is just beginning to show its power. Unlimited selection is revealing truths about what consumers want and how they want to get it in service after service, from DVDs at Netflix to music videos on Yahoo! Launch to songs in the iTunes Music Store and Rhapsody. People are going deep into the catalog, down the long, long
The first is the need to find local audiences. An average movie theater will not show a film unless it can attract at least 1,500 people over a two-week run; that’s essentially the rent for a screen. An average record store needs to sell at least two copies of a CD per year to make it worth carrying; that’s the rent for a half inch of shelf space. And so on for DVD rental shops,
Now, with online distribution and retail, we are entering a world of abundance. And the differences are profound. list of available titles, far past what’s available at Blockbuster Video, Tower Records, and Barnes & Noble. And the more they find, the more they like. As they wander further from the beaten path, they discover their taste is not as mainstream as they thought (or as they had been led to believe by marketing, a lack of alternatives, and a hit-driven culture).
videogame stores, booksellers, and newsstands. In each case, retailers will carry only content that can generate sufficient demand to earn its keep. But each can pull only from a limited local population - perhaps a 10-mile radius for a typical movie theater, less than that for music and bookstores, and even less (just a mile or two) for video rental shops. It’s not enough for a
An analysis of the sales data and trends from
great documentary to have a potential national
these services and others like them shows that
audience of half a million; what matters is how
the emerging digital entertainment economy 011
the tyranny of physical space, an audience
many it has in the northern part of Rockville,
too thinly spread is the same as no audience
Maryland, and among the mall shoppers of
at all.
Walnut Creek, California.
Many of our assumptions about popular taste are actually artifacts of poor supply-and-demand matching — a market response to inefficient distribution. There is plenty of great entertainment with
The other constraint of the physical world is
potentially large, even rapturous, national
physics itself. The radio spectrum can carry only
audiences that cannot clear that bar. For
so many stations, and a coaxial cable so many
instance, The Triplets of Belleville, a critically
TV channels. And, of course, there are only
acclaimed film that was nominated for the best
24 hours a day of programming. The curse of
animated feature Oscar this year, opened on
broadcast technologies is that they are profligate
just six screens nationwide. An even more
users of limited resources. The result is yet
striking example is the plight of Bollywood in
another instance of having to aggregate large
America. Each year, India’s film industry puts
audiences in one geographic area - another
out more than 800 feature films. There are an
high bar, above which only a fraction of potential
estimated 1.7 million Indians in the US. Yet
content rises.
the top-rated (according to Amazon’s Internet
The past century of entertainment has offered
Movie Database) Hindi-language film, Lagaan:
an easy solution to these constraints. Hits fill
Once Upon a Time in India, opened on just two
theaters, fly off shelves, and keep listeners and
screens, and it was one of only a handful of
viewers from touching their dials and remotes.
Indian films to get any US distribution at all. In
Nothing wrong with that; indeed, sociologists will tell you that hits are hardwired into human
ANATOMY OF THE LONG TAIL
online services carry far more inventory than traditional retailers. iTunes, for example, ofers 20 times as many songs as Wal-Mart’s stock of 39,000 tunes. The appetite for iTunes more obscure traks (charted below in yellow) makes up the co-called Long Tail. Meanwhile, even as consumers flock to mainstream books, music, and films (right), there is real demand for niche fare found only online.
TOTAL INVENTORY: 28,000,000 SONGS
TOTAL INVENTORY 2.3 MILLION BOOKS
Walmart Stocks around 39,000 CDs
Typical Waterstones stock around 10,000 books
Average number of plays per month on iTunes
6,100
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TOTAL INVENTORY 25,000 DVDS
typical Blockbuster store:3,000 DVDs
THE NEW GROWTH MARKET: OBSCURE PRODUCTS YOU CAN’T GET ANYWHERE BUT ONLINE TOTAL SALES
2,000 songs available at both Wall-Mart and iTunes
POPULAR CDS & DVDS 0
22%
songs available only on Rhapsody
1,000
39,000
TOTAL SALES
TOTAL SALES
20%
57%
Product not available in offline retail stores LESS POPULAR CDS & DVDS
200,000
100,000
Titles ranked by popularity
500,000
psychology, the combinatorial effect of
at them with a question that visitors invariably
conformity and word of mouth. And to be sure,
get wrong: “What percentage of the top 10,000
a healthy share of hits earn their place: Great
titles in any online media store (Netflix, iTunes,
songs, movies, and books attract big, broad
Amazon, or any other) will rent or sell at least
audiences.
once a month?”
This is the world of scarcity. Now, with online distribution and retail, we are entering a world of abundance. And the differences are profound. But most of us want more than just hits.
Most people guess 20 percent, and for good
Everyone’s taste departs from the mainstream
reason: We’ve been trained to think that way.
somewhere, and the more we explore
The 80-20 rule, also known as Pareto’s principle
alternatives, the more we’re drawn to them.
(after Vilfredo Pareto, an Italian economist who
Unfortunately, in recent decades such
devised the concept in 1906), is all around us.
alternatives have been pushed to the fringes by
Only 20 percent of major studio films will be hits.
pumped-up marketing vehicles built to order by
Same for TV shows, games, and mass-market
industries that desperately need them.
books - 20 percent all. The odds are even
Hit-driven economics is a creation of an age without enough room to carry everything for everybody. Not enough shelf space for all the
worse for major-label CDs, where fewer than 10 percent are profitable, according to the Recording Industry Association of America.
CDs, DVDs, and games produced. Not enough
But the right answer, says Vann-Adib, is 99
screens to show all the available movies.
percent. There is demand for nearly every one
Not enough channels to broadcast all the TV
of those top 10,000 tracks. He sees it in his
programs, not enough radio waves to play all
own jukebox statistics; each month, thousands
the music created, and not enough hours in the
of people put in their dollars for songs that no
day to squeeze everything out through either of
traditional jukebox anywhere has ever carried.
those sets of slots. This is the world of scarcity. Now, with online
A hit and a miss are on equal economic footing, both just entries in a database called up on demand, both equally worthy of being carried.
distribution and retail, we are entering a world of abundance. And the differences are profound.
People get Vann-Adib’s question wrong because the answer is counterintuitive in two ways. The first is we forget that the 20 percent rule in the
To see how, meet Robbie Vann-Adib, the CEO
entertainment industry is about hits, not sales
of Ecast, a digital jukebox company whose
of any sort. We’re stuck in a hit-driven mindset
barroom players offer more than 150,000 tracks
- we think that if something isn’t a hit, it won’t
- and some surprising usage statistics. He hints
make money and so won’t return the cost of 013
its production. We assume, in other words,
have to go somewhere else. Bookstores, the
that only hits deserve to exist. But Vann-Adib,
megaplex, radio, and network TV can be equally
like executives at iTunes, Amazon, and Netflix,
demanding. We equate mass market with quality
We equate mass market with quality and demand,when in fact it often just represents familiarity, savvy advertising, and broad if somewhat shallow appeal. has discovered that the “misses” usually make
and demand, when in fact it often just represents
money, too. And because there are so many
familiarity, savvy advertising, and broad if
more of them, that money can add up quickly to
somewhat shallow appeal. What do we really
a huge new market.
want? We’re only just discovering, but it clearly
With no shelf space to pay for and, in the
starts with more.
case of purely digital services like iTunes, no
To get a sense of our true taste, unfiltered by
manufacturing costs and hardly any distribution
the economics of scarcity, look at Rhapsody,
fees, a miss sold is just another sale, with the
a subscription-based streaming music service
same margins as a hit. A hit and a miss are on
(owned by RealNetworks) that currently offers
equal economic footing, both just entries in a
more than 735,000 tracks.
database called up on demand, both equally
worthy of being carried. Suddenly, popularity no longer has a monopoly on profitability.
Chart Rhapsody’s monthly statistics and you get a “power law” demand curve that looks much like any record store’s, with huge appeal for the
The second reason for the wrong answer is that
top tracks, tailing off quickly for less popular
the industry has a poor sense of what people
ones. But a really interesting thing happens
want. Indeed, we have a poor sense of what we want. We assume, for instance, that there is little demand for the stuff that isn’t carried by Wal-Mart and
The potential book market may be twice as big as it appears to be, if only we can get over the economics of scarcity.
other major retailers; if people wanted it, surely it
once you dig below the top 40,000 tracks, which
would be sold. The rest, the bottom 80 percent,
is about the amount of the fluid inventory (the
must be subcommercial at best.
albums carried that will eventually be sold) of
But as egalitarian as Wal-Mart may seem, it is actually extraordinarily elitist. Wal-Mart must sell at least 100,000 copies of a CD to cover its retail overhead and make a sufficient profit; less than 1 percent of CDs do that kind of volume. What
the average real-world record store. Here, the Wal-Marts of the world go to zero - either they don’t carry any more CDs, or the few potential local takers for such fringy fare never find it or never even enter the store.
about the 60,000 people who would like to buy
The Rhapsody demand, however, keeps going.
the latest Fountains of Wayne or Crystal Method
Not only is every one of Rhapsody’s top 100,000
album, or any other nonmainstream fare? They
tracks streamed at least once each month, the
014
same is true for its top 200,000, top 300,000, and
are. In other words, the potential book market
top 400,000. As fast as Rhapsody adds tracks to
may be twice as big as it appears to be, if only
its library, those songs find an audience, even if
we can get over the economics of scarcity.
it’s just a few people a month, somewhere in the country. This is the Long Tail. You can find everything out there on the Long Tail. There’s the back catalog, older albums still fondly remembered by longtime fans or rediscovered by new ones. There are live tracks, B-sides, remixes, even (gasp) covers. There are niches by the thousands, genre within genre within genre: Imagine an entire Tower Records devoted to ‘80s hair bands or ambient dub. There are foreign bands, once priced out of reach in the Import aisle, and obscure bands on even more obscure labels, many of which don’t have the distribution clout to get into Tower at all. Oh sure, there’s also a lot of crap. But there’s a lot of crap hiding between the radio tracks on hit albums, too. People have to skip over it on CDs, but they can more easily avoid it online, since the collaborative filters typically won’t steer you to it. Unlike the CD, where each crap track costs perhaps one-twelfth of a $15 album price, online it just sits harmlessly on some server, ignored in a market that sells by the song and evaluates tracks on their own merit. What’s really amazing about the Long Tail is the sheer size of it. Combine enough nonhits on the Long Tail and you’ve got a market bigger than the hits. Take books: The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon’s book sales come from outside its top 130,000 titles. Consider the implication: If the Amazon statistics are any guide, the market for books that are not even sold in the average bookstore is larger than the market for those that
Venture capitalist and former music industry consultant Kevin Laws puts it this way: “The biggest money is in the smallest sales.” The same is true for all other aspects of the entertainment business, to one degree or another. Just compare online and offline businesses: The average Blockbuster carries fewer than 3,000 DVDs. Yet a fifth of Netflix rentals are outside its top 3,000 titles. Rhapsody streams more songs each month beyond its top 10,000 than it does its top 10,000. In each case, the market that lies outside the reach of the physical retailer is big and getting bigger. When you think about it, most successful businesses on the Internet are about aggregating the Long Tail in one way or another. Google, for instance, makes most of its money off small advertisers (the long tail of advertising), and eBay is mostly tail as well - niche and one-off products. By overcoming the limitations of geography and scale, just as Rhapsody and Amazon have, Google and eBay have discovered new markets and expanded existing ones. This is the power of the Long Tail. The companies at the vanguard of it are showing the way with three big lessons. Call them the new rules for the new entertainment economy.
RULE 1: MAKE EVERYTHING AVAILABLE If you love documentaries, Blockbuster is not for you. Nor is any other video store - there are too many documentaries, and they sell too poorly to justify stocking more than a few dozen of them on physical shelves. Instead, you’ll want to 015
join Netflix, which offers more than a thousand
exclusive. Now Daughter From Danang
documentaries - because it can. Such profligacy
consistently ranks in the top 15 on Netflix
is giving a boost to the documentary business;
documentary charts. That amounts to a market
last year, Netflix accounted for half of all US
of tens of thousands of documentary renters that
rental revenue for Capturing the Friedmans,
did not otherwise exist.
a documentary about a family destroyed by
There are any number of equally attractive
allegations of pedophilia.
genres and subgenres neglected by the
Netflix CEO Reed Hastings, who’s something
traditional DVD channels: foreign films, anime,
of a documentary buff, took this newfound clout
independent movies, British television dramas,
to PBS, which had produced Daughter From
old American TV sitcoms. These underserved
Danang, a documentary about the children of US
markets make up a big chunk of Netflix rentals.
You can find everything out there on the Long Tail. There’s the back catalog, older albums still fondly remembered by longtime fans or rediscovered by new ones. soldiers and Vietnamese women. In 2002, the
Bollywood alone accounts for nearly 100,000
film was nominated for an Oscar and was named
rentals each month. The availability of offbeat
best documentary at Sundance, but PBS had
content drives new customers to Netflix -
no plans to release it on DVD. Hastings offered
and anything that cuts the cost of customer
to handle the manufacturing and distribution if PBS would make it available as a Netflix
THE DOCUMENTARY NICHE ANATOMY OF THE LONG TAIL GETS RITCHER
online services carry far more inventory than traditional retailers. iTunes, for example, ofers 20 times as many songs as Wal-Mart’s stock of 39,000 tunes. The appetite for iTunes more obscure traks (charted below in yellow) makes up the co-called Long Tail. Meanwhile, even as consumers flock to mainstream books, music, and films (right), there is real demand for niche fare found only online.
20,000
DOCUMENTARIES AVAILABLE Average number of plays per month on iTunes
6,100
10,000 2,000
songs available at both Wall-Mart and iTunes
40%
TOTAL SALES
3%
100,000
TOTAL SALES
20%
Product not available in offline retail stores
LESS POPULAR CDS & DVDS
Amazon.com
39,000
typical Blockbuster store:3,000 DVDs
57%
Netflix Titles ranked by popularity
016
Typical Waterstones stock around 10,000 books
TOTAL SALES
22%
POPULAR CDS & DVDS 0
Walmart Stocks around 39,000 CDs
TOTAL INVENTORY 25,000 DVDS
THE NEW GROWTH MARKET: OBSCURE PRODUCTS YOU CAN’T GET ANYWHERE BUT ONLINE
songs available only on Rhapsody
1,000
0
TOTAL INVENTORY 2.3 MILLION BOOKS
More than 40,000 documentaries have been released, according to the internet Movie Database.
15,000
5,000
TOTAL INVENTORY: 28,000,000 SONGS
2%
Local Video Shop 200,000
500,000
acquisition is gold for a subscription business. Thus the company’s first lesson: Embrace niches.
Netflix has made a good business out of what’s unprofitable fare in movie theaters and video rental shops because it can aggregate
dispersed audiences. It doesn’t matter if the several thousand people who rent Doctor Who episodes each month are in one city or spread,
half the price. Same for independent films. This year, nearly 6,000 movies were submitted to the Sundance Film Festival. Of those, 255 were accepted, and just two dozen have been picked up for distribution; to see the others, you had to be there. Why not release all 255 on DVD each year as part of a discount Sundance Series?In a Long Tail economy, it’s more expensive to evaluate than to release. Just do it!
one per town, across the country - the economics
The same is true for the music industry. It should
are the same to Netflix. It has, in short, broken
be securing the rights to release all the titles
Great Long Tail businesses can then guide consumers further afield by following the contours of their likes and dislikes, easing their exploration of the unknown. the tyranny of physical space. What matters is
in all the back catalogs as quickly as it can -
not where customers are, or even how many of
thoughtlessly, automatically, and at industrial
them are seeking a particular title, but only that
scale. (This is one of those rare moments where
some number of them exist, anywhere.
the world needs more lawyers, not fewer.) So
As a result, almost anything is worth offering on the off chance it will find a buyer. This is the opposite of the way the entertainment industry now thinks. Today, the decision about whether or when to release an old film on DVD is based on estimates of demand, availability of extras such as commentary and additional material, and
too for videogames. Retro gaming, including simulators of classic game consoles that run on modern PCs, is a growing phenomenon driven by the nostalgia of the first joystick generation. Game publishers could release every title as a 99-cent download three years after its release no support, no guarantees, no packaging.
marketing opportunities such as anniversaries,
All this, of course, applies equally to books.
awards, and generational windows (Disney
Already, we’re seeing a blurring of the line
briefly rereleases its classics every 10 years or
between in and out of print. Amazon and other
so as a new wave of kids come of age). It’s a
networks of used booksellers have made it
high bar, which is why only a fraction of movies
almost as easy to find and buy a second-hand
ever made are available on DVD.
book as it is a new one. By divorcing bookselling
That model may make sense for the true classics, but it’s way too much fuss for everything else. The Long Tail approach, by contrast, is to simply dump huge chunks of the archive onto bare-bones DVDs, without any extras or marketing. Call it the Silver Series and charge
from geography, these networks create a liquid market at low volume, dramatically increasing both their own business and the overall demand for used books. Combine that with the rapidly dropping costs of print-on-demand technologies and it’s clear why any book should always be 017
available. Indeed, it is a fair bet that children
consumers should pay more for the privilege of
today will grow up never knowing the
purchasing la carte to compensate for the lost
meaning of out of print.
album revenue. Ask consumers, on the other hand, and they’ll tell you that 99 cents is too high. It is, for
RULE 2: CUT THE PRICE IN HALF. NOW LOWER IT.
starters, 99 cents more than Kazaa. But piracy aside, 99 cents violates our innate sense of
Thanks to the success of Apple’s iTunes, we
economic justice: If it clearly costs less for a
now have a standard price for a downloaded
record label to deliver a song online, with no
track: 99 cents. But is it the right one?
packaging, manufacturing, distribution, or shelf
Ask the labels and they’ll tell you it’s too low:
space overheads, why shouldn’t the price be
Even though 99 cents per track works out to
less, too?
about the same price as a CD, most consumers just buy a track or two from an album online,
economic analysis on what the right price for
rather than the full CD. In effect, online music has seen a return to the singles-driven business of the 1950s. So from a label perspective,
Surprisingly enough, there’s been little good online music should be. The main reason for this is that pricing isn’t set by the market today but by the record label demi-cartel. Record
So free has a cost: the psychological value of convenience. This is the “not worth it” moment where the wallet opens.
THE REAL COST of MU$IC Oneline music services dont incur packaging, distribution, and retail fees -and they should charge accordingly
CREATION COSTS
Artist $1.50 Marketing & profit $5.00 Publishing $0.96
+
= $7.46
PRODUCTION COSTS Packaging $0.75 Distrabution $2.00 Retail markup $5.00
= $7.76
$15.21
per CD
018
divided by 12 traks = 62c/track + 17c online delivery cost
79c
per song
companies charge a wholesale price of around
By this calculation, hit music is overpriced by
65 cents per track, leaving little room for price
25 percent online - it should cost just 79 cents a
experimentation by the retailers.
track, reflecting the savings of digital delivery.
That wholesale price is set to roughly match the
Putting channel conflict aside for the moment,
price of CDs, to avoid dreaded “channel conflict.”
if the incremental cost of making content that
The labels fear that if they price online music
was originally produced for physical distribution
lower, their CD retailers (still the vast majority
available online is low, the price should be, too.
of the business) will revolt or, more likely, go
Price according to digital costs, not physical
out of business even more quickly than they
ones.
already are. In either case, it would be a serious disruption of the status quo, which terrifies the already spooked record companies. No wonder they’re doing price calculations with an eye on the downsides in their traditional CD business rather than the upside in their new online business.
All this good news for consumers doesn’t have to hurt the industry. When you lower prices, people tend to buy more. Last year, Rhapsody did an experiment in elastic demand that suggested it could be a lot more. For a brief period, the service offered tracks at 99 cents, 79 cents, and 49 cents. Although the 49-cent tracks were only
But what if the record labels stopped playing
half the price of the 99-cent tracks, Rhapsody
defense?
sold three times as many of them.
A brave new look at the economics of music
Since the record companies still charged 65
would calculate what it really costs to simply put
cents a track - and Rhapsody paid another
a song on an iTunes server and adjust pricing
8 cents per track to the copyright-holding
accordingly. The results are surprising.
publishers - Rhapsody lost money on that
Take away the unnecessary costs of the retail channel - CD manufacturing, distribution, and retail overheads. That leaves the costs of finding, making, and marketing music. Keep them as they are, to ensure that the people on the creative and label side of the business make as much as they currently do. For a popular album that sells 300,000 copies, the creative
experiment (but, as the old joke goes, made it up in volume). Yet much of the content on the Long Tail is older material that has already made back its money (or been written off for failing to do so): music from bands that had little record company investment and was thus cheap to make, or live recordings, remixes, and other material that came at low cost.
costs work out to about $7.50 per disc, or around
Such “misses” cost less to make available than
60 cents a track. Add to that the actual cost of
hits, so why not charge even less for them?
delivering music online, which is mostly the cost
Imagine if prices declined the further you went
of building and maintaining the online service
down the Tail, with popularity (the market)
rather than the negligible storage and bandwidth
effectively dictating pricing. All it would take is
costs. Current price tag: around 17 cents a track.
for the labels to lower the wholesale price for the vast majority of their content not in heavy rotation; even a two- or three-tiered pricing 019
structure could work wonders. And because so much of that content is not available in record stores, the risk of channel conflict is greatly diminished. The lesson: Pull consumers down the tail with lower prices.
maximize their share. By offering fair pricing, ease of use, and consistent quality, you can compete with free.
Perhaps the best way to do that is to stop charging for individual tracks at all. Danny Stein,
How low should the labels go? The answer
whose private equity firm owns eMusic, thinks
comes by examining the psychology of the
the future of the business is to move away from
music consumer. The choice facing fans is
the ownership model entirely. With ubiquitous
not how many songs to buy from iTunes and
broadband, both wired and wireless, more
Rhapsody, but how many songs to buy rather
consumers will turn to the celestial jukebox of
than download for free from Kazaa and other
music services that offer every track ever made,
peer-to-peer networks. Intuitively, consumers
playable on demand. Some of those tracks will
know that free music is not really free: Aside
be free to listeners and advertising-supported,
from any legal risks, it’s a time-consuming
like radio. Others, like eMusic and Rhapsody,
hassle to build a collection that way. Labeling
will be subscription services. Today, digital music
is inconsistent, quality varies, and an estimated
economics are dominated by the iPod, with its
30 percent of tracks are defective in one way
notion of a paid-up library of personal tracks.
or another. As Steve Jobs put it at the iTunes Music Store launch, you may save a little money downloading from Kazaa, but “you’re working for under minimum wage.” And what’s true for music is doubly true for movies and games, where the quality of pirated products can be even more dismal, viruses are a risk, and downloads take
But as the networks improve, the comparative economic advantages of unlimited streamed music, either financed by advertising or a flat fee (infinite choice for $9.99 a month), may shift the market that way. And drive another nail in the coffin of the retail music model.
so much longer. So free has a cost: the psychological value of convenience. This is the “not worth it” moment where the wallet opens. The exact amount is an impossible calculus involving the bank balance of the average college student multiplied by their available free time. But imagine that for music, at least, it’s around 20 cents a track. That, in effect, is the dividing line between the commercial world of the Long Tail and the underground. Both worlds will continue to exist in parallel, but it’s crucial for Long Tail thinkers to exploit the opportunities between 20 and 99 cents to
020
Rule 3: Help me find it In 1997, an entrepreneur named Michael Robertson started what looked like a classic Long Tail business. Called MP3.com, it let anyone upload music files that would be available to all. The idea was the service would bypass the record labels, allowing artists to connect directly to listeners. MP3.com would make its money in fees paid by bands to have
their music promoted on the site. The tyranny
was no familiar point of entry for consumers, no
of the labels would be broken, and a thousand
known quantity from which further exploring could
flowers would bloom.
begin.
Putting aside the fact that many people actually
Offering only hits is no better. Think of the
used the service to illegally upload and share
struggling video-on-demand services of the cable
commercial tracks, leading the labels to sue MP3.
companies. Or think of Movielink, the feeble
com, the model failed at its intended purpose,
video download service run by the studios. Due
too. Struggling bands did not, as a rule, find
to overcontrolling providers and high costs, they
new audiences, and independent music was not
suffer from limited content: in most cases just a
transformed. Indeed, MP3.com got a reputation
few hundred recent releases. There’s not enough
for being exactly what it was: an undifferentiated
choice to change consumer behavior, to become a
mass of mostly bad music that deserved its
real force in the entertainment economy.
obscurity.
By contrast, the success of Netflix, Amazon, and
The problem with MP3.com was that it was only
the commercial music services shows that you
Long Tail. It didn’t have license agreements
need both ends of the curve. Their huge libraries of less-mainstream fare set them apart, but hits
with the labels to offer mainstream fare or much
still matter in attracting consumers in the first
popular commercial music at all. Therefore, there
place. Great Long Tail businesses can then guide
ANATOMY OF THE LONG TAIL“IF YOU LIKE BRITNEY,
YOU’LL LOVE...”
online services carry far more inventory than traditional retailers. iTunes, for example, ofers 20 times as many songs as Wal-Mart’s stock of 39,000 tunes. The appetite for iTunes more obscure traks (charted below in yellow) makes up the co-called Long Tail. Meanwhile, even as consumers flock to mainstream books, music, and films (right), there is real demand for niche fare found only online.
Average number of plays per month on iTunes
2,000
ink 10 P
POPULAR CDS & DVDS 0
39,000
TOTAL INVENTORY 25,000 DVDS
Typical Waterstones stock around 10,000 books
53 #5,1
No
typical Blockbuster store:3,000 DVDs
TOTAL SALES
22%
songs available only on Rhapsody
1,000
Walmart Stocks around 39,000 CDs
TOTAL SALES
#1,8
songs available at both Wall-Mart and iTunes
TOTAL INVENTORY 2.3 MILLION BOOKS
Just as lower prices can entice consumers down the Long Tail, recommendation engines drive them to obscure content they THE NEW GROWTH MARKET: might notPRODUCTS find otherwise. OBSCURE YOU CAN’T GET ANYWHERE BUT ONLINE
S tney
ri 40 B
#3
6,100
rs pea
TOTAL INVENTORY: 28,000,000 SONGS
bt Dou
TOTAL SALES
20%
57%
Product not available in offline retail stores
LESS POPULAR CDS & DVDS
Amazon sales rank 100,000
5T
,19 #32
cter
ele he S
200,000
500,000
Titles ranked by popularity
021
consumers further afield by following the contours
and can reawaken a passion for music and film,
of their likes and dislikes, easing their exploration
potentially creating a far larger entertainment
of the unknown.
market overall. (The average Netflix customer
For instance, the front screen of Rhapsody features Britney Spears, unsurprisingly. Next to the listings of her work is a box of “similar artists.” Among them is Pink. If you click on that and are pleased with what you hear, you may do the same
rents seven DVDs a month, three times the rate at brick-and-mortar stores.) And the cultural benefit of all of this is much more diversity, reversing the blanding effects of a century of distribution scarcity and ending the tyranny of the hit.
for Pink’s similar artists, which include No Doubt.
Such is the power of the Long Tail. Its time has
And on No Doubt’s page, the list includes a few
come.
“followers” and “influencers,” the last of which includes the Selecter, a 1980s ska band from Coventry, England. In three clicks, Rhapsody may have enticed a Britney Spears fan to try an album that can hardly be found in a record store. Rhapsody does this with a combination of human editors and genre guides. But Netflix, where 60 percent of rentals come from recommendations, and Amazon do this with collaborative filtering, which uses the browsing and purchasing patterns of users to guide those who follow them (“Customers who bought this also
bought ...”). In each, the aim is the same: Use
recommendations to drive demand down the Long Tail.
This is the difference between push and pull, between broadcast and personalized taste. Long Tail business can treat consumers as individuals, offering mass customization as an alternative to mass-market fare. The advantages are spread widely. For the entertainment industry itself, recommendations are a remarkably efficient form of marketing, allowing smaller films and less-mainstream music to find an audience. For consumers, the improved signal-to-noise ratio that comes from following a good recommendation encourages exploration 022
Chris Anderson (canderson@wiredmag.com) is Wired’s editor in chief and writes the blog The Long Tail.
These are the worlds, the stories,
the visions,
that inspire us to dream to look beyond
to believe
to boldly go
and entertaining solo record, Discipline/ Communication. I had the opportunity to throw a few questions his way about this project and the plentiful side projects he’s been involved in between Zorch tours and record releases. Here is what he has to say… FLABmag: What were you like as a child? I ask because judging from your musical
preferences showcased on your shmusix.
com blog your shit is all over the place – in a good and jarring way (I checked out some of
the bands you profiled on your blog and a few times was like, “Owww my head hurts!” or
“Ahhh this is interesting…”). I mean you were either super sheltered but inquisitive, and
once free from parental restraint went fucking
bonkers headlong into all sorts of artistic (and extreme) expressions, or you were always way out there/ahead of your peers in your
artistic and personal preferences. But that’s
FEATURED ARTIST: SAMUEL CHOWN
all supposition, so go ahead; tell us about you
as a child.
Samuel (Sam) Chown: I was a very musical kid, my head was in a musical cloud all the
Every once and a while a new band will come
time, completely oblivious to the real world and
along and that band will be righteously and truly
unmotivated to care about anything else other
progressive, and entertaining and far in fact
than the desire to be constantly composing music
beyond the stuff that qualifies as any of the above,
in my head. I would say I was always way out
but truly isn’t anywhere near it.
there, for better or for worse. I was very much
The Austin based duo, Zorch is unequivocally a progressive act that manages to (purposefully) be entertaining. And they are so far beyond the bullshit that passes for progressive or experimental music that they almost redefine both terms. So, it should be no surprise that vocalist/drummer (who also plays any number of instruments besides the drums) Samuel Chown has put together a truly progressive 024
a late bloomer in terms of learning how to be a normal person, doing normal people things. Like tying my shoe or ironing a shirt, ya know, basic things. It was as if the right hemisphere of my brain was on overdrive and the left more linear/ logical side was asleep at the wheel for a while. FLABmag: What did you study in college?
Did it in anyway shape your current artistic output?
I met Zac (from Zorch) in
Zac and I would go to a lot of
college, so that greatly shaped
shows and notice people weren’t
my current artistic output,
moving around that much. We
otherwise Zorch wouldn’t exist.
wanted to create an experience
In terms of my solo stuff, I’ve
that was inclusive, where
always had a similar vision of
everyone at the show became
what I wanted to artistically, so
(part of) the show, so it was like
the older I got, the more refined
a communal experience. Our
and on point my musical vision
goal was to affect/stimulate each
became. It’s kinda hard to say
and every person on some level,
whether or not my solo music
whether it be emotionally and/or
would sound relatively the same
mentally by our music, visually
if I went to music school or not.
by our lasers/projections, or they
FLABmag: Zorch is known for far out musical expressions
and hilarious in-concert hi-jinx. Did you guys develop an “act” to off set potential backlash or apathy from an audience?
simply had a good time shaking a tambourine and getting lost in the moment. FLABmag: What has been the
general response to the band? Do you foresee longevity for
Zorch as a band? Do you
guys even want that given
both of you are involved in
innumerable side projects? 95% of our side projects involve both Zac and I so that’s not an issue. Yes, I definitely see Zorch as a band existing for a long time. It’s really fulfilling when people come up to me after a show and express how moved they were by the music. The greatest compliment I’ve ever received, which has happened a few times, is when someone comes up to me and tells me how our show was a spritual/ religious experience for them. That to me makes all the hard 025
work we put into the project worth more than
We usually come up with a concept and let that be
worth it.
the leading force into the creative journey. They’re
FLABmag: By the way I adore the Cosmic
Gloss/E.M.F. EP – funky as fuck! It reminds
me of some seriously tasty Earth, Wind and
Fire grooves mixed with late 80s R&B falsetto histrionics. I love the glistening keys and
usually concepts that we work off of. For example, do we want to make an Aqua (the Danish Barbie Girl pop group) cover album? Yes, I think we do, and we have, you should expect that sometime in the next 6 months!
the poppy snare cracks right around the
FLABmag: How long have you been working
to it many times). A few questions about the
making it anyway?
five-minute mark (as you can tell I’ve listened track: What is “Cosmic Gloss”? Second, is the
bass on the track sampled or did you also play that part as well? The bass is pretty sweet as
well. Did you both share vocals on the track? And what was the inspiration for this song?
I’m happy you enjoy it! What isn’t Cosmic Gloss? haha. Zac and I wrote all the bass lines together; he’s playing those lines on his Moog, and I’m performing all the vocal melodies. “Cosmic Gloss” came from a couple of jams, as do most of our songs. It’s kinda difficult to pinpoint where inspiration comes from with each given song, we just jam a lot and then choose our favorite moments and turn them into something. We just follow our instincts of what we like in music. FLABmag: So about these side projects, I
was wondering if that doesn’t, at some point, divide your attentions too much? Or does
creating outside of Zorch provide an outlet for
music that might not suit the band? And of the projects you’ve worked on lately (aside from
the solo record) which do you think are most successful – musically speaking?
The side projects are purely a means for us to get specific creative ideas out of our system that aren’t necessarily possible in the Zorch medium. Usually, it’s because we’re utilizing instruments and approaches outside of our traditional setup. 026
on the solo record? What was the impetus for I actually made that album 4 yrs ago, it’s really
old to me. I’ve always been making solo music, I’ve always been a solo artist, Zorch is actually the first serious band I’ve ever been in, and
that’s only two dudes. I’m working on new solo stuff right now, should be out sometime next year.
FLABmag: The album showcases a wide
variety of styles and instruments, which are
your favorite tracks, or put another way, which do you feel best exemplify your personal preferences and personality?
There is no one track that best represents my personality. That’s why my solo stuff, and the stuff I write in Zorch sound so different, because they’re different aspects of my personality showing their faces. “Shadowgames” has always been a personal favorite of mine off the solo record. It represents a side of my personality very accurately, a side not often seen in Zorch. FLABmag: You seem to have some R&B
and funk leanings. Are there any current or
past artists in that genre that you look to for inspiration (aside from Prince, which is an obvious influence).
70′s Stevie Wonder and 70′s Shuggie Otis. Check out Shuggie’s album “Inspiration Information”, it’s beautiful.
FLABmag: You’ve received some pretty good
press and review of the record. How does that make you feel, aside from good, which is also
obvious, any reflections you can share about what has been said so far?
I like how people seem to get that the album is an eclectic tapestry of sound. Redefine Magazine called each song a sonic equivalent of a 15-minute Adult Swim show. I’m very down with that description. FLABmag: Got any juicy or entertaining anecdotes you can share about the making of the record? My drum performance on the song “Impressions” are very subtle and chill. The reason for that is because the night before I recorded those drums at my apartment in Boston. I had a visit from the police, due to the fact that I was having a very loud jam sesh. This happened a few times. The way I would sneak back into playing at full volume would be to gradually play longer and louder each day; t hat was Day 1 after police intervention, therefore chill drums. FLABmag: Now for some drums-related questions; Was it your first instrument?
No, piano was, but if voice is considered an instrument, then that would be the first. FLABmag: Do you think you have distinguished
yourself on the kit? It’s very difficult to do so and not many have achieved distinction…so, do you think you have? How often do you practice if at all?
I think I’ve developed my own distinct sound and style. I try to practice every day for an hour and a half, most of the time I do, sometime I don’t. FLABmag: Was there a point in your evolution as a drummer when you felt you had achieved full competency as a player?
Absolutely not. I always see my weak points and
aim to strengthen those aspects. I’m never
happy with staying in the same place, always gotta keep movin’ forward.
FLABmag: What kit do you currently play? A 20′ (bass drum) Tama Silverstar. It’s a really beautiful sounding birch kit. FLABmag: Any current drummers out there
that you admire? Any past players? And why? I love Zach Hill, he’s amazing. He’s a perfect example of a guy who has released tons of quality records in different styles and shreds in the most interesting way. I love his grooves on the “Face Tat” record and I love the new Death Grips. Other than Zach, there are too many amazing drummers to name, but Zach Hill stands out as being a key inspiration in life. I think he is for a lot of people. From the old school, I’ve always loved Tony Williams.
comes out of the house that we had parked in front of, thinking I was a crackhead tresspassing on her property. I explained to her that her roommate said it was ok that we stay at her house. They obviously didn’t have a conversation about it. I grabbed Zac, we got the fuq out of there. The crowd at the Townhouse couldn’t handle an entire Zorch vs Religious Girls set and I don’t blame them. Pregnant played that night, he’s great, I love that guy. Check out “Life Hard: I Try”, fantastic album. FLABmag: I missed the show after driving like a maniac from Los Angeles just so I wouldn’t miss the show! But I nearly died from heat
stroke so there’s that…and I figure I will have
another opportunity at some point to see you guys live – at least I hope so. I hope you do!
FLABmag: Moving back to your current
projects, will you be touring in support of the
solo record? When will Zorch release another record?
Zorch is on the precipice of finishing a new record. It is unlikely I will tour on this record, Shmu is currently more of a studio project for me. FLABmag: And finally, you played Sacramento
last year on the 4th of July. It was a 106 degree day and about 88 degree night. What did
you make of the weather – is it comparable to Texas? What about the crowd at The Townhouse?
I slept in the van after the show, the sun woke me at 9am cuz it was so ridiculously hot. I came out the van with my pillow, a sweaty, tired mess. I attempted to find another place to sleep such as the backyard that Zac was sleeping in. A girl 028
Cheack Shmu out at: http://www.shmusix.com http://www.facebook.com/shmusix
DAVID BYRNE’S SURVIVAL STRATEGIES FOR EMERGING ARTISTS — AND MEGASTARS Full disclosure: I used to own a record label.
completely ignored. I love music. I always will. It
That label, Luaka Bop, still exists, though I’m
saved my life, and I bet I’m not the only one who
no longer involved in running it. My last record
can say that.
came out through Nonesuch, a subsidiary of the Warner Music Group empire. I have also released music through indie labels like Thrill Jockey, and I have pressed up CDs and sold them on tour. I tour every few years, and I don’t see it as simply a loss leader for CD sales. So I have seen this business from both sides. I’ve made money, and I’ve been ripped off. I’ve had creative freedom, and I’ve been pressured to make hits. I have dealt with diva behavior from crazy musicians, and I have seen genius records by wonderful artists get
What is called the music business today, however, is not the business of producing music. At some point it became the business of selling CDs in plastic cases, and that business will soon be over. But that’s not bad news for music, and it’s certainly not bad news for musicians. Indeed, with all the ways to reach an audience, there have never been more opportunities for artists. Where are things going? Some see this picture as a dire trend. The fact 029
that Radiohead debuted its latest album online
pub sing-alongs, ceremonial music, military
and Madonna defected from Warner Bros. to Live
music, dance music — it was pretty much all tied
Nation, a concert promoter, is held to signal the
to specific social functions. It was communal and
end of the music business as we know it. Actually,
often utilitarian. You couldn’t take it home, copy it,
these are just two examples of how musicians are
sell it as a commodity (except as sheet music, but
increasingly able to work outside of the traditional
that’s not music), or even hear it again. Music was
label relationship. There is no one single way of
an experience, intimately married to your life. You
doing business
WHAT DO RECORD COMPANIES DO?
these days. There are, in fact, six
MANUFACTURE PRODUCT
(Or, more precisely, what did they do?)
viable models by DISTRIBUTE PRODUCT
all that in the 20th
for artists; it gives
century. Music — or
them more ways
MARKET PRODUCT
to get paid and
a product, a thing that could be bought,
audiences, too,
sold, traded, and
who will have
music to listen to.
replayed endlessly in any context.
Advise and guide artists on their careers and recordings
This upended the economics of music,
Let’s step back
but our human
and get some
instincts remained
perspective.
What is music?
its recorded artifact, at least — became
FUND RECORDING SESSIONS
And it’s good for
interesting —
did, it was over, gone Technology changed
variety is good
more — and more
music, but after you — a memory.
my count. That
make a living.
could pay to hear
HANDLE THE ACCOUNTING
intact. I spend plenty of
LOAN AND ADVANCE MONEY FOR EXPENSES (TOURS, VIDEOS, HAIR AND MAKEUP)
my ears listening to
First, a definition of terms. What is it we’re talking about here? What exactly is being bought and sold? In the past, music was something you heard and experienced — it
time with buds in recorded music, but
I still get out to stand in a crowd with an audience. I sing to myself, and, yes, I play an instrument (not always well).
was as much a social event as a purely musical
We’ll always want to use music as part of our
one. Before recording technology existed, you
social fabric: to congregate at concerts and in
could not separate music from its social context.
bars, even if the sound sucks; to pass music from
Epic songs and ballads, troubadours, courtly
hand to hand (or via the Internet) as a form of
entertainments, church music, shamanic chants,
social currency; to build temples where only “our
030
kind of people” can hear music (opera houses and symphony halls); to want to know more about our favorite bards — their love lives, their clothes, their political beliefs. This betrays an eternal urge to have a larger context beyond a piece of plastic. One might say this urge is part of our genetic makeup. All this is what we talk about when we talk about music. All of it. This was the system that evolved over the past century to market the product, which is to say the container — vinyl, tape, or disc — that carried the music. (Calling the product music is like selling a shopping cart and calling it groceries.) But many things have changed in the past decade that reduce the value of these services to artists. Recording costs have declined to almost zero. Artists used to need the labels to bankroll their recordings. Most simply didn’t have the $15,000 (minimum) necessary to rent a professional studio and pay an engineer and a producer. For many artists — maybe even most — this is no longer the case. Now an album can be made on the same laptop you use to check email. Manufacturing and distribution costs are approaching zero. There used to be a break-even point below which it was impractical to distribute a recording. With LPs and CDs, there were base manufacturing costs, printing costs, shipping, and so on. It paid — in fact, it was essential — to sell in volume, because that’s how many of those costs got amortized. No more: Digital distribution is pretty much free. It’s no cheaper per unit to distribute a million copies than a hundred. Touring is not just promotion. Live performances used to be seen as essentially a
way to publicize a new release — a means to an end, not an end in itself. Bands would go into debt in order to tour, anticipating that they’d recover their losses later through increased record sales. This, to be blunt, is all wrong. It’s backward. Performing is a thing in itself, a distinct skill, different from making recordings. And for those who can do it, it’s a way to make a living. So with all these changes, what happens to the labels? Some will survive. Nonesuch, where I’ve done several albums, has thrived under Warner Music Group ownership by operating with a lean staff of 12 and staying focused on talent. “Artists like Wilco, Philip Glass, k.d. lang, and others have sold more here than when they were at so-called major labels,” Bob Hurwitz, president of Nonesuch, told me, “even during a time of decline.” But some labels will disappear, as the roles they used to play get chopped up and delivered by more thrifty services. In a recent conversation I had with Brian Eno (who is producing the next Coldplay album and writing with U2), he was enthusiastic about I Think Music — an online network of indie bands, fans, and stores — and pessimistic about the future of traditional labels. “Structurally, they’re much too large,” Eno said. “And they’re entirely on the defensive now. The 031
only idea they have is that they can give you a
Live Nation. For a reported $120 million, the
big advance — which is still attractive to a lot of
company — which until now has mainly produced
young bands just starting out. But that’s all they
and promoted concerts — will get a piece of
represent now: capital.”
both her concert revenue and her music sales.
So where do artists fit into this changing landscape? We find new options, new models. The six possibilities
I, for one, would not want to be beholden to Live Nation — a spinoff of Clear Channel, the radio conglomerate that turned the US airwaves into pabulum. But Madge is a smart cookie; she’s
Where there was one, now there are six: Six
always been adept at controlling her own stuff, so
possible music distribution models, ranging from
we’ll see.
one in which the artist is pretty much hands-off to one where the artist does nearly everything. Not surprisingly, the more involved the artist is, the more he or she can often make per unit sold. The totally DIY model is certainly not for everyone — but that’s the point. Now there’s choice.
1. At one end of the scale is the 360, or equity, deal, where every aspect of the artist’s career
is handled by producers, promoters, marketing people, and managers. The idea is that you can achieve wide saturation and sales, boosted by a hardworking machine that stands to benefit from everything you do. The artist becomes a brand, owned and operated by the label, and in theory this gives the company a long-term perspective and interest in nurturing that artist’s career. Pussycat Dolls, Korn, and Robbie Williams have made arrangements like this, selling equity in everything they touch. The T-shirts, the records, the concerts, the videos, the BBQ sauce. The artist often gets a lot of money up front. But I doubt that creative decisions will be left in the artist’s hands. As a general rule, as the cash comes in, creative control goes out. The equity partner simply has too much at stake. This is the kind of deal Madonna just made with 032
2. Next is what I’ll call the standard distribution deal. This is more or less what I lived with for
many years as a member of the Talking Heads. The record company bankrolls the recording and handles the manufacturing, distribution, press, and promotion. The artist gets a royalty percentage after all those other costs are repaid. The label, in this scenario, owns the copyright to the recording. Forever. There’s another catch with this kind of arrangement: The typical pop star often lives in debt to their record company and a host of other entities, and if they hit a dry spell they can go broke. Michael Jackson, MC Hammer, TLC — the danger of debt and overextension is an old story. Obviously, the cost of these services, along with the record company’s overhead, accounts for a big part of CD prices. You, the buyer, are paying for all those trucks, those CD plants, those warehouses, and all that plastic. Theoretically, as many of these costs go away, they should no longer be charged to the consumer — or the artist. Sure, many of the services traditionally provided by record labels under the standard deal are now being farmed out. Press and publicity, digital marketing, graphic design — all are often handled
by smaller, independent firms. But he who pays
flip side is that because the label doesn’t own the
the piper calls the tune. If the record company
master, it may invest less in making the release a
pays the subcontractors, then the record company
success.
ultimately decides who or what has priority. If they “don’t hear a single,” they can tell you your record isn’t coming out.
But with the right label, the license deal can be a great way to go. This is the relationship Arcade Fire has with Merge Records, an indie label
So what happens when online sales eliminate
that’s done great for its band by avoiding the
many of these expenses? Look at iTunes: $10
big-spending, big-label approach. “Part of it is
for a “CD” download reflects the cost savings of
just being realistic and not putting yourself in the
digital distribution, which seems fair — at first. It’s
hole,” Merge cofounder Mac McCaughan says.
certainly better for consumers. But after Apple
“The bands we work with, we never recommend
takes its 30 percent, the royalty percentage is
that they make videos. I like videos, but they don’t
applied and the artist — surprise!
sell a lot of records. What really sells records is
— is no better off.
touring — and artists can actually make money on
Not coincidentally, the issues here are similar to
the tour itself if they keep their budgets down.”
those in the recent Hollywood writers’ strike. Will recording artists band together and go on strike?
4. Then there’s the profit-sharing deal. I did something like this with my album Lead Us Not
3. The license deal is similar to the standard deal, except in this case the artist retains the
copyrights and ownership of the master recording. The right to exploit that property is granted to a label for a limited period of time — usually seven years. After that, the rights to license to TV shows, commercials, and the like revert
Into Temptation in 2003. I got a minimal advance from the label, Thrill Jockey, since the recording costs were covered by a movie soundtrack budget, and we shared the profits from day one. I retained ownership of the master. Thrill Jockey does some marketing and press. I may or may not have sold as many records as I would have with
to the artist. If the members of the Talking Heads held the master rights to our catalog today, we’d earn twice as much in licensing as we do now — and that’s where artists like me derive much of our income. If a band has made a record itself and doesn’t need creative or financial help, this model is worth looking at. It allows for a little more creative freedom, since you get less interference from the guys in the big suits. The 033
a larger company, but in the end I took home a
download. They weren’t the first to do this — Issa
greater share of each unit sold.
(formerly known as Jane Siberry) pioneered the
5. In the manufacturing and distribution deal, the artist does everything except, well, manufacture and distribute the product. Often the companies that do these kinds of deals also offer other services, like marketing. But given the numbers, they don’t stand to make as much, so their incentive here is limited. Big record labels traditionally don’t make M&D deals. In this scenario, the artist gets absolute creative control, but it’s a bigger gamble. Aimee Mann does this, and it works really well for her. “A lot of artists don’t realize how much more money they could make by retaining ownership and licensing directly,” Mann’s manager, Michael Hausman, told me. “If it’s done properly, you get paid quickly, and you get paid again and again. That’s a great source of income.”
6. Finally, at the far end of the scale, is the
pay-what-you-will model a few years ago — but Radiohead’s move was much higher profile. It may be less risky for them, but it’s a clear sign of real changes afoot. As one of Radiohead’s managers, Bryce Edge, told me, “The industry reacted like the end was nigh. They’ve devalued music, giving it away for nothing.’ Which wasn’t true: We asked people to value it, which is very different semantics to me.” At this end of the spectrum, the artist stands to receive the largest percentage of income from sales per unit — sales of anything. A larger percentage of fewer sales, most likely, but not always. Artists doing it for themselves can actually make more money than the massive pop star, even though the sales numbers may seem minuscule by comparison. Of course, not everyone is as smart as those nerdy Radiohead boys. Pete Doherty probably should not be handed the steering wheel.
self-distribution model, where the music is self-produced, self-written, self-played, and self-marketed. CDs are sold at gigs and through
Freedom versus pragmatism
a Web site. Promotion is a MySpace page. The
These models are not absolute. They can morph
band buys or leases a server to handle download
and evolve. Hausman and Mann took the total
sales. Within the limits of what they can afford, the
DIY route at first, getting money orders and
artists have complete creative control. In practice,
sending out CDs in Express Mail envelopes; later
especially for emerging artists, that can mean
on they licensed the records to distributors. And
freedom without resources — a pretty abstract
things change over time. In the future, we will
sort of independence. For those who plan to take
see more artists take up these various models
their material on the road and play it live, the
or mix and match versions of them. For existing
financial constraints cut even deeper. Backup
and emerging artists — who read about the music
orchestras, massive video screens and sets, and
business going down the drain — this is actually
weird high tech lights don’t come cheap.
a great time, full of options and possibilities. The
Radiohead adopted this DIY model to sell In
future of music as a career is wide open.
Rainbows online — and then went a step further
Many who take the cash up front will never know
by letting fans name their own price for the
that long-range thinking might have been wiser.
034
A Look at the Theoretical Deal Spectrum for Upcoming Artists With more control comes more responsibility but also more opportunities License Deals
Profit Sharing Deals
Just Distribution Deals
Standard Deal
More Corporate Investment
...But for most bands the
Less Corporate Investment
sweet spot
is somewhere in the middle
Equity Deals / 360 Deals DIY All The Way
More Control
Less Control
The Dream: DIY your way into a decent funding situation: with enough fans, respect and leverage to develop a mutually beneficial relationship with a corporation, label or sponsor.
What Successful Musicians and Managers Know in 2012 Revenue producers greatest to least: Touring 035networking has Social made promotion in new cities cheaper and
Merch For artists struggling to make a living in the digital age, a strong
Licensing Artists who fit the sound requirements and have a certain buzz amongst
Recorded Music The "album" has quickly become relegated to a promotional item
Publishing 0035 Publishing a song is administering the rights to, and commercially
Mega pop artists will still need that mighty push and marketing effort for a new release that only traditional record companies can provide. For others, what we now call a record label could be replaced by a small company that funnels income and invoices from the various entities and keeps the accounts in order. A consortium of midlevel artists could make this model work. United Musicians, the company that Hausman founded, is one such example. I would personally advise artists to hold on to their publishing rights (well, as much of them as they can). Publishing royalties are how you get paid if someone covers, samples, or licenses your song for a movie or commercial. This, for a songwriter, is your pension plan. Increasingly, it’s possible for artists to hold on to the copyrights for their recordings as well. This guarantees them another lucrative piece of the licensing pie and also gives them the right to exploit their work in mediums to be invented in the future — musical brain implants and the like. No single model will work for everyone. There’s room for all of us. Some artists are the Coke and Pepsi of music, while others are the fine wine — or the funky home-brewed moonshine. And that’s fine. I like Rihanna’s “Umbrella” and Christina Aguilera’s “Ain’t No Other Man.” Sometimes a corporate soft drink is what you want — just not at the expense of the other thing. In the recent past, it often seemed like all or nothing, but maybe now we won’t be forced to choose. Ultimately, all these scenarios have to satisfy the same human urges: What do we need music to do? How do we visit the land in our head and the place in our heart that music takes us to? Can I get a round-trip ticket? Really, isn’t that what we want to buy, sell, trade, or download? David Byrne is currently collaborating with Fatboy Slim and Brian Eno. Separately. Chart Szzzzources: Jupiter Research, Recording Industry Association of America, Almighty Institute of Music Retail, Wired Research
0036
What Successful Musicians and Managers Know in 2012 Revenue producers greatest to least: Touring Social networking has made promotion in new cities cheaper and easier. As tough as touring can be, artists focused on this are clearly leveraging it into a career.
Merch For artists struggling to make a living in the digital age, a strong merch strategy can be the difference between living life as a starving artist and making a comfortable living.
Licensing Artists who fit the sound requirements and have a certain buzz amongst music supervisors are often rewarded with multiple placement opportunities for their music.
Recorded Music The "album" has quickly become relegated to a promotional item although there is still immense value in recorded music, especially live and alternate versions/takes/b-sides, for the fan base.
Publishing Publishing a song is administering the rights to, and commercially exploiting it. Traditionally artists sign to publishing companies which perf collect income from usage, but now it is possible to self publish.
1 Touring
2 Merchandise 3 Licensing 4 Recorded 5 Publishing music royalties
The Majority of DIY Artists Juggle Multiple Roles “Musicians are musicians because they play music, not because they love accounting or managing Facebook pages. But in the current climate, artists are now forced to play more roles than ever.”
1594 1600
1400
1400 1200
983 817
1000
- Paul Resnikoff
800 600
388
400 130 200 0
1 role
2 roles
3 roles
4 roles
5 roles
6 roles
41
18
7roles
8 roles
- Future of Music Coalition 2012 037
IF ‘DIY’ IS KILLING YOU, THEN PLEASE READ THIS... by
Paul Resnikoff
The industry debunked ‘DIY’ years ago, yet the concept remains a romanticized, religious idea for many artists and companies. More and more, that’s proving to be an expensive belief, especially when it overloads, distracts, and demoralizes artists who need to be focused on their art firstand-foremost. Here’s what Daniel Glass of independent Glassnote Records told an audience at Musexpo on the topic on Monday. Glassnote is home to artists like Phoenix, Childish Gambino, Mumford & Sons, and the Temper Trap, among others. 0038
Childish Gambino AKA Donald McKinley Glover is an American rapper, actor, writer, comedian, and producer.
I think it’s very difficult to do things without a team. I would hate to have an artist or a manager leave this room thinking, ‘oh that’s easy, I can do this myself, I can just do the site, do the work, get my records loaded in and everything goes well,’ or ‘I can just sign the artist and go to a distributor and it ends there.’ I think ‘DIY’ means the autonomy of the decisionmaking on the taste within your operation. I think that’s the do-ityourself feeling where you don’t have to
depend on someone to tell you
really well in distribution. So I’d
do it themselves. Odd Future
what to do with your music. But
go to those professionals. And
put together a team, but it feels
I still think that either you’re
go to like-minded people, if they
DIY. I just think that they are
putting together a loosely or
distribute labels in the culture
making creative decisions on
tightly knit team of professionals
that you like, and they pay their
their own, and not encumbered
to perform functions and rent
bills and if you can get some
by some filter at a major
them out or use consultants. I
recommendations, then take that
corporation or label that will
think it’s been done quite well by
out of the way.
say, ‘oh this should be the
certain people.
The same thing with
first single.’ They’re over that, they don’t want to hear that
The Civil Wars, for example,
campaigns. If you’re looking at
went to the Grammys and had
Radio 1 or Triple J, or if you’re
a profound effect and won two
looking at K-Rock or KCRW type
Grammys. They did things on
of records, who’s working on
So that’s where it comes from. I
their own but had an amazing
those records? So look at those
think the DIY will tell you more
team, and spent a lot of money
teams, look at the pedigree.
about a band that’s pretty
getting there. I praise them, they got there and sold several hundred thousand albums.
Just like we look at who masters records, who mixes records. If you have a child, and your child
But a pure DIY is really smart
God forbid needed surgery - a
if you put together the right
serious thing - you’d go to one of
professional teams - song
the twenty best surgeons in your
pluggers, publicists, distribution
country. You’d fly anywhere for
people, people who will do those
your child.
things well for you.
record for three months, put
to be too DIY, because you
every bit of your life savings and
should focus on the essence of
not have it mixed or mastered
why you got there. And most
properly by one of the great
of us feel that it’s the music,
people who do it? So the same
and repertoire, so if you get
thing should be for every part of
bogged down in distribution
your DIY team.
and sub-contracting issues, I think that’s when you kill your business, and kill your spirit. Because people do those things really well, obviously there are people on this panel who do
touring bands.
self-sustaining in the touring area and then can do things on their own.”
So why would you make a
My advice to people is not
issues, and payment issues,
anymore. These are successful
So you may not check into that big hospital, but you would research it for your child. Same with your band and your music. Pearl Jam has a team they’re doing it themselves. Radiohead has a team - they 039
Forget Conventional Cleaning.
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