Connect or Die: How to survive in a Music 2.0 world

Connect or Die. Digital & social technology are reshaping the music business. Here’s your guide to succeeding in a brave, new Music 2.0 world. PHOTO BY EMAYOH ON FLICKR.COM

SOUND CHECK. It’s no understatement that digital and social For this reason, we’ve created Connect or Die, one technologies have dramatically and permanently of a series of publications that examines the altered the music landscape. A decade ago, few in challenges and opportunities inherent in a 2.0 the industry foresaw the enormous shift that began world, and offers one central theory about the with the introduction of simple file-sharing future of the music business: technology. Over the past ten years, MySpace, iPods, a slew of social networks, music blogs, and To survive and thrive in a brave, new Music digital music retailers have all played their part in a 2.0 world, artists must embrace and utilize radical shift that is continuing to transform the way the very technology that has caused such fans discover, acquire, and experience music. This turmoil in recent years. Through it, they must is truly a whole new kind of revolution. cultivate and nurture deep, direct relationships with their fans, engaging them consistently and As the marketing agency that coined the term genuinely. brand infiltration™, Espresso is acutely interested in understanding how evolving technology, Those that do so will discover unprecedented demographic shifts, economic factors, and cultural opportunities to generate revenue and grow their phenomena like those impacting the music industry fan base. Those that do not, well... the title says it are reshaping consumer expectations—and helping simply: Connect or Die. our clients rise to the challenges that unfold along the way. Jacquelyn Cyr Chief Executive Officer Espresso 2

Sound Check Welcome to Music 2.0 Bands Getting it Right Inﬁltration How-Tos Encore Credits 3

“ They say the music business is in trouble. No! The business of selling CDs is in trouble. This is a religion.” Michael Rapino Chief Executive Ofﬁcer Live Nation 4

THIS IS NOT THE ‘RECORD’ BUSINESS. Once upon a time, the music business was simple: the conﬁnes of the old record label system behind talent + record label + plastic discs = dollars. and eagerly experimenting with new business models and revenue strategies. Over the past decade, however, digital and social technology have exploded that formula. As the From some of the world's biggest performing acts media landscape has fragmented, CD sales have to small indie bands, music creators are realizing fallen off precipitously, and the backbone of the more than ever the future of their business hinges record business—the ability to charge consumers on the relationship they have with their fans. In a for access to music—has crumbled before our very Music 2.0 world, fans are not just consumers; eyes. they are producers, participants, members, promoters, and more. They—not any kind of discs —are the lifeblood of the music industry. Sheer copyright enforcement is no longer the path to ﬁnancial success and professional longevity. These days, artists all across the board are leaving Music, after all, is a social business. 5 PHOTO BY WILLIAM.K ON FLICKR.COM

ALIVE AND WELL… In 2007, after 25 years at Warner Brothers Records, which had released all of her albums up till then, Madonna left the label to sign a $120 million “360 degree” deal with Live Nation. In addition to operating the world’s highest-earning female singer’s tours, which it had already been doing, Live Nation would now also be handling her albums, merchandising, ﬁlm, and TV projects, DVD releases, music-licensing agreements, and more, and getting a cut of all of it. In the three years since, U2, Jay-Z, Shakira, and Nickelback have all followed suit, eschewing the traditional record label route for similar kinds of deals with Live Nation. No doubt more are to come. In January 2010, the Department of Justice approved the ﬁrst big merger of the Obama administration, between Live Nation and Ticketmaster, giving the newly formed Live Nation Entertainment the ability to book its own concerts, sell its own tickets, and merchandise and manage its exclusive artists all under one roof. This entirely unprecedented model within the music industry is centered around not any one revenue stream, but rather on one guiding principle: From tickets to trinkets, success in the new Music 2.0 landscape means owning the PHOTO BY ANIRUDH KOUL ON FLICKR.COM complete fan relationship. 66 PHOTO: Live Nation

“ In a statement issued at the time of her deal with Live Nation, Madonna said: The paradigm in the music business has shifted, and I have to move with that shift. For the ﬁrst time in my career, the way that my music can reach my fans is unlimited. The possibilities are endless. Who knows how my albums will be distributed in the future?” 7 PHOTO: MADONNA.COM

PHOTO: GETTY IMAGES RIGHT NOW, YOUR FANS ARE... Hanging out on Facebook. Tweeting about their Every day, music fans are discovering new ways favorite song. Discovering new music on LastFM. to ﬁnd, share, enjoy, and even remix their favorite Leaving comments for their friends on MySpace. music, and then broadcasting their ﬁndings and Sharing playlists on iLike. Posting concert photos favorites, their complaints, and their compliments on Flickr. Loving your new release on Hype Machine to a global audience that is listening 24/7. 8 —or trashing your latest video on YouTube. PHOTO: GETTY IMAGES

PHOTO: PEDESTRIANREX ON FLICKR SOURCE: ROYAL.PINGDOM.COM THIS IS THE CONNECTED ERA. As a species, we are consuming and creating media via social technology at an unprecedented rate. In February 2010 alone, we collectively: • Watched 12.2 billion videos on YouTube • Posted over 1.5 billion Tweets on Twitter • Shared more than 20 billion pieces of content on Facebook 99

According to new research in the THIS Razorﬁsh FEED report, Americans now spend, on average, about the same amount of time online as they IS do watching television. In fact, according to Forrester, those under the age of 45 spend THE more time signiﬁcantly using the Internet than watching television. NEW MAINSTREAM. 10 10 PHOTO: HTTP://WWW.BANDLEM.COM/XMAS/2006/

THIS IS MUSIC 2.0. In the U.S., 62% of us are listening to music This year, for the ﬁrst time online through services like iTunes and Pandora. in history, revenue from digital We’re spending 15–20% more each year music will eclipse CD sales on digital music, while spending less on CDs in equal proportion. in the U.S. Meanwhile, 95% of digitally-downloaded music By 2016, this will be the reality worldwide. is not paid for. 11 SOURCES: RAZORFISH FEED STUDY & NPD GROUP PHOTO: BETA KAREL ON FLICKR.COM

70% OF 16-19 YEAR OLDS WOULD RATHER GO A WEEK WITHOUT SEX THAN A WEEK WITHOUT MUSIC. SOURCE: MARRAKESH RECORDS AND HUMAN CAPITA, UK 12 PHOTO: LOVE, KIRA ON FLICKR.COM

“ In the past, people would tour to promote their albums; today they put out albums to promote their tours. The pendulum has swung.” Guy Oseary Madonna’s manager PHOTO: GREENPLASTIC875 ON FLICKR 13

RADIOHEAD FINDS A $10,000,000 POT OF GOLD. In 2007, Radiohead blazed new trails with the 2003’s Hail to the Thief, which sold 300,000 independent online release of their seventh copies in its ﬁrst week. album, In Rainbows. In a groundbreaking move, Radiohead let fans choose to pay as much or as The band later released a CD version of In little as they liked to download the entire album. Rainbows, which sold 1,750,000 units, and An astonishing 1.2 million copies were sold in an $80 boxed set which sold an additional the ﬁrst week at an average price of $8*. Up 100,000 units. until then, the group’s biggest success had been 15 PHOTO: KRUDO ON FLICKR.COM * IN US DOLLARS

NINE INCH NAILS TURNS A FREE ALBUM INTO $2,350,000 IN REVENUE. In 2008, Nine Inch Nails released Ghosts I-IV in a number of different formats. Ghost I was released under a Creative Commons license, and was made available at no cost on numerous file-sharing sites across the web. Ghosts I-IV was also made available for $5 on Amazon.com through a distribution deal that cost them a mere $38. In its first week, the album sold 800,000 units, generating $1,600,000 in revenue and hitting #1 on Billboard’s Electronic charts. A Deluxe Limited Edition version of Ghost I was later released and sold out in three days, grossing over $750,000. Ghosts I-IV went on to become the top-selling MP3 album on Amazon.com for all of 2008 and the fourth-most-listened to album of the year on Last.fm. NIN continue to experiment with creative packaging and distribution models such as USB flash drives with “leaked” music left in concert bathrooms for fans to discover, iPhone applications, and more. PHOTO: EDVILL ON FLICKR 16

JIMMY EAT WORLD GETS 20% OF RECORD SALES STRAIGHT FROM TWITTER. That’s right, Twitter, the micro-blogging service that enables its users to post and read text-based status updates of up to 140 characters in length. The band gained 200,000 followers on Twitter in its ﬁrst 30 days of using the service. According to TopSpin, within a month of the release of 2009’s Clarity Live, Twitter had delivered more than 22% of all trafﬁc to the Jimmy Eat World site and resulted in more than 20% of the album sales. 17 PHOTO: BURKAZOID ON FLICKR

AMANDA PALMER GIVES HER FANS CONTROL OF MERCH. Launched in 2008, Amanda Palmer’s groundbreaking merchandising concept allows fans to not only support the musician, but one another as well. Postwartrade.com is Palmer’s platform for fans and artists the world over to sell their custom-made, band-inspired “merch.” Offering everything from toothbrushes to pillowcases, each designed and handmade by a fan/artist who shares proﬁts with Post War Trade, this approach not only blows the tired band T-shirt out of the water, it takes the creative possibilities of fan community engagement to the next level. 18 PHOTO: VONLOHMANN ON FLICKR

SOCIAL MEDIA HELPS EMINEM BREAK RECORDS. Never one to shy away from controversy, Eminem turned a 5-year hiatus and a real-life struggle with addiction into a buzz-building campaign that made The Relapse arguably the most highly- anticipated hip-hop release of last year, and led the first single, Crack A Bottle, to a record-breaking first week of downloads (418,000). Leaning on Twitter and other digital channels to provide a mix of behind-the- scenes and “in character” updates that suggested Eminem was in a fictional mental hospital called Popsomp Hills, Slim Shady created an audacious connection with fans that blurred the lines between his alter ego, his real-life struggle, and his latest commercial work. PHOTO: EMINEM.COM 19

OK GO GO FOR FREEDOM. In February 2010, Damian Kulash, lead singer impediment to greater exposure for the band. A of OK Go, wrote in a New York Times op-ed month later OK Go announced their split from EMI that the band’s label, EMI, had tried to increase —via a YouTube video, of course. The group plans its streaming royalties from YouTube by preventing to release all future material, including a re-release users from embedding the band’s videos on other of their new album Of the Color of Blue Sky on their websites. Kulash saw the policy as a serious own Paracadute Recordings label. 20 PHOTO BY OK GO ON FLICKR

QUEEN OF THE INTERNET. In 2010, there is arguably no greater example of an artist getting “it” right than Lady Gaga. With the clout of a label backing her serious social media savvy, she has garnered over ﬁve million Facebook fans, three million Twitter followers, and become the top-selling digital artist of 2009. With a niche-busting sound [and look] that cuts across subcultures and pushes boundaries without crossing them, and a relentless commitment to staying in touch with her fans— sometimes even tweeting from backstage at concerts— Gaga has created a devoted community that eagerly embraces her pet name for them: “little monsters.” From product partnerships with Polaroid, Estée Lauder, and MAC, to her Haus of Gaga iPhone app, Gaga’s investment in her fan community fuels the success of everything her brand touches. Proof positive: the music video for “Telephone” (co-starring Beyoncé) had been viewed over 7,000,000 times within just three days of its March 11, 2010, release. Is Lady Gaga a master of the tools and strategies of the digital age? Absolutely. You might even say she is the embodiment of its spirit. PHOTO: LADYGAGA.COM 21

“ She's tapped into one of the primary obsessions of our age—the changing nature of the self in relation to technology, the ever- expanding media sphere, and that sense of always being in character and publicly visible that Gaga calls ‘the fame’—and made it her own obsession, the subject of her songs and the basis of her persona.” Ann Powers LA Times 22 PHOTO: LADYGAGA.COM

“ The internet opens a world of limitless possibility, where the only boundaries are the boundaries of your own imagination.” Adam Duritz Counting Crows 24 PHOTO: BATINTHERAIN ON FLICKR

HERE’S TO YOUR FUTURE. As many within the music industry struggle to ﬁnd their footing in this new landscape, one thing is clear: There is no going back. To succeed in the Music 2.0 economy, the only way to go is forward. Bands that are exploring and embracing the opportunities of the digital medium are discovering new ways to connect and build relationships with their fans. On the following pages, we present the Cliff’s Notes to doing just that. 25 PHOTO: MUSE.MU

1. LISTEN TO YOUR FANS. Social and digital technology is helping your fans to connect to each other in more places than you can imagine. They’re talking, sharing, praising, trashing, remixing, discovering, complimenting, complaining, gossiping, speculating, collaborating… and more. You should be part of the conversation. And what’s the ﬁrst step to being a good conversationalist? Being a good listener. Start ‘listening’ in the most obvious places: MySpace, Last.fm, Twitter, Facebook, YouTube, Flickr, Imeem, Hype Machine, Vimeo, qik. Try one of the many easy-to-use tools to help manage and monitor the conversations, such as Google Alerts, TweetDeck, Addictomatic, SocialMention.com, or Radian6. 26 PHOTO BY ANIRUDH KOUL ON FLICKR.COM

2. ENGAGE & EMPOWER THE AUDIENCE. Your fans like to show off their love, so make it easy for them. Some artists—like Mariah Carey, John Legend, and The Roots—are deliberately encouraging remixes of songs from their new albums by providing fans with the track stems and source ﬁles. Others, like Third Eye Blind, are asking fans to participate in their creative process by posting unmixed instrument stems of tracks and inviting fans to tweak, shape, and edit them through a series of contests. The bottom line? Your fans are your lifeblood. Feed their passion for your music. Make it easy for them to share that passion by providing resources to do so both online and off. There is no better promotion strategy. PHOTO: JOHNLEGEND.COM 27

3. INVEST IN THE LONG-TERM RELATIONSHIP. Your fans want to know EVERYTHING. From what you’re recording to what you’re wearing, to what’s keeping you up at night. Cultivate your connection to the fan community by sharing your stories and personality through blogs, tweets, videos, photos, and more. Yes, it’s okay for band members, managers, and other members of your marketing and public relations team to post things on your behalf—some of the time. But there’s no substitute for authenticity. In the Music 2.0 era, it’s the relationship with your fans that drives success. Cultivating a direct connection with your fan base is a long-term investment, but it’s an investment into the sustainability of your own band. 28 PHOTO: ANIRUDH KOUL ON FLICKR.COM

4. USE THE NEW TOOLS. From Topspin to Bandcamp to Fan Mail exactly how the relationship with their fans is Marketing, the past few years have seen the managed. emergence of a slew of tools aimed at empowering artists to gather, communicate, Three years after its launch, the artists utilizing and sell to their fans directly. These tools are Topspin run the gamut from music industry not only allowing artists to elegantly tackle the veterans who have literally deﬁned the very functions for which they were once dependent history of rock and roll, to indie newcomers on record labels, they are offering artists who have never been signed to a label. The unprecedented access to information about breadth of this roster alone is indicative of how their fans and, most importantly, control over equally appealing these tools are to artists at literally every stage of their careers. 29

5. EXPERIMENT. The digital revolution has changed the way your fans discover, share, and purchase music—forever. The good news? This shift to digital consumption has created the potential for virtually limitless new revenue streams. Instead of charging for “access” to your music, let the access be your marketing. Charge instead for above-and-beyond-access: immediacy (priority access or immediate delivery), accessibility (wherever and whenever they want it), and syndication rights (pay- per-use versus pay-per-sale). Imagine the dozens of new revenue streams that could be created if the gateway to transactions was moved downstream—away from the initial discovery and deep into the premium services that fans are growing used to paying for, like personalization, interpretation, unique experiences, curation, immediacy, and accessibility. At the end of the day, the music business is a business. Digital and social technology are opening new worlds of opportunity for artists to get creative about their merchandising, product, and distribution strategies. Now is truly the time to “think outside the [CD] box”. PHOTO BY ANIRUDH KOUL ON FLICKR.COM 30 30

ENCORE. A decade after Napster, the relationship Together with our fans, the Music 2.0 with music fans is the music business. revolution is pushing us to rewrite the rules of engagement, the rules of commerce, and Music 2.0 isn’t some ﬂash-in-the-pan fad the rules of ownership. that will pass like a spring storm; it’s a legitimate revolution. And while it’s hard to Those of us who embrace the shift will not predict what the future of music will hold, only survive, but thrive, by gaining new one thing is clear: this ain’t business as fans, unlocking new revenue, and usual. discovering new joy in the unfettered ability to share our art with the world. The time has come. Connect or die. PHOTO ON FLICKR.COM BY BITZCELT 32

Connect or Die was researched, written, and produced by a team of music-lovers and avid fans who also happen to work for a marketing agency called Espresso (www.brandinﬁltration.com). Espresso uses the new art of brand inﬁltration to help brands (and bands) use digital and social technologies to get connected with their fan communities, promote their products, and unlock new ways to generate revenue. 34

Say hello, why don’t you? ESPRESSO TORONTO Jacquelyn Cyr | Chief Executive Officer jacquelyn@brandinfiltration.com twitter.com/infiltrators 416 620 6773 ext. 0214 ESPRESSO BOSTON Marta Kagan | Managing Director, US marta@brandinfiltration.com twitter.com/mzkagan 617 477 5811 ext. 3 ESPRESSO WWW brandinfiltration.com slideshare.net/infiltrators 35

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Connect or Die: How to survive in a Music 2.0 world

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