Matthew Hawn - "Do Labels Still Matter?" - sounds digital


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Presentation for X|Media Lab's Sounds Digital conference on 16th April, 2009 at Sadler's Wells in London.
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  • Introduce myself
  • They were hubs of creative energy and capital. They also housed massive egos, especially through the 70s and 80s as record companies were profitable and growth was strong. The consolidation and corporatization of the industry made the egos bigger and the paychecks larger. Something was being destroyed in the process.
  • But in 1999, the egos took a serious blow.Napster and Peer to Peer distribution put a huge crack in their business model as how people discover and acquired music changed. It quite famously took us a long time to notice this or even admit that our business model was now broken. Blame the egos, blame the cost of changing.
  • In 1999, the revenues of the global recorded music industry peaked at 40 billion dollars a year. Depending on who you ask, It’s been dropping about 10% each year since then.
  • But something more interesting also happened. Control shifts in 1999 from the industry and the media to the consumer. The disruptive shift hits music (and newspapers) very hard and all the rules change. Within a decade, the ecosystem around music is totally different and the dominant players are all different. Clay Shirky’s “collapse of complex business models” is very much the story here. (but if you have seen an Apple or Google Keynote, you can tell we still have the egos)
  • Let me take you through how a label’s business model worked
  • Discovery:Labels had entire departments dedicated to getting our music played everywhere. You’ve heard the phrase “sex, drugs and rock and roll?” You can thank our promotions teams for fueling that whole era. If any of you know the history of Casablanca records – the disco label of the seventies – you know what I’m talking about.
  • Labels made vinyl and cassettes, then ultimately CDs and DVDs, which was what they were good at. They’ve become become pretty good at getting digital products out too and that’s become a pretty decent business for them but it has only slowed the decline, not stopped it.
  • Having music fans love the artist and their songs was a pretty cool by product of selling them stuff but a lot of the big labels didn’t think it was all that important. Certainly not a business model.
  • A product to a record company exec is the sound track to someone’s life. We have to realize that our products don’t exist in a vacuum and that thecontext and process in which a music fan discovers and uses that music matters as much as the act of buying it. Maybe more.
  • Creating a platform for music fans to interact, discover, talk about and share music means we need be offering something more valuable than a digital music file. It has to be better than what I can get for free from the internet with a few key strokes.
  • These are the players and their value is not in units sold – the slides that Ken showed were the wrong measurement of these companies. Their value is different than we’re used to seeing. Spotify and other access models actually have the potential to generate MORE revenue than we used to get from recorded music. Mangling Gibson: The future (and the revenue model) is there but it’s just not evenly distributed.
  • So if that’s the great opportunity for us, how do we get there?
  • Labels are in an ideal place to create these “generative” values – if they can change.Kelly’s definition: A generative value is a quality or attribute that must be generated, grown, cultivated, nurtured. A generative thing can not be copied, cloned, faked, replicated, counterfeited, or reproduced. It is generated uniquely, in place, over time. In the digital arena, generative qualities add value to free copies, and therefore are something that can be sold.
  • So what does this conversation look like?
  • If we don’t recognize and amplify the value of the community and the ecosystem around the artist, labels are stupid and doomed to irrelevance.
  • To do this, you need people, process and technology. These are the tools that labels MUST provide to stay relevant. If we don’t, there are people and companies ready to provide this to artists directly. This is TopSpin’s business model.
  • We’re now regularly in the top tier of sites dedicated to music, beating our competition in terms of traffic and engagement.Our goal was to bring back music fans from the places where they were going instead of our sites, which had become bad brochures for selling a record. They were ghost towns between releases.The real test: Do a google search for one of our artists.
  • Free tracks, Early preview listening parties, exclusive events for fans, meet and greets backstage. It’s about adding value to the music that fans are buying and rewarding people who engage with us and with the artist. Most importantly, over time, You’ll see us do a LOT MORE for fans who still BUY from us instead of stealing it.
  • Once you know who the fans are and what they want (and don’t want), you can start offering them great products and services. This doesn’t mean we wont still work with the high street and online partners. This is just another channel for us.
  • This last step closes the loop. To listen to them, you need to find them where they live online and to sort through the data we collect on them in a meaningful way: We’re doing surveys and going to social networks with our Neolane forms so that we can collect the fans from the sites that we don’t control.
  • English speaking countries don’t get this but anyone outside the UK will know that they often get emails from artists in english and with a link to WalMart or Best-Buy, US retailers which arent available globally. How much more rude could you get?
  • Matthew Hawn - "Do Labels Still Matter?" - sounds digital

    1. 1. DO LABELS MATTER ANYMORE?building a direct-to-fan business<br />Photo from Not So Good Photography<br /><br />
    2. 2. Labels Used To Matter<br />
    3. 3.
    4. 4. In 1999, a nineteen year-old college student created software that used the internet to bypass the labels distribution network<br />
    5. 5. And just like that,<br />the recorded music business as we knew it changed<br />1990s<br />1980s<br />1970s<br />1960s<br />
    6. 6. But music discovery and usage continues to grow. Music fans are moving to services to share and interact with each other.<br />2010s<br />2000s<br />1970s<br />1990s<br />1980s<br />1960s<br />
    7. 7. How it used to work<br />Buy Recorded<br />Music<br />Discover <br />Music & Artists<br />Listen, Share,<br /> Talk About, Love<br /> Music & Artists<br />
    8. 8. How it used to work<br />Buy Recorded<br />Music<br />Discover <br />Music & Artists<br />Listen, Share,<br /> Talk About, Love<br /> Music & Artists<br />Labels worked with press, radio and other media to help fans do this<br />
    9. 9. How it used to work<br />Buy<br />Recorded<br />Music<br />Discover <br />Music & Artists<br />Listen, Share,<br /> Talk About, Love<br /> Music & Artists<br />…while they built massive distribution networks to sell stuff<br />
    10. 10. How it used to work<br />Buy Recorded<br />Music<br />Discover <br />Music & Artists<br />Listen, Share,<br /> Talk About, Love<br /> Music & Artists<br />…and basically ignored this because they thought it didn’t matter.<br />
    11. 11. ...but it was probably the most important thing of all<br />
    12. 12. The New Music Business starts with discovery and continues on with people using and sharing their products. Understanding that process is critical if labels are going to create amazing digital products & services.<br />Listen, Share,<br /> Talk About, Love<br /> Music & Artists<br />Discover <br />Music & Artists<br />Buy <br />Recorded Music<br />
    13. 13. The successful players in the new world understand this and are already there. If labels still want to matter, they have to be there too.<br />Listen, Share,<br /> Talk About, Love<br /> Music & Artists<br />Discover <br />Music & Artists<br />Buy <br />Recorded Music<br />
    14. 14. So labels have to change.<br />Or be made irrelevant.<br />But what does positive change<br /> look like?<br />
    15. 15. Better than Free - Kevin Kelly<br /><br />The eight generative values in digital media products and services:<br />Interpretation<br />Embodiment<br />Immediacy<br />Accessibility<br />Authenticity<br />Patronage<br />Personalization<br />Findability.<br />Kelly’s definition for generative values :“A quality or attribute that must be generated, grown, cultivated, nurtured. A generative thing can not be copied, cloned, faked, replicated, counterfeited, or reproduced. It is generated uniquely, in place, over time. In the digital arena, generative qualities add value to free copies, and therefore are something that can be sold. “<br />
    16. 16. So how do labels reconnect with what matters and re-invent a broken business model ?<br />Help their artists to start real conversations with music fans<br />
    17. 17. Open and honest conversations build culture and trust around artists<br />…and create generative value over time<br />
    18. 18. Three deceptively simple steps for labels who want to matter again :<br />1<br />3<br />2<br />Help your artists to communicate directly with music fans<br />(Politely. Always ask permission!)<br /> Engage & reward<br />them<br />(free tracks, premieres and new experiences around/with the artists) <br />Offer them great products and well-designed services<br />(Based on Kevin Kelly’s<br /> 8 Generative Values)<br />
    19. 19. 1<br />Create a fan-centric experiences online<br /><ul><li> Make sure that you are building and investing in online and the social networks
    20. 20. Leverage existing fan communities & user generated content. Partner with them and reward them.</li></ul> Communicate directly with music fans<br />
    21. 21. eMail / Mobile Newsletters & Communications<br /><ul><li> Seth Godin’s Permissions Marketing is still the bible for this.
    22. 22. John Battelle and Federated Media also get it.</li></ul>How:<br /><ul><li>Start conversations and engage fans.
    23. 23. Contests, listening parties, free tracks
    24. 24. Special fan events & exclusive premieres
    25. 25. You can use brands to help pay for this but make sure there is a cultural fit. </li></ul>2<br /> Engage & Reward<br />Them<br />
    26. 26. Direct-to-Fan Sales<br />If you have a great platform for your artists and you have built a culture and you have earned trust, you also have a platform for commerce<br /><ul><li> Pre-orders for limited fan editions
    27. 27. Tickets + Album bundles
    28. 28. T-shirts, limited edition artwork
    29. 29. Instant gratification downloads</li></ul>3<br />Offer them great products and well-designed services<br />
    30. 30. Help your artists communicate directly with music fans<br />Offer them great products and well-designed services<br />1<br />3<br />Engage & reward<br />them<br />2<br />Then get out of the way and let them talk to each other!<br />(And listen to them because they will tell you what they want)<br />
    31. 31. What are the benefits of a more direct relationship with music fans?<br /><ul><li>A permissions marketing approach can give labels a single view of customers & an understanding of their behaviors
    32. 32. Targeted, one-to-one messaging means labels can deliver in the right language with with the right offers in local currency and support.
    33. 33. An open channel to communicate with music fans and ask them what they want…. and to apologize when you get it wrong.
    34. 34. When the artist is engaged, the fans are exponentially engaged as well. User generated content and interaction become central to the experience.</li></li></ul><li>And some of the more traditional bottom-line benefits:<br /><ul><li> Clearer, measurable performance indicators on marketing and communications
    35. 35. Direct Sales pre-order function gives the ability to do just-in-time manufacturing for fan editions and less stock risk
    36. 36. Physical deluxe packages with better margins than digital products
    37. 37. Re-engaged artists and managers who see the record label as a key partner again because they provide scale and global support.</li></li></ul><li>Thanks for your time!<br />Bibliography:<br />Kevin Kelly – Better than Free<br /><br />Seth Godin – Permissions Marketing<br /><br />Clay Shirky - Collapse of Complex Business Models<br /><br />Alex Bogusky & John Winsor - Baked In <br /><br />me:<br />me at work:<br />twitter: @jukevox<br />tumblr:<br />