Strategies for Success


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Strategies for success in todays music business

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Strategies for Success

  1. 1. Success in Today’s Music Business Pt 1 & 2 Freelance Musician Chris Baker
  2. 2. What we will look at• Opportunities and challenges facing new artists• Whether an artist should sign with a label• What record companies give to and take from artists• What to avoid in signing with a label• Advantages of DIY• How new technologies have made it possible for new artists to succeed• Strategies for DIY success• How artists should use online tools
  3. 3. I. Opportunities and Challenges Facing New Artists The Current State of the Music Business 1999: 14.6 B 2011: 7 B
  4. 4. Major Labels• The four major labels are now only three• Each has suffered significant decrease in revenue of 50% or more from sales of prerecorded music• Each label has dropped artists and is signing fewer artists• But, the majors still control more than 80% of distribution, and own more than 80% of popular music
  5. 5. Top Ten Selling Albums 2010 AKB 48 - Kamikyoku Tachi1 King Records Japan - 295.000 Justin Bieber - My Worlds (My World+My World 2.0)2 Island - 207.000 Lady GaGa - The Fame (Monster)3 Interscope - 128.000 Slash - Slash4 Dik Hayd / Roadrunner - 109.000 Usher - Raymond V Raymond5 Laface / Arista - 109.000 Madonna - Sticky & Sweet Tour6 Maverick - 83.000 Black Eyed Peas - The E.N.D.7 Interscope - 71.000 Lady Antebellum - Need You Now8 Capitol Nashville - 62.000 Sadé - Soldier Of Love9 RCA / Epic - 58.000 Gorillaz - Plastic Beach10 Parlophone / Virgin - 55.000
  6. 6. Challenges Facing New Artists• Less likely to be signed to a major• Even if signed to a major, less likely to sell as many units as ten years ago
  7. 7. Additional Challenges: More Competition than Ever • 8 MILLION bands on MySpace • Over 100,000 albums released in US alone: • Only 10,000 sold more than 1,000 copies • Only 1,000 sold more than 10,000 copies • Only 250 sold more than 250,000 copies
  8. 8. Opportunities!• New technologies have reduced price of recording• Distribution is almost free
  9. 9. Affordable Recording• For £750 you can have a home studio with speakers, headphones, a laptop, and music software.• With today’s inexpensive equipment and software you can write, arrange, produce, mix and master your own music at home, without the need for an expensive producer, mix engineer or mastering engineer.
  10. 10. Free or Nearly Free Distribution• CD Baby: 9% of receipts• DIY/Paypal: 1-2 pence per side
  11. 11. Flip Side of Opportunity• Anyone can be on the Internet• Anyone IS on the Internet
  12. 12. Whether An Artist Should Sign with aLabel: What Record Companies Giveand Take from ArtistsA label will: • Produce & Record • Market & Promote • Distribute
  13. 13. Major vs. Indie Label DealMajor Label Deal:• £100,000 advance• £800,000 marketing budgetIndie Label Deal:• £0-15,000 advance• £15,000-£30,000 marketing budget
  14. 14. Marketing and PromotionBoth majors and indies do the following:• Radio play• Tour support• Radio & TV interviews and performance• Advertising for product (print ads, posters)• Press coverage
  15. 15. Online Marketing and Promotion• Blogs• Internet Radio• Website Development and Maintenance• Online promotions• Features on major websites: Yahoo, MSN• Positioning on music stores: iTunes, Amazon, Rhapsody
  16. 16. What the Artist Has to Give Up• Both majors and indies take more than 90% of record income• Deal may say 15 20%• Deductions – Packaging: 25% – Net sales:10 15% – Foreign reductions and royalty – “New technology” deduction
  17. 17. What To Avoid In Signing With a Label360 Deals• 20-50% Performance• 20-50% Publishing• 20-50% Merchandise• 20-50% Endorsements• 20-50% Everything else – Appearance in movies, TV, etc – Private parties – Paid interview – Etc.
  18. 18. What To Avoid In Signing Cont.Make them Pay or Perform• Advances for each income source• Performance-based deals – Percentage of revenue IF they secure a synch – Percentage of revenue IF they secure endorsement – Percentage of revenue IF they secure a live engagement
  19. 19. Whether it is Better to Do It Yourself(Freelance) Advantages of DIY LABEL DIY Keeps 90% of record Artist keeps the £ sales 20-50% of everything Artist keeps the £ else
  20. 20. Is DIY (Freelance) Better? Yes! BUT HOW? Strategies for DIY Success…
  21. 21. Freelance MusicianHow to succeed in todays Music Business Part 2 Chris Baker
  22. 22. Production, Marketing and Promotion Budget• Investors• Marketing Companies• New Business Model: Polyphonic
  23. 23. Investors• £5,000-£1M : Return on Investment – 25-50% – Cap of 100% of investment. – Payable after recoupment of artists’ expenses. – Family, angels, and businessmen.
  24. 24. Marketing Companies• Create marketing plan• Implement strategies to secure goals – Create buzz online through major websites. – Acquire coverage in press. – Secure play on radio and internet radio. – Branding improve image of artist with proper photos, interesting graphic design, consistency across social networks and website
  25. 25. Polyphonic• Joint venture between Nettwerk Music Group and Radiohead management.• £20M investment behind it.• Artists to keep copyrights of their own music.• Polyphonic provides funds: Promotion, marketing, tour support, distribution.• Profit-sharing model: 50/50 split.• Polyphonic and artist for all sources of income.
  26. 26. How Artists Can Use Online Tools• YouTube• Websites• Online Distribution: Third Party or DIY• Blogs• Social Networks
  27. 27. OKGO’s Viral Success on YouTube• Their first DIY video, “A Million Ways”, cost £17 and was downloaded 9 million times from YouTube• Their second DIY video, the Treadmill Video, cost a few thousands dollars (for eight used treadmills) and debuted in July 2006.• Two years later:• It had been viewed 42 million times on YouTube Parodied on The Simpsons• Led to the band’s appearances at the MTV Music Awards, The Tonight Show with Jay Leno, and The Colbert Report• It won a Grammy for Best Short-Form Video (2007)
  28. 28. WebsitesWeb 2.0 aesthetics: clean, streamlined website -make site easy to navigateMake contact information easy to find: email of artist,manager, PR agent, booking agent, and links to socialnetworking sites (include widgets to make links easyto find)Make sure the site looks cool for the genre of musicyou are working with (branding/aesthetics can varygreatly from rap to pop to folk, etc.)
  29. 29. WebsitesInclude music and video players in addition tolinks to YouTube / Vimeo (DO NOT have musicvideo automatically playing it can be distractingand even deterring for new visitors to your site) Also include: photos (both from live shows andfor press) link to a mailing list, link to where youcan buy music (iTunes/Amazon/label website),and post favorable reviews or other press.Giveaway downloads in exchange for emailaddress on a mailing list.
  30. 30. WebsitesDonts: Don’t make the site difficult to navigate. Don’t let your site have a ‘corporate’ vibe. A) Don’t have banner or sidebar ads unrelated to your music. B) Don’t make it difficult to sell your album! Don’t let the site ‘age’: make sure that you are constantly updating the site.
  31. 31. Third Party Distribution: CDBaby• Storage Fee: None• Distribution: album: goes to 21 online retailers and physical copies sold by CDBaby (physical copies must be mailed to CDBaby)• CDBaby keeps 9% of revenue from digital sales, and £3.50 for each physical album sold
  32. 32. Self Distribution: PayPal• Create seller account on PayPal and mail your own albums/merchant.• PayPal keeps just a few pence on each transaction.• Can easily add a PayPal widget to your website, blog, MySpace, and other online profiles.
  33. 33. Social NetworksIs MySpace Dead? YES: Inundated with advertising Clunky interface New ‘ugly interface’ What have they done? Only bands and artists use MySpace for social networking NO: Important people still look at and play music from MySpace pages Still one of the easiest ways to quickly preview an artist’s sound and image
  34. 34. Social NetworksFacebook • Become an essential tool for social networking. • Artists can easily self-promote with the creation of Facebook Pages and Groups. • Over 200 million people on Facebook.
  35. 35. Social NetworksTwitter • Another easy method to connect with fans and potential listeners. • Can instantly and easily update.
  36. 36. BLOGS• Huge number of music blogs on the Internet, all featuring different styles of music.• Bloggers are both writers and music fans – they are interested in listening to new music and writing about what they like.• Blogs are viral tastemakers.• Vastly underrated.• Can be used to create easily updatable website with host of plugins & widgets.• See:wordpress
  37. 37. Blog Stats• Approximately 133 million blogs.• 77% of internet users read blogs.• 2/3 of bloggers are male.• 60% of bloggers are age 18-44• 75% of bloggers have college degrees.• 75% of bloggers are employed full time.
  38. 38. Blog Benefits2008 NYU Business School StudyResearched whether there was a correlation of album sales and blog posts.The research found:If 40 or more blog posts were made before an album’s release, sales ended up being three to four times the average for both independent and major label releases.If blog posts crossed 250, album sales rose to six times the average, regardless of label.
  39. 39. Blogs: Viral TastemakersWhy “tastemakers” ?1. Bloggers are active consumers of new music and each features from several to more than a dozen artists every week.2. Bloggers are active on social networks (to promote their own visibility) – if your music gets a post it will be mentioned on Twitter/Facebook/elsewhere.3. Bloggers read other blogs – will likely repost something if they like it as well.
  40. 40. How to get your music featured by bloggers– DO YOUR HOMEWORK: Find blogs that feature similar styles of music. (E.G. Do not send your latest R&B song to an indie folk blog!)– Bloggers gets hundreds of emails a week from artists who want to be featured.– To make your email stand out: Make it short: Include a one-sentence description of what your music sounds like, a 1-3 sentence bio, two download links and a link to your MySpace.– NEVER send mp3s in attachments – only send download links.
  41. 41. Another Model for Success: Be Successful First• OkGO broke away from EMI to start its own management, Parachute.• Moby established successful career with aid of EMI. He is now with “indie” Mute• Aretha Franklin announced that she will leave long time home Arista to start her own label.• Prince “Lotusflower/MPLSound/Elixer” triple album set exclusively released by Target (Warner)• Paul McCartney “Memory Almost Full” – Starbucks (formerly Capitol)
  42. 42. New Models Contd.• Radiohead “In Rainbows” – Internet/pay-what-you-want/discbox for £875 released independently – “In Rainbows” later released by XL (formerly EMI)• Madonna left Warner and signed with Live Nation for $120 million deal.• Mariah Carey - Channel and Elizabeth Arden endorsements.• Eagles “Long Road Out of Eden” - Walmart represented by Irving Azoff.• (Frontline/Ticketmaster) – success at Walmart.• 50 Cent gave his name to “Formula 50” in exchange for stock. Coke bought the brand and his share is worth from $100 to $400 million.
  43. 43. The END!