More on the Demands of Social Media

I have added some updates to my previous post on this topic, but I didn't want keep adding more material for fear it would get buried.

I just came across this blog entry and the author, singer/songwriter Shaun Groves, describes very well the new realities for musicians today.

Artists aren’t accustomed to being so accessible, accountable and out of control. Artists are accustomed to being in front of audiences that care about what they do, audiences they know are fans and they keep in the seats for a couple hours by charging a ticket price. But on-line, where spending time with an artist is free, anybody can wander into the crowd, boo, change the subject, or walk out. And they will. "If the Music Business Dies,"Shlog, 5/21/09.

He talks about the old system, where artists had handlers who did everything and shielded them from any unpleasantness.

... artists are used to hiring people to handle their relationships for them. That’s at least 90% of what a manager does. Labels congratulate and critique through a manager, for instance, who adds his own diplomatic spin to every word so the artist’s feelings aren’t hurt and the relationship is preserved. Not so on-line. Someone can be hired to hit the “publish” button on a blog post that gets e-mailed over, invite people to a Facebook event and even write to people for an artist and signed their name (it happens), but no one can convincingly be the artist every day in post after post or interact with commenters regularly. Artists can’t hire anyone to be them 24/7 and the internet demands those kind of hours.

Most of the musicians I talk to do not want to put in the time to relate to their fans. They feel it is sufficient to write, record, and perform good songs. They think that is their job and all they should have to do. But as Groves notes, "If the music industry dies it won’t be because everything changed. It will be because artists didn’t."

Suzanne Lainson

UPDATE 5/25/09

Billboard.biz just posted a good article on the use of Twitter by musicians. There have been other articles on the topic, but this one actually mentions CD sales pre and post Twitter fame. "How Twitter Is Changing Music," Billboard.biz, 5/30/09.

Of Money, Machines, and Music

I've been a follower of Richard Greenfield and his Pali Capital blog for some time -- predominantly because I appreciate his clear-eyed, cutting analysis of media stocks. This past few weeks, however, in his write-ups on Warner Music Group, I think he got it a bit wrong. He lauded the company's recent moves to improve its cash position, and re-negotiate the maturity date of its longterm notes. Just what every shareholder in a company saddled with $1+ billion in debt wants to hear, right?



Unfortunately I think the focus on pure balance sheet clean-up is shortsighted, as just one week earlier the company announced it would discontinue investing in digital music start-ups (WMG's positions in Imeem and Lala were both written down last year). One can argue all day long as to whether those were the right horses to bet on, but ultimately a company -- an industry -- that fails to invest in revolutionary innovation will die. Were WMG's $15-20MM positions in these start-ups that much of a drag on its $400+MM EBITDA?



Why are we talking about 3M and GE decades after their birth? Because the imperative of change, the Darwinian directive to disrupt, was and is baked into their DNA. Everyone points to the major labels' investment in MySpace Music as a "giant step" toward Music 2.0. The truth, of course, is that for everything MySpace Music is, and promises to be (and I'm a big believer in their branded content model), the division itself is really the outgrowth of a lawsuit settlement. Kinda like Imeem, come to think of it. The point is that with "this whole digital thing" now entering its second decade, you'd think the labels would be taking what little cash they have left and going on a shopping spree at the VC fire sales currently in progress.



Speaking of revolutionary innovation, I've been reading about recommendation engines and learning machines for a while now. Sounds like talk at the MusicTech Summit centered around these thrilling new platforms which are positioned, ultimately, to blow the lid off the music industry. These web crawlers will basically scour the ocean of behavioral data on-line -- who visits what website, subscribes to which Tweats, shares which tracks with whom and where and when (and infers why?), then cross references it with purchase data on downloads, tickets, and merchandise -- and will map musical similarities and affinities. It will allow New Artist A to bypass commercial radio, American Idol and the entire major label machine, and simply post new music on-line and let the recommendation engines point an audience toward him/her based on what music is similar, and why (and where -- geo-targeting will be an important component for club-level artists).



How does all this get monetized? If New Artist A posts a track and the RE's bring an audience of 700,000, of which maybe 70,000 are interested enough to download that track (better recommendation efficacy will drive higher conversion), what would an advertiser would pay for that super-contextualized and highly-engaged audience?



Lastly, music. Yeah, most of us got into this game for the music, remember? I still actually pay for downloads (although it's been a minute since I purchased a shiny disc... sigh...). My faves so far this year are Lady GaGa -- does that make me a 15-year-old girl? -- Duncan Sheik, Green Day, a new collection of hip-hop and soul classics remixed by Rae & Christian, called Raiding the Vaults, and the improbably named Miike Snow, actually a trio of Swedish and New York-based producers best known for collaborating on Britney Spears' hit, "Toxic".



Straight outta Williamsburg, baby!

Can You Sell 10,000 T-Shirts Annually?

As a marketing person, I'm interested in what sells, how much, and to whom.

I like to look at trends and then focus on what works and abandon what doesn't.

A few years ago I helped a musician put together a business plan. She had more than three years of sales data for us to use for projections. Playing in a local/regional market with a mailing list of 3000 fans generated $150,000 annual gross for her. Of that, approximately $45,000 was from CD sales and most of the rest was from show income. Her performance income ranged from $150-$200 for a coffee house solo gig to as much as $3000-$5000 for a private party with her band. She played approximately 200 shows a year, so the average performance income per show was $500 (not including CD and merch sales).

We knew that rarely, if ever, did CD sales drop below 10% (in other words, for every 100 people in the audience, at least 10 CDs were sold). That was what we used for projected sales, although her CD sales were usually much higher (as much as 40 CDs sold to an audience of 100 people). Using a 10% sell-through meant that if she played in front of 30,000 people over the course of a year, she would predictably sell at least 3000 CDs. Play in front of 100,000 people and sell 10,000 CDs.

However, knowing that the days of CD sales were declining, we also developed an alternative plan based on spending per fan. It didn't matter if they bought CDs, or tickets, or merchandise. We had three spending categories: $10 annually for the casual fan, $20 for the more involved fan, and $100 for the hardcore fan who came to most of the shows.

Running the numbers a variety of ways, we were able to project a gross income of $1 million annually with a fanbase of about 30,000 to 40,000 fans across the country.

I'd love to be able to use the same business plan template for other bands, but there are two issues: (1) Most artists I have worked with don't have the same level of sell-through. (2) It's a different environment now. Fewer people are buying CDs, so you can't really count on those for income.

Let's look at a hypothetical band in today's market.

If a four-piece band wants to pay everyone $20,000 a year and have money left over to cover band expenses, then the band needs to gross at least $100,000 a year. Let's round that up to $120,000, which would work out to $10,000 a month.

What would a band today need to do to make at least $10,000 a month?

Let's start by eliminating money from CDs. While some bands can still sell CDs for as much as $15 each, so many bands are giving away free downloads or pricing CDs at cost that counting on income from music sales is risky. Limited edition vinyl sales are working for some bands, but probably won't work for every band.

Can a band make the $10,000 a month in performance revenue? There are a variety of scenarios to do this.

One option would be playing in front of 1000 people at $10 per person, a reasonable cover charge for a moderately successful band. Newer bands might get less, more established bands might get more. A band getting $10 per person probably isn't playing in clubs holding 1000 people, so doing one show a month is unlikely. Therefore we have to break it down into more frequent shows at smaller clubs. How about four 250-person shows per month (or about 50 shows a year)? A band that can consistently draw 250 people to a show has likely been playing for at least a few years and tours either regionally or nationally.

But perhaps the band doesn't have that big of a following in many locations. So it needs to play more shows to smaller audiences across a bigger area. How about 100 shows a year of 100 people per show? That's a full-time schedule, but might be necessary to achieve enough income. Some bands, even with current or past major label releases, are playing to audiences of 100 or less on their tour stops.

But maybe the band wants more exposure, so it goes on tour as an opener for a bigger act or does something like the Warped Tour and essentially is making no money in ticket sales.

Now, if we are no longer counting on income from either CD sales or ticket sales, that leaves merchandise sales, which is where a lot of bands find themselves. Here are two examples:

"Q: Did you guys really make $19,000 in one day's merch sales?

A: It's crazy, right? It was mostly T-shirts. But we sold out of merch that day. Thankfully we always have really strong merch sales, and because of that, we ended up making a decent amount of money on Warped, which is pretty unique because a lot of other bands are barely scraping by."
"Lines and T-shirts and beats, 3OH!3 my!" The Denver Post, 10/31/08.

"After each show, [Amanda] Palmer heads to the 'merch table' in the lobby to sell T-shirts, posters, CDs and — for $10 — black Dresden Dolls underwear. At bigger shows, the Dresden Dolls can take in more than $1,000 a night selling merchandise, which makes the 'merch table' a major source of income when they're on the road. Of course, venues try to take as big a cut of that as they can. Palmer says that leads to regular screaming matches between bands and venue managers."
"Band Tries to Make It Big Without Going Broke," All Things Considered, 1/17/07

So if a band wants to make a decent living, it may come down to selling lots of T-shirts.

10,000 T-shirts @ $20 = $200,000.

Can your band move that many T-shirts a year?

Here's a resource for you:

Merch War

Suzanne Lainson

The Demands of Social Media

Each time we change our music marketing tools, what we expect from artists also changes.

For example, the music video age ushered in a generation of highly attractive performers. Good looks became at least as, and often more important than, singing and playing ability.

Now that social media and fan relationships have begun to define the new music business model, online communication skills are being added to the mix.

"It really comes down to a new 'survival of the fittest' paradigm. Only a small percentage of artists have that rare combination of musical chops, stage presence, likeable qualities, marketing smarts, communication and social skills, discipline, drive, passion, etc.

Sure, there are ways to lighten the workload, involve your fans, and pay people to do design work and other technical tasks. But the most effective artists are hands-on with many aspects of their promotion. It's something they accept and embrace and make the time for." "Gatekeepers & Music Promotion Overload: The Good News,"Bob Baker's Indie Music Promotion Blog, 4/28/09.

What I don't think has been fully sorted out yet is the extent to which social media is a must-do versus a nice-to-do. Presumably all things being equal, the more interactive artist will have the advantage. For example, there's Jill Sobule. She has been widely cited as someone who funded her most recent album entirely from fan contributions. She credits personal interaction as a plus.

"I’m really accessible. I get an email from a fan, I email them back. I’m still at the point in my career where it’s possible to do that. It’s not like some generic site where people invest in a band they don’t know. It was something personal for these people. They knew they were contributing to a real person who was going to put the money to good use." "Reinventing the music business: Fan donations pay for new Jill Sobule album,"Chicago Tribune, 3/18/09.

Another artist who works social media hard and well is Amanda Palmer (known both for her work as a solo artist and The Dresden Dolls). But she says there is a downside in terms of creativity.

"I'm spending a lot of time connecting with fans... and I don't feel as much of an artist as much as a promoter of Amanda Palmer. All of this instant connection has taken the place of making art. An idea that might have translated into a song before might now go into my blog instead." "D.I.Y. & the Death of the Rock Star...," Digital Music News, 3/29/09.

(Read more about her social media activities here: "Amanda Palmer don’t need no stinkin’ label," Online Fandom, 4/5/09)

Both Sobule and Palmer have had label deals, so their online activity isn't so much about generating fame in the first place as it is about maintaining a presence in an increasingly fan-focused world.

In terms of unknown artists, there have been multiple stories about artists who launched themselves via MySpace. But many of the stories have been more hype than reality. If you dig deep enough, you find that there was already a label, a manager, and/or a publicist engineering the "grassroots" campaign.

However, I recently ran across someone who I know truly has done it herself, so I asked her about her online fan and social media activities. She's a Colorado artist who goes by Danielle Ate the Sandwich. She has no team of handlers, or even a band for that matter. Just herself. But she also has over 10,000 YouTube subscribers and her videos have been viewed more than one million times.

1. How much time do you spend connecting to fans online?

I check MySpace, Facebook, and YouTube quite often and make sure I have a feel for what's going on and what people are liking and wanting more of. I'd say it's about an hour or two every day.

2. Do you try to respond to everyone, or just a few?

I used to try to respond to everyone, but it became a little ridiculous. And I found that if I stopped corresponding, some people would become upset with me. Nowadays I try to hit back a few, especially those who say interesting things, are funny, or pour their hearts out in ways that generic compliments don't.

3. How has it helped you in terms of selling CDs and/or finding places to play?

The majority of my CD sales have come from my videos on YouTube and being featured on blogs or written about on message boards. I haven't had too many offers to play at specific venues from my online popularity, but I have gotten an idea where I have fans and where they would come to see me. It helps me plan where to tour next and what kind of crowds to expect.

4. Did you have a plan when you started uploading videos to YouTube, or did it just evolve?

It did just evolve. I think it's impossible for me to be serious, so I did tiny silly things in the first few videos and then eventually turned them into 1-2 minute skits with costumes and songs and ridiculousness. Now, it's hard for me to not to have something at the beginning of my videos. But I do feel that some songs need a video all their own. When I want people to JUST LISTEN and not laugh and look, I try to only play the song. Also, some days I just don't feel like spending hours planning out a skit to do!

Some days I wish I was discovered in a coffeeshop or a county fair, like the old days, but I am so thankful I was discovered at all! And the Internet has been so good to me! It's a great medium for a person like me. I tend to be very anti-social and would prefer to be in my apartment all alone than talking and networking in a club. The Internet allows me to be a personality and be personable, but still remain somewhat anonymous and escape from people and the attention when I need to.

I was playing a show in NYC and this man shouted after one of my songs that I was the leader of the revolution of music. I could do it all from my apartment and book a show without a manager and without a team of professionals. Talent was what got me this far and he seemed to be postive that this was how it was going to be for musicians from now on.

I was a little rattled from a fan shouting a 2-3 minute speech on how I was the revolution. Then I played my next song thinking, "Hey, leader of the revolution might not be such a bad gig."

Welcome to the revolution.

Suzanne Lainson

AN UPDATE 5/17/2009

The comments function on this blog doesn't allow easy editing, so I am going to add my updates this way.

On Friday night (5/15/09), as Amanda Palmer was sitting at home, she invited everyone who was doing the same to join the "Losers of Friday Night On Their Computers" club.

Then she drew a logo and started selling T-shirts on the spot. On Sunday afternoon (5/17/09), she posted this on Twitter:

holy fuck! we've sold over 200 #LOFNOTC shirts. this shit is nuts! http://bit.ly/lofnotcshirt

And then, as orders started approaching 300 shirts, she wrote:

you're all paying my fucking rent!!! i love life.

Now, that's the way to do realtime market research.

If you want to follow the thread, go here:

Twitter search for #lofnotc

If you just want to read Palmer's comments on the topic, go here:

Amanda Palmer (amandapalmer) on Twitter

UPDATE NUMBER TWO 5/22/2009

One week after her LOFNOTC, Palmer posted her story of it:

Amanda Palmer's blog

UPDATE NUMBER THREE 6/23/09

Here's how the LOFNOTC story continued to play out.

How an Indie Musician can make $19,000 in 10 hours using Twitter

Can Sponsorships Convert the Sponsor?

This last week there were stories about De La Soul working with Nike to produce a training album. "Hip-Hop Trio De La Soul Works With Nike for SportMusic LP," Advertising Age, 4/27/09.

Writing about the deal, Scott Thrill raised the issue of "selling out" in an article for Wired. He pointed us to an interview he did last year with Saul Williams, who allowed Nike to use one of his songs in an ad.

In that interview, he asked Williams, "Do you think working with a company with a questionable labor history skews strange with 'List of Demands,' which I read as a commentary on poverty and oppression?"

Williams's response puts an interesting spin on music sponsorships.

I think it guarantees that the people in power in that corporation are listening close to what I'm saying and what their kids are dancing to. I think it makes them question their ethics as much as fans or reporters question mine. It also exposes a whole new world of people to my music, my thoughts, my world view which will perhaps enlist more casual listeners into questioning authority, realizing their power, and all of the things that my music demands.

At the end of the day, I think its a dangerous decision for Nike to popularize a song like "List of Demands." My belief in the power of music tells me that it could possibly work against them. So I applaud their courageousness. My intention remains for these songs to be heard by as many as possible. They are the virus that I wish to spread. I've infected Nike and all within their reach with a song that raises awareness as well as fists. It is indeed written in the voice of the impoverished and oppressed, which includes the factory worker. They know its their song when they hear it. The last thing it does is make someone want to go buy sneakers, but it may encourage someone to hit their boss over the head with a tennis racket. So be it. "Infecting Nike, Initiating Obama: An Interview With Saul Williams", Huffington Post, 9/28/08

I've long been a proponent of sponsorships because I come from a sports marketing background; sponsorships fund a lot of athletes and their events. It's a necessary and usually very productive alliance among all parties. There are rarely, if any, true ethical compromises. Generally either the companies are a perfect fit for those they sponsor, or at least the sponsors have enough redeeming characteristics that athletes/artists taking the money can justify the arrangement in some fashion.

Looking for an example of a potential sponsorship which was deemed too compromising to accept, I found this case of a someone offered an opportunity to work with a cigarette brand.

[Leslie] Nuchow, a powerful throaty singer-songwriter, had been bouncing around New York City's music scenes like many other talents, looking for the break, trying to scrape enough money together to get a CD made, playing often at the Mercury Lounge.

A 'scout' approached Nuchow and asked her to participate in a three women competition for the best unsigned singer-songwriter and the ongoing promotion had a number of great elements -- including tours and a potential label -- but there were two big hitches. The first: the whole effort was sponsored by Virginia Slims, owned by Phillip Morris. and second, Virginia Slims Women Thing music was to produce a CD that would only be available with the purchase of two packs of Virginia Slims cigarettes.

Nuchow said no way. "Virginia Slim SLAM,"AlterNet , 4/26/00

Thinking about sponsorships and this issue of ethical compromise, I've listed a series of questions those being offered the sponsorships might ask themselves:

1. Are you being compensated?
It's unlikely you are going to enter into any sponsorship agreements if you aren't being compensated in some way (e.g., money, free goods, promotion). And if you aren't being compensated, there's no incentive to agree to any partnerships you don't fully embrace, so it's a non-issue.

Accepting compensation, on the other hand, is a double-edged sword. Payment makes the deal worth your time, but it opens you to criticism that you are either only doing it for the money or your values are so malleable that you'll adjust your thinking to fit the situation. Still, many people who work regular jobs have been hired by companies they don't fully embrace. Being paid does not necessarily mean we have lost our identities to a company.

2. Are you donating money?
If you are ambivalent about a sponsorship deal (i.e., perhaps you like some aspects but not others), you can go the charity route. You can donate some or all of your compensation to a cause you believe in. It allows you to play the system for a greater good. It's an example of "the ends justify the means."

3. Are you speaking out?
Saul Williams felt having Nike using his song would generate more interest in his work and his world view. The arrangement gave him a bigger platform to speak from. His take on the situation is unusual, but other artists could try a similar approach.

4. Have you discussed the issues with the sponsor and said that you want to raise awareness?
If you are going to be outspoken about an issue and it appears to run counter to your potential sponsor, you might want to let the company know before signing any contracts. This could avoid future conflicts. And if the company wants to change its image in that regard, perhaps it will even back you on your position.

5. Is the company willing to work with you?
This is an extension of the above point. If you feel strongly about an issue, you might want to talk to a potential sponsor about creating a campaign that supports and incorporates your beliefs. With the right company and the right cause, there could be positive benefits for all.

6. Are you helping them maintain the status quo or are you helping them make changes?
If the sponsor has had a poor track record in some areas and wants to sponsor you to modify that image, do you feel there are real changes being made, or are you being used as camouflage to allow them to continue questionable practices?

7. Do you see your music as a subversive act?
If you consider yourself a guerilla warrior, you may want to take on incompatible sponsors either to embarrass them down the road, or because your hardcore supporters already know you so well that they are able to interpret your sponsored message as a call to action to work against the company and/or what it stands for. Using a sponsorship this way is highly unlikely, though. Relatively few artists are so motivated as to infiltrate the system and put their careers on the line. Some may imagine such a scenario as a justification for signing a questionable deal, but then never carry it out. A more plausible situation is where the artist has a profound change of values after signing and then makes public statements which run counter to the sponsor.

As I have stated, I'm very much in favor of sponsorships. I think they can add value to everyone involved when done correctly. But artists and sponsoring companies should think through any real or potential conflicting values and either find ways to deal with them or not work together.

Suzanne Lainson