Letting the Fans Decide What to Pay You

Derek Sivers, founder of CD Baby, posted an article on his blog that is getting lots of comments.

Say to the audience, “It's really important to us that you have our CD. We worked so hard on it and are so proud of it, that we want you to have it, no matter what. Pay what you want, but even if you have no money, please take one tonight.” "Emphasize meaning over price = More paid sales," Derek Sivers, 9/21/09.

Sivers said the band that tried this was selling more CDs and gaining more new fans via this technique than when it charged a set price for a CD, so he is encouraging more bands to do this. A similar success story was recounted by Ben Taylor's manager when they tried it. I have some thoughts about this concept, starting with this question: What happens if every band does this? 1. Will people take a CD from every band and pay less, on average, for each CD? In other words, will they budget an equal amount for every band's CD? 2. Or will they pay different rates to different bands/artists? Will they give $1 to a band they don't like much and $20 to a band that they love? Or will they pay according to need, giving the unknown starving artist more than the well-known rich artist? 3. Or, if fans hear this same pitch at every show, will they sometimes decline to take a CD because, on the one hand, they don't really want to pay for it, but, on the other hand, they don't want to take it for free because that would insult the band? I found an article by someone pondering a similar dilemma.

The fact that there’s a very good chance that a customer might leave feeling like they either underpaid or overpaid is not really a good sensation to create if you want repeat business. "Pay What You Want (and Maybe Still Feel Like You Got Cheated!)" Everything Must Go, 4/27/09

He gives a very interesting list of reasons why people might feel forced into overpaying for something and then resent being in the situation. Before I touch upon some practical matters when trying the pay-what-you-want-for-a-CD system, I have a few thoughts on tipping, which is similar. I've worked for artists who have made more money playing for tips than charging a cover. So the system can work. But there are certain dynamics involved in tipping that musicians must understand before making the transition to pay-what-you-want. 1. Direct acknowledgment from the artists. The whole point of tipping artists is to show your appreciation to them and have them KNOW that you are showing your appreciation. You are saying to them, "I like you." But that gesture is lost if they don't know the tip was from you. So usually the tip is made directly in front of the artist. 2. To have public awareness of your tip. At a lot of shows, you will see "the big tipper." He will wave a $50 bill around a bit so that the artist and the other people in the audience see the big tip. There are, of course, anonymous tippers, but that is less common. Being a big tipper is a status symbol. So there have to be mechanisms to display that. 3. Public pressure. If you want a pay-what-you-want model, it's good for people to see others paying and for people to see who DOESN'T pay. Imagine going to church and not leaving anything in the collection plate. Or going to a restaurant and not leaving a tip. You'll look like a cheapskate. So you have to incorporate some peer pressure into the pay-what-you-want model for it to work. In other words, when you are playing for tips, you are selling the interaction, not just the entertainment. Here's someone else explaining the same concept:

Giving to Get is Not a Scaleable Sales Technique – The theory goes that people will be loyal to someone who gives them something for free. In fact, this nugget is a required part of every seminar ever given on “How To Sell Stuff”. Create an obligation that the receiver will feel a moral need to reciprocate. My experience is that this works fine person to person, but it isn’t scaleable. So, yes, some people will buy music or products or consulting services from someone who has given them something of value for free, but not enough people will do it to actually make much money from it, unless there’s a whole army of people out there selling. I think this is because the giving must be accompanied by some kind of personal connection with the giver to make this tactic effective. So, don’t give people free music and expect that they will love you so much that they will buy en masse. "Monetising Music: Simple Rules For Engagement," fyimusic.ca, 9/18/09

There's a lot more to explore on the concept of "gift economies" and I will in future posts. If you can't wait, here's one place to start, although giving away something for free or asking for a donation online has different dynamics than doing it in person. Internet gift economies Assuming that a band does want to implement a pay-what-you-want system at shows, here are some points to consider: 1. Are people handing cash to an actual person, dropping it in a jar, or sticking it in an envelope? I'm going to guess that you'll get more per fan as the level of interaction increases. If someone is just going to stick some money in anonymously in an envelope, they are likely to pay what they think is fair, but not more than that. If they are sticking it into a tip jar, they'll hide it if they are underpaying and make a big show of it if they are overpaying. And if they have to hand the money to someone who looks at the payment amount, they aren't likely to underpay unless they don't have any money on them and explain that. (Of course, if people want to underpay for CDs, they can learn to go shows with little or no cash so that they never have enough to pay full price.) 2. You're likely to get paid in round numbers. Either people are going to hand you some loose bills, or they are going to hand you a bill and not ask for change. So you are likely to get $5, or $10, or $15, or, if you are lucky, $20, for a CD. People aren't likely to give you $10 and ask for $2 back. My guess is that most people will think in terms of giving you $10 for a CD, while a few will give you $5 or $20. 3. How do you handle the logistics for big shows? What if you are playing in front of 600 people? Should you haul in enough CDs to accommodate everyone? Something to think about. If you want everyone to leave with a CD, you've got to plan accordingly. Here's a list of articles that make reference to pay-what-you-want experiments. One point that has come up repeatedly is that when a price has already been established (either based on what is usually charged or through a suggested price), people often base how much they give on that amount. In theory, if this sort of experiment becomes so popular that there is no longer a standard price, contributions may go down. In other words, when people think CDs normally sell for $15, they may give $15- $20. But if people begin to think CDs sell for $5 or less, or no longer know what they sell for, how much will they pay? 1. One restaurant experiment.

For two weeks during the end of November and beginning of December in 2007, the regular price of the lunch buffet was removed and customers were asked to pay what they wanted for the buffet. Beverages were sold at regular prices. ... During this period, lunch buffets sold increased 61%, from 157 units to 253 units, while the transaction price under PWYW was 19% lower, from 7.99 euros to 6.44 euros on average. Combined, the result was a 30% increase in revenue. Since lunch buffets are a largely fixed cost offering, the increase in traffic more than offset the decrease in average price paid, yielding an overall profitable promotion. Furthermore, the PWYW promotion was particularly successful at attracting new customers rather than increasing sales to existing customers. ... In addition, the Persian restaurateur noticed a marked increase in evening traffic. During the evenings, when the restaurant would still list and charge regular prices, revenues almost doubled. As a result, the restaurateur returned to the PWYW price format for the lunch buffet a few months after the experiment ended and decided to keep it for the long run. "If a Business Lets You 'Pay What You Want,' Could It Survive?" The Wiglaf Journal, 6/09

2. Another restaurant using a pay-what-you-want approach.

Out of 55 envelopes, seven are empty. One has a piece of string with beads on it; two others are stuffed with bits of napkins to make it appear that money was included. Some contain as little as 25 cents, but other envelopes hold tens and twenties, and one has $23. The total take for the day is $201.45. This averages out to $3.66 per meal. Brad figures his food cost per meal at around $2. As long as he can cover that, the rest can go back into the business. "SAME Cafe: The restaurant where you pay what you can," Westword, 2/26/09.

3. Another example.

So far, she's not getting rich; in fact, she's not even breaking even. Customers have been leaving an average of about $7 per person in the envelopes, and Potager's food costs are running about $8 per person, she says. "Arlington cafe serves gourmet food and lets customers pay what they want," Dallas Morning News, 3/24/09. 3/24/09.

4. "5 Pay What You Like Restaurants," Secret Food Tours.

5. This article has a number of non-restaurant examples. Here are two of them:

Most [Seattle Art Museum]-goers (97.3 percent) pay full admission at $13. The rest pay less. ... Seattle Repertory implemented a pay-what-you-will night for the usually light Halloween, and it sold out. Like many theaters, it holds one such night per performance, totaling around a half-dozen a year. The minimum cost is $1, but customers pay on average $5. But each show, there's always somebody who is willing to pay the full price of $40, because that's what they decide the show is worth, said Christy Carlson, the ticketing services manager. "Paying what you can for the arts," Seattle Times, 11/30/07/

6. "Wouldn’t It Be Nice to Really Pay What You Wish?" Freakonomics, New York Times, 9/24/09. Suzanne Lainson @slainson on Twitter UPDATE 10/24/09 Here's an experiment involving a game which normally sells for $20.

Since the birthday sale started, about 57 thousand people bought World of Goo off our website. The average price paid for the game was $2.03 a significant percent of which went to PayPal for transaction fees. "Pay-What-You-Want Birthday Sale Results," 2dboy.com, 10/19/09.

Let's Get Realistic About Your Music Career

There's a great discussion going on over at Hypebot about the extent to which marketing is a part of music.

I'm sorry if this comes as a surprise, but it has never been enough to just make great music. Every generation of musicians has had to face their own challenges which forced them to go beyond creation and recording. "I'm Sorry, But It Was Never Just About The Music," Hypebot, 9/15/09.

With the major label system coming down, the burden to promote music and connect with fans is falling more than ever on the artists themselves.

People are weighing in on both sides of the debate. I've joined into the discussion as well, posting quite a few times. But I wanted to elaborate on one of my comments, which I have copied here.

I can understand why musicians might be frustrated with all the advice.

First they are told to write, record, and perform great music. An understandable place to start.

And maybe they are also encouraged to tour and play various festivals/showcases that don't pay any money, but are good exposure.

Then they are told to give away their recorded music for free to gain fans. Not such a great scenario, but what are you going to do?

Then they are told to blog, twitter, YouTube, and use multiple other forms of online communication to develop a relationship with their fans.

I'm sure they will be told to do even more once the tools are available and it becomes the norm.

That's why I've been touting the joy of just making music that you want to make and not worrying about whether you can make a living from it. If the fans find you or if you enjoy seeking out fans, great. If not, you've at least created something that meant something to you.

So this is what I want to discuss further:

What is it about music these days that encourages people to think they have potential careers as rock stars or famous recording artists? Just because people can sing or play an instrument, form a band, record some music, and put it on MySpace, why do think they can make a living touring the country playing music?

When you shoot a photo, do you think about becoming a professional photographer?

When you learn a sport, do you assume the next step is a career in professional sports?

If your daughter takes ballet lessons, do envision her joining the New York City Ballet?

Do so many people think they can make it in the music because they view it as a profession that doesn't take all that much talent and/or training? Whether or not that is the case, and even if all it takes to make it big in music is the right marketing, the reality is still that relatively few musicians (other than those who teach or have music-related salaried positions) will make their living solely from music.

I don't want to discourage people from playing music. But I do want to encourage more people to embrace music as a form of self-expression and as a way to bond with friends, family, and neighbors rather than as a source of income.

Toward that end, I'll toss out these points:

1. Financial success and talent are not necessarily linked. Music discovery is still imperfect. The system does not automatically find and reward those who write the best songs or who are the most accomplished musicians.

I'm not saying that to reinforce the idea that you've intentionally been overlooked by a rigged system. Too many musicians already think that and they stew in their own bitterness. Rather I am suggesting that the music you create ultimately needs to be its own reward because it may not produce huge income or audiences for you.

2. You don't have to land a record contract to be validated as an artist. Until very recently, unsigned artists didn't get much respect. Now there are enough successful unsigned artists that anyone can say it's a personal choice, not a lack of talent, that keeps them unsigned.

3. You don't have to be a full-time working musician to be validated as an artist. Juggling music and another job can be very difficult, especially when your day job ties you to a schedule. Therefore many musicians hit a point when they wonder if they are being held back by not devoting themselves to music full-time.

But as the Hypebot discussion illustrates, a lot of what goes into a music career isn't playing music. It's doing all the marketing, promotion, booking, and other tasks that go along with turning music into a paying job.

Consequently, it's possible that you might actually play more music if you have a non-musical day job that pays the bills and therefore you aren't depending on music for income. If you don't expect music to be profitable, you can dispense with the business side of music and just create and play. It can be very liberating.

4. Artists who choose to stay local or regional may have very good reasons for doing so. Don't dismiss them as less talented because they aren't touring the country. Don't assume they have remained local because they weren't good enough to tour. A life on the road is not what everyone wants, particularly for those with kids in school, for those with day jobs they don't want to leave, and for those who are heavily in demand in their home markets.

5. Don't get caught up in the fear of overplaying. Don't listen to those who tell you you can't play in the same market very often. If you want to play every weekend and you have a place to play, do it. Don't assume you can only play once every three or four months. Limit your local appearances only if that's your choice or because you can't get more frequent gigs. In other words, play as much as you want to.

6. Local media and fans, please support your local music scenes. I think local media and local audiences sometimes reinforce the "rock star" mentality. Too often they discount local talent until it has gone national.

Therefore, don't fall into the trap of thinking local is second-rate. It may not be. And if it is lacking, spotlight what is good, and find ways to encourage more talent and opportunities to improve your local scene.

Local musicians are part of your community; they make it a better place. You don't want to live where no one plays music, so create an environment that is conducive to them.

7. There's a long tradition of playing for friends and family. You don't have to build your music around music venues, which can be in short supply. Play in your homes, schools, churches, or wherever you can find some space. You don't have to play so loudly that neigborhoods don't want you there. Unplugged jams are cool. And to get more people involved, encourage them to join in some fashion.

In summary, the music business requires more than just making music. If you just want to make music, do it, don't apologize for it, and don't count on it to pay the bills.


While I was writing this article, I came across this blog post, which I think is relevant because it deals with the realities of music as a career. It's written by Chris Sligh, who was on American Idol Season 6. He's giving advice to the top ten finalists from Season 8. Here's an excerpt:

Leave home and live WAY below your means. Move to a music city. L.A., New York or Nashville. Move there immediately. Don't wait for a record deal, because chances are you'll never have a record deal. Oh and when you move, get a crappy apartment that is cheap, cheap, cheap. You're not a rock star. You're a wanna be who happens to be more famous than most wanna bes are. Get a part time job with flexible hours that will help pay your bills...your tour savings will fly out of your bank account faster than you realize. $200k or whatever looks like a lot of money until you have to spend it. You need to finance your lifestyle and though a few gigs will pay big bucks most won't. So live WAY below your means. $200k now doesn't mean you will make remotely close to that next year. ...

Freaking love what you do. When you don't love this anymore, when the pain of travel and the hurt from non-success hurts more than the joy you feel when you rock people live, quit. Go get a "real job". Love what you do. Do what you love. Period. "To the Idols: A Realistic look at your career prospects," From My Mind To Your Eyes, 9/19/09.

Suzanne Lainson
@slainson on Twitter

The People Formerly Known as Fans

What the Internet and digital technology have given people is empowerment or at least a sense of empowerment. When it comes to music, the tools are there to allow people to make and record their music, upload it to the Internet, sell it, give it away for free, create digital stores, and so on. You know the drill.

So everyone can be a rock star, or at least feel like one. That's changing the dynamics of the music business, though not everyone has caught on yet. People still talk in terms of artists and fans (e.g., tribes, direct-to-fan sales) on the assumption that there will be people who create music and those who consume it. Instead, I think music business futurists need to think about a world where "fans" have disappeared.

In 2004 Jay Rosen, a journalism professor at NYU, wrote about "the people formerly known as the audience." He was talking about the news media, but I think it applies to music and the arts as well. People are going to gravitate to those experiences which make them feel creative and empowered.

Here's another discussion about the concept, originating from a book by NYU new media professor Clay Shirky.

One path is called Shirky Avenue, named for Clay Shirky, author of Here Comes Everybody: The Power Of Organizing Without Organizations. ... On Shirky Ave. we find mass collaboration can lead to greater audience investment, and a potentially higher payoff in terms of purchases and donations. Who doesn’t want to own a piece of something they invested their time in? "5 Ways to Attract and Empower Your Crowd," Mashable, 9/2/09.

I added a comment to the article.

I've been trying to explore this from the perspective of art, theater, and especially music.

Social media is playing an increasing role in music, and more fans are getting involved with remixes, creating videos with music by various artists, designing t-shirts, and so on. Some have adopted the concept of Godin's tribe, with the artist/band being the center of the tribe.

But I see us moving beyond that, and I'm not sure the music community is ready for it. The tribe concept still promotes the idea that there is a creative person at the center, and a group of fans revolving around it. But I see more fans wanting to become the show themselves. So I think we may be moving toward the idea that, at best, the artist is the facilitator and doesn't own the creative object that results.

I'm not sure how many musicians are ready to step into a role where their biggest contribution may be to enable the "people formerly known as the audience" to become their own source of creativity.

Unlike journalism professors and community organizers, members of the music business haven't gone nearly as far into this discussion. When music people talk about new business models, they are still thinking in terms of "fans." While they may envision fans having more freedom to decide which artists they like, there's not so much discussion of the end of fandom. A music world without fans is a scary thing indeed for most who have invested time and money into music.

However, I ran across some insightful comments from two people involved in the creation of the Beatles Rock Band game.

“This is definitely legitimate art,” Yoko Ono said of Rock Band. “A lot of artwork that I’m doing is always audience-participation.” She considers the game in the same tradition as her 1964 book, “Grapefruit,” which sought to create communal happenings through simple instructions, on the theory that art gains meaning by being shared. ("A dream you dream alone may be a dream," she wrote, "but a dream two people dream together is a reality.”)

“The music itself has a very strong power,” Ono said, “but that’s not as powerful as what people put in there for themselves.” "While My Guitar Gently Beeps," The New York Times Magazine, 8/16/09.

And:

And the future? “In 10 years’ time you’ll be standing there, and you will be Paul McCartney. You know that, don’t you?” He made a sound like a “Star Trek” transporter. “You’ll have a holographic case, and it will just encase you, and you will be Paul McCartney.” He paused and then said, “God knows what that will mean for me.” Then he added slyly, “I’ll be the guy on the original record.” "While My Guitar Gently Beeps," The New York Times Magazine, 8/16/09.

Paul and Yoko get it.

Suzanne Lainson
@slainson on Twitter

UPDATE 9/23/09

This is an example of where I think music is headed. All of those people in the audience who join in as part of the dance are not just passive fans. They have helped to create the moment and it has been recorded and is being shown in multiple YouTube videos.

Black Eyed Peas And Oprah Orchestrate A 21,000 Strong Flash Mob Dance

UPDATE 10/12/09

And that’s the great thing about games like “Beaterator” and apps like “I Am T-Pain” or “Bloom” and even games like “Guitar Hero” and “Rock Band.” They encourage us to think about music and, more importantly, to imagine ourselves at the center of it. They encourage us to do something we might not otherwise do — to try our hand at music making when perhaps making music seems like something only other people do. And as much as they may seem like trifling and sometimes silly little toys, they put modern music making within reach of us all.

As Timbaland says, “I tried to give people a game but I also tried to give people who love music hope of making their own music.” "Gaming our way to musical genius," Citizen Gamer, 10/12/09.

The Pop-Up Store Model

I like pop-up stores. They feel more like event marketing than retailing. The concept has been around for a few years.

Pop-up store articles at trendwatching.com

Pop-up store articles at Cool Hunting

Lately I've seen a new round of stories. For example:

"Pop-Up Stores Help Brands Build Buzz," Advertising Age, 8/31/09.

"Pop-Up Stores Help Brands Pop," TheStreet.com, 8/26/09.

"London Artists Turn Empty Commercial Space Into Galleries," New York Times, 9/1/09.

"Summer's Top Pop-Up Shops," Forbes, 6/5/09

"High-end retailers 'pop up' then go bye," Marketplace, 5/27/09

So on that note, I'll suggest that you think of your merchandise table as a mini-pop-up store.

The concept isn't totally transferrable, I know. I've sold merchandise at shows. Often you have very little room at the venue. And even if you do, you may have very little room in your car or van to transport merchandise and displays. And even if you can deal with those issues, you may have to hand over your merchandise sales to someone at the venue, therefore giving you little or no control over the display.

Still, I have experimented. For one artist I wanted to move into a full line of clothing. She played a lot of outdoor festivals, so I went looking for a clothing rack that was collapsible and was also sturdy enough to stand up to wind. I did find such a device at an online store that sells them to salesmen who are always on the road and need to set up sample displays. But the artist quit using it after a few months because it was heavy.

Even if most merch displays are bare bones out of necessity, I'll toss out some examples to get people thinking about creative retailing in small spaces. Here are three music related pop-ups:

... downtown’s Regent Theatre is currently being turned into a pop-up record store named Third Man Records, after White’s Nashville-based record label and permanent store there. According to White's manager, Matt Pollack, the store will house various sorts of Third Man Records merch, included limited-edition goods. "It's an opportunity to bring his label and music to the masses," Pollack said. "Jack White's pop-up record store: Get in line," Brand X | Los Angeles Times, 8/25/09.

... the pop up shop's upscale interior outfitted with mohair sofas, suede walls, custom zebra wood cabinetry, a 46-inch flat screen TV, stereo system and a custom gaming zone, is designed to transport the customer into the Jay-Z and high-end Rocawear lifestyle. As part of a campaign to present the Rocawear lifestyle in a slinky setting and to upswing the profile of Jay-Z's brand, the mobile lounge showcases the new premium line of apparel for Rocawear. "Rocawear Mobile RocPopShop," Cool Hunting, 4/09.

The store gives customers a chance to see and feel limited-edition boxed sets, silkscreen posters, fine art photographs, and other merchandise in person rather than rely on the thumbnail images and sound samples that are the currency of the digital domain. "Rhino Pop-Up Store Returns to Retail Roots," Promo, 12/27/07.

There are quite a few companies that make large displays for booths, smaller displays for tabletops, and very portable displays for traveling salespeople. In most cases what they sell is going to be too bulky and too expensive for musicians. But perhaps looking at their catalogues will give you some ideas. Here are a few places to check out. It's by no means a comprehensive list.

Everything Displays

ExpoDepot.com

Displays2go

It's best to experiment before investing too much money into merchandise displays. I've seen a lot of attempts at creativity abandoned after they've been hauled around a bit. Focus on something that is relatively lightweight, can be folded or broken down, and is very sturdy. Also, if you have to prioritize, efficiency is better than looks. It's more important to have a system that keeps your merchandise organized and easy to grab in a hurry and in poor light than one where all your storage space is devoted to a fancy display.

If you have already created a functional and creative music merch set-up and you want to share it, post a link to a photo in the comments section.

Suzanne Lainson
@slainson on Twitter