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Don’t just monetize, maximize.

May 4, 2009

POSTED BY TONY VAN VEEN

There’s no shortage of information online about how to monetize your music: sell CDs in stores and online, downloads, merch, synch licensing, live gigs, etc. There’s not nearly as much written about how to maximize your revenues once you’ve made use of the above selling opportunities. Here’s a quick list of some common sense things the average artist can easily implement (and which will show instant results):

1) Be ubiquitous:
Common sense, but too often poorly executed. Pursue as many sales channels as possible: go direct to local record stores, traditional distribution (good luck with that one…), online (CD Baby offers the widest selection of online download stores, including iTunes, Amazon, to smaller partners in territories as far-flung as Armenia). Besides sales channels, you also want to pursue as many ways as possible to get your brand name out there. Besides your own web site and the big social networks like MySpace and Facebook, that means setting up profiles and a presence on other social or music sites like iMeem, iLike, Bebo, and any other site with a music angle. Then be an active participant, so your presence is a reason for fans to visit your site(s).

2) Don’t fear free:
Let’s face it, people don’t know you or your music. You have to push yourself on an unsuspecting audience. Free is the way to do that. Give away your music online. Put it on peer to peer networks. Allow fans to redistribute it. It may not look like it’s contributing to your revenues, but it’s building your brand. And if you selectively make some content available for free and sell other content, the free content will drive revenues.  Little Wayne gave away hours of content on mixtapes and online before blowing up and having the biggest selling album of 2008.

3) Build your list:
Most every activity you pursue should include a component meant to build your list. To put it bluntly, names on your list are sales leads. They’re prospective customers. Sure, you may call them fans, but really, you want them to be customers.  So make it easy for people to sign up at your web site. Have table tents at gigs that folks can fill in. When you’re onstage, tell people in the audience to email you from their smartphone (or text you) to be added to your mailing list. Offer an incentive: offer visitors to your site a free song download in exchange for their email address (and capture at least their name and zip code too, so you can email them when you’re in their neighborhood).

4) Retain mindshare:
What’s likely to happen right after someone signs up for your mailing list? They’ll forget about you! If you want to turn prospects into customers you need to remind them you’re still around. Do so by sending interesting, funny, engaging emails to your list periodically. Make them personal. Pretend you’re writing to one person, not 200, or 20,000. Use their name (any email program with a mail merge functionality will allow you to do this). Don’t just send “buy my music” emails. They’ll quickly end up in the spam folder. Share stuff of interest – about your tour, recording, band issues, political commentary, you get the drift. But communicate regularly – I’d suggest at least monthly – so your fans don’t forget you.

5) Build a deep product catalog:
The formula is simple: more products to sell = more sales revenue opportunity. So don’t just sell your latest CD. Sell ALL your CDs; don’t let any of your titles go out of print. Fans at your gigs may be tempted to buy more than one disc if you blew them away. Offer shirts (various designs if possible), hoodies, posters, other items. Once the fan is at your table you can try to upsell them on multiple items (more on this later). Sure, inventory costs money, and not everyone will buy every item, but you don’t need to produce large quantities today, and they’ll quickly pay for themselves.

6) Work your iTunes strategy:
iTunes is the biggest music store in the world. That means that your likely buyers are probably shopping there. It also means that there are many chances for other iTunes shoppers to accidentally stumble across your music. Publicist Ariel Hyatt recently posted a great article about how to use a simple iMix strategy to gain visibility for your music. CD Baby founder Derek Sivers suggested many years ago to record cover versions of moderately famous songs so that if someone searches for that song your version will show up alongside the original version, driving occasional incremental revenues for you. A derivative suggestion is to write your own original songs, but give them names identical or similar to well-known songs so they show up in search results. Finally, use multiple iTunes accounts (and encourage your fans) to write reviews of your product on your iTunes product page.

7) Tell customers what to do:
If you tell people what to do, it’s amazing how many of them actually do it. When you’re on stage, ask people to sign up for your mailing list, tell them you have merch for sale in the back, and invite them to stop by and check it out. You’ll see, if you start doing this your revenues will increase. Heck, feel free to ham it up: “We’ve been on the road for three weeks straight eating spam from a shared can. We have a merch table in the back and would love it if you bought a CD so we can upgrade to White Castle tonite.”

8 ) Offer specials and incentives:
Everyone loves a deal. One of the most popular and effective ways to sell more at gigs is to bundle products together and offer a discount. CD: $10. T-shirt: $20. CD + shirt: $25. Trust me, it works. If you have old CDs you can’t get rid of, offer your fans a free copy of the old disc if they buy your new one. Offer a free poster or button with purchase. Some major artist like Prince have even used a “free CD with every concert ticket” strategy to sell tickets and fill venues.

9) Make it easy to buy:
Sounds obvious? Then why aren’t you accepting credit cards at your gigs? Go to http://cdbaby.net/swiper to get yours. Artists accepting credit cards at gigs report that sales double or triple in many cases. Also, on your web site have a clear, prominent call to action with a “buy CD or download” link that fans can’t miss.

10) Take away the fear of buying:
Many new fans are hesitant to buy a CD from an artist they don’t know well. Start with a professional looking CD, which instills buyer confidence. But perhaps the best way to take away the customer’s fear of buying your music is to make the purchase of your music risk-free by offering a money-back guarantee. Put this in your e-mails! “Buy my CD. If you don’t love it… please return it to me in 30 days or less, and I’ll refund your full purchase price.” Two things will happen: You’ll sell WAY more CDs, and you’ll quickly find out just how good your music really IS. BTW, most people aren’t crooks who will copy the CD, and ask for their money back. Some will, but most won’t. People like to support the artists they come to see. They may not support the labels, but they do support the artists they like. You’ll also find that a lot of people who intend to ask for their money, never get around to it. People love to procrastinate.

11) Work your ass off:
No one is as invested in your career as you are. It’s fun writing and performing music, but the business side (what I’m writing about here) is not nearly as much fun. Yet, executing the business side well is the biggest driver of revenues (and success) in the biz. Since you have the most at stake, you should do most of the work. At night. On weekends. After your day job. When you’re tired. The reason most artists fail is because they don’t have the discipline to execute the business side consistently well.

So there you go. 10 simple tips to execute, and one hard one (#11) that can cause all the other 10 to crumble like a house of cards if you don’t do it. Got any other suggestions  for maximizing the revenues from your music? Feel free to add them.

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Hare-brained idea of the month: The cable company charges me for music I didn’t consume?

March 9, 2009

I recently was a panelist at the Digital Music Forum East, and was struck by how many digerati proposed – with perfectly straight faces – a scheme where your Internet Service Provider would charge you extra each month (a modest sum, like $2 a month) for your music consumption. If the majors got their wish, the proposal went, all internet users would pay this $24 a year extra. This $24 for each of the hundreds of millions of users would be put in a big giant pot, and be divvied up among the labels according to whose music was pirated the most. In fact, there were representatives there from Isle of Man who are testing just such a scheme on their tiny British protectorate, and they were virtually hailed as saviors of the music industry.

 

And while the industry is fawning over this great concept I wonder “am I the only one who thinks this emperor has no clothes?” I mean, c’mon people.

 

A welfare program for the labels

Hundreds of millions are collected, and distributed to labels for music they didn’t sell? Sounds like a welfare program for the largest labels in the industry. No wonder the labels love it (in fact, they’re big boosters of this scheme, which should tell you something). But will indies get any money from this kitty? I’m sure all the experts will say we will, but what’s the mechanism for tracking independent music traffic online? And for distributing the royalties to independent artists? In this feeding frenzy of elephants, the mice will surely get trampled.

 

This concept – essentially a tax on a product or service that allows for illegal consumption of intellectual property – has been tried before. Remember the discussion about taxing blank cassettes, blank video cassettes, blank CD-Rs and DVD-Rs, all tools that also allowed for unauthorized copying? Yet every time these initiatives failed. So will this internet music “tax.”

 

Sure, the ISPs will fall right in line. Right.

Then there’s the minor detail that we still live in a competitive marketplace, with multiple ISPs serving each market. No ISP is going to want to price themselves out of the market by charging substantially more than the competition. Sure, they can raise the rate even more and make themselves a profit on this music “tax,” but inevitably some ISPs won’t participate, trying to grab market share, and basically killing this program.

 

Honest consumers subsidizing IP thieves?

The difference between a tax on CD-Rs and this internet music “tax” is this: with a CD-R you can only do one thing: copy content on it. Much of that content is legal, and some of it isn’t, but copy you must. (And even the CD-R tax scheme failed.) But your internet service allows you to do many things besides download music. In fact, most internet users don’t download music at all. They just use email and surf the web. When the music fee gets applied to your internet service and you’re not a music downloader, you’re not going to be happy. ISPs don’t want to piss off the majority of their customers, I can assure you. (Oh, and did I mention this is not the ISPs’ problem to begin with? The labels have the problem, and they’d love to make it the ISPs’ problem.)

 

A license to steal

What happens to the psyche of the basically honest music consumer who buys most of their music from iTunes or Amazon when they now start paying this internet music “tax” for music they didn’t download? They turn into pirates! Take me, for example. Since I make my living in the music industry, I pay for all the downloads I acquire. However, if I need to start paying my ISP for music consumption, you can rest assured I’ll start looking for free downloads. And hence, in one fell swoop do the labels assure that the whole country will stop buying music online, and will instead start looking for free music. That’s not good for iTunes. Or Amazon. Or the industry in general.

 

So let’s get past this hare-brained idea for once and for all. In case the labels hadn’t figured it out, the internet is here to stay. You can’t get this download genie back into the bottle. All you can do is offer enough value to your customers that they’ll want to pay for what you have to offer them. And for the slow-moving labels, this is a concept they’ve only recently begun to grasp.

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What’s next for independent music retail?

February 18, 2009

I was talking to the CEO of a well-known music distributor the other day, when the topic of the future of independent music distribution came up. He lamented to me that his business was down 25% in the fourth quarter of 2008, and continues to be down this year. He’s not alone.

 

Most music retail chains are having problems paying their bills – Q4 saw massive returns from retailers to distributors(for credit) so they could afford to take in new titles.  Many record store chains have already gone belly up. Circuit City, long one of the country’s leading CD retailers, is out of business. Borders is reducing floor space for music by 70% over the next 90 days. One of the few healthy chains left appears to be Best Buy…for now.

 

These retail woes have repercussions up the distribution chain. Distribution giant Alliance announced in January that it was laying off over 400 and shutting down a warehouse. Circuit City owed them some $16 million. Gulp.

 

In the face of all this bad news, everyone gets more conservative. Less acts signed, less product into distribution, less product at retail; what’s an independent artist to do?

 

The only record stores that appear to still be doing well fall in one of two categories:

 

1) The specialty record store. Usually a single store in a niche market, the specialty store caters to a local clientele. There are clerks who know music and can turn you on to cool new stuff. And perhaps most important, they sell other products besides new CDs – used CDs, T-shirts, DVDs, posters, bongs, magazines… They’ve diversified within their very narrow niche. Artists can get into these stores, but usually by going direct, and only in regions where they are local.

 

2) Online stores. Amazon is the big daddy, and CD Baby is the most prominent one for independent artists. These stores sell physical product online, as well as downloads, and other items. Anyone can join these stores, though Amazon requires a retail ready, barcoded, replicated CD, while CD Baby’s more artist friendly approach accepts any kind of CD.

 

Is it still possible as a growing independent artist in 2009 to get your product into bricks & mortar distribution? Unfortunately, the answer is probably no, unless you have a track record of 5 to 10 thousand CDs scanned and sold of a previous release. Distributors, with lower sales than ever, are less likely than ever to want to take a chance on a band they don’t know. Rather than think “they might sell,” they think “I’ll get returns.” And can you blame ‘em, really? After all, retailers are reducing floor space so severely, that there is no place on store shelves for up and coming bands.

 

So here, in my opinion, is how the future of CD distribution looks for independent artists:

·         Physical distribution to bricks and mortar goes away. No distributor with nationwide reach will want to take a chance on an unknown act. Artists will realize the futility of physical distribution through traditional channels, and stop aspiring / hoping / dreaming of a distro deal.

·         CD sales direct to fans at gigs will continue to be a major revenue generator for independent artists for years to come. Catching a fan when they’ve just experienced a great show is still a strong sales driver, and will always be.

·         The main nationwide CD distribution opportunity for independents will be online. A couple of megastores like Amazon will thrive, as will niche players like CD Baby (100% independent), and other stores in certain narrow verticals (specific genres or interests).

 

Of course, digital is where all the growth is these days, but I can’t help but think that this viscious downward cycle we’re in is creating a rapidly accelerating self-fulfilling prophecy that the CD is dead at retail – and thereby prematurely killing an important revenue stream for artists.

 

In fact, my distribution scenario above is already playing out across the U.S. and Europe. It’s just that the old dream of nationwide distribution dies hard for musicians.

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Push versus Pull: why independent artists need not fear online piracy.

February 13, 2009

While many artists have enthusiastically embraced the internet and its ability to distribute their music for free to unsuspecting listeners, I still run across a surprisingly large contingent of artists who adhere to the myth that if your music is shared for free on the internet, that’s a bad thing.

 

I understand that you want to be paid for your efforts. However, it’s 2009, amigos. The internet and P2P genie is out of the bottle, and can’t be put back in. Free music is a fact nowadays, and every artist needs to realize that in order to make it as a full-time musician you need to make your money from a number of diverse activities including performing, CD sales, download sales, merch sales, and alternative revenue streams like synch licensing. The days of just sitting back and selling CDs are behind us. Way behind us.

 

The good thing is that free music is nothing to fear for an independent artist. The reason is the old economic theory of pull vs. push. Let’s give an example: When the next Jay Z album comes out, millions of fans will immediately fire up their PCs and look for it online – for free. That’s bad for Jay Z and his label, because many of those fans might have paid for the music if it wasn’t available online for free. This phenomenon happens because Jay Z has pull – there’s existing demand for his music. People know him, want his stuff, and are actively looking for it.

 

The typical independent artist doesn’t have pull. He (or she) is not known beyond a small circle of fans and friends. When their next album comes out, no one jumps online to grab it for free, because almost no one knows the artist! The typical independent artist can’t get airplay or retail placement in stores, so he instead has to rely on push – personally promoting and selling himself and his product. The main way most artists do this is by selling CDs at gigs.

 

But what is it that an independent artist needs most? She needs to become better known, because that means that they’ll be able to increase their income. And how do you become better known? By having people try your music. That used to be done through radio (yep, for free). Today it’s done through the web, and one of the most effective ways is by making your music available for download for free. Offer a free song on your web site. Make it available on peer to peer networks. “Yes, but someone might forward it to someone else,” you say. And I say: If someone likes your song, and emails it (or a link to it) to 100 friends who didn’t know you, what’s bad about that?

 

Rapper Lil Wayne had the biggest selling album of 2008 (Tha Carter III), with 2.88 million units sold. He built his reputation by giving away hundreds hours of recordings for free, online and on mixtapes and mix CDs. Free music helped make Lil Wayne a wealthy man.

 

So set yourself free. Embrace “free.” Use it to build your fan base. The revenues will follow.

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Why do musicians love to discredit each other?

February 4, 2009

Why are musicians so damned judgmental? As a group united by the tall odds against breaking through and making a living from their music I’d expect more tolerance towards each other. Yet when I read blogs and forums I notice artists quick to criticize, insult, and knock each other down.

There’s the “music for art’s sake” contingent that chastises anyone who approaches their music as a business. There’s the “I’m not selling, so I’m suspicious of those who are” group. There’s the “I’m talented but everyone’s against me” posse. There’s the ever-popular “all major artists suck” crowd. And the ones I understand the least are those artists who write and record songs, don’t perform or work their records, and then are angry (or at least surprised) that their stuff doesn’t sell.

And boy are they all eager to criticize each other. I don’t get it.

Everyone’s musical goals are different. And who are we to criticize how someone else approaches their career? Compare music to sports for a minute. The landscape is like a pyramid: There’s all sorts of athletes. The biggest group is casual sports participants aged 5 to 85, who pursue their sports for the love of it, and who have no dreams of doing anything but having a good time (and working up a sweat once in a while). Then there’s the serious amateurs who work it hard, play on teams, and try to develop their skills and performance on an ongoing basis. There’s the semi-pro athletes and entry level pros scraping by on what their sports careers pay them. And at the very tippy top of the pyramid there are a few hundred top pro athletes who are at the top of their game (and getting paid handsomely to do what they love). I don’t hear any of them criticizing the other groups as unworthy, or as only in it for the money, the way I hear with musicians.

There’s a good analogy between sports and music. There’s the weekend warriors who do it for the love of it. No performing, no recording, just having a good time jamming with some friends. There’s amateurs with day jobs who have recorded and perform live once in a while. There’s indies who work it hard and do regional tours, though they may still need to keep a regular job to pay the bills. Then there’s independents who can make a living from their music, either on their own, or on a label. And finally there are those major artists on a major label, who we see on TV award shows, MTV Cribs, and in the tabloid pages. Each artist does what feels right for them.

Music is personal. You pursue it for your own reasons, with your own goals and motives. It’s not for anyone to criticize that. If you want to drive more revenue from your music, work it harder. If you want to just enjoy it, be my guest. If it’s a way to provide for your family, great. So long as it works for you.

Remember, we’re all on the same side, fighting long odds against economic success in music. One artist’s success doesn’t take away one CD or download sale from you. In fact, the more independents are successful, the better it is for everyone.

Got any thoughts on why musicians are so quick to criticize? Post your comments here.

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The age of the independent.

January 31, 2009

I’m on my way back from Portland, OR, where I spent some quality time with the peeps at CD Baby. Recession or not, one thing is clear: plenty of artists have music they need to sell… and people are buying! CD Baby’s payouts to artists were up 28% last year, to a record $34 million.

 

The shift in the musical landscape away from plain vanilla, homogenized, processed, pasteurized music officially sanctioned by the major label machinery is clearly benefiting the independent artist. While industry CD revenues were down 14% in 2008, CD Baby’s artists’ share of the overall music market grew, not just in relative terms, but in absolute dollar revenues. It’s not a new phenomenon, but what happened to TV over the past 30 years has been happening to music for the last 5 to 7 years, and indies are winning.

 

Just like TV watching habits have migrated from the big three networks to hundreds of cable channels that cater to every human interest (not to mention the myriad internet-enabled video channels), musical listening habits have shifted from top 40 and rock radio that caters to the masses to the internet and satellite radio. With very few exceptions, terrestrial radio listenership has declined. Yet, overall music consumption has increased dramatically. Music is everywhere. On the radio, on your PC, in your CD player, on your turntable, on your iPod, on your phone. And it’s so portable that you can take your whole music collection with you wherever you go. (As I’m writing this I’m at 36,000 feet listening to Nigerian Femi Kuti kick out the jams.)

 

Mass marketers are noticing that the market’s interests are fractured and heterogeneous, not homogeneous, and they’re starting to cater to the market in more targeted, specialized ways.  This is good for independent artists. Your music is available at the same places where the major titles are sold: iTunes, Amazon, Rhapsody, and dozens of online stores (if you’re a CD Baby client, that is). And with new discovery technology like iTunes’ amazing Genius it’s easier than ever for fans to discover your music.

 

Radio is not even close to being the hit making medium it once was. Web sites like Pitchfork are just as influential in introducing new artists to the market, as are music blogs, playlists, and music recommendation technologies like Pandora.

 

So while the majors have been on the decline for the last five years, the age of the independent has officially just begun. 2008 was the first year that “going independent” lost its negative stigma for mainstream artists. Artists like Radiohead, Trent Reznor, David Byrne, and Paul McCartney released product directly to fans, bypassing labels (and reaping massively larger profits in the process). All of a sudden, major artists and their managers were discovering what independent artists have known for 20 years: if you release your own product and work it, the income opportunities (not to mention creative freedoms) are liberating.

 

That’s why Disc Makers launched Elite Artist Services in 2008. The company offers label-like services to major artists who are leaving their labels, including manufacturing, mastering, design, ecommerce services, download sales, national CD distribution, merch production, and more. The time is right, and the future is bright. Not for labels, but for the ever-growing army of independents who have seen the truth.

 

Are you in?

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Obama, Metallica, and you.

January 20, 2009

It’s only Tuesday, and already it’s been a great week.

We have a new president, and quite an exceptional one, it would appear. It is quite remarkable when you think about the challenges facing our country (President Obama has reminded us time and again that there are many) that one man can make such a difference to the psyche of a whole nation. I mean, despite being involved in two wars, the ongoing concerns about terror, and our economy shedding millions of jobs, there is great joy and hope across the country, not just today, but for the past few months. Barack Obama has singlehandedly lifted the spirit of this nation.

Imagine how different our collective outlook would have been if we had faced four more years of George Bush. Or even four years of John McCain. While I’m sure each of them is quite competent in their own right, neither of them has the ability to inspire like Barack Obama. Thanks to Obama, in the face of America’s greatest challenges in generations, our country is not just filled with hope, we’re filled with an unbridled optimism that even though things will be tough, as a nation led by our president we will battle through, and flourish when the economy inevitably turns around. Now that’s inspiration.

In an entirely unrelated event, I had the great pleasure of taking my 13 year-old son to his first Metallica concert this past weekend. I’ve been a Metallica fan since the early 80’s, and taking my son was a great father-son bonding moment. And while some of Metallica’s music over the past 10 years hasn’t excited me too much, their latest album has been outstanding. So, there, on stage, surrounded by 20,000 or so screaming fans, are four guys – about Barack Obama’s age (and a couple of years older than me) – rockin’ their butts off to an audience that ranged in age from about 10 to about 50. Hard to believe that they’ve been around for about 30 years already. And that they can relate to two generations of fans. And that without much radio airplay they became one of the biggest selling rock bands ever. And that they can still fill arenas.

What do Obama and Metallica have in common? And how can you tap into some of that magic?

Some would call it charisma. Certainly, in their own very different ways, Obama and the four rockers are charismatic individuals. But it’s more than just superficial. It’s charisma backed by a deep competence: Obama’s was proven by how he ran his campaign, and by how he’s managed his transition; Metallica’s by their songwriting skills, the way they crossed over, and their authenticity. Perhaps most of all, what they have in common is that they are deeply committed to what they do, and they connect with their audience.

Are you? And do you?

I’ve seen too many concerts where the band was just going through the motions. Where the artist wasn’t enjoying herself. Wasn’t consumed by the music they were making. Wasn’t establishing that all-important connection. And when I leave the concert I say to myself “It’s the last time I’ll see you live.”

I’m frequently asked what advice I have for bands who want to “make it.” While there are many pieces of advice to give, I’m going to recount one of the lessons Obama and Metallica have taught us: Make that connection. Let your passion show. And make sure that passion is built on a foundation of competence – of strong songwriting, recording, and performing skills. In short, be an artist of substance.

It takes work. And commitment. And knowing yourself and who you are and what you believe in.

But when you figure out the formula, your fans will thank you. And stick with you, maybe for generations.