Name: Alex
Posts by Scratch:
Empowering Artists – Digital Utopia
March 5th, 2010
Having just read a brilliant article on the new ‘landscape’ emerging in the music industry, it got us thinking about our last blog… ‘what do record companies actually do?’
Our theory – with the collapse in cost and access to production and promotion facilities, record companies are basically Venture Capital firms with a bit of marketing prowess.
Where does that leave us (Music Balloon)? To nurture the Artist <–> Fan relationship and give fans a way of exploring and following music they love. True fans that is. Those that prefer not to accept the content thrown at them by radio stations; people who love music. Sit back at home and actually listen to an album. All the way through. And then want to stay connected to that artist and that type of music. And then find new stuff all over again.
That’s what technology can give us these days. Not just leaving us to walk into a warehouse full of music, whether it’s online or on the high street, and start searching at ‘A’.
Through 5 million artists.
Your music collection starts to gravitate around artists beginning with ‘A’. And Aerosmith gets boring after a while. As a fan and as an artists, technology can give a sort of relevance to music. A bit like it was when you picked up an LP or a CD. But that LP finds you.
Shit, it’s exciting.
Do record companies need to be involved? Who cares? I guess so if they’re gonna support and invest in artists’ careers. We’d prefer it if, instead, artists had good managers and didn’t give away 85%+ royalties.
What we can do at Music Balloon is actually empower artists in ways that iTunes, Spotify and the like, don’t. In the way that Amie Street, Topspin and MySpace do.
And we can stop using words like ‘monetising’, ‘content’ and ‘platforms’. We can start with a utopia of love, passion and music. It feels like the 60’s all over again.
What do Record Companies actually do?
January 6th, 2010
One thing’s clear, they’re doing a good job of pissing off their customers. STOP PISSING OFF YOUR CUSTOMERS AND STOP SUING PEOPLE. Joel Tenebaum has reopened the court case that made him pay $675K to Sony BMG for illegal downloads. Give the money back to him if you’ve got a brain, Sony. Don’t you see that if you’re nice to us, we may actually start buying from you again? Just except that you didn’t have a good enough handle on the digital market in the Naughties. Start spending your money innovating with your artists’ content and developing new products, not suing your customers. Live in the present, not the past. The Music Industry is still in turmoil and it’s product innovation amongst other things that will save it, not biting the hand that feeds. That’s from a fan’s perspective, anyway.
But more importantly, this question hits right at the heart of an artist’s livelihood because these Companies take complete control of an artist’s copyrights and only pay them a small fraction of royalties in return. So they should expect a lot. Looking at the big four Record Companies around today, (EMI, Universal, Warner and Sony BMG) some of the things they do for artists are still useful. But many are either unnecessary or out of touch with the public.
At their core, these Record Companies collect an artist’s copyrights, foster and promote the artist’s wares, make money from these wares and give the artist a royalty payment (normally 10-20% of the total money made on their wares but only after recoup).
The Record Companies used to do a lot during this process. They used to have a lot of power and influence over a very complex industry:
In the words of Branson,
“Virgin Records funded recording sessions, manufactured the product, distributed it to shops and then marketed the band and the music. We would give loans and advances for touring, for making promotional videos, for equipment, props and lighting. We would also advise and look after the careers of our musicians and handle the accounts and the sales.”
Their justification for small royalty payouts were also because they used to operate like Music Venture Capitalists. They’d invest a large amount of money in five acts in the hope that one of them would break the big time. They knew that more often than not most of them would go nowhere, that one of them may just about recoup… but they made sure that one of them would be an international super star. Not foolproof, but the one that hit the big time would justify the time, money and effort investing in the four that never really went anywhere.
Their investments may have been £100K+ per artist but that was fine because that one superstar artist would bring in £1m+.
This was great for music, the artists and the fans; big names would break, smaller acts would earn a living, fans had choices and the Record Labels would make enough money to pay its Execs well and move on to the next batch of hopefuls.
Fast-forward to the 21st century and things have changed. Big time. The big four Record Companies are too big. They stopped focusing on the music and focus too hard on their shareholders. The value of the services they used to offer have, in Branson’s words, “mainly disappeared” and the Labels won’t invest much money in an artist until they’ve proved themself. They operate as Indie Labels but charge the artist so much more.
And I’m talking about the big Record Labels here, not small Indie labels.
Does it not seem ridiculous that while the role of a Record Label is diminishing, the percentages paid from the Labels to the artist HAVE LARGELY STAYED THE SAME. If you’re an artist, think about that for a minute.
Record sales are down, the Record Company does less and is less useful but the percentage that you, the artist, are entitled to FOR THE MUSIC YOU CREATE stays the same. In most cases they have actually decreased. If you’re about to sign to a big Label, you’re about to give away your copyright in exchange for a huge chunk of future money and control. In return you should expect to get loans, advances, management, promotion, videos from the outset.
If it’s just management you want, step back. Decent band managers only take around 10%. If you want a bit more, small Indie Labels can be useful but try not to give them your Rights.
If it’s promotion you want, think smart. Use MySpace, Twitter, Facebook. Get on Last FM. If it’s distribution you need, go onto TuneCore and pay them $10 per month to store your music. They’ll pass it on to retailers like iTunes and Rhapsody.
If you write your own music then register with PRS. You should do this anyway, but you can also sign up to an Indie Publishing House.
You can start releasing tracks when you want and how you want, straight to your fans. This is the modern way of doing things. We now live in an age of the real-time web. You shouldn’t get pressured into making an album-worth of music just cos it makes them more money. That’s the old way of doing things.
Make friends with musicians who are further in their career than you and ask if you can tour with them.
If you want a day in a medium size studio it will cost you £1-2K (UK or US). Choose the right one and you’ll get a pro. You’ll get tonnes of advice and hopefully a good sounding couple of tracks to give/sell to fans. That’s more great promotion
I know there isn’t somewhere you can do all this under one roof. Trust me, I’ve researched this… it’s the very premise of Music Balloon. It’s why we think it’s so relevant. So until something like Music Balloon takes off, just get out there and use the resources available to you and HANG ONTO YOUR COPYRIGHTS!
I’m not the only one who thinks this. Branson goes on to say,
“If I was a happening band on the cusp of success today, I wouldn’t go through a conventional Record Company.”
This guy started off his empire with a Record Company!
He goes on to say,
“I’d gather a small team of people around me and release [my own music]. I would consider getting together and sharing distribution, advertising and marketing with like-minded musicians and marketing people. Promotion is as easy as setting up a page on MySpace, Facebook or other social networking sites.”
Amazing that a man who turns 60 this year has such a relevant vision of the future. But he’s a man who’s used to change. In the 20th century, successful artists had it pretty easy. But they gave a lot away to have it easy. And the guys they gave it away to did a lot for them.
As we enter a new decade, it feels like we’re moving away for the overly-marketed, talentless pap that pollutes our radios, mainly because the Record Companies can’t afford to fuel it anymore. Live music and touring are massive again. It’s about being free to create music and promote music in the way you want it to be promoted. You don’t need big Record Labels to do all this for you. Think about the music. You no longer have to sell out to radio stations or do adverts for price-comparison websites, instead you can carve out your own niche. You can talk direct to your fans through stuff like Twitter instead of relying on journalists to tell your story… and if the passion and talent is there, you’ll have a great following in no time.
Until Record Companies stop ripping off their aritsts and suing their fans then the limited value these guys offer is offensive. While we wait for them to innovate with content, copyright management and promotion I suggest artists go ‘Direct to Consumer’. I know as an artist all you want to do is create great music. Musicians back in the 70s and 80s had it much easier because a Label would do so much more. It was worth handing over your royalties. But right now you’ve got to follow up your passion with a bit of nous. Be a bit shrewd. And don’t worry too much, as they the Record Companies continue to falter, a far more relevant, leaner, fairer and more transparent type of service will start to emerge for artists that will make your lives easy again.
Alex and Steve
www.musicballoon.com
(Branson quotes taken from ‘Business Stripped Bare’, 2008)
Birdfeed is becoming Music’s new staple diet
November 26th, 2009
The real-time internet (e.g. twitter feeds, you tube etc.) might be giving the music industry the life-line it needs to survive. But it’s going to be a rocky ride for most.
Music is alive and well, the industry that supports it is not. The way artists are now expected to distribute their music, or more accuratly their musical experiences, has changed and the rule books are still being written. Behind the ususal ranting, Bob Lefsetz makes this point very well, “if older folk still buy music and younger people steal it, why did John Mayer sell almost twice as many albums the first week out as Bon Jovi?” I like both artists. However, I subscribe to John Mayer’s twitter feed, I listen to him on Spotify and I will probably buy his album in the next week. On the other hand, Bon Jovi are living in the 90’s and just want to sell their music wrapped around some artificial showbiz story that’s been pre-fabricated by music execs. And it’s so obvious.
John Mayer comes across as human, Bon Jovi come across as corporate. Selling music on the real-time web is all about revealing your human side and not an editors cut. If I were a talented artist (if only) I would embrace this whole-heartadly. You aren’t going to make it in the music industry without intrusion into your personal life but suddenly your handed a lot more control; your die hard fans, your life-blood, still want to know every intimate detail about you but you can now share these details your own way. For years the Media have been able to manipulate ‘your story’ in any way they feel sells more records or sells more news stories. Now, artists have a chance to tell their story, their way. Artists who are twillionaires, have over 1m twitter followers, now have the kind of reach to their followers that outstrips most magazine or newspaper circulations. Suddenly, PR agencies, record labels and magazine editors aren’t as useful to thses artists any more. And the good news is that even those not fortunate enough to be ’twillionaires’ can prosper.
This myth that people won’t pay for music is pure nonsense. The business model is simply changing. It’s no good simply taking a CD and putting it on the internet. We live in a new age of uber-connectability and instant access. Fans aren’t as fussed about owning vast record collections, they want access and will pay for this access either directly, or indirectly through ticket sales and merch. At the moment, digital music is simply ‘too expensive to be free, too free to be expensive‘ but things are changing. It’s just not acceptable to think people will pay the same sort of price for an mp3 as they would for a CD. It’s pretty simple; back in the 90’s when I actually bought CDs I would choose to spend money on the CDs of artists who I wanted to know more about, if not I would be content listening to them on the radio. Translate that into the type of connection that can be made through the real-time web and the music industry is back in the game.
We are sitting on the edge of a new and exciting era in the music industry. The power is swinging back in favour of the artist over the record label and those artists who start using the tools of the real-time web will have more people at their gigs, more people wearing their t-shirts, more people buying their tracks and more people following their personal music experiences.
Alex and Steve
The Music Industry is still searching for sustainable answers to its digital headache
November 3rd, 2009
As part of our morning trawl through Google Alert’s digital music digest there seems to be a new music streaming service popping up every day, offering free access to music with ‘millions of songs’ in its library. At the moment, iMeem and Spotify probably lead the pack with Sky, Virgin, Mog, Skype Music, we7 etc. each offering some variation on the above. They are based either on subscription-based or ad-funded business models, or a mix of the two. Sometimes you even get some token free downloads thrown in. But as the market gets flooded with these new services, will their revenue streams ever be able to cover the royalties needed to pay the record companies?
Doubtful. Record companies have a history of being greedy bastards and as the number of services offering ‘free’ keeps on growing, as a cruel twist of fate the global advertising revenues that feed ‘free’ are shrinking. At Music Balloon we’re biased – we won’t rely on ad-revenue or subscriptions when we launch – but it’s part of the future of how we are going to consume music so it’s worth having a look at it in more detail:
As of June 2009, Spotify were running up £60K bills per day in royalty obligations alone and their advertising revenue was bringing in just £82K a month. (Music Week article, August 2009). That’s almost a £2mil loss per month before subscription revenue. Recent Guardian figures are even more alarming, estimating streaming costs could be as high as £6.8mil per month. Whatever the costs are, they are significant. Therefore, Spotify also have to rely on a subscription model to bring in the real money in return for an ad-free music listening experience but at the moment they are way off the volume of subscribers needed to make the maths work. Spotify is cool; they have already made a massive impact on changing the mindset of the music industry and as they launch in the US they can only get bigger. Bigger sounds expensive though. The record companies have a vested financial interest in making Spotify work, but we hope they make a success of ‘free’ in the long run; a lot more people are starting to listen and experience music legitimately and to see that fail would probably send these new converts back out to sea on their pirate ships.
So, although the maths doesn’t work the impact that these streaming services are having on the music industry feels good. Their underlying theory about more ubiquitous music is capturing fans’ imaginations but for long-term success the financials also need to add up…
That means the ad-supported model becomes one piece of a much larger puzzle. They introduce and promote music to a fan-base but when that audience is offline or on holiday or like me, get huge enjoyment from building a music collection, actually owning some kind of experience with the artists becomes more important. And delivering an experience is key. The industry really needs to innovate with this in mind; the over-priced iTunes LP format is now building an even bigger toll-bridge between artists and fans – can digital music really get more expensive! An innovative, new download experience has great potential for artists, fans and even labels as the second stage to a ‘free’ streaming service… any ideas welcome, we’re launching ours in January next year.
Alex and Steve
www.musicballoon.com
Music Balloon gets ready to launch Jan 2010
October 22nd, 2009
Musicians, fans and friends,
The idea of Music Balloon was born one evening in April 2009 when Steve and I were throwing around business ideas in the pub after work. We were excited about music and the changes happening in the industry. We could see that more people than ever were enjoying music but the industry itself was loosing touch with the musicians and their fans. We had an idea for a business that would do two things: put the fun back into discovering new music and look at the industry from the artists’ and fans’ perspective. We did our market research and off the back of that we both quit our jobs in Summer 2009 to go commando – we were actually going to start Music Balloon.
It’s been a crazy few months and from where we stand now, we are set for a beta launch in January 2010. We wanted to start a blog to keep people updated about what’s going on pre-launch in the Music Balloon world, share our controversial opinions about the music industry and hopefully spark some debate to get people engaged. We’d love you to interact with us by either leaving comments, linking to us from your blogs, contacting us in person or just following us on our journey. Starting from the beginning of November, if you’re an artist you will be able to leave your details on our website and become part of the Music Balloon from the very beginning. It’s a rapidly changing time for digital music at the moment, get involved!
Music Balloon loves unsigned and Indie artists. It’s an online platform for digital music. Some stuff that we offer – the killer 3 or 4 ideas that we came up with that night in the pub – can’t be discussed in detail here because they are our ammo against the big boys. We’ll tell you all about them as we get closer to launch. But the principles and opinions that steer the Music Balloon can be discussed here. There are some industry experts out there who get these principles and opinions and we respect them – for example David Kusek and Gerd Leonhard who wrote The Furture of Music in 2005, Radiohead, Mojo Nixon and co. who continually push the boundaries of how they get their music to their fans and the Featured Artists Coalition – but so many in the industry don’t. Is it right for the music industry at large to make Internet Service Providers’ responsible for illegal file sharing or should the over-protectionist record companies be more innovative with their royalties? Should music be free or should it just not be so damn expensive? The likes of Spotify (Europe), MOG (US) and Google Music (mainly China, for now) have catalysed the record companies into doing something new. That’s great but the digital music evolution has only just begun.
Please join us, follow our journey and leave comments and questions when you feel like it.
Alex and Steve