Tag Archive for: money

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The Future of Music Book and Podcast

The Future of Music – by Dave Kusek and Gerd Leonhard

The Future of Music book is available in various forms.

future of music

 

You can buy the book on Amazon.

 

You can purchase the audiobook from Audible.

 

You can listen to the book on iTunes as a podcast for free. Go to the iTunes store and search “Future of Music” podcasts and subscribe.

Here are a few of the reviews.

Publishers Weekly
Two innovators in music technology take a fascinating look at the impact of the digital revolution on the music business and predict “a future in which music will be like water: ubiquitous and free-flowing.” Kusek and Leonhard foresee the disappearance of CDs and record stores as we know them in the next decade; consumers will have access to more products than ever, though, through a vast range of digital radio channels, person-to-person Internet file sharing and a host of subscription services. The authors are especially good at describing how the way current record companies operate – as both owners and distributors of music, with artists making less than executives – will also drastically change: individual CD sales, for example, will be replaced by “a very potent ‘liquid’ pricing system that incorporates subscriptions, bundles of various media types, multi-access deals, and added-value services.” While the authors often shift from analysts into cheerleaders for the über-wired future they predict – “Let’s replace inefficient content-protection schemes with effective means of sharing-control and superdistribution!” – their clearly written and groundbreaking book is the first major statement of what may be “the new digital reality” of the music business in the future.

5.0 out of 5 stars THE FUTURE OF MUSIC IS NOW
Gian Fiero (Hollywood, California)
This book is so brilliant that it makes the vast majority of music industry books that are being published seem irrelevant. It discusses in detail, the reasons why the future of the music industry is headed into the digital/mobile entertainment era. It also provides statistical information that professionals, marketers, entrepreneurs, and educators can use constructively. Both Dave and Gerd (the books co-author), have their fingers firmly planted on current music industry activities and trends. They also possess and display a clairvoyant eye toward the future that offers beneficial insight and foresight to those who may not be aware of what this whole digital (i.e. independent) revolution is about, and most importantly, what it will entail to prosper in it. The book is easy to read, easy to understand and simply brilliant. If you buy just one industry book this year, this should be THE one. Buy it now!

5.0 out of 5 stars Indispensible
Stephen Hill “Producer, Hearts of Space” (San Rafael, CA USA)
A stunningly candid source of concentrated, up to date insight about the music business and its turbulent transition into the digital era. This book tells it straight and will make the dinosaurs of the music industry very unhappy.

Like Martin Luther’s ’95 Theses’ nailed to the door of Wittenberg Cathedral, Kusek and Leonard drive nail after nail into the sclerotic heart of the old-fashioned music business. Their rational vision of the future of music rests on the idea of unshackling music from the hardcopy product business in a yet-to-be-realized era of open content licensing, facilitating sharing and communication among users, and growing the business to its full potential.

It provides as clear a vision of the future of the music industry as you will find, from two writers with a rare combination: a solid grounding in the traditional practices of the music business, an up-to-the-minute knowledge of the new technologies that are changing it, and the ability to think through the consequences.

I’ve dreamed about a book like this, but thought it would be impossible in today’s hyperdynamic environment where every week seems to bring a breakthrough technology, device, or service. But by digging out the underlying trends and principles Kusek and Leonard get under the news and illuminate it. Along the way they provide a brilliantly concise history of the evolution of digital media.

I can’t think of any book more important for artists to get the full re-orientation they need to survive and prosper in the digital era. It’s no less critical for members of the music and broadcasting industries who need to consolidate their thinking into a coherent roadmap for the future. In a word: indispensible.

Other things to do from here:

We have a wide variety of blog posts and articles on the music business and the future of music. Please click on any of these links to read more.

How to Promote Your Music

How to License Your Music

How to get your Music on Spotify Playlists

How to book bigger and better Gigs.

Instagram for Musicians

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5 Finance Tips for Musicians: How to Make Money & Fund Your Projects

finance tips for musicians

There are many articles out there telling indie musicians about all the cool ways they can make money in today’s music industry.

However, all that money that you could potentially make probably won’t equate to very much if you don’t have an understanding of personal finance and budgeting.

Without a sense of finance you could see your hard-earned cash going down the drain as a result of impulse buys, unstructured saving, and over-spending for your projects and tours.

If you’re far enough along in your career, your manager or accountant may take care of budgeting and finance, but, especially in today’s industry, most musicians starting out may only have a friend or classmate acting as their manager.

With all the stuff you need to get done, something as mind numbing as finance tends to get pushed under the rug in favor of more glamorous activities like recording, writing, and talking with fans on social media. But the fact of the matter is, it’s not glamorous to throw money away. And that’s exactly what you could be doing with poor budgeting and finance.

So how can you get a better handle on your finances and get the most money out of your music? It’s actually a lot easier than you would think – no boring accounting lecture necessary!  With just 5 finance tips for musicians, you can be more organized and make more money.

Want more music career tips? Download this free ebook to learn how to find your place in today’s music industry:

1. You Are a Business – Act Like One

The indie musicians who are truly successful think of themselves as a business and act accordingly. That is the first finance tip for musicians.

I know, it’s really easy to just pocket the money or split it up with your band mates on the spot after a gig, especially if you’re paid in cash. This method is fine if you’re a hobby musician, but if you want this to become your career, you’ll want to get more organized.

A great option is to have a secure place to put the cash you get from live performances. Envelopes and small lock boxes are great options depending on how secure you want to be. The key is to make sure that everyone in the band knows where to put the money so it stays safe and accounted for. No one wants to be in the position of telling their band that they misplaced a couple hundred dollars!

Beyond the gig itself, you’ll want to set up a separate bank account for your music income and deposit any money you get from your music in there. This will allow you to resist spending all your music income before dealing with the band’s expenses. Have a set time to pay your band members or yourself. This could be once a week, every other week, or once a month. It’s important to remember that you are all part of the business and should be paid in an organized fashion.

2. SAVE!

We all want a big pay check, but saving is really important too. You need to pay for the band’s expenses, and pay your band members, but remember to leave something in the bank. Even better, take a little bit off the top and save it. If you’re just starting out and not making very much it can be a very small percentage. The key is to just get in the habit of saving something.

This will be really beneficial finance tip when you are looking to record a new song or album or go on tour. Instead of having to ask band members to fork over money for the recording studio costs, you’ll be able to pull some dough out of your business bank account.

3. Spreadsheets Are Your Best Friend

The next finance tip for musicians is to use spreadsheets. I know, a lot of musicians (actually a lot of people in general) hate spreadsheets and avoid them at all costs. But keeping track of your income and expenses is one of the smarter things you can do for your music career.

As an indie musician, you have an extremely irregular income stream. Meaning you don’t bring a set amount each month. Your income is entirely dependant on the time of year, how often you gig, when you release an album, and a huge list of other variables. If you keep track of everything on a spreadsheet, your income becomes a lot more predictable.

Set up a spreadsheet to track your income and expenses over a full year. Divide everything up into categories like touring, recording, and publishing (you could even get more specific) and separate everything into months. Have total income for each month and another for the full year. There’s no better feeling than being able to look back at your yearly income from a few years ago and see how much better off you are now.

Aside from that, spreadsheets let you notice other trends in your career. You may find out that your average monthly income is $2,000 but it peaks above this in the summer months when you tend to gig more often. With these kinds of insights you’ll be able to avoid over-spending on the good months to compensate for the slower times.

The important thing is to get organized. You can get a bunch of spreadsheet templates for keeping track of your income and expenses and budgeting projects in the New Artist Model online courses.

4. Bootstrap

Don’t wait for someone to come along and lay a big advance on you. Start making and distributing your music now with what you have. Just like entrepreneurs starting a business, musicians need to learn how to make money, even it it is just a little bit every month.  This is one of the good musician habits to get into.

This really goes along with the Lean Startup philosophy. Make your music as good as you can with the resources you have available, release it, get out and gig, make some money, and use the money you gained to create your next recording. It’s a slow process, but in the end it’s better than waiting for some advance that may never come or putting yourself into debt by taking out a big loan to record a full album. The important thing is to start your business by generating some income.

5. Budget

The last finance tip for musicians is to budget. When you’re looking to go into the studio to record some new tracks or hit the road for some gigs, take time to budget of all your expenses beforehand. Make a spreadsheet for each project that splits everything up into categories. For example, an album budget could include rehearsal studio and recording studio costs, equipment purchase or rentals, session musician fees, producer and engineer fees, album artwork and/or photography, and digital distribution costs.

By laying all these costs out before you even go into the studio, you’ll have a better idea of just how much money you’ll need. If you’re figuring out the expenses as you go, you’ll always end up spending a lot more than if you plan ahead. If it looks like you’re going to go over budget you can choose to cut out that track that would require you to buy or rent a banjo, you could even record some tracks at home on your computer to cut down the amount of days you have to be in the studio.  The important thing is to plan ahead and develop a strategy for success.

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The New Artist Model is an online music business school for independent musicians, performers, recording artists, producers, managers and songwriters. Our classes teach essential music business and marketing skills that will take you from creativity to commerce while maximizing your chances for success. We’re offering access to free lessons from the New Artist Model online courses to anyone who signs up for our mailing list.

 

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Investing in Media and Tech from Roger McNamee

Roger McNamee is probably the coolest investor I know.  He has called it right so many, many times and just did it again with Facebook.  You have to pay attention to him.  I have been “schooled” by him on more than one occassion and for that I am eternally grateful.

Here are his thoughts on the road ahead, taken from a Mashable keynote presentation he made the other day.  Great stuff if you want to try and make money in web and mobile tech in the years ahead.

 The shift is away from the desktop experience of free undifferentiated content. Mobile users don’t navigate the Internet with Google searches. They use apps, which deliver a better experience. And they spend much more time within those apps than on any web story.

Instead of needing tens of millions of lightly engaged users in order to be considered successful, McNamee hypothesizes that future success will come from smaller numbers of even more engaged — and thus more valuable — users.

It will, he believes, will be built not on the Google-controlled HTML4 web nor within Apple-controlled apps, but using HTML5, which allows for differentiated, engaged experiences without the downsides of the app store.

“The basic success factors going forward are going to be exactly opposite of those we’ve had in recent years,” he said.

You can get his entire presentation here.

Awesome stuff.  I’m definitely paying attention.

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Build a business around your personality.

I am often amazed at how much today’s musicians can learn from the past.  We all think that we are in the age of digital music and the old rules no longer apply and that there are only new models to develop and pursue.  Wrong.  Instead, we can all learn a whole lot by looking backwards and trying to map the successes of the past to the future.  Lets take a look at the late Dick Clark’s career and see what we can learn.

Dick Clark capitalized on the integration of music and television long before “American Idol.” But his legacy extends well beyond the persona of the laid-back host of “American Bandstand” whose influence can still be seen on TV today.

He was the workaholic head of a publicly traded company, a restaurateur, a concert promoter and real estate investor. Clark, who died of a heart attack in April at age 82, left behind a fortune and is the model of entertainment entrepreneurship.  He was ahead of his time, creating a business empire built around his personality and interests that led the way for many other musician/ entrepreneurs to come.

“Work was his hobby,” said Fran La Maina, the longtime president of Dick Clark Productions Inc.

La Maina started as the production company’s financial controller in 1966. He estimates Clark amassed a fortune that reached into the hundreds of millions of dollars. “He had this never-give-up attitude. He was a great salesperson and a task master,” La Maina said.

Clark was one of the early pioneers of the idea that a public company can be formed around an entertainer’s personal appeal. By the time La Maina went to work for him, Clark already had three shows on air: “Swingin’ Country,” “Where the Action Is,” and, of course, “American Bandstand.”

He promoted more than 100 concerts a year back when promoters, not bands, called the shots. His roster included The Rolling Stones and Engelbert Humperdinck. In the 1970s, he launched shows like the “American Music Awards” and “New Year’s Rockin’ Eve” – shows that are highly valued by advertisers because fans still want to watch them live in an age of digital video recorders.

At one point, he hosted shows on all three major TV networks, including “The $20,000 Pyramid” on ABC, “Live Wednesday” on CBS and “TV’s Bloopers and Practical Jokes” on NBC. All the while, he was hosting shows “Dick Clark’s Countdown” and “Rock, Roll & Remember” on the radio and running a business.

“He had boundless energy and a remarkable ability to do innumerable things at any given time,” La Maina said.

By the time it went public in 1987, Dick Clark Productions had several thousand employees, had launched a restaurant chain with Clark’s name on it, and ran a communications-promotion business. Revenue exceeded $100 million a year and the company was profitable.

His daily schedule was daunting, even when Clark was in his late 50s and 60s, according to longtime board member Enrique Senior, a managing director at Allen & Co. who helped Dick Clark Productions go public. “It frankly was the schedule of a 20-year-old,” Senior said. “This guy was a dynamo. I’ve never seen anybody who would be so personally involved in everything he did.”

What can be learned?  Work hard, diversify, promote, be personally involved, build a great team around yourself, dream, and go for it.

Read more here from Ryan Nakashima at the Associated Press.

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How Will Musicians Earn Money in the Future?

Here is an excerpt from a great piece from Wyndham Wallace of The Quietus on how the music industry is killing music and blaming the fans. This rather dark opinion is spot on in so many ways and raises some very difficult questions about the future of the music business that most people do not want to talk about.

“All the time the industry talks of money: money it’s lost, money it’s owed. It rarely talks about the effects upon artists, and even less about how music itself might suffer. But no one cares about the suits and their bank accounts except shareholders and bankers. People care about their own money, and the industry not only wanted too much of it but also failed to take care of those who had earned it for them: the musicians. And it’s the latter that people care about. Because People Still Want Good Music.”

“In March this year, for instance, the RIAA – the Recording Industry Association of America – and a group of thirteen record labels went to court in New York in pursuit of a case filed against Limewire in 2006 for copyright infringement. The money owed to them – the labels involved included Sony, Warner Brothers and BMG Music – could be, they argued, as much as $75 trillion. With the world’s GDP in 2011 expected to be around $65 trillion – $10 trillion less – this absurd figure was, quite rightly, laughed out of court by the judge. The RIAA finally announced in mid May that an out of court settlement for the considerably lower sum of $105 million had been agreed with Limewire’s founder.”

What is questionable about all of this is exactly how much of the settlement of $105 million will flow to the musicians, songwriters and producers whose work was the subject of the infringement to begin with. In previous settlements including Napster ($270 million), Bolt ($30 million), Kazaa ($130 million) and MP3.com ($100 million) it is unclear how much, if any, of the money received by the labels ever reached the pockets of the artists. I have yet to see an accounting of this and many managers I have spoken with have simply laughed when I asked the question if they ever received any payment from these settlements. I suppose that proceeds from litigation may be considered recoupable costs.

“But if the industry wants to talk money, let’s talk money, albeit the ways that developing musicians are encouraged to make up the loss of sales income in order to ply their trade. Someone’s got to bring this up, because it’s not a pretty picture. Consider, first, direct-to-fan marketing and social networking, said to involve fans so that they’re more inclined to attend shows, invest in ‘product’, and help market it. In practise this is a time-consuming affair that reaps rewards for only the few. Even the simple act of posting updates on Facebook, tweeting and whatever else is hip this week requires time, effort and imagination, and while any sales margins subsequently provoked might initially seem higher, the ratio of exertion to remuneration remains low for most. It’s also an illusion that such sales cut out the middlemen, thereby increasing income, except at the very lowest rung of the ladder: the moment that sales start to pick up, middlemen start to encroach upon the artist’s territory, if in new disguises. People are needed to provide the structure through which such activities can function, and few will work for free – and nor should they – even though musicians are now expected to.”

“Still, if an act can find time to do these things, or has the necessary capital to allow others to take care of them on their behalf, then they can hit the road. Touring’s where the money is, the mantra goes, and that’s the best way to sell merchandise too. But this is a similarly hollow promise. For starters, the sheer volume of artists now touring has saturated the market. Ticket prices have gone through the roof for established acts, while those starting out are competing for shows, splitting audiences spoilt for choice, driving down fees paid by promoters nervous about attendance figures. There’s also a finite amount of money that can be spent by most music fans, so if they’re coughing up huge wads of cash for stadium acts then that’s less money available to spend on developing artists. And for every extra show that a reputable artist takes on in order to make up his losses, that’s one show less that a new name might have won.”

“Touring is also expensive. That’s why record labels offered new artists financial backing, albeit in the form of a glorified loan known as ‘tour support’. Transport needs to be paid for, as do fuel, accommodation, food, equipment, tour managers and sound engineers. These costs can mount up very fast, and if each night you’re being paid a small guarantee, or in fact only a cut of the door, then losses incurred can be vast, rarely compensated for by merchandising sales. Again, financial backing of some sort is vital, but these days labels are struggling to provide it. In the past, income from record sales could be offset against these debts, but with that increasingly impossible, new artists will soon find it very hard to tour. Everyone’s a loser, baby.”

From Beck’s ‘Loser’

Forces of evil in a bozo nightmare
Banned all the music with a phony gas chamber
‘Cause one’s got a weasel and the other’s got a flag
One’s got on the pole shove the other in a bag
With the rerun shows and the cocaine nose job
The daytime crap of a folksinger slob
He hung himself with a guitar string

Soy un perdidor
I’m a loser baby, so why don’t you kill me?
(Know what I’m sayin?)

“Whether the industry likes it or not, music is now like water: it streams into homes, it pours forth in cafés, it trickles past in the street as it leaks from shops and restaurants. Unlike water, music isn’t a basic human right, but the public is now accustomed to its almost universal presence and accessibility. Yet the public is asked to pay for every track consumed, while the use of water tends to be charged at a fixed rate rather than drop by drop: exactly how much is consumed is less important than the fact that customers contribute to its provision. Telling people that profit margins are at stake doesn’t speak to the average music fan, but explaining how the quality of the music they enjoy is going to deteriorate, just as water would become muddy and undrinkable if no one invested in it, might encourage them to participate in the funding of its future. So since downloading music is now as easy as turning on a tap, charging for it in a similar fashion seems like a realistic, wide-reaching solution. And just as some people choose to invest in high-end water products, insisting on fancy packaging, better quality product and an enhanced experience, so some will continue to purchase a more enduring musical package. Others will settle for mp3s just as they settle for tap water. Calculating how rights holders should be accurately paid for such use of music is obviously complicated but far from impossible, and current accounting methods – which anyone who has been involved with record labels can tell you aren’t exactly failsafe – are clearly failing to bring in the cash.”

“The problem is, it’s not really the industry that is being cheated. It’s the artists and their fans. People get what they pay for, but – whatever the industry claims – most fans know that. They just don’t want to hear the businessmen fiddle while the musicians are being burnt. Revenues are unlikely ever again to reach the levels of the business’ formerly lucrative glory days, but in its stubborn refusal to recognise that both the playing field and the rules themselves have been irreversibly redefined without their permission, the industry is holding out for something that is no longer viable. Lower income is better than no income, and the industry has surely watched the money dwindling for long enough. Musicians, meanwhile, are being asked to make more and more compromises as they’re forced to put money ahead of their art on a previously unprecedented scale.”

Read the whole ugly story here at The Quietus.

The comments alone tell the sad story of the state of affairs in the music industry today.

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Making a Living as an Artist in the Future

Photo by Robert Couse-Baker on Flickr

Photo by Robert Couse-Baker on Flickr

From the Wharton School, an article on the new economics of life for creators and how they will be compensated in the future.

Making a living as an artist has never been easy — whether in film, music or publishing. But the digital revolution — and to a lesser extent, the global economic crisis of the last two years — is transforming the business of content creation. One of the biggest shifts is in how filmmakers, musicians and writers are compensated. There is an evolving relationship between creator and publisher in which the artist bears a larger percentage of the upfront costs for the production and marketing of his or her work. In this new world, artists’ pay is based to a greater degree on how their product sells in the marketplace, a change that has major implications for the content creators themselves, large firms like Hollywood studios and music labels, and consumers.

“In the past, it used to be the case that content creators got paid the bulk of their salary in advance and whoever made that payment — whether it was the music label, the book publisher or the studio — would take on the risk of marketing and distributing that product,” says Kartik Hosanagar, a Wharton professor of operations and information management. “If [the project] was a success, [the publishers, studios, etc.] kept the upside, and if it was a failure, they bore that failure. Now the upside — or downside — is shared with the content creator.”

This shift is largely driven by the move away from shipping physical products toward increasing digital distribution. In music, the threat of digital piracy has made the business of selling songs more challenging, even as the shift from album sales to digital singles has further undermined traditional revenue streams in the music industry. In film, the decline in home entertainment revenues as consumers switch from DVD purchases to online streaming video has also put pressure on profits. And in book publishing and journalism, the move toward e-readers and online news platforms where revenue models are still in flux has created additional uncertainty. The difficulty in predicting the profitability of these products, Hosanagar notes, means that marketers are trying to shift their cost base. “A lot of firms are asking, ‘How do we move from fixed costs to variable costs?'” he adds. “That makes a lot of sense when you have unpredictable returns.”

In the music industry, the pressures on the business model have been even more intense. Ed Pierson, a Seattle-based attorney who represents musicians, says the 1990s were the heyday of big advances for musicians. According to Pierson, easy credit and a war for talent led labels to pay escalating upfront fees to musicians. But as music sales began declining, in part due to piracy and digital downloads that allowed consumers to buy just the songs they wanted and not the entire album, the flush times came to an end. The result these days, notes Pierson, is that labels are making fewer advances and the upfront money they do dole out is smaller.

Artists have responded by taking greater control of their business. “The risk is shifting away from the label and toward the artist,” says David Kusek, chief executive officer of online music school Berkleemusic.com and a digital music technologist. Some big names, including the Dave Matthews Band or the Eagles, have created their own recording labels. Lesser known artists have been forced to become entrepreneurs of sorts. Kusek points to firms like ReverbNation and Top Spin Media that have sprung up to help artists sell their music on platforms like iTunes, to promote a group or artist, or to help sell merchandise. Those firms, in many cases, will charge a small upfront fee and then get a cut of the sales the act generates. “It is a different gamble now,” adds Wharton’s Whitehouse. “The corporate players may be gambling a bit less and the artists may be gambling a bit more. But those artists can now have more control over their work than they did before.”

Read the whole article here.

Listen to the podcast here.

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Will Artists Profit from Digital Distribution?

For the past 5 years I have been delivering presentations, in a wide variety of contexts including Digital Music Forum, AES, Billboard, IEBA, Music Hack Day, NAMM, Digital Hollywood and at many, many other private consulting gigs.   The essence of the presentation I have been making since 2006 is shown below with a couple of updates, roughly based on the Top 10 Truths described in our Future of Music book.  All along I have been advocating for artists, songwriters and publishers to challenge the way iTunes transactions were accounted for by the labels on the legitimacy of the splits.  The way iTunes royalties have been distributed is just wrong, a scam and a holdover from the accounting practices of the record companies past.

http://static.slidesharecdn.com/swf/ssplayer2.swf?doc=kusekkeynote-101024210138-phpapp01&stripped_title=kusek-keynote&userName=davekusek

Kusek keynote

Finally someone (Eminem’s production company), challenged Universal Music Group in the way that artists and labels split the money generated by iTunes transactions and won an initial ruling in their favor.  Just this past week Universal Music Group’s inevitable appeal was rejected meaning that the industry giant may now have to split its digital music royalties from money earned from ringtone sales and iTunes.

San Francisco’s US 9th Circuit Court of Appeals decided last month that all royalties made by the record label from such sales must be shared in higher proportions with producers. The recent court rejection will result in this case proceeding in a lower level court which will then determine exactly how much Universal owes Eminem and his producers, taking into account both damages and royalties.

This could be a very significant development for the entire recorded music industry.  When Steve Jobs and his team negotiated the original iTunes deal with the major labels, the economics of what iTunes would receive from transactions was roughly 35% of each download, a similar number as a  distributor/retailer of CDs would receive and the remaining 65% would flow to the labels and be split as with a traditional CD sale.

This was a masterful negotiation by Apple, effectively granting itself amnesty from claims of copyright infringement or inducement to infringe copyright on the part of the major labels and publishers in exchange for the promise of digital cash flow, potentially reigniting the recorded music business for the labels.  Even if most of the music contained on iPods was pirated, now the labels would have a new revenue stream and Apple would be safe from litigation.  This move paved the way for Apple to become the dominant company in the music business and one of the most valuable brands on the planet.  A transformational revenue shift was underway whereby Apple would effectively eat the labels lunch.  The ultimate iCon.

But what artists and writers failed to question at the time, was the way the 65% label share would be split.  The labels assumed that these downloads were “sales” of copies of the songs and that artists would receive their royalties based on traditional accounting practices.  In the early days of payments from iTunes, labels often continued to deduct fees from the artists share for “packaging” and “marketing” and “coop” often when there were no actual costs being incurred.  No one questioned whether iTunes downloads were “licenses” versus “sales” which would have tipped the accounting in favor of the artists.  Indeed Steve Jobs himself referred to his deal with the labels as a “license” in his rare and open “Thoughts on Music” letter posted February 6, 2007.

Now fast forward to 2010.  Although not directly listed in the UMG suit, Eminem could benefit from the results, as he could get a much larger share of the payments. The case is being touted as a landmark decision for the music industry as it could determine a precedent that could see 90 per cent of contracts signed before 2000 change for the benefit of the artists and songwriters.  If this ruling holds up and is widely interpreted, it will destroy the traditional record labels.

The ruling will hinge on the standard record deal contract, which predates the digital era and changes that have come with it. New rulings will most likely govern how digital royalties will be accounted for.

In the most recent decision the court has defined record companies’ deals with such firms as Verizon and iTunes as ‘licensing’ contracts as opposed to music sales, meaning the 50/50 split would apply.  This will be devastating for the labels and great for artists.

When I commented on this issue in an earlier post, one of my readers wrote “if Eminem eventually prevails it will be the end of discovering and nurturing new talent by record companies and will throw the music scene into more disarray that P2P ever did.”  While this may be true, I am completely convinced that the old record company model must change, will change, and will eventually be replaced by something more clearly aligned with the times and the new digital reality.  There is no doubt that these times are truly wrenching for the music industry – but music will prevail and the interests will realign into something sustainable.

Read more here and stay tuned to see how this all turns out.

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Musician Economics 101

musicians&money

From Hypebot.  It’s no secret that the amount of money artists are earning from recorded music is declining.  But by how much? And as digital sales replace physical and streaming music gains traction do the numbers shift in the artist’s favor?  Infographic created by David McCandless of Information Is Beautiful from a spreadsheet of data.

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Insight in music business & management

The music industry is being reinvented before our very eyes. Learn how it is developing from today’s entrepreneurs including Ian Rogers from TopSpin, Steve Schnur from EA, and Derek Sivers and how you can capitalize on the changing opportunities.

MPN is my latest project and an online service for music business people and music and artist managers creating the future of the industry. MPN provides online music business lessons, exclusive video interviews and advice, career and business planning tools and thousands of specially selected resources designed to help you achieve success in this ever changing industry. MPN gives you the tools, expertise and guidance to help you get organized and take your music career to the next level. Learn from industry experts, set your goals and realize your vision.


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Fan Financed Music – Symphony of a Million

Patronage of the arts is a time honored practice that is still alive and well in the music business.  Many examples of fan financing from Ellis Paul, to Jill Sobule and many others have been reported and detailed recently in this blog and others.  Now a group of musicians from California have put together a very interesting program to raise money for commissioning projects that I hope catches on.  We need more thinking like this in the music industry today.  Effective and creative methods of connecting music fans to artists, writers, composers and producers will help propel the next generation of music making.

Symphony of a Million

“Symphony of a Million” is a 6-month campaign, a commissioning project that brings together composers, performers, and the general public.

The goal is to sell 1 million notes. Purchased notes will be used in not just one single million note work, but rather many new works. Composers will work with performers and compose pieces of varying lengths. The first work to be written will be a 1000 note work for solo marimba composed by Music Academy Online founder, Dave Schwartz, and written for percussionist Nobue Matsuoka. The second work will be a 4000 note composition for saxophone and harp and it will be composed by Anthony Lanman who will be working with saxophonist Dr. Noah Getz and harpist Jacqueline Pollauf who perform together as the duo Pictures on Silence.

* Buy a note for $1

* Each note becomes part of a piece of music composed by award winning composers. Throughout the process we will be commissioning composers to write new works of varying lengths using the notes that you purchase.

* A special “Symphony of a Million” concert, sponsored by Music Academy Online and featuring world-class ensembles, will premier all of the works created using the notes you buy. The concert will be held May 18, 2011, the 100th anniversary of the death of Gustav Mahler, the man who composed the “Symphony of a Thousand.”

* Buy as many notes as you wish. Dedicate the notes to someone special. Help to shape entire sections of new music with the notes you select! Your name (and theirs) will forever be part of the final scores.

* Encourage your friends and family to buy notes.

Find out more here.

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Where will the money come from? The Fans.

There is nothing new except what has been forgotten. Things have a way of cycling around, and if they are effective, becoming novel again when more recent methods of making progress fade away. Fan financing is picking up steam as a way of raising money to support artists in the face of falling label support. Like the patron model of old, artists are reaching out to their fans, offering incentives and various forms of access for fans that donate money in support of their artist’s work.

This model is not new, but is gaining steam once again. And why not, it works. In the 70’s Cris Williamson, who just spent a week in residence at Berklee used fan financing to raise money for her album projects which helped to start the women’s music movement. She started the first women’s music label, Olivia Records using fan financing as a strategy to fund numerous projects including the label itself. Now lots of artists are returning to this strategy to fund their careers. James Reed has a new story in the Boston Globe on the subject. Enjoy.

Lighters down, checkbooks up
A growing number of musicians are looking to fans, not record labels, to help fund their albums and tours. And giving has its perks.

By James Reed, Globe Staff | April 12, 2009

Ellis Paul, a veteran singer-songwriter who first made his name in New England’s folk clubs in the 1990s, found himself in a disconcerting position last year. He had decided not to renew his contract with Rounder Records, his longtime label, but wanted to make a new album.

With no immediate ideas for funding, Paul took a novel approach: He enlisted his fans, posting a letter on his website asking for donations. Since July they’ve surprised him by contributing more than $90,000 through a Framingham-based online service called Nimbit, along with checks sent in the mail.

“When you’re only selling 20,000 or 30,000 records, you don’t really need a label,” he says. “We figured we could do this in-house, but we just needed the money, and where was the money going to come from?”

In a growing trend reminiscent of the old-fashioned ways of artists and patrons, musicians around the country – including local singers Mieka Pauley, Mark Erelli, Kris Delmhorst, and former Throwing Muses singer-guitarist Kristin Hersh – are depending on their fans for unprecedented financial support. And it’s not just limited to American artists. In France, singer-songwriter Grégoire channeled fan funding through the website MyMajorCompany.com and released “Toi + Moi,” which peaked at No. 2 spot on the French album charts.

Even as the economy deflates and the record industry continues its downward spiral, indie artists are finding that their supporters are eager to help. In a sense, the fans are replacing – or at least augmenting – the traditional role of a label, which previously would have financed the album with a monetary advance and then taken care of the promotion and distribution.

Piano-playing songwriter Seth Glier, who lives in Western Massachusetts, is only 20 but has already built a fan base that supported him on a recent monthlong tour. Through online efforts, Glier raised $2,500, which came in handy as he and a bandmate zigzagged across the Northeast and had to pay for gas, tolls, and the occasional hotel room.

The initial goal was to raise $500, which Glier accomplished within two hours and then kept going. Glier admits it takes a certain caliber of artist to ask fans outright for money. “It was an idea I had a couple of years ago, but I have a really hard time asking for help,” he says. “When I was able to unclench my fist, it was great to realize how many people were there for me.”

The fans aren’t technically just giving money to these artists: They’re buying services.

To fund “The Day After Everything Changed,” his new album out in the fall, Paul allowed fans to buy different tiers of sponsorship, ranging from $100 (the “Antje Duvekot Level,” named after the local singer-songwriter) up to $10,000 (“the Woody Guthrie Level”).

The higher the contribution, the greater the goods. For $100, you got an advance copy of the album with a bonus disc of demos and outtakes, along with tickets to one of Paul’s shows. For the top-level contributions, of which Paul received a few, fans got several perks – everything from a one-year membership to Club Passim to a signed acoustic guitar to a credit as an executive producer of the album.

One $10,000 contributor, a Boston-based fan who wished to remain anonymous (“People are losing their jobs and homes right now. I don’t think it feels sensitive,” she explains), says she and her husband couldn’t pass up the opportunity to have him write a song for them, one of the perks at their donation level. They even visited Paul in the studio.

“We left feeling that our donation – as well as everybody else’s – is in very good hands,” she says. “In this day and age, to pull out your pocketbook, it’s got to be something pretty compelling.”

Karen Zundel, a librarian in Pennsylvania who’s been a devoted Ellis Paul fan for 12 years, says she even saved up for her contribution because it held more importance than your typical splurge. “The arts are what sustain us and bring individuals and communities together and help us to connect with our innermost beings,” Zundel says. “A new car won’t do that. When you buy a new car or a new outfit, you get that little thrill that lasts very temporarily, and then it’s gone. But I think art really sustains me. It lasts.”

But the way that art gets to the consumer is changing. Dave Kusek, vice president of Berklee College of Music who co-authored the book “The Future of Music: Manifesto for the Digital Music Revolution,” says the role of record labels is declining.

“I personally think unless you need massive radio airplay, there’s very little reason for record labels to engage with artists anymore,” he says. “It’s a relic of the past in that artists today can find other ways to get to the market, to get money, to distribute their product in a way where they have a lot more control.”

Kusek acknowledges there are pitfalls to blazing a new trail with fan funding, though. “I do think there’s some risk if you don’t deliver,” he says. “Essentially, you are relying on people’s trust in you. They’re effectively loaning you money in the hopes that they’ll get something in return. So if you don’t come through, you’re running the risk of alienating your fans and eliminating those relationships.”

Jill Sobule, who rose to fame in the mid-1990s with the ubiquitous hit “I Kissed a Girl” (long before Katy Perry swiped the topic), recorded “California Years,” set for release on Tuesday, with the help of $80,000 from fans after establishing a website, www.jillsnextrecord.com, specifically for the project.

“I know some people say that’s a lot to record a record,” she says, “but it’s also for everything a big label is supposed to do: publicists, marketing, promotions, distribution. I’ve pretty much used all of it.”

Like Paul, Sobule offered various services at different price points. For $10,000 one lucky contributor got to sing on a new song. Sobule says she vetted the idea with her fans first. “That’s really important: You leave out the middleman and go directly to the fans and talk to them,” she says.

The one thing she hadn’t counted on was the level of freedom fan funding brought her, both financially and creatively. “In the old model, you’d have to sell 150,000 albums for people to think you were successful,” she says, “and now you don’t have to.”

“It definitely is humbling,” she says of asking fans for money. “I feel like I better do the job for my fans. I better bow down to them more than a record label. They’re the ones in control now, in a way.”

James Reed can be reached at jreed@globe.com.

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They Mayor of Margaritaville

I have posted about Jimmy Buffet before. He is the epitome of genius and invention when it comes to mixing music and commerce. There is so much to learn from him.

“The title of his most popular song is showing up on restaurants, clothing, booze and casinos. Among the products he’s involved with are Landshark Lager, the Margaritaville and Cheeseburger in Paradise restaurant chains, clothing and footwear, household items and drink blenders. The Margaritaville cafe on the Las Vegas strip is said to be the top grossing restaurant in the nation. Buffett writes best-selling novels. There’s Radio Margaritaville on Sirius. Even his recording career is booming as the music industry tanks: His recent album, “License to Chill,” was the first No. 1 album of his career.

“He wants to be known as an artist and musician, but he’s an extremely savvy businessman,” said Brian Hiatt, an associate editor for Rolling Stone who covers the concert industry.

Buffett is somewhat unique among aging crooners in that his fan base is broad, and is not tied solely to a string of past hit songs. For most of his career, Buffett had only one Billboard Top 10 hit, “Margaritaville,” in 1977. What he offers his fans is an accessible fantasy. “Anyone of any age could imagine retiring to a tropical paradise and drinking margaritas,” Haitt said. “There is something extra-musical about the whole thing.”

You don’t have to go to a concert to buy his stuff. Margaritaville boat shoes and flip flops are found in shopping malls. Margaritaville Foods sells salsa, hummus, tortillas and dips in Wal-Mart and other stores. Landshark is sold in grocery stores, and Margaritaville tequila is in liquor stores. And concert tickets sell out in short order, despite prices that run well over $100. The Buffett brand is on a growth spurt, usually as a result of marketing deals.”

Read more from Starpulse here.

I had the great fortune to interview Jimmy earlier this year. Lets see what he has to say about the Future of Music.

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Reconciling the Value of Music

I had the good fortune of meeting Matthew Daniel of R2G in China a couple of weeks ago. He presented his thoughts on the Chinese music market and reconciling the intrinsic value of music over there. It is very interesting that Intellectual Property has had very little monetary value in China and they are struggling with a situation that the rest of the world is just beginning to learn about.

Music in China has essentially always been free. They are now just trying to put structures in place to encourage people to pay for recorded music. Access and Convenience are the keys to his strategy. Lots of lessons to be learned for sure.

“While commercial music consumption has never been more widespread in the known history of man, and with the Internet offering the most capacious vehicle the world has ever seen to disseminate the near infinite body of musical works that exists universally to the greatest number of people, the existing music industry powers-that-be have yet to formulate a system to set this music free – even 10 years after Napster showed the way technologically.

And as elements in the music industry still continue to control the amount of legally accessible music to consumers, and only feed them the acts from which it can make the most money while keeping its vast catalogs in obviously porous vaults, other companies and intermediaries have capitalized on the clarion call to set the music free in all senses of the word. But some of these very companies and intermediaries are themselves simply in the game to enrich themselves via other ancillary services and products which use the pull of music and the accompanying audience, with minimal revenues trickling back to the very creators of the music.

Whilst this tug-of-war continues, one casualty is the increasing reference to music as a commodity,which is a gross misrepresentation of what music really is. Music is food for the soul which creates an emotional attachment with the listener and where it strikes a chord, an intrinsic value in the music is realized.

The industry needs to re-focus on this value in music that many seem to have forgotten, and which others have seemed to have contributed to its devaluation.”

Here is a link to Matthew’s Blog and his presentation from the Transmission Conference I recently attended in Vancouver.

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Napster’s Children

Want to know what’s up with new music startups? Read on. Great coverage by Paul Bonanos from The Deal. So good to see mainstream financial coverage of our music industry.

Striking a chord

A decade after Napster, a new crop of Internet startups is challenging the music industry’s dominant companies. Their instruments of choice: social networking, discovery, ad-supported streaming, marketing and other tools that change how business is done.

New Music Startups

Source: Tech Confidential

U.K.-based We7 Ltd., which has drawn funding from British musician Peter Gabriel, along with VC firms Eden Ventures and Spark Ventures plc, both of London, offers free songs that contain short advertisements that vanish after a few weeks. We7 recently added songs from a third major label, while SpiralFrog signed up only two of the four majors, meaning that finding free songs can still be something of a wild
goose chase.

Nashville’s NoiseTrade, a bootstrapped startup, provides a way for artists to give away music in exchange for the e-mail addresses of prospective new fans, while angel investor-backed TrueAnthem Corp. of San Francisco connects brand advertisers with musicians, who introduce tunes with short, personalized ads.

Consumers less inclined to possess a virtual copy of a song also have more options. That includes subscribing to libraries of music content and Web sites that allow streaming songs on demand and limited downloading. Publicly traded RealNetworks Inc. of Seattle has emerged as a clear leader among such products with its Rhapsody service, while the existing Napster, which purchased its trademark from the original bankrupt startup, has lost subscribers and remains far from profitable. Both companies offer several tiered plans, ranging from roughly $10 to $15 per month, that provide access to millions of songs from all four major labels, as well as “tethered downloads,” or DRM-restricted files that expire once a customer cancels his subscription.

The market for free music “streamed” on a Web site is more complex, with some startups relying on subscription services to supply songs through their own user interfaces. Most streaming services are married to some other Web utility, whether a social networking site, music discovery service or
paid-download store.

With investment from VC firms Sequoia Capital and Morgenthaler Ventures, both of Menlo Park, Calif., as well as from Universal Music and Warner, social music site Imeem Inc. of San Francisco has built the fastest-growing free streaming service. All four major labels now supply music to Imeem, which lets users play songs on demand.

Imeem’s growth highlights the pressure on “old music” companies, like other old media firms, to change with the times. And the legal battles between upstart music firms and incumbents have been no less intense than the fights in other quadrants of the media industry, such as the ongoing court dispute between Google Inc. and Viacom Inc. over the search giant’s use of protected video on YouTube. Warner sued Imeem in 2007 over alleged copyright infringement, only to later buy a stake in the startup after settling the case.

“Sometimes a lawsuit is foreplay to a licensing deal,” says Norwest Venture Partners principal Tim Chang of startups’ path to legitimacy in the age of free music. “They infringe so that users get what they want and advertisers pay attention, scale so that you have some leverage against labels, get sued and then settle.”

The digital-music business is entering a phase common to many emerging high-tech sectors. The land rush of startups that follows any significant technological shift, such as file sharing, is already starting to thin out as winners stake their claims and losers get consolidated, if they’re lucky, or simply disappear.

For example, Last.fm rival Pandora Media Inc. faces a fight for survival despite having attracted prominent venture investors and a slew of good publicity. The Oakland, Calif., startup employs music experts to create a recommendation “engine” for Internet radio. But an upcoming regulatory change that will result in a doubling of streaming royalty rates for Web radio companies could spell the company’s doom unless it elects to charge users a subscription fee or finds a way to add advertising that its audience will accept.

Like Pandora and Last.fm, music discovery site iLike Inc. of Seattle has become popular, if not consistently profitable. One key to its success in attracting users has been its availability over Facebook Inc. of Palo Alto, Calif., through which more than half of its 30 million users connect to the service. Through a partnership with Rhapsody, iLike allows users to stream as many as 25 songs per month and download selected others for free while examining their friends’ tastes and recommendations. The startup has raised $15.8 million in two rounds of funding from former Time Warner Inc. executive and MTV co-founder Bob Pittman, star venture capitalist Vinod Khosla, and the Ticketmaster unit of IAC/InterActiveCorp of New York.

“There’s a natural propensity for social networking and music to go together,” says MySpace founder Brad Greenspan, who left the social network in 2003. “When you’re surfing people’s profiles and everything starts to look the same, the only way to differentiate among them is their individualization. And if you add an image of an artist on a site, you will bring in people who want to be close to that musician’s energy, whether by blogging, chatting, befriending or following them.”

Drawing on such desires, music-blogging hub MOG Inc. of Berkeley, Calif., wants to tap into fans’ efforts to spread the word about their favorite artists. Universal and Sony BMG joined the Angels’ Forum of Palo Alto in putting $6 million into the startup, which compiles the musings of volunteer bloggers writing on given musicians and bands. MOG, which also offers on-demand music, represents a one-stop version of the musical blogosphere, where songs are commonly shared without compensation for content owners.

Also harnessing the power of the blogosphere are music-focused search engines such as the bootstrapped Hype Machine Inc. of New York and angel-backed Seeqpod Inc. of Emeryville, Calif., which index thousands of music blogs where MP3s often reside for a few weeks so users can sample them.

Another area where Internet startups are encroaching on the record labels’ turf is marketing. Launched this summer, Los Angeles-based Topspin Media Inc. enables artists and fans to communicate directly, offering a sort of customer management technology package for musicians that allows sales of songs, albums and merchandise. Under one subscription option offered through the company, a fan can pay a flat fee for a musician’s entire recorded output over the coming year — income a musician might otherwise have to share with a label. Venture investors are on board, with Topspin having raised funding from Redpoint Ventures of Menlo Park and Foundry Group of Boulder, Colo.

But rampant music piracy continues to dwarf legitimate sales, cutting label revenues by as much as half since the mid-1990s. Meanwhile, work that had long been the province of music companies has been gradually appropriated by newer, fleeter Internet companies or, as with marketing, “disaggregated” out of existence. Other competitors also have emerged. LiveNation Inc. of New York, a publicly traded live music promotion company spun out of Clear Channel Communications Inc. in 2005, has signed top acts, including U2 and Madonna, and has sweetened its deals by letting artists maintain ownership of their material.”

If so, what will the business look like? A dying era of superstar acts may give way to a music scene carved into myriad niches, with proliferating media channels creating room for more voices — the “middle class” of artists, as Rogers puts it. Artists and fans will operate in closer proximity, with more tools in place to help them connect.

How, then, will music derive its commercial value, and where should investors place their bets? The future is likely to include more sponsorship and patronage. Imagine liquor companies, fast-food joints and other advertisers paying the band of the moment for rights to its music before it’s recorded rather than after it hits the charts. Alternatively, rich benefactors — or legions of fans — could support artists in exchange for early access to a new album or even a shout-out in the liner notes. Tie-ins with other media such as video games will also create opportunities: People may not buy the album for $15, but they’ll pay $39.99 for the “Guitar Hero” version.

The old ways, reinvigorated by technology, are made new again.

Read the complete article at The Deal.

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Why do they think they have it figured out now?

Doug Morris on the state of the music industry. The problem, he says, is that “there’s sympathy for the consumer, and the record industry is the Shmoo.”

Oh my God.

Wired writer Seth Mnookin interviews and skewers Universal Music Group Chief Executive Doug Morris in the latest issue, which speaks for itself. You just got to read this interview.

“There’s no one in the record company that’s a technologist,” Morris explains. “That’s a misconception writers make all the time, that the record industry missed this. They didn’t. They just didn’t know what to do. It’s like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?”

Well, for one, maybe – instead of suing the technologists from Napster 1.0 – perhaps you should have considered hiring them. Just a thought…

Unbelievable. No wonder we are in the situation we are in.

Total Music. Hmm… Why do they think they have it figured out now?

For another great history lesson on how the major music labels ignored change and tried to impose their will on the masses, read this. Disturbing and painful. Great work Seth.

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Access, Convenience and Trust

The last few weeks have heralded some great news for the music industry. Radiohead’s experiment with user-based pricing, Madonna’s new deal and the formation of ArtistNation, a “360” model for music where the artist and the company partner on numerous levels including recordings, touring, merchandise, etc., and Apple’s repricing of DRM free tracks to $.99. These are all very positive moves that continue to point toward a healthy future of music.

Madonna left Warner Music for a newly formed ArtistNation designed to optimize the revenue potential and investment strategy by combining multiple revenue streams into a package deal. “Madonna is the first step to making Live Nation into the next-generation music company,” Live Nation CEO Michael Rapino said during an investor conference call. “We believe it should help attract additional artists.” Let’s hope so for them.

Read more about this deal here.

The Irish Independent published a great commentary on the state of the music industry this past week. “Madonna – the most successful female artist of all time – is the latest high-profile artist to turn her back on the music majors, ending a 25-year relationship with Warner Music in favour of a lucrative deal with Live Nation. The deal follows the recent excitement around Radiohead’s decision to ditch EMI and offer their new album for download with the consumer choosing what to pay – a move set to be echoed by The Charlatans.

Earlier this year, Prince gave away his new album to readers of The Mail on Sunday. Meanwhile, a slew of yesteryear’s superstars, including Paul McCartney and Joni Mitchell, have signed record deals with Hear Music, which is owned by the coffee chain Starbucks.

It appears that artists of all calibres are forsaking the traditional route to fame and fortune – making a hit record with a household-name label – in favour of giving music away and making money off the back of touring and T-shirts. Arguably it reflects the way that consumer attitudes have changed toward music over the past decade, with today’s consumers happy to pay vast sums to see a band but unwilling to pay for songs they can download for free. Many of today’s music fans – and artists – hold a very dim view of the music majors, arguing that they have charged too much for CDs for too long and that the dinosaurs of the industry – namely Universal Music, EMI, Warner Music and Sony BMG – were too slow to harness the power of the internet and the way the industry has changed.”

This potentially is great news for established artists seeking to renegotiate their contracts or establish new deals with more forward thinking companies willing to write the big check. However, it has yet to be seen how this model will benefit emerging artists looking for marketing muscle to help them break through the noise level. Can a LiveNation afford to break acts now in order to develop the revenue streams it will need in the future? If not them, then who?

With the widespread sharing of files online moving into the end of its first decade, and the rapid disintegration of the old-school record business clearly in sight, what exactly will the future hold? Will these new models make it easier to find new music? Will the new 360 companies garner the trust of the consumer and make it possible to grow the music business again? Will it be more convenient for the music lover to get all their Madonna stuff from one source, or will the widespread choices available online keep pulling control away from the center and distributing it out to the edges of the equation, namely in the hands of the consumer. Interesting times to be sure.

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Radiohead knows where the real revenue comes from

Great to see a band of this stature make a bold move like this.  Radiohead has released their latest album "In Rainbows" online and for free, if you want it.  They will also accept whatever amount you wish to pay for the songs.  Brilliant!

Bertis Downs, manager of R.E.M., says "This is the sort of model that people have been talking about doing,
but this is the first time an act of this stature has stepped up and
done it. . . . They were a band that could go off the grid, and they
did it."

Just watch what happens when they launch their tour!  Tickets, t-shirts, hats, box sets, other goods – watch the cash register ring.  KA-CHING

LA Times reported the story on Sunday.

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CD Sales Take Another Dive

CDs are now sliding precipitously, especially in the United States, and that has intensified media diversification efforts at major retailers.  At the halfway point, year-over-year disc sales in the United States dropped 15.1 percent, according to Nielsen Soundscan.  That gap has since broadened to 18.4 percent.

For retailers like Trans World, Hastings, and Virgin Megastores, diversification has now become an accelerated survival tactic.  During the recent quarter, music-specific sales at Trans World dropped 19 percent on a comparable store basis.  That is more severe than dips of 16 percent recorded during the same quarter last year, and represents a worsening trend.  "Trans World has 950 stores and we would expect them to continue to deemphasize music over the next 12-24 months," said Richard Greenfield of Pali Research during a recent investor note.  Greenfield noted that Trans World has already lowered its music-specific selection to 43 percent of total inventory, down from 47 percent last year.

The decreased selection means less consumer matches, and lowered sales volumes.  "As floor space continues to contract at physical retail, we are increasingly concerned that the rate of decline in CD sales will materially accelerate in 2008," Greenfield asserted.

From Digital Music News

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