Artist Revenue Stream Poster

My friends at the Future of Music Coalition are conducting an online survey from Sept 6 – Oct 28th to determine the variety, depth and complexity of the ways that musicians are making money these days.  Not theoretically, but actually.  We are looking for performers, songwriters, composers, band members, session players, producers, MCs and anyone else making music to join in and take the survey.

A while ago, I posted this from my friend and Berkleemusic student David Sherbow showing a pretty comprehensive list of the different ways that musicians can make money.  This might give you food for thought on taking the survey and planning your career…

The artist music business model has been in flux for years. The record deal dream that most artists sought is no longer the viable alternative that it once was.  The leveling of the music distribution playing field by the Internet is virtually complete.  Terrestrial radio is on a path towards destruction that even the major labels can’t compete with.  People now access and download music from multiple sources, usually for free.  D.I. Y solutions are everywhere, but for many artists hard to integrate into their daily lives.

Where does this leave the average independent artist? At the beginning. Every artist wants to know how they can make music, make money and survive to write and play another day. Here, in no particular order, is a list of possible income streams.

• Publishing
• Mechanical royalties
• Performance Royalties from ASCAP and BMI
• Digital Performance Royalties from Sound Exchange
• Synch rights TV, Commercials, Movies, Video Games
• Digital sales – Individual or by combination
• Music (studio & live) Album – Physical & Digital, Single – Digital, • Ringtone, Ringback, Podcasts
• Instant Post Gig Live Recording via download, mobile streaming or flash drives
• Video – Live, concept, personal,  – Physical & Digital
• Video and Internet Games featuring or about the artist
• Photographs
• Graphics and art work, screen savers, wall paper
• Lyrics
• Sheet music
• Compilations
• Merchandise – Clothes, USB packs, Posters, other things
• Live Performances
• Live Show – Gig
• Live Show – After Party
• Meet and Greet
• Personal Appearance
• Studio Session Work
• Sponsorships, and endorsements
• Advertising
• Artist newsletter emails
• Artist marketing and promotion materials
• Blog/Website
• Videos
• Music Player
• Fan Clubs
• YouTube Subscription channel for more popular artists
• Artist programmed internet radio station or specialty playlist.
• Financial Contributions of Support – Tip Jar or direct donations, Sellaband or Kickstarter
• Patronage Model – Artist Fan Exclusives – e.g. paying to sing on a song in studio or have artist write a song for you
• Mobile Apps
• Artist Specific Revenue Stream –  unique streams customized to the specific artist, e.g Amanda Palmer
• Music Teaching – Lessons and Workshops
• Music Employment – orchestras, etc, choir directors, ministers of music, etc.
• Music Production – Studio and Live
• Any job available to survive and keep making music
• Getting Help From Other Artists and Helping Them –  Whatever goes around come around. – e.g. gig swapping, songwriting, marketing and promotion

Guest Post by MC Lars

Back in 2005, my former manager at Nettwerk, Tom Gates, gave me a copy of Kusek’s “Future of Music” book.

“Read it,” Gates said.  “It might be interesting to you.”

I read the whole book in a weekend and was inspired to write a song detailing the changes Kusek proposed, many of which have come true.  It seemed crazy then.  Five years later, there has been an ideological shift made very apparent by the new generation of artists and consumers; music isn’t really a physical product anymore, it’s a service that artists provide that they are then paid for (if the service they provide has cultural and/or emotional value).

The song I wrote was called “Download This Song“, and it charted in Australia where I did TRL on MTV.  The YouTube video received a half a million plays and the single was given press in the NME, the UK’s biggest music magazine.  Afterwards, a girl in Texas who was being sued by the RIAA heard the song and contacted me.  I forwarded it to Gates.  Gates sent it to Terry McBride.  Nettwerk paid for her legal fees because one of the songs in her collection was by an artist they managed.  Clearly the ideas in the book and my song had reached a large audience.

It’s honestly somewhat eerie how much of what Kusek predicted came true.  Gone is the ineffectual A&R I described in songs like “Signing Emo” who races to find “the next hit” to get their band on the radio and a $200,000 video that only recoups 10% of the time.  WTF? Gone is the idea that record labels are necessary or even always helpful.  Gone too is MTV’s agency as a music network, platinum albums, and commercial music retailers like Tower Records and Circuit City.

It might seem very bleak to the common music fan, but from an artist’s perfective, things have never been better.  In the independent hip-hop community, thousands and thousands of regional pockets of talented artists working hard to perfect and distribute their material have all popped up across America and the world.  No longer do artists aim to get $1,000,000 advances, a ridiculous and usually unrecoupable amount, but find themselves as part of an emerging middle-class that Kusek predicted would come to be.

Rap crews like Twiztid and the Psychopathic collective have used their underground and independent acumen to build empires and continue to bring tens of thousands of kids to their annual midwest hip-hop festival.  Upstate New York’s Weerd Science have become a credible and influential voice in the hip-hop underground on the strength of their 2005 debut – an impressive feet for a group with no strong label backing or touring history.   Records and regional tours have directly translated to lucrative career music for some of these artists.

The Peter Principal states that in the workplace, “each employee tends to rise to his level of incompetence”.  Basically this means that you will keep getting promoted and promoted until you are unable to do the next job and that there is a subjectively manifested glass ceiling based on one’s ability to do their job.  This is reflected in the music scene because artists now get to become as famous as they care to be or deserve.  If the music is good, it sticks with people.

And this meritocracy is the future Kusek predicted – catalyzed, in part, by the broadband technological improvements made in the last few years.  HD YouTube videos are a click away, downloading speeds have increased and you can get any artist’s discography for free within a  few clicks.  I listen to most of my new albums on Rhapsody because it’s easier than keeping track of the stacks hard drives full of mp3s I’ve collected over the years.  There’s a Zen to music consumption now, one of the new simplicity of it all.

And for the record, I’m living proof that downloading doesn’t hurt artists.  Without the advent of torrents, kids can quickly get any of my albums for free at any time from basically anywhere.  And that’s awesome!  Kids have my albums, even the rare out-of-print ones, because they’ve found them for free online.  Some of them decide to help support me in other ways by buying t-shirts or getting the occasional track from iTunes, which adds up if the net is wide enough.  I then pay my bills with digital sales, college gigs, and international touring.

I can’t buy a mansion in Hollywood, but that was never the goal.  I get by comfortably and will keep making music until I die.  High five!  What more could I ask for?  The 14 year old version of myself would be very proud of how I turned out at 27.

“Music was a product, now it is a service”.

Check out a new favorite crew of mine from South Africa, Die Antwoord, luminaries in the Johannesburg “zef-rap” scene.  In a truly viral word-of-mouth fashion, another artist I’d worked with (Tina Root from Switchblade Symphony) sent me the YouTube link.

“You’ll like this,” she said. “It’s different.”  She was right.

I checked out their “Enter the Ninja” video – the raps were tight, the chorus was very catchy, the visuals were unique, and the editing was dope!  I then researched zef-rap and learned that it is an international postmodern culture that takes every regional hip-hop tradition I could imagine and amalgamates it into one thing.  It’s hip-hop of the future that I had found by the web from a colleague.

This is how it “zef” a uniquely postmodern hip-hop form: In one video, a rapper named Jack Parow “ghostrides” his car, dancing along side of it.  This is a hip-hop tradition that was popularized in the Bay Area in the last decade, a reflection of the car culture being so integral to “hyphy” rappers like E-40 and Mac Dre.  Zef-rap incorporates many regional hip-hop movements into one genre, which is why I’m so in love with it these days!  Would I have heard of this genre otherwise?  Probably not.  It’s all because of this viral video my friend sent.  Now I can’t stop talking about them.

When kids ask me how I got into music, I always tell them this; if you want to have a career in indie hip-hop or any other genre of music these days, you need to be dedicated, come original, and work on building your brand as something real and human that people can relate to.  Don’t expect to make money on albums, labels are essentially just banks that help promote artists as brands, with CDs being their main promotional tool.

Kusek gave me hope when I was starting out that the playing field would be leveled if you believe in your art.  The punk rock ethics that I grew up with as a teenager in the late 90s are very conducive to the new culture of music listening and consumption.

I’d also like to thank Dave for his support through the years and also for getting me into classes at the Berklee College of Music in 2007 – I’ve learned a lot from him and trust you all can too.

Much respect to anyone working to make a career in music.

Welcome to the future!

MC Lars

mclars.tv
mclars.com
comics.mclars.com

Here is an interesting article/interview by Mark Small and Gerd Leonhard on the future of music marketing from the latest issue of Berklee Today.

“There is no recipe. We can’t go to Universal, Warner Music, EMI, and Sony and say, ‘Here is the solution so you can stay in business.’ says Gerd Leonhard. There is an ecosystem comprising content owners, telecoms, advertisers, marketers, artists, and social networks that have to build the solution together.” Leonhard advocates a blanket license and a flat rate that users would pay for unlimited access to, and unfettered use of, digital music. This method, he maintains, would be one of many revenue streams that could support a new middle class of musicians who are not superstars but who can make a comfortable living in the new music economy.

The day following the conference, I met with Leonhard, who shared more thoughts from his latest book, Music 2.0, a series of essays about the emergence of a new music business model driven by the Internet.* He spoke at length and optimistically about the opportunities he envisions for Web-savvy artists who produce their own music and bring it directly to fans.

Out of Control
For the past 14 years, Leonhard has called for a reevaluation of the prevailing logic in the music industry that exercising complete control over the distribution and use of the assets in record label catalogs is the principal way to make money in music. In the digital era, that model is tanking. Leonhard stresses that computers and handheld telecom devices are essentially copy machines that facilitate the sharing of music, text, photos, video, and more on the Web. In his online book The End of Control, he wrote, “Let’s face it, in our increasingly networked world, the vast majority of media content simply cannot be kept away from its audience. Today in our world of Googles, Facebooks, YouTubes, and iPhones, all content is just zeroes and ones, and trying to prevent its ‘leakage’ is simply futile.”

Everyone knows that the vast array of music is accessible for free via “pirate sites,” software applications that harvest streaming music, and via other sources. Users freely download songs, share files, post songs on their Facebook pages, sync them with their videos and slide shows, and more. For copyright owners-especially the major record labels-the genie is out of the bottle, and litigation against users sharing copyrighted music without payment has yielded little more than bad press. The problem of making enough money to continue producing music is most acute for content creators, whose primary business has been to develop superstars that sell millions of records.

Leonhard has long advocated a shift from tight control of products and copyrights. In what he refers to as the “link economy,” the new commodity is the public’s attention. In this climate, he predicts superstar status will be much harder to attain-and sustain-as the marketplace experiences further fragmentation and mainstream artists compete for attention with lesser-known artists in specific musical niches.

“Thirty years ago, 72 percent of the television audience used to watch Dallas or Gunsmoke,” Leonhard says. “Now 7.1 percent of Americans watch American Idol on a good night. That’s it. There is no ubiquitous TV show these days because there are so many options.”

It’s the same in the music industry. It’s much harder for current artists to sell the number of records their predecessors sold simply because there are more artists out there, more competition for people’s attention. A look at the RIAA’s [the Recording Industry Association of America’s] top-selling albums of all time underscores the point. Vintage artists-including the Eagles, Michael Jackson, Pink Floyd, Led Zeppelin, AC/DC, and several others-dominate the chart. In the United States, the most recent album to sell more than 20 million copies is Garth Brooks’s Double Live album, and it was released in 1998.

Major labels and other repositories of valuable copyright properties may not be wild about the notion that products should take a backseat to audience attention, but they have noted the power of an energized fan base. Leonhard avers that musicians who fully utilize their Internet resources realize that they rather than their CDs are the product, and if they sell themselves properly, they will do well in the link economy.

“In the link economy, the product is the marketing,” says Leonhard. “If you want to promote yourself as a musician, you publish and make everything available on the Web so that people can pick it up and go elsewhere with it. If they like you, they do the marketing for you by telling others and sending links around. In the old days, if you were a star, MTV or the Letterman Show would recognize that by putting you on. Today, your fans recognize your value and send your links to friends, who send them to more people. This is what makes someone a celebrity on the Web. And you can’t buy that; you have to earn it.”

Today, the Web is flooded with content. Anyone with a computer can be a producer. Leonhard contends that this will ultimately raise the bar of artistic quality. “You have to be very good and very unique, and constantly innovate to get people’s attention,” he says. “There are 140 million blogs, and many new ones are created every second. We don’t pay any attention to a blog unless it is good. The same is true with music.”

Show Me the Money
So if musicians loosen control of their copyrights, what sources other than the proposed flat rate on Internet users for access to music could provide income? According to Leonhard, there is a $1 trillion worldwide advertising economy, and Google took in $27.1 billion of it last year. Projections are that in five years, Google’s share could rise to $200 billion. If licensing agreements can be forged with the powerful search engine, the fees could pay musicians for a lot of “free” content. “If Google was authorized to play on-demand music, someone could see my name and play my song,” says Leonhard. “Google would agree to pay a percentage of the revenue from every ad on the page with my song. The fee would be paid to a rights organization like ASCAP or BMI to be divided between all the artists whose music is played. Google can track everything that’s been played, so all artists could be compensated. The technology is in place to do this now. This system is currently being used in China and Denmark.”

It is important for agreements to be made sooner rather than later. When radio began broadcasting music during the 1920s, songwriters demanded a share of the money generated by programming featuring their compositions. ASCAP negotiated for compulsory licenses and radio began paying writers. But there was no provision at the time for a fee to compensate the recording artist if he wasn’t the songwriter. Even today, American radio stations, unlike European broadcasters, pay a fee to the composer or songwriter but not to the recording artist. Radio ad revenue currently yields about $20 billion annually, with the benefit of hindsight we can see that this was a missed opportunity. This situation should be kept in mind as new agreements are made. Half the world now uses cell phones, and a tremendous amount of music is downloaded to handheld devices. In a recent address at Berklee College of Music, Terry McBride, the CEO of Nettwerk Music Group, described the role smart phones already play in the sale of music.

“Musicians need to push for legislation to require issuing licenses for use of content on the Web,” says Leonhard. “Right now if you have a video that gets a million plays on YouTube, you don’t get a dime because there is no license or agreement. Through revenue share, every click, forward, download, [or] video play on the Web would get monetized.”

Fifty Ways
Too many musicians believe that playing gigs and selling CDs or digital copies of their music are the primary ways to make money. “We have to do away with that mentality, because there are 50 other ways a musician can get paid,” says Leonhard. “In the new music economy, you need to build an audience and energize them to act on your behalf and forward your music virally. Later, they can become paying customers. Don’t ask them for their money first. Once fans are sold on you, you’ll be able to ‘upsell’ them special shows, backstage passes, webcasts, a live concert download, a multimedia product, your iPhone application, a premium package for $75.

“When musicians start thinking of themselves as brands, like Nike, they will see that they have more assets than just the zeroes and ones that people can download. Other assets are their creativity, the way they express what they experience, their performance, and their presentation. As a musician and composer, you stand for something. The Web allows you to publish things that showcase who you are and what you do. In 10 minutes of clicking around on your site, people will be able to understand who you are if you’ve put enough out there.”

Even in a time when many have predicted doom and gloom in the music business, Leonhard is optimistic. “Current developments are good news for the artist-provided he or she is good. You have to be different, unique, and honest; have a powerful persona; and know your brand. If what you are doing is real and you are forthright, people will pay you. It’s all about the creator and the person who wants the music. Musicians of the future will do well if they can view themselves as more than someone who wants to be a star and sell a lot of records.”

From SPIN.COM

MC Lars, a self-proclaimed “post-punk laptop rapper,” may be best-known for his fast-talking rhymes about Hot Topic stores and hipster girls, but the Bay Area musician is notably literary, and therefore a fitting participant in our ongoing series of musicians talking about their favorite books. Not only has MC Lars penned songs about Moby Dick, Edgar Allen Poe’s “The Raven,” and Hamlet, he’s also published a book of his own poetry called Bukowski In Love.

For his SPIN.com Book Club pick, Lars veers away from iconic works of literature, instead choosing a practical tome for anyone making music these days: The Future of Music: Manifesto for the Digital Music Revolution, authored by two veterans of pop music who outline the music industry’s digital future.

SPIN: Why did you pick this book?
MC Lars: I studied English literature in college, but in a few years I want to do a PhD in media studies, so I’m always reading books about music technology and the digital music revolution and the evolution of content and new media economics. I read this book because one of the authors, Dave Kusek, is a professor at Berklee College of Music and he’s a really smart guy [who actually was one of the co-developers of MIDI technology, a revolutionary development in electronic music]. It’s really influenced my philosophies on technology and media and it’s also really influenced my business model as a guy with a label.

How many times have you read it?
Three times. It’s a good one.

Do you reread the whole thing or do you just have sections you go back to?

What happened was I read it casually and then I read closely and then I read it again because I wrote a song that was inspired by it. I took some of his philosophies and made it into lyrics. It’s called “Download This Song.” The author heard my song, and on the website for the book they did a little piece about how the song reinforced those philosophies. It was really cool to have this author I really love like the song I wrote about his book.

Read the Spin Article here.

Listen to this episode of “With A Voice Like This” where I am speaking with Jim Goodrich about the future of music.

It’s been four years since The Future of Music book came out and this radio interview starts with what has changed and what has stayed the same since the book was published. But there’s a twist. At the beginning of the show Jim asked that we not focus on the technology itself, since the book had so much more to offer than just a discussion of technology. Among other things we talk about what’s going on in China currently, the Universal Mobile Device (UMD) and of course, the Music like Water concept.

Listen to the interview here.

Download the MP3 file here.

Let’s face it.  Even though Steve Jobs and Apple almost single handedly led the major labels into the digital age of music, the numbers just don’t make sense, for anyone but Apple.  With the licenses for the music that Apple sells on iTunes coming up for renewal, it is time for the music industry to take a cold, hard look at the reality of the deal that it made, and consider their options.

According to research firm Fulcrum Global Partners, while the installed base of iPods will quadruple from 2004 to 2005, the average number of paid downloads per iPod fell by nearly 50%, from 31 to 16.  All of those iPods are almost entirely filled with ripped, copied or pirated music.

Here are the numbers as of Summer 2005:

While CD revenues have declined by some $1.7 Billion dollars on an annual basis,
iPod revenues are predicted to total over $4 Billion dollars in 2005.
At the same time, iTunes gross revenues for music downloads are about $200 million annually, with the labels taking home approximately $130 Million.

Do the math:  CD revenues down $1.7 Billion.  Download revenues up $130 Million.  That leaves a shortfall of $1.57 Billion for the music labels.   At the same time, Apple makes $4 Billion off of the iPod this year alone.  Surely the labels cannot be happy with this.  As a major label shareholder I would be outraged.

Those precious music licenses are up for renewal soon.  The future of music is at stake.  What does the smart money say the labels should do?

Independent labels use networks as a way to reach consumers, not necessarily make money.

"…To many independent labels, the main goal is simply to introduce music fans around the globe to little-known artists who have no chance of being played on commercial radio stations. The payoff they hope for in the long term is greater CD sales; any downloads they sell on the networks are icing on the cake.

"It is small, but everything starts small," Chief Executive Daniel Glass of Artemis Records said of his company’s revenue from Kazaa and other popular file-sharing networks. "To not be part of it is insane."

Read the whole article from the LA Times here

New York – WFUV Presents – If the new world of mp3 blogs, mash-ups, downloads and ringtones boggles your mind, tune in to Let’s Get Digital as host Jen Guerra takes a musical look at all things online.  The New Yorker Pop Music Critic Sasha Frere-Jones, CDBaby.com Founder Derek Sivers, Berklee College of Music Vice President David Kusek, Creative Commons Executive Director Glenn Otis Brown, Analyst Phil Leigh and others join Guerra for an hour-long program examining how the race to get online affects not only musicians, but music fans and the music business in general. 

Let’s Get Digital can be heard on WFUV (90.7 FM) www.wfuv.org and streaming online.

"The latest CD sales numbers are part of an increasingly bleak picture, with the first half of 2005 likely to be a big disappointment. Disc sales have been declining for years, that is nothing new, but now it appears that the bottom could be a long ways away. A quick and dirty analysis points to a format transition, with music consumers gradually moving away from the physical (CDs) towards the digital (downloads, subscription services, etc.) That is how disruptive market shifts work. But somehow, the reality is a bit more complicated. After all, the U.S. market is still estimated to be more than a $10 billion business, and people are still buying CDs from artists they love. Most of these consumers have easy access to free or paid downloads, subscription services, and other options like satellite radio. Perhaps it is in our consumer genes, the need to touch and own something tangible in exchange for our hard earned dollars. Whatever it is, the CD market has not been decimated, and it is not going away tomorrow.

But CD sales are only one part of a much larger picture. Sure, tremendous attention is paid to declining major labels, RIAA lawsuits, suffering retail chains, and lackluster IPOs. But that is all part of the record business, with the music business a much larger entity. Smart artists today think beyond the CD, incorporating merchandising, touring, publishing and sponsorships into a more well-rounded picture. Those other aspects of the business are not in a downward spiral, with customers often spending more than $150 in one evening for a concert ticket, parking, and a t-shirt or two. And no one has to ask those consumers twice – they are ready and willing to spend big bucks for the artists they love.

That larger picture has never been one that major labels have been able to capture. The story is a familiar one: artist signs with label, label invests and makes artist popular, artist reaps benefits of ancillary revenues without the label getting a cut. That is a scenario that has been repeated for decades, but now that non-diversification is starting to threaten the very existence of the big four. Meanwhile, movie studios have an entirely different business structure, reaping revenues from theaters, DVDs, television broadcasts, even stuffed animals and airline screenings. That, coupled with an entirely different consumer relationship, may make the digital disruption less severe in Hollywood. In the meantime, artists like Linkin Park and Coldplay could be the first of many flare-ups, with more artists starting to view themselves as small business units and not major label adjuncts."

From Paul Resnikoff, Editor Digital Music News