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Article by  of CyberPR. Check out the full article here

Newsletter

Before the internet, newsletters were used as a way to connect a world-wide community of fans. However, even now with the existence of social networks, newsletters are a personal and direct interaction that can connect not just you to your fans, but your fans to each other.

One excellent examples of community newsletters are the Grateful Dead’s ‘Almanac.’ What made this newsletter work so well is that it covered more than the music; it covered the scene as a whole.

The ‘Almanac’, typically spanning 5 or 6 pages in length, spent much of the first few pages showcasing original (and exclusive!!) artwork, discussing side projects and music as a whole that the community would be interested in, as well as updating the community about the charitable foundations started by band members (more on sharing passions below). The second half would be band news, announcements of upcoming tours or album releases and finally, mail order music/ merch and tickets.

Video Tour Diary

A concert is more than just music. It is an event. An experience.

A well-delivered concert experience is THE best way to connect with your fans on an emotional level. Because of this, video tour diaries are an extremely effective way to increase that emotional connected established through the concert experience, by giving the attendee’s a deeper look into the behind the scenes happenings before, during and after the concert. Ultimately this gives attendees the chance to grab on to, and re-live the event any time they want to.

The idea of a video tour diary has become quite popular in the emerging hip-hop world, as many of these upcoming artists give their music away for free through mixtapes and focus on making money from the live show; a business model similar to that made famous by the Grateful Dead and Phish.

These videos not only act as a way to offer additional value to those who attended the event, increasing the emotional connection within, but can function as an emotional marketing tool as well. Giving your fan base the opportunity to take a sneak peek of your recent live shows is a fantastic way to drive further ticket sales…

Always remember that a concert is more than just the music. It is an event. If you can convey that your shows are a must-see experience, then you’ve already begun to establish an emotional connection with fans before they’ve even bought the ticket.

Name Your Fans

This is THE first step to creating a tribe, which is the most ultimate form of emotionally connected fan base you could have. This gives your fans away of identifying themselves as apart of a group, and ultimately this creates insiders and outsiders which helps to strengthen the loyalty of those within.

Like her or not, Lady Gaga has done an incredible job labeling her fans as her ‘Little Monsters’.

Even emerging hip-hop artists are starting to understand the power of naming the fan base, such as CT-based Chris Webby, whose ‘Ninjas’ (Webby is an avid Teenage Mutant Ninja Turtles fan) have lead to the over 13 Million youtube views. His latest mixtape  garnered over 23,000 downloads in under 24 hours.

How have you built an emotional connection with your super fans? 

If you’re ready to take your music career to the next level, check out the New Artist Model online music business classes. You can also sign up for access to free lessons.

Photo credit: http://bit.ly/1h7Jtka

Photo credit: http://bit.ly/1h7Jtka

Crowdfunding isn’t being talked about as much as when Amanda Palmer ran her famous Kickstarter campaign, but it’s still going strong. It’s still a great way to fund your projects. However, we’ve all learned a few things about the process along the way. Crowdfunding is more than just a funding tool. It’s a way to connect with your fans, build a deeper relationship, and get people interested and buying your music before its even created. Pre-sale and marketing are just as much a part of crowdfunding as funding.

Here are 5 crowdfunding for musician tips that will set your crowdfunding campaign on the right track. These tips come from the CD Baby blog. This is just a short excerpt, but you can check out the full article here.

1. Build your crowd and then fund: Although there is a discovery element to most crowdfunding platforms, you’re gonna end up very disappointed if you launch a campaign without an existing fanbase.

2. The number isn’t as important as loyalty: If you buy followers or email subscribers, it doesn’t mean they’re gonna buy your crap. You don’t need a huge fanbase to run a successful campaign; you just need an active group of loyal fans, the kind you earn one at a time and interact with regularly.

3. Give your fans an experience: You’re not just selling downloads and t-shirts. You are including your fans in the creative journey. More on this in the next section…

4. Over plan for the fulfillment process: Make sure to get all the pertinent information you’ll need when fulfilling all the orders, rewards, perks and exclusives you’re offering. One of the most commonly overlooked pieces of information is the size preference for t-shirts. But also, make sure not to offer the house concert option to people in Thailand if you’re not going to be able to follow through.

5. Keep updating after you hit your goal: There is often a gap between when all the money is collected and when the final product is released. Don’t leave your fans hanging like a prom date that might not show up. They spent a lot of money on that dress. Make sure they know you’re still taking them to the dance. Keep them updated as to your progress.

There are a lot of great crowdfunding tools out there, but one that stands out for musicians is Pledge Music. Because the platform is specifically focused on musicians, they have a lot of tools in place to help you keep on track and follow the tips outlined above. Here are some stats from Pledge Music:

* 22% of PledgeMusic site traffic comes from fans sharing pledges-only updates.

* 75% of pledgers contribute to a campaign without knowing the band personally. Ergo, they are the email subscribers, Facebook fans, Twitter followers, etc.

* The average pledge is $55-$70.

* 37% of pledges are over $250.

* 37% of the income comes after the 30-60 day campaign on other platforms would have ended.

* PledgeMusic boasts an 86% success rate of reaching funding targets.

* On average it takes 17 pledges-only updates to hit your financial goal.

If you want to learn more about crowdfunding, CD Baby has a free guide available.

Create Fan Engagement on Facebook

Facebook can be an extremely valuable tool for fan engagement when used correctly. It can serve as a platform to talk to fans, and a platform for fans to talk to each other. Additionally, if you create engagement in the form of likes, comments, and shares, you’re also reaching a wider audience – the friends of your fans.

Of course, creating fan engagement on Facebook can be easier said then done. But it is possible! The key is to focus on talking with your fans, not at them. Social media is all about creating an authentic connections with your audience.


If you want some ideas for what to post to Facebook and other social media platforms, download this free ebook: How to Promote Your Music: With 3 Social Media Checklists 


This article features some great tips to create fan engagement on Facebook.

Facebook: It All Starts with a Page

Before you start planning a Facebook strategy, make sure you’re using a Facebook Page, not a personal profile. This issue can be especially tricky for solo artists, who tend to promote their music from their personal profile initially, but it’s important to make the change to an actual Page. Here’s why:

No “Friend” Limit: Facebook Pages don’t have a limit on the amount of fans you can have (personal profiles have a limit of 5000 “friends”).

Keep Personal & Professional Separate: Having a page is a great way to help keep your personal and professional lives separate as well as minimize the risk of annoying friends/family with your music promotion.

Analytics/Insights: Page Insights can be a powerful tool to let you know where your fans are from, who are the most engaged, and what kind of content is working best (photos, videos, text, etc.).

Promoted Posts: With Pages, you can “promote” a post so that it reaches more people. Depending on how much you’re willing to pay, the posts can even reach beyond the fans who have liked the page. This can be a great way to increase engagement and visibility for your music/content, but it can also get expensive quickly.

Ads: Using a Page gives you access to using Facebook Ads. You can use ads to promote your page and increase likes, promote shows, a new music release, etc. You can even target specific geographic regions, demographics, and interests. But again, just like with promoted posts, ads can get expensive quickly, so set a budget and stick to it.

Tip: Reverbnation has a great tool called “Promote It” that makes Facebook Ads a lot easier, and actually tests different ads for you, then uses the best performing one automatically. Check it out here.

To learn what you should include on your Facebook page, how to make the most of your posts, and how to drive Facebook traffic to your website, read the full article on Hypebot.


Hypebot reports: Technology has changed a lot about how concerts are marketed, ticketed and produced since Woodstock.  Recently, the greatest driver of change – particularly from the fan perspective – has been the smartphone.  From taking photos to texting friends and song requests, smartphones are changing how concerts are  consumed and remembered.  But early glimpses of projects from Live Nation Labs and startups like  Tastemate show that we’re on at the start of a smartphone driven live music revolution. This infographic above chronicles the journey so far.
Lots more to come…

Kaiser Chiefs released their new album, The Future is Medieval, on Friday in a very creative manner that is completely customizable by their fans, and with a pretty unique twist, generates income for the fan.

Visit the band’s website, and choose 10 out of 20 tracks and create your own personalized version of the album, place them in any sequence you wish and design your own album cover from pre-selected art.  Fans then get their own web page to sell their version of the album. For every copy their page sells, the fans receive £1 via PayPal.  How about that!

The whole project was conceptualized by the band, Universal Music UK and Wieden + Kennedy London.

Lead singer/percussionist Rick Wilson told the NME, “Is it the future of music? We can’t tell you that. But we hope it might be a catalyst for other people to try similar things. Mix it up a bit.”

Check it out here.

From a fascinating article just published in the Atlantic. “The Grateful Dead’s influence on the business world may turn out to be a significant part of its legacy. Without intending towhile intending, in fact, to do just the oppositethe band pioneered ideas and practices that were subsequently embraced by corporate America. One was to focus intensely on its most loyal fans. It established a telephone hotline to alert them to its touring schedule ahead of any public announcement, reserved for them some of the best seats in the house, and capped the price of tickets, which the band distributed through its own mail-order house. If you lived in New York and wanted to see a show in Seattle, you didn’t have to travel there to get ticketsand you could get really good tickets, without even camping out. “The Dead were masters of creating and delivering superior customer value,” Barry Barnes, a business professor at the H. Wayne Huizenga School of Business and Entrepreneurship at Nova Southeastern University, in Florida, told me. Treating customers well may sound like common sense. But it represented a break from the top-down ethos of many organizations in the 1960s and ’70s. Only in the 1980s, faced with competition from Japan, did American CEOs and management theorists widely adopt a customer-first orientation.

As Barnes and other scholars note, the musicians who constituted the Dead were anything but naive about their business. They incorporated early on, and established a board of directors (with a rotating CEO position) consisting of the band, road crew, and other members of the Dead organization. They founded a profitable merchandising division and, peace and love notwithstanding, did not hesitate to sue those who violated their copyrights. But they weren’t greedy, and they adapted well. They famously permitted fans to tape their shows, ceding a major revenue source in potential record sales. According to Barnes, the decision was not entirely selfless: it reflected a shrewd assessment that tape sharing would widen their audience, a ban would be unenforceable, and anyone inclined to tape a show would probably spend money elsewhere, such as on merchandise or tickets. The Dead became one of the most profitable bands of all time.

It’s precisely this flexibility that Barnes believes holds the greatest lessons for businesshe calls it “strategic improvisation.” It isn’t hard to spot a few of its recent applications. Giving something away and earning money on the periphery is the same idea proffered by Wired editor Chris Anderson in his recent best-selling book, Free: The Future of a Radical Price. Voluntarily or otherwise, it is becoming the blueprint for more and more companies doing business on the Internet. Today, everybody is intensely interested in understanding how communities form across distances, because that’s what happens online. Far from being a subject of controversy, Rebecca Adams’s next book on Deadhead sociology has publishers lining up.

Much of the talk about “Internet business models” presupposes that they are blindingly new and different. But the connection between the Internet and the Dead’s business model was made 15 years ago by the band’s lyricist, John Perry Barlow, who became an Internet guru. Writing in Wired in 1994, Barlow posited that in the information economy, “the best way to raise demand for your product is to give it away.” As Barlow explained to me: “What people today are beginning to realize is what became obvious to us back thenthe important correlation is the one between familiarity and value, not scarcity and value. Adam Smith taught that the scarcer you make something, the more valuable it becomes. In the physical world, that works beautifully. But we couldn’t regulate [taping at] our shows, and you can’t online. The Internet doesn’t behave that way. But here’s the thing: if I give my song away to 20 people, and they give it to 20 people, pretty soon everybody knows me, and my value as a creator is dramatically enhanced. That was the value proposition with the Dead.” The Dead thrived for decades, in good times and bad. In a recession, Barnes says, strategic improvisation is more important then ever. “If you’re going to survive this economic downturn, you better be able to turn on a dime,” he says. “The Dead were exemplars.” It can be only a matter of time until Management Secrets of the Grateful Dead or some similar title is flying off the shelves of airport bookstores everywhere.”

Read more at the Atlantic.

Great post from Mashable about how artists are creating upgrades and enhancements to music business models. Earlier Mike King reported in his blog how Amanda Palmer made $19,000 online using Twitter on a Friday night. The important thing is not the fact that she used Twitter, but that she found a way to engage her fans and make money, on top of the traditional approach of trying to sell CDs or tickets.

“Amanda is not producing money out of thin air, or by swindling some people into buying something they do not want. She’s engaging her fans who are glad to be able to buy some merchandise directly from the artist. Secondly, she’s not a professional PR or a marketing professional; she did it by engaging her audience through the simple tools at her disposal.

Which brings me to my most important point: Twitter is just a tool in this case. Her 30,000 Twitter followers aren’t just people who she followed and then they followed her back; they’re not some random mass of people who just happen to be following Amanda Palmer. They’re her fans, which means that any artist who has fans can do the exact same thing. It’s not a one-time thing or a passing fad: true fans will always be interested in buying a t-shirt, attending a secret gig, or getting their record signed.

We’re still at a very early stage in the online music revolution. Soon, artists will have a multitude of tools to help them communicate with their audience, offer them extra value and, last but not least, make money.

Ultimately, we’re not talking only about replacing current business models; we’re talking about upgrading them; finding new, better business models. You think that the music business is fine as it is? It’s not. It scales awfully. It’s great if you’re hugely popular, but if you’re an indie artist, the big record companies don’t care much about you. As Amanda bluntly puts it:

“TOTAL MADE THIS MONTH USING TWITTER = $19,000
TOTAL MADE FROM 30,000 RECORD SALES = ABSOLUTELY NOTHING.“

These new tools, such as Twitter, will help the entire music business scale much, much better. Very popular musicians such as Radiohead will still make a lot of money. But relatively unknown artists, by promoting their work and selling stuff directly to the fans, using free or inexpensive online tools, will be able to make a better living than they do right now. The future might not be very bright for the big record companies, but it is indeed bright for the artists.”

Read more here at Mashable.

This guy is always so over the top, but he delivers the message.

“What happens when the labels stop paying an advance?

You know that’s gonna happen. With such limited revenue from recorded music, no one’s going to pay you a fortune to make it. There’s no incentive. Live Nation might pay you a fortune to TOUR, but who, in their right mind, is going to pay you a few hundred k when the only thing selling is singles? Hell, not one album released this year has yet gone PLATINUM! Do you expect Universal to be ponying up millions of dollars in the future?

Don’t be surprised if the major labels morph into management companies. In a way, they already have. That’s what a 360 deal is. That’s what the manager has ALWAYS had, a share in all revenue streams. You only get paid if there’s success. Are the majors going to follow this paradigm?

Of course, there could be a bidding war, generating large advances, but Live Nation/Ticketmaster is always going to win that one. Until the majors merge with a touring company, they’re fucked, they just don’t have enough to offer, their costs are too high, their margins too thin. If I were a major, I’d be calling Jerry and Arny, maybe even Seth right now. After calling Phil Anschutz, of course. In order to survive, labels have to play in the touring arena.

But the foregoing is all about money. Don’t you realize that’s what the album was about, money? That’s how you got paid, by delivering an album. Of course the public didn’t know this, but this was the game for eons. Sure, the Beatles made a STATEMENT with “Sgt. Pepper”, but Capitol was more interested in the revenue. Selling 33’s was much more profitable than selling 45’s. And the high-priced/low royalty CD was even more of a moneymaker than the LP record. That’s how we got here. Pure greed, not artistry.

If you want to record a full-length statement, be my guest. I see nothing wrong with that. But are you really interested in laying down ten tracks on wax if you’re not going to trigger a payment?

Please don’t be blinded by history. If your goal is to make money, and seemingly everybody e-mailing me is focused on bucks, how are you going to make money in the future? I’ll tell you. The public is your bank. And people don’t pay solely for recorded music, they may not pay for recorded music at all. How are you going to get paid?

By building an audience.

An album’s worth of material usually does not build an audience. A TRACK builds an audience. If you’re a career artist, people will want more tracks. But only if they’re good.

So the focus is no longer on cutting ten songs, but cutting GOOD songs! There’s an unlimited audience for GREAT songs. Still, how do you nurture your audience?

Playing every night in a single town is not going to build heat. You’ve got to go away for a while to increase demand. But you can’t go away for TOO LONG or you’ll be forgotten. Same deal with music. How do you deliver enough to keep people interested, but not too much to overload them?

DON’T tell me how much you love albums. That’s like labels saying no one will ever download music from the Internet. The album is history, you just don’t know it yet. STATEMENTS are not history, but are you really making a statement?

Innovate in the new sphere.

If U2 weren’t getting paid by Universal upon delivery of an album, they’d be better off releasing tracks in fits and starts. You get continuous publicity. AND, the way they just did it didn’t work, the album’s sales are small. Imagine going on Letterman EVERY MONTH, not for a week straight. BUILDING, instead of blowing your wad.

Imagine rewarding a fan who buys all ten tracks over the course of months. Maybe buying all ten delivers a code that allows you to purchase guaranteed good seats at the pre-sale. Maybe there’s a quiz regarding the content that allows people to qualify.

Maybe when you do that commercial endorsement, the reward is someone can go to the company’s Website and download YOUR NEW SONG! The insta-collection of ten tracks is no longer the starting point, rather you dole out your tracks in drips and drabs, making each release a minor marketing event, that keeps people interested, that keeps them going to the show.

If you’re a star, maybe you announce that you’re going to play the new track at the top of every show. And maybe then not again for a YEAR! So you’ve got to download to be familiar, and come if you want to hear it live. Don’t you see? Giving up the album delivers FREEDOM!

No one says a fan can’t create a playlist of ten tracks that he plays ad infinitum. Maybe the fan creates the album, and posts it to your Website, delineating why he picked this running order, imploring you to play these tracks in this order live. Hell, if the album were such a defined success, how come almost no act plays their latest opus straight through at a gig? BECAUSE ALMOST NO ONE CARES!

People don’t know the music. They want to hear some old stuff too. Just like you do when you make an iTunes playlist. You mix it up. Why shouldn’t the artist mix it up?

As for Record Store Day… How laughable is that. If you’re salivating over this, you’re living in 1990, and hoping we go back to 1970. Record stores are dead. As dead as your Apple II. Some will survive, as dealers in antiquities and tchotchkes, but essentially everyone will buy online.

Point being, how can you lambaste Doug Morris for missing the digital revolution when you too are stuck in the past?

People only want to hear good music. On demand. This has decimated radio. But the album went first. We’re just feeling the full effect now. And it’s only going to get worse.

Newspapers saw a crisis coming. But they figured it was always in the future. That crisis is now. Newspapers will probably not survive. I get three a day. But I know the paradigm is history. I lament the loss, but look forward to the future, wherein more people report upon more stories in a constant 24 hour news cycle.

You too should look to the future. Not one in which you deliver product to get paid by a middleman, but one in which you and your handlers are all in it together, and you build an audience fan by fan, which lasts. Toyotas were a joke in 1970. Now GM is a joke. Toyota built its brand based on reliability, word of which was spread slowly from mouth to mouth. Toyota took decades to surpass GM as the largest automobile company in the world, but GM will never regain the crown.

So don’t tell me about ancient paradigms. Please look to the future. It’s coming. It’s about great. Fans want more music by the acts they adore. Release all the live stuff, all the alternative versions. They don’t taint the original, they allow fans to burrow deeper, the revealing of all your warts burnishes your image!

We live in an information society. That’s what your fans want, information. They don’t want a CD dropped every few years with canned hype, they want continuous info. Don’t get locked into the album syndrome. You’re missing the future.”

– From The Lefsetz Letter

Props to Dave Allen founder of Gang of Four for these suggestions below. Well considered (and annotated). I recommend that you do what he says.

“Humans are subconsciously moved by the emotion of music, it provides a link to their ancestry and to their tribes, it stirs not only positive but sometimes negative feelings linked to moments in time and is often steeped in nostalgia and memories. No other art form is ‘consumed’ as broadly and passionately as music on a daily basis around the world.

How music was delivered used to be in the hands of the few – bands, concert promoters, record companies and their retail distribution companies, radio, and video shows such as MTV. In tech-speak this system embraced ‘push’ – we the mighty and powerful will “provide you” [at a price determined by “us”] with access to our treasures when “we” feel like it. These days that system is rapidly breaking down as music fans now ‘pull’ what “they” want to listen to.

Control has moved from the few to the millions of many. Dull labels and dull bands offering dull, flat, non-experiential product – e.g. a CD, will go the way of the CD as it goes the way of the Dodo. Consider what Cirque Du Soleil provides as an experience compared to Barnum and Bailey’s circus. Or Burning Man compared to your average music festival. Even the Las Vegas Beatles-themed show ‘Across The Universe’ wipes the floor with most rock concerts these days.

Music fans are no longer patiently waiting for their favorite bands to deliver new music according to the old customary cycle – album, press release, video, radio, tour. No, the fan base has to be regularly and consistently engaged.

Some Ideas (for artists, managers and labels):

– First, communicate openly and ask your fans what they want from you

– Listen to what they have to say. Really listen

– Provide unique content such as early demos of new songs

– Never under estimate the power of a free MP3

– Forget completely the idea of an organizing principle (album). Invent a new one

– Use social media wisely. Twitter and Facebook Pages are best, MySpace is too cluttered

– Don’t push messages to your fans, have a two way interaction with them

– Invite them to share, join, support and build goodwill with you

– Scrap your web site and start a blog

– Remember to forget everything you know about the CD “business”

– Start to monetize the experience around your music

– Remember – the browser is the new iPod

Read more from Dave Allen here at his Pampelmoose Blog

Trent Reznor gave this interview to Digg recently.

“I can give you free music, and in my opinion, it may contribute to more people showing up to a show,” he says. “It’s not up to me to give you free music, it’s free anyway, you know for anybody that wants to admit it. Pretty much any piece of music you want is free on the Internet anyway.”

“We’re in between business models,” he continued. “You know, the old record labels are dead, and the new thing hasn’t really come out yet. So, I’m hoping that whatever gets established puts a lot more power in the hands of artists and more revenue.”

“If you have nothing in common with American Idol, and you don’t want to be The Pussycat Dolls, then you really don’t want to be on, certainly a major record label,” he adds.

“At every fork in the road that (profits) will be what’s put first,” he comments.”Not your longevity, not your vision. How can we make money from you.”


Connect With Fans + Reason To Buy = Business Model ($$)

http://revision3.com/player-v2997

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.

I have know Terry McBride for many years now and have had the privilege of working with the entire Nettwerk team on overall strategy a while ago. I am very proud to see some of what we worked on taking shape. What I love about Terry is his ability to act on ideas very quickly and make things happen one way or another. He is not afraid to experiment. He is also not afraid to take risks and transition his revenue model to something that makes more sense and is sustainable.

He got out front very early on in forming a “network” of companies to manage artists, promote tours (remember LillethFest), create merchandise, distribute both physically and digitally, publish writers and integrate the marketing. He tried memory sticks, free downloads, free stems for people to mash up, artist-owned labels, viral and crowd-based marketing.

I met with him in Vancouver a month ago and am preparing a video interview. In the meantime, here are some excerpts from a fine piece by Mark Glaser at PBS.

“At the vanguard of the movement of crowdsourcing music and putting the fans in control is Nettwerk Music, a record label and band management service in Vancouver, BC, that has become synonymous with digital music and alternative revenue streams. The label completely revamped itself in 2002, putting digital music and Internet promotion at the forefront and downplaying physical CD sales. Fans have been able to remix albums by Barenaked Ladies and rapper K-OS — even before his new album comes out — and Avril Lavigne has racked up millions of plays and possibly millions in revenues on YouTube.

The driving force behind the digital makeover of Nettwerk is CEO Terry McBride, a man who has helped pay legal fees for people sued by the RIAA for sharing music online. After McBride took such a strong stance for digital music — and away from CD sales — he started speaking more at conferences and talking to the media to spread his vision for a “digital valet” service. He thinks we will all end up paying $5 to $10 per month for access to all music, TV and movies, with a digital valet that knows our tastes and finds media for us.

While most music labels have been squeezed by the shift to digital music, Nettwerk has had growing revenues, McBride told me, and he expects 80% of the company’s 2008 income to be from digital and alternative revenues — and not CD sales.

“In 2007, about 70% of our sales on intellectual property was all digital, and this year it will be around 80%,” he said. “A lot of physical sales comes from our bigger artists and we do print-on-demand for our smaller artists, for their mail order or for touring…My stance on file-sharing did not match what my brethren in the music industry believed. I remember giving a keynote speech three or four years ago, and having a lot of pissed off people.”

When did you realize how important digital music would be vs. physical music and CDs?

Terry McBride: We started our whole change internally in spring or summer of 2002. We did it really quietly. We had one of these executive team summits. We looked at where everything was going. We looked at the fact that 25 million [CD] sellers would be 5 million sellers. The fact that million sellers would be quarter-million sellers. And how our existing model would work within that. Would we take the same stance, to protect the castle and fight, or was there a different way of doing it?

The interesting thing then was that we had the initial digital data to look at. We saw a lot of what was happening. And we said, ‘Where will all this be in five years, and will we be ready for it?’ There was a conscious decision made at that meeting to get out of the physical music business. So we decided to retool our whole company and over the next two years, that’s what we did. For a company that had had an attrition rate of 1% or 2%, a company of 120 or 150 people, over the next three years we had a turnover of almost 25% a year as we changed almost everything.

Rather than have a marketing team with marketing meetings, and promotion team with promotion meetings and sales team with sales meetings, we got rid of all that and created silos. We created three teams that had everything from Internet to traditional marketing to sales to IT to promotion — all in one group, and got rid of the meetings. So everything you needed for an artist was in that group. There was no heads of marketing. We shifted from 12 traditional marketing people to 3 traditional marketing people and 8 or 9 Internet marketing people.

Then we aggressively went after every DSP [digital service provider] that was interested in music that we had, and we set up a team to deal with the programming of metadata behind what we were actually doing…All of our marketing is not around albums but around bands and brands. Our marketing is about understanding the social elements of songs, of music, of emotions.

Fortunately we’re a growing business right now. We didn’t protect the castle. We also made the switch at a very good time to make the switch. Avril had broken, Coldplay had broken, Dido was doing amazing, Sarah [McLaughlin] was doing amazing. The Barenaked Ladies were doing amazing. We were flush with cash. If we made those changes now, it would be very very difficult because money is much more tight.

You have been pushing many bands to start their own labels. How did that start?

McBride: That came from a point of view of how do we get collapsed copyright. How do we get an authentic relationship between the artist and the fan? How can we remove everything that we possibly can from the relationship — or between the relationship — of the artist and the fan. Artists owning their own copyrights and being able to be in direct communication is a far more authentic relationship.

There’s a risk and reward to that. If an artist is signed to a major label, then the manager has no risk, but then you’re only getting a commission from publishing and master royalties combined, maybe a maximum of $2 [per CD sale]. With an artist [label], we had to finance it, but we were commissioning off a $5 or $6 net [per sale]. So obviously we get a much better commission, but it’s a much higher risk. With these artist imprints, it takes two to three albums for them to work.

We’ve found in the digital space, that you will sell anywhere between 25% to 50% of your volume from your catalog upon release of any new albums. So you are layering intellectual property. In the digital space, where you don’t need to buy shelf space, if you create the right metadata behind what you’re doing, and market it in an effective way — you’re not marketing the new album, you’re marketing the brand. By the time you make it to album three, you are selling as much of the catalog as the new album, but you don’t have the cost with the catalog and everything starts to make sense.

So I had to get people here to believe in this, and stop people from having a heart attack over the equity we were tying up, which we had no ownership in. But proving the model that you have have an artist like State Radio, which is a great example of an artist who makes a couple hundred thousand dollars a year from intellectual property, which will help finance the next album.

Chad [Urmston of State Radio] just played to 2,800 people with a $25 ticket price in New York on the weekend. He’s marketing a brand, he’s not just marketing intellectual property. Now it all makes sense. He’s happy, he owns his future, his audience has grown with him really well. Now everything makes sense to him, where initially he was unknown and had to work from the ground up.

The Internet marketing team and his manager did a spectacular job of understanding who his tribe is and would be. Out of the eight artist imprints that we launched, seven of them are very profitable, but it took time and selling the managers on the fact that there were no commissions to be made to a certain point. If they signed an artist to a major label there was instant commissions. And it took the lawyers years to get their heads around it because they just didn’t believe in it. It’s taken time, but now the managers are looking at a very steady cash flow, and the artists aren’t fighting for their creative freedom but actually using their imagination — and those are two very different things.

For the marketers of music these days, how has their job changed? It used to be about talking to radio and retailers. Now is it about search engine optimization (SEO)?

McBride: Search engine optimization, the ability to write basic code, understanding how social networks and blogs work together, how to connect that interaction back to the sale of music or monetization of behavior or crowdsourcing music. It’s understanding all of those things, and having a very imaginative marketing plan around the artist vs. around a product. It’s really brand marketing. What are the artists’ causes? Are there cause alignments? Are there other brands we can hook up with to align our causes? And if the other brand is bigger, can we give them free music and get exposure to their audience because it’s like-minded tribes?

It’s basically social marketing. It’s understanding social tribes and peer-to-peer interaction that the social networks have taken from a small group of 20 of your peers to 250 of your peers. And not focused on recommendation engines, but the social aspect of recommendations. So it’s not a computer making the recommendation, but social groups doing it. Looking at the technology but not using it for what it was meant for. That’s what the creative arts do. The technologists build something with a certain purpose in mind, and then the creative people take what the nerds have done and take it in a completely different direction than what people saw coming.

You’re doing a lot of crowdsourcing of music, where you put out pieces of music and let people remix them. Is that about engagement and interaction more than business?

McBride: Well it’s both. We started initially with T-shirts. We found out that the T-shirts that the fans designed — even if the artists didn’t like them — the people who went to shows liked them more than the ones that the artists designed. That was consistent whether it was Barenaked Ladies, or Avril or Sarah — the fans’ T-shirts always sold more. The fans would do the designs and vote up the ones they liked, and filter them to the top, and we would take the top 3 voted designs and put them in production. And they were consistently the top sellers out there.

In 2005, we took it a step further by releasing Barenaked Ladies songs in stems [pieces of the music tracks]. That sparked the idea for the guys who created Rock Band. That was more of a remix. Now I’m more about the mix; to hell with the remix! We have an artist named K-OS, and we released all of the stems two weeks ago, and the fans have not heard the album. It’s not due out until March, so they are actually mixing the album. So we will release physically and digitally the artist version and the fan version. And when we go to radio, we will service the artist version and fan version. So we are taking it the rest of the way.

You can even take it beyond that. With K-OS, we’re thinking about having the audience vote on which 10 to 12 cities he plays in Canada. We might even take it one step further: pay as you go not as you enter. And maybe when you leave you get a copy of the fan mix for your donation, so there’s karma pricing on the exit. Let’s take this whole tribal/social interaction the whole way. Everyone including Nettwerk has dabbled with it. We have probably dabbled more than any company with a wide assortment of artists, so we have a good idea of what works and what doesn’t work. But with K-OS it’s the first time we’ve gone all the way with it.

Read the whole PBS Interview here.

Corey Smith

Bob Lefsetz posted in December about Corey Smith, a fantastic artist who is blazing a new trail through the music business using entirely new ways of thinking.

Corey’s whole business model is based on giving away lots of music for free and building relationships with his fans. Last year he grossed $4.2 million with a team of seven people. He does it primarily through touring and developing seriously close relationship with his fans.

Lefsetz said “Corey was a high school teacher. Playing gigs on the weekend. Marty Winsch (now his manager) was booking a venue. Was there any way to make headway, for Corey to support his wife and two kids playing music?

Absolutely said Marty. But first they had to release the equity in Marty’s recordings. They had to make them free on his site. To everybody.

And it was this giving away of the music that was Corey Smith’s tour support. They didn’t need a nickel from a label or a fat cat. Because once people heard Corey’s music, they had to see him live.

Which they did. In 2007, Corey Smith grossed $1.7 million. This year, not even half a decade into Marty’s management of the act, Corey’s going to gross $4.2 million. Free music built the base. Fan rabidity blew the act up.

You can buy the tracks on iTunes. They’ve sold 420,000 so far. When they experimented last summer, and took the free tracks down from Corey’s site, iTunes sales went DOWN! So, they put the free tracks back up. Actually, people e-mail Marty every day, asking for a track. AND HE JUST E-MAILS THE SONG BACK!

Not everybody’s ready to commit right up front. The free music allows people to try Corey out.

They don’t want radio play. They gave a station in a city sixty tickets to give away, but only on the condition that they DIDN’T play the songs. Marty wants people to experience Corey Smith live. That’s where it happens.

And Marty wants it to be easy. So therefore, he sells FIVE DOLLAR TICKETS! Yes, he rewards fans. Tickets are CHEAPER on the on sale date. And let me ask you, how many people are going to tell their friends they scored such a deal? And maybe drag them along with! That’s your marketing. Your fan base. It isn’t about hiring a PR firm or using Twitter. Actually, Marty pooh-poohs most technology. He says you’ve got be wary that the technology doesn’t get ahead of, doesn’t overwhelm the act. He doesn’t use Google Analytics to find out where each and every fan is. Marty goes on feel. He, and his uber agent Cass Scripps just go into a new territory, and although the first gig might be soft, the one after that never is. Because Corey delivers.

Actually, that’s important. Marty has tried releasing the equity, giving away the music of other acts. But they haven’t succeeded. Because they’re just not good enough.

If you’re truly good, you don’t need anybody else’s money, your recordings can be your tour support, they can put bodies in the seats, you can build a career.

Whenever anybody e-mails Marty and asks if they can meet Corey, Marty always says YES! He tells them when to show up for the meet and greet. This is the new paradigm. Eliminating the gulf between the act and fan. Trusting your audience. That if you’re damn good, they’ll give you all their money.

You don’t have to play by the old rules. You don’t need any money. You just need good music. And good management.”

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The Future of Music Book

Corey recently gave a lecture at a UGA Music Business class and talked about his philosophy and career. He mentioned that he has been influenced by “The Future of Music” book. Yeah Baby!

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Check out Corey’s Website here and be sure to get one of those $5 tickets to see his live show. This is the future of the music business.

Here’s an email from Trent Reznor of Nine Inch Nails to his fans. Here is a band that is inventing their own future and building their fan base directly. Take note, this is how it is done… Awesome. (Thanks to Mike King for this one).

Subject: Nine Inch Nails survey

Message from Trent:

Hello everyone. I’d like to thank everyone for a very successful year so far in the world of Nine Inch Nails. I’m enjoying my couple of weeks off between legs of our Lights In The Sky tour and got to thinking… “wouldn’t it be fun to send out a survey to everyone that’s shown interest in NIN?” Well, that’s not exactly how it went, but regardless – here it is. As we’ve moved from the familiar world of record labels and BS into the unknown world of doing everything yourself, we’ve realized it would benefit us and our ability to interact with you if we knew more about what you want, what you like, what you look like naked, etc. I know it’s a pain in the ass but we’d truly appreciate it if you’d take a minute and help us out. As an incentive, everyone who completes the survey will be able to download a video of live performance from this most recent tour (and I know what’s going through your little minds right now: “I’ll just grab this off a torrent site and not have to fill out the survey!!!” and guess what? You will be able to do just that and BEAT THE SYSTEM!!!! NIN=pwn3d!!!) BUT What if we were to select some of those that DO complete the survey and provide them with something really cool? I’m not saying we’ll ever get around to it, but if we did maybe something like signed stuff, flying someone to a show somewhere in the world, a magic amulet that makes you invisible, a date with Jeordie White (condoms supplied of course), you know – something cool. See, you’d miss that opportunity AND be a cheater. Do the right thing – help us out. You’ll feel better.

Thank you and I’ve had too much caffeine this morning, Trent

You wanna take the survey? Click here
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