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As an independent artist, it’s frustrating to be stuck and broke. You find yourself wondering why others are successful and where all the money is hidden. Yeah I know, it’s really all about the music, but the reality is you need money to operate your business and invest in your future.

In my continuing Mini Series, I reveal tools and specific strategies you can implement to create multiple revenue streams and cash flow for your music. Discover two crowdfunding platforms you can use to support your art and ring your cash register again and again. 2015 can be your best year ever!

Let’s get to it.

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You will learn about Patreon and Pledge Music and how to use those platforms to increase your cash flow through fan funding.

Jump into the video as I show you the money.

Thanks for all of your comments and encouragement. I absolutely love hearing what you’re thinking, so please be sure to leave a comment or question below today’s video. Someone will be very happy that they did.

PLEASE – If you know anyone else who might benefit from watching this Mini Series on the music business, please share this post with them. 

Photo credit: http://bit.ly/1dCOr9T

Photo credit: http://bit.ly/1dCOr9T

One of the best ways to grow is to look at what’s worked for other indie musicians and adapt it to your own career. I’ve compiled 10 great strategies for indie musicians with 10 real examples to get you going. A lot of musicians I’ve talked to think they can’t start making strategies to move their career forward until they’re making money, until they take some business classes, or until they get a manager. The coolest thing about these strategies is that you can start using them TODAY.

Here’s strategies 1-5. (You can find part 2 right here).

1. Make a Plan from the Start

Making a great plan is one of the best ways to get to that music success you deserve. Not only do concrete goals give you something to aim for, they also help you decide what your first step should be.

Try to make your goals as specific as possible. Instead of saying “I want to be rich and famous,” try something specific like “I want to be able to be a full time musician with a yearly salary of at least $75,000 and be able to tour outside my home state.” Break down your lofty goal into smaller tasks like “gather contact information for local venues,” “contact 5 venues this week,” and “connect with another band to share a gig.” Suddenly finding a way to reach that goal becomes more manageable.

From the start Karmin knew they wanted to be a pop duo targeting a young teen audience. Manager Nils Gums suggested the duo cover current popular songs to get in front of their target audience. They followed the charts and consistently covered the most popular songs every week. The important takeaway here is that Karmin knew their goal, they made a plan to get there, and they stuck with it. If they had given up on the cover strategy after only a few weeks, they would never have gotten to where they are today.

2. Leverage Your Copyrights
Your copyrights are your business. They are your assets and your products, so it makes sense to take some time to understand them. You don’t need to be on the same level as a big-shot entertainment attorney, but it helps to have a general understanding of copyright law.

There are two kinds of copyright: composition and sound recording. Copyright is created when a musical idea is put into tangible form. So when you write that song down (composition) or record it (sound recording) you own the rights!  All those rights are exclusive, meaning you, and only you can leverage your song. Remember that copyrights are power! You own the copyrights, so you have the power. Think about it, without your copyrights would labels or publishers have anything to sell? Lots of musicians have been realizing this and have figured out cool ways to leverage their copyrights.

The Happen Ins are an Austin-based rock band that were featured in a catalog from the clothing company Free People, a corresponding video, many blog posts, and played at the catalog release party. In order to grow their fan base, the Happen Ins offered a free download to Free People’s customers. In many cases this exposure can be far more valuable than money.

3. Focus on Time Management

Today’s indie musician plays the part of the artist, and the business professional, and as a result, many find themselves juggling entirely too many tasks. It’s great that artists today can be 100% in control of their career, the problem comes when you can no longer find enough time for what matters most – your music!

If there’s anything you are doing that’s not bringing you closer to your goals, stop or take a closer look.  If you’re spending hours each day on tasks that don’t have much benefit, eliminate, simplify, postpone, or delegate to your team members. Try to prioritize the list. More urgent matters and tasks that you keep putting off and putting off should have a high priority. AND REMEMBER, make time for your music!

Michael Shoup is a musician and entrepreneur who turned his career around and started making profit with time management. After graduating college with a Bachelors degree in music, Shoup started his career as a musician and effectively gigged himself into $6,000 of high interest credit card debt. Time management has helped Michael Shoup become debt free. On top of that, he’s managed to self-fund an album, started a music marketing agency, 12SouthMusic, and created a social media app, Visualive.

4. Build a Team that Grows with You

DIY may not be the best option for indie artists. There are a lot of artists out there with excellent business chops, but they’re still not experts. And that’s okay, because you have more important things to do like creating music! The key is to find a team who is motivated and passionate. Instead of DIY, move towards a do-it-with-others (DIWO) strategy.

Your team doesn’t even have to be seasoned pros. If you have a band you’re already way ahead of the game. Everyone has their own unique skills, so take advantage of that!

Pop singer/songwriter Betty Who was able to be really successful with a team made of college classmates. Producer Peter Thomas and manager Ethan Schiff attended Berklee College of Music with Betty Who. With Peter Thomas she was able to find and really latch onto her signature pop sound, and Schiff helped set her up on the business side of things. Betty Who’s “Somebody Loves You” began drawing the attention of the pop music world after the release of her first EP The Movement in spring of 2013. In September 2013 the song was featured in a viral gay marriage proposal video and just a few days later she was signed to RCA Records.

5. Get out There and Network!

Networking is really important to success in music, but it’s easy to get overwhelmed with internal tasks and forget to take the time and introduce yourself. You don’t need a big speech or a prepared pitch. Just get into the habit of introducing yourself to one person at every show you play or at every studio you record in. Talk to the guy in charge of the soundboard, maybe he loved your show and wants to produce your next album.

Remember, networking is a two-way relationship, and collaboration is usually the best way to promote this win-win situation. If you collaborate on a show, a song, or a recording, both of you will be exposed to the other’s fanbase!  Always remember to give before you ask. Do something for someone and they will remember you.

Vinyl Thief used their extended network to find success. The band released their first EP, Control, in 2010 but were disappointed in the results. They called on a former high school classmate, now music marketing graduate, Wes Davenport who started working on improving their marketing efforts. Davenport helped them grow their fanbase through the digital releases of single, White Light, and second EP, Rebel Hill. (Source)

 To learn more strategies for indie musicians that you can be applying to your career RIGHT NOW, sign up to get a free copy of our most popular ebook, Hack the Music Business.

 

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

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

“Why would anyone want to be a musician in this environment?”

I wake up every day fascinated by this question. There are plenty of articles written by people looking into the music industry from the outside proclaiming the end of an era and the doom of indie musicians. Many ask this question and simply cannot comprehend why anyone would want to spend so much time and creative energy on something that may never bring in any real money. And who can blame them given the industry’s overall decline.

Within the business however, some musicians have a completely different outlook. For them, music is just what they do. It’s not about making a ton of money, or trying to impress anyone – its just a way of life, a dream to live.  It’s like breathing.  These people believe that they have the privilege to create. Almost the obligation to do so.

The question these musicians ask  is “How could I not be a musician?”

As we talk about in the New Artist Model course, the love of music is a prerequisite to a life as a successful musician. If people went into the arts to with a sole purpose to make money – there would be no magic – and that creative spark and passion that drives so many people to create would not be present. Music goes beyond money and economics, and isn’t that why it’s so powerful?

Some people are musicians because they just have to be.  The truly great ones.  So there’s my answer.   Are you one of those people?

I’d love to know what you think.

I posted the question “Why Would Anyone Want to be a Musician in this Environment?” to Twitter and this is what I got in the first hour.

musicadium@davekusek I would want to be a musician no matter what environment we were in. The desire to create would override, methinks.

andreakremer@davekusek Isn’t that like asking why anyone would want to play tennis? Do people who play tennis give up because they can’t make a profit?

timothyeric@davekusek fascinated that people still want to be musicians or by the environment and its challenges?

kmsolorio@davekusek passion is the only reason I could come up with. btw, very interested in learning more about your tools for musicians.

marjae@davekusek I am a musician because I love music and, more importantly, sharing it with people. This sharing gives a high unlike any other.

marjae@davekusek Great question! It would be great if you could share some of your replies with us. . . the questions certainly made me think!

Lars_Christian@davekusek I think that if “he environment is a factor on whether you become a musician or not, you probably won’t “make it” either way.

tigerpop@davekusek it’s not always about want.

Pattyoboe@davekusek Being a musician is just who I am … no matter the environment. Maybe like I was still a mom when my kids acted up, I guess ..?

gah650@davekusek it’s an inexorable artistic need to create; thank God.

melbahead@davekusek If being a musician is anything like being a visual artist then it doesn’t matter what one wants. It’s a compulsion, a calling

_willthompson@davekusek it’s extremely hard and counterintuitive to hold back from doing something you have natural predisposition for.

kimpwitmanRT @davekusek: why would anyone want to be a musician in this environment? can someone tell me? i wake up every day fascinated by this.

manishamusic@davekusek Being a musician is not particularly easy in any market-based economy. Something deep inside steers the wheels. Is it insanity?

PtbTrees@davekusek perhaps the love of music is enough to make it worth it. at least thats how I feel

atomicdacia@davekusek because its like a drug. Once its in you you just can’t get enough

Kalajdame@davekusek it seems like an easy way to make money i guess..i do it cuz i love to make music and if i could get paid for it ..u kno the rest

You can love what you do and be successful.

Tell us what drives you.

 

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Photo credit: http://bit.ly/1de4Yfe

In the past the standard model was to release a full length album every year or so, and while a lot of musicians today still go by that model, more and more are starting to do smaller, more frequent releases. Especially if you’re an indie artist, this strategy is great for building a fan base and staying in the front of your fans’ minds.

Here CD Baby lists out some of the key benefits to the frequent release strategy. If you want to see all 10, check out the full article.

1. Keep your existing fans “tuned in” – Our attention spans are getting shorter and our entertainment options are increasing. If you disappear for three years without any new music, you can’t expect your old fans to pick right up where you left off. You need to stay on their radar if you want them to continue supporting you with equal fervor. The more frequently you release music, the more chances you have to remind them of why they love you.

2. Generate more opportunities for press – Likewise, the more music you put out, the more chances you have to contact bloggers, music magazines, local weeklies, etc. Pinning all your PR hopes on one album release every few years really limits your chances to get the press talking about your music.

3. Pace your creative and recording workload – It’s very time-consuming (and potentially expensive) to complete a major recording project all at once. Generally to finish tracking and mixing a full album in one stretch, you’re looking at anywhere from two to twelve weeks’ worth of work. But what about one song a month? That sounds more manageable, healthy, and realistic, which probably means it’s more likely to happen!

You’ll put everything you have into one song at a time to get it right; then have a little break from recording until next month — rather than exhausting all your energy or ideas. You can release a single every month for a year (and even do a release party for each one if you want to draw some extra attention to the new music). At the end of the year, compile the best ten tracks into an album.

4. Highlight your best songs in multiple ways – Fans love bonus material: remixes, rough demos, alternate takes, b-sides, etc. You can either release these bonus tracks as singles throughout the year, or include them in a special edition of your next album (which gives diehard fans another incentive to purchase the full album even though they already bought the singles that appear on that album separately).

5. Show off your live chops – Whether you produce your own concert recording or do an in-studio for a radio show, TV program, or music blog — turn those sessions into albums or EPs. People love to hear raw, live performance versions of their favorite songs.

How often do you release music? Share in the comments!

 

One of the most amazing things about music is that it is always evolving. You can alway push the boundaries of a genre or even mash two together to create something completely new. All the genres we have today are a result of this creative evolution and new genres will continue popping up as we move towards the future.

Especially today, it’s easy to feel like everything has been done. With so many creative people out there, developing a unique style can seem almost impossible. But isn’t that challenge one of the reasons we became musicians in the first place? If there wasn’t always some way to improve or grow, would we be as drawn to making music? Maybe you won’t invent a completely new genre, but by continuing to push yourself creatively you’re adding to the infographic below one song at a time.

Today, remember this infographic. We’ve come from classical and ragtime to grunge, post rock, and EDM. Just like the evolution of music, your creative journey as a musician has no final end where you know and have done everything. And that’s a good thing.

Here’s the static version of the infographic. Be sure to check out the interactive version here.

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Photo by Mark Thorsen on Flickr

Photo by Mark Thorsen on Flickr

For musicians, video is an extremely powerful media. Many music fans use sites like YouTube to keep up with news from their favorite bands, discover new bands, and listen to music.

Indie musicians with a limited budget do not need to be intimidated or discouraged by the big-money major label videos. You can create great video content on a budget. As a musician, you are creative. Use that creativity to come up with great video ideas that don’t require millions of dollars! Your fans will appreciate the thought you put into the video and the fact that you didn’t follow the default “we’re playing our song in the woods” approach.

Kelley James is a singer/songwriter. This article he wrote for Hypebot is a great example of how real musicians are doing great things on a limited budget. Here’s a short excerpt from the article. You can read the full article on Hypebot

1. When creating content, think outside the box.

Everyone is pretty familiar with the two main standbys that most artists will utilize when it comes to creating videos: the video-blog update and, of course, music videos. One is low budget with the potential to be stale and contrived while the other often seems like too big of an investment for artists who are still growing. That’s why it’s very important to think outside the box when it comes to video content. What are your viewers getting from your videos that they can’t get elsewhere? If the answer is “nothing”, they probably won’t be tuning in any time soon. When I’m creating content for my channel, I like to give my fans something they can’t see at a show or buy on iTunes, so I like to do one of my signature freestyles on-the-spot. Other times, I’ll mash up two songs into one streamlined acoustic performance. Once your viewers realize that they’re getting in on something special when they watch your videos, you can bet they’ll be back again next time.

2. More is less.

There’s proof all over the web that a clever idea can be as valuable, if not more, than a bloated budget. A lack of funds can be a blessing more than a curse in that it forces you to think creatively and work with whatever resources are immediately available. In 2012, I released my single “Summertime On My Mind” and wanted to create a unique video to promote it without spending a ton of cash. I was involved in a campaign for Patagonia at the time called “Repair, Reuse, Recycle” which was aimed at promoting cleaner environmental practices and conserving resources, and I saw one that one of the logos was an acoustic guitar with only one string. Inspiration struck. With the goal of showing that you can create something awesome with only simple tools, I rounded up five friends and six guitars – each with only one string. We played the entire song together, one string per person, and over 13,000 views later, I was able to prove that it doesn’t take more than a few buddies and some ingenuity to make something special. Don’t get caught up in trying to copy the music videos you see on TV, because the average major label video usually has a budget somewhere between $200,000-$500,00. Use your brain and remember, more is less.

For more tips from Kelley James, check out the full article on Hypebot.

How do you make the most of your  video budget? Share in the comment section below!

The music profession and musical training is often pushed aside for the likes of math, business, and economics. However, recently more and more studies have presented evidence that musical training contributes to more than one’s ability to play a song. You may be surprised to find out that many top executives and influential people in today’s society are musicians on some level. Some are trained at top music schools, others are more causal, self-taught players, but all of them will not hesitate to name music as one of the contributing factors to their success.

In this article, which originally ran on the New York Times, many top executives say that music taught them collaboration, creativity, discipline, and the ability to meld many conflicting ideas into one solution. These skills are useful not only in music, but in all aspects of life, including business.

Think about it, musicians spend hours trying to perfect one short phrase. They know when to take the solo and when to give the spotlight to their bandmates. They would rather try something new than stick with the same old. The professional who puts that same dedication into their work, who is not afraid to share the spotlight and delegate, and who tries new things is often the one that achieves success.

This article, written by Joanne Lipman, was originally published on the New York Times:

CONDOLEEZZA RICE trained to be a concert pianist. Alan Greenspan, former chairman of the Federal Reserve, was a professional clarinet and saxophone player. The hedge fund billionaire Bruce Kovner is a pianist who took classes at Juilliard.

Multiple studies link music study to academic achievement. But what is it about serious music training that seems to correlate with outsize success in other fields?

The connection isn’t a coincidence. I know because I asked. I put the question to top-flight professionals in industries from tech to finance to media, all of whom had serious (if often little-known) past lives as musicians. Almost all made a connection between their music training and their professional achievements.

The phenomenon extends beyond the math-music association. Strikingly, many high achievers told me music opened up the pathways to creative thinking. And their experiences suggest that music training sharpens other qualities: Collaboration. The ability to listen. A way of thinking that weaves together disparate ideas. The power to focus on the present and the future simultaneously.

Will your school music program turn your kid into a Paul Allen, the billionaire co-founder of Microsoft (guitar)? Or a Woody Allen (clarinet)? Probably not. These are singular achievers. But the way these and other visionaries I spoke to process music is intriguing. As is the way many of them apply music’s lessons of focus and discipline into new ways of thinking and communicating — even problem solving.

Look carefully and you’ll find musicians at the top of almost any industry. Woody Allen performs weekly with a jazz band. The television broadcaster Paula Zahn (cello) and the NBC chief White House correspondent Chuck Todd (French horn) attended college on music scholarships; NBC’s Andrea Mitchell trained to become a professional violinist. Both Microsoft’s Mr. Allen and the venture capitalist Roger McNamee have rock bands. Larry Page, a co-founder of Google, played saxophone in high school. Steven Spielberg is a clarinetist and son of a pianist. The former World Bank president James D. Wolfensohn has played cello at Carnegie Hall.

“It’s not a coincidence,” says Mr. Greenspan, who gave up jazz clarinet but still dabbles at the baby grand in his living room. “I can tell you as a statistician, the probability that that is mere chance is extremely small.” The cautious former Fed chief adds, “That’s all that you can judge about the facts. The crucial question is: why does that connection exist?”

Paul Allen offers an answer. He says music “reinforces your confidence in the ability to create.” Mr. Allen began playing the violin at age 7 and switched to the guitar as a teenager. Even in the early days of Microsoft, he would pick up his guitar at the end of marathon days of programming. The music was the emotional analog to his day job, with each channeling a different type of creative impulse. In both, he says, “something is pushing you to look beyond what currently exists and express yourself in a new way.”

Mr. Todd says there is a connection between years of practice and competition and what he calls the “drive for perfection.” The veteran advertising executive Steve Hayden credits his background as a cellist for his most famous work, the Apple “1984” commercial depicting rebellion against a dictator. “I was thinking of Stravinsky when I came up with that idea,” he says. He adds that his cello performance background helps him work collaboratively: “Ensemble playing trains you, quite literally, to play well with others, to know when to solo and when to follow.”

For many of the high achievers I spoke with, music functions as a “hidden language,” as Mr. Wolfensohn calls it, one that enhances the ability to connect disparate or even contradictory ideas. When he ran the World Bank, Mr. Wolfensohn traveled to more than 100 countries, often taking in local performances (and occasionally joining in on a borrowed cello), which helped him understand “the culture of people, as distinct from their balance sheet.”

It’s in that context that the much-discussed connection between math and music resonates most. Both are at heart modes of expression. Bruce Kovner, the founder of the hedge fund Caxton Associates and chairman of the board of Juilliard, says he sees similarities between his piano playing and investing strategy; as he says, both “relate to pattern recognition, and some people extend these paradigms across different senses.”

Mr. Kovner and the concert pianist Robert Taub both describe a sort of synesthesia — they perceive patterns in a three-dimensional way. Mr. Taub, who gained fame for his Beethoven recordings and has since founded a music software company, MuseAmi, says that when he performs, he can “visualize all of the notes and their interrelationships,” a skill that translates intellectually into making “multiple connections in multiple spheres.”

For others I spoke to, their passion for music is more notable than their talent. Woody Allen told me bluntly, “I’m not an accomplished musician. I get total traction from the fact that I’m in movies.”

Mr. Allen sees music as a diversion, unconnected to his day job. He likens himself to “a weekend tennis player who comes in once a week to play. I don’t have a particularly good ear at all or a particularly good sense of timing. In comedy, I’ve got a good instinct for rhythm. In music, I don’t, really.”

Still, he practices the clarinet at least half an hour every day, because wind players will lose their embouchure (mouth position) if they don’t: “If you want to play at all you have to practice. I have to practice every single day to be as bad as I am.” He performs regularly, even touring internationally with his New Orleans jazz band. “I never thought I would be playing in concert halls of the world to 5,000, 6,000 people,” he says. “I will say, quite unexpectedly, it enriched my life tremendously.”

Music provides balance, explains Mr. Wolfensohn, who began cello lessons as an adult. “You aren’t trying to win any races or be the leader of this or the leader of that. You’re enjoying it because of the satisfaction and joy you get out of music, which is totally unrelated to your professional status.”

For Roger McNamee, whose Elevation Partners is perhaps best known for its early investment in Facebook, “music and technology have converged,” he says. He became expert on Facebook by using it to promote his band, Moonalice, and now is focusing on video by live-streaming its concerts. He says musicians and top professionals share “the almost desperate need to dive deep.” This capacity to obsess seems to unite top performers in music and other fields.

Ms. Zahn remembers spending up to four hours a day “holed up in cramped practice rooms trying to master a phrase” on her cello. Mr. Todd, now 41, recounted in detail the solo audition at age 17 when he got the second-highest mark rather than the highest mark — though he still was principal horn in Florida’s All-State Orchestra.

“I’ve always believed the reason I’ve gotten ahead is by outworking other people,” he says. It’s a skill learned by “playing that solo one more time, working on that one little section one more time,” and it translates into “working on something over and over again, or double-checking or triple-checking.” He adds, “There’s nothing like music to teach you that eventually if you work hard enough, it does get better. You see the results.”

That’s an observation worth remembering at a time when music as a serious pursuit — and music education — is in decline in this country.

Consider the qualities these high achievers say music has sharpened: collaboration, creativity, discipline and the capacity to reconcile conflicting ideas. All are qualities notably absent from public life. Music may not make you a genius, or rich, or even a better person. But it helps train you to think differently, to process different points of view — and most important, to take pleasure in listening.

How has music contributed to your career? Share in the comments below.

Mobile is becoming increasingly important for musicians and music fans. Consumers seem to be using their smart phones and other portable devices like the tablets for just about everything, and music is no exception. Fans today can listen to their favorite music through streaming services like Pandora from anywhere and discover new bands and musicians on the go. In addition to listening and discovery, there are also a wide range of music apps that allow fans to keep track of their favorite bands. The market for mobile in music will no doubt continue to grow, providing fans and musicians with new opportunities to connect.

To get a better picture of some of these trends check out this infographic from Hypebot:

Mobile_Music_Infographic

 

Photo by buddawiggi

Photo by buddawiggi

Collaboration is a key factor for success in today’s music industry. It is very difficult to “make it” on your own without the help of band members, team members, and other musicians and bands. When it comes to growing your fan base, collaborating with other bands or musicians is a great method. You can promote each other on Facebook, you can play live shows together, and you can share each other’s music with your followers. Get creative with your collaboration ideas! In the end, collaboration between two or more bands creates a mutually beneficial relationship.

Here’s one example of musician collaboration from Hypebot:

Let’s say you put together a playlist with tracks from 10 artists you feel close to in your scene, with a couple of simple assumptions: each of you has 2,000 fans (or followers), and there is no cross-over in your fanbase. If each of those 10 artists shares your playlist, you’ll be reaching a potential of 11*2,000 = 22,000 fans. Assuming 20% actually listen to the content, and a quarter of those become fans or followers of you and the artists in your playlist, that’s 1,100 new fans for everyone. Some of the assumptions are simplistic, but you get the picture.

This idea of curation as a means of putting a musical scene you feel a part of in the spotlight has yet to overpower the hype of discovery algorithms, but already some artists have been headed in that direction for some time, notably in the electronic music and hip-hop scenes. Take a look at French artist Brodinski: hisFacebook and Twitter feeds are filled with musical content from artists he’s close to. Or Boston duo Soul Clap, who regularly create DJ charts on Beatport; and, because, there’s a “buy” link on the tracks, these guys are actually providing their fans with an incentive to financially support the acts they’ve curated. If you believe in the power of connecting with other musicians, of creating a movement, your job as an artist becomes to get connected with your scene, finding the artists you see as part of your movement, help them be discovered and identified as part of the movement, and help them reciprocate. As long as there’s an unmistakable unity, the bigger the movement, the bigger everyone’s personal gains, ultimately.

To read the full article, visit Hypebot.

Apple announced its long anticipated online radio last month. The free version, iTunes Radio, and the ad-free paid version, iTunes Match, will be available to consumers and music fans later this year. Apple’s iAd will be supporting the free service. As a company known for innovation and market disruption, seeing a model so similar to Pandora’s is a little anticlimactic. Apple’s lack of success and interest in the advertisement market also raises some questions about their model. However, while it seems like Apple is late to the game and that their model is similar to that of the struggling Pandora, a deeper look shows some key differences on which Apple is betting their success.

Granted, many of Apple’s recent iTunes endeavors like Ping have not been wildly successful. Ping was installed on hundreds of millions of devices and was easily available to consumers, but if the product is not good, this does not matter. iTunes radio will most likely take a similar approach. Through iTunes, the iPod, and the iPad, Apple has an enormous customer base to which it can push this new service. However, in order to get people to switch from their current streaming service, there must be minimal switching costs – it must be easy to understand, intuitive, and clean.

Similar to Ping, iAd has not currently gained the traction it needs to support an online radio. In the past, iAd has had a difficult time attracting and holding on to top brands for advertisements. The service previously offered little control over where the ad was placed, costed more than rival services, and had a reach limited to Apple’s mobile products. It will be interesting to see how Apple adapts this service to support the online radio.

The radio service itself may be enough to attract the high-paying advertisers they need. The iTunes Store has gathered data on millions of consumers for years. Data on what genre of music they purchase, what bands they like best, how much money they spend on music and other recreational goods, what movies they watch, what books they download, and what apps they have downloaded and use. With this information, Apple can offer advertisers extreme consumer targeting based not only on demographics, but psychographics as well.

Other than data, Apple has good relations with more record labels. Because of the importance of the iTunes Store in today’s music economy, Apple has secured more robust licensing agreements with the majors, allowing Apple to potentially reach more people in more countries with more music than Pandora or Spotify.

As implied by the services names, iTunes Radio and iMatch will be heavily integrated with the iTunes store. Listeners will be able to purchase music heard on the radio and the music discovery mechanism will most likely be based on a mixture of listening information and data from the listener’s iTunes library preferences. Again, the huge amount of data Apple has been able to collect over the years may help them produce a more intuitive recommendation and discovery method.

To see an in-depth overview of the royalty calculations for Apple’s online radio services, check out this article from Billboard.

Of course, at this point, the potential success of Apple’s online radio is all speculation. It will be interesting to see what Apple can bring to the table in terms of innovation in this difficult market. The price for iTunes Match is currently set at $24.99 per year, as compared to Pandora’s $36.99 yearly fee.

As of May 2013, Pandora has 70.8 million users and Spotify has 24 million. What do you think about Apple’s online radio? Will it disrupt the market, or are they too late coming into the game?

Musicians are smart, creative, and innovative thinkers despite what popular culture would have you believe. Too often, when we think of musicians, images from Spinal Tap come to mind, but this is not usually the case. Being a musician requires a mix of extreme creativity and logic, collaboration, listening and multi-tasking skills, and complete dedication  – a mix that not many professions require.

Many entrepreneurs would do well to take up an instrument, as many of these skills are also required in business. Here’s a list of 11 leadership lessons to be learned from musicians:

1. Playing it safe gets you tossed off the stage. Some executives would say that in today’s turbulent economy, takings risks isn’t wise. If you don’t take risks you’ll never excel. Playing it safe all the time becomes the most dangerous move of all.

2. There are no do-overs in live performances. For every hour in a “performance” setting, you should spend five hours practicing. Athletes do this, musicians do this–muscle memory is no different in the board room, in front of a new client, or with your team. So why aren’t you doing this?

3. Listening to those around you is three times more important than what you play yourself. If you’re the one talking all the time, you’re not learning anything. Listen, absorb what you hear, and use the information to make a conscious choice about whatever you’re facing.

4. There’s a time to stand out as a soloist and a time to support others and make them shine. You rocked a project–nicely done. Praise is well-deserved. However, as a leader, it’s more likely the case that your team members rocked a project, together. Susie was on top of her game with the slide deck? Tell her–and tell the client. Johnny couldn’t have articulated the challenge to the press any more astutely? Refer back to his commentary as a stellar example. When you can share the wealth, everyone wins.

To see the full list, visit Inc.com.

Why do most music players look like spreadsheets?

Discovering music on your own requires that you listen to a song for a period of time to see if you like it. Sure, if one of your friends tells you about a track you may “discover” it through them, but you will also spend some time listening to the song before you decide if it’s for you. This is the nature of the beast. Music is a time-based phenomenon.

Unlike with videos where you can “time compress” a video into a single frame image that you can easily visually scan, with music there is no alternative format that represents the song that can be easily scanned, except for the song name. This explains why most music interfaces display playlists, with song names as text not unlike in a spreadsheet, or list of song names. These can be easily scanned, but have no direct correlation to the sound or feeling of the song itself. I have always found it odd that in this era of digital music and highly designed interfaces, that most players default to a spreadsheet of song names to present music – true of iTunes, Amazon, Spotify, Rdio and many others.  Spreadsheet music players.

Sure you can have a thumbnail of the album cover, but rarely do you see this on a song-by-song basis. Maybe in parts of Beatport or other DJ sites that are focused on tracks, but not generally on the web for the mass consumers of songs. And yes we have also seen many different visual interfaces like Sonorflow that let you visually traverse music genres or the linkage between bands, but these do not convey information about the songs themselves or the emotions that they convey.

What if we had a way to make a song come alive visually? This was the whole idea behind the original MTV and it was wildly successful for decades. What is the online equivalent, or even better, what can we do to push the whole boundary of music discovery and showcasing to new levels by embracing the time-based nature of music and coupling it with visual expression and a modern interface that lets you experience and interact with music in new and interesting ways. And no, I’m not talking about the waveform displays on Soundcloud.

I am working with a new company called Viinyl which is in the final testing stage for a whole new video-based version of their Music Showcasing platform that is very hot. I haven’t seen anything like Viinyl 2.0 and I think it represents a whole new way of presenting music. Viinyl amplifies the emotional content of songs visually, in a way that is enjoyable and super easy to use. This is a whole new way of showcasing music.

Viinyl is re-defining the way music and videos are experienced. In fact their video player is a new way to attract attention, engage an audience with the emotion of a song, and make money on singles and tracks. From a simple URL you can run a full screen video with interactive overlays and gather email, sell tracks and tickets, connect to your social networks and literally showcase music thru video. You can sell any digital file including music and movies, and provide relavent information directly in the context of the song including bios, links, credits, contacts, concert dates, lyrics, etc.

Here are some examples of the new Viinyl 2.0 in action:

http://hiphopdraft-ghost-in-the-machine.new.viinyl.com/
http://synthetica-mini-documentary.new.viinyl.com/
http://destination-brazil.new.viinyl.com/
http://idareyoubeta.new.viinyl.com/

The new platform supports audio file sales with fixed or flexible album pricing (minimum price and Pay What You Want) along with various free distribution options. The software is lightning fast, with just a few clicks, musicians and labels will be able to share their work independently – and hold onto all revenue generated.

The new Viinyl 2.0 LP format delivers a visual playlist, giving listeners and fans a far richer, more immersive and inviting music experience compared with the current spreadsheet format.  This new software will be available in the coming weeks.

The Atlantic published this awesome map, which plots the geographical origins of indie bands who played at SXSW last week.  The data is not perfect in the sense that it does not include unofficial showcases but it puts Austin in the lead, trailed by New York and Los Angeles.  Nashville and London just about tie for fourth place.

SXSW reflects the dual geographies of independent music. On the one hand, large well-established music scenes and centers like New York, L.A., London, and Nashville have the most acts. On the other, smaller college towns do very well in musical acts on a per capita basis. These college towns have two things going for them: They are magnets for musical talent and have lots of young people who enjoy and support live music. These two factors underpin their flourishing music scenes which have given rise to critically acclaimed indie bands.

Map by MPI's Zara Matheson

Map by MPI’s Zara Matheson

See the full story and how this year’s data compares to 2012 at The Atlantic Cities

Here is a presentation developed for clothing manufacturer Carhartt as they try and capitalize on the popularity of their products with the youth market. Interesting trends and stats posted by students from Parsons The New School for Design.  “By identifying the forces at play in the world of music and the behaviors that are driving those forces, one can identify particular patterns that support current trends. By looking forward to what the future of music may encompass, this presentation aims to provide Carhartt, with valuable insight that will help the brand as a whole, cater to the future of urban millenials.”

The music business has been utterly transformed by technology. New music apps such as Pandora, Spotify, Soundcloud, Shazam and Songza among hundreds of others are driving new music revenue and employment opportunities for technically oriented musicians.

Olivia Leonardi over at Online Computer Science Degree has written an article about the intersection of music and software development and describing the rich past of the impact of technology, specifically software on the music business.  It is excerpted here.  Lets go people, tool up for careers in the music industry of the future!

Computer Science and Music Technology

You’re a heavy-duty programming dude or computer grrl, but you also love music.  Is there any way to reconcile these two interests?  Unless you’ve been living under a rock, you know that computers and technology play a major role in the 21st century music scene. Audio sequencers, MIDI and associated laptops are standard operating equipment for performers like PrinceKraftwerk, OK Go, international deejay Paul Van Dyk or electronic music pioneer Thomas Dolby. Indeed, popular music today – from indie rock to hip-hop to house – would not be the same without innovations in computer science and technology. The following article is an exploration of the pioneering inventions and innovations in music technology that, through the use of computers, continue to define the musical experience of today.

Making Music in the 20th Century

1930 marks the year that the technological roots of modern popular music were formed. In that fateful year the world welcomed its first drum machine while the revolutionary electric guitar took the music scene by storm. Although the drum machine wouldn’t find its way into popular music for another 40 years, the electric guitar was seen as a brilliant invention and one immediately adopted by the jazz community and early blues artists. Perhaps more importantly, however, was that these two innovations inspired and challenged others to experiment with electric instruments and to test how technology could continue to enhance the musical experience. In the years following, the legendary Les Paul would lay down the first multi-track recording in 1947 and in ‘58 Link Wray, unsatisfied with the sound his amplifier was producing, would think to jam pencils into it to distort the sound of the guitar in the track “Rumble” – a technique The Kinks pushed into the mainstream with “You Really Got Me” in 1964.

Then, in 1966, producer George Martin was faced with a dilemma. The Beatles had recorded multiple takes of a John Lennon penned song called “Strawberry Fields Forever.” John had finally settled on not one, but two takes of the song that he liked best. The problem: the two takes, numbers 7 and 26, were recorded in different keys and played at different tempos. Without the technological innovations available today, Martin ingeniously solved the problem by mechanically slowing one take while speeding up the other, then spliced the two takes together to produce one of the most celebrated popular music recordings in history.

Enter Computer Technology

Computer technology has since incorporated innovations such as Martin’s and made them a routine part of music recording. Without major advancements in computer technology, however, such would not be the case. Once monolithic, the late 1970s and early 80s saw the size of computers greatly diminish while major improvements were being made in processing power. Personal computers were made accessible for the first time in history and, watching closely, the music industry quickly responded. As the Beatles were walking Abbey Road and the Rolling Stones were licking their way to chart toping heights, brilliant innovations on old technologies would surface simultaneously that – from sampling to the drum machine to the Musical Instrument Digital Interface (MIDI) – gave rise to whole new genres like hip-hop and electronic music while altering the trajectory of popular music itself. The following is a brief run-through of some of those major developments in computer technology.

Sampling

Sampling allows musicians to borrow snippets of past tracks and even entire recordings and incorporate them into original creations. Using synthesizer technology, artists can also alter the tone of the sample by speeding up or slowing down the track; later iterations of samplers would actually come in the form of synthesizers as synths became more sophisticated and were able to adopt sampling technology.

The first sampler – the Mellatron – appeared in the late 60s and early 70s and was a tape replay keyboard that stored recordings on analog tape. Although its genius was widely recognized, it was soon improved upon with the emergence of the memory-based digital sampler. Developed by a trio of computer scientists and software engineers, the first digital sampler – the EMS Musys system – ran on two mini computers (PDP-8s), giving birth to the first digital music studio. As musicians began realizing the need and benefit of sound synthesis for sampling purposes, sampling synthesizers soon emerged. Surfacing in the late 70s, these sampling synthesizers would enable the use of percussion samples and techniques such as the crossfade and “time stretching” and are credited with advancing hip-hop away from the drum machine sound of its youth.

Today, sampling technology is either software-based or appears as part of the music workstation.

Digital Drum Machine

Beginning with the Rythmicon – the father of all drum machines, first produced in 1930 – the drum machine has had a strong impact on music through the years. The first “modern” drum machine – in the form of a programmable drum machine — emerged in the 70s with the Roland CR-78 machine and a few year later, the legendary Roland TR-808 (1980) and Roland TR-909 (1984). Both machines are icons of the early hip-hop, underground dance and techno genres. Indeed, Marvin Gaye’s classic “Sexual Healing” wouldn’t be the same without use of the Roland TR-909.

Digital drum machines, otherwise known as drum computers, also figure heavily in the development of pop music in the 80s. Starting with the Linn LM-1, digital samples of drum sounds and drum sound synthesis were both used with increasing frequency, appearing in works from the soundtrack ofScarface to Prince.

In music today the physical drum machine is a rare sight, whose use was rendered obsolete by MIDI and digital music workstations.

Digital Synthesizer

The digital synthesizer produces a stream of numbers at a certain rate that is then converted to analog form, allowing speakers to produce sound. Synthesizer aided music is some of the most identifiable of the 70s and 80s. No only did the Beatles and Rolling Stones utilize its capacity to produce unique and spacy sounds, but a whole new genre arose from its use: synthpop. Today, the synthesizer is a major element of the music workstation.

    • Forms of Sound Synthesis
    • Additive Synthesis
    • Subtractive Synthesis
    • FM Synthesis
    • Phase Distortion Synthesis
    • Granular Synthesis
    • Physical Modelling Synthesis
    • Sample-Based Synthesis
    • Analysis/Resynthesis

Sequencers

Of all music technology, the sequencer has arguably benefited the most from computer science, giving birth to the very genre termed “computer music.” In modern days, a sequencer is a piece of music software that can record, edit, and play back music. The first digital sequencer emerged in 1971 from Electronic Music Studios while the first microcomputer based digital sequencer, the MC-8 Microcomposer or “computer music composer”, appeared in 1977 using a keypad to enter notes in numeric codes.

As the personal computer’s capabilities progressed, software sequencers soon emerged. The New England Digital ABLE (1973) computer and its brother the Synclavier 1 (1977) are two of the most notable with the latter being used by such artists as Michael Jackson. These two advancements were also two of the first iterations of the modern music workstations. In the current day and age, however, most sequencing is done via software through the use of MIDI.

Musical Instrument Digital Interface (MIDI)

The development of Musical Instrument Digital Interface (MIDI) was a remarkable innovation in the history of music. The MIDI made it possible for anyone with a computer, a modicum of talent and a measure of determination to become his or her own performer and producer. MIDI originated as a means to link keyboards with synthesizers, but has since evolved to become a computer software application used to edit all aspects of music recordings. MIDI allows for the interaction of many different instruments at once through a central transceiver that the instruments are plugged into. With their memory, processing power and interactivity, computers became the central brain that all electronic instruments were connected to. From this point on, the computer became irreplaceable in music production. Sequencing software was developed to piece together the disparate musical elements received on the computer through MIDI connections in addition to the development of software synthesizers, drum machines and samplers (often coalesced into one program).

Prior to MIDI, the recording process required a sound booth, session musicians, mixers and other expensive features. Since the development of MIDI, a single musician can sing, play accompaniment and mix multiple tracks together to produce a polished, sophisticated recording using only a computer, a mike and digital recording software.

From Olivia Leonardi at Online Computer Science Degree.

Side note – this is the 30 year anniversary of MIDI.  I will be writing more about that in the weeks ahead.

Ale Delgado wrote this great recap of our CMJ panel on merchandise last week.  Thanks Ale!  Here is most of it.  Visit her site for more:

Considering that I’m always looking for the next big thing, I knew I had to go to CMJ’s “Modern Merch: Beyond the Tour T-Shirt” panel. See, merch is a $2.2 billion business and one of the biggest ways an artist can make money. But while most merch is sold at shows, most people at shows don’t buy merch. Tricky, huh?

The basic premise of the panel was that opportunity comes when you marry a point of passion (e.g., a song stream or live show) with a call to action (e.g., a merch sale)– and yes, they had some tips to help you take advantage of any opportunities that come your way.

Moderator: Dave Kusek, co-founder of MerchLuv and co-author of The Future of Music.

Panelists: Zach Bair, founder of RockHouse Live Media Productions and the original CEO of DiscLive Network, which records, masters, and burns concert CDs to be made available to fans right after the show;  Mary Sparr of screen-printed gig poster pros Print Mafia and culture blog Young Mary’s Record; and Alexandra Starlight, funky and spunky indie starlette whose Kickstarter campaign resulted in 205% funding and a rainbow glitter 7″ EP.

 

1.Think of merch as an extension of your brand

As always, the first thing to do is consider your brand as an artist. Once you develop a consistent aesthetic, you can open the door to more innovative merch because fans will recognize it as one of your pieces. For example, Starlight created a one-of-a-kind rainbow glitter vinyl record for her self-titled EP. A record like that had never been pressed before and each one was hand-glittered, so each fan received a unique copy. If you’ve ever peeked at Starlight’s website (or rainbow-dyed hair), you know that a rainbow glitter album fits perfectly with her brand– and it’s damn memorable.

Furthermore, if you think of merch as your brand being integrated into someone’s lifestyle, it opens up even more creative possibilities. For instance, The Hold Steady created branded foam fingers. Y’know, the ones you wave around like crazy when you’re cheering on your favorite team. What do foam fingers have to do with music? Not much, but they’re fun, different, and priced for the college-aged fan. And judging by the fact that they’re sold out, they’re a big hit with fans.

2. Cater to your spectrum of fans

Take another look at The Hold Steady’s foam finger. It’s $10 reduced to $5. Easy sale for a teenager or college student who might have a lot of spending money but is willing to pay for something cool to show off to their friends. Making sure that you have different tiers of merch for different fans is key to building sales. You should have something at your merch table for the fan who just wants to snatch a free download card and for the fan who wants to buy everything. That also means bundling items together (CD, t-shirt, button combo) for a quick sale.

3. Be show-specific

If possible, create show-specific merch. It can be as simple as individual gig posters for each city in which you tour or something a little more involved. Sparr brought up the tickets that Mumford & Sons created for their Gentlemen of the Road Stopover Tour. Each ticket was a commemorative passport that contained a download code for a compilation of songs recorded at each Stopover. Then it got better. Fans could get their passports stamped at the merch tables at each Stopover, personalizing their passports to their experience. Then it got even better. People were wandering around each Stopover with unique stamps, essentially turning the passports into a Pokemon game. (Gotta stamp ‘em all!) Talk about fan engagement.

Next, update your Facebook and Twitter on the day of the show and let your fans know what merch you’re going to be offering, especially if you have something that will only be available at that show. The more people can prepare (or at least consider the possibility of picking up your record), the more likely they’re going to buy something.

 

4. Work your merch like a pop-up shop

Think about every grumpy salesperson you’ve had to deal with. They don’t greet you, they don’t look you in the eye, they don’t care if their store is a mess, they don’t want to help you find anything, or (even worse) they’re way too pushy… Okay, now be exactly the opposite.

Your merch table is your pop-up shop. Have your items propped up nicely so that fans who are moving past your table can see what you have to offer. Greet them as they walk up to your table; don’t badger them, but put on a friendly face like you would if they were customers coming into your brick-and-mortar store. Also make sure that you’re being as meticulous as you would be if you were running a store: keep track of your inventory and double-check any email addresses written down on your mailing list. Remember that the experience doesn’t end when your show does; fans will remember what you were like behind the table.

5. Extend the experience

Well, actually, the experience doesn’t have to stop when your fans walk out of your venue either. There are a lot of ways you can extend your show experience, from the simple to the elaborate. Here are a few ideas from the Panelists:

  • Make sure there’s someone taking pictures of your show, including grabbing a few shots of the crowd. Then post it on Facebook and encourage your fans to tag themselves.
  • Have your fans post pictures of your show to Instagram with a hashtag of your choosing, and then sending them aPostagram thanking them for coming to the show or giving them a discount for your store.
  • Use DiscLive to record, mix, and master a live recording of your show. By the time you’re ready to sell some merch, they’ll have CDs ready to go. DiscLive also allows for preorders, meaning that a) you can bundle tickets and CDs and b) you’ll have an estimate of what you’ll sell at your show.
  • Use MerchLuv to bundle streaming songs with merch items to cater to those new fans who hadn’t heard of you before your show, but want to check you out afterwards. Remember, opportunity lies where passion meets action.

Read more here including a Happy Halloween Bonus Tip!

For artists struggling to make a living in the digital age, a strong merch strategy can be the difference between living life as a starving artist and making a comfortable living.

Yet compared to the recording, publishing and ticketing businesses—which have felt the full effect of technology and the Internet— the merch business today is mostly stuck in the analog 70s. If we are looking to make money in the music industry of the future, why focus our energies on debating the intricacies of Spotify payments or whether licensing terms stifle innovation. Instead let’s examine an area ripe for disruption and revenue expansion.

A Highly Fragmented Environment

Indeed merch seems to be a highly fragmented business ripe for consolidation and transformation. To illustrate, let’s look at some research conducted by a company I work with— Merchluv. We looked at the August 2012 Big Champagne charts and came up with a list of  100 top artists and analyzed their merch availability:

– The 100 artists on the list used 44 different merch vendors (how’s THAT for fragmentation?).

– 75% of artists sold merchandise on their website, Facebook page or through an official supplier.  A surprising 25% of the top selling artists in August did not sell any merch AT ALL.

– 18 artists were “self” merchandisers, meaning they used Topspin, Paypal, Amazon, or a 3rd party services or ran their own commerce site/shopping cart.

– The remaining 57 artists were served by 26 different merch suppliers.

That means to sell merch for the top 100 artists in August you need to make nearly 44 deals with merch suppliers. Clearly a consolidation of merch vendors could help to rationalize the market. Where is the Amazon of music merchandising?

Merch is an Insulated Service

The merch business is largely disconnected from the real heat in the music market today, namely the explosion in digital music services. For example: 45 BILLION songs are streamed or viewed every month, yet there is NO MERCH being sold against this engagement. And that number is just going to BLOW UP to hundreds of billions of streams per month in the next few years.

Imagine if streaming services allowed fans to browse and buy an artist’s merchandise from the same page where they  are streaming their album or buying their tickets? There is a complete disconnect between where most music is discovered today, and the $2.2 billion in annual merch revenue.  The vast majority of merch is sold at the venerable merch table at any given concert. Why not make the effort to expand that experience into the digital realm? An alignment of merch distribution with the direction that the overall music market is headed would serve artists and merch companies extremely well, and potentially unlock a flood of new revenue.

Merch is Analog

Most artists sell 85% or more of their merch directly at live shows at the merch table. As effective as they are, merch tables can stand to be improved on in the digital age.  For example:

– Fans have to know where the merch booth is.

– Why stand in line when you can order from your seat?

– What if the merch guys don’t have your size or color preference at the table?

– When you buy merch at a show you have to hold it and take it home. Do you want it delivered instead?

– What if you want a bundle of something physical and something digital.  Is this easy to buy?

– How about something personalized for you, or something bigger than you can carry home?

There hasn’t been much innovation at the merch table at all, except for perhaps using Square readers to process credit cards. I wonder if the major merch vendors of today are going to be blindsided by technology and the changing habits of music consumers in much the same way that the record labels were hit.  Merch is extremely difficult to digitize.  But the sales of merch are not.

Tons of artists have web stores attached to their web sites and Facebook pages.  Companies like Reverbnation and Bandcamp can help independent artists manage their merch on their web stores and spread the merch offer out via social media to numerous outlets.  There are many businesses such as Bandmerch and Cinderblock, JSR and Bubbleup addressing this niche, providing fulfillment, webstores, warehousing and shipping services.

But the problem with this approach is that fans need to navigate to an artist’s web site and find the merch for sale and be ready to buy.  Today only 15% of merch is sold online.  New companies like Merchluv, which I am an investor in are about to blaze new trails in digital merchandising. The reason to do this? Grow overall revenue.

The large merchandising companies are very aware of the opportunities of snaring a hot band and bringing their merch to market effectively.  The holy grail of this is the long-term sales possible from mega-popular bands over time.  Anyone want to guess how many Dark Side of the Moon T-shirts have been sold?  Companies like Old Glory have been licensing artist merchandise for decades.

Now we can argue whether there will ever be another blockbuster band like Pink Floyd or the Rolling Stones or Metallica – but if there is going to be significant revenue in the music market of the future, merchandise is going to be a huge contributor.  Merchandise might possibly become the single largest revenue generator for artists of the future. You have to think big here and broader to see what I am talking about.

When artists today are being pulled in various directions to run their businesses, create, act, teach, write and express themselves and interact with their audience, what could be better for supporting a career than a good merch strategy?  Think about the merchandising empires built by Jimmy Buffett, Jay-Z, Puffy, 50 Cent, the Grateful Dead.  The merch is the tail wagging the dog and it has made these artists a fortune.

For musicians in the digital age, revenue needs to come from something than other the recording itself.  To some extent this has always been true, but never more so than today.

Creative Explosion

My friend Todd Siegel and partner in Merchluv tells me that these days creating innovative merch and finding things that resonate with your audience is easier than ever, and many clever artists are using fan sourcing and crowd sourcing options like Talent House and Creative Allies to design merch with their fans.  Once you have a design, you can use sites like Zazzle to test ideas for new products without investing in inventory up front.
Bands like Insane Clown Possee (ICP) have created a cult-like brand through the use of iconic imagery and building a strong following by involving their fans.  The Misfits have sold more merch than music because of that iconic skull that people buy because the merch itself is cool and fashonable.

And talk about branding, take a look at what Deadmau5 is doing with the goofy mouse head. This guy has merch everywhere and may just overtake Mickey Mouse in brand awareness across teenagers.  Even if you have never heard him perform, you know who he is.

Beats by Dr. Dre is another example of merch that has gone over the top and transcended the music entirely to become a lifestyle product that in some respects is becoming a big part of the music industry.  This in only a matter of a few years.

The brainchild of artist/producer Dr. Dre and Interscope Chairman Jimmy Iovine, Beats is bringing high-quality audio to fans through their headphones, sound systems, and now the recently acquired MOG digital music service. Dre has taken a brand established as a recording artist and is in the process of turning it into the music industry of the future, through a grand merchandising strategy.

Conclusion

In the face of declining recorded music sales, many of us are looking hard at the opportunities for generating money in music today. Most of the investment from VCs, Angel investors or Private Equity in music has been in streaming music, discovery, ticketing, crowd funding and artist services. Businesses like Pandora, Spotify, Beats, Ticketfly, Soundcloud, Songkick and Indiegogo all have received significant investments in recent years.

There are two ways that bands have always made money. One is by performing and the other is by selling merchandise. Both are tried and true methods, difficult to download or duplicate, and solid and reliable opportunities.

Why have hundreds of millions of dollars in venture capital been poured into online music services in the face of severely declining recorded revenue, when one of the most profitable parts of the music business—namely merch—been largely ignored by investors? Wouldn’t it make more sense try to increase sales of an already healthy and expanding market segment, ripe for disruption?

Gotta love it.

James Taylor is suing Warner Bros over digital royalties seeking $2m in compensatory damages from his former label for past MP3 sales.

The Guardian reports that singer-songwriter James Taylor has filed a multimillion-dollar lawsuit against his former label, Warner Bros, claiming they have underpaid millions in royalties on downloads of his songs. As in similar cases brought by Eminem and the Temptations, the principal issue is the royalty rate for downloads or ringtones among artists who signed record contracts prior to the advent of digital music sales.

I reported on this situation in the Huffington Post here a while ago with Musicians may be owed billions in unpaid digital music royalties.

All of this stems from a landmark ruling in 2010, when a company representing Eminem’s publishing rights won a case against Aftermath Records. The label was ordered to pay royalties on downloads and ringtones according to the rate for licensing, not sales. Since then, a wide range of acts have pursued their labels for compensation.

Lots more to come.  The leveling of the playing field.

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.

My buddy Bruce Houghton at Hypebot, caught me last week for a quick interview before Rethink Music.  Here is an except from our discussion:

HYPEBOT: Your new focus is on consulting and investing. Are there any sectors, particularly within music and music tech, that particularly interest you or where you see the most room for growth?

DAVE KUSEK: Online education is one of them. This is an area that is already transforming how people learn and gain job skills and it is only going to grow as time goes on. There are big opportunities here that will effect tens of millions of people around the world. Online training is going to be huge. Job requirements are shifting and people need to be able to adapt to changing circumstances that can benefit them. The traditional model of higher education is already under pressure and there are many people and companies exploring alternative models that are very interesting.

The other area I am bullish on is live music and live events. The live concert experience cannot be digitized, yet can benefit enormously from technology. There really has not been much innovation in live music or in music merchandising beyond ticketing. I think there is a lot more that can be done with mobile technology and am actively working in this area. My investment in Tastemate is one way of digging into this potential in a meaningful way. We will be bringing our service to a venue near you, very soon.

I also think that there is potential to expand the reach of live performance using remote technologies. I am interested in ways to cut the costs out of touring to make it more profitable and to reach broader audiences. It is amazing to me that there has not been more activity in this area either, so I am looking for companies and people to work with that are thinking differently about what live music is all about and how to make it even more lucrative.

HYPEBOT: What are some of the things that Digital Cowboys has done in the past or is looking to do now?

DAVE KUSEK: We are focused on business development, marketing and product development, particularly in online and mobile services. We also do strategy consulting for businesses wanting to expand or enter new markets or make acquisitions. I say we, because while I am the managing partner, I also leverage a network of people around the world and with different specialties that I bring together to form a team to address the issues. For example, with a lot of the product work that we have done I brought together a team of visual designers and user experience people to execute on the product vision and do the testing. With business development projects I sometimes work with friends that have particular contacts or relationships that are beneficial to my clients. Sometimes I put together a couple different investors or strategic partners to provide capital or distribution or some other need. The main thing is to get the work done and show results, while trying to have some fun and work on interesting projects that are pushing the envelope.

HYPEBOT: There’s some talk of another tech bubble. Do you see think we’re approaching one in music and media technology?

DAVE KUSEK: I do think that some of the deals we have seen recently are off the charts, like Instagram – but who knows? That has all the earmarks of “bubble” written all over it. But Facebook is also about to go public and at their level, what’s another billion dollars?

But really I don’t think overall that we are at the point of frivolousness and excess that we witnessed in the earlier dot-com bubble, at least not yet. I believe that people are just beginning to figure out better ways to communicate and interact and learn via technology. That is having massive implications on the future of society around the world. Take a look at the stock market trend over the past 100 years and you will see that things tend to move up and people get smarter and more prosperous. I am an optimist.

There are a lot of music startups getting funded these days and certainly they are not all going to make it. I think we will see some consolidation in the DIY space as there are probably more companies addressing that market than the market really needs. The same is true for music streaming and distribution and music discovery. I think the real breakthrough companies will be formed by trying to do something completely different, rather than mimicking the past with technology. We’ll see.

HYPEBOT: Any plans to write a follow-up to the “Future Of Music” book?

DAVE KUSEK: I plan to spend a lot more time posting things to my blog and on digitalcowboys.com. This is a much better way to continue to update original thinking and way more efficient than writing another book. The music industry has gone digital and online outlets like Hypebot really do work as conduits in this business. That is a real bright spot in the transformation of the music industry. So, look for more at futureofmusicbook.com.

You can get the entire interview here.

More coverage from Hypebot here and from Billboard here.

Sunday night at Coachella Festival Snoop Dog and Dr. Dre brought Tupac Shakur back from the dead to perform live with them onstage as a hologram.  Holy Smokes.  He appears on stage and greats the audience with “Yeah, you know what the fuck this is … What up Dre? … What up Snoop? … What the fuck is up Coachella.”  The Tupac illusion aka “Holopac” was brought to life by James Cameron’s visual production house Digital Domain, and two hologram-imaging companies, AV Concepts and the U.K.-based Musion Systems at a price estimated at more than $200,000.

The holographic performance is spectacular and very eerie, and there are more shows planned.  This is not the first time that holograms have been used in concerts, and these effects are in a way, natural extensions of the laser displays and light shows that have been part of live shows for decades.  Madonna, the Black Eyed Peas and (notably) Gorillaz have all been projected as holograms on stage during the show.  There is a laser light touring show of Pink Floyd featuring “none” of the band members.  If this can be done with Tupac, it brings up very interesting questions about the future of live shows and exactly who or what we will be seeing.

Can you imaging the Rolling Stones 2050 “Skeletons in the Closet” Tour?  The Beatles finally play Shea Stadium in high fidelity?  “Elvis Comes Alive”?  Will nothing be sacred?

I am not sure if this is science fiction or our worst nightmare, or both.  Will live performers really even be needed in the future?  If the wizards at visual production companies can create virtual artists in 3D that can strut on stage, engage the audience, and belt out their latest hits – who exactly will be entertaining us?  If the music industry can strip out the artists and replace them with computer generated formulaic constructs that are programmed to entertain and mesmerize, what will live music become?  Its already happend with the “Chipmunks” and “Gorillaz” and “Hatsume Miku” and “Dethklok”.  “This is just the beginning,” Ed Ulbrich, chief creative officer at Digital Domain told the LA Times,  “Dr. Dre has a massive vision for this.”    Virtual artists are becoming a thing of the present.

Think about it.  Is this really the Future of Music?

You gotta love Neil’s honesty. We owe it all to artists to stand up to what they believe in and drive us forward. Without them, we would have nothing.

“Still the searcher
must ride the dark horse
Racing alone in his fright.”

“I’m finding that I have a little bit of trouble with the quality of the sound of music today,” says Neil Young. “I don’t like it. It just makes me angry. Not the quality of the music, but we’re in the 21st century and we have the worst sound that we’ve ever had. It’s worse than in 1978. Where are our geniuses? What happened?”

I can’t agree more.  We need a new format that breathes life into the music industry by improving the quality of the sound that we listen to.   If you are under the age of 22, I will bet that most of you have never really heard a great audio recording.  You don’t even know what I am talking about.

This issue is vital to the future of the music business.  What we have today with the proliferation of ear buds as the primary listening medium and compressed MP3 files is a low res music experience that is the bottom of the barrel, lowest common denominator form of a listening experience there can be.  Really listening to music is simply lost on most people these days, and as a result the art form has lost the majority of its value.

It commonly accepted that crappy sounding music is the norm and people, by and large, have no idea what they are missing.  The MP3 has stripped the emotional value from music today and has reduced it to a commodity.  The audio business has truly been compressed and marginalized and is nearing extinction.  We cannot let that happen to the music business.

As artists, “We can’t control the back end of the donkey, laments Young.  The donkey has two ends, products like Beats and Bose and every little product that comes out for your car, the whole thing – is all about the back end of the donkey.  There is nothing talking about the front end of the donkey, that’s what I’m talking about.  You don’t have to that rich to do this, you just have to be smart…  We are in the low res world, make no mistake that is right where we are…

“I look at the internet as the new radio.  I look at the radio as gone…  People change and do their music, people trade it they do whatever and Apple makes it very possible for you to store stolen or traded songs in the cloud, they opened up the door so that that can happen… its acceptable.  Thats the way it is… Piracy is the new radio, that’s how music gets around, thats the real world for kids, thats the (new) radio… Lets let them really hear it.

“I’m hoping that some people who want the hi-res would have the choice in buying it.  It has to be convenient, people should not associate hi-res with inconvenience.  That’s a myth, we’re living in the 21st century and all of these things are possible.  The technology exists, the internet is fast enough to support it…  If Steve Jobs had lived long enough, he would be eventually have done what I am trying to do.”

Quality.  We need a new format that will deliver better quality sound to drive the business forward.  Period.  Here is a true clarion call for innovation, and something that we all need to pay attention to.   Neil Young cares about music. He is successful enough that he could sit back and ignore the realities of the marketplace today, but instead chooses to push the agenda forward. Awesome. I would not be surprised to hear a new song from Neil about a donkey.  Maybe I can sing backup on it.

See the video with Neil Young and Walt Mossberg from All things D here.

Here is a brief description of some of the technical issues from Thinkdigit.  “The renewed focus on audio quality in some circles has a sense of déjà vu about it. Some of it recalls the 1970s, back when the term “high fidelity” was thrown around to indicate quality stereo recordings. We also saw this go around again at the turn of the millennium with the introduction of SACD and DVD Audio formats, which brought 24-bit fidelity and surround sound to audio mixes, although neither took off at the time.

So what’s going on here? In a word, it’s about data. More data translates to better-sounding audio files—but those files are largely unavailable to most consumers. Granted, to the casual listener, Amazon MP3 and Apple iTunes Store sound pretty good, as they’re encoded as 256Kbps MP3 and AAC files for the most part. Amazon has some MP3 files encoded at variable bit rates, but most of them center around the 224Kbps to 256Kbps range. AAC generally sounds slightly better than MP3 when encoded at the same bit rate, although recent improvements in MP3 encoding algorithms have largely rendered this academic.

Aside from music purchases, 256Kbps is also iTunes’ default encoding rate for when you rip audio CDs in iTunes (although you can change it), and it’s the size iCloud uses to deliver tracks to other PCs or mobile devices on your network if you’re a subscriber. I’m just using Apple products here as an example; Windows Media Player, Winamp, and countless other apps do similar things. Any way you cut it, 256Kbps files sound a lot better than ones encoded at 128Kbps, which is what Apple used years ago before it removed DRM from its iTunes Store tracks. Granted, 256Kbps files take up twice the space as 128Kbps files, but on today’s devices, that usually isn’t a problem, and the improved sound quality is worth it.

The thing is, 256Kbps still isn’t enough. Higher-resolution, uncompressed, 16-bit audio files match the sound you get on an actual CD. 24-bit sound files even sound better; the increased headroom matches the format most artists and mix engineers have been working in over the past decade or so.

Cheap consumer electronics manufacturers abused the phrase “CD-quality” for many years, but in this case it still has meaning. True CD-quality files take up anywhere from three to 10 times as much as space as an MP3 or AAC file, depending on the latter’s bit rate; 24-bit files take up even more space. They come in several formats: FLAC, WAV, AIFF, and Apple Lossless. (FLAC and Apple Lossless contain some data compression but only in a method that doesn’t affect sound quality. FLAC is much more widely supported than Apple Lossless, though.)”

And finally, The Tennessean wrote a great piece on the lure of high fidelity and what some people in Nashville are working on to bring it back.
More to come.  This is a big issue.  Chime in on what you think and how can we move this agenda forward.

Here is a guest post excerpt from my friend and artist MC Lars from the Huffington Post UK.

“In last week’s State of the Union, President Obama stressed the importance of creatively revitalising our nation’s economy. He called for “an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values,” the blueprint for lasting domestic prosperity. There are some parallels to this shift in thinking in today’s indie rap game, specifically in application of sustainable new media economics.”

“What this means then is that in order for artists like me to survive, I must be creative with how I let people hear my music. A primary means of distribution in 2011 was my USB robot, a two-gigabyte hard drive keychain that housed all of my albums digitally. I also sell t-shirts with cartoon characters I draw myself and I try to print on shirts manufactured domestically when I can. 47% of my income comes from merchandise, 40% from ticket sales, and 13% comes from iTunes, Spotify or other paid music services through the internet. I used a crowdsourced funding site called Kickstarter to produce my last album, with added bonuses of drawings and personalized songs to the highest contributors.

If the internet were compromised or regulated to the point where the 13% of my traditional digital income (from iTunes, Spotify, and others) were to disappear, it could likely mean that people would turn to getting my music for free, which would then mean that I would need more ticket and t-shirt sales in order to maintain my income level. (My income, by the way, covers my expenses, taxes, and health insurance, and that’s it.)

“Economically, we are living in an era that takes us back to the punk and indie roots of the 70s and 80s. Musicians must be able to go out and perform for years in small clubs to tiny crowds; it’s the way one perfects his or her craft and pays his or her dues. It’s how bands like Black Flag and Minor Threat became legendary, they had explosive, powerful shows and were willing to sacrifice everything to make their music heard. Henry Rollins of Black Flag tells his story in his classic book of journals, Get in the Van, an important read for any indie musician today.

We live in an era of innovative fusion of old and new. Being a musician no longer means simply being a songwriter and performer. One must also know a little bit about business, branding, t-shirt design, social networking, production, publicity, accounting and tour managing.

Ultimately, what this is means is that if you own and run your own business, no one can take that away from you. (The MPAA and RIAA exist to maintain the status quo of the entertainment industry, but I don’t need someone with a large salary lobbying for my interests as an artist when that person is disconnected from the reality of new media economics that I’ve described above.)

The internet in its current free and open format is important to me as an independent indie rap musician and artist. In fact the internet is essential to me and to all of the other artists who are like me. The government’s harnessing and regulating the internet and its free flow of information would be a dangerous thing in that it could lead to government control of a very important channel of a portion of the income that I earn – and through which I express myself freely, exercising my First Amendment rights as an artist.”

Read the whole thing here from the Huff Post UK.

Here are two visions for the future, one from Corning and one from me.  The Corning video is from earlier this year and shows their vision for a visually connected communications environment.  This is not unlike the future that Gerd Leonhard and I described in the Future of Music in 2005.

Can you imagine organizing your daily schedule with a few touches on your bathroom mirror? Chatting with far-away relatives through interactive video on your kitchen counter? Reading a classic novel on a whisper-thin piece of flexible glass?

The video depicts a world in which interactive glass surfaces help you stay connected through seamless delivery of real-time information – whether you’re working, shopping, eating, or relaxing.

Does the world showcased in “A Day Made of Glass” seem like something out of a fantasy movie?  Just a decade ago, pay phones, VCRs, and film cameras were also commonplace. Today, we’re accustomed to movies streaming on demand to a 60-inch television hanging on the wall and to video calls on notebook computers, essentially for free.

What might this mean for music? Well, today we have Spotify and Rdio and Mog all providing on demand music for free or nearly for free. Listen to this vision for the future and see how far we have come in the past 5 or 6 years from our book on the Future of Music.

https://player.soundcloud.com/player.swf?url=http%3A%2F%2Fapi.soundcloud.com%2Ftracks%2F29101326&show_comments=true&auto_play=false&color=ff7700

Check out the Future of Music book here.

A new survey from the Gartner group shows digital music revenues forecast to grow less than 5% per year.  This is close to flatlined if you factor in inflation.  Not good news for most of the world.

■ Online music revenue from end users will grow more than 31% by the end of the forecast period: from $5.9 billion in 2010 to $7.7 billion in 2015. By comparison, consumer spending on physical music (CDs and LPs) is expected to slide from around $15 billion in 2010 to around $10 billion in 2015.

■ Online music subscription services, such as Spotify, will be the main growth sector in this market, showing fivefold growth from 2010 to 2015. A la carte sales will drive the bulk of overall revenue.

■ The highest growth rates will be in regions such as Latin America and the Middle East and Africa, which have not historically been strong in paying for tracks or albums from online services or stores (although perhaps stronger in paid-for ringtones from their service providers).

digital music sales chart

Read more from Gartner here.

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

The future of the profitability of the recorded music business is unquestionably in jeopardy.  One might speculate that new “access based” services like Rdio and Spotify could re-start a failing record industry.  I hope so.

But as sales have fallen to less that 1/2 their heights at the turn of the century, artists and their managers and attorney are looking to every means possible of generating revenue both now and in the future from their recorded works.

The New York Times published a great piece on the coming battles over song rights, excerpted here.  This will be a very interesting fight to watch as it has the potential of forever driving the nail into the coffin of the traditional record labels, forcing a complete restart of the business if it is to survive at all.

“When copyright law was revised in the mid-1970s, musicians, like creators of other works of art, were granted “termination rights,” which allow them to regain control of their work after 35 years, so long as they apply at least two years in advance. Recordings from 1978 are the first to fall under the purview of the law, but in a matter of months, hits from 1979, like “The Long Run” by the Eagles and “Bad Girls” by Donna Summer, will be in the same situation — and then, as the calendar advances, every other master recording once it reaches the 35-year mark.”

“The provision also permits songwriters to reclaim ownership of qualifying songs. Bob Dylan has already filed to regain some of his compositions, as have other rock, pop and country performers like Tom Petty, Bryan Adams, Loretta Lynn, Kris Kristofferson, Tom Waits and Charlie Daniels, according to records on file at the United States Copyright Office.”

“In terms of all those big acts you name, the recording industry has made a gazillion dollars on those masters, more than the artists have,” said Don Henley, a founder both of the Eagles and the Recording Artists Coalition, which seeks to protect performers’ legal rights. “So there’s an issue of parity here, of fairness. This is a bone of contention, and it’s going to get more contentious in the next couple of years.”

“My gut feeling is that the issue could even make it to the Supreme Court,” said Lita Rosario, an entertainment lawyer specializing in soul, funk and rap artists who has filed termination claims on behalf of clients, whom she declined to name. “Some lawyers and managers see this as an opportunity to go in and renegotiate a new and better deal. But I think there are going to be some artists who feel so strongly about this that they are not going to want to settle, and will insist on getting all their rights back.”

“Given the potentially huge amounts of money at stake and the delicacy of the issues, both record companies, and recording artists and their managers have been reticent in talking about termination rights. The four major record companies either declined to discuss the issue or did not respond to requests for comment, referring the matter to the industry association.”

“But a recording industry executive involved in the issue, who spoke on condition of anonymity because he is not authorized to speak for the labels, said that significant differences of opinion exist not only between the majors and smaller independent companies, but also among the big four, which has prevented them from taking a unified position. Some of the major labels, he said, favor a court battle, no matter how long or costly it might be, while others worry that taking an unyielding position could backfire if the case is lost, since musicians and songwriters would be so deeply alienated that they would refuse to negotiate new deals and insist on total control of all their recordings.”

“Right now this is kind of like a game of chicken, but with a shot clock,” said Casey Rae-Hunter, deputy director of the Future of Music Coalition, which advocates for musicians and consumers. “Everyone is adopting a wait-and-see posture. But that can only be maintained for so long, because the clock is ticking.”

Read the entire NYTimes article here.

My friend Roger McNamee, a founding Partner and Managing Director of Elevation Partners has been getting some great press lately on his thoughts on the new music business, investing in technology, Apple, Google, Facebook and much more.  Here is the transcript of a speech he gave at NARM earlier this summer, a must read.

“Our band – Moonalice – is inventing new opportunities in music. We would like you all to join us.

I have been a working musician for more than 30 years, and a technology investor for 29 years. I have played about 1000 concerts over the past 15 years, which means I have personally experienced everything in Spinal Tap except the exploding drummers. I also spent three years helping the Grateful Dead with technology and many more advising other bands, most notably U2.

My band is called Moonalice. We play 100 shows a year in clubs and small theaters, mostly on the coasts. Moonalice was the first band broken on social networks. What broke us was 845,000 downloads – and counting – of the single “It’s 4:20 Somewhere.” We’re the band that Mooncasts every show live, via satellite to thousands of fans on iPads, cell phones, and computers. We’re the band that has a unique psychedelic poster for every show. After four years, Moonalice has 371 poster images from the likes of Stanley Mouse, Wes Wilson, and David Singer. Licensing those images will eventually a big business for us. We’re the band that offers the EP of the Month for $5. And we’re the band that uses the latest technology to radically improve both the production cost and commercial value of the content we produce. Now I’m looking for people who want get on this bandwagon with me.

The first question I hope you ask is “Why now?” The world of technology is beginning a period of disruptive change. The old guard – represented in this case by Microsoft Windows and Google search – is under assault and hundreds of billions of dollars may become available for new and better ideas. I hope that gets your attention!!!

The biggest beneficiaries of this disruption should be the people who got the short end of Google’s business model, especially creators of differentiated content. For the past twelve years the technology of the internet has been static. Every tool commoditized content by eliminating differentiation. The most successful companies monetized content created by others. Google was king.

I believe Microsoft and Google are about to get a taste of what the music industry has been dealing with for a decade. Their world is going to change and they won’t be able to stop it. Not so long ago Microsoft’s Windows monopoly gave it control of 96% of internet connected devices. Thanks to smartphones and tables – especially the iPhone and iPad — Windows’ share of internet connected devices has fallen below 50% … and it will fall much further in the years ahead.

Consumers are abandoning Windows as fast as they can. I expect businesses to follow suit.

This is a HUGE deal. Businesses whose employees use smart phones and iPads instead of PCs will save up to $1000 per employee per year in support costs.If corporations buy fewer PCs, they will save tens, if not hundreds of billions per year.

This is happening because today’s strategic applications – email, Facebook, Twitter, LinkedIn, YouTube and other internet applications – don’t need a PC . . . in fact, they are far more useful on a phone.

Microsoft has been in trouble since it first missed the web in 1994. Then it was unable to prevent Google from taking charge in 1998. When Google showed up, the World Wide Web was a wild environment. No one was in charge. The prevailing philosophy was “open source” . . . and free software.

Google had a plan for organizing the web’s information that treated every piece of information as if all were equally valuable. To create order, Google ranked every page based on how many people linked to it.

What we all missed at the time is that by treating every piece of information the same, Google enforced a standard that permitted no differentiation. Every word on every Google page is in the same typeface. No brand images appear other than Google’s. This action essentially neutered the production values of every high end content creator. The Long Tail took off and the music industry got its ass kicked.

Google captured about 80% of the index search business, which gave it a huge percentage of total web advertising. Google’s success eventually filled the web with crap, so consumers began using other products to search: Wikipedia for facts, Facebook for matters of taste, time or money, Twitter for news, Yelp for restaurants, Realtor.com for places to live, LinkedIn for jobs. Over the past three years, these alternatives have gone from 10% of search volume to about half.

As if all this competition wasn’t bad enough for Google, then along came Apple with the iPhone and App Store. Apple offers a fundamentally different vision of the internet than Google. Google is about the long tail, open source, and free, but also had to remove 64 apps from the Android app store for stealing confidential information. Apple is about trusted brands, authority, security, copyright and the like. In Apple’s world, the web is just another app; it is called Safari.

People who have iPhones and iPads do far fewer Google searches than people on PCs. The reason is that Apple has branded, trustworthy apps for everything. If they want news, Apple customers use apps from the New York Times or Wall Street Journal. If they want to know which camera to buy, they ask friends on Facebook. If they want to go to dinner, they use the Yelp app. These searches have economic value and its not going to Google, even on Android.

When Apple and the app model win, Google’s search business loses. Like Microsoft, Google has plenty of business opportunities, but the era of Google controlling all content is over. Consumers compared Google’s open source web to Apple’s app model and they overwhelmingly prefer Apple’s model. Software development and innovation has shifted from “web first” to “iPad first” . . . which is a monster long term advantage. Get this: Apple may sell nearly 100 million internet connected devices this year!

Apple’s strength can be seen best in the iPhone vs. Android competition. There are many Android vendors. Together they sell more phones than Apple does. But Apple gets around $750 wholesale for an iPhone. The other guys get between $300 and $450. This means Apple’s gross margin on the iPhone is nearly as big as its competitors’ gross revenues. Game over.

The other thing that makes Apple amazing is the iPad. No electronic product in history – not even the DVD player – can match the adoption rate of the iPad. Apple may sell another 30 million this year. At this point, the competing products have not put a dent in the iPad. Image what happens if Apple’s share of the tablet market remains closer to the iPod (at 80%) than to the iPhone (20%)?

This sounds like, “Game Over, Apple wins” . . . but it’s not . . . at least, not yet. The open source World Wide Web has finally responded to Apple. A new programming language has come to market called HTML 5. HTML is the foundation of the World Wide Web. For the past decade, HTML has been static, which allowed Google to dominate.

HTML 5 is a new generation of HTML and it changes the game fundamentally. It allows web developers replicate the iPhone experience, but with many extra bells and whistles … and no App Store. One reason HTML 5 matters is because it eliminates Adobe Flash, which has been an inadvertent barrier to creativity

Creativity enables differentiation. Differentiation can be monetized. Huge differentiation can be monetized hugely. With HTML 5, creative people can now use the entire web page as a single canvas. For the first time in a dozen years, web pages will be limited only by the creativity of the people making them. They can create experiences that will be more engaging to consumers and more profitable for advertisers than network television.

New forms of entertainment will emerge. New forms of business. Companies the size of Facebook and Google will develop in categories I can’t guess at. Companies as important as Amazon, iTunes, and Netflix will emerge to support what new content comes to market.

Whether you view Apple as friend or foe, HTML 5 offers real opportunity. Why?

Because you can deliver a better experience than an app . . . without an app. HTML 5 is cheaper to build, cheaper to support, no 30% fee . . . oh, and the apps perform better, too.

I believe Apple’s best response would be to focus on selling hardware and accept that consumers will demand products that happen to bypass the app store. Based on the argument with Amazon, I sense Apple is not ready to concede the point. That’s ironic, because the only way Apple can get hurt would be if they try to force all commerce through the App Store. The would create a real reason for customers to buy a tablet other than iPad.

Let me review my key points so far:

Google and Microsoft will remain huge, but their influence is evaporating, which means we can ignore them

Apple is winning big, which means we have to support their platforms first

For people who make content, Apple is a better monopolist to deal with than Google.

HTML 5 will give you a better product than the Apple app model at a lower cost and with more value.

Now let’s figure out what we can do together. My band Moonalice exists because T Bone Burnett wanted to produce an album of new and original hippie music in the old school San Francisco style. We put together an all-star band with in late 2006 and recorded the album. T Bone was about to win the GRAMMY for the Alison Krauss/Robert Plant album, Raising Sand, so we thought we were made.

We had a budget
We had an A-list PR guy
We had a really fine manager
We had custom label deal with a nice budget
T Bone’s innovative sound technology would make the album cutting edge

Old school music is good. Old school marketing wasn’t going to work for us. About four months before release, I reviewed the media plan with our PR guy. He said, “Sorry, man, but nobody cares.”

A few moments of somber reflection followed. Then, with great regret, I let our manager go. I let our publicist go. I let our label go. For all intents and purposes, we wrote off an album everyone was extremely proud of and which accounted for half of T. Bone’s portfolio the following year when he was nominated for Producer of the Year.

But I freed up most of our operating budget. Real money. And I focused it all on Twitter and Facebook. Our goal was to build an audience of dedicated fans around a Moonalice lifestyle. Three years later, we have 57,000 fans on Facebook and 75,000 on Twitter. We learned a great truth: as hard as it is to get people to spend money, it is much harder to persuade them to spend enough time listening to you to become a long term fan. We traded our music for their time. We discovered we could build an audience by giving away stuff that costs nothing to produce and distribute. These are serious fans who engage with us dozens and often hundreds of times a year.

The first thing we invented was the Twittercast. Before us, no one had ever done a concert over Twitter. Now we have done 103. Our marginal cost is exactly zero. Next we created Moonalice Radio, which has broadcast one song every hour on Twitter for the past two years. Then our drum tech bought a video camera and started recording the shows. Then he bought more cameras, put them on mic stands and started doing live video mixes. About a year ago, he figured out how to mooncast our concerts over the net for free.

Nearly all of our past 100 shows have been mooncast live on MoonaliceTV and then archived. Because we play mostly late shows on the west coast, only 10% of the audience watches in real time. But approximately 3,000 people watch EVERY show on a time shifted basis. Fans like the Moonalice Couch tour because they can chat, make friends, and do things that are not permitted at a live venue. They even buy Couch Tour tee shirts. And they are helping us create a new ecosystem where most of the music is free, because Moonalice art and life style products have huge economic value.

Thanks to HTML 5 and a satellite dish, Mooncasts can now be viewed on a smart phone without an app. Our video quality competes favorably with the best you have seen on an iPhone, and the technology to do all this costs the equivalent of six months of our former manager. He was a really good guy, but a satellite-based tv network is more valuable.

I want to finish up by recommending a course of action for you

Step 1: Remember that HTML 5 is just getting started, but the learning curve is less expensive and more profitable for those who commit to it from the beginning. The new business is going to emerge over a few years, not overnight

Step 2: Don’t wait for the labels to figure this out. Labels are not organized to get this right, which leaves a big hole in the new music market where labels used to be.

Step 3: Don’t wait for major artists to figure it out. The great new stuff is going to come from artists who have nothing to lose. Artists who come out of nowhere will create huge value for next to no cost.

Step 4: Make sure you are successful addressing the needs of next generation content creators … not just listeners. There are WAY more of content creators than you may realize. Thanks to Moore’s Law, Karl Marx is right at last: the means of production are in the hands of the proletariat. At the peak, there were 8 million bands registered on Myspace. They weren’t playing gigs, they were creating stuff, mostly for their own entertainment. Those people spent a lot more money creating the content they posted on Myspace than they did on recorded music. Thanks to Apple’s Garageband, the population of people capable of mixing something is now measured in tens of millions. Making these people successful is the key to creating new markets and new music products.

Step 5: Do everything in your power to encourage new product ideas and new forms of content. HTML 5 is a blank canvas and there is no telling what people will do with it. For all I know, HTML 5 may produce five or even ten amazing categories of product.

Contests, prizes and publicity will give you an opportunity to associate yourself with whoever creates the cool new stuff. If you have local stores, do local events. Think Alan Freed.

Step 6: Near term, focus your platform strategy on Apple.

Step 7: Long term, focus on HTML 5. The sooner you commit to HTML 5, the more likely you will produce something of economic value.

Step 8: Remember that HTML 5 will produce companies as important as Amazon, iTunes, and Netflix. It costs musicians practically nothing to create good digital video and fantastic audio, but they need distribution systems optimized for their content.

Step 9: Make music fun again”

And if that isn’t enough, Roger was kind enough to share with me his thoughts on investing in technology related businesses.  TechInvestingHypotheses

We all need a good laugh for the weekend.

Hipster Music Diagram

From Gary Tan at Y Combinator.  Happy 4th of July Everybody!  Dave