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Dave Kusek Podcast

I had a chat a couple of weeks ago with my friend Bobby Owsinski that he recorded for his Inner Circle Podcast. I I hope you enjoy it.

We talked about a lot of things in the Dave Kusek podcast including the early days of electronic and digital music, the creation of MIDI, the digital music revolution and the release of ProTools and the rise of online music education.

“Dave has been a pioneer in the digital space in many ways. Dave is the creator of Berklee Online, one of the first online education programs in the world, and now teaches music business at New Artist Model.”

You can listen to the full podcast at bobbyoinnercircle.com,  There is also some news about Spotify creating its own music label in an attempt to dominate certain playlists.

or via iTunesStitcher, Mixcloud or Google Play.

Read more here:
http://bobbyowsinskiblog.com/2016/09/06/dave-kusek-inner-circle-podcast/#ixzz4JamVjcPw

Learn more about the New Artist Model online music business school here.

Photo credit: http://bit.ly/1crjCq1

Photo credit: http://bit.ly/1crjCq1

As the music industry moves forward, revenue streams are expanding into territories we would never have imagined. The live show can now be streamed over the internet, music fans can listen to any song they want with streaming services like Spotify, lifestyle companies like Red Bull and Converse are getting into the record label business, and new publishing opportunities are popping up everyday.

One industry that just keeps growing is the gaming industry, and its presenting more and more opportunities for musicians. Rock Band and Guitar Hero really started the ball going for customizable game music, and since then, many platforms have been integrating in their own streaming or local music players. This definitely presents a great way forward for music. Integration with Spotify could mean more paying customers, and in-game purchases could evolve to include music packages. I really think this segment of the music industry is wide open for innovation.

Last week, Steam announced the beta of Steam Music. Check out the article below from Billboard for more information.

Steam, which passed its tenth birthday last year, operates as both an online marketplace and a media hub for video game players worldwide, keeping their game libraries in a central location and storing game information and their purchases in the cloud. Similar to iTunes with music, Steam makes money the same way, taking a 30% cut of purchases. That structure keeps Steam’s marketplace a click away and Valve’s brand ever-present. While most video games are too complex to be played without having their files stored on a local device, Steam users are able to install the client on a new computer and bring their software with them, along with save game files and similar information. As of last October, Valve put the number of Steam accounts at over 65 million.

As it stands now, Steam Music simply allows its users to listen to tracks from their local digital libraries while simultaneously playing video games — as long as they are in “Big Picture Mode,” a user interface designed to mimic the living room-based functionality of the Xbox and PlayStation’s operating systems. But what if the service integrated a streaming service like Spotify? The result could be a boon for that streaming service as well as music rightsholders; recent revenue gains in Norway’s music industry have been directly attributable to streaming services’ pervasive scale in that country, accounting for 65.3% of recorded music revenues and driving industry-wide growth.

But there are strong indications that Spotify could eventually arrive on Steam. Martin Benjamins, one of two people behind the website SteamDB, a website — unaffiliated with Valve or Steam — dedicated solely to investigating the underlying code of Steam and its attendant programs, found something interesting inside Steam’s guts. “Valve has already done quite a bit of work on Spotify integration in the Steam client, and appear to be using… Spotify’s official API for [placing] Spotify functionality into third party applications.” If you need a translation: Steam is already testing integration with Spotify into Steam Music. Benjamins says that it appears as if Spotify Premium users would be able to utilize the feature.” It’s important to note that, while such digital sleuthing is a worthwhile exercise, unreleased or unactivated code doesn’t mean that a feature will see the light of day.

Valve declined to comment on upcoming or requested features, and Spotify did not respond to a request for comment at press time.

Steam Music’s beta page does state that “we see an opportunity to broaden Steam as an entertainment platform, which includes music alongside games and other forms of media.” The company has taken significant steps to this end recently, developing SteamOS which allows users to all but replace their gaming consoles with a home-built computer intended to be always connected to the living room television, as well as Steam Machines, a prefab console intended to serve the same purpose.

Neither Xbox or the Playstation have a Spotify app available on their platforms, each preferring to push its own products — Sony’s paid Music Unlimited and Microsoft’s Xbox Music., which, like Spotify, offers a free and paid tiers.

As far as their plans to sell music, the company says, alluringly, on its site that “Steam currently offers a number of game soundtracks for sale. Your feedback will help guide where we take things next.” It’s also emblematic of a company well-respected by its customers, largely on how closely it listens to user feedback.

A quick glance at the Steam users online at the time of this writing showed 6.5 million — about 500,000 more than currently pay for a Spotify subscription. If 10% of Steam’s 65 million-strong user base subscribed to Spotify as a result of a trial or bundle deal, it would raise Spotify’s paid subscriber base by over 100%. Playing with games may just mean serious business for music.”

What do you think? Do video games present a huge opportunity for the music industry?

 

We discuss music placement in video games in the New Artist Model online course, but you can also get access to some free lessons by signing up for the mailing list

The first ever Music Education Hackathon took place June 28-29 in New York City. Around 300 people gathered together in the 24 hour time frame to develop more than 40 usable music education tools. The hackathon brought together groups that rarely collaborate: educators, developers, and the music industry. Collaboration in the music industry is extremely important if we want to progress, and educating the next generation of musicians, music entrepreneurs, and music business professionals is a solid investment in this industry’s future.

Spotify was the catalyst. “We’ve done a lot of hackathons and seen such creative things come out of them,” Kerry Steib, Spotify’s director of social responsibility told EdSurge. “We wanted to unleash that creativity onto something like music education and support the next generation of music makers and musicians.” The Swedish company’s U.S. operations are headquartered in Manhattan, making the New York City school system an obvious partner. (The event was co-sponsored by Spotify andInnovateNYC, an iZone initiative that, among other things, builds bridges to the entrepreneur and edtech communities.)

More than 300 people flowed in and out of co-working space Alley NYC over the course of the hackathon. About 170 were developers. The rest were designers or other helpers, business people and teachers. Some executives and teachers attended as mentors to give developers advice. Bob Lamont, who teaches performing arts at Manhattan’s Gramercy Arts High School, said his most frequent recommendation was to add assessment features. “I asked the developers, ‘How do we know the kids know it?’” he told EdSurge. “The apps should be fun, but also illustrate, ‘I know how to do xyz in terms of musical technique.’” Teachers also shared ideas during the hackathon’s open-mike session. Jamillah Seifullah, who teaches math at Brooklyn’s Pathways in Technology High School, a.k.a. P-TECH, used that time to request an app that would express math equations in sound waves.

The hackathon kicked off Friday night. Developers learned about available tools and formed teams. They could add functionality to their apps via 14 application programming interfaces, including APIs from the Echo Nest,Peachnote and Spotify. Projects were due late Saturday afternoon. The tight turnaround allowed little rest. Roger Li, a Stuyvesant high schooler who participated in the hackathon, said he slept for three hours in a chair inside Alley NYC.

Despite the rush, the resulting projects were relatively polished and incredibly diverse. There were apps that focused on analyzing music, teaching music and making music. Sometimes music served as a bridge to another subject. One developer took Seifullah’s suggestion and built an app that lets users graph trigonometric functions and listen to corresponding sounds. Another app, “Poke A Text,” leverages rap and hip-hop lyrics to teach spelling, grammar and listening comprehension. Users listen to audio clips then translate the lyrics into grammatically correct English. “Map That Music!” links music to geography. Students can click on a world map to listen to songs from a particular country or listen to a song and guess where it originated.

To read the full story and learn about the winners, see the full article on EdSurge.

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.

musicbizrecapHere’s a recap of some of the key trends and topics that marked the music business in 2012.  As we move forward, it’s good to look back, especially amidst the music industry’s chaotic, shifting paradigms.

As the music industry’s traditional structures continue to fall away, new models are building upon unsteady foundations.  Some of the new companies that stepped onto the playing field in previous years fought in 2012 to stay in the game.  Major music companies merged and reorganized while digital startups gained more and more attention.  Digital Music News reported that 1 in every 43 venture capital dollars was spent on music related businesses last year.1  One example, The Echonest, a music data and analysis company, popped up from under the radar and secured over $17 million in funding.  With success stories from Amanda Palmer, Kickstarter pushed funding into uncharted territory, creating viable new streams of capital for musicians.  Here are ten examples of trends and events that marked the music industry in 2012 and that will continue to have an impact on the months and years to come.

Check out the full story at The Berklee Music Business Journal

Music_Evolution_lowres1

Music is a much smaller and less significant part of many people’s lives than 10-20 years ago.  There is more competition for our attention and the value of music has declined precipitously. This graphic shows the rise of digital against physical music, and the overall impact of piracy, widespread distribution and digital media on the music industry. The sad story is that overall the music business is shrinking. That is a fact that we all have to face.  The silver lining in all of this may be on the horizon, but it cannot come soon enough for me. We have to do something to reverse the trend.

Courtesy Daily Infographic.

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?

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.

musicians&money

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