GO YOUR OWN WAY
Aug 1, 2007 12:00 PM, By Jeff Price
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Learn how to really survive and succeed in the music business without depending on a record label with this extended online version of the Remix Band Aid column.
I am the co-founder and have been GM/President of the New York-based independent record label spinART records for the past 19 years. Over the years, spinART has been in strategic relationships with Sony, Warner Bros., Sire, Polygram Music Publishing and others.
spinART has distributed over 200 releases since its inception, including such bands/artists as The Pixies, Frank Black, Nellie McKay, You Am I, John Doe, Apples in Stereo, Jason Falkner, Richard Thompson, Echo & The Bunnymen, The Fastbacks, Creeper Lagoon, The Church, Lilys, The Eels, The Dears, Michael Penn and more.
In 1997, spinART records became the first record label in the music industry to offer its catalog of releases via paid download as mp3s.
From 2004 to present, I contributed to the founding charter and organization of The American Association of Independent Music (AAIM), a non-profit non-governmental trade organization representing the interests of its independent label members.
From 1997-2001, I worked with eMusic, serving first as a consultant, then as interim VP of Content Acquisition and finally as the Senior Director of Music/Business Development. I contributed towards the creation of eMusic's initial business model, played an active internal team role in eMusic's successfully completed financing in September 1999 and helped create and implement the first subscription-based music sales and distribution structure.
On January 23rd, 2006, I launched a new delivery and distribution company TuneCore. TuneCore.com changed the 100-year-old rules and model of the music business. It is a low, flat fee service that delivers music to iTunes, eMusic, Rhapsody and many other major download sites while taking no rights and no revenue from the sale of the music. TuneCore's fees are simply based upon the number songs delivered and the number of digital retailers it will be delivered to.
With TuneCore, for the first time in the history of the music industry, any artist or label can get their music into the stores around the globe where people go to buy and discover it and receive 100% of the revenue from the sale of the music while keeping control of their masters via a non-exclusive agreement that can be cancelled at anytime. The goal of TuneCore is to empower the artist or label to succeed by serving them as opposed to “exploiting” them.
I lecture and appear on panels in the U.S. and Europe, discussing the changing music industry as well as the impact the Internet, compression technology, encryption and peer-to-peer file sharing have had on it.
I have also appeared on Nightline and have been interviewed and quoted in publications ranging from Billboard and Spin to Business Week, The Industry Standard, Boston Globe and The New York Times.
I am also featured in the book Off the Charts — an expose of the music industry. At the request of a congressional panel, I supplied a written deposition in the SEC investigation of Time Warner's failed acquisition bid of EMI and have provided a witness statement for the SoundExchange arbitration relating to the royalty rate for Webcasting.
Should bands still aim for the coveted signing to an indie or major label?
Record labels provide very specific functions for artists: They give advance money to record, contribute toward the recording process (find a studio, producers, have input into the recording/song creation), manufacture inventory, market and promote the music, provide accounting information and get the CDs into retail stores.
One of the most important things to note is that the traditional music industry is about distribution. Record labels make the CD to give to the distributor. The distributor puts the CD in the store. If a CD is not on a shelf, it cannot sell. The record label then markets the album on the CD to create demand. The physical distributor works to get the CDs on the shelves and keep the album in stock. Stores have a finite amount of shelf space and can only have a limited number of CDs in stock. Physical distributors, amongst many things, warehouse, insure and pick/pack and ship CDs. They also have a sales staff that travel around the country trying to convince retail stores to take in copies (or replenish inventory) of particular CDs.
A band gives up rights to their masters and revenue from the sale of their music to a label in return for the services from the label.
The question becomes, is that relationship still equitable? In other words, does and Artist/Musician need a label in order to have access to all of the things listed above? The short answer is “no.”
Home recording has never been cheaper and easier. Yes, it still takes some cash outlay, but for less than $2,000 a high quality multi track mastered, mixed and sequenced album can be made on a home computer.
There is no substitute for experience, but with home recording, there is no studio clock ticking; you have unlimited time to have your music sound the way you would like it to. In addition, software programs enable you to recreate sounds that you might not otherwise be able to reproduce.
As for the manufacturing side, the CD is simply a delivery device that allows someone to hear sound waves if they put the CD into a CD player. The CD player reads the information on the CD and coverts it into information that can be translated into something a speaker can output. People purchase CDs not to have a 5-inch circular piece of plastic but to be able to hear the music on it. Despite this, the CD is the most important part of the financial equation — without the CD, you cannot sell your album to the fan.
The problem is, there is no guarantee once you make a CD it will sell. And if it does not, you still need to pay for the cost of making it. Manufacturing inventory upfront in hopes that it will sell can be a very financially risky proposition. In addition, you always need to have more sitting in stock to replaces the inventory that does sell.
Enter the digital age. Deliver your album once to a place like Apple/iTunes via a broadband pipeline and the 4th largest seller of music in the United States today has virtual unlimited inventory that never runs out.
However, you still need to promote the music to get people to buy it. Music marketing and promotion is either giving your music to someone or letting someone hear it with the hope that they will talk about it to others or buy it.
Traditionally, music was discovered from the top down. That is, there were three ways people could discover music on a mass level: commercial radio, TV and Viacom owned properties (i.e. MTV, VH1, BET) and print magazines.
These three outlets would have bands/music pushed to them from the labels. If you were not on a label, the possibility of getting exposure from one of these three outlets was virtually impossible. These outlets would then play/expose the music, and then fans would discover it — from the top down.
Once again, enter the digital age. The Internet has allowed anyone to have global reach to others. Via a blog, MySpace, YouTube, Pandora, LastFM or countless other sites, any person can spread the word to anyone else that has Internet access.
Each person in and of themselves has become their own commercial radio station, magazine and/or TV network that can reach tens of millions of people. This allows fans to network with fans — and things spread virally. As an example, the artist Kelly put up a video onto YouTube for his song “shoes” and ended up with over 30,000,000 views (more than most TV shows) and sold over 100,000 copies of his song in three weeks then he was asked to appear on TV shows — from the bottom up.
In other words, you no longer need the label to present your music to media outlets to get the exposure; you can create the same opportunity the label can.
Digital stores like iTunes, Napster, Rhapsody, eMusic, etc. have unlimited shelf space. This means everything can be in stock. In addition, digital stores have virtual unlimited inventory that is replicated on demand. The music is delivered once to a server. When it is bought, it reproduces itself and downloads to the buyer as a perfect digital copy but still remains in stock for the next customer. It can also be found instantly whenever a customer searches for it.
In the old model, every CD in a store could be returned to the distributor at any time for a full refund. This meant you never knew what you sold; you only knew what you shipped. A sale in the digital world cannot be returned, so for the first time in this industry you know exactly what you sold.
These three changes — unlimited shelf space, unlimited virtual inventory and no returns — make the big warehouses and sales staff obsolete. This means that the four major labels (aka the four major distributors) have invested tens of millions of dollars into an infrastructure that is becoming less relevant.
Labels still provide the cachet of the label name and the buzz of the artists on their labels. How can a band compete with artists who are on a renowned label?
It's important to define what it is you are trying to achieve. Are you a bedroom musician who will never tour? Do you only want to tour and could care less about the sales of your music? Is your goal to be the next big Britney-type pop star? Is this your career or hobby? Do you want to make money from your music?
Once you get your head around what it is you want to accomplish and you have decided you want to make money off your music, it's important to understand all the different ways you can generate revenue for yourself.
These include public-performance fees, gig income, merchandise sales, music sales, licensing and copyrights. Learn what each one is, how they work and how they make you money. From there you can move forward in assembling the pieces you need to accomplish your goals.
All the assets and opportunities are out there for any artist to have direct access to — most with no cost. Remember, music is not food shelter or clothing, but everyone wants it, and everyone needs it. It is the fuel that generates money for all of these businesses. Your music is valuable. In some cases so valuable the there are federal laws requiring you to get paid for the use of your music.
What are important steps for a band to effectively promote itself when there are a million artists fighting for attention?
Your art is the most valuable asset you have. It is no longer about releasing one 12-song album on one day. It is about rolling out media — music, video, flash animated games etc. — over an extended period of time. Each piece of media you put out to the world has the potential to make you “happen”
The ability to produce the media has never been less expensive — simple hand held cameras for a few hundred dollars or even short clips from your cell phone have the potential to turn you into the next OK Go “Treadmill Dance” phenomenon, Star Wars Kid icon, Sick Puppies Free Hugs campaign or Numa Numa sensation (look them up online; you can't miss them).
There are many ways to get your creations out to the world and many more people that want to see or hear what you have created.
What are some mistakes you've witnessed bands make that you'd like to see them avoid?
Not being educated on the business side of the music business. Understand the way it all works so you can then move forward with knowledge and realistic expectations.
Also, don't assume that a record label is the solution to everything — they aren't. And bands still need to put in the work necessary to reach the goals they have for themselves.
Don't be intimidated by technology. Technology has provided new empowering tools for you to use to succeed. If you can record a song, you can certainly figure out how to use the Internet.
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