Photo: digital vincent/flickr.

Mr. Owl, How many clicks does it take to get to the rock n’ roll center of a retail mp3?

Let’s find out. A One… A two-HOO…too many!

Mr. Owl just BitTorrented right into your album because it was easier than buying it on iTunes. It took less clicks.

Jay Frank suggested counting “clicks to content.” iTunes and Amazon send you through more than 10 clicks if you don’t already have an account but P2P takes only four clicks on average, he said. Streaming takes one or two. Think YouTube or Google, who nailed it with OneBox—the player that appears in their search results. “Anything more than two clicks and you’re missing out on the majority”, said Frank, “Impress them fast.”

Ariel Hyatt asked NMS attendees to raise their hands if they’ve ever bought their own songs on iTunes. The crowd was split but most hadn’t. She used the analogy of cooking: you wouldn’t serve food to guests without tasting it first, would you?

“Make it easy to buy” said Tony Van Veen. Have “compelling offers” such as package deals or name-your-price, and “take away the fear of buying” with a money-back guarantee. He told the story about an 80s band (I forget the name of the band but please comment if you know it) who recently sold their entire back catalog + their entire future catalog + free entry to any of their shows forever all for $100. For a superfan that’s a compelling deal.

Ripping and Burning > P2P

Eric Garland and Tom Silverman talked about the so-called problem with illegal downloads. If it’s hosted on an upload site like RapidShare, then “there is a place we can bomb”, said Silverman, “but not with P2P.” Research showed that more music is actually ripped/burned than it is shared via P2P.

Bombing the service provider is no solution when “people and their insatiable appetite for free music are the real problem.” –Eric Garland, CEO, BigChampange.

The desire for free music isn’t going away. Don’t blame the consumer. Musicians need to find ways to work free into their strategy. e.g. Free downloads for email addresses. Use free to convert strangers into fans. Tony Van Veen said, “Free music is the way to do it. Aggressively offer free. Do swaps. Use P2P. …Don’t fear free. …Build your list. …Don’t be afraid to steal a good idea and make it your own.”

Collaborative Consumption describes the rapid explosion in traditional sharing, bartering, lending, trading, renting, gifting, and swapping redefined through technology and peer communities. (collaborativeconsumption.com)

Short on time? Here’s the ultra-hip 2-min version:

Device Dependency

Apple continues to create a major dependence on iTunes through their mobile products—the iPod, iPhone, and iPad—and I don’t think that anything is going to “kill” iTunes without a war. iTunes is the 7-Eleven of media—it’s more convenient and expensive, but it’s closer to home. For many, the iTunes experience is ingrained behavior—a household name—and part of their daily commute so to speak.

Generation Gap

The second huge advantage Apple has is the generation gap. Older people are more likely to have money to spend, and are less likely to adopt something new—especially if it’s less convenient. For Spotify to compete stateside, it will start through today’s youth. I love the Spotify concept, its mobility, and its adaptivity. They are smart to develop/test/improve their service in one location (Europe) before attempting to roll it out in another market (U.S.)—that’s business expansion 101. I hope that Spotify becomes a hit in the U.S. mainly for the sake of the music. Who wants an iTunes monopoly?

Apple Affinity

Apple products have strong affinity, and an army of enthusiasts drinking their Slurpees. Anyone looking to compete with them has to have an equal or greater affinity, and/or introduce something totally disruptive (which Spotify has done to a degree). Spotify has game, but so does Apple, who made a calculated move with last year’s Lala acquisition. One big thing to remember is that music has always been about the experience, and it always has been.

Apple Shuttle

With the smartphones coming, and all these apps coming, the music business gets one more kick at the can, and I hope they don’t fight this one, because there’s a huge opportune to grow the business faster than what they’ve ever considered. I think there’s a huge sense of optimism for the first time in about five years that this business can actually grow. –Terry McBride in his 2009 interview with tech reporter Matt Hartley [video above].

Music is becoming more of a service than a product and Terry believes that in these digital times, context trumps content, access trumps ownership, and customer service is as important as ever. P2P filesharing should cease to be an issue as listeners increasingly prefer instant-access streams.

The second interview details the history of the Nettwerk Music Group as a DIY all-in-one company that developed by adapting to meet the needs of musicians and their fans. Towards the end he talks about joint ventures between musicians and non-music brands as being likely in the next five years.

I really think that the paradigm is shifting. I think within the next five years you’re going to have other brands inside the market signing artists. Brands will look at this going, well, we already use music within all of our TV, and radio, and, you know, internet media. Um, why don’t we just sign the artist? –Terry McBride, in his 2008 CMU-Tube interview [video below].

On my previous post, Musicians—Money Is Not Motivation, Dave MacDonald had commented that Terry McBride recently spoke positively about the music industry at TEDxVancouver in November 2009. That video isn’t available yet, but I hope they air it soon on TEDxTalks—I’ll keep you posted.

[homepage thumbnail photo: Flickr/stephen_dyrgas]

Science

In his above TED talk, Daniel Pink makes a strong case relating the science of motivation to creativity and business. The verdict is that money is not a primary motivator for people doing creative work. Sure, it does play a factor today as people need enough money to meet their essential needs. Once those needs are met, money is out of the picture. I look forward to reading his upcoming book, Drive.

Spotify

I felt compelled to deliver the point—money is not an artist’s true motivation—in response to the exorbitant editorial negativity surrounding yesterday’s news of Lady Gaga getting paid $167 for 1+ million Spotify streams. Where I live—in the US—Spotify is not yet available so I have not been able to try the platform. Spotify is a new service and its revenue model is understandably in a shakedown period where they are still determining what works, what data they have, and how they can best leverage that data to generate revenue.

Mr. Ek [Spotify CEO and Founder] revealed how the company has been working on making its advertising as personally tailored to an individual’s tastes as possible. “We have a lot of information about people. We know our users’ age, gender, location and even mood – which figure out by through BPMs [beats per minute],” he explained. Depending on whether a person has listened to lots of fast or slow music, Spotify is trying to make its mood analysis as accurate as possible – so it can serve highly targeted adverts for users to properly engage with—which should in turn, increase the amount it can charge brands to advertise on the platform. Mr. Ek said Spotify was “beginning to figure this stuff out”. (Spotify chief, Daniel Ek, rules out 2009 US launch | Telegraph)

It sounds like Spotify is on track to me. I like the ad-based model and there are many variations to explore. I brainstormed launching an ad-based free music service back in 2007, and I think Spotify is the closest service to what I would have done, but they’ll need to continue to evolve, as do musicians.

Whether it is really relevant to measure the success of Spotify in this way remains to be seen as it is still a service in it’s infancy. Much like Twitter, it is phenomenally successful in terms of usability but is still finding its feet in terms of making money. As it continues to attract users its appeal to advertisers will grow and so too will the financial returns. How this filters down to the individual artist is then probably more of an issue with the labels than with Spotify. (A Ga Ga approach to marketing? | The Naked Pheasant)

Industry

It’s smart business to think years down the road by expanding your fan base even if it doesn’t pay off immediately. I think Lady Gaga and many other artists see that. The long-term benefit of those 1+ million streams is immense, and I think many people are blinded to that fact—such a level of exposure leads to sellout shows and non-music revenue streams. The one thing I dislike about the situation is that the major labels still have major pull and they can afford huge production and marketing investments. But the need for heavy financing is down—thank you, Internet. In today’s connected, music-abundant world why does any one artist get so popular? Is it hard work, affinity, or talent? To me, talent is relative—it’s not what you can build, but rather it’s what you can build with what you have. It’s the Internet Age—indie musicians have the power to take the industry back but they must embrace change and creativity to do it—they must creatively leverage the internet and mobile apps.

The connection from the fan to the band, financially, has been broken. The fan knows that their purchase will hardly help the band, or more precisely that the marginal benefit from their purchase to the band is near zero, so why do it? The cost to the fan is much higher than the marginal benefit to the band, so the fan just torrents the damn song. (Why Music Is Broken – The Artist To Consumer Connection)

P2P rocks—it turned the industry up-side-down letting the label-lords know they had lost control. I see P2P as a massive benefit for musicians. Do they have P2P streaming yet? They will. With all that said, I believe that many music fans are as-motivated-as-ever to pay for music when they know their money is going directly to the artist. Maybe subscription services like Spotify can find a way to work this, or endorsement deals that fans would want to support, into their business model. I think that fans—and people in general—need to feel like they are part of something and they want to feel empowered.

Artwork: jahdakinebrah/flickr.

The fan artwork you see above is a creative visualization of Pink Floyd’s Money. The image squares depict the story of the song lyrics. What motivates you? What do you think motivates music fans?

Carey is pioneering a new business model for music. She’s cutting deals with the kind of partners musicians have traditionally shunned, pushing herself into new areas such as publishing, tourism and food and drink. … “A lot of big powerful music-industry executives made a giant mistake,” she says. “They gave the music business away on the internet. If they had just sat back and said, ‘Maybe let’s figure this internet thing out, it could be something cool,’ we could have found a way to distribute music online on our own terms, not somebody else’s. … Musicians have long promoted non-music products. The Rolling Stones marketed Windows 95 with Start Me Up. Michael Jackson did endless Pepsi promos. And rappers such as P Diddy and Jay-Z have moved on from name-checking other people’s fashion and luxury-goods brands in their songs to create their own brands, usually in partnership with their record labels, and promote them instead. But Carey is breaking new ground in three areas. Mariah Carey: The gloves are off | Times Online

The internet has leveled the playing field. It has proven that content is king, and that those who work hard at delivering content can build a following. Artists have channels with live streaming video content and direct connection with their fans through mobile applications. The same opportunities exist for everyone, and they’re almost all free. You may think that endorsements and partnerships are only for megastars—but I don’t. I believe that indie musicians with smaller niche fan bases can make the same types of product endorsement deals and partnerships with brands or services that the megastars can. The trick is finding the right brands and companies to match up with. But if you have—for example—a Ustream or YouTube channel that’s getting hundreds of views on a daily basis then I don’t think it would be hard to pitch to a company that relates to your audience. Ideally your audience would be a target market for the endorsed product or service. Think big but also think local.

flickr.com/photos/eyesofrc/ / CC BY-NC-ND 2.0

There is no single exact solution for indie artists, but the best solutions revolve around leveraging social media and video streaming to maximize fan engagement. Visual content is a must. Video content is supreme. YouTube serves well over 1 billion views per day. Live videos are easy to stream with ustream.tv, stickam.com, or justin.tv and a decent webcam. For recording non-live videos I recommend HD pocket cameras like the Zi6 or Zi8, or smartphones that enable mobile uploads like the iPhone. Video is becoming more interactive by the second and mobility is always important. Each musician has their own unique style and identifying that will help you see opportunities. Keep an open mind and be willing to adapt.

It seems that we truly are at the dawn of a new era. Opportunities abound at every corner. Music is more alive than ever, consumers listen to more music in more ways than ever thought possible, artists interact and build connections with fans in new and unique ways, music and other entertainment content can be delivered via multiple platforms for a fraction of the cost of traditional methods, and artists can form business relationships with many different partners—including consumer brands. (Music Branding Gets All Grown Up | Talent Zoo)

A lot of businesses still don’t get the internet, but a lot of them do—these are the ones that you can work with. Realize that a band’s physical merchandise is a product line, and there’s nothing stopping bands from partnering with companies to sell their own non-music products. Smart companies would likely jump at the chance to sponsor bands that have built active communities around the internet and are accessible via mobile phones. They see the meaning in social media—for business.

The types of products that will work for indie musician endorsements will vary greatly and be determined by each musician’s personal style or brand. A middle-man service that helps musicians match up with consumer brands and vice-versa might be viable—don’t you think? It would probably be pretty easy for Google, Facebook, or MySpace to implement such a service. However I’m a fan of DIY and I usually like to cut out middle-men. I think the best approach would be to directly contact companies that you’d like to partner with. Don’t be afraid to fail. You can’t get anywhere without trying things. Remember to focus on the dopeness—see Part 1: Music Dopeness and Bands as Brands.