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How to Succeed in Today’s Music Business By Steve Gordon.

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Presentation on theme: "How to Succeed in Today’s Music Business By Steve Gordon."— Presentation transcript:

1 How to Succeed in Today’s Music Business By Steve Gordon

2 Opportunities and Challenges Facing New Artists Whether An Artist Should Sign with a Label: What Record Companies Give To and Take from Artists What to Avoid in Signing with a Label Advantages of DIY & How New Technologies Have Made it Possible for New Artists to Succeed Strategies for DIY Success How Artists Should Use Online Tools

3 I.Opportunities and Challenges Facing New Artists The Current State of the Music Business 1999: 14.6 B 2009: 7 B

4 Major Labels The five major labels are now only four Each has suffered significant decrease in revenue of 50% or more from sales of prerecorded music EMI Music is teetering on bankruptcy Each label has dropped artists and is signing fewer artists But, the majors still control more than 80% of distribution, and own more than 80% of popular music

5 Top Ten Selling Albums 4/24/10: 1 AKB 48 - Kamikyoku Tachi King Records Japan - 295.000 - 1 week at No.1 - Hot Shot Debut 2 Justin Bieber - My Worlds (My World+My World 2.0) Island - 207.000 3 Lady GaGa - The Fame (Monster) Interscope - 128.000 4 Slash - Slash Dik Hayd / Roadrunner - 109.000 5 Usher - Raymond V Raymond Laface / Arista - 109.000 6 Madonna - Sticky & Sweet Tour Maverick - 83.000 7 Black Eyed Peas - The E.N.D. Interscope - 71.000 8 Lady Antebellum - Need You Now Capitol Nashville - 62.000 9 Sadé - Soldier Of Love RCA / Epic - 58.000 10 Gorillaz - Plastic Beach Parlophone / Virgin - 55.000

6 Challenges Facing New Artists Less likely to be signed to a major Even if signed to a major, less likely to sell as many units as ten years ago

7 Additional Challenges: More Competition than Ever 8 MILLION bands on MySpace Over 100,000 albums released in US alone:  Only 10,000 sold more than 1,000 copies  Only 1,000 sold more than 10,000 copies  Only 250 sold more than 250,000 copies

8 Opportunities! New technologies have reduced price of recording Distribution is almost free

9 Affordable Recording For $1000 you can have a home studio with speakers, headphones, a laptop, and music software With today’s inexpensive equipment and software you can write, arrange, produce, mix and master your own music at home, without the need for an expensive producer, mix engineer or mastering engineer

10 Free or Nearly Free Distribution TuneCore: $2 per side per store CDBaby: 9% of receipts DIY/Paypal: 1-2 cents per side

11 Flip Side of Opportunity Anyone can be on the Internet Anyone IS on the Internet

12 II. Whether An Artist Should Sign with a Label: What Record Companies Give To and Take from Artists “Rising Above the Din” A label will: Produce & record Market & promote Distribute

13 Major vs. Indie Label Deal Major Label Deal: $500,000 advance $1M marketing budget Indie Label Deal: $0-15,000 advance $15,000-$30,000 marketing budget

14 Marketing and Promotion Both majors and indies do the following: Radio play Tour support Radio & TV interviews and performance Advertising for product (print ads, posters) Press coverage

15 Online Marketing and Promotion Blogs Internet Radio Website Development and Maintenance Online promotions Features on major websites: AOL, Yahoo, MSN Positioning on music stores: iTunes, Amazon, Rhapsody, Napster

16 What the Artist Has to Give Up Both majors and indies take more than 90% of record income Deal may say 15-20% Deductions: –Packaging: 25% –Net sales:10-15% –Foreign reductions and royalty –“New technology” deduction

17 III. What To Avoid In Signing With a Label 360 Deals 20-50% Performance 20-50% Publishing 20-50% Merch 20-50% Endorsements 20-50% Everything else –Appearance in movies, TV, etc –Private parties –Paid interview –Etc.

18 What To Avoid In Signing Cont. Make them Pay or Perform Advances for each income source Performance-based deals –Percentage of revenue IF they secure a synch –Percentage of revenue IF they secure endorsement –Percentage of revenue IF they secure a live engagement

19 IV. Whether it is Better to Do It Yourself: Advantages of DIY LABELDIY Keeps 90% of record sales Artist keeps the $ 20-50% of everything else Artist keeps the $

20 Is DIY Better? Yes! BUT HOW? V. S trategies for DIY Success…

21 Production, Marketing and Promotion Budget Investors Marketing Companies New Business Model: Polyphonic

22 Investors $5,000-$1M : Return on Investment –25-50% –Cap of 100% of investment –Payable after recoupment of artists’ expenses –Family, angels, and businessmen

23 Marketing Companies Create marketing plan Implement strategies to secure goals –Create buzz online through major websites –Acquire coverage in press –Secure play on radio and internet radio –Branding – improve image of artist with proper photos, interesting graphic design, consistency across social networks and website



26 Polyphonic Joint venture between Nettwerk Music Group and Radiohead management $20M investment behind it Artists to keep copyrights of their own music Polyphonic provides funds: Promotion, marketing, tour support, distribution Profit-sharing model: 50/50 split between Polyphonic and artist for all sources of income

27 VI. How Artists Can Use Online Tools YouTube Websites Online Distribution: Third Party or DIY Blogs Social Networks

28 OKGO’s Viral Success on YouTube Their first DIY video, “A Million Ways”, cost $20 and was downloaded 9 million times from YouTube Their second DIY video, the Treadmill Video, cost a few thousands dollars (for eight used treadmills) and debuted in July 2006. Two years later: –It had been viewed 42 million times on YouTube –Parodied on The Simpsons –Led to the band’s appearances at the MTV Music Awards, The Tonight Show with Jay Leno, and The Colbert Report –It won a Grammy for Best Short-Form Video (2007)

29 Websites Do’s: Web 2.0 aesthetics: clean, streamlined website - make site easy to navigate Make contact information easy to find: email of artist, manager, PR agent, booking agent, and links to social networking sites (include widgets to make links easy to find) : Make sure the site looks cool for the genre of music you are working with (branding/aesthetics can vary greatly from rap to pop to folk, etc.)

30 Websites Do’s (cont.): Include music and video players in addition to links to YouTube/Vimeo (but, DO NOT have music/video automatically play - can be distracting and even deterring for new visitors to your site) Also include: photos (both from live shows and for press), link to a mailing list, link to where you can buy music (iTunes/Amazon/label website), and past favorable reviews or other press Giveaway download in exchange for email address on mailing list

31 Example of a Good Website: Terry Poison

32 Websites Dont’s: Don’t make the site difficult to navigate Don’t let your site have a ‘corporate’ vibe A) Don’t have banner or sidebar ads unrelated to your music B) Don’t make it difficult to sell your album Don’t let the site ‘age’: make sure that you are constantly updating the site

33 Example of a Bad Website: Mr. Cota Cota

34 Example of a Bad Website: Chrisette Michele

35 Third Party Distribution: TuneCore Storage Fee: $20/year Distribution Options: –$9.99/song in all 19 stores –$47/album with unlimited number of songs –$2/song per store Digital distribution only

36 Third Party Distribution: CDBaby Storage Fee: None Distribution: –$35/album: goes to 21 online retailers and physical copies sold by CDBaby (physical copies must be mailed to CDBaby) CDBaby keeps 9% of revenue from digital sales, and $4 off each physical album sold

37 Self Distribution: PayPal Create seller account on PayPal and mail your own albums/merch PayPal keeps just a few cents on each transaction Can easily add a PayPal widget to your website, blog, MySpace, and other online profiles

38 Social Networks Is MySpace Dead? YES: Inundated with advertising Clunky interface Only bands and artists use MySpace for social networking NO: Important people still look at and play music from MySpace pages Still one of the easiest ways to quickly preview an artist’s sound and image

39 Social Networks Facebook Quickly becoming an essential tool for social networking Artists can easily self-promote with the creation of Facebook Pages and Groups Over 200 million people on Facebook

40 Social Networks Twitter Another easy method to connect with fans and potential listeners Can instantly and easily update

41 Blogs Huge number of music blogs on the Internet, all featuring different styles of music Bloggers are both writers and music fans – they are interested in listening to new music and writing about what they like Blogs are viral tastemakers

42 Blog Stats Approximately 133 million blogs 77% of internet users read blogs 2/3 of bloggers are male 60% of bloggers are age 18-44 75% of bloggers have college degrees 75% of bloggers are employed full time Source for all above statistics: /

43 Blog Benefits 2008 NYU Stern Business School Study Researched whether there was a correlation of album sales and blog posts.The research found: If 40 or more blog posts were made before an album’s release, sales ended up being three to four times the average for both independent and major label releases If blog posts crossed 250, album sales rose to six times the average, regardless of label

44 Top Music Blogs on the ‘Net Stereogum, Spinner, Brooklyn Vegan, Gorilla vs. Bear (pop, electronic, indie, folk, rock, hiphop, soul) Nah Right, Grandgood (electronic, rap, R&B, hiphop) Blog aggregators: giant RSS feed of thousands of various music blogs Hype Machine Elbows We Are Hunted

45 Hype Machine

46 Blogs: Viral Tastemakers Why “tastemakers”?: –Bloggers are active consumers of new music and each features from several to more than a dozen artists every week Why “viral”? –Blogs are often aggregated on sites like or Hypemachine – if you are featured on an aggregated blog your visibility will soar –Bloggers are active on social networks (to promote their own visibility) – if your music gets a post it will be mentioned on Twitter/Facebook/elsewhere –Bloggers read other blogs – will likely repost something if they like it as well

47 How to get your music featured by bloggers –DO YOUR HOMEWORK: Find blogs that feature similar styles of music. (E.G. Do not send your latest R&B song to an indie folk blog!) –Bloggers gets hundreds of emails a week from artists who want to be featured. To make your email stand out: Make it short: Include a one-sentence description of what your music sounds like, a 1-3 sentence bio, two download links and a link to your MySpace NEVER send mp3s in attachments – only send download links (attachments clutter in- boxes)

48 Getting Posts: Is it better to DIY or get an Agent? If you DIY, your emails might go unread – bloggers get hundreds of emails a week, and larger blogs like Stereogum won’t read unsolicited emails If you pay for a PR agent, they might be able to get you the kind of coverage that DIY can’t – on larger blogs and online magazines – IF they have existing relationships. Never pay a PR agent if you haven’t seen his/her artists on blogs you want to be featured on – bloggers often overloaded by mass mailings from ill-established PR agents!

49 Example: DIY

50 Example: Agent – LCD Soundsystem on Perez Hilton

51 Another Model for Success: Be Successful First OkGO broke away from EMI to start its own management, Paracadute Moby established successful career with aid of EMI. He is now with “indie” Mute Aretha Franklin announced that she will leave long time home Arista to start her own label Prince “Lotusflow3r/MPLSound/Elixer” triple album set exclusively released by Target (Warner) Paul McCartney “Memory Almost Full” – Starbucks (formerly Capitol) Radiohead “In Rainbows” – Internet/pay-what-you-want/discbox for $82 released independently – “In Rainbows” later released by XL (formerly EMI) Madonna left Warner and signed with Live Nation for $120 million deal Mariah Carey - Chanel and Elizabeth Arden endorsements Eagles “Long Road Out of Eden” - Walmart represented by Irving Azoff (Frontline/Ticketmaster) – success at Walmart 50 Cent gave his name to “Formula 50” in exchange for stock. Coke bought the brand and his share is worth from $100 to $400 million

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