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New Music Seminar Report

By Monica Pa, with Eva Dickerman's assistance

The first New Music Seminar occurred in New York in 1984. The director of the conference, Tom Silverman, of Tommy Boy Entertainment opened the current conference at Webster Hall with an interesting point: The music industry still faces many of the same concerns today that it did in 1984, namely the challenges of new technology and the evolving habits of the consuming public.

This conference was intended to be an informative and affordable program devoted to the future of music. It sought to give labels, website operators, artists and their representatives information about the music business, a forum to discuss changes in music and technology, and an opportunity to network with others in the industry. The conference organizers scheduled panel discussions, short talks and performances. There were also informal areas for exhibitors and networking. My sense was that the conference was geared towards artists rather than seasoned industry professionals. This was not necessarily a bad approach. For example, the NMS Guidebook contained an extremely helpful “do’s and don’ts” section, and included tips from industry experts about artist management, digital distribution, touring, marketing and merchandising, web strategy and music licensing.

There were three closed-door industry summits: The NMS Brand Summit, The NMS Tech Summit and The NMS Business Summit. These were unfortunately closed to press and reporting. I understand that the purpose of each summit was to provide a forum for dialogue about the music industry, and the panelists discussed legal issues, such as the new music deal and economic models. The legal panel (of which EASL was a sponsor) included Tom Silverman, Adam Ritholz, Jim Cooperman and venture capitalist David Pakman.

I was able to report on the marketing and branding panel in the morning, which focused on “how to cultivate fans and how to harvest them.” This discussion on marketing strategy and band branding offered information that is relevant to any entertainment lawyer.

The panel included Ariel Hyatt from Ariel Publicity and Cyber PR; Jay Frank from CMT; Gwen Lipsky from Sound Thinking; Eric Garland from Big Champagne; and Mike Doernberg from Reverb Nation.

The panelists began by pointing out that there exists a fundamental tension inherent in marketing music. On the one hand, music should be spontaneous and creative; on the other hand, marketing should be systematic and scientific. Musicians need to understand that their music is a product, and that they are not just creating music, but also creating a brand. Artists are often skilled at communicating their art but deficient at communicating from a business perspective.

The panelists emphasized the financial importance of a fan base. Historically, although fan relationships were important, these relationships were disconnected from the core music business, which was the creation and distribution of music by labels. Today, as the music industry has become more decentralized, fan relationships are increasingly important. To illustrate this point, the panelists discussed the “Theory of a Thousand True Fans.” The theory is that if an artist can have 1000 fans, and each fan contributes $100 a year, the artist could earn $100,000 a year, which should be a sustainable living. Not all fans, however, are created alike. The deeper the fan relationship, the more value that relationship contributes to the band as a brand. The more you understand about your fans and the more direct contact that exists between artist and fan, the more value that fan relationship has. Every artist, at least in his or her early stage, needs to develop and nurture a fan base to support the music and brand.

The classic marketing rule is that fans will result in a 20/80 profit split: 20% of the fans will account for 80% of the artist’s revenue. In terms of music, the split is even more pronounced (perhaps more like 10/90). So if there are 1,000 fans, the artist needs to focus on gaining the attention of the 1 in 10 fans that will be dedicated enough to purchase music, tickets, shirts, merchandise, etc.

Typically, musicians market online by having MySpace and Facebook pages, and perhaps by sending out sporadic communications through a general newsletter. They then tour and ask fans for money (e.g., purchasing tickets to a show) but this occurs before they have built any value as a commercial product. Artists need to be precise and goal-oriented in their communications with fans. Expert marketers focus on controlling the message that gets out. Smart marketers don’t just rely upon general social media platforms, but rather use analytics to understand the relevant fan base, in order to better create a compelling product and brand.

The panel discussed three stages for a band:

(1) Create: Bands are usually well-equipped at how to approach this initial stage. The band should make a compelling product, but also develop itself as a brand. In this early stage, the band members should create social media profiles, digitally distribute music, and give away free music in exchange for fans signing up to an email mailing list.

(2) Grow: Once the artist has established his or her product and brand, then it’s about maintaining and growing the fan base. Artists need to be able to understand the existing fan base (e.g., perfect their music and performance quality, play lots of gigs and get feedback, nurture fan relationships).

(3) Develop the Band’s Fan Base (see above): Artists should revise their marketing strategy on a daily basis and continually shift their engagement (in other words, keep assessing what the fans want and accommodate these demands). Musicians should pay attention to their audience and constantly refine the marketing strategy. Social media takes a while to get traction, so do not quickly abandon these platforms – it takes patience to develop successful strategies.

What constitutes a real fan (e.g., a “valuable” fan)? An audience member is someone who has listened to your music; a fan is someone who has a sustained relationship with you. You should have a two way relationship with your fans, and that relationship should be growing and exponential.

One panelist noted an interesting tidbit: an email “friend” is 8 times more valuable than a “friend” on a social networking website (e.g., a Facebook friend). Mailing lists are therefore more valuable then merely having passive Facebook friends. The ideal trajectory for fan development is to convert a social network friend to an email friend to a devoted fan.

There are two models for monetizing a fan base: breadth and depth. “Breadth” refers to the general awareness of the artist. For example, Lady Gaga is incredibly well-known, so there is a lot of fan awareness of her product. Depth refers to the engagement of fans. An artist with a million views on YouTube has wide awareness, but to transform this awareness into “engagement,” viewers need to purchase the music after viewing the video. An artist can survive with a low awareness base if there is substantial fan engagement. If each fan will buy the t-shirt, go to the concert, tell his or her friends, and create long‑term sustained interest, then the artist will have a continuous stream of revenue. An artist with high awareness but low engagement will not survive as a business. It's crucial to use marketing data to figure out ways to move fans along the continuum of involvement, from awareness to engagement.

When an artist engages a listener, the artist wants to do it quickly and then effectively capitalize on it. When a person hears a song and decides to buy it; that is a rare and valuable opportunity. To create the most opportunities for engagement, the song needs to be widely available and distributed everywhere. One panel member discussed how he had become interested in a song that had already been released for three weeks. He couldn’t purchase the song though because the record label had not made it available for digital sales. This squandered a valuable opportunity. Moreover, since that song was not available, the website suggested that he listen to a similar artist name Boy Wonderbread. The panelist liked Wonderbread’s music and ended up purchasing a few songs. As a result, the label lost the $1 that the listener was going to spend on the original artist, and he ended up spending $10 on Boy Wonderbread.

Ariel Hyatt made an interesting point that few people purchase their own music on iTunes and Amazon. But, she said, this is like making dinner for 10,000 people without tasting the food before it leaves the kitchen. It is also key to make sure that listeners can easily purchase the artist’s music. Hyatt provided an interesting “Clicks to Content” slide, which showed how many “clicks” it takes to purchase a song on a website. For example, if a listener goes on iTunes to purchase a song she just heard, it takes up to 14 clicks to actually purchase it if she does not have an account. Google Onebox stream takes 3 clicks to get to the music. It takes one click to hear the song on a promoted stream on a music blog, on a YouTube video, on a video or audio stream from Facebook, on an artist’s MySpace page, etc. Anything above 2 clicks and the consumer will likely lose interest. Bear in mind that, for the average consumer, when faced with too many choices, the consumer will end up choosing nothing. The decrease of music sales may be related to there being TOO much available music.

Jay Frank said that, regardless of all this marketing information, the music should be great, identifiable and have an immediate impact, which means artists need to impress listeners fast. The top 25 selling downloads in 2010 had an average intro length of 6.6 seconds, and 2/3 of the top selling downloads have an intro of 7 seconds (“don’t bore us, get to the chorus!”). People are giving music about 6 seconds before deciding whether the song is worth purchasing.

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