I recently had the pleasure of attending and speaking at the Social Fresh Cruise, an invite-only social media 4-day floating conference/cruise from Miami to Cozumel.

The cruise was part conference, part pure fun. I was one of eight speakers for the conference portion of the cruise, and spoke about “The Recording Industry is Screwed… Now What Do We Do?”

Why yes, I do like to stir the pot. Thanks for asking.

The 45-minute “speech” was more of an open discussion, prefaced by a bit of background about the industry.

The background centered around the alternatives that exist, allowing musician to carve their own paths and often times, decide IF they even want a record deal with a major label.

The discussion portion of the talk was the most valuable, and many people contributed their thoughts, opinions and experiences about the music and recording industires.

The discussion ranged from how research completed in the 80′s about how people would contribute and use the Internet is still relevant, from how one of the attendees favorite bands used Kickstarter to finance their projects.  Many of the attendees had their own experiences to share about connecting with artists on Twitter, and as we were on the cruise with Rick Springfield’s fan club, we ALL could see a real-life example about how connecting directly with an audience really works.

To talk a bit more about one of the best comments of the discussion, I’m going to jump back and discuss a bit about my personal tastes:

I REALLY like a great debate, and really enjoy people intelligently disagreeing with my opinions. As mentioned, the highlight of the talk came from one such comment by Lucretia Pruitt, who made the excellent point that the recording industry is experiencing what a lot of other industries go through when a seismic shift in their business model occurs. Hint: This shift for the recording industry begins with an “I” and rhymes with schminternet.

In general, innovation comes from the bottom up. The start-up, the smaller companies and the ones that have “less to lose” take the “risk” and innovate. They try out new things, see what works and adopt that into their strategy. The bigger more entrenched companies usually wait to see if what the smaller guys do works. If so, they copy it and make it part of their business. Less risk with potentially the same rewards.

Now, I’m not saying that this is an absolute, but it’s certainly a trend.

The difference with the music industry, is that the “big guys” have fought against this change for the better part of a decade, instead of embracing it and trying to innovate from the beginning.  From a PR perspective, that decision has caused a huge problem for the public image of the music industry.  In many people’s minds, it is now “us vs. the music industry”, especially “us vs. the RIAA”.

I’m thrilled to see some of the “big guys” waking up and beginning to realize that the “stick my head in the sand” approach is NOT a smart move, but they must do this while remembering that consumer perception is still a huge concern.

I have much more to say on this topic, and am starting with a conversation today at 3:30PM EST/ 12:30PM PST where I’ll be participating in an un-panel on SnazL with Mary McKnight (EMI, Sacrilicious Marketing) and Mike Fabio (Warner Bros. records).

Join the un-panel and upload a video, share photos or chat to participate.

Ian Rogers (CEO of Topspin Media, another company I have a crush on) posted a brilliant article yesterday about how a band he’s co-managing (Get Busy Committee) is marketing and releasing their newest album, Uzi Does It.

You should read the full article here.

If you’re slightly lazy, I’ve taken a few excerpts from the original post (emphasis mine).

At Topspin we generally talk about three stages of development:

1. Creating awareness
2. Making connections
3. Monetizing

We sometimes hear artists complain: “Dammit! I’m not selling anything!” Usually it’s a result of skipping straight to #3 above and not concentrating enough on #1 and #2. Consumers have an unlimited number of places to spend their time and money today. How are you getting in front of them? It is not a build-it-and-they-will-come world. How many you will sell is a small (and relatively consistent) percentage of how many people you have looking at a buy button. More impressions equals more sales, and most importantly none equals zero. If you have a very small number of fans (as we did, starting with zero emails, zero Facebook fans, zero Twitter followers, and just a handful of MySpace friends) IMHO you start by creating awareness and connecting with folks, not concentrating solely on selling.

The object was to make the site:

1. Home base. The top SEO result for “Get Busy Committee” and anything else related to the band.
2. Vibrant. It should update with the latest information about Get Busy Committee with very little effort, from a variety of sources. Furthermore, we weren’t going to spend time or money building any of these tools from scratch. We integrated WordPress and Twitter to make sure it was easy to update with long or short-form updates (respectively) easily.
3. A fan acquisition tool. The site should be sticky like fly-paper. If you visit the site you should have an incentive to leave behind your email address, follow GBC on Twitter, become a fan on Facebook, a friend on MySpace, friend on Flickr, subscriber on YouTube, or subscribe via RSS. We may only get one chance to make a connection with you. We don’t want you to bounce in and bounce out without granting us permission to reach out to you later with an update.
4. A tool for fans to create other fans. Every page of the site is instrumented with simple ways to share on Facebook and Twitter, and feedback for having done so either in the form of a counter or free music for having done so. We want it to not only be easy to spread the word but for you to be recognized for having done so.
5. A place to convert at whatever level of fan you happen to be. Never heard of Get Busy Committee? No problem, you can stream the record or download a few songs for free. Super fan? How about the T-Shirt/USB Flash Drive combo for $55? Somewhere in between? No worries. We have something for you.
6. Useful. If you’re a college radio DJ who needs a clean version to play on your show or a beatmeister who wants an acapella to remix that should be easy to find. If you’re a blogger writing about the band there should be a special page for you, even if it’s not linked from the front page. Anything you email to people regularly should be on the site and easily linked to.

Once we had the site up and running, we needed to create some awareness. We did a few simple things to bootstrap those first few views:

1. Created a unique product. By creating the Uzi-shaped USB we had a hook, something people could talk about.
2. Leaked some music. We took two songs from the album and made them available for download in return for an email address from GetBusyCommittee.com, and available for streaming on MySpace, Facebook, iMeem, Last.fm, YouTube, and iLike.
3. Told the world. We worked every source we had to get the word out, Twitter, MySpace, Facebook, email, blogs, friends, family, etc. We even bought a few Facebook and Google ads (more on that in a later post).

We started with a range of products, things we’d buy ourselves if we were fans:

1. A cheap digital download. $6 gets you the whole album in high-quality 320kbps MP3, CD-quality FLAC, or CD-quality Apple Lossless format.
2. An inexpensive CD with an immediate digital download. Buy the CD, download now. CDs printed on-demand by our friends at Kufala. Oh and the shrink-wrap is smokeable so every CD comes with free rolling papers.
3. An Uzi-shaped USB flash drive and an immediate digital download. This was the most difficult piece but also the linchpin. We had to get this sourced by a company that deals directly with manufacturers in China and had to spend money up-front to buy a few hundred. To be honest I was very reticent to spend the money. But since these have constituted about 40% of our sales at a good price point as well as garnered us the most attention it was certainly money well spent. We’re already about 50% sold through our order, which is completely unexpected for me.
4. High-quality t-shirts added to any of the above. We partnered with street wear company True Love & False Idols to do a high-quality shirt. They’re fashion-quality and fashion-priced and as a result we aren’t selling a ton of them on the site just yet (they’re also not merchandised particularly well at the moment, I plan to correct that later in the cycle). But also as a result we have interest with some great retail outlets such as Suru LA, who will be selling an exclusive version of the shirt along with a CD starting this week.

When people talk about what Trent Reznor did with Ghosts they always mention the 2500 $300 box sets he sold but rarely do they mention what is perhaps the most genius concept he introduced with that offer: the price point of FREE. What Trent really did was look his fans in the eye and ask them, “So, how big a fan are you?” But he also acknowledged that “not that big” or “I dunno yet” was a perfectly valid response by saying, “if you’d prefer to spend nothing, I have a package for you, it’s half the album.”

I really can’t say how much this post hits the proverbial nail on the head. Ian (and Topspin) GET IT. They GET that music isn’t just “put my shit out there for people to buy, flood the airwaves with my song over and over again, plaster banner ads and billboards anywhere my ad budget will allow and see the money roll in”.

They GET that it’s about connection with fans.

They GET that music is about that relationship.

They GET that it has to be sustainable – you have to end up selling shit (who knew!)!!

I also ran across a great interview with Ian, conducted by Wired. Check it out:

NARM 2009 Keynote Interview With Ian Rogers from NARM on Vimeo.

This subject keeps resurfacing – most recently in a few blog posts by Mark Mulligan (VP and Research Director at Forrester) and a less recent critique of the Forrester  report “Music Release Windows: The Product Innovation That The Music Business Can’t Do Without“.

Note: Another report came out in late September from Forrester dealing with a similar topic – “Music Product Manifesto: The Product Features That Will Save Recorded Music.“  That’s for a later blog post (or few).

Today, we stick with free!

In my previous post, I covered Imogen Heap’s latest release (Ellipse) and how it’s up to the artist to decide what their own “free” will be.  Is it the music? Is it the experience of getting to see the work behind the scenes? Is it copies of your live concerts? Whatever it is, you need to have a strategy and be clear on how that strategy gets executed day-to-day.

I’ll start at the beginning, with a chart explaining how Forrester’s proposed Music Release Windows schedule would work:

Now, the critique from Michael Masnick at Techdirt (emphasis mine):

But, of course, parts of the plan are a bit of a headscratcher. It still seems very much focused on getting people back into “buying music” rather than coming up with actual scarcities to buy. Instead, it tries to invent new artificial scarcities, mostly by copying an awful idea from the movie industry: windowed releases. The idea is that “premium club” members would pay to get access to music before others, and could get some sort of bundle of content. Two weeks later, the regular “release” would happen, with CDs, download stores and radio. Then, three weeks later, there would be a “free” component that actually is more “feels like free” using either ad-supported downloads or streaming.

Of course, like the movie industry, this ignores both reality and what people want. Those timelines won’t make much sense, because as soon as the music’s out, it’ll be widely available. There’s just no stopping that. Artificially holding it back doesn’t do much good and doesn’t give anyone a reason to buy. If anything, it actively drives people to unauthorized copies. Those who don’t want that “premium club” offering won’t wait six weeks for the official “free” streaming version with ads. They’ll just go out and get an unauthorized copy.

Fair point from Michael, and one I strongly agree with.  I liken this to the practice a lot of smaller (especially electronic) record labels use when selling new tracks digitally and on vinyl.   I’ll list it out step-by-step for those not too familiar with how this works.

1. Release a digital track
2. Press a small number of  numbered Limited Edition vinyl releases
3. See how they both sell
4. If demand continues to be present for the Limited Edition vinyl release, press a larger amount with a different B side, keeping the star track on the A side, preserving the value of the Limited Edition release and fulfilling the demand with product for eager consumers

This works with electronic music as many people still like the physical copies of the records.  Record stores may be a niche business to many, but they’re still a profitable business for people interested in jazz, soul, hip hop and electronic music to name a few.

The process above is also a great example of true scarcity and responding to true demand for a product, which is different than purposefully creating a scarce product in order to try and attach a better profit margin to the product. Same result, but created from two different situations; one is business-led, the other consumer-led.

Mark Mulligan later posted a blog entry defending his stance in the “Music is Free” raging debate.

Here’s the part I take issue with:

One of the counter arguments used by commentators is that having a MySpace page is an ends in itself these days.  No, it is a means to an end, and the VAST majority of artists see it that way.  If an aspiring artist doesn’t get signed to a label / publisher / agent they’ll remain one of those many tens of thousands of artists struggling to stand out from the crowded pack on MySpace.

My question to Mark, or any artist that reads this blog, is WHY does a label / publisher or agent have to be involved in order to make you successful?

What is preventing the independent artist from getting in contact with companies like TuneCore (nice new website design, by the way!)? If the answer is “it’s too much work to be my own label / publisher / agent” then why not use a company like ArtistData to simplify everything? Even the argument of “funding is given by these companies to develop the artists” is rendered pretty null and void if you use Kickstarter (see my recent post about JuaKali’s project on Kickstarter, which I’m happy to report got funding and is being produced!).

Forrester’s points are valid if viewed within the mindset that you HAVE to involve a label, publisher or an agent.  They’re also valid if you view the “main problem” of the music industry as “the inability to stop illegal downloading and file-sharing and the struggle to get consumers to buy music”.

That’s the point, though. The music industry doesn’t require any of those parties or viewpoints expressed above.  Yes, it’s a struggle for many artists to adapt to this new model when they’ve been able to survive so long on the old one.  On the flip side, it’s an event greater opportunity for those very same artists and companies to lead the way with developing the new music business model.

It’s an opportunity to develop a model that works, one that evolves, one that is sustainable and, most importantly – one that satisfies the needs of the businesses, the musicians AND the fans.

With Radiohead recently hinting that they would be “unlikely to release another album conventionally” and Mos Def’s newest album released via t-shirt (yes, t-shirt), I can’t help but wonder what else we’ll see from artists in the coming months.

As a former musician and DJ, I’ve consumed all forms of music media through the years.  I still have the very first CD I bought (Cake’s Fashion Nugget, for the record), have an old boom box lurking somewhere in a forgotten closet corner with a stack of tapes to match, and still have a bit of vinyl around from my DJ’ing years.

However, in recent years I’ve found that online streaming media and downloaded music (mixes and “here, have this for free” music of the legal kind, mind you) have served my musical appetite very well, leaving me very few reasons to actually go and purchase music, digitally or otherwise.

According to Trent Reznor, ” music IS free whether you want to believe that or not”.  As a musician, I agree.

Recording music? Not free

Promoting your recordings? Not free

Traveling to play a show? Not free

Here is where the problem lies.  Due to Napster and the birth of the current music-sharing “free for all” (pun not intended), recorded music is considered free, leaving the “not free” costs of recording the tracks to be covered by other means.

Consumers have a voice and they’ve been speaking for a long time by not purchasing what they consider to be over-priced music.  Liner notes, cover art and the physical medium (these days, CD’s) aren’t considered to have as much value as they once carried, and due to the endless alternatives available for acquiring the actual music, CD profits are continuing to decline.

None of this is news.

What is news, is the fact that artists are taking things into their own hands and using a bit of creativity with the packaging of their music.  Mos Def’s t-shirt is a great example, and I’d like to see other artists pick up on the trend.  Thinking from a marketing perspective, I argue that this is more valuable than just selling a basic CD, as the consumers are now walking billboards, promoting his music wherever they go (on top of spending the same price, or more, that they would have paid for the actual CD).

So what about vinyl? “Dead” a few decades ago, it’s experiencing a small resurgence.  Radiohead’s In Rainbows was released as a “pay what you want” digital download, CD set as well as limited-edition vinyl. In Rainbows, the vinyl edition, was the top-selling vinyl album of 2008 and single-handedly helped 2008 vinyl sales almost double.

The main point is this: With consumers unwilling to pay for traditional music formats, artists and labels are forced to find new (or old) ways to package their music.  The industry has been in decline for the better part of a decade, and it seems to be turning a much-needed corner by trying to innovate instead of just complain and punish.

I’m interested in keeping an eye on artists and labels who are embracing this innovation instead of shunning it, and wonder who we’ll see coming out with new methods of distribution next.

Any ideas?

*this photo made available under the Creative Commons license by Carolyn Coles