I’ve been doing a lot of thinking lately about why so many artists seem to be suddenly splitting from their record labels. There was a wave of self-released records a few years ago, including NIN and Radiohead, but recently the “I can do this myself!” camp has expanded with the addition of OK Go and Amanda Palmer, among others.

The basic premise of a label is this: you sign an act you think will end up making you money, invest some time and resources into them in exchange for some ownership (profits, rights) of the product, and start on your journey to making the big bucks. You need the talent to make your connections worthwhile, and the talent needs you, your money, and your connections to help them make it big.

I know, it’s a touch more complicated than that in reality. But, when you get right down to the meat of it, it’s about the label making a wise choice on the artist selection side, dedicating the resources (time, money, guidance) into making that investment a success, and enjoying the rewards when it happens.

Tell me again exactly how that process differs from being a venture capitalist?

It doesn’t!

EXCEPT when you consider the fact that the labels somehow forgot about patience (among other things), and started screwing up from the very beginning.

Sign an act that can’t sing their way out of a paper bag? Great, auto tune the records to hell and use every available bit of technology at your disposal to get them to sound nothing short of magnificent.

Not writing songs that reach as many people as you’d like? Hire a songwriter and make sure their music fits the masses.

There ARE labels out there that take the time to really evaluate the acts they sign, and sign them BECAUSE of their talent and their potential. These, lately, have been the indie labels, which are doing quite well if you look at their growth over the past few years.

It seems to be the majors that have this problem – this immediate need to recoup their investment and milk the artist for all they’re worth. Yes, the music business IS about making a profit. It’s a business and for any business to be sustainable, you have to have some cash coming into the door. However, they’re not looking at things from a long term view as well as a short term view, it seems.

All of that technology to make an artist sound amazing when they’re truly not comes at a cost, and that cost = overhead. Keep increasing the # you’re putting into someone and profits for you diminish, lessening both what you make AND what the artist makes. Tough cycle.

Venture capitalists will put money into a business they think could be viable in exchange for partial ownership of the returns. They’ll sit on the board, they’ll guide, they’ll oversee, and they’ll use their connections to help improve the business. They’ll be present and their input will be heard, but what they wont do is demand their investment back from the first few customers their new business signs. They’ll wait it out, see their investment slowly grow (if they chose wisely), and be in it for the medium to long haul.

Just like labels, VC’s come in different flavors. Some request more of one thing, or less of another. For the artist, it’s about picking wisely (just like the startup!). For the label, it’s about putting terms out there that provide ways for both your profits AND your artist (and THEIR profits) to grow over time.

If artists evolve over time, and fan bases grow and change right along with those artists, hey don’t labels take the same approach? Why don’t they act more like guides, instead of dictators? Why don’t they make smarter choices about who to sign from the very beginning?

It seems that labels put profits above all else in both the short AND the long term, preventing (often times, it seems) the chance of long term growth. Plus, some of the signing decisions? They’re just downright silly! Why are you going to sign someone who can’t sing to a label?!

Riddle me that.

Photo credit: Alejandro Groenewold

You know that crazy guy on the street corner, shouting at you to buy his wares? They may be designer handbags (fake), pashminas, fruit, or biblical reckonings. Whatever he’s selling, he passionately wants you to buy. Obviously he conveys this by yelling at you. Obviously.

How often does that work?

… how about “It never works, unless I have a genuine need to buy his stuff – and then I buy despite the yelling.” That seems about right for me, and I know many others in this great city will also agree.

Marketing has gone from a “tell anyone who will listen our message, over and over again, and hope that they’ll eventually buy from us”, to a much more relationship-based approach.  Without being all buzzwordy – people want to talk to people and companies they’re interested in. They’re not as interested in listening to said people and companies shout in their general direction, and some are just plain turned off by the shouting.

The point is this: Social media tools aren’t just about taking the same practices from “old” marketing ways and adopting them to “new”. You can’t expect to shout at people on Twitter or Facebook like you used to do (even on MySpace, the horrors!) and have them pay attention to you. They just won’t.

If you don’t “get” it you’re probably wondering “Wait, why won’t they pay attention?”. If you do “get” it, you’re probably thinking “Yup, I agree!”.

For the ones that don’t “get” it – it boils down to the way you think about your fans/consumers. They’re not nameless and faceless people who happen to buy your stuff. They have personalities, they have passions, they have interests, they have likes and dislikes. You fit in there somewhere, which is why they buy your stuff. You have to quit thinking about your fans/consumers as anonymous pockets of money and start thinking about them for what they are – people. Fans. Consumers. Actual living breathing females and males with actual lives.

That’s where you start from!

Suddenly, shouting at people with lives and interests doesn’t make so much sense.  You wouldn’t do this in a normal social setting, so why would you online?

For years the recording industry, and even the music industry as a whole, viewed their customers as anonymous open wallets. Clearly this hasn’t worked for the recording industry in recent years, and the public is finally seeing a shift towards viewing people as actual people.

Consumers across all markets now have a true voice, and fans/consumers expect you to at the very least, listen to them.

So – on behalf of all fans and consumers out there, I beg you.  Bands? Solo artists? Please stop shouting at me. Please stop “connecting” with me on social sites and then turning the conversation around so it’s 100% about you.  I’ll stop listening, and I’ll show you that by unsubscribing, or unfollowing, or unfriending.

Chris Brogan touches on this in a recent post – check it out here (excerpt below).

The Mindset: Don’t Be That Guy

First, learn to promote, but don’t be that guy. It’s really important that you are participatory in the social space. If you’re here just to talk about you, your work just won’t get as much spread. People won’t take the actions that they might if they feel you’re “one of us.” By starting with this point, I’m saying this: your mileage WILL vary if you approach social media tools as just another channel exactly like what you were doing with marketing.

Have you had this happen to you before? Do you have more to add? Say so in the comments!

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.

Before I tell this story, I want to fully disclose that I’m involved with this project. I DO NOT receive monetary compensation for my work (nor have I ever) on this project, but I do receive the releases we put out for free in digital format. Thus far I haven’t received the actual vinyl releases for free, but this may happen in the future, so I’ll go ahead and disclose that now, too.

In other words, I put in a lot of work at night and on the weekends and get “paid” in free music a few times a year.

I’ve written before about collaboration, and this is an extension of that story.

In 2006, a few members of the dubstepforum.com message board mentioned in a thread (conversation) that the forum had a lot of unsigned talent among their 5,000 members, and enough resources on the forum to start a record label and get those talented artists exposed to the limelight.

In short order, Pressing Issues was formed. Members of dubstepforum.com came together from all over the US (NYC all the way to San Francisco), Canada, the UK, and eastern europe to work in A&R, marketing, operations and design roles.

The logo? Community chosen
The music? Submitted by the community and voted on by the community
The initial funding? Provided by the community

Everything about this project came from the community.

Pressing Issues took a hiatus in late 2008-2009, but is now back planning the 3rd release. Even though dubstepforum.com has exploded from 5,000 to almost 35,000 members, Pressing Issues is still about the community.

The greatest thing about the concept is that every community has the power to come together and make a project like this happen. We all have our unique talents, our individual interests, and something special to contribute to group projects.

I challenge musicians and aspiring musicians out there reading to see what your community can come together to accomplish. As already shown, something as simple as a post on a message board can quickly transform into something much bigger. In this case, a record label. In your case… who knows?

Yes, really.

This post is a direct result of a dubstepforum.com thread about a certain big-name Dubstep label removing their tracks from being sold online.

This argument can be broken down into two sides.

Side 1 – Labels should release content in one (or a limited # of) format(s)

Side 2 – Labels should release content in multiple formats

This is one of the most heated debates happening around music right now. Feel free to comment and tell me how wrong I am if you disagree with my viewpoints!

To the arguments!

Side 1 – Labels should release content in one (or a limited # of) format(s)

The “pro” argument for this side really comes down to two points:

1. By releasing in a select # of formats you preserve the value of the music (i.e. – if it’s on vinyl, those pieces could become collectors items eventually)
2. By only releasing a select # of formats you make it harder for people to illegally share your music (ex: if you want to illegally share your vinyl you have to rip it to your computer first, then share it – it’s much harder than just sharing a digital release)

The “pro” arguments of this make sense, and while I’m not saying they’re false, I do disagree with the implications of these arguments.

Supply and demand ” concludes that in a competitive market, price will function to equalize the quantity demanded by consumers, and the quantity supplied by producers, resulting in an economic equilibrium of price and quantity. An increase in the quantity produced or supplied will typically result in a reduction in price and vice-versa.”

In other words, the more something is wanted and the less resources of that “something” available, the higher the value of that “something” will be.  See below for the pretty picture. (the above quote and below photo are all from the Wikipedia page linked above)

The implication of this supply and demand argument (#1) is that you should produce a small quantity of an item, and certainly smaller than you anticipate demand to be for this particular item. That, in turn, creates incentive for people to pre-order or stand in line (for example) to purchase your music.  The format will preserve it’s “value” because your item is now a limited resource. Think “collectors item” as far as the consumer is concerned.

That’s all well and good, but not every piece of music is going to be a collector’s item.

I’m getting ahead of myself…

On to Argument #2 – “By only releasing a select # of formats you make it harder for people to illegally share your music”

Here’s where I really have my beef with limited format releases. I’m willing to buy your music. I may not buy a lot of it these days because I can find what I like in other formats (i.e. – mix sets), but if I like a piece of music I’m absolutely willing to go to your store (whether it be a website or a physical store) to buy your music.

What really upsets me as a consumer is when I’m ready and willing to buy your music, and you put barriers in my way.  Let’s stick with the electronic genre for a moment, and consider that their target audience usually owns a record player. It makes sense, if I’m trying to prevent people from sharing my music illegally, to limit my release to a format that makes it harder for people to do just that.  For the vinyl example I’d have to play the track, record a high-quality version on to my computer, then upload that to a filesharing program somewhere and distribute. That’s harder than just sticking a CD in my computer and clicking “copy”… but not by much.

Here I am, willing consumer ready, able and wanting to part with my money, and I can’t. Why can’t I? I don’t own a record player. If you offered your music on CD or in a digital format I could play it, but as it happens, I don’t have the resources to play your music.

What do I do instead? I go search for it online.

Lost money for you, and I’m now helping to perpetuate exactly what you don’t want – illegal download of your music.

Side 2 – Labels should release content in multiple formats

On the flip side of this argument you have the “go forth and prosper” folks, or, as they can be called, the consumers.

This side comes down to a few simple arguments as well:

1. If I’m ready to part with my money to buy your music, I want to purchase your music in a format I can enjoy.
2. If you put barriers in my way, there are easy ways I can overcome them. Very few of these ways equal money in your pocket.

I stated this above, but it’s worth repeating.

Here I am, willing consumer ready, able and wanting to part with my money, and I can’t. Why can’t I? I don’t own a record player. If you offered your music on CD or in a digital format I could play it, but as it happens, I don’t have the resources to play your music.

What do I do instead? I go search for it online.

Lost money for you, and I’m now helping to perpetuate exactly what you don’t want – illegal download of your music.

I’m a consumer. I want to consumer your music. I may prefer the richness of a track on vinyl, or I may be riding a subway for an hour a day and really want something new for my MP3 player. Either way, I want you to cater to my wants and needs. I’m giving my money to you and in this day and age, I’m used to getting what I want, how I want it, when I want it.

Please me, please.

As a music producer or label, you can probably guesstimate what % of your target audience consumes music in which format. You can base this off of previous sales or market trends/statistics, for example. That’s smart. What’s not smart is saying “So 70% of our audience consumes our music in this format, so we’re going to ignore the other 30% and just cater to this 70%.”

Using the vinyl example (again), how do you know that I’m not a traveling DJ who really prefers DJ’ing with actual records when at home, but prefers using Serato or CDJ’s when I’m on the road? Sure, I could follow the example above and rip your music to my computer without spending any extra money, but that requires time and I think my time is worth coughing up the extra cash to also download a digital version.

I may be in your 70% that consumes your music on vinyl, but how do you know I’m not also in the 30% contributing to consumption in another way??

You don’t.

This brings me to the second argument. “If you put barriers in my way, there are easy ways I can overcome them. Very few of these ways equal money in your pocket.”

I’ll, again, re-iterate what I said above:

Here I am, willing consumer ready, able and wanting to part with my money, and I can’t. Why can’t I? I don’t own a record player. If you offered your music on CD or in a digital format I could play it, but as it happens, I don’t have the resources to play your music.

What do I do instead? I go search for it online.

Lost money for you, and I’m now helping to perpetuate exactly what you don’t want – illegal download of your music.

I’m an honest consumer who is ready and willing to part with my money to buy your music. Please, let me!

A forum member stated this exact thought pretty well, saying that they were searching online for tunes to buy but couldn’t find any of them, and since the label didn’t release in a digital format and he didn’t own a record player, he couldn’t buy their music. The post has since been moved or deleted, preventing me from quoting.

Summary: Perhaps “idiot” is a harsh term to some, but I think it’s fitting. Consumers have more power now than they ever had before, and the companies that are succeeding are companies that are keeping this power in mind. My suggestion isn’t to bend over backwards and do whatever the consumer wants, but my suggestion is to keep their needs and preferences in mind, and see how you, as a music producer, can modify your actions to accomodate their needs/wants.  Gone are the days of “consumers will do as the company commands” – and the quicker companies realize this, the better off they’ll be.

A suggestion, if I may.  Encourage people to buy your music in multiple formats by offering discounted pricing on these items. If I purchase your music in a store, give me a discount to buy it digitally too. You can track this to figure out where/when I bought, as well as end up with more money in your pocket in the end. I don’t expect things for free, but I do want to feel like you actually care for my preferences. Show me that and not only get my money, but begin to win my loyalty.

On with the controversy. I’m eager to hear your thoughts!