Berklee College of Music Music Business Journal
Volume 5, Issue 6 www.thembj.org December 2009 Mission Statement Piracy Made Unattractive By Minden Jones The Music Business Journal (of the The music business has suffered pira- piracy, and provides the most enjoyable expe- Berklee College of Music) is a student pub- cy more than any other media. The past 10 years rience so far. lication that serves as a forum for intellectu- have been unprecedented with music sales down more than a third in many countries. During this In the meantime, the music industry al discussion and research into the various past decade the record industry has also embar- and the ISPs continue to work. together. For aspects of the music business. The goal is rassed itself with desperate attempts to restrict example, recently, so-called ‘graduated-re- piracy through litigation. sponse laws’ have been enacted in South Ko- to inform and educate aspiring music pro- rea, Taiwan, Britain and France. This approach fessionals, connect them with the industry, Today, however, more consumer works with the cooperation of national record- and raise the academic level and interest in- friendly efforts to thwart piracy are gaining con- ing industry organizations who report copy- siderable strength due to legal alternatives and right infringers to the ISPs. The ISPs can then side and outside the Berklee Community. greater cooperation send warnings between the music to subscribers industry and inter- and penalize Inside This Issue net service providers them with a (ISPs). Three exam- slower inter- ples are given below. net connec- tion and/or a The first m o m e n t a r y is Google’s music shutdown. streaming service. Government and the Internet Google has part- There p. 3 nered with Rhapsody, are a number Imeem, iLike, and of examples Lala and receives li- here. A newly censing from EMI, enacted copy- Universal, Warner right law in Trade Conditions Music, and Sony Mu- New Zealand sic. Google is allowed states that p. 10 to highlight music from independent labels ISPs must discontinue internet services for through Lala and MySpace’s iLike. Currently repeat violators. Britain and the US are also this service is only available in the US. considering such laws. Also, in April of this year Sweden enacted legislation forcing ISPs Next is Nokia’s “Come With Music” to disclose data about their patrons; later, in Topspin Exposed package, a full subscription service paid ‘invis- June, a poll conducted by major marketing re- p. 9 ibly’ with the purchase of many of its phones. search company, GfK, concluded that as much With this subscription model the user has access as 60% of all Swedish illegal downloads were to over four million songs for up to one year af- being impacted by this provision. ter the subscription terminates. This service was started in UK and is presently available in many It seems that ISPs are finally strik- MySpace Under Scrutiny countries in Europe, South Africa, Singapore, ing partnerships with recording organizations p.6 Australia, Brazil, Mexico, and Russia. “Comes worldwide, and making themselves more ac- with Music” plans launch in the US in 2010. countable in the fight against piracy. This unusual co-operation between the sellers of Last is Spotify, which permits custom- recorded music and the owners of the digi- ers to stream tunes for free with limited com- tal highways, on which pirates have always Legacy Managers mercials. The consumer can easily download preyed, is an unexpected yet welcome devel- p. 13 and install the application to their smart phone opment for the recorded music trade. and computer for syncing and then begin listen- ing to music instantly. Spotify may become the There is more. Recently, in Britain, most successful model for providing a long-term Virgin launched a music streaming service substitute for illegal downloading. It is not just in partnership with Universal Music Group that it is free, but that it streams instantly and au- and Pay-TV mammoth BSkyB. The ISP al- thorizes the sharing of songs and song play lists. lows its subscribers use of over four million It is the most socially engineered alternative to (Continued on Page 14) Volume 5, Issue 6 Music Business Journal
Editor’s Note Table of Contents
Season’s Greetings!
I’d like to personally thank you for picking up this December 2009 issue of The Music Busi- Business Articles ness Journal. We feel it contains a number of topics imminent to the current state of the music industry. Our goal is to keep you informed on issues that, directly or indirectly, are sure to affect Confronting Piracy...... 1 the lives of music professionals and musicians alike. Piracy and ISPs in Europe...... 3 Brief:Terry McBride...... 5 Music industry analysts have recently noticed that anti-piracy efforts seem to be prospering Topspin...... 6 while legal alternatives to file sharing are more prevalent. Minden Jones and Silvina Moreno, in True Entrepreneurship...... 7 two separate articles, cover the topic for us. Both suggest a newfound cooperation between ISP’s, Reinventing MySpace...... 8 Government, and music industry leaders. A Survey of the Music Business...... 10
In the online world, Hulu has become a big media player. In the light of the recent Comcast Current Events purchase of NBC, there is a good chance online television watching could transition soon into a Endorsements and the Law...... 4 subscription model. Jamie Anderson informs on Hulu, and provides insight into the dangers of TV Subscriptions...... 4 switching to a pay-only platform. Elsewhere, I will tackle the latest facelift at Myspace Music, where change is happening despite a significant loss of traffic. MBJ Editorial As marketing tools for artists continue to become more refined, Amy Mantis opens Topspin’s door for us. Amy shows how CEO Ian Rogers is empowering individuals who wish to live off Mission Statement...... 1 their talent and better exploit their relationship with fans. Endorsements are certainly a prospect, Editor’s Note...... 2 and Ricardo Gomez updates us on the latest Federal Trade Commission requirements on full dis- Upcoming Topics...... 16 closure. Model Work Also included in this issue are two model works written for Jeff Dorenfeld’s Music Interme- diaries class at Berklee- one written by Thomas Bolen and the other by Ivonne Hernandez. We Legacy Artist Management...... 13 also append an essay on the state of the music industry written by Itay Shahar Rahat for Peter Alhadeff’s Economics class. Lastly, Peter Spellman has been kind enough to contribute a piece Sponsorship on entrepreneurial innovation. Berklee Media...... 15 Thanks for Reading, and Have a Wonderful New Year!
Michael L. Benson
ERRATA: In our last issue, we failed to recognize Neda Shahram for her generous contributions to Silvina Moreno’s piece about the La Nueva Canción in Latin America. We would like to thank her for her valuable input. Neda runs the Nueva Canción student club at Berklee; interested read- ers should write to [email protected].
Management Editor-in-Chief...... Michael Benson Webmaster...... Brenda Segna Finance...... Dr. Peter Alhadeff Layout Editor...... Ryan Driscoll Faculty Advisor...... Dr. Peter Alhadeff
Contributors Writer (Editor’s Note)...... Michael Benson Writers (Business Articles)...... Peter Alhadeff, Jamie Anderson, Michael Benson Writers (Business Articles)...... Ricardo Gomez, Ivonne Hernandez, Michael King, Amy Mantis, Silvina Moreno Writers (Business Articles)...... Itay Shahat Rahat, Peter Spellman Model Work ...... Thomas Bolen
2 www.thembj.org December 2009 Music Business Journal Volume 5, Issue 6 Business Articles
Three Strikes Against Illegal Downloading By Silvina Moreno Music piracy, in its digital form, has It will be clear to them that they have overriding motivation for illegal downloading endured now for almost a decade. The Record- been detected, that they are breaking the law (it certainly is not the motivation of upload- ing Industry Association of America has com- and risk prosecution… [We] will go further and ers), there is a gram of truth in the assertion. pared it to shoplifting. “The impact on those make technical measures available, including According to an Edri-gram article, a study who create music and bring it to fans”, it says, suspension of accounts. In this case, there will published on November 2nd, 2009 by the “[is] devastating, [and] for every artist you can be a proper route of appeal. But it must become London-based think-tank Demos, those who name at the top of the Billboard music charts, clear that the days of consequence-free, wide- illegally download music from the Internet there is a long line of songwriters, sound en- spread online infringement are over.”3 are also those who spend the most money on gineers, and label employees who help create legitimate media; the survey also reveals that those hits. All of them feel the pain of music Today, Government and Industry six out of ten file sharers would be encouraged theft.”1 are working in closer cooperation in Britain to stop illegal downloading if they had the op- and in France. The Memorandum of Under- tion of new and cheaper music services.4 Yet it is possible that anti-piracy ef- standing signed by the six ISPs in Britain, for forts are finally paying off. On October 22nd, instance, was drawn up the UK’s Department Partly because of this, Jim Killock, 2009 France adopted strong anti-piracy legis- for Business, Enterprise & Regulatory Reform Executive Director of the Open Rights Group, lation, meant to deny Web access to chronic (BERR). The trade association of the British has expressed his disappointment related to file sharers for up to a year. That very same recorded music industry, the BPI, of course, his government’s actions. “Mandelson”, he day, a continent away, the Chairman and could hardly be more pleased. Its Chief Ex- says, “seems determined to push forward CEO of the Motion Pictures Association with his plans for ‘three strikes’ - threat- of America, Dan Glickman, remarked that ening to punish people extremely harshly, “[the] decision is an enormous victory for threatening their education, businesses and creators everywhere, and our hope is that livelihoods for a relatively minor financial ISPs will fully honor their promise to co- misdemeanor”. Apparently, even the coun- operate… [We hope] that the French gov- ter-intelligence service MI5 believes that the ernment will take the necessary measures to proposed legislation may have an unintend- allocate resources and handle the enormous ed consequence; instead of protecting artists task ahead.”2 and discouraging illegal downloading, MI5 thinks it may encourage “an encrypted dark Indeed, the new anti-piracy ef- net that would affect the artists negatively”5. forts in France don’t come easy. New agen- cies will need to be created in order to send All of this highlights the difficulty termination notices to the infringers. But a of taking on digital piracy. But there seems judge has to review each case first, a condi- to be more consensus now between the in- tion of the new law. When the Court finally dustry and the private sector on how to provides notice, though, providers will cut tackle it, and this is what makes this juncture off Internet service to the offending party. ecutive, Geoff Taylor, may have well put these different. America, however, has not seemed very words in Lord Mandelson’s mouth: “The to move as forcefully against song piracy as Such efforts in France appear to focus is on people sharing files illegally; there Europe—at least in regard to the active in- have also revived anti-piracy considerations in is not an acceptable level of file-sharing. Musi- volvement of ISPs. Britain. The “Three Strikes and You’re Out” cians need to be paid like everyone else…File- law spurned UK music industry lobbyists and sharing is not anonymous, it is not secret, it is In the meantime, piracy is affecting politicians to seek a comparable framework against the law.” the livelihood of hundreds of hard-working against illegal file sharing. In quick succes- musicians, artists, publishers, producers, and sion, six of the Britain’s biggest net providers, The music industry’s cry for help promoters all over the world. The crime is i.e., BT, Virgin, Orange, Tiscali, BSkyB and is finally being heard in high places. In fact, perceived as small, users are too atomized, Carphone Warehouse, agreed on a joint plan if dissent exists, it probably lies among the and the tracking of ISPs has to be validated with the music industry to tackle piracy online. smaller ISPs, both in Britain and in France, politically and in the Courts. If it is to stop, UK internet users would be monitored by their who may be more sensitive to customer with- music piracy has to become much more in- ISP’s for illegal downloads, such that those drawals. There is also the fact that the policy convenient for the user—and that is where the caught would first get a warning e-mail, then a is far from being welcomed by Internet users. three-strikes-laws come in. It is a last resort, suspension of service if the infringement con- For instance, a BBC News website user from and right now probably the only way to really tinued, and finally, if there were a third strike, Hampshire, asked: “Why should I yet again stop users from illegally downloading music. their contract would be terminated. Lord Pe- pay for, say, the Beatles’ White Album at full ter Mandelson, Britain’s Business Secretary, whack? I already bought it on LP, eight-track, Sources 1. http://www.riaa.com/faq.php explained the rationale of the measure as fol- cassette, and CD!” 2. http://news.cnet.com/8301-31001_3-10381365-261.html lows: “What we will be putting before parlia- 3. http://www.edri.org/edrigram/number7.21/three-strikes-uk ment is a proportionate measure that will give Others have pointed out too that file 4. http://www.edri.org/edrigram/number7.21/three-strikes-uk people ample awareness (of their wrongdoing) sharers are buyers that “try before they buy” 5. http://www.edri.org/edrigram/number7.21/three-strikes-uk and an opportunity to stop breaking the rules. Though it is hard to believe that this is the December 2009 www.thembj.org 3 Volume 5, Issue 6 Music Business Journal Current Events
Endorsements and the FTC By Ricardo Gomez After almost thirty years without reforming the regulations that govern the use of endorsements to promote or advertise a product, the Federal Trade Commission (FTC) recently announced the final revisions for the guides regulating endorsements and so far third party testimonials have approved. The FTC works to prevent fraudulent, deceptive, and unfair business practices against consumers. Their “Guides Concerning the Use of En- dorsements and Testimonials in Advertising” address endorsements by consumers, experts, organizations, and celebrities, as well as the disclosure of important connections between advertisers and endorsers. In the 1980 version of the Guides, it allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical”. Under the revised Guides, advertisers will be required to clearly disclose the results that consumers can generally expect, when the advertisement features a consumer conveying his or her experience with a product or service as typical; when in reality that’s not the case. As bloggers’ influence in the marketplace increases, the revised Guides also address this component of the marketing chain. With the intention of protecting the final consumer, bloggers who make an endorsement must indicate the “material connections” (payments or free goods) they share with the seller of the product or service. In contrast to the 1980 Guides, this revised version reflects modern case law and clearly states that both advertisers and endorsers may be liable for false or unsubstantiated claims made in an advertisement. Celebrities also have a duty to disclose their relationships with advertisers when they’re mak- ing endorsements in the form of public relations, such as talk shows or social media. It’s worth mentioning, however, that these guides are not binding laws themselves, but rather are administrative interpretations of the law in- tended to help advertisers comply with the Federal Trade Commission Act. (1) It is likely that the new guides will darken celebrity endorsements as a form of marketing, since the effectiveness of using celebrities to persuade consumers to buy a product or service relies on the consumer believing that what the celebrity is saying comes from real reasons as opposed to monetary reasons. (2) It will be interesting to see how these new regulations affect the music industry, since – at least at the mainstream level – endorsements for both the public and the private sector represent a significant source of income for many artists.
Sources (1) Federal Trade Commission website. FTC Publishes Final Guides Governing Endorsements, Testimonials. October 5th, 2009.
Hulu: Changing the Face of Free Broadcasting By Jamie Anderson Rumors have spread like wildfire concerning a subscription-based Hulu. As of late October, the free video streaming website ranked number 36 on the list of most frequently visited sites, with 21.5 million global users making visits each month. The convenience of free, on-demand television with limited advertisements is enough in itself to draw people’s attention and help soften the blow of piracy. Up to this point, Hulu has been a free service funded by advertisements. Despite the fact that large profits have been made by the developers and employees of the site, that income came to a peak back in April of 2009. News Corp properties, a company comprised of Fox News, 20th Century Fox, The Wall Street Journal and others, brought in Jonathan Miller (formerly of AOL) as their new chief digital officer to try and boost revenue. Miller proposed an array of ideas to get Hulu back on track, but the one that seems to have stuck is the idea of changing Hulu’s model to that of a subscription based package. Though to this day nothing has been confirmed by Hulu executives, Miller has expressed his ideas on this new business model publicly. He said that while Hulu will continue to stream TV and movies for free for the time being, moving towards a paid medium seems like “over time [it] could be a logical thing” . Miller also expressed some of his ideas surrounding how Hulu would make the switch. For now, ev- eryone on the board is playing with the idea of having limited free content available while keeping the bulk of the media reserved for paid subscribers. Though no one has made a public statement on these terms, it would definitely be a great way for users to ease into the new business model. In keeping some content free of charge on the site, executives hope to keep a strong fan base while continuing to grow as a website. The other less favorable outcome would be to turn Hulu into a service dedicated to paid subscribers. Miller shared some ideas on how the site would run this theoretical service. In his opinion, bundling together popu- lar TV shows and movies by genre and lifestyle has the most appeal to a general audience. In an interview with Daily Finance, he stated, “I think you have to figure out what are the right bundles that people buy and what’s contained in that bundle. For example, you could have -- and I’m making this up entirely -- you could have a New York bundle, and that could consist of various papers or publications that are relevant to the audience in New York, and you could make that all, potentially, a bundle to a consumer at one price.” In this quote he is speaking relative to the newspaper business, but is convinced that the same type of bundle packaging would apply to Hulu users alike.
The fact that nothing has yet been confirmed by Hulu executives only feeds fire to the growing rumor mill. At this point it’s safe to say that Hulu will remain a free website until the end 2009 and into the beginning of 2010, but speculations on both the company and audience sides all point to some sort of paid service expected to launch by spring of next year. Whether or not this is a smart business move will be determined by members of the board and frequent users of the popular site. Currently, many people who use Hulu also download content illegally, yet would sacrifice the time and effort put in to obtaining said material to watch it for free online with two thirty second advertisements mixed into the clip. If Hulu does decide to change to a paid- subscriber only service, we can expect to see an immense decline in internet traffic and revenue for the site, which could ultimately lead to its demise. 4 www.thembj.org December 2009 Volume 5, Issue 6 Music Business Journal Business Articles Brief: Terry McBride and Nettwerk
By: Ivonne Hernandez Terry McBride is the CEO of the lan. Lillith Fair became a festival with an all where he and Nettwerk’s headquarters are still Nettwerk Music Group, Canada’s leading female lineup that included both big headlin- based today. Terry McBride’s role at Nettwerk privately owned record label and artist man- ers and smaller local acts. It wasn’t just about varies a bit, but essentially his main job is to agement company. Nettwerk is responsible empowering women, but also about empower- work directly with Sarah McLachlan, Avril for managing some of the biggest artists ing local communities and filling a niche in the Lavigne and the Barenaked Ladies. He travels around like Sarah McLachlin, Avril Lavigne music industry. Each show was devoted to a about two weeks every month for various rea- and the Barenaked Ladies, as well as many different local charity, and although it took 3 sons, and works with other managers within others. Terry McBride is one of the world’s years of his life to create it, Terry said it was Nettwerk and their artists to help them when leading businessmen in the music industry totally worth it. Women in the music business needed. On the record label aspect of the busi- and has created a music business model em- overall get the shaft, Terry says. Rock radio ness, nothing gets signed unless Terry loves it, pire long before this so called “new” manage- has a hard time playing females and it is very and he pledges his word on that. His great ear ment/label/artist 360 deal. He is an innovator prejudicial even though it has nothing to do and sense for the music industry’s inner work- in everything he does. Nettwerk was a 360 with the music-- it is just the male perception. ings has brought top artists such as Coldplay company long before the new craze of 360 Overall there are a lot less female artists on the and Dido, as well as many other great artists deals emerged. Terry becomes the manage- airwaves, although Terry says it doesn’t seem that remain loyal to Terry. ment company, the publishing company, and the record company all rolled into one, and Nettwerk works with major labels, only takes 20% of the whole pie. He has em- but they offer alternatives. Artists which use braced the quick and ever changing music the infrastructure of Nettwerk hold on to the industry to the point where he says that the ownership of their intellectual property. If at future of the music industry isn’t selling re- any point, they choose to opt out, they can do cords, it’s selling music in every form imag- so. For Terry, major label artists get paid a flat inable! royalty which doesn’t give them ownership rights to their music. Labels also inhibit artists For instance, Terry McBride’s lat- from benefiting from the multiples associated est promotional idea for the new Barenaked to that stock. It’s not really a true partnership, Ladies’ album was to issue a single, and all because the artists have no equity. 29 songs of the new album as Protools files through MySpace--so DJ’s can use them like Since Nettwerk works with many Lego bricks to create something unique on different global artists, Terry has had to learn their own. McBride is known to be one of the to adjust to the many different markets in or- most artist-friendly persons in this industry to der to promote his artists. Economically the date, but he is very aware of what the music world is flat when it comes to music. Anyone industry is going through with the new digi- from anywhere can access music from virtu- tal revolution. He has even paid for the legal ally anywhere else. Marketing and promotion fees of a young boy who was being sued for is very different and dynamic and needs to be illegal downloading and file sharing. For de- this way because about half a dozen of those based on the cultural codes in individual plac- cades, major labels have tried to control how artists are huge and there is Disney. es. What Terry has found is that even within music is distributed, how it’s priced, and who the United States, it is like marketing to seven gets to keep it. With Terry’s vision, Nettwerk What Terry has learnt from global or eight different countries in one country. has basically done the opposite, giving cus- artists such as Avril Lavigne, who sells about The marketing done in Boston is very differ- tomers music in literally any tangible form, 70% of her intellectual property outside of ent than the marketing done in Texas, or Flor- giving them cheaper or even free music, North America, is that whether the artist is ida, because it is all based on the local culture. while giving artists more control over their male or female shouldn’t matter. Kids are music. This gives these artists the ability to emotionally attached to the songs, and they For Terry, finally, the future of the sell that music with what is called a ‘long-tail use those songs in their own lives, which turns music industry is here. “I think that major approach’, that is, in more forms and for less them into a sort of bookmark. It is easy for labels have about one or two more years of money. people to become very cynical and negative pain, but they are slowly coming to the real- in thisindustry, so they don’t see what mu- ization that trying to control their intellectual I had the honor to speak with Terry sic is all about. Music is about emotions, not property is not the best way, and they have to in a lengthy and very informative conversa- products or celebrity endorsements; it is much somehow monetize the behavior of the con- tion. I touched on his vison, how he runs the deeper than that. The way Nettwerk markets, sumer better”. The need and desire to own Nettwerk Music Group and ultimately asked promotes, and goes about things is truly differ- something is generational and as the millen- him where the music industry is headed. ent, and Terry really tries to stay away from the nium generation is approaching their mid thir- cynical and negative vibes of the industry. ties, that need may go away. There is a true Terry was the businessman that behavioral shift from a push society to a pull first came up with the positioning idea for Nettwerk Music Group was started society. Lillith Fair, along with artist Sarah McLach- by Terry McBride in Vancouver, BC, Canada, December 2009 www.thembj.org 5 Volume 5, Issue 6 Music Business Journal Business Articles
The Topspin Platform By: Amy Mantis There are more opportunities for to jump on board. Since May of this year, it has “build successful businesses.”(4) Email address- bands to get their music heard than ever. Ev- already grown and developed so much. It just es provide one of the easiest ways to directly eryday it seems that there is a new software keeps getting better and better.” connect artists to fans. program, distribution platform, or website de- signed to help musicians further their careers. One of the goals of the Topspin plat- Topspin’s Personnel Social media websites like Facebook, MySpace, form is to build up an artist’s fan base via direct- or Twitter help bands engage with a heavily en- to-fan marketing and generate more income for Topspin is home to many important trenched user base, whereas elsewhere those the artist than would normally see from a tradi- people in the frontier of digital music. Peter sites geared solely for musicians and music lov- tional record label (2). Direct-to-fan marketing is Gotcher, its Chairman and co-founder, has spent ers like ReverbNation, or a website and distri- the backbone of Topspin, and is the complete the past 25 years developing some of the most bution platform such as Bandcamp, are fast and opposite of the way music was marketed be- significant innovations in music production and easy ways of creating a sizable web footprint fore the Internet. Mike King makes an excellent distribution (5). In 1984, Gotcher co-founded and online marketplace (Bandcamp recently point: “Instead of having tens of outlets affect- Digidesign, the world’s leading manufacturer of added the option of physical distribution). With ing millions of people, you have millions of out- Digital Audio Workstations (6). He also accepted all of these do-it-yourself tools out there, it can lets affecting tens of people.” Topspin provides a GRAMMY Award in Technical Achievement be tough to find out what works best for your you with the tools to find out which niches work in honor of Digidesign and its contributions to band. There is no one-size-fits-all in the ever- best for you. the recording industry (7). Peter Gotcher is also evolving music industry, but there may be one on the board of trustees at the Berklee College that comes close: Topspin. By utilizing the data Topspin collects of Music (8). from fans, artists are able to create bundles of What Topspin Does their products and sell them directly on their site. The other co-founder of Topspin is Every artist has a different fan base, and not ev- Shamal Ranasinghe. For the past ten years, Ra- Topspin was founded by Peter Gotch- ery fan wants the same thing. The bundles vary nasinghe has been at “the forefront of digital er and Shamal Ranasinghe, who also co-wrote from artist to artist. Some artists like Metric music product strategy and development,” and BerkleeMusic’s online course Online Music have several bundles ranging from a barebones “has been responsible for defining software and Marketing with Topspin. It is a technology- digital download of their recently released CD service best practices for leading companies in focused platform for direct-to-fan marketing, “Fantasies,” to the “Fantasies Deluxe Edition” the digital music space.”(9) management, and distribution (1). It allows art- bundle. The Deluxe bundle includes a digital ists to market, promote, and sell their music on download with two bonus tracks as well as the The man at the helm of Topspin is their website, and it provides an easy way to physical CD and vinyl album, a VIP Fan Pass Ian Rogers, a veteran within the technology identify who your fans are, and sell directly to that “brings you early and sometimes exclusive and music industry “with roots in defining the them. access to unique offers from the band.”(3) Met- way artists and consumers promote and experi- ric knows that not everyone wants just the digi- ence digital media online.”(10) Rogers has been From a software perspective, Top- tal download, and not everyone wants the VIP involved in numerous digital music projects spin allows you to manage your content and Fan Pass, so they have offers in between, all of throughout the years. His list of credentials is fan base as well as create offers of content to which include the immediate digital download. extensive. Prior to joining Topspin in April of that fan base. Along with the platform, Topspin 2008, Ian Rogers was the president, CTO, and runs deep in analytics, allowing you to see what Many, if not all, artists on Topspin founder of Mediacode, which was acquired by works, what doesn’t work, and what you can do have a widget, i.e. a piece of software that can Yahoo! in 2003 (11). Rogers followed Mediacode to improve sales and expand your fan base. be installed on nearly any HTML-based web- to Yahoo! where he eventually became the Vice site. Widgets can do virtually anything that can President of Video and Media Applications One reason Topspin may not be on be done with web programming, and every independent musician’s radar is because Topspin offers a free download of a it has yet to go public. At the moment, the Top- song or an album in exchange for an spin team handpicks the artists that are using email address. Email addresses are the platform. Current Berklee College of Mu- critical for any artist at any level. sic student and soon-to-be alum Chris Carlson Mike King says: “The conversion rate is using Topspin with one of the artists he’s is pretty consistent across the board, managing, Tom Howie. When asked why Chris regardless whether or not you’re an opted to use Topspin as the distribution plat- A-level artist or not. It typically di- form for Tom Howie’s website, he answered, “It rect hits to your site and searches should be stipulated that Topspin only services produce the most conversions. After the direct-to-fan channel, so it is only a part of that, it’s usually email.” The conver- every artist’s distribution platform. That being sion rate is defined as the fraction of said, I wanted to get underneath the hood of the casual content views or website vis- Topspin platform as quickly as possible and the its into monetized transactions. Part release of Tom’s last EP was a great opportunity of Topspin’s mission statement is to 6 www.thembj.org December 2009 Volume 5, Issue 6 Music Business Journal Business Articles among many other high-ranking jobs (12). He has effectively for the search engines, and how to been building digital media applications since make it a compelling destination for fans.” Rog- 1992 (13), and founded one of the first-ever mu- ers chimed in that the other content the course sic-related websites. Rogers is fascinating; see covers is a “back office, intranet type of soft- http://www.fistfulayen.com/blog. In the blog, ware toolset”, where the advantages of the Top- he discusses what it is like to co-manage an art- spin platform to monetize revenue across many ist, his diet and exercise routine, and, of course, platforms are made clear. “We talk about best all things related to Topspin and the artists that practices with creating email, and we talk about use it. offer strategies. What is the best thing that you can offer your fans? And if you’re offering a va- In a recent interview, Ian Rogers riety of products, what should those products be compares the old model of the record industry and what should you be pricing them at? It’s a with the new model. “In the past there was a real holistic view of online marketing.” lot of distance between success and failure…A lot of people working, slugging away day af- Topspin has yet to fully set sail, but it ter day with a day job, performing their art… has generated much interest already. For more The old model was, ‘I gotta get signed. I gotta information, visit http://www.berkleemusic. get signed. I gotta get signed. I’m gonna keep com. doing what I’m doing until I get signed. Hope- fully someone in one of four record companies Sources Find somewhere will deem me good enough to be on 1 Topspin. “About” Web. 29 Nov. 2009. the stage.’ If you’re lucky enough to make that < http://www.topspinmedia.com/home/about/>. happen, the success rate there is incredibly low 2 Topspin. “About” Web. 29 Nov. 2009. as well. The way it works is you get a check, < http://www.topspinmedia.com/home/about/>. us hopefully [the record company] will help you 3 Metric. “Metric Store.” Web. 30 Nov. 2009 < http://ilovemetric.com/ produce and release your record. And really at store/>. the end of the day, you either have a hit at radio online 4 Topspin. “About” Web. 30 Nov. 2009. and succeed, or you don’t and you fail…Thanks < http://www.topspinmedia.com/home/about/>. to Internet and to the fact there’s no longer lim- ited distribution through these narrow channels 5 Topspin. “Peter Gotcher.” Web. 30 Nov. 2009 < http://www.topspinmedia.com/peter-gotcher/>. at of FM radio and music television, now consum- ers have unlimited choice and therefore people 6 Topspin. “Peter Gotcher.” Web. 30 Nov. 2009 who are talented and can reach a consumer base < http://www.topspinmedia.com/peter-gotcher/>. www. can actually build a business without having a 7 Topspin. “Peter Gotcher.” Web. 30 Nov. 2009 (14) massive hit.” . < http://www.topspinmedia.com/peter-gotcher/>.
8 Topspin. “Peter Gotcher.” Web. 30 Nov. 2009
Berkleemusic’s new course, “Online 9 Topspin. “Shamal Ranasinghe.” Web. 30 Nov. 2009
One of the many hardships that Google search, but click through rates have Sources: eventually befalls an extremely popular social- been unsatisfactory--and conversion rates abys- (1) Prebluda, Aaron. “Facebook vs Myspace - Tale of the Tape.” Web log post. Blog.compete.com. Compete, 26 Feb. 2009. Web. 29 Nov. 2009. networking site is the mass of spam it attracts. mal. It is no wonder that Google has been rela- (2) “Google’s Last MySpace Payment: $75 Million On June 20, 2010.” Essentially, it was the perfect storm- millions of tively unhappy with the results. Additionally, an TechCrunch. 13 May 2009. Web. 01 Dec. 2009.
An Essay on the State of The Music Business
By: Itay Shahar Rahat The Internet has been adapted in our increased 74% between these two years and ous factor affecting the demand of legally world faster than any other media. It has taken US author’s society BMI saw revenues and produced recorded music is the availability of seven years to reach a 25% market share-- as distributions rise for the 2008/09 financial year pirated product. Illegal downloads, it is said, opposed to radio, which took twenty-two years; , physical sales of recorded music decreased still represents 95% of all downloads. If that television, which took twenty six years; and the heavily between 2007 and 2008, with a 24.7% percentage were lowered even by a little, the phone, which took thirty five years to be owned plunge in CD shipments, a 71% drop of CD revenue grossed by the labels would rise sig- by 25% of the consumers in the market . The singles sales and a 54% freefall for DVD vid- nificantly. PC itself needed 15 years, and even the cellular eos and music videos. Total units sold in 2008 phone did it in about 13 years. The digital world were 26.1% less than in 2007 and the revenue Vigor in Anti-Piracy is unquestionably the future and offers much decreased by 28%! hope. But adaptation is required, and the record It is this third factor that deserves at- industry has not fared well yet, even if music is In 2008, physical products still tention, for in the current juncture it appears now just a click away from a user’s desktop or counted for 68% of total shipments, the rest that some progress is being made at last. It phone. being digital. This is of course changing at should be understood that a claim of infringe- a rapid rate, as in 2007 the comparable data ment against Internet Service Providers (ISPs) There will always be short-run costs was 77% and 23%, respectively. Total dollar is by the ISP. There is the issue of intrusion that can’t be adjusted quickly when a new tech- value fell by 18.2% in 2007-08. Still, Nielsen- in a client’s privacy. Second, even if the ISP nology appears. Fixed costs make it harder for Soundscan’s senior analyst Valentina Nucete admits that something can be done about pi- firms and businesses with large infrastructures concluded that in the past five years the decline racy, the music industry is only the first in line: to be able to profit or avoid early losses in the in physical sales grew at a much faster pace the film, gaming and software industries are first period after a major change. However, we than the increase in digital sales . likely to follow and will want to get rights to are now well past the Napster revolution in 1999 compensation. For instance, in June of 2007 a , and labels have not perhaps been as mentally This change in demand towards dig- Belgian court had to reassure itself that there agile as they should. ital music has not yet fulfilled the promise of was a practical way to target and filter out any restoring the market back to the golden ‘nine- infringement before it ruled against the ISP. The Market and a Change in Demand ties. There are, ostensibly, three additional ele- When expert testified that there were eleven ments that are holding back industry revenues. filtering technologies available, the Court then A statistical overview of the market held the ISP liable rather than the user and was today is illuminating. The 2008 end of the year First, there is a shift from full album able to discard a defense based on the protec- shipment statistics report by the Recording In- purchases to single song downloads . Music tion of privacy rights. Other European gov- dustry Association of America (RIAA) shows albums were either complete products or bun- ernments are starting to follow suite. (Editor’s an increase of 28.1% in digital units sold be- dles of ten to twelve songs with two or three Note: See this edition of The MBJ for more tween 2007 and 2008 and a 30.1% increase in “hits”. Consumers who only wanted these updates on ISPs and copyrights in Europe) dollar value. This is due to the rising sales of hit songs had no choice but to get the whole digital albums and singles, and to downloads of album, allowing the record labels to wrap a Declining Value of Music and Mechanicals music videos. Mobile ringtones sales have actu- small product in a bigger and more expensive ally decreased a small percentage because of the package. However, the era of digital down- Even if ISPs were held more ac- option to download an mp3 music file and have loads brought up to the surface the culture of countable, enormous problems remain con- that be played as a ringtone. Ringback Tones, single song sales. Naturally, this affected total cerning the decline in revenue of the majors. A the songs that are being played while a caller is revenue negatively. historical outline should make this clear. waiting on the line, are nevertheless showing an increase. While digital performance royalties Second, there were many Statistics show that in real terms re- different substitute goods for re- corded music prices were falling since the be- corded music that exploded with ginning of the 1990’s—much before the birth the new technology, especially of Napster in 1999. A table of wholesale prices video games and online movie of recorded music products between 1990- sales. The Internet, of course, 2004, published in Peter Alhadeff’s article made much more entertainment The Value of Music is revealing. Alhadeff uses options available to many more data from the RIAA’s annual reports to value people at a much cheaper price. music and compares it to evolution in the con- “The show was stolen” from re- sumer price index, which measures inflation. corded music and consumers’ time Although nominal prices increased between and money distributed differently 1990 and 2003, real prices fell steadily dur- to the detriment of recorded mu- ing the industry’s “golden years” (so-called sic. because the conversion to CD’s was in full swing and labels released both new and old Thirdly, the most obvi- catalog material in the new format). Alhadeff 10 www.thembj.org December 2009 Volume 5, Issue 6 Music Business Journal Business Articles explains that the majors could not push the more than 30% then it would create gross losses access to UMG’s entire catalogue for a monthly prices of their “hits” or “stars” up and maximize and price needs to be readjusted. If demand is added fee . However Virgin media is still ne- revenue. Hit music, unlike the rest of the less elastic, lowering the price will increase rev- gotiating with the other three major labels for successful albums, was sold not just in record enues since more people will presumably buy the rights to use their catalogs since it needs the stores but also in hypermarkets (Wal-Mart, Best it. A price for a song that was dropped by 30% whole pie to offer to its subscribers. Buy, and so on). These retailers were willing to from $0.99 to $0.69 would be lower the price of music sold in their stores just expected to have more than a to drive traffic in and get people to buy other 30% increase in total down- more expensive consumer durables. Since there loads thus creating higher total was almost perfect competition at retail for hits, revenue. recorded music devalued against the consumer price index by more than 25 per cent without the With variable pricing, labels being able to stop this. therefore, and because Apple iTunes is by far the most signif- Another area, incidentally, where the icant retailer in the online mu- value of music suffered, and which also affected sic market, labels have gained the creative community, has to do with the pay- some control over pricing. The ment of the mechanical right of reproduction implication is that labels will of a song. In this case, the ‘mechanical’ royalty be looking at price data very paid by the labels to copyright owners of musical closely in the near future. They creations can be shown to have dropped consis- will try to price a song as close as possible to its tently against inflation since 1975 (even though potential value having a positive affect on de- Overall, Europe and Japan seem to be back then it was 2.75 cents a song and now it is mand and on their revenue. moving faster towards mobile music goals. Us- 9.1 cents). Here, as a matter of fact, the labels did ers in Japan buy a fair amount of music through use their stronger lobbying power in congress to (b) Subscriptions their cell phones, while in Britain, subscriptions trump artists and their publishers. are seamlessly tied with phone cell phone pur- Some new business models that are chases through Nokia’s “Comes With Music” Monetizing Demand focused on profiting from recorded music are platform. The smart phone maker is the largest heading towards the model of subscriptions. in the world, and a US launch is expected 2010. Yet, in the midst of all this, trade or- These are either ad based or monthly/yearly fee All of this is likely to nudge the frontier of le- ganizations, governmental agencies and industry based. Services like “Spotify” in Europe and gitimate recorded music sales and help sellers. analysts concur that demand for recorded music “Raphsody” are charging monthly fees for the is actually at an all time high. So what are the possibility of unlimited streaming. Spotify has (c) From 360° Deals to Live Music options to monetize this into more revenue from a more narrow, free, ad based streaming service this demand in the new world? What promise and an option to upgrade to an account with no Since recorded music sales plunged, does the future bring for the music industry? ads and more advantages for a fee. There are the labels have started to negotiate differently Internet Radio stations such as Pandora that with their artists. Under the banner of the so- (a) Variable Pricing charge a fee or are ad based as well. Sirius XM called “360° deals”, they are now tapping a Radio is an example for a satellite radio that wider pool of revenue, arguing that they already The first example of revenue maxi- charges a monthly fee for the access to its 120 invest in the marketing and financing of an art- mization comes from the leading online music channels. These services all pay performance ist and his tours. This would also better justify retailer, Apple’s iTunes. In early 2009, iTunes royalties to songwriters and publishers through advances, diversifying the inherent risks of their began to incorporate variable pricing for its ASCAP, BMI and SESAC and since last May investment. products: $1.29 for hits, $0.99 for a regular song, some are paying sound recording performance and a floor price of $0.69 for less popular songs royalties to the record labels as well through As music sellers diminish their de- . SoundExchange, a new collecting society. pendency on recorded music sales, the music The effects, and the limits, of this The terms are constantly negotiated, and many business can take comfort from the fact that strategy can be gauged by using a price elasticity hurdles are still to be passed as these services, there are other growth areas. The music pub- of demand (PED) analysis. For instance, if there and especially other smaller ones, don’t really lishing industry is well on its feet and more and is a strong demand for a product, such as the de- generate a positive cash flow yet. The most suc- more music is being licensed instead of sold. mand for hits and superstar’s music, it implies cessful models have been able to offer enough Composers, artists and bands can partner with that consumers are less sensitive to price chang- free features to classify themselves as a viable a publisher and be able to profit from the use of es and thus, demand is said to be “inelastic”. competitor in the market . The problem is that their music in any of the other kinds of mediums The demand for catalog songs is usually soft or these models are still competing with free. and media such as TV, mobile, ads or games. “elastic”, meaning that consumers are sensitive Performance royalties, as opposed to mechani- to price changes. If demand is inelastic, raising Another model is to have ISP users cal collections, are increasing. If imposed in a the price will raise the sellers’ revenue. An ex- pay a monthly fee for the use of their broadband wise and not strangling way on the digital radio ample is that if iTunes pushes a price of a song for unlimited downloading and streaming of stations they can provide even more substantial from $0.99 to 1.29 which is a 30% increase and music. Universal Music Group announced this monies for the copyright owners. downloads drop by 20%, the label will still gross June that it would be pairing with Virgin Media Finally, live music will always be more than before. If the drop in downloads were in the UK to offer the subscribers unrestricted there, and will always have a demand. The con- December 2009 www.thembj.org 11 Volume 5, Issue 6 Music Business Journal Business Articles cert business is doing great and since 1991 con- Sources (1) Leonard, Gerd. “The Future Of Music, Opportunities and Visions.” cert ticket sales have increased each year and (2) Driscoll, Ryan. “The Impact of Digital Technology on the Record cracked the $2 billion threshold. Another trend Industry The Music Business Journal | Berklee College of Music. 04 we see in live music is that major stadiums are Mar. 2009 (3) Benson, Michael. “A Decade To Remember, Changes in the Music becoming less popular as smaller venues are in- Industry, 1999-2009.” Music Business Journal 5.4 (2009): 10-11. Print. creasingly being used and actually gross in total (4) 2008 Year-End Shipment Statistics. Rep. no. 202-775-0101. RIAA. more than the stadiums. This is also related to Print. (5) “US authors society BMI reports increased revenues and distribu- the existence of a “middle class” of musicians tions for the2008/9 financial year. and, perhaps, the fall of the superstars. (6) Alhadeff, Peter. Berklee College of Music “The Value of Music and the Trappings of the Market place, 1990-2005.” MEIEA Journal (2006). Print. In this new world, moreover, there is (7) Alhadeff, Peter. Berklee College of Music “Music Industry Statis- more room and cheaper options available for tics: A Reappraisal.” MEIEA Journal. Print. (8) Fanelli, Gian Marco. “ISPs held liable copyright infringement more independent bands and artists. A Do-It- throughout EU” The Music Business Journal | Berklee College of Mu- Yourself attitude is not uncommon, as musi- sic. 22 Dec. 2007. cians can record their own albums for a much (9) Benson, Michael. “Spotify and the New Music Platform” Music Business Journal 5.4 (2009): 1-3 Print. lower investment, can promote themselves and (10) Benson, Michael. “Universal and Virgin Launch New Subscrip- find innovative and creative ways to use the tion Model.” The Music Business Journal | Berklee College of Music. new media, the Internet and the mp3 format to 18 July 2009 ultimately benefit from the situation and gener- (11) http://www.nimbit.com ate income. Artists still need their “team” of Bibliography managers, lawyers and promoters to be able to 1.) Leonard, Gerd. “The Future Of Music, Opportunities and Visions”. generate income and stay in control of all op- 2.) Driscoll, Ryan. “The Impact of Digital Technology on the Record Industry | The Music Business Journal.” The Music Business Journal erations, but the label’s role in the process has | Berklee College of Music. 04 Mar. 2009. Web. 06 Nov. 2009.
12 www.thembj.org December 2009 Volume 5, Issue 6 Music Business Journal Model Work
Legacy-Artist Management
Model work features the best paper of a ma- After their contract with Scher ended, Holman label, radio, recording studio, or promoter, you jor assignment from an MB/M class. The can- was asked to take on the duties and responsibili- are only involved in a certain aspect of the art- didates are chosen by the professors(s) of the ties of a personal manager. ist. It seemed to me that the power was with the course, then The MBJ chooses from blind sub- artist, so I wanted to get as close to the artist as missions. The following piece was written for Holman recounted to me how he be- I could.” Jeff Dorenfeld’s Music Intermediaries Class. came interested in management and how he first *Note: all essays are edited for placement in started: It took time for Holman to build a the MBJ. relationship with the band. His knowledge of “When I was 16, an agent of the Wil- the band’s music gave him motivation to work By Thomas Bolen liam Morris Agency moved next door to my best for them as well as built a foundation of trust. An artist is someone whom by sheer friend…He would give me records and concert Holman’s experience with many aspects of the talent has the ability to create intangibles that tickets, and really inspired me to think there working industry also gave him a well-rounded get straight to our heart. But to succeed, the were actually people who got paid to do this grasp to take on more responsibility and in the artist needs to create, and that’s where the stuff…Through the advice of this agent, I got end become a personal manager: manager comes in. A manager has to nurture involved in the concert committee at my univer- the artist, understand the art, and know how to sity, started producing shows in school, and went Holman continues to nurture the make it flourish in the public eye. These are to a lot of rock shows and I guess you just look career of the Allman Brother’s Band through special skills. A manager’s duties, for instance, at everything that’s going on. Not just the peo- lineup changes, the loss of one of its founding range from providing advice and counsel, to ple on stage, but how it all worked. Who were members, a GRAMMY award, and a punishing organizing tours and recording sessions, and these people moving the equipment, running the touring schedule almost every year since he’s acting as an intermediary for the artist in the in- security, tearing tickets and working the box of- been on board. The loss of three of its founding dustry. Managers drive the record label, build fice? All this stuff caught my imagination…I be- members over forty years has made a big dent up relationships with everyone at the label, and came a college concert chairman, [and] worked on the group. Yet have always found a way to push the artist. Of course, trust and understand- through all the local promoters in D.C…” beat the odds by creating new and fresh music ing should be at the core of that relationship, i.e., the trust by the artist that the manager is “When I graduated, I worked with a To keep up with the times, many man- looking out for him/her, and the understanding promoter named John Scher. He asked me what agers have to re-break their artists when their by the manager that the artist’s creativity is the my career aspirations were. Of all the things I music changes: “We always felt like the band defining feature in his association with the art- saw, artist management was the best door in, in was one of those great jazz bands….Miles, ist. that it didn’t seem like any of the people there Coltrane, Charlie Parker…Those bands were had any magic, or any specific skills except or- always changing. We’re not quite in the same I interviewed Bert Holman, man- ganizational skills—which I already had from vein, but we have a playbook, music book— ager of the world-famous southern-rock band producing shows. I got a job road managing one call it what you want—that is pretty holy, and The Allman Brother’s Band. I really wanted of [Scher’s] bands…We made three albums with we get great players to fill those slots. It’s no to enhance my knowledge of a manager who Sire, toured throughout America, and I learned different with what you see now with the Mo- works for an artist who already has had a long with those guys how it was all done. Simulta- town groups where two original members are and fruitful career, so Bert was ideal. I also neously, I was working at the Capitol Theater, still alive, but they have great singers and they called on Tim Bernett, the personal manager of which was promoter-owned. First as a stage- recreate the magic…It’s always going to be dif- Richard Thompson, Loudon Wainwright, and hand, and then I sort of moved my way up tak- ferent…The ABB are very hard to play with… Catie Curtis. Also, both Bert and Tim manage ing different areas of responsibility in the loose You have to play what Greg [Allman] calls the artists that I personally enjoy listening to--and hierarchy of the theater. We learned on the job ‘meat and potatoes,’ and then the improvisa- who are still in top form, almost recreating the through mistakes, trial and error, and a lot of tional stuff. There are very few guys who can success they knew at their peak more than 30 ingenuity. In 1981, the company I was work- do both.” years ago. ing for had the opportunity to manage the ABB, and I was really into it. It was easy. I knew A Manager Taking a Back-Seat Bert Holman’s and The Allman’s Brothers so much about the band. I knew the music, the hierarchy…I knew how it all worked, and that’s It is often with new acts that conflicts Bert Holman has has been the on- how I built my first business relationship with in management occur. When a manager must and-off manager for the Allman Brother’s the guys… Sometimes, when you do a good job, put his input into the artist’s creativity to en- Band since 1971, when he promoted a concert people remember.” hance their career, things can get a little tense. of theirs while in college. The band was under With already established acts, such as the All- a contract in 1981 with John Scher, Director As Holman shows, the business of man Brother’s Band, a manager must usually of Management Activities, and a concert pro- management isn’t something that can be eas- nurture what has already been created rather moter. At the time, Holman was working for ily taught academically. To get involved, one than provide some creative guidance. Richard him. The band then became Holman’s client must get in there and work on some level with Thomson would likely agree, and so would his for a yea, later disbanding to pursue personal the artist--whether you do stage jobs or get in- manager. endeavors. It wasn’t until 1989, when the All- volved with a promoter. As he says: “That’s why man Brother’s Band reunited, that Holman was I wanted to be in artist management. Everything As Tim Bernett says: “After forty asked to come aboard as their road manager. else was just a segment. Whether it’s a record years, we have a built-in audience who look December 2009 www.thembj.org 13 Volume 5, Issue 6 Music Business Journal Business Articles forward to anything [Richard Thompson] does, Another method for generating more so that’s a blessing. He still operates under revenue is the practice of performing residen- Piracy Made Unattractive (cont.) the general public’s radar, so I’m always look- cies in major cities. A residency occurs when tunes. In contrast to other streaming services, ing for new angles.” But when asked about an artist plays many shows over a series of how much influence a manager has over their nights, weeks, months, or even years in the the consumer retains permanent possession of artist(s) production of music and live perfor- same venue in the same city (typically Las Ve- all downloaded music and can make copies of mances, Tim Bernett is categorical, “The good gas). Residences allow artists to save a tremen- the song files. The quid-pro-quo is that harsher news with someone like Richard [Thompson] is dous amount of money because they don’t have action is promised against any infringer at the that he’s a pure artist and really needs no direc- to go out on the road. Instead, they set up shop site. tion. I can make suggestions about what type of only once and most of their travel expenses van- record to make, but Richard has great instincts. ish. Residencies also let the artist go home (or Finally, TDC, a leading telecom firm I wouldn’t be any more comfortable telling him to a temporary home) each night. Residencies in Denmark introduced a music service in April what to play or write than I would Bob Dylan. appeal to fans as well because it gives them an 2008 and reports that over 120 million tracks But I do recommend musicians when neces- excuse to go to a new city and see a fantastic have been downloaded so far. As John Ken- sary.” show. nedy, Chairman of the International Federation of the Phonographic Industry (IFPI), was able “I don’t think I have a lot [of influ- To quote Holman, “As they (the All- to report: “TDC was one of the first ISPs in ence],” said Bert Holman when asked the same man Brother’s Band) get older, residences get the world to see the enormous potential to be question. “The ABB are very artist-driven. A more appealing. And the audience is mobile unlocked in a service that bundles music into lot of times when they can’t decide themselves and more willing to travel—especially if it’s a its broadband offering. [TDC] offers consum- they ask what do I think; they know I’m a fan.” desired destination…it becomes a reason to go ers access to a vast library of repertoire, while to a city, shop, visit family…it all works.” fairly paying artists, songwriters and record The Manager-in-Residence producers for their work”. With proven methods such as residen- A key feature of artist management cies and packaged tours, older and established While such tactics in the fight against today is to find new ways of broadening the artists are able to make the most of their situa- piracy are encouraging, they might not yield audience of an artist. Many artists are now co- tions in the music industry. They have the abil- immediate results. Half of all world sales of re- headlining concerts and even touring nationally ity to work the industry in their favor because of corded music are still in CDs. A company like with other widely known artists. This goes be- the strong fan bases they have built up over the Spotify, for instance, might hardly make a dent yond just being an opening act. By having acts years from touring and recording. Fans travel in overall revenue even if it duplicates sales. of the same stature play shows together, larger far and wide to see their favorite bands play, But if ending piracy absolutely is unrealistic, venues can be played, money can be saved, and and new fans are formed from packaged tours. the indirect strategy of providing stronger in- new audiences won. These artists do not necessarily have to “play centives for legitimate downloads is working at the market,” but may continue to build on their last. Holman shares his thoughts on co- established fan base. Their managers are not Sources headlining tours: “It’s called packaging. People subject to the same struggles as others. Their 1.) http://news.sky.com/skynews/Home/Business/BSkyB-And- need to get more bang for their buck. We all job is to improve upon an existing legacy—and Virgin-Media-Sign-New-Channel-Carriage-Agreements/Ar- want to make more money, and [we have] to what a wonderful responsibility it is. ticle/200811115141950 2.) http://news.bbc.co.uk/2/hi/business/7708819.stm compete and give value. He says: “I remem- 3.) http://www.theiphoneblog.com/2009/10/29/iphone-music-stream- ber U2 going out with Journey, which doesn’t Sources: ing-app-lala-coming/ seem to work musically, but U2 went out and 1.)Interview: Bert Holman 4/13/2009 4.) http://www.economist.com/businessfinance/displaystory. cfm?story_id=14845087 2.) Interview: Tim Bernett 4/20/2009 killed every night and gained a lot of new fans. 5.) http://arstechnica.com/old/content/2008/12/riaa-graduated- We’re asking, ‘How do we compete in today’s 3.) Managing Your Band by Dr. Stephen Marcone, 4th Edition response-plan-qa-with-cary-sherman.ars paradigm?’ We’re not a must-see show. We’re 4.) Class Lecture Notes: Professor Jeffery Dorenfeld, Spring 2009 6.) http://www.techcrunch.com/2009/10/21/new-google-music-service- not a Beatles reunion or a Cream reunion where 5.)http://www.allbusiness.com/retail-trade/miscellaneous-retail-retail- launch-imminent/ 7.) http://current.com/1i6hq4c Google, Lala, iLike you had to go or you’d never see it again. We stores-not/4623968-1.html 8.) http://arstechnica.com/media/news/2009/02/nokia-comes-with- had to give the people what they wanted…With music-comes-to-us-in-2009-au-in-march.ars the economic times, it’s all the more reason to 9.) http://www.foxnews.com/story/0,2933,510283,00.html package. It’s the scale of the economy [too]… They built these big amphitheaters for fifteen to twenty thousand people. We go in there and make X amount for 10,000 people. You bring another band with 10,000 more people, and you both can make more.”
In short, creating a situation that al- lows the band to make the most revenue from their efforts has always been a staple in a man- ager’s duties. We see that packaging bands to- gether helps attain this and continues to sustain the growth of an artist.
14 www.thembj.org December 2009 Volume 5, Issue 6 Music Business Journal Business Articles Berklee College of Music Music Business Journal
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