Strategies for success in todays music business

1. Success in Today’s Music Business Pt 1 & 2
Freelance Musician
Chris Baker
www.musicstudentinfo.com

2. What we will look at
• Opportunities and challenges facing new artists
• Whether an artist should sign with a label
• What record companies give to and take from artists
• What to avoid in signing with a label
• Advantages of DIY
• How new technologies have made it possible for new
artists to succeed
• Strategies for DIY success
• How artists should use online tools

3. I. Opportunities and Challenges Facing New Artists
The Current State of the Music Business
1999: 14.6 B
2011: 7 B

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

5. Top Ten Selling Albums 2010
AKB 48 - Kamikyoku Tachi
1
King Records Japan - 295.000
Justin Bieber - My Worlds (My World+My World 2.0)
2
Island - 207.000
Lady GaGa - The Fame (Monster)
3
Interscope - 128.000
Slash - Slash
4
Dik Hayd / Roadrunner - 109.000
Usher - Raymond V Raymond
5
Laface / Arista - 109.000
Madonna - Sticky & Sweet Tour
6
Maverick - 83.000
Black Eyed Peas - The E.N.D.
7
Interscope - 71.000
Lady Antebellum - Need You Now
8
Capitol Nashville - 62.000
Sadé - Soldier Of Love
9
RCA / Epic - 58.000
Gorillaz - Plastic Beach
10
Parlophone / Virgin - 55.000

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

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

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

9. Affordable Recording
• For £750 you can have a home studio with
speakers, headphones, a laptop, and music
software.
• With today’s inexpensive equipment and software
you can write, arrange, produce, mix and master
your own music at home, without the need for an
expensive producer, mix engineer or mastering
engineer.

10. Free or Nearly Free Distribution
• CD Baby: 9% of receipts
• DIY/Paypal: 1-2 pence per side

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

12. Whether An Artist Should Sign with a
Label: What Record Companies Give
and Take from Artists
A label will:
• Produce & Record
• Market & Promote
• Distribute

13. Major vs. Indie Label Deal
Major Label Deal:
• £100,000 advance
• £800,000 marketing budget
Indie Label Deal:
• £0-15,000 advance
• £15,000-£30,000 marketing budget

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

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

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

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

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

19. Whether it is Better to Do It Yourself
(Freelance) Advantages of DIY
LABEL DIY
Keeps 90% of record Artist keeps the £
sales
20-50% of everything Artist keeps the £
else

20. Is DIY (Freelance) Better? Yes!
BUT HOW?
Strategies for DIY Success…

21. Freelance Musician
How to succeed in todays Music Business Part 2
Chris Baker
www.musicstudentinfo.com

22. Production, Marketing and Promotion
Budget
• Investors
• Marketing Companies
• New Business Model: Polyphonic

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

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

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

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

29. OKGO’s Viral Success on YouTube
• Their first DIY video, “A Million Ways”, cost £17 and was downloaded 9
million times from YouTube
• Their second DIY video, the Treadmill Video, cost a few thousands
dollars (for eight used treadmills) and debuted in July 2006.
• Two years later:
• It had been viewed 42 million times on YouTube Parodied on The
Simpsons
• Led to the band’s appearances at the MTV Music Awards, The Tonight
Show with Jay Leno, and The Colbert Report
• It won a Grammy for Best Short-Form Video (2007)

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

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

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

33. Third Party Distribution: CDBaby
• Storage Fee: None
• Distribution: album: goes to 21 online retailers and
physical copies sold by CDBaby (physical copies must
be mailed to CDBaby)
• CDBaby keeps 9% of revenue from digital sales, and
£3.50 for each physical album sold

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

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

36. Social Networks
Facebook
• Become an essential tool for social networking.
• Artists can easily self-promote with the creation of
Facebook Pages and Groups.
• Over 200 million people on Facebook.

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

38. BLOGS
• Huge number of music blogs on the Internet, all
featuring different styles of music.
• Bloggers are both writers and music fans – they are
interested in listening to new music and writing about
what they like.
• Blogs are viral tastemakers.
• Vastly underrated.
• Can be used to create easily updatable website with
host of plugins & widgets.
• See:wordpress

39. Blog Stats
• Approximately 133 million blogs.
• 77% of internet users read blogs.
• 2/3 of bloggers are male.
• 60% of bloggers are age 18-44
• 75% of bloggers have college degrees.
• 75% of bloggers are employed full time.

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

41. Blogs: Viral Tastemakers
Why “tastemakers” ?
1. Bloggers are active consumers of new music and each
features from several to more than a dozen artists every
week.
2. Bloggers are active on social networks (to promote their
own visibility) – if your music gets a post it will be mentioned
on Twitter/Facebook/elsewhere.
3. Bloggers read other blogs – will likely repost something if
they like it as well.

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

43. Another Model for Success: Be Successful
First
• OkGO broke away from EMI to start its own management, Parachute.
• Moby established successful career with aid of EMI. He is now with
“indie” Mute
• Aretha Franklin announced that she will leave long time home Arista to
start her own label.
• Prince “Lotusflower/MPLSound/Elixer” triple album set exclusively
released by Target (Warner)
• Paul McCartney “Memory Almost Full” – Starbucks (formerly Capitol)

44. New Models Contd.
• Radiohead “In Rainbows” – Internet/pay-what-you-want/discbox for
£875 released independently – “In Rainbows” later released by XL
(formerly EMI)
• Madonna left Warner and signed with Live Nation for $120 million deal.
• Mariah Carey - Channel and Elizabeth Arden endorsements.
• Eagles “Long Road Out of Eden” - Walmart represented by Irving Azoff.
• (Frontline/Ticketmaster) – success at Walmart.
• 50 Cent gave his name to “Formula 50” in exchange for stock. Coke
bought the brand and his share is worth from $100 to $400 million.

45. The END!