It occurred to me as I walked the same quarter mile circuit along Sixth Street for the three hundredth time in three days that the primary benefit of SXSW for A&R people is not the opportunity to hear hundreds of up and coming bands in a single four day span. The primary benefit of SXSW for the music weasel is exercise. Instead of sitting around an office all day, the middle-aged weasel is forced to actually walk from place to place, thus ensuring more aerobic activity than most of us have seen in months. Many also seemed to be working on their arm muscles as well, with lots of pouring and heavy glass-lifting to build those biceps.

During Austin’s giant music-fest, it also occurred to me that the only thing sustaining the music industry at the moment has nothing to do with music. The only people at SXSW that brought their checkbooks and actually had money in their accounts were the media and branding companies. Record label A&R were there of course– after all, there were parties with free food– but there were far fewer than in years past, with whole major label teams missing in action. Music publishers were there too, hoping to meet people in the advertising business. Of course, the music supervision crew was in full effect, but unlike the good old days of two years ago, they were no longer the coolest kids in the room. Given the falling revenue at most broadcast companies and the ridiculous glut of music that is chasing the same gratis spot on The Hills, synchronization licensing fees have dropped to the point where even indie bands desperate for a break have realized that there is no pot of gold at the end of the Hollywood rainbow.

The only people left with any juice at SXSW are the magazines, the websites, clothing brands, car companies, or beer companies. Like it or not, music’s greatest value at the moment is as a marketing or branding tool for companies eager to target a very specific, target audience. Musicians of course are eager to embrace what they see as crucial avenues of exposure– meanwhile, the brands view music as simply one more way to attract the all-important but ever-elusive, A.D.D.-addled college and post-college demographic. The music industry may think they’re using the media. But it’s clear from the amount of music being used by the media, advertising and branding businesses, compared to the amount of music actually being sold, that it’s the media, advertising and branding people using us.

Not that there’s anything wrong with that. It’s just that once more, the music industry finds itself a pawn in a game that it doesn’t control, a plight that seems to be the underlying theme of music business history. First it was radio– since the Fifties, the record industry has found itself on bended knee, pleading (or paying) for any favors that the gatekeepers of radio might dole out. Then it was television, with MTV able to extract free 24-hour programming courtesy of the record labels. Make a half a million dollar video, give it to MTV for free, then hope they choose to play that video from among the other fifty half a million dollar videos they received that week. Wow, what a business model.

Of course, the previous decade brought us a new power player in Apple, and once again, the record industry was left at the mercy of a different business, which sees music largely as a means of selling electronic equipment. And now, with the loss of album sales draining any profitability from the business of selling music to the consumer, there’s a new power alignment emerging– and once again, the music industry finds itself a supporting actor in someone else’s play.

Why couldn’t music companies have created Sirius Radio or iTunes? Why could a music company not have diversified into the advertising business? How did Sony, which is an electronics company as well as a record company, manage to get beaten so badly with the iPod? Why do music companies not own music magazines or music websites? Even when someone tries to create some synergies with moves like the Time-Warner-AOL merger, they manage to let the politics of the various businesses impede all attempts to make the companies work together. Only a handful of organizations, Disney being the most obvious example, actually seem to have understood that controlling the means by which the music reaches the audience (the Disney Channel, Disney Radio, Disney Girl magazine, even Disneyland) or the merchandise related to the music is far more valuable than simply finding and developing artists and leaving the rest to someone else.

Just as musicians often seem to have a blindspot when it comes to realizing that there’s more to music than simply the technical level of musicianship, music business types seem to be unable to see that the power lies with those who understand how to use music to attract an audience (radio, television, internet companies and other brands) rather than those who simply discover and manufacture the music. As a result, the music weasels are left outside the Levi FADER Fort trying to talk their way past the doorman so that they can see their own band perform.

Of course, there’s not much we can do now to undo the mistakes of the past. So given this new world order, what can a savvy publisher or songwriter do to make sure that his or her music is a media magnet, that it’s brand-friendly and advertising-attractive? The one thing that even the most short-sighted weasel can see is where the money is– and ain’t in radio and records. Here are four things to keep in mind when you’re making music as a marketing tool:

1. Versatility is not an asset.

The only time versatility is valuable to a musician today is in a wedding band. The rest of the world is all about narrow-casting, about appealing to a specific, definable core audience and being immediately recognizable to that group of people. Take a look at the magazine stand– there are very few general interest magazines left. Most media companies, whatever their format, work hard to appeal to a very specific, specialized audience. That’s what gives their advertising space value. In the same way, when they consider an artist or a band, they don’t want someone that appeals a little to a lot of different types of people. They want someone that appeals a lot to a very specific group of people.

2. Know your audience.

This does not mean being acquainted with everyone that shows up at a gig or having a million MySpace or Facebook friends. It means understanding exactly who your audience is– demographically, emotionally, and financially. What is the age range of your audience? What do they do (school, work, retirement)? What are their hobbies? What movies do they see? What books do they read? What other music do they listen to?

If you can’t define your audience in that way, then a brand, advertising exec, or press person probably can’t either. That means they have no reason to think that you would help them sell jeans or makeup or alcohol or magazines (which of course also need to sell jeans and makeup and alcohol). Bands that work in the Marketing Age have easily identified audiences, which is sometimes more valuable even than the size of the audience, as measured by record sales or downloads.

For those who are songwriters, rather than artists, the point remains the same. If you wish to write for a specific artist, you need to have some idea as to the nature of the artist’s audience, and what that audience wants to hear about. A song will define the person that sings it to his or her audience, so you have to be sure that the song is presenting the artist to that audience in a way they will understand and appreciate. I’m not suggesting you write jingles. I’m urging you to do your homework, and know how the artist for whom you’re writing is trying to define himself or herself.

3. Understand music as fashion.

The branding, advertising and media worlds are not in music for the long haul. They’re not in anything for the long haul. The media business relies on constant change and ever-shifting sands, that’s what keeps it relevant and entertaining. Fashions will change every spring– they have to, because there are magazines and new clothing collections to sell. Likewise, your music, when it’s part of the media world, has to be up to the minute, reflective of the moment, and sonically on the cutting edge. And then it has to change as times do.

There’s no point in criticizing fashion for being “trendy”. That’s the nature of it. It would be like complaining that water is wet. Likewise, there’s nothing wrong with music that’s trendy. But to be effective in this new media world, you have to stay one step ahead of the trends, knowing which sounds are in vogue and which are getting worn out, what subjects are ripe for picking and which ones are past their sell date, and when it’s time to move on and re-invent your whole musical approach. The advertising, media and fashion worlds make the weasels back at the record company look like long-term thinkers by comparison. In this world everything is always changing, and fast. Which leads us to:

4. Seize the Moment.

A music manager was recently telling me about an incredible placement he had just obtained for his artist, which had the young artist featured prominently in a major national advertising campaign for a big consumer product. If this artist had already landed one such huge opportunity, he suggested, imagine how many other brand or advertising related calls were going to come his way, once people saw this campaign?

My first thought was: None. The problem in working with a brand is that it is “branding”– the brand is now identified with the artist, and the artist with the brand. The bigger the campaign, the more “branding” takes place. Once you have defined yourself to your audience, and closely identified yourself with a particular product, it becomes harder, not easier, for other brands to embrace you. Once you’re on the cover of Rolling Stone, you’re not going to get hyped in Brooklyn Vegan. Because advertising agencies or products are focused on using your music to define their brand, it will, by definition (pardon the pun), take you out of the running for many other related products, who don’t wish to share their definition with any other company. In this media/advertising world, you’ll only get a couple of big chances.

That means you have to make the opportunity work for you. If you know that you’re going to be working with a particular brand, or getting a key placement at an important media outlet, then you have to build an entire strategy around that, making sure that you are prepared to use that exposure to build your audience (and database), drive sales (which means making sure music is ready and available) and establish yourself as a key part of the brand’s identity (which means supporting the company in every and any way possible).

This is not like the old music business, where you could tour around without too much planning, and slowly build a fan at a time for as long as it took. These opportunities are windows that open and close rapidly. You have to have your social networking, music distribution, touring and marketing campaigns ready to capitalize on whatever opportunity you get, and be prepared to measure and document the results. You also have to fully embrace the brand, to make sure you hold onto the chance for as long as you can. If it means going to Phoenix to play for a room full of car salesman or softdrink manfacturers one day, then you better do it with a smile. Trust me, it will be far more useful than any conflicting gigs your record company might have put on the schedule.

This week, I’m in Miami trick! I’ll be at the Winter Music Conference and Ultra Fest on Thursday and Friday– give me a shout if you’re down there. Or I’ll see you at the Beatport Party, or the Belvedere Vodka/Sirius Radio Listening Lounge, or…. you get the idea. If you can’t beat ‘em, let ‘em throw you a party.

We’re seeing the future— all over again. Just when the music industry had finally started to almost get the hang of selling mp3s on iTunes (even if we still haven’t figured out how to sell music from around the world, which blows my mind) the weather shifts and suddenly our new technology is dead.

“Gone is the MP3!” all the headlines are reading, and indeed, for the first time, the sales growth of digital track downloads dropped drastically this year, from a growth rate of 26 percent in 2008 to only 8 percent in 2009. Apparently all of us who were waiting for legal downloading to make up the revenue lost to the death of the CD had better find a new dream to embrace, because this once-new technology appears to be over before it began. What once was the future now appears to be officially “past”.

What makes it official of course is Apple– as we all know, it’s Steve Jobs’ world and we’re just living in it. When the big Mac shells out money to purchase the start-up venture Lala, with its whopping 100,000 person customer list, something must be bubbling. As we enter a new decade, it now appears that bubbling sound is the music stream, which is bringing you the next big thing:

Cheap music!

Uh… wait. Don’t we already have cheap music? NO! This will be cheaper still!!! While iTunes, that old-school relic of yesteryear, still wants to sell you a download for a dollar, services like Lala will allow you to stream the same song once for free and then give you unlimited access for 10 cents a track. The hitch of course is that the music doesn’t really “belong” to you. It’s more like a library book that you never have to return– which is close enough to ownership for me. Rather than shelves of CDs (like your grandparents have) or iTunes folders full of MP3s, the listener can access a full collection of music from the Web-based “cloud”, for either a per-song fee, or perhaps a monthly subscription (as in the Spotify model).

In a perfect illustration of the new technology approach to finance, Lala, a company started with $35 million of venture capital (provided in part by Warner Music) generates revenues under $10 million dollars, but is purchased by Apple for somewhere between $17 million (not too great a deal for Warner) and $85 million (which seems completely inexplicable). The general consensus is that Apple did not buy the company with the intention of replicating Lala’s current business model, but rather using the start-up’s technology and executive talent to launch their own Apple streaming service, which if they do it really well, could render iTunes obsolete.

Interestingly, the one hitch in Apple’s plan, and the one silver lining for the music industry, is that the current music licenses allowing Lala to offer legal music streams are not transferable as part of the sale. This means that Apple will have to re-negotiate the licenses with the major labels and publishers before they can launch their new service– a prospect that has label executives digging in for their last real chance to save their industry (and their jobs). While it would appear that the general licensing framework on the publishing side has already been laid by the recent agreement with the DMA (see the blog “Triumph or Turkey”), both the labels and publishers are determined to protect their interests within whatever business model Apple eventually constructs. If songs downloaded from iTunes will now be kept in a permanent online “locker” from which they can be streamed at any time on any device, labels will want a higher price per download, a fee for each stream, and a cut of any fees that Apple gets to increase the size of the locker. Publishers will expect a “mechanical” royalty for the stream, as provided in the new DMA agreeement, and ASCAP and BMI will certainly consider the “stream” a performance.

http://ericbeall.berkleemusicblogs.com/?s=triumph+or+turkey#

That’s all good– provided the model catches on. Not too surprisingly, the jury is still out on that one. So far most streaming models have proven very popular when the music is free, but far less so once that whopping 10 cents per track price tag is attached. Subscription models have not caught on either. Spotify offers a premium subscription at 10 GBP per month. So far, only about 10 percent of their customers buy in.

The inescapable fact is that until these services become profitable, the money for music-makers and music licensors will be pretty paltry. On the positive side, Apple has proven quite adept at figuring out how to make money off of music. The danger is that the new streaming service kills off iTunes, which is just starting to make some real money for the music business, and replaces it with something that earns ten percent of what iTunes did.

In general, it’s hard for me to be overly optimistic about the technological trend. First, we replaced the CD, which sold for as much as $15-20, with a product that sold for a dollar. Now we’re poised to replace the service that sells music for a dollar with a service that sells it for 10 cents. That’s not a great direction for music publishers, music labels, artists and songwriters to be headed. Given the precarious position of major labels like EMI, collection organizations around the world, and the thousands of small and large music publishers who saw as much as a 30 percent drop in income last year, we MUST collectively drive a hard bargain with Apple. That won’t be easy. Then, once an agreement is in place, we must continue to take legal action against unlicensed services that undercut Apple and other legitimate business partners.

If streaming is the future, and it likely is, then we need companies like Apple to make that business profitable. We also need to see a fair share of those profits. Otherwise, our vision of the future will indeed look a lot like a cloud– gray, ominous and full of hot air.