Hello Mr. Brightside

Jul 25 2011

I’ve been waiting about 5 years to write this particular blog. I can’t say that it’s done with total confidence. Like a person in the desert finding a fresh pool of water just ahead, I’m a little afraid that what I’m seeing is just one more mirage. It’s not written with much joy either. There are far too many talented music people, on both the creative and business sides of the industry, who are still out of work to unabashedly celebrate the moment. But with all the caveats and caution, I still think it’s time to go on record:

There’s light at the end of this deep, dark tunnel that we’ve been in.

After almost a decade of what has seemed like irreversible decline in the music industry, with each year bringing declining sales, more consolidation, less creative growth, and a growing irrelevance in pop culture, we might finally be turning things around. Over the past several months, there’s been not just random bits of good news, but an emerging pattern that would seem to indicate, dare I say it, positive momentum for a recovery that can reinvigorate the record labels, publishers, artists, songwriters, producers, live industry and all the thousands of other music-related businesses that have been suffering through this long slog through the wilderness.
Here’s a few of the things that have weasels smiling these days:

• The emergence of new technologies that are legal, licensable, and viable – and fun to use!

The appearance of Spotify, Turntable.fm, and iCloud, along with the continued growth of services like Pandora are showing that it is possible to make music available in a way that’s attractive and profitable. Of course, there will continue to be winners and losers in what seems to be an ongoing story of overnight sensations and quick, brutal endings (say goodnight, MySpace). But the convergence of streaming services and social networks, and the cooperation between labels, publishers and technology services in making the music available legally, is a model for a more promising future.

• A growing government concern about piracy and illegal file sharing.

I’ve been predicting it for years: once the technology of file-sharing reached the point of endangering the movie and television industry, we’d start to see a change in the US government’s willingness to step in and get involved. The truth is, politicians couldn’t care less about the music industry. It’s too small, too controversial, too disorganized, and too youth-oriented to matter, and as a result the industry has lost virtually every battle it’s entered, whether it with the broadcasters, restaurant and bar owners, or internet service providers (ISPs).

The movie business is a whole different animal. It is the big dog of American entertainment, and the companies that are built on movies, like Disney, Viacom, and Universal Pictures are among the crown jewels of the American corporate world. Now that they’re being threatened by illegal file-sharing around the world, the US government is sending signals to internet service providers both here and abroad that they will be held responsible for copyright violations occurring on their networks. In return, ISPs are showing a willingness to consider some type of punitive action toward consistent copyright violators, as well as a surcharge that would compensate rights holders. Thanks to Hollywood, what was deemed utterly impossible when the music industry asked for it five years ago is starting to look like a reasonable compromise.

• The revitalization of the CD catalog business.

Again, I’ve been at this one for awhile now—in “Living In the Past Beats Dying In the Present” I used the example of the German music market to argue that the short-term future of music was “selling old product to old people”. With its new $5 CD program, Walmart is taking that formula to the bank, selling CDs of classic music to older, mainstream consumers. Not surprisingly, it’s revitalized the catalog business, which especially for major record labels, is absolutely essential for a return to profitability.

• The opening of China.

This week brought more good tidings from abroad, where it appears that a consortium of the major US labels, called One-Stop China, and Baidu, China’s primary online Google-equivalent, have reached a deal that will allow Baidu to provide users with free ad-supported music streams. In turn, Baidu will pay the labels and creators of the music, as well as crack down on illegal sites that infringe copyrights. While it’s unlikely to generate any significant income for 5-8 years, this first crack in the Chinese fortune cookie could be a massive long-term step toward breaking into a potentially massive market of consumers. The prospect of monetizing markets like China, India, Eastern Europe, and Southeast Asia has been one of the primary factors fueling the hedge fund interest in purchasing publishers and music catalogs. It now seems that may have been right.

• The success of Adele.

Doesn’t seem right to discuss a resurgence of the music industry without even mentioning music itself. Given the divergence in tastes among any random group of listeners, as well as the constant creative rise and fall in each different musical genre, it’s possible at any time to make an argument for the proliferation or the imminent demise of “good music”, whatever that means. Still, one has to take note of the fact that just this year, Adele has sold more than 5 million copies of her album and set the record for the longest stretch at #1 of any female artist. Those kinds of numbers weren’t supposed to happen anymore in our post-album, singles-dominated, market-fractured, ADD-addled music world.

Adele

But the fact that it was done by a real singer who is neither a fashion model, television star or an ongoing gossip-column soap opera; who is not a winner of any TV talent contest; who doesn’t rent her music to advertising campaigns; who doesn’t Twitter; whose music is not aimed at Top 40 radio trends—these are signs that can’t be ignored. Add in other new artists like Mumford & Sons and Florence & The Machine, and one begins to sense a shift. This is not to demean Katy Perry, Kei$ha, or Rihanna, all of whom make great pop music for a demographic that loves and lives that kind of music. But it means that there are alternatives, and that there is more than one audience and one road to building a very substantial, and lucrative business around your music.

Of course, it would be foolish to ignore the equal number of warning signs flashing in the distance, or any of the huge potential pitfalls that could easily derail the resurgence of the music business:

• The major labels continued reliance on over-age, tired, and narrow-minded chief executives

• The brewing meltdown of many of the world’s performing rights and mechanical collection organizations

• Our continued inability to update and streamline copyright law to keep pace with technology and globalization

• The inescapable reality that music is no longer a primary pillar of youth culture, but rather shares that role with social networking, gaming, fashion, and a million other diversions

Yet even some of the worst news in the business, like the mass layoffs at Universal Records, or the continued consolidation of the major labels, has a positive aspect. At least it shows people making changes that in many cases were either inescapable or long overdue. Restructuring an industry is never pretty, and much that’s good is inevitably lost in the slash and burn of clearing the way toward the future. Nevertheless, it has to be done.

There is a time for criticism, and this blog has often pointed out the looming problems, mis-direction, or just plain dumb decisions throughout the music industry. But there is also a time for letting positive energy feed upon positive energy, re-establishing a sense of optimism and untapped potential. This business was never easy, nor was it meant to be. As I said in last week’s blog: the only thing that can truly kill you in show business is cynicism. Once that deadly element sets in, it’s over.

As we head into the 4th Quarter of 2011, this blog is going to try to focus on the good news, and what we can do to take advantage of the positive developments in the music business. With the help of my standout Berklee intern, Jorge Oliveres, I’m also looking forward to highlighting some of the people who are making new things happen, or who have a particular expertise that can help music publishers and songwriters exploit the new opportunities we’re seeing.

I think we’ve finally turned a corner in the music business. Now, it’s time to step on the gas and head toward that light at the end of the tunnel.

Follow me on twitter @EricBeall

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.