Big Data Can't Find Austin's Songs

Some time ago I worked with an artist named Austin. Austin was immensely talented and equally tortured. He's been writing songs since he was twelve and drinking whiskey since he was fifteen. Austin doesn't own a computer, doesn't use social media, and he lost his cellphone number because he couldn't pay his bill. Five managers have walked away, and he's been tossed out of venues up and down the east coast. Nevertheless, he's got a good heart, striking charisma, a commanding voice, and he effortlessly writes the kind of timeless songs that are loved by everyone that hears them. Beyond being a bit of a drunk, Austin's biggest mistake is endlessly waiting for the rockstar bus; he's invested twenty thousand hours into being a musician...with no plan B.

On the other side of town, Cara graduated from a notable university with a degree in music. She has been playing piano and guitar since she was ten.  You can find Cara on Facebook, Twitter, Instagram, and she operates her own Wordpress site.  Cara is attractive, fit, and energetic.  She records music with a notable producer, is managed by a pro, and plays to packed rooms in her hometown.  Not only does Cara have over ten thousand fans, friends, and followers, her family supports her in every way imaginable.  I like to watch Cara perform, but I can't whistle a note or recite a chorus from a single one of her songs.

You can find entertaining Caras all over the world. They are everywhere.  You can't find Austin anywhere. He's barely on the Internet.  His unmastered recordings are decaying on a hard drive in a defunct studio, and the venues that loved him have given up trying to find him.

If you want to be in the label business of discovering, co-writing, developing, producing, investing in, and promoting dozens of Caras in the hope of creating a (360 degree) breakout, big data can help you. However, if you are looking for Austin's unpromoted songs, big data falls on its face. 

Given the risk, the failure rate, and the lottery machine nature of the music industry, I would rather promote one of Austin’s songs versus discovering a dozen Caras.  

Sure, the big labels and a few independents have a formula for making Caras into celebrities, but it’s expensive, inefficient, and the product is often bland and repetitive.

To date, nobody has created a machine that finds Austin's songs.  Given where the world (consumption, demand, streaming, etc.) is heading, this is what I want to invest in.

Meanwhile, you can find me at Cara’s next gig.

Social and Technical Phenomena That Are Making Your Music The Only Thing That Matters To Your Success

Published in 2010 

I will argue here (just to be controversial) that prior to becoming popular (as in financially viable), you could choose to have no website, no Facebook fan page, no widgets, no videos, no album, no twitter, no centralized location on the Internet, and never do much of anything on the Internet that could be called self-promotion, and that your fans can and could effortlessly do everything for you now…including the recording and the distribution of your music. 

Moreover, I will also stipulate that all the stuff I just listed above is practically a waste of your time now, as it’s all being steamrolled anyways. See the list below:

Social Amplification. With the unprecedented, widespread use of social utilities like Facebook and Twitter, hundreds of millions humans now have super simple mechanisms that enable all of us to rapidly connect, communicate, and share thoughts and stuff between targeted and/or widespread groups of people.  Collectively, people are currently doing this billions of times a day.
 
Swarming Capabilities. With wireless devices, GPS, and the location-aware and geo-tagging capabilities that are (or will be) part of Facebook, Twitter, FourSquare, Flickr, YouTube, and part of countless other programs, humans can and are swarming upon physical sites, happenings and events.  If the swarm/crowd/herd wants to be someplace together, they can and will be. 

Fan-Driven Crowd-Control. Prior to obtaining 50,000,000 spins / impressions (niche-fame), fans can and will exert unprecedented and real-time control over the size and the composition of your crowds.  The shared knowledge of who is going to your shows, and who is already there, is equal to, or more important than…you are.

Effort Shifting. The camera, video and recording capabilities that are baked into the devices that ordinary people carry in their pockets now, are capable of capturing moments and events, and at a quality level that’s entertaining enough, to engage today’s entire online population.  Fans can and will record everything and anything that’s remarkable.  You no longer need to do this for them.

Brand Un-Control. Your brand name, your images and your music will be linked and tagged to thousands or even to tens of thousands of images, videos, and status updates that may or may not have anything to do with you or the brand you once tried to control.  You and your brand will often be sideshows attached to someone’s permanent online memory. 

Thumbs Up. And all those images, videos, recordings, and status updates that are linked and tagged to your name - they’re all being quality-rated…in real-time.  Think about the Facebook thumbs up button; it’s not only a rating tool, it’s a social amplifier.

Decentralization. Both Microsoft Bing and Google Search feature mixed search results that include traditional text-based search results, audio, video, images and real-time stream postings.  Look for social (quality) ratings, location awareness, scheduling and other tidbits to also become part of every search-results presentation.  

Your brand (and brand rating) will be everywhere and anywhere fans put it and rate it.  Search results are becoming (to artists and fans) what MySpace use to be (a glorified directory).  However this time, you won’t be able to completely control the presentation.  Every bit of information about you will be found and smartly presented as the result of a search query.

Remixing. The ability to slice, dice and remix whatever you create is also unprecedented.  There are even smart phone applications that will enable fans to remix your show before you have even left the stage.  Don’t expect anything to remain as you intended it.

Given these eight relatively recent social and technical phenomena, the only three things you have to get right now are: 1) incrementally improve your songs or a song, until it is, or they are, all over the Internet (via the efforts of fans); 2) incrementally improve your live show to the point where fans are asking you to turn up the volume; and 3) learn how to throw an ongoing party that keeps people coming back week after week, or month after month (to be covered in my next post).  If you give fans great songs, a great show, and a great party…they can and will do everything else now.  Everything.

Create an Elaborate Plan

Published in 2008

Creating an elaborate plan may not be for everyone, but someone is going to succeed at doing this.  The image below is one of the most important parts of this post.

There has been a lot of discussion on this blog and on the Internet about the end of the album as an organizing principle.  Spending mind time on the decision to make albums or to sequentially release singles is missing the point.

Revenue from the sale of music is slowing considerably for everyone.  Recurring revenue, which is the ongoing stream of revenue you make outside of touring, is going to come from consumers that tune into and fall in love with your brand on the Internet.

To persuade fans to tune in, to fall in love with, and to spend money on your brand, you need an elaborate plan that goes way beyond the album or singles decision.  You will have go far beyond creating a MySpace page that features five of your songs and ten pictures of your band.  You will have to rethink what it means to be entertaining on the Internet.  

The name of your brand, the URL you use, the first word you type, the sequence in which you release your songs, your lyrics, the images you feature, the videos you release, the messages you type, and everything you put into your online presence should be part of an elaborate plan to seduce fans.
 
The concept of seduction does not have to be sexual.  I use the concept of seduction to convey complexity and long term planning.  Map out a two year or three year plan that elaborately pulls people into your world of images, poetry, lyrics, stories, music, mystery, hints, clues, energy, characters, plot, storyline, drama, intrigue and excitement.

A regular old website or MySpace page is not the ideal vehicle for building a brand upon.  Your name and your image may not be the ideal vehicle to build a brand upon.  Start by thinking like the creator of a television series.  What do you call it?  What is it about?  How many “seasons” will it take to tell the story?  Make the presentation simple and compelling, but make your plan to seduce - elaborate, intriguing and complex. 

The Flat Earth Conundrum

Published in 2010

Do you believe crowds of humans will ever (or do now) sway as much control over the rate and depth of media dissemination as the established media machine does now?

It’s easier than ever to make studio-quality songs and great looking videos.

You can easily distribute your music and creations worldwide.

Through promotion tools and strategies, you can continually increase the rate and depth in which your media spreads throughout the world.

However, just as there‘s always someone that’s stronger, faster, smarter or wealthier than any one of us, will there always be entities that can push media faster and deeper into the marketplace than ALL of us (humans) networked together?

My answer to the question above is:  The media world is flattening, but it will be years before networks of humans can consistently push media and messages faster and deeper than most media entities can now.  However, due to the shrinking fortunes of most media businesses, the gatekeepers that control mass-media exposure opportunities are looking for artists that are flat-earth savvy (capable of mitigating risk by excelling at self-promotion) and/or content that has flat-earth appeal (the potential to go viral).

It’s a conundrum.  You currently can’t match their speed and depth (of dissemination) on your own, but they can no longer afford to feature you unless you can obtain speed and depth on your own.

The Primary Job of a Manager is to Take Care of Your Lazy Artist!

Published in 2009

When a westerner (an American for example) walks by the office of a co-worker, and the co-worker is quietly sitting there doing nothing, the westerner’s first reaction is that the co-worker is lazy and probably slacking. On the other side of the world, when an easterner (someone from Japan for example) walks by a coworker, and that coworker is doing nothing, the easterner’s first reaction is that the coworker is most likely engaged in deep thought whilst grinding away at a solution to some problem.

I want to say two things in this post:  

First, You are probably never going to promote your artist to fame and fortune. I think it’s the manager’s job to help his or her artists earn enough money on a weekly basis until the day comes when the artist writes the song that puts the manager-artist partnership over the top. Yes there’s plan B, but that’s probably not why you quit your day job to manage artists.

Second, I am not a songwriter, but I practice my own form of art, and I’m pretty good at it. I find that churning out quality art takes a lot of iterations, physical iterations and mental iterations. Mental iterations are the toughest. When you have a lot of stress in your life and distractions around you, iterating can seem like riding a loop of barbed wire.   

So if you want to help the lazy artist you believe in, take care of all the business you can, and someday he or she may pen the song you have been waiting for. After all, the music business is more or less a lottery; so you have to ask yourself, how many hours would you trade for the winning ticket?

Point and Click Copyright Control

Published in 2009

For context, read the comments on the original post.

Q: What happens when you put a lawyer, an economist, a business executive, a government bureaucrat and an artist into a locked room?  A: The business executive assaults the economists, the lawyer sues the executive, the bureaucrat falls asleep, and the artist writes a song about it.  This is the copyright debate.

Over the last couple of years, and as a background task, I have tried to make sense of the copyright / copy restriction debate.  Is more or less copy restriction better or worse for rightsholders? 

The debate, which requires multiple, advanced degrees and a slug of caffeine to follow, is often dominated by intellectual giants that toss around economic concepts such as ‘rivalrous resources’ and ‘marginal cost of production’.  I have to admit, I still feel a little stupid when it comes to debating with the debaters.  I am the person (the dreamer/entrepreneur) they didn’t let into the room to begin with.

So after two years of listening to all sides (and I am still listening), I have decided that today (October, 2009), I am not for loosening copyright restrictions.

The Lottery Model and Bubble Marketing
The graphic above depicts how the music industry operates today.

• Money is spent to launch an artist or song.

• A revenue / market traction bubble is created (depicted in green).

• More often than not, after the bubble-budget runs out, measurable market traction resembles pre-bubble spending.

• Breakeven on investment is occasionally achieved.

• And on rare occasions, a song or artist achieves post-bubble popularity over time (this would be a lottery hit). 

Therefore, if one was concerned about the wellbeing of artists, and if he or she also happened to be a student of economics and intellectual property philosophy, I can see how this person would conclude (after looking at the current industry model) that less copyright restriction leads to more exposure, and thus profits, for artists.

The Free Culture ‘Model’
The graphic just above (source: www.questioncopyright.org) depicts the thinking behind the Free Culture model; it goes something like this: if restrictions are removed, content flows freely between humans, and then (song/artist) popularity (and thus profits) increase over time (see the maroon line).  Alternatively (to the free culture model), content gets ‘locked up’ after the marketing/launch blitz in copyright monopolies; thus preventing the content (books, songs, video, etc.) from ever achieving the market traction they deserve (depicted by the green line).

I think I get it.  Nobody can (today) ‘control’ content; it wants to be ‘free’.  Songs are not rivalrous resources and the marginal cost of production is zero. Nobody gets hurt except those that have a vested interest (for example: record labels and publishers) in copyright monopolies.  And even these ‘vested interests’ could benefit if they adopted new business model.  Do I have this right?

My objections to the Free Culture model are as follows:
Beyond the fact that there’s no shelf life on the Internet and digital goods don’t go out of print, once a country, state, organization or individual - legislatively, legally or individually (via Creative Commons), dials back (loosens restrictions on) copyrights, they cannot easily be reclaimed or dialed back.  I have a problem with this.  I could be missing something here, but I can’t lend support to a model/mindset that fails to contemplate a day when global copyright can be controlled (turned on and off) via the click of a mouse (Jeff Shattuck - Cheers).

Just because the business models of rightsholders have not kept pace with the realities of Internet culture, it does not mean we should be throwing the baby out with the bathwater.  There is another way, and interestingly enough, I believe the industry is organically moving/evolving in this direction.

The Click Control Model
The Click Control business-copyright model is one in which rightsholders will (someday) simply and easily suspend and reclaim their copyrights.  It makes sense to be able to temporarily and selectively suspend one’s copyrights to encourage adoption (including commercial usage), and then (via the click of a mouse) reclaim their suspended rights someplace along the way to becoming a classic; provided that is where the song is headed (why bother otherwise?).

As a practical matter, in world where people still love to physically control their music (as in downloading it to their hard drives), this vision / model would be nearly impossible to absolutely enforce (non-absolute versions are surely possible).  However as we transition from an ownership model to a streaming model (and we are), point-and-click copyright control makes a lot more sense.  

The Click Control Model is in touch with where the industry is going.
The business models of rightsholders are finally catching up with Internet culture.  Not only are labels figuring out that there’s not enough ROI in the bubble/lottery model to keep it going, they are also embracing 360 deals which create an alignment of economic interests between artists and investors.  In these deals, music can be set free (preferably for period) to encourage viral promotion of a song or an artist; then it’s in every stakeholder’s interest, once some optimal level of viral exposure has been obtained, to be able to fully reclaim some or all rights.  There are other benefits, as this model more closely tracks the slow-build, organic growth curve that most products (there are exceptions) on the Internet have to follow.

As I said at the top of this post, I am for more (extended) copyright control, not less; provided that we can someday move to the click-control model I just covered.   However as I stated prior, I am not for any sort of broad government-driven controls on file sharing, as I view this as a reduction rather than an extension of (artist/rightsholders) rights.


Note: Please don’t confuse my authoritative writing style with my willingness to adopt a different position on this subject.  I readily admit that I may have even mixed up terms and concepts within this post.  Discussion and debate is what I am after here…

The Song Adoption Formula

Published in 2010.

To the extent that a recording artist (versus an entertainer) is the sum of his or her songs, I am going to stipulate that song-adoption equates to artist-adoption.

I effectively use this formula when working with industry startups and artists to concisely communicate (usually on a bar napkin) the challenges that artists face as they attempt to obtain marketplace traction for their songs.

I have updated the formula (below) to recognize the importance of placing unknown songs into a series of songs that are familiar to listeners (the Adjacent Song Factor).

Fans = L * OFR * SSR * RR * ASF
Fans = Listeners * Optimal Frequency Rate * Social Situation Rate * Resonation Rate * Adjacent Song Factor

• Listeners - a song obviously needs as many listeners as possible.

• Optimal Frequency Rate - a song needs maximum spins (plays) within a compact span of time.

• Social Situation Rate - a song benefits from maximum socialization during that same time period.

• Resonation Rate - the percentage of listeners that a song easily resonates with.

• Adjacent Song Factor - the frequency rate in which a song is placed into a series of familiar songs.

The formula stipulates that for a song to obtain maximum traction, all the variables in the formula have to push up and max out.  If you plug the formula into a spreadsheet and play around with scenarios, you will notice (it’s all multiplication), that a single low variable sinks a song (this is important). In other words, you need ALL the variables to work for you to maximize the conversion rate from listeners to fans.

Here’s an extended description of the variables:

Listeners (L)
Listeners (L) is the variable that equals the number of listeners (not fans but receptive listeners) that have frictionless access to your song via a download, a music stream, a broadcast, or by way of receiving your CD.

Optimal Frequency Rate (OFR)
It’s often stated that falling in love with a song is a complex process. For the purpose of this post, I am going to speculate that a song needs to be heard by the average person at least 10 times within 60 days to make a shallow (but lasting) memory imprint. Therefore, 10 spins within 60 days equals the Optimal (maximum) Frequency Rate of 100%.

Less spins over a longer time period equates to a lower Optimal Frequency Rate.

Social Situation Rate (SSR)
Once again, the imprinting/socialization process is complex. Most (young) people need social cues (signals from others) to believe in (adopt and evangelize) a song. When people spin songs in a vacuum (think about the lone iPod user with headphones on), they are less likely to have an imprinting experience than during a shared/social listening session.

Social settings (where social cues are gathered) range from listening to songs with friends, to hearing songs at a club or party, to sharing/playlisting/promoting songs to friends online. In a perfect world, 100% of a song’s early spins would occur within a social situation; this would equate to a Social Situation Rate of 100%.

All social situations are not created equal. If you want to be more specific, assign varying weights to different social situation types.

Resonation Rate (CR)
Resonation Rate is the subjective component of the formula. Listeners are going to love your song(s) along a spectrum. A percentage of listeners (this would be the resonation rate) are going to adopt your song, while others won’t give it a second listen.

Adjacent Song Factor (ASF)
A recent study has shown that listeners easily tire of screening unfamiliar songs. The more often that a song is played within a playlist or stream of familiar songs, the higher the Adjacent Song Factor is going to be.

Now in simple terms…
You need a ton of listeners; a lot of spins within a compact time period; spins that occur within social situations have more impact; you obviously need a great song; and your songs are more likely to be received when sandwiched between pre-existing hits. Sounds like radio doesn’t it? 

Don’t go over the self-promotion cliff, crush your local radio station instead.

Written in 2009, I got this one wrong, but there are some valid points in this post. Perhaps I was twenty years too early?

The more that I read about the latest and greatest music marketing trends, the more I want to stand up on my desk and shout “don’t go over the cliff with the rest of the lemmings!” But, given the current hype and the herd mentality that artists usually exhibit, twenty-four months from now 5,000,000 artists will be using Twitter and fan relationship management tools to attempt to acquire fans and/or to boost average-revenue-per-fan (ARPF). When I think of the prospects of millions of artists traveling down this road, ARPF is exactly what I want to do. Three years from now, most artists will be disappointed and a new crop of artists will be jumping off a different cliff altogether (remember the MySpace cliff?).

The famous hockey player Wayne Gretzky once said: “A good hockey player plays where the puck is; a great hockey player plays where the puck is going to be.” In this post I want to uncover the obstacles to self-promoting music and suggest an alternate path that will take you where the puck is going to be.

Self-promotion obstacle one - online fragmentation
The Internet is not one big homogeneous, connected web of word-of-mouth amplifiers. The reality is, music consumers are frequenting a hundred different disparate sites and they are engaging with music in a myriad of ways. An artist is extremely fortunate if he or she can attract a large audience within one or more of these online fragments at a time. Great songs do go unheard. Don’t buy into the hype/myth that putting your songs into ten online stores and upon fifteen social networks matters. It doesn’t. Consumers need filters and the imprinting that results from radio-like repetition.

Self-promotion obstacle two - geographic fragmentation
The English-speaking world is comprised of over 1.6 billion people. The fragments that may enjoy your brand of music are going to be spread out all over this world. The combination of online fragmentation combined with geographic fragmentation is a matrix of target and reach challenges that’s extremely difficult to overcome given the promotion budgets of independent artists.

Self-promotion obstacle three - the need to obtain multiple impressions 
Once you have sorted out the fragmentation obstacles you have to start thinking about obtaining multiple spins for your song or video. Depending on the song, after a certain number of spins and/or live appearances, some X percentage of listeners may become fans; chances are it’s going to take more than one spin. Previously, it was easy for music marketers when radio was the biggest source of repetition; now spins have to be had within a variety of devices (iPods, cell phones, laptops, etc.) and upon a variety of ‘radio’ options (terrestrial, internet, satellite, cable TV and wireless).

At this point in the post, visualize the multi dimensional music promotion matrix that includes online fragmentation, geographic fragmentation, network fragmentation, device fragmentation, consumer preferences, and consumer behavior.

Self-promotion obstacle four - delivering the right online value proposition
A value proposition answers the question: “What does this product or service do for me?” Does the product make me smart? Does the product make me sexy? Does the product make me healthy? What does your music-related website do for me? For 99.9999% of all artists, the answer to that question is: your website informs me and that’s it. Your site tells me: who you are, where your next show is, what you look and sound like, how to obtain your music, and how to purchase your tickets or merch. What you site probably fails to do, is to truly entertain ‘me’ (as in consumers).

A playlist filled with your songs, two of your videos and pictures of your cat is not entertainment that can compete with all of the other forms of online entertainment, and it’s probably not entertainment that you can build a sustainable, product-shucking, cash-generating brand upon. To begin to solve the puzzle of obtaining multiple impressions on a low budget from a highly fragmented and geographically dispersed target audience comprised of overloaded consumers that don’t want to spend more than .99 cents for a song, you are going to have to grow beyond ‘informs me’ to deliver ‘entertains me’ and more.

Self-promotion obstacle five - overloaded consumers 
Five years ago, in any given marketplace the impressions (the spins) were simply delivered through five to seven competing radio stations featuring separate to overlapping genres of music. Now, not only have the listening options expanded, every kid with an electric guitar and a TuneCore account is promoting music. Self-promotion will not scale; there are not enough receptive consumers to absorb the marketing messages or to take on the spins that are needed to convert listeners into fans for all the artists attempting to do so. When three million artists start pounding out emails, tweets and fan management action items, the whole lot of you will start to seem like stockbrokers at a cocktail party. 

Self-promotion obstacle six - minimal ROI
Dollars that were once earned from three to four revenue sources are now pennies earned from hundreds. Given the investment you have to sink into solving the Rubik’s promotion cube divided by the revenue you generate from all sources, the return seems hardly worth bothering over. When a million artists generate one dollar of revenue each, who makes the real money? The aggregators that collect a percentage of every dollar processed are the ones generating a reasonable return on investment; it’s certainly not artists. 

Yes there are independent artists earning a sustainable living, and there may even be one or two that are making a lot of money. However, show me another industry where the gross / aggregate investment (time and money) across all of the participants generates such a negative ROI. When this industry had (past tense) a massive upside lottery component to it, the potential reward mitigated the risk. Now, if you are going to go over the dream-chasing cliff that the tech providers are currently peddling, you better be doing it for the love of your art (period).

Go where the puck is going to be…
Look at the fragmentation of the music consumption marketplace this way: genres are coastlines, niches within genres are beachfront properties, and standalone artists are rocks or grains of sand. Sticking with the metaphor: coastlines and beachfront properties are compelling, interesting and entertaining; rocks and sand are things that get stuck in your shorts and sandals. 

IMPORTANT - the competition for consumer mindshare (when it comes to music consumption) is going to be fought on the battlefield where the war is over which ‘channel’ can deliver the most compelling entertainment (underline) to any given market segment. Moving forward, trusted entertainment channel providers - filters that can continuously find great songs for a niche - will have access to consumers as surely as consumers desire to gain access to the beach; alternatively, attempts by standalone artists to ‘manage’ relationships with fans will be as welcome as sand in a sandwich. 

Pick a niche, band together, form a channel, attack radio…
Radio stations and the radio industry are vulnerable right now. The radio spectrum, the broadcast antennas and the satellites that define traditional radio are becoming an expensive liability (think debt service and operating costs). More and more consumers are switching to online listening (internet, iPhone, etc) as the preferred method to consume ‘radio’ programming. When this happens (and it’s happening) there’s really NOTHING that a conglomerate of artists can’t do FAR better.

Better than radio…
When it comes to being the ‘channel’ that can deliver the most compelling online entertainment (to a targeted niche) radio stations can’t compete with an organization of artists and/or rightsholders working together (referred to as ‘you’ from this point onward). Here are just some of the distinct advantages ‘you’ have:

Advantage one - the cost advantage. Radio stations have legacy costs (mentioned above), they have to pay royalties and they have high (relative to you) operating costs. You can put together an operational and a legal structure where all your costs are far less. Moreover, you are probably going to be selling your own product (music, tickets, merch, ringtones), which means you don’t have to attract numerous annoying advertisers (ads are annoying); just one or two sponsors will probably suffice.

Advantage two - the entertainment advantage. Just streaming music is yesterday’s entertainment. Broadband speeds are expected to rise substantially over the next few years, which will increase demand for all forms of high definition audio and visual content. Your ability to provide hours of HD video and thousands of relevant images (think high resolution, flat panel wallpaper coupled to music) blows away what a radio station can provide; moreover you own it, radio doesn’t.

Advantage three - the niche advantage. Radio stations stock their playlists to satisfy the widest possible segment within a genre; it’s the most common denominator approach that mass-market media outlets always pursue. This won’t work on the Internet. The Internet is about sub-segments, fragments and niches. You can splinter a radio station’s audience by promoting a superior entertainment product to a sub-segment of listeners.

Advantage four - the personality advantage. You are not bound by the restrictions placed on radio and you are not (should not be) confined to the traditions and practices that define the personality of radio; you can be something completely different. Furthermore, the local radio station jock is a middleman between you and your fans. Within your online community, you (collectively) can supply highly relevant, direct, continuous and simultaneous interaction.

Advantage five - the promotion advantage.
Take away radio’s satellites and antennas (which are becoming irrelevant), and you are competing against five guys withering under relentless budget cuts that are trying to survive an unprecedented downturn in ad revenue receipts. Your ability to leverage 100 artists and 100,000 fans to promote (for free) a single brand / community will trump anything these low budget operations can put into a niche market. Furthermore, an organization of artists pulling together can overcome every promotion obstacle listed above. 

I found the puck, how do I score?
Clearly, there’s a lot of wood to chop to take on radio stations in any market or niche. This is a blog post not a book, so there’s lots of missing details… Here are some execution ideas and obstacles to think about. 

Stocking the pond…
It’s essential to find unencumbered songs (no strings attached - any deal is possible) that squarely appeal to the niche you are targeting. Each song will have to meet a quality threshold and you will have to monitor your traction analytics (plays, skips, session ends, downloads, etc.) to determine when it’s time to say goodbye to certain songs. You will also have to set all politics and personalities aside when programming your station. Death occurs for a proposition like this when you start spinning songs and featuring videos because you like the person more than his or her music.

The incentives and the deal structure…
Consider this fictional example:

• 100 artists contributing 100 songs are on board initially - more could follow.

• Participation in the program is non-exclusive.

• (Although, I think exclusivity will ultimately be better for everyone involved.)

• Each artist will send 1,000 fans to the ‘channel’ within a year.

• Each fan will stream every song three times (on average).

• Which means - each song will receive 300,000 spins.

• At a 2% conversion rate, each artist will generate $6,000 in music sales (average).

• Everything takes place over a rolling twelve-month period.

• Due to participation in the channel - every artist will see an increase in show traffic.

• Due to participation in the channel - every artist will obtain a portion of sponsor revenue.

• Due to participation in the channel - every artist will share in branded merch revenue.

• The channel should be jointly owned by the anchor tenants (most popular artists) and management.

• New artists and songs are introduced to the channel through any artist or fan of the channel.

• Note: the numbers above could be much higher or lower depending on the artists and the songs.

Management’s responsibilities…

• Recruit (sign) the first 100 artists / songs / videos and associated images.

• Utilize the latest technology and infrastructure to provide a compelling online home for the channel.

• Deal with all of the legal docs, reporting, payments and tax forms.

• Provide participating artists with everything they need to uniformly promote the channel.

• Eliminate all middlemen that extract percentages.

• Only use services and products that are sold on a fixed-cost, fixed-fee basis.

• Compel participating artists and fans to contribute video and images.

• Put listener-driven, artist-driven and management-controlled mechanisms in place to maintain the most compelling mix of online content.

• Be mindful that you are not managing artists; you are managing an entertainment channel.

Here’s a possible scenario for the distant future:

• Channels will bid for the rights to exclusively feature songs and/or artists.

• There will no longer be radio stations that play new music.

• There will no longer be content aggregators.

• iTunes will relegated to back catalog; new songs will be on channels.

• Widget providers will merge into channels or disappear all together.

• There will be no music-related websites/social networks other than the channels.

• Artists will own a chunk of the channels (teams) they play for.

• Consumers will simply flick (think iPhone) from channel to channel.

The End of File Sharing

Written in 2009

Can you say stuck in the past? According to the news, the new U2 album has been downloaded illegally over 400,000 times since it was released. While this isn’t a number to sneeze at, it reminds me of the mulletheads that put hood scoops and air blowers over their carbureted engines in the early 1980s. When the rest of the world switched over to fuel injection, the mullet-powered Camaro became a thing of the past.

Someone click over to Torrent Freak and tell darkshare, labeldeath and redfilephantom to garage the Camaro and trim the mullet. Fuel injection has arrived. Sorry angry dudes, the cost of acquiring a music collection is approaching zero, while the cost of listening to whatever you want is no more than a 30 second ad spot for every sixty minutes of music. Look at the Google search trends for Free Music, Free MP3s and File Sharing. Sharing volume may be up, but the four-year search trend is down. Smart people are finding better ways to consume music.

The End Date

In any business, a good manager should be able to tell you the ‘end-date’.  The end-date is a hypothetical day in the future when cash reserves will run dry if expenses continually exceed revenues.  Knowledge of the end-date is a huge (negative) motivator.  When the boss says: "We need to generate X by next Thursday or else...", people respond like soldiers going to battle.  

I am going to argue that bands and projects need end-dates to succeed.  Far too often, as music industry participants, we begin things with no end-date in mind.  We enthusiastically invest our undervalued time, and we keep doing so until the project crumbles, until a bandmate unexpectedly quits, or until the van breaks down five hundred miles from home.  This is no way to run a business.  Pick an end-date on day one.  Print it, hang it on the wall, and let it serve as a motivator for everyone.  If you haven’t reached your goal(s) by the end-date, then end it.

There’s another great reason to pick an end-date.  The end-date should serve as the date when the founders officially acquire their ownership in the band or project.  Think about it: it’s actually silly to allocate ownership to anyone on day one.  Instead, participants should sign simple agreements that stipulate that ownership is acquired on the end-day (e.g.: two years from today).  If someone leaves before the end-day, then a pro rata share is allocated to the missing person (by days and/or depending on the terms of the agreement).

What happens after the end-date?  The end-day is a time to assess if you met, exceeded, or undershot your goals, it’s also a time to evaluate the assets and the liabilities that you all have created.  And if everyone agrees to continue onward, it's a great time to pick another…end-day.

Music as a Service

Written in 2013:

Today, a great wireless device has to be a phone, a camera, a computer, a GPS, an e-book reader, an application ecosystem, an entertainment center, a social instrument, a business toolbox, and a great music service.

Music probably consumes more device-time than any other phone feature.  So, it’s clear that device manufacturers understand that music-as-a-service (MAS) is a core feature that’s essential to competing. 

However, the current music stack that includes: MP3 acquisition and management, playlist management, playback control, music discovery, music recommendation, and social sharing is outdated and cumbersome.  

Streaming services such as Spotify and RD.IO are far better.  However, to a device manufacturer such as Apple, leaving MAS to a third party is akin to letting Sony or Canon supply the iPhone camera (after the sale and out of Apple’s control).  

Similar to cameras, maps, telephony, social, and cloud services, MAS will be a supplied (more than less) by device manufactures.  Here are some of the features I expect to be directly welded into every device:

Integrated Recognition and Tagging - Shazam-like recognition and tagging is central to music discovery, integrated playlist management, and (native) ad revenue generation.  Expect this feature to be universally accessible and baked into the highest level of the device UI.  Recognition, tagging, and playlist insertion/management should be a seamless, integrated experience.  

Speaking of Shazam…Shazam has missed so many opportunities to be a permanent part of the music ecosystem.  Unless they own rock solid IP (think acquisition), expect Shazam to slowly dissolve as sound recognition and tagging become ordinary device features.    

Song Cards - Songs will cease to be files; instead, they will resemble cards that can be easily manipulated, played, shared, turned, flipped, flicked, traded, shuffled, and stacked.  Files won’t be shared; instead, song cards will be instantly exchanged via audio recognition, messaging, email, and OTA technologies like airdrop.  Upon arrival, cards will be pushed, pulled, dragged, and dropped into playable stacks that can be shared, merged, and shuffled.  Since payment only happens upon full consumption, cards (decks and stacks) will zip between users like gossip at a slumber party.  

Central Command - Tagging, playlist management, playback control, and card sharing will be accessible from everywhere, overlay anything, and will be part of the top-level navigation on every device.  

Native Advertising & Music Preference-Based AD Targeting - Advertising will subsidize MAS, while ad-free will be a premium option.  Paid, relevant, and seamless song recommendations (native song advertising) will appear during tagging, and while managing playback and playlists.  Unfortunately, banner advertising will appear here also, but expect it to be highly targeted and based upon the music preferences of end-users.

Apps Become Features - As previously stated, music (as a service) is too important for device manufactures to ignore.  I expect lots of third-party app ideas (most are not businesses) to become MAS features.  Anything that is at the intersection of social, proximity, location, sharing, discovery, and/or recommendation will be become ordinary features.  

Interoperability and Lock-In - Rightsholders that are in a position to bargain with companies like Apple, Amazon, and Google have to avoid the scenario where one hundred million users (five years from now) can’t migrate their cards, decks, or stacks from one device ecosystem to another.  When migration is simple and seamless, rightsholders can preserve the threat of withdrawing from a service (for any reason).

Do Great Songs Ever Go Unheard?

I am not talking about good songs, I am talking about great songs.  I know good and great are subjective, but can you point to a song that you said to yourself - “that’s one of the best songs I ever heard in my life” - and then that song went on to die on the shelf…never to be heard by more than a handful of humans again?  Does death by obscurity really happen to great songs, or does lack of traction only happen to mediocre songs?

To learn more, read the great comments on Music Think Tank.

Do fans want anything from you other than your music?

I think this is one of the most important questions that we can ask ourselves. Do most fans just want your music, or do most fans want something else from you beyond your music?

Why is this question so important? In a world where music is generating less and less revenue, it’s important to understand what fans truly want; especially if you plan to sell them something other than your music.

The following quote is from Ariel Hyatt:
“People want personality. They want authenticity. They want a genuine look at the person behind the music.”

Personality, authenticity, a look at the person behind the music… I am trying to understand who, why, when, what, how and how-many fans (what percentage) would trouble about anything but your music, tickets or t-shirts. 

Do fans want to have a packaged, semi-authentic, digital relationship with bands? Can anyone quickly describe how the effort required to maintain these ambient relationships could generate a measurable return on investment? Is this stuff just for kids, or can adults find the time to participate also? 

I am asking, in a rather provocative way, because I am looking for clues as to what the next generation of digital music products might do for you and your fans.  What’s missing?  What do you need to capitalize on your efforts to sell be more than your music?

To learn more, read the comments on Music Think Tank.

Music Absorption

2008:

Music absorption is the process that occurs between music discovery and the (self) conversion of an average music consumer into an active fan. I believe the music absorption process is radically different now than it was just two years ago, and understanding how this process has changed should impact your approach to succeeding in the music industry.

The New Law of Music Absorption
Consumers are rapidly accumulating vast libraries of songs from around the globe at unprecedented rates. As a consequence, the speed (the time) that it takes the average consumer to absorb new music is increasing proportionately. 

Music Absorption - From Average Consumer to Paying Fan
That rate at which consumers absorb songs varies. Absorption rates depend on the song, the song’s genre and on the song’s natural demographic. 

Stage 1 - Artist Discovery: This post is about music adsorption, and not about how early adopters discover your presence on the Internet; for the sake of this discussion, they just do. For music to be absorbed, it has to be found one way or another. Create >> promote >> discover >> absorb, will become: create >> filter >> absorb. This will happen in the near future, but that’s a subject for another day.

Stage 2 - Rapid Review: Like it or not, billions of songs are being sold and downloaded by consumers that only review 20 to 30 seconds of a song. Moreover, confident music fans (they know what they like) can scrub though a song and make a consumption decision in 10 seconds or less using the scrub bar on any music player.

Stage 3 - Playlist Installation: After rapid review, songs are installed into playlists. Statistics show that music collections and playlists have grown substantially over the last 36 months, and this trend is only growing. A song may have to tumble around a playlist (set on random shuffle) for months before it moves into the next stages.

Stage 4 - The Substitution Challenge: Consumers are rapidly acquiring vast quantities of songs now - legally and not. To obtain multiple p-spins, which are spins within the portable/personal devices owned by music consumers, your song has to compete with every other song in the playlist and/or on the device. Every song is only a button press away from being substituted for another song that’s equally interesting and probably free.

Stage 5 - Who Sings That Song? After obtaining multiple p-spins, consumers begin to connect the dots. A mental note or a physical act is made to move a song into heavy (p-spin) rotation, or to plop your song into a playlist designated as tolerable background noise, or to just trash your song all together.

Stage 6 - Public Proclamation: This is the stage where fans of new music test out their taste-making ability on friends or within a social setting (online and offline). I suspect that this stage is far more important to younger music fans than it is to confident music fans. In addition, this is the stage where others also discover new songs (go back to stage one).

Stage 7 - Imprinting: Someone said: “Songs are like memory sponges.” Memories and shared memories become forever tied to songs. However today’s consumers listen to a broad selection of music; seemingly delivered through anything that runs on electricity - from video games to mobile phones, consumers have more listening options than ever. As a consequence, imprinting is spread out over more songs, the impressions are probably shallower, the shared imprints are probably less frequent (think five friends with five iPods all in the same car), and the imprinting opportunity is spread over a longer timeline (consider today’s 15 year-olds imprinting on Led Zeppelin for example).

Stage 8 - Meaningful Patronage: Unless you have a truckload of money, you are relying on organic growth to convert numerous listeners into paying fans. Organic growth outside of the geographic areas where you perform is only going to happen (globally) when your songs have made it through the absorption gauntlet (funnel). On the other side of absorption, you should have name recognition, perhaps an email address tied to the fan or an RSS subscribe (better), the untapped willingness to attend a show, and probably even the inclination (from the fan) to purchase something that you’re selling.

Stage 9 - Rockstar Recurring Revenue - The music absorption process is taking longer than ever; competition (within devices) is increasing; legitimate substitution (fueled by recommendation technology) is a button-press away; and imprinting frequency is falling. It’s a lot harder to become a rock star capable of generating recurring revenue from music. Consumers are going to try just about every song before they buy you and/or your music. In addition, the entire process can take many years instead of a few.

Advice and Conclusion
Outside of what a smart record label with a lot of promotion money (contradiction?) can do for an artist, it seems to me that nothing can have more impact on the absorption process and the desire to achieve success, than to have an evenly paced plan and a vision to make lots of great songs over numerous years. Most artists don’t have enough money or time in the day to alter the process with DIY promotion in a meaningful (financially material) way; they have to do it with music. Even if you had the support of a label, you would flame out of the funnel if the quality and consistency of your music didn’t exceed the gravity of your promotion. 

In short, you should be trying to persuade everyone around you to believe in a five to ten year plan, anything less is probably doomed to fail. If you are relying on organic growth, you have to reconcile your plan with the absorption patterns that are typical of the fans within your genre and niche

Music Can’t Be Marketed, It Can Only Be Found

With the exception of marketing music to naïve teenagers that consume anything that’s fed to them on FM radio, it’s becoming impossible to market music to people that know what they like.

In the old days, mystery, intrigue, celebrity, and real or imagined bullshit benefits could be baked into the product and into the packaging.  Record labels profited wildly by being experts at it, but digital music has changed all this.

Music is now the most naked product on Earth.  Music sits upon the shelf unwrapped, raw and void of packaging. Consumers can fully try it before they buy it; they can take it home unmolested; and they can pay for it randomly, or not at all.  I can’t think of another product that is so fully exposed and vulnerable to quick and precise, pre-purchase decision-making as music. You click. You listen. You buy. It doesn’t get any quicker or more precise than that.  

I fully believe, of the five billion tracks sold on iTunes to date, a billion (20% or FAR more) have been sold to consumers that have NEVER seen the artist, have NEVER visited the artist’s website or MySpace page, and have NEVER had any interaction with the artist…other than exposure to a thirty second clip. A billion(s) of iTunes purchase decisions have been driven off simple recommendation algorithms (those that liked X, also liked Y).  

Fortunately for artists that make great songs, the same naked qualities that make music impossible to market, also make music the easiest product in the world to recommend. Once again, I can’t think of another product that has the viral qualities that are inherent in music. It’s the only product where the entire product (the MP3) can be easily attached to the recommendation. Try doing that with chicken nuggets.

In my mind, the greatest unintended consequence of being stuck with a product that can’t be marketed, and can only be recommended, will be the overwhelming desire to seek brutal feedback and rapid validation.  You can no longer say: it’s a marketing problem…when marketing was not an option. The only questions worth pondering are: does this song suck?  If so, how can I make it better? Nothing else really matters in the recommendation-driven world of naked digital music.

Compound Growth For Artists

There’s a lot of commonality between business advice for artists and startup advice.  In a recent post, Paul Graham (@paulg) writes about doing things that don’t scale.  Near the top of the post, he talks about compound growth:  

“If you have 100 users, you need to get 10 more next week to grow 10% a week. And while 110 may not seem much better than 100, if you keep growing at 10% a week you'll be surprised how big the numbers get. After a year you'll have 14,000 users, and after 2 years you'll have 2 million.”

You don’t need to hit home runs.  10% weekly growth will get you where you need to go. 

Rage Against The Wrong Machine

When self-appointed guardians of the Internet and rightsholders argue about the fall and the future of the music industry, you can put all of the talking points into two buckets:

Guardians of the Internet
Open, free, free culture, remix, sharing, do no evil, censorship, don’t break the Internet, innovation, value creation, music-will-be-like-water (don’t worry), scale, disintermediation, alternative income sources, patronage, greedy and shortsighted labels, etc..

Rightsholders (artists, labels, publishers)
Copyrights, permissions, illegal sharing, stealing, royalties, negligible royalties, transfer of wealth, ad-supported sharing, free-loading, livable wages, the necessity of labels and publishers as investors, etc..

Like groundhog day, the debate keeps reoccurring.  However summer came and went sometime in 2011.  

Convenience is going to kill off file sharing; it’s the only thing that ever could.  In a few short years, downloading MP3s will seem so yesterday; like a heavy task that only meatheads do.

Meanwhile, the web is already ‘broken’.  Depending on which web we’re talking about: the world-wide-web-of-China, Facebook, iOS apps, Android apps, or the so-called “open” web – which is only compatible with certain browsers…supporting Flash or not?  And then there’s the private Comcast Internet, the Verizon Internet (think tiered access, throttling, and preference-based-billing), and eventually every major religion will have an ‘internet’.

If you ask me, ending file sharing versus saving the 'open' Internet is a so-yesterday argument.  Unfortunately or fortunately (depending on your view of the world), the marketplace is obsoleting the debate.

Artists, labels and rightsholders, tell the nerds the Internet is already broken.  The web is balkanizing around huge ecosystems run by giant companies and paranoid governments.  Meanwhile techies might want to suggest to artists that they should stop hunting file-sharing-dinosaurs; extinction is coming.  

Music attracts and sells things that are far more profitable than…music.  From advertising to electronics to cloud computing services, the presence of your brand, images, lyrics, songs and soft endorsements generates far more traffic, goodwill and profit for the Apple's and the Google's of the world than your music revenue does.  

In the not-so-distant future, if creators and rightsholders (versus Internet Corporation X) want to fully profit from the exploitation of their brands, likenesses and works, my advice is:

• Stay out of the file sharing rat hole.

• Collective licensing seems like a great idea. Obtaining cash and equity in exchange for blanket licenses is something the larger labels have turned into a profitable art form.

• Ignore the “break the Internet” arguments and continue to expect and demand the capacity to withdraw or withhold your stream of stuff from sites and services that don’t pay.

• Why are you paying for distribution? Without your music their products are simply narrow and boring.

• Why are you paying for distribution? This is backwards. Perhaps it’s time to consider disconnecting your works from the anonymous ‘long tail’ that costs more to distribute than it generates in revenue.

• Don’t buy the crippling royalty rates story the next time around. There are companies that sell other highly-profitable stuff that will gladly stream music.

The list above are just some of the things that seem more important than worrying about the kids that are filling their hard drives with soon-to-be-deleted MP3s.

Copyrights and Scalability

There's a portion of the population that doesn't respect, doesn't believe in, or that simply desires to abolish copyrights altogether; they have their non-rivalrous resource argument to bring to the debate; now here's something to toss back at them…

Every investor wants to invest in ventures where the incremental costs of scaling to infinity and beyond are minimal to zero.  In other words, $100 buys you the first 100 widgets, but the cost of producing the next 100 widgets is de minimis.  In fact, the competition for investment capital is often won or lost on a cost-to-scale analysis basis.
 
The problem with the "to hell with copyrights, you can make money from live performances" argument is that this thinking limits an artist's ability to scale to: his or her capacity to perform (live) on a consistent basis.  If music (for example) is consistently stolen borrowed or free, where does the capacity to scale through minimal additional investment come from?  T-shirts?
 
One might argue that if you reach the top tier of the profession that the capacity to generate easy, incremental income scales far beyond the income generated via performances.  However nobody wants to invest in a business or an industry where the only way to obtain a financial exit is to hit a home run.  There are far too many investment alternatives where you can pile up rewards by hitting singles and doubles…while preserving the opportunity to hit a home run also.

Art requires investment, as somebody always has to pay the bills.  Investing in artists has to appear attractive on a cost-to-scale analysis basis.  Every attempt: legal, cultural or otherwise, to weaken copyrights is an assault on every artist's capacity to scale via minimal incremental investments, and thus the capacity to compete for investment dollars.  

Who wins the race for investment money, the artist with the epic song or the software developer with the snazzy iPhone app?  Which took more time and skill to create?  It's all software to me.

For those of you that detest dumping art into an investor equation, simply substitute the concept of investment dollars with a personal time-cost / benefit analysis and ask yourself why so many artists become hobbyists prior to obtaining traction; the key reason is: the lack of copyright respect results in the sinking perception that scaling one's digital entertainment business by shoveling time (or investor money) at it, often results in a negative return.  For many, there simply ends up being…better ways to make a living.

Effective Music Advertising Campaigns

When it comes to music and advertising, there’s no such thing as a one-size-fits-all solution.  What works for some artists will not work for others, and vice versa.  However here’s one thing I can tell you for sure: too many artists are using advertising as a blunt force weapon.  Simply dropping a picture of yourself, your band, or your album art into an ad unit and then indiscriminately campaigning nationwide for clicks will rarely generate the advertising ROI you need to justify spending on another campaign.  

Based upon my own experiences and upon the numerous campaigns I have reviewed over the last year, I believe artists should 1) commit to running numerous test-trial campaigns prior to allocating the majority of their advertising spend to a single message, and 2) seriously consider which geographic targeting option (local, regional, or nationwide) will generate the immediate ROI artists need to justify a continuous investment in advertising.

For test campaigns, if you want to compare click results between campaigns, plan on spending at least $100 to generate 30 to 40 clicks per test campaign.  Campaign costs and results will vary widely between advertising platforms.  Test a matrix of targeting options, artwork, songs, messages and propositions to determine which combination outperforms all the others.

Are you a local, regional, or nationwide advertiser?
The answer to this most-important question depends on 1) your career goals, 2) your niche, and, 3) your evolving status as an artist that may (or may not) be attempting to obtain widespread recognition.  For most, jumping the rails and attempting to become a nationwide advertiser prior to achieving local and then regional success is an advertising investment mistake.  

When you progress from being a local, to a regional, to a nationwide advertiser you accumulate essential messaging signals that enable you to effectively telegraph a value proposition that music fans will instantly recognize as deliverable.  Let me explain...

Messaging signals help advertisers cut through the noise.  For example, car manufacturers love to blow their horns about the awards their cars have received because it strengthens their messaging.  Ditto for restaurants, hotels and coffee.  Signals that instantly communicate trust, value and quality convert more frequently into consumer actions (e.g.: clicks).

Effectively telegraphing a message translates into achieving enough return on your advertising investment to perpetually advertise.  

Delivering a value proposition that music fans instantly recognize as deliverable equates to communicating (I can deliver the goods) believability versus the same old bullshit fans see and hear everywhere.

Consider the following roughed out ad campaign examples for further clarification:

A Local Advertising Campaign Example:
Campaign goal: Increase my Thursday night audience size from 50 to 100 people.  Value proposition: Meet people similar to yourself and have a great time on Thursday night.  Messaging: Great food, great people, great music (briefly described), no cover charge.  Featured photo or video: Attractive shots of the sample audience that also take in the room setting and the performing artist; focus is on the audience and the venue and not on the artist.  Targeting: within 20 miles of the venue.  Notes: The venue should pay for or subsidize this type of campaign.  The campaign is about selling a great evening out with compatible humans; the artist takes a back seat to the event (the evening).

A Regional Advertising Campaign Example:  
Campaign goals: Generate regional awareness; increase music and ticket sales.  Value proposition: Discover new but proven, vetted, quality music.  Messaging: Award wining artist (list accolades and awards), selling out at (name venues), is releasing new music and coming to (name areas).  Featured photo or video: Close up of the artist; rotate to jam-packed venue / live performance shots.  Targeting: Regional areas where you will be touring soon; keyword targeting for fans of artists that have fans that could also become your fans.  Notes: Notice how excelling locally gives the advertiser the opportunity to insert essential messaging signals (believable bullets and great crowd shots) that enable the artist to effectively telegraph a value proposition that music fans will instantly recognize as deliverable.

A National Advertising Campaign Example:  
This is a campaign for an artist that has already obtained significant mass-market exposure.  Campaign goals: Inform/link preexisting fans about/to new music and about/to an upcoming tour.  Value proposition: The easy acquisition of music and entertainment from an artist that you already trust as a quality supplier.  Messaging: New music, new tour.  Featured photo or video: Artist logo and recognizable shots / footage.  Targeting: re-targeting of website visitors; keyword targeting for fans of artists that have fans that could also become your fans; regional advertising to a targeted demographic and a genre audience prior to visiting an area.  Note: Advertisers in this category may want to consider a re-targeting campaign where targeted display ads are repeatedly shown to previous visitors to the artist’s and the label’s website.  Re-targeting campaigns should be planned far in advance of any mass-market exposure such as a Saturday Night Live appearance.

Quick conclusion: The advice here does not apply to every artist. With niche artists being the exception, If you can't fill local venues with fans, don’t worry about squeezing your logo and an iTunes link into every banner ad, and stop pushing pictures of yourself unless you're hotter than the sun.  If you don’t have what I termed above as “essential messaging signals”, you will not be able to generate enough ROI to perpetually advertise.  Start small and think big.

Music Marketing ROI

There’s an item missing from the music-marketing dictionary.  What do you call the person that has decided to surrender an email address, follow you on Twitter, or Like you on Facebook?  If the word ‘fan’ is short for ‘fanatic’, or as someone said last week: “a fan is someone that buys all your stuff”, then we need an intermediate descriptor that sits between a potential fan that has yet to learn about you, and a fan or fanatic that is already buying your stuff.  ‘Pre-fan’ seems like it will work, but why bother?

As more and more labels and artists use advertising to bridge the gaps between social media islands, it’s essential to get the advertising return on investment (ROI) calculation correct.  If a potential fan is not yet a fan, and if a pre-fan is not really a fan, then you need to apply TWO conversion rates to your ROI calculation.

1) The Pre-Fan Conversion Calculation
The advertising cost to reach potential fans is typically priced on a cost-per-thousand impressions (CPM) basis. For each one thousand impressions, a small fraction of potential fans will convert into pre-fans; this is your first conversion rate calculation.

1,000 Impressions * Conversion Rate (CR%) = Total Pre-Fan Acquisitions.  1,000 * 0.2% = 2 Pre Fan Acquisitions

Note: For every 1,000 impressions, the conversion rate (CR%) to a pre-fan is going to be low.  As a point of reference, brand advertisers on the Internet typically obtain ‘click-through' rates that are far less than one percent.

2) The Fanatic Conversion Calculation
The second conversion rate calculation arises when you have to estimate the percentage of pre-fans (those that surrendered an email address, followed you on Twitter, or liked you on Facebook) that will become true fans or fanatics that actually purchase stuff; the conversion rate will vary depending on the engagement platform; I am using a blended Fan-To-Fanatic Conversion Rate of 20% for my example below.

Multiply a Fan-To-Fanatic Conversion Rate * Total Pre-Fan Acquisitions to get Total Fanatics.  20% * 2 = 0.4 Fanatics

Now divide your CPM price by Total Fanatics to yield Cost-Per-Fanatic.  $4.00 / 0.4 = $10 (cost per obtaining each fanatic).

Now Calculate Your Advertising Return On Investment
Estimate the lifetime, combined net profit you will make on merch, tickets, music sales and streaming on a per-fanatic basis.  I am using $100 in my example below.  Subtract your estimate of the lifetime value of a single fanatic from the cost of obtaining each fanatic to estimate the per-fanatic return on your advertising investment.  

$100 - $10 = $90 (your per-fanatic advertising ROI).  You spent $10 to earn $90 over a lifetime. Not bad if you can do it consistently!

What’s Missing?
Many potential fans will not notice and absorb a message until they have seen it more than once.  And, due to the time it takes for fans to absorb new music and for tours to rollout, you have to factor timing and time lag into your equation and into your campaign planning.  In addition, the term ‘lifetime’ is only equal to the projected longevity of you or your band as a branded and performing entity, as hoping to generate ROI solely from music sales three years from now would be highly speculative.