THE HEAD OF MY BEER
Bruce Warila | Thu, December 27, 2007 at 10:16 PM | Making Money In Music, Music Industry Commentary, Planning & Strategy If you are an artist or manager reading this blog you are probably, consciously or unconsciously, attempting to predict the future.
You are an entrepreneur; like it or not, you are the owner of a small business that is hoping to become a global corporation that is generating revenue from music, publishing, touring, advertising and merchandise. And, just like every other entrepreneur you have to make crossroads decisions that will directly impact your career and your bottom line. Decisions like:
- Should I tour or just continue to write and create songs?
- Should I seek a record deal?
- Should I put time into MySpace or Facebook?
- Should I seek a publishing deal?
- Should I do everything on my own?
- Should I allow fans to download my songs for free?
- Should I create a blog?
- Should I create some video?
- Should I give up any publishing rights?
- What should I invest time into?
- What’s important today and in the near future?
- Should I get out of music?
- How will I make money from music – now and in the future?
The answer to every one of these important questions requires you to look into a crystal ball and pull out a decision. The reason you are here is that you don’t want to make these decisions in a vacuum; you want to be informed before you pull the trigger.
The questions that I want to answer in this post are:
1) What qualifies me to help you with your crystal ball gazing?
2) How do I make my predictions?
WHAT QUALIFIES ME TO HELP YOU WITH YOUR CRYSTAL BALL GAZING?
The first answer to this question is – a question?
What qualifies anyone to advise anyone in the music industry in 2008? When it comes to this industry, I say the past is not a good predictor of the future.
If you read the industry press, you have noticed that just about every music-related business that was growing in 2002 is barely growing or outright declining in 2007. As CDs disappear from Best Buy and Circuit City, and as the music industry transforms and reshapes, industry outsiders are becoming the industry insiders.
Taking a seat at the table with the A&R veterans, the entertainment attorneys and the label executives are the software developers, the user interface designers, the data experts, the intellectual property attorneys and the wireless industry experts.
As for myself, beyond my thirty-nine months in the music industry, I am a genuine outsider with twenty years of management, software development, user interface, strategic planning, intellectual property and wireless industry experience.
In all honesty, I have not done one thing (yet) in the NEW music industry that has generated a substantial return on investment. However, my criterion for doing so is also the yardstick I measure every company against.
I look for companies and people that are enabling artists to earn, or more easily earn, a decent living from making music.
When this as the factor that I use to measure my own steps and the steps of others by, the venture options slim and the list of companies to recommend to you shortens.
Real quick – there are a few companies that I really like: TuneCore, SonicBids, and Pandora to name a few… And, there are more that I am beginning to like: OurStage, iLike, Last.FM and MyStrands to name a few more… As for people, I can reccomend Andrew Dubber, and take a look at the speaker roster for Musexpo for a great list of credible people that I will gladly fly to LA to listen to.
So, there you have it: Thirty-nine months of intense industry experience, no new music industry successes, lots of other relevant successes, and my criteria for measuring success in the future.
HOW DO I MAKE PREDICTIONS?
In 2001/2002 my company filed what could turn out to be some of the most important patents concerning the overlap of music and wireless; patents that would enable us to uniquely create products like the FAT Decks I have talked about in other posts.
As I sat down to write this post I thought to myself: how did we know what to file patents on? What was our basis for predicting the future? What gave us the courage to spend time and money filing patents, as filing patents is a form of predicting the future?
The answer is simple: understand the pain and needs of the marketplace; understand the capabilities of technology – now and in the future, and based upon trends; understand human nature; be grateful that you don’t know what you don’t know – which is the same thing as saying: don’t be biased by the past; and be smart enough to recognize patterns.
So (again), when it comes to predicting the future of the music industry I base my predictions on the following:
1) The pain in and the needs of the marketplace - that must and will be solved:
- Artists must earn a decent living.
- The needles (great songs) in the haystack have to be easier to find.
2) Technology - handheld and portable wireless technology will continue to penetrate our lives. Wireless technology will become faster, cheaper and ever-present.
2) Technology - music recommendation engines are going to rock and change everything.
2) Technology - new inventions that can and will be built will obsolete the MP3 and enable artists to generate high margin, reoccurring revenue (like the CD once did).
3) Human nature, culture, demographics - file sharing is impossible to stop. New inventions/products must change the playing field.
4) Ignorance - I don’t know any of the old rules.
5) Patterns - I have witnessed an industry go through an identical transformation (next post).
6) Patterns - the things I will see in the head of my beer.
Just about everything I predict, "spills" from this short list...
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Reader Comments (5)
Bruce, those items which you detail as your prediction criteria are exactly right, for more things than just music. However, I think you're leaving out one very key item for an 'external player' such as yourself: the barriers to entry and change put in place by 'the old regime'.
The RIAA has used the DCMA to club everyone upside the head again and again. Though they haven't been hugely successful at ending file sharing or online downloads, they have certainly choked off a lot of technological progress due to their heavy handed attempts at re-asserting the old school philosophy.
The RIAA doesn't need the DCMA to shut you down though. They just need to use their influence to drown you out of terrestrial and satellite radio, to keep your artists off of big-name tours, and keep you confined to the internet.
Whereas the internet is a great medium for viral marketing, there's no guarantee of reaching a target audience. Pop-ups can be turned off and ads can be ignored. An opening band can't be ignored. A song broadcast by Clearchannel Communications--which owns nearly everything it seems--will get more recognition than one played continuously on a college station.
If they choose to, the existing industry could simply keep the 'new production methods' quashed by leveraging their much greater resources. All they would really need to do to maintain a stranglehold is up the volume of traditional marketing. If an artist still broke through that barrier to entry, then the deep-pocketed industry could simply buy that artist away...not everyone has a price, but most people do to some degree.
If you were embedded in a Columbia House / BMG / Sony, applying your principles synergistically with existing marketing principles could help propel a massive coup in the industry for that company. Outside of a big pre-existing publishing house, I fear they might be able to just tie you to the railroad tracks.
The challenge before you then, is this one: How can you take the 'new media' and not only leverage it to overcome the 'old media', but also use it to overcome people who would actively attempt to prevent you from doing so?
The best answer I can come up with is investment capital, and not just financial. Grab the Radiohead and Pearl Jams of the world, the big named artists who are sick of the big-name labels and ticket warehouses. Mix some established talent with new talent and send them on tour. market them in traditional and 'new' media markets, with emphasis on the universal reach of the internet. Starting a new business plan with new talent is tough; get some philosophical allies willing to do business with you, and you will have the momentum you need.
First, I want to say thanks for the recommendation, Bruce. As you know, it's entirely reciprocated.
I've been reluctant for a long time to predict the future -- and I suspect that in some small part, this is what the beginning of this post is in reference to. I am automatically deeply suspicious of anyone calling themselves a 'futurist'.
However, the best way to predict the future is to have some hand in creating it - and I think that this is the way forward for musicians and independent music businesses. That's essentially where New Music Strategies will be heading in the new year. And I look forward to the new connections, partnerships and ventures that spring forth from that.
The other thing I wanted to say was that I get Paul's logic above - but I disagree with some of his premises.
I don't think the best way to instigate change of this magnitude is 'from the inside'. Smaller and innovative music organisations are much better placed to effect radical change in the music business. Investment capital is a great starting point, but I'd rather be driving a motorbike than sitting on board an aircraft carrier when it comes to changing course. Sure, motorbikes can get blown over much more readily, but these times require maneuverability far more than stability.
My money's on entrepreneurship over corporatism in this particular game.
Also, the phrase 'keep you confined to the internet' is a bit like the paraffin oil industry keeping you 'confined to electricity' when you want a bit of light around the house. It may have taken some time to become the dominant fuel of choice, but the electric wires, like the broadband pipes, gradually took over as the mainstream preference.
Incidentally, it's still possible to make money selling paraffin oil, and there are even some very large, established players. But their industry changed too.
But although he starts in an odd place, he arrives at a good one. Paul's 'Mix some established talent with new talent and send them on tour' idea is a good one. One of many to come, I suspect.
Looking forward to 2008. All the best for the new year.
bruce,
this blog is amazing, it is totally spot on. i manage my band and i realize how long the hours are, trying to get noticed and the likes,specially if you are doing it for the first time.
I WANT YOU TO BE OUR MANAGER!!!!
www.myspace.com/warmwaxx
you seriously have the music game pegged!!! you know your stuff, and thats what we need!
thanks for your time bruce
Laurance Meade
Warm Wax
Dubber, I think that you have some valid points. All I'm saying is "we're not there yet". We haven't moved completely to mobile media, and while the existing corporations are still running the game, we have to take their perspective in consideration. If you'eve ever seen Peter's Laws (Rules for the Sociopathic Obsessive Compulsive) --I used to have them hanging over my bed--there's one key one that applies: "If you can't beat them, join them, then beat them." Actually, I find quite a few applicable, so please forgive me for pasting them all right here:
Peter's Laws
The Creed of the Sociopathic Obsessive Compulsive
*If anything can go wrong, Fix it! (To hell with Murphy!)
*When given a choice -- Take both!
Multiple projects lead to multiple successes.
*Start at the top and work your way up.
*Do it by the book...but be the author!
*When forced to compromise, ask for more.
*If you can't beat them, join them, and then beat them.
*If it's worth doing, it's got to be done right now.
*If you can't win, change the rules.
*If you can't change the rules, ignore them.
*When faced without a challenge, make one.
*"No" simply means begin again at the next highest level.
*Don't walk when you can run.
*Bureaucracy is a challenge to the be conquered with a righteous attitude, an intolerance for stupidity, and bulldozer when necessary.
*When in doubt: THINK!
*Patience is a virtue but persistence to the point of success is a blessing.
*The squeaky wheel gets replaced. (I disagree with this one)
*The faster you move, the slower time passes, the longer you live.
Paul makes some good observations but I wanted to address a couple of Paul’s assumptions at the beginning of his first comment.
There’s an assumption that people are still paying attention to mass media. Some are, but way more are ignoring it. You just need to look at the crashing sales of mass-media “superstars” to see that. In the last 7 years, the sales numbers of the Top 5 selling Billboard acts has decreased by between 50 – 60%, way bigger than the market as a whole. That play on Clear Channel radio may be heard by a lot more people than college radio, but they don’t care. It’s my bet that the listener to a college radio generally cares more, because he’s more engaged. Getting attention is the critical currency now, and specialist media is better suited to do that. The trick is letting interested people know where you are.
The RIAA and the major labels are bullies, but p2p usage continues to climb despite the lawsuits. I agree that it’s held back technology development and just this week Pandora is quitting the UK because the proposed licensing fees are too high. But that isn’t going to stop anything, just slow it down. On the other hand, people take a long time to adapt to and adopt new behaviour. It took 3 years before mobile SMS texting became a mass medium.
Working from within does not help with the major labels. They will stamp out any innovation that can’t bring commercial results within the year. I see friends within the majors being let go because their vision is how to get to the next decade, not next year. It’s the indies and the software guys who are going to take us to wherever it is we’re going.
Good post, Bruce.