Bruce Warila | Mon, November 10, 2008 at 08:55 PM Investing in artists - the human part of the capital attraction equation...
More and more artists are seeking advice on how to obtain a substantial investment ($50,000 to $250,000), and artists around the globe are structuring their organizations as small businesses that will generate a return on investment for investors (for fans and for brands that invest in artists).
Prior to writing more about the legal or business things you need to do to obtain an investment, I wanted to touch on the human part of the capital attraction equation.
After reading this list you may say to yourself "WTF, do I have to be a saint to raise money?" The answer is no, maybe you don't. This is my investment checklist, and I believe it's necessary to keep every business option open, especially in the music industry. When an investor is investing in more than a single song (a person or a band), he or she is probably looking for someone that MOST consumer-facing brands would also be comfortable promoting.
Note: You can't fake it. Obtaining capital involves going through a process called due diligence. If an investor is smart, he or she will check you out as if you were applying to join the Secret Service. And, if you can hide something, you will probably have to make specific legal guarantees that could cause you to loose some or all of your rights if you misrepresent yourself.
From an investment perspective, bands (artists) are small businesses.
- Phenomenally successful businesses are piloted by natural leaders.
- Successful businesses create outstanding products.
- Successful businesses deliver unmatched services.
- Visionary humans create outstanding products.
- Driven individuals deliver unrivaled services.
Natural leader + visionary person + driven individual = minimal risk + maximum upside potential. There are no guarantees when investing; there are just levels of risk and reward.
Here are the qualities I believe are important when considering the option to invest in an artist.
Leaders that have IT.
Every great frontperson has a quantity of "IT". What's IT? You know IT when you see IT. IT is magnetism; it's the immeasurable and intangible quality that compels friends and fans to join the orbit of the person that has IT. Don't confuse IT with attractiveness. I believe it's safe to say that there's a lot of average looking people in the music industry with IT.
Leaders that have slain their dragons.
You can only follow someone that's messed up for so long before you tire of his or her bullshit. It's been said to me that some of the greatest songwriters are the biggest trainwrecks, and that's what makes them great songwriters. My response: get a therapist and write from the memory of the dark days you've put behind you. Nobody wants to deal with multiple personalities, especially an investor.
Leaders that learn.
Leadership is a skill that can always be improved. I want to know whom you're still learning from, and what you've read about leading a team. If your business grows rapidly, can you can lead it, or (alternatively) do you recognize what good leadership is (and happily get out of the way, and happily take direction) when someone offers to provide it.
Leaders that bounce back from failure and adapt rapidly.
Setbacks don't sidetrack great leaders. There's only one direction, and that's forward. You don't get to press the reverse button and you can't skip over tracks. Do you know how to set your emotions aside and how to rapidly move forward after a bad review, a tired show or a lukewarm fan-response to a new song? Or, do you drag down the people around you with your negative emotions or anti-social behavior?
Leaders that surround themselves with the best talent they can find.
You are running a small business. First, can you recruit and motivate all the talent you need (a tech person, a video person, a photographer, and other musicians to collaborate with) to help you create compelling products. Second, do you know how to peacefully move beyond the people that are a drag on your momentum? If you don't, you may be doing an injustice to the other people on your team that are counting on you to surround yourself with the best talent available.
Leaders that openly communicate.
To convince you have to communicate. Moreover, it's impossible to peacefully move beyond those that are a drag on your momentum when you have not explicitly stated (hopefully in writing) what your expectations are, and (most importantly) what it is you are promising (your commitment) to deliver to everyone involved in your business.
Visionaries that know how to get into the zone.
The zone is the place your head goes when you need to create or perform at levels that make ordinary humans appear average. I don't count cocaine or alcohol use as effective or sustainable methods for getting into the zone. Try taking great care of yourself (eat, sleep and exercise) and find someone that can help you elevate your self-worth to loftier heights. Those that can easily get into the zone are prolific creators and over-the-top performers.
Visionaries that demonstrate good judgment.
Not only does bad judgment cloud your ability to get into the zone; because you're weighed down by the dumbass things you did, it also shows that you are not a strategic thinker. In the past you didn't have to be squeaky clean to be a rock/rap star. These days, you have to show good judgment all around. You don't know whom your next investor or corporate sponsor is going to be. I can tell you for certain that it will be impossible to market you to brands if you are serial screw-up, a non-stop partier, a dishonorable/disrespectful fraud, or anything else the mass-market shrinks from.
Visionaries that can tap into the collective consciousness of humanity.
You are a singer, a songwriter and an aspiring public figure; you have to have deep sense of what the world wants and where it needs to go. You can't get this sense by exclusively slurping down cable television (no couch potatoes). You have to demonstrate that you are a man or a woman that seeks knowledge about, and solutions to - personal, social and global challenges. You just get what's going on in the world and it shows.
Driven individuals that are driven to create the perfect song.
I want to work with artists that seek unfiltered feedback; that use feedback as a tool and motivation to iteratively improve their songs. Driven artists write, rehearse, perform, absorb feedback and then repeat the process over and over until they are satisfied. I am not impressed by quantity. I would rather invest in masterpieces.
Driven individuals that take responsibility for creating their own songs.
Investing is about risk mitigation. When someone says I have twenty songs to pick from, I just need to get into the studio to do some recording... I translate that statement as: I'm not sure which of my songs can make the earth spin backwards; I want the producer/engineer to finish my songs for me; and (furthermore) these songs are not really dialed in because I can't get my act together to practice, perform and reinvent these songs until some of them defy gravity. Sorry, too risky for me.
Driven individuals that are driven to connect with fans.
On stage, off stage, or online, I believe an artist has to be driven to connect with his or her fans - individually and collectively. Connect to seduce, connect to engage, and then connect to obtain commitment. Seduction equates to your total effort to attract fans. Engagement is the bidirectional interaction you use to improve your music (feedback), and engagement is what you use to deepen the relationships you have with your fans. Obtaining commitment is the result of effective seduction and genuine engagement, but it's also the effort (the drive) to enable your fans to demonstrate commitment however they may choose (street team participation, product purchasing, show attendance, widget showcasing, picture posting, banner hanging, site visiting, etc.). Driven artists make it all happen, and successful artists do it by inspiring a team to help.
Driven individuals that take responsibility for their failures and little credit for their successes.
I love working with people that never blame where they are in life on others, and when they do achieve success, they are the first ones to attribute it to others. Driven individuals are not slowed by the actions or inactions of others, and when they succeed they heap praise and thanks upon those that advised, helped, supported, coached and patronized their music business along the way.
Minimal risk / maximum upside - the magic ingredient.
If you have solid mix of most of the qualities on this list, you are or you will be, a successful artist. In fact, you will probably succeed at whatever you do in life. However, I can't tell you that you'll create the song that makes you famous; that seems to require a bit of luck, magic or intervention, or whatever you want to call it. Lightning seems to strike some, but not others, no matter what they do. However, you can always increase your odds by holding a long metal pole during an electrical storm. Hopefully you get the metaphor.
Minimal risk / maximum upside. Invest in what you like and know - but measure demand.
Someone once told me: work with the artists that create the songs that you want to listen to every day; don't guess about what others like; go with your own preferences. I have mixed feelings about this advice. It violates marketing advice 101 that says: don't assume the world wants what you want. I am attempting to reconcile this difference by creating technology that measures songs against market demand (globally and within every niche). Ultimately, I want to enable any investor that believes in an artist to gauge demand for songs. Can this be done? With millions of artists, tens of millions of songs, and a global market that includes billions of music fans, every investor needs an initial assessment tool. Yes, tools can and will be created that can help to minimize risk.
The bottom line...
You have to be firing on all cylinders. You need a bit of magic (as noted above). And, you will have to have your songs measured (by a computer) against the global demand that may or may not exist in every niche. Does this make the music business a bitch? Possibly, but I can tell you for sure it's like this in every industry; people, product, luck and automation, you can't escape it, so you may as well embrace it.
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Reader Comments (10)
Bruce,
Once again a great article. An artist can never revisit these concepts too much. Also very true that we have to embrace (as much as it makes me slightly cringe) new technologies like recommendation engines. Though I would like to play devil's advocate on one of your point:
<<It's been said to me that some of the greatest songwriters are the biggest trainwrecks, and that's what makes them great songwriters. My response: get a therapist and write from the memory of the dark days you've put behind you>>
There is a certain fascination that the public has with the tortured, iconoclastic artist. From Robert Johnson to Syd Barrett to Kurt Cobain to Amy Winehouse, many succesful and important artists have been fit this mold. I am not saying that the tragic paths that many of these people went down is something I would wish upon mine or anyone else's band mates. I am just saying that I believe that there will always be a strong pull towards the Ozzy Osbournes of the world. you may or may not consider this to be an ideal belief, but If all musicians were clean cut, straight-arrow individuals, all music would sound like Kenny G or Creed or American Idol.
I have to say that I agree with just about all you say here, Bruce. I'm just not quite sure whether it's a very good outlook for popular music (at least, music someone's going to try to make money off).
However you look at it, the list you've proposed is geared at making the artist appealing to investors - not necessarily the listeners. The way things are going, it's likely that risk minimisation is going to be King in producing new high profile acts and there's nothing good I can see about such a scenario. While I agree that being an all-round ass isn't, nor ever was, a good way of ensuring anyone's support, I see it as one of the crucial elements of an artist's staying power in popular music. We certainly don't remember Sid Vicious for being easy to work with (or for his musicianship, compositional skills, etc.), but boy, do we remember him.
My only hope is that the listeners decide to take power back into their own hands by voting with their wallets for what they want to hear. Otherwise, chances are good we'll be fed a constant diet of risk-free, inoffensive and ultimately boring pap.
(P.S. Sid Vicious aside, it has occured to me that if the Beatles kept with their initial "Love Me Do" image, rock history would've been a lot different.)
First, I think you are perpetuating the myth that you have to have an off-the-charts personality and exhibit off-the-charts behavior to be someone in the music business. That's just factually wrong.
Second, I can assure you that plenty of amazing, unique and off-the-charts great new music will come out of the methods, science and business practices of those involved in Music 3.0.
Every generation has their ways of getting things done, and every generation seems to create and find great music.
You should also note - it absolutely will not take an investment to make each and every song popular. In fact, I will go out on limb, as I often do, and say that more songs will be found without the help of an investor or label...than with one. However, if you want to grow a music-related entertainment business with the help of risk-averse investors...see the list above.
BTW - I would have invested in Elvis.
Elvis was a really good boy at heart - and at the start.
I'll still contend that, to quote G'n'R, "nice boys don't play rock'n'roll" and that in this particular genre that's what the listeners are expecting. If you're looking for easy listening, than you probably won't give two hoots about the artist's off-stage personality, however in most rock music (and hip-hop to some extent) a controversial personality is par for the course. To some extent, it is more important than the actual music and you really don't have to look far to see this. Make a list of the biggest names in rock'n'roll and see how many of those people fitted the list. I'm guessing that not a lot. However, these people made the music we still remember, while the "nice boys" have for the most part come and gone. I didn't make this up.
The thrust of my argument is that the real question is where the money's going to come from. The problem with all pseudo-free services (subscription, ad-supported or whatever) it becomes really difficult to say what people really want. If you have a fairly attractive product that's available for free, people will download it even if it's not really their cup of tea. Since I remain pessimistic about people looking much further than what's handed to them on a plate (and will continue to, unless I see some convincing evidence to the contrary), I fear that popular music will sag towards the lowest common denominator.
You'll notice, by the way, that I agree with you as far as the list being appropriate for the purpose. I'm just not particularly interested in the kind of music (and off-stage personalities) observing such a list will produce - speaking as a music fan, not a musician.
Krzysztof,
You obviously are misinterpreting my list, as I suspect you have misinterpreted "bad boy image" or "bad ass act" or "bad looking" for being a dink or an asshole. You can be "bad" without being a serial screw-up, a non-stop partier, or a dishonorable/disrespectful fraud (from my list above). If that's the kind of person your are looking for, I am afraid you will be in a small minority. You can have the Amy Winehouses and the Pete Dohertys of the world, and I will take everyone else.
I agree with a lot of what Bruce puts out – certainly the human characteristics he talks about are undeniable – but I had a couple of major problems:
1/ Bruce has been talking about creating the technology that will measure songs against market demand for a while and although I can see the technical validity and ultimate application of such a tool – I don’t see it as a smart way of finding the next “big thing.” As Henry Ford is supposed to have said - "If I’d asked my customers what they wanted, they’d have said a faster horse.” As a short term tool for identifying which song to “Get behind” – then great – but as a wider tool for identifying which artist to select – I think it has less application – the big money is in the Goose, not the golden egg.
2/ I’d written this yesterday and I see that Bruce has already replied that “…I will go out on limb, as I often do, and say that more songs will be found without the help of an investor or label...than with one.” And I absolutely agree – but at some point an act needs dough – capital for food, housing, merch, gas, marketing, etc – and cash flow from digital when you’re breaking doesn’t cover it – so we’re back up to the top of the post – where do you get the $50k from?
If you intend to jump the bit where you gain a small but loyal local following and you wanna get right on the tour bus and get "out there!" – then study Bruce’s character traits and be them – however – if you focus on yourself and your music, do the leg work, play the local shows, develop the fan base, grow a following and reach the point where there is enough demand to legitimately move to the next level – then the last fucking thing you want to do is change who you are to meet the needs of a financial investor - ;-p
It is of course incredibly likely that leaders who have got that far share traits similar to those listed above – but investors should be aware that often things don’t look like they seem and that when predicting the future – the past can be a horrible indicator!
Andrew - thanks for the thoughts.. Subscribed to your blog today. Cheers.
On it being a bad idea to use technology to find the next big thing.. I agree. It's a huge funnel. Use technology to sift through the 1,000,000 songs a year that are being created now. Use technology to summarize and process all of the social and transaction data tied to songs. Use people to listen to the songs coming out of the funnel.. Use people to refine the decision making.. Do it all with minimal friction and under legal terms that enable you to move fast and honorably.. Make wise investments. Then use technology to pinpoint promotion and to keep your overhead as low as possible.
Oh, and cut out as many middlemen as possible..
Technology is a tool, not the answer..
I'm not sure about Doherty or Winehouse... I just can't dig what they're doing musically. :) But hey, I've heard of them (more than I would like) and know who they are, despite the fact they're completely off the scope of my radar, so that's 1:0 for me.
It's interesting to note, Bruce, that what we have here is something best summed up by the Polish proverb: I'm talking of heaven, you of bread (or is it the other way around?). I'm getting the impression that we're having two different conversations.
Let me sum up what I've originally tried to say:
1. The list you've proposed will probably do it's job: make you attractive to potential investors.
2. The danger I see stemming from risk-minimising is that the artistic element will suffer. Historically, most of the really lasting musical material has been risky. Safe, mainstream music of the day has - for the most part - not lasted.
3. I'm concerned that the current technological trends will place even more power in the hands of the big players, because the fans won't express their demand through purchases (I'm talking strictly new "free music" models). The big players are in a better position to negotiate with new technology companies and have more marketing punch. If you don't have to pay anything to download, you're much more likely to do so, just to see what all the fuss is about. This may further skew the market towards big label releases (consider the ad-supported model, where revenues are split according to number of downloads: who do you think is going to get the lion's share?). Since the big players will tend towards risk-minimisation, new releases aren't likely to be revolutionary. I'm already seeing the fruits of such an approach here in Poland (I can elaborate, if you're interested).
From my experience and analysis of known cases, I'd boil your and similar lists to three points that I see as being key to achieving success:
1. The artist must have appealing material (good songs, if you prefer)
2. The artist must have a compelling and in some way unique presence (he or she has to be in some way interesting, the more, the better, and in some way different from the competition)
3. The artist must be trustworthy, with regards to getting the job done.
We got sidetracked into the question of image and personality. It really wasn't my intention and I can now see the poor choice of words on my part. What I was trying to say that point 2 of my list often involves behaviour that is contrary in some ways to your list, Bruce, but it need not necessarily conflict with my point 3. Even if it does however, this need not be a problem if in the end the result is consistent with point 1. In other words, someone may be a pain to work with, but if he or she makes great songs and captivates the audience, the upside is greater than the downside.
I understand that point 2 is mainly a question of image, but remember that a lot of fans expect their idols to be "real". Alice Cooper has caught a lot of flak for being too detached from his image off-stage, so I'd risk saying that if you can't support your on-stage personality off-stage, you should change it.
Incidentally, there is a rather large gap between fitting your list, as worded, and being a "serial screw-up" or "dishonrable/disrespectable fraud". In claiming everyone except the Winehouses and Dohertys you are exhibiting something of a split-personality.
P.S. Andrew has made at least one of my points a lot more clearly than me.
P.P.S. Don't take it all so seriously. :)
You're a good guy Krzysztof. Thanks for clarifying your points.
This is straying from the post a bit. However, I am rock solid positive, that as we move forward, unique, unusual and groundbreaking music will be more easily found than ever. I don't share your fears (if I properly understand them) that music will be blended down (homogenized) to it's most common denominator. I also believe the playing field is leveling. I could discuss this all day, but I have to get back to creating the stuff that will help make it all happen.. I heard (loud and clear) your concerns and the concerns of others expressing similar doubts; that's why I write this blog, to uncover the objections.. All I can say is: I'm on it. Cheers :)
Consider the widgit example of a band to know only the basics of business:
1. They are a talented and progressive unit.
2. They are all good people; a little crazy at times but cool.
3. They have tons of material and can pinpoint the songs that they would present at the time valuable and worthy marketable material
4. Web presence, shows, looking for more shows, good following, no sponsorship
5. NO money, No credit.
From the list above THIS BAND IS SCREWED.
What you probably are saying is that a band must invest in themselves first; but this BAND is LOOKING for WORK, and people that will HELP advance this cause. They can be turned away from doing what they do best and it's PLAY, RECORD, SUPPORT, to side with the desires of the public and it's APPEAL What THIS band needs is MONEY to help them do WHAT THEY WANT TO DO FOR LIFE.....not polish a turd (being the personality, problems with the band, bad credit) If they can in fact get past THIS ....my assumption would be a HAPPIER BAND, better music. At least my observation of the PREMIER ACTS carry themselves this way.
I did in fact like the idea of throwing out the LIGHTNING ROD IN THE STORM! this is great stuff.