What Is The New Music Business Model?

On July 2oth I published an article about the ways in which musician Imogen Heap is using the internet and social media sites to connect with her fans.  While many musicians are using the internet to engage with their audience, I profiled Heap because she is an exceptional case.  She has consistently used social media tools to reach her fans, in an integrated, and authentic way for the past several years.  Not only has she been sharing information about her life and the making of her latest record, Heap has been soliciting feedback, ideas, and creative services from fans. You can read my original post for more details.

The premise of the original article is: if musicians invest (time) in the relationship with their fans, their fans will invest (monetarily) in them.  Yes — people will still buy music (although I agree – don’t put all your eggs in this basket).  There are other ways to generate revenue, of course, some of which include giving the music away for free (e.g. Nine Inch Nails) and building greater interest among fans in touring, merch, and special projects.  The core component of what I’m calling the “new music business model” is true fan engagement.  How musicians choose to generate revenue beyond that is up to them, but connecting with fans in a meaningful, consistent way provides the foundation for the sustainability of an artist’s career.

On August 26 I posted a follow-up article, addressing some of the points that were raised in response to the original article and chronicling some of the early results of Heap’s efforts.  As of 11:00am the morning of release, Heap’s new album, Ellipse was #4 on iTunes Top Albums Chart, #2 on Amazon’s MP3 Download Chart, and #6 on Amazon’s Top 100 Bestsellers Chart.

I received quite a bit of feedback on both articles (thank you) and would like to address some of it here:

1. “What about the music? This article is about marketing, not about music at all. Why do I feel like there’s something wrong with that?”

Well, this is a marketing blog, not a music blog.  (That said, if you’d like to check out my music blog, visit RockIsAGirlsBestFriend.com.)

The other reason I didn’t raise the issue of the quality of Heap’s music is because music taste is generally subjective.  What I consider to be one of the best albums of the year may be un-listenable to others.  My article was an attempt to highlight some of the ways musicians can engage with their fans in order to support the longevity of their career; it was not meant to debate the merits of a specific album. Did Heap compromise the quality of her music while spending so much effort nurturing her fans? That’s something you can determine on your own after listening to the record.  In my opinion, Heap managed to release a beautifully composed album, all the while illustrating her ongoing commitment to her fans.

2. Is it worth it?

Some people questioned whether all the time and energy Heap expended in order to connect with her fans was worth it.  Would it generate revenue in the end?

First of all, even though this blog is about marketing, the reason artists are investing in their fans is not solely to make money.  As Heap has stated in previous interviews, she solicits the advice and help of her fans because she truly values it.  Heap reminds everybody – she makes music precisely for her fans.  So, involving the audience in the process of making music and releasing an album, is a natural extension of that relationship. It used to be the only time a musician could interact with their fans and receive feedback directly was when they were touring.  Now artists have the opportunity to engage with their audience daily and to apply the feedback they receive from fans in-real time.

But for the people who simply wondered whether or not the time Heap spent cultivating relationships with her fans would result in album sales, the answer is: YES, it did.  Heap’s album Ellipse debuted at #5 on the Billboard Top 200 Chart in the U.S. and at #4 in Canada.   This is the highest chart position Heap has achieved.  Her previous release Speak For Yourself reached #145.  It’s also the most records Heap has sold in any given week during her career.  More details at Billboard.

So what is the new music business model? As stated previously, the new music business model (one that is not reliant on radio play, traditional record labels, and video promo guys) is highly dependent on the artist’s relationship with their fans. In one sense, this is the only thing consistent about the “model” because the second core component is: authenticity.

This means that there isn’t one model or formula that will work for every artist.  Each musician must engage with their fans in a way that is authentic to who they are as a person.  This is also why it’s hard for major labels to replicate this relationship with fans – there’s something vastly different between the way labels and (most) artists communicate with their fans.  For example, Trent Reznor will sometimes tell his fans to “stop bitching” and “fuck off!” And you know what? They’ll “stop bitching” and “fuck off” for the time being and then they’ll pay $65 to see Nine Inch Nails in concert and are devastated when tour shirts sell out before they can get one.  Interscope Records, former home of NIN, would not have engaged in that specific dialog with fans – it’s something only an artist like Reznor can do.

Reznor is another great example of somebody who’s using the available platforms to connect with their fans.  As he points out, this is actually nothing “new” — Nine Inch Nails has always paid attention to fan feedback — there are just more tools to facilitate this.  On NIN.com Reznor writes:

Twitter seemed like an interesting way to quickly reach a large number of people, and people that seem to exist outside of the nin.com world of fans. For a while, I found it useful to read replies and get a sense of what people are thinking / saying, and this worked well for a while. As I’ve mentioned in other letters, the key to understanding your audience / fan-base is to engage them and understand them. The results of me doing this with NIN include the way we sell tickets on nin.com, the way we’ve distributed the last records, the multi-tracks available for free download for you to remix, the Creative Commons licensing, the open camera / recording policy for live shows, no fan-club fees, the tour music samplers, the open design of nin.com, etc etc etc. I could keep going because pretty much everything we’ve been doing with NIN lately has been based upon what you as an audience think would be a cool way to do it.

Most of these policies and approaches have nothing to do with Twitter, but it was another tool to see what people think about things and get feedback.

In another post Reznor elaborates on his perspective about using online communities to engage with fans:

It’s been an interesting experiment over the last couple of years or so. Faced with leaving the infrastructure of traditional record labels and figuring out what the right thing to do is in this new world – I found myself realizing that for me to have any concept of how to interact with the community and know what they might want / what they find appropriate, I need to immerse myself in that world and live it for a while.

The reason no record label knows how to market anything to new media is they don’t live there. They don’t get it because they don’t use it. What you’ve seen happen with the marketing and presentation of NIN over the last years is a direct result of living next to you, listening to you, consuming with you and interacting with you. Directly. There’s no handlers or PR people here, it’s me and my guys – that’s it. There’s no real plan, even – it’s just trying to do the right thing that respects you the fan, the music, and me the artist. That’s the goal – a mutual and shared respect.

When Twitter made it’s way to my radar I looked at it as a curiosity, then started experimenting. I thought it through and in light of where I was / am in my career I decided to lower the curtain a bit and let you see more of my personality. I watched some of you get more engaged because you started to realize there’s a person (flaws and all) back there, and I watched some of you recoil in horror because I’m not what you projected on me. All expected. I’m not as concerned about “breaking” your idea of NIN at this point. It is what it is and I am what I am. The relationship between artist and fan is changing if you haven’t noticed, along with the way we consume and experience music and even communicate since the internet arrived.

Reznor “gets it”.  He understands the importance of engaging with fans. While he’s since canceled his Twitter account, Reznor still engages his fans and has a very “open” policy when it comes to how fans interact with NIN and their music.  NIN encourages the remixing and posting of their songs; they have a relaxed camera/recording policy at their live shows (the final NIN shows take place in LA this week); when trying out new things (i.e. allowing ads on NIN.com), Reznor explains the change to fans and also asks for their feedback/objections; when fans are hassled by venue security who may not be aware of NIN’s relaxed policies, Reznor has an NIN representative resolve the situation. Each time NIN releases a new album it’s in conjunction with some underlying activities created for the most die-hard fans. NIN also gives fans freedom to use their content (especially consumer generated live audio and video recordings) as they wish, so long as they don’t sell it.  This has facilitated projects like This One Is on Us, a fan-driven, open-source DVD project documenting the 2008 Nine Inch Nails “Lights in the Sky” tour.

Reznor has also managed to do something very difficult — maintain a sense of mystique around the band, while simultaneously acting with transparency. When NIN.com began hosting advertisements, Reznor posted a note explaining the actual cost to run NIN.com, along with multi-media and interactive plans for the future that were going to require additional funds in order to be sustainable, so that he can continue to offer them to fans for free.  Additionally, Reznor openly communicated about the process of getting NIN’s iPhone app, Access, approved by Apple and his frustrations that current cross-platform technology limitations prevent NIN from offering the app in its full capacity on other devices.

Bottom line: even though they already had a large, established fan base when they broke ties with Interscope Records, NIN realizes the relationship with their fans is integral to their sustainability (in the business sense) as a band. Breaking from the label and all their “people” has also allowed NIN to have a more direct relationship with their fans and to utilize all emerging social media platforms to do so.

Imogen Heap, on the other hand, has been building this relationship from scratch, with support of social media networks, since she moved from Frou Frou and into her solo career.  She’s at a different phase in her career than Nine Inch Nails so how she navigates this space varies from NIN.  Heap is also a very different person from Reznor and this comes across in her interactions with her fans.

What about the “new” artist? Or musicians that never previously had major label support? Yes, there is a lot of documentation about bands such as Radiohead and Nine Inch Nails forging the way in this changing environment.  And yes, they have the advantage of an existing fan-base and previous support from major labels. But remember  each of these bands had nothing when they began – they’ve been building this relationship with their fans for 20 years. Yes, the funds and infrastructure of major labels helped boost awareness for these bands, but now that they’ve moved off major labels, the relationship with their fans (along with their music) is what they own.

So new artists — you can learn from some of the veterans and along with making great, consumable music, prioritize your engagement with your audience.  What’s refreshing about innovators such as Thom Yorke and Trent Reznor is that although they’ve been in this business for 20 years, they’ve kept up with the changing atmosphere and are often ahead of it.  This is what differentiates them from several record label veterans who have not learned how to evolve with these changes in how music is consumed.

Imogen Heap, on the other hand, falls somewhere in the middle.  She is on a major label, but she doesn’t have the radio hits, flashy music videos, or stadium-scale tours that the larger artists have.  Imogen Heap has music.  And she has fans (a base that she’s built herself). That’s all she needs because she knows how to bring the two together – the music feeding the fans and the fans feeding the music.

If you’re looking for an example of a truly independent artist who has gained success and maintained a career without the help of a label, radio, or video, check out Ani DiFranco.  DiFranco has been building her fan base for 19 years through consistent touring and the use of old-school newsletters (the kind that come in the mailbox).

See, the thing about not having a record label is that the pressure for that “quick radio hit” subsides and musicians have the time it takes to develop themselves, their music,  and build a base of dedicated fans.  And it does take time – so be patient and understand this likely isn’t going to happen overnight.  I first saw Matt Nathanson open for Lisa Loeb at Largo more than 8 years ago.  I thought his music was catchy and wondered, as he was selling CDs out of his backpack and going person to person in the audience soliciting members for his mailing list, “how long will this kid stick around? How long is he willing to work at this, on his own?  Will he ‘make it’ before he gives up?” Well, many years and a lot of hard work later Nathanson’s song “Come on Get Higher” spent 30 weeks on the US Airplay Top 100 charts and 20 weeks on the US Singles Charts.  It takes time.

Another thing to recognize is that when you do cut the major label out of the equation, more weight of the “business” aspect of your career rests on your shoulders. For many artists this is especially challenging – their talents flourish because they are creative, right-brained individuals and the more tactical, left-brained aspects of running a business are foreign or frustrating to them. But, if you want to make your living making music, then indeed it is a business. Thankfully, there are platforms and services that help make the business aspects of your career more efficient and allow you to do much more to support your craft than you could have done 10 years ago.

With the changing environment (not just in the music business), comes great opportunity for innovation and creativity.  Several companies have emerged, created to support the independent musician.  There are highly publicized companies like Top Spin that provide independent and established artists with the tools to directly market their music and merchandise to their fans. There are also some lesser-known companies like Pledge Music that allow fans to invest (financially) in the making of an artist’s next record, and Zoxsy that helps artists get radio airplay, top concert spots, film/tv/video game placements, and record deals. Companies like TuneCore provide digital music and video distribution to iTunes and Amazon, allowing artists to retain 100% of their rights. One of my clients, LP33.tv, has an in-house A&R team and more than 100 A&R reps around the country, dedicated to finding the best new music out there. LP33.tv works with artists (new and established) to create original video programming and promotions around their music, and with the help of the marketing team, syndicates this content around the web, generating millions of impressions for artists and video views in the hundreds of thousands.  Bands Under The Radar also helps filter out the noise and highlights some of the best emerging talent out there.  New artists can submit their music to Bands Under The Radar for consideration to be placed in one of BUTR’s podcasts or sold through their direct to fan digital download service (powered by Topspin).

So the good news about all this change is that there are more and more ways for a musician to support his or her craft and more and more ways for artists to reach their fans.

To answer the question “What about the music?” again:  of course, the music needs to be good and a musician’s primary focus should be on creating music that people somewhere will want to hear. But the other part of this equation is having an audience to begin with. Some artists have endorsements from other artists or filmmakers (Zach Braff has helped launch some careers) and others find support from brands.  But more often than not, musicians are building their fan base one by one as they meet them, on the road or online.

The new music business model isn’t really new. It’s about stripping away everything else and getting back to the root of what music is to begin with: artist communicating with fan.

Advertisements

4 responses to this post.

  1. Hey Colette,

    I’ve been reading your (this) blog since the very first post. I’m lucky I found it from the beginning. Your posts, although not as frequent as other music industry blogs, is definitely always on the mark. You’re a sniper of a writer.

    I’ve already favorited 2 of your posts on my RSS reader. This one and the one before (Immi vs Bob Lefsetz). The best part about this post is how you say that the “new music business model” is true fan engagement. I completely agree, and also agree that it has always been about the connection. Andrew Dubber calls it a conversation (check out his blog if you haven’t already: http://newmusicstrategies.com). As an (aspiring if not starving) artist myself, I’m also thinking more and more about the connection with my (phantom) fans. Ergo, I’m starting to more and more minimalize the production process (recording, mixing, and marketing) and am taking the time to do my best in the songwriting process to create songs that engage and inspire the listeners.

    So thanks for the support. I know you don’t mean it especially for me, but your thoughts affirm my belief that art isn’t just about self expression. It’s about finding a solution.

    Cheers,
    Endy

    Reply

  2. Great post. I agree it is all about fan engagement in whatever form that feels natural to the artist today. I am worried about the next crop of artists and how they will establish themselves without the delivery mechanism (broken or not) that the labels were providing. Imogen Heap, Radiohead, NIN and even Nathanson (briefly) were all in the major label systems.

    I don’t know that there is a formula that can turn an artist’s audience into a community but that seems to be part of the new model.

    Reply

  3. Posted by Kerry on February 1, 2010 at 9:14 am

    This is an interesting new marketing strategy. Are there examples of other businesses adopting the model in ventures other than music? I’d be interested in particular of models enabling an entrepreneur to create a business from the ground up without the traditional funding model of banks or VC. Thanks

    Reply

  4. Posted by James on April 6, 2010 at 12:10 pm

    Very interesting article. i don’t know if anyone knows anything about a R&B/Funk genre called “Go Go” (i.e. Chuck Brown and the Soul Searchers “Busting Loose”, EU “Doin da Butt”) which is unique to the Washington D.C. area, but the bands in this genre have been for years working outside of the traditional “business model”. They created fans by giving free concerts or shows at high schools, parks and etc… They also allowed folks to tape concerts and share with others, resulting in much interest when albums or singles were released. At the concerts, they allowed the music to be loose enough to spontaneously interact with the crowd (took role calls of fans and gave shout outs, etc…). Very engaging on many levels. These folks were considered superstars in the region. In a matter of fact, I went to several shows where the local/regional band would open for a popular national act and the latter would get snubbed or booed in favor of the local. Again it was “fan-centric”. There are quite of few reasons that have been published as to why the genre did not explode in the way hip hop did, but as an observer and follower it seemed when there was “major” label interest, the labels would try to conform the bands to their model, whether it be style or marketing and since the genre’s model was as much apart of the regional success as the entertainment itself, efforts to nationalize the genre seemed to fail; leaving many artist tied to bad contracts and unable to move on. So as you can see the concept is the same, except with the newer technology it has decentralized almost every aspect of what kept the old music label business model standing and now its crumbling.
    http://en.wikipedia.org/wiki/Go-go
    http://www.upress.state.ms.us/books/1167

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: