Thursday, February 21, 2008


Allen Johnston – The Music Specialist

My journey to MidemNet & Midem in Cannes France this past January gave me a chance to converse and listen to some of the most creative minds within the digital music community. A few things transpired that I want to past along to you.

The record business built enormous infrastructures. The business created lopsided executive run corporations, corporation devoted superstores, a touring industry that offered acts for sale at a loss in order to attract customers, abnormally high revenues, music video and more. The record business is dead and will not be revived. The music business is an old business that is continually growing and changing but it has one main constant. The music business is based on MUSICIANS, Music is social. Music is current and ever changing. The winners in the music business of tomorrow are individuals and companies that create communities, connect people, spread ideas and seed that makes new concepts blossom. This will then help musicians to become necessary and financially rewarded.

Be prepared; if you are a musician learn why certain chords make people feel a different way. Understand why music creates emotions and capitalize on that understanding. If you are a writer learn words, there meanings and usage. Keeping it REAL should never mean being ignorant, selfish and lazy, but being committed to honesty, truth and yourself. Believe me when I tell you that Industries don’t die by surprise. It’s not like they can’t see their demise or didn’t know it was coming. It's not like record executives didn't know who to call (or hire). The major labels saw this coming years ago and planned for the change by developing technology departments, cutting staff, reallocating resources and developing new business models.

The future music business isn’t about having a great idea. The great ideas are out there, for free, all around you for the taking. The music business is about taking initiative and making things happen. The last person to leave the current record business won’t be the smartest and he won’t be the most successful, either. Getting out first and staking out the new territory almost always pays off.

Making a “HIT” does not equate to copying what another person has done. Everyone in the hit business thinks they understand the secret: just make hits. After all, if you do the math, it shows that if you just made hits, you’d be rich beyond your dreams. Of course, the harder you try to just make hits, the less likely you are to make any hits at all. Movies, records, books... the blockbusters always seem to be surprises. Instead, in an age when it’s cheaper than ever to design something, to make something, to bring something to market, the smart strategy is to go against the majority. Keep your costs low and go with your instincts, even when everyone says you’re wrong. Do a great job, not a perfect one. Bring things to market, the right market, and let them find their audience. Following the “RADIO” has never been more wrong. Instead, find products your listeners want. Don’t underestimate listeners ever.
Originally musicians knew who their fans and customers were, because they played in front of them on a regular basis. With the advent of recordings and the recording company the concept of exactly who a musicians fan base was quickly diminished. Now the Internet has revived the concept by having “permission based marketing, or delivering anticipated, personal and relevant messages to people who want to get them. Many musicians have understood that all they need to make a very good living is to have 10,000 fans. 10,000 people who look forward to the next record, who are willing to come to the next concert, who are ready to buy your merchandising and products thus creating a life making music for your fans, not finding fans for your music.

Advertising and subscription services are the money makers of the Internet. Few businesses can successfully sell subscriptions to their customer base, but when you can, the whole world changes. HBO, for example, is able to spend its money making shows for its viewers rather than working to find viewers for every show. The biggest opportunity for the music business is to combine permission with subscription. The possibilities are endless. And I know it's hard to believe, but the good old days are yet to happen.

When you can distribute something digitally, for free, it will spread (if it’s good). If it spreads, you can use it as a vehicle to allow people to come back to you and register, to sign up, to give you permission to interact and to keep them in the loop. Here’s something to remember. More people got iPods for Christmas than any year before. As the iPod population grows, CD sales fall. Once you've got the MP3 on machine, you don't want the disk. Disks sound better than low-res MP3s, but it seems most people don't care. Don't forget, low quality cassettes eclipsed sales of vinyl records, which still sound better than the vaunted CD. Sound quality is not an issue, and won't be until people start acquiring high quality sound systems. The iPod delivers portability. How many people sit in one place and listen to music anymore? Each band is an individual entity that should maximize revenue in all streams. Right now, recorded music is not a great profit center, but you need music to drive the enterprise. At some point in the future, music will not be free. And when that time arrives, we're bound to have a lot of live show acts. Only flavors of the moment will be able to sell out arenas, never mind stadiums. There's a lot of money to be made in the music business. But it's no longer major labels, no longer about begging for a deal, but hard work. Creating consistently good material and spreading the word from fan to fan, treating the fan as a partner as opposed to an afterthought. The record business is dead.

Monday, February 11, 2008

The Grammy's or The Grimey's


Can someone please tell me why we have a Grammy’s? Why is there an award show for the music industry? It absolutely has nothing to do with today’s music industry, for nowhere did the Grammy’s look at the music that is being traded, downloaded or listened to over the Internet. In fact it is as if iPods don’t even exist.

I remember a time where after winning a Grammy you would be insured to sell multiple thousands of new albums in the following weeks. That’s not happening anymore. I remember a time when a Grammy nomination would be advertised at the independent and national stores WEEKS before the event in the hopes of increasing sales. That doesn’t happen anymore.

Who really wins?

What do they win?

What is there to gain?
This year there was an unexpected winner in Herbie Hancock who won album of the year. "You know it's been 43 years since the first and only time that a jazz artist got the album of the year award," Hancock said, then proceeded to honor "the giants upon whose shoulders I stand, some of whom like Miles Davis, John Coltrane ... unquestionably deserved the award in the past. But this is a new day that proves that the impossible can be made possible." DID ANYONE NOTICE THAT THIS ALBUM HAD NOT BEEN PLAYED ANYWHERE ON RADIO? What made it an album of the year? I love Herbie but get real, where was this album last year?

The bottom line is that NARAS (National Academy of Recording Arts & Sciences) makes more money from the Grammy’s than any other event or subscription service that it owns.

If you think this awards show is important, then you must have a financial interest.

Sunday, February 10, 2008

MidemNet The Future of Digital Music

Allen L. Johnston - The Music Specialist

The music business’s future is being rebuilt and the originators of the most popular music on the planet are not even aware of what is happening. In the past year several new business models have been created that will totally change the direction of how music is served and received worldwide. Labels have become retailers and TV channels, mobile phone companies have been turned into multi-media companies while expanding on to the PC platform, live music promoters have signed recording artists and are selling music, merchandizing and licensing their artist’s works while still selling massive amounts of tickets. We have seen the iPod go from music to movies and now become a mobile phone and above everything else all of this new social networking connection has caused advertising to become KING.

Web 2.0
Unknowingly to millions of people Web 2.0 has taken over the way people communicate online. Just in case you don’t know, Web 2.0 is the proliferation of social networking sites such as MySpace, Facebook and YouTube. This growth has occurred so fast that individual artists now have Web 2.0 sites, and Internet leaders such as MySpace have created spin-offs of their own site to capture more users. These sites allow users to communicate between one another at unprecedented levels while sharing personal tastes, ideas and generating massive opportunities for advertising.

Music has become an integral part of these sites with the addition of widgets (specialized software that either plays music or captures information concerning usage) that now effectively gives online subscribers personal players for uploading and downloading music either from their own websites or over social networking sites.

Social networking has also afforded great opportunities to many bands and individual artists. Radiohead showed the world what the consumer wanted was the ability to make up their individual mind about music pricing. Amy Street, an online retailer using the Amazon backbone, offers buyers free music until the downloads become popular then their pricing structure starts increasing with the popularity of the download to a maximum .98 cents (US) with the artist retaining 70% of the revenues and their copyright.

From the Netherlands SellaBand allows unsigned acts to upload their music to its website and offers listeners the opportunity to financially invest in the artist they like. As soon as the act raises $50,000 from its investors, SellaBand provides the professional resources to record the album. Since its launch in August 2006, 11 different acts have raised the required funds and all 11 have placed either major label deals, licensing deals or enormous digital distribution deals.

What is becoming a beast of a concern among labels, retailers and subscription services is the new concept of music for free.

There is a growing swell of advertiser funded digital music services around the world and during this MIDEMNET this became the hotbed of controversy. On one side of the aisle are the traditionalists that believe music must ALWAYS be paid for, irregardless of the format it is in. On the other side are the people that see the web creating a 61 BILLION dollar advertising industry by 2010. These people point to the current figures of 35 Billion for 2007 and only see upward growth. The largest unauthorized music download site today on the web is LimeWire and estimates place this software on one out of every six pc’s in the world, thus proving that consumers still want to receive music FREE.

Advertising supported sites now include Spiral Frog, MySpace, InGrooves, Qtrax, the college targeted Ruckus Network and the French site Deezer. Advertising is also being considered for mobile-distributed music MVNO (mobile virtual network operator) a new concept is the basis for Blyk a new service that offers free airtime for voice and text as long as it users are prepared to receive advertising messages. Participating musical artists will use their websites to invite fans to register with Blyk, which will setup an account and a free mobile communication line to enable artists to reach their fans directly.

Major labels, major publishers, retailers and more argue that advertising based free services will give music fans the impression that they should never pay for music, what I see is that this is a “front” to disguise the fact that the music industry has failed to react to the consumers demand for more digital music free. The fact that the music industry failed to deliver economic models that matched the consumers needs digitally is not the consumers fault. So why should consumers be held liable?

With the proliferation of mobile phone handset makers worldwide Nokia leads the globe with an unprecedented 40% market share. They have manufactured handsets that allow new forms of digital media delivery. Social networking, broadband internet, mobile TV, handsets that can hold up to 6000 songs have made downloading a viable business. Last year when the iPhone hit the market Nokia released the Nokia Music Store, a dual delivery service for mobile and PC downloads, unlike iTunes and other services Nokia Music Store allows users the capability to transfer music to other devices and if you lose your phone you can still have your music on your PC or any other digital device capable of housing mp3’s. NOKIA and UNIVERSAL struck a deal last year that calls for NOKIA to offer music fans access to unlimited digital music for a period of time with the cost built into the price of the portable mobile phone sometime this year.

This has changed the way the world listens to and treats music. Worldwide mobile phone delivery of music and now video is ever increasing and the only thing stopping a wider penetration of delivery is content. This is where you, my reader, can join the new world order. You are the ORIGINATORS of the most widely popular and listened to music in the world and you have a responsibility to uphold. Content is needed for every style of music / video imaginable, content is the deciding factor when people from other countries want to know more about YOUR country. Content is a superior form of education for the masses and a revenue builder for the content creator.

MidemNet made one thing extremely clear. There will be multiple new delivery systems and business models, however without the creative creation of content there can be NO FUTURE.

Thursday, February 7, 2008

Getting Paid From Labels

Allen L. Johnston – The Music Specialist

While sitting in a music conference panel recently it dawned on me that the Independent labels had created a whole new series of individual and small group owned independent SUPPORT businesses . These businesses are flourishing while the independent labels that use them are not.

As a Hip-Hop / R&B / Neo Soul / Rock / Country or Gospel artist you feel that your material should be the hottest in the country. You just don’t know what to do to get started, so based on what you’re seeing and hearing today the first thing you desire is a

Manager – Most individuals imagine that a manager will be the one person that can take an artists career to great heights. Unfortunately the entry level manager knows just about nothing concerning the intricacies of the entertainment industry. At this level it’s ALL about ego and a false sense of power. Many mid-level managers only know how to spend money on delusional marketing schemes and are not creative enough to really enhance an artist’s revenue streams or career.

Consultant – This person is normally hired by the artist or label based on either who they know or the company they used to work for. I recently had a label consultant tell me that he knew how to sell music because he had worked for G-Unit as a STREET TEAM LEADER. The best consultants know how to develop team strategy, work within specified budgets and develop meaningful marketing plans.

Since the majority of today’s artists don’t know how to make music they now need someone who can place music around their lyrics and make people want to listen to them.

Beat Makers – is a name that was created because rappers wanted people to believe that they were solely making the music popular with just their lyrics. It doesn’t matter that the people inventing the music, which ultimately gives the artist their muse, are relegated to an inferior position. They only make the BEAT and sell it for a few hundred or thousand of dollars. This new business is becoming so popular that I have recently seen directories of Beat Makers for sale.

Producer – is the correct name given to the person who not only creates the music, but assembles and mixes the musical project. Sometimes considered Beat Makers, today’s producers are becoming stars in their own right and their fees are becoming astronomical also. It is normal to expect to pay $20,000 - $75,000 per track for the expertise of a Gold or Platinum selling producer, plus own NONE of the publishing royalties. These are the real “ballers” in the entertainment industry for they retain more money, more often.

Since there is a growing cadre of Beat Makers and Producers, then there has to be a business in making the tools these people will need to work with.

Computer recording software – Fruity Loops, Pro Tools, Sonic Foundry and thousands more have been purchased and downloaded on multiple machines around the world. These new recording software businesses have become so wealthy that they are having their own closed vendor shows to network and give rise to newer business models.

Recording has become so removed from the art of making music that people now say “Out of the lab” making recording a Frankenstein phrase. Musical products should instead be a work of genius, emotional yet precise and be originated from creative thought. Once “out of the lab” most labels and artists start immediately promoting the “upcoming” music.

Flyer & Business Card Printers – Computers have made this business easy and home grown. Just in the streets of Charlotte NC alone I saw thousands of flyers, post cards, mini-posters and business cards ALL promoting a new artist, a new band, mix tape or song. This phenomenon is happening in every major, secondary and tertiary city in this country, and it is happening in every major city around the world. Who is reading ALL OF THIS PAPER?

CD Inserts, posters, merchandise – This is normally a 2 or 3 person operation, with one person doing artwork, while another person does the physical machine runs. This business physically makes most large orders obtained from Flyer & Business Card Printers who become the middle man. This company is also working with the…..

CD Duplication – Not to be confused with replication, the duplication process is just copying onto a pre made blank cd. Having to buy the cd duplicating machines is the first qualification for the owners of this type business. Computers have made this business easy to operate as long as you have supplies and your machines are clean and maintained.

Now you’ve got your product and you need to expose it to the world so you can become rich and famous. Of course your ego has told you that your song is HOT and you are the greatest performer of all time. Therefore you need to perform it in front of as many people as you can even though you have never had any training in how to perform. This brainstorm has generated many different varieties of the following business concept.

Night Club showcases – In every town and hamlet weekly showcases have opened, giving the artist a chance to perform in front of an audience. Very few showcases promise any reward and the few that do still use the performers’ audience to make additional money every week. I have yet to find a showcase that actually gave an artist a major label deal as the grand prize, or any artist that received one.

Talent shows – Not to be confused with Fashion show (That’s another article)

Talent Auditions – Normally this is a weeding out process to see who will really pay money to be told that they have NO talent.

Music Conferences – If I read or hear about one more conference being compared to JACK THE RAPPER’S FAMILY AFFAIR I will start a fight. Today’s music conferences leave much to be desired for the new artist. Panels have people talking down to the audience or just promoting the panelists individual agendas. The dress code is loose and so are the attendees who arrive with pre-conceived ideas of grandeur, . What made Jack’s conference the best is that it WAS a family affair, with proper rules of etiquette and a complete cross section of the industry, announcers, store owners, labels, artists and support groups. It was NOT a
DJ’s Summit
Producer’s Summit
How Can I Be Down
Get Seen & Signed

Street Teams – someone has to place this monstrous pile of paper and plastic goods in the street. Teams have become specific as the All Woman Country Music Street Team I met in Nashville recently.

Another avenue of promoting your song or performance is now the impressive…..

Publicists – Dedicated to getting you as much publicity as possible the majority of the new business publicists only have a limited amount of physical contacts and a myriad amount of email addresses. How many times have you seen 80,000 emails sent for $100 or something just as ludicrous. A real effective publicist has writing contacts, print contacts, radio contacts, television contacts and venue contacts.

Periodicals - Have you been able to count the number of genre specific magazines in your city? Not only the Hip-Hop magazines, R&B magazines, Gospel magazines, but now urban lifestyles, hair, business contacts, and networking magazines ALL in print form. Add to that the ever increasing….

Ezines/ E Blasts – Interactive emails that I am receiving about 20 a week publicizing concerts, shows, new songs, new artists, and other entertainment events. This seems to be the wave of the future reaching the consumer directly.

Internet Radio shows – There is now a radio show or pod cast for every type of music and genre available. You can hear it over the Internet at any time day or night.

When you are ready you are told that retail distribution is the only way you will ever see any substantial financial reward from your product. The reality is that if you were organized you could make more money selling your own product.

Distribution Services – This is really the new business model for making money off labels that never sell records. You offer the label or artist distribution then you charge them for everything you do.

Major Independent Distribution - First to get your product into a major indie distributor you must pay another company that already has a distribution deal with the major indie, thousands of dollars to be able to be a subsidiary company. Next you must hire a liaison that has a relationship with the major indie distributor to make sure that your product has preferential treatment. Finally you must hire a radio promotion person to TRY and get you airplay in several different cities over different radio stations all during a specified time period that should coincide with the product release and video showing.

Mid-Level Independent Distribution – This new business model is popping up at a surprising rate. Companies are now charging labels AND artists to distribute their product. Additional charges include storage fees, shipping fees, marketing fees, distribution fees, advertising fees and the new digital distribution fee. These distributors seldom have direct access to the larger chain stores (Best But, Wal-Mart, Target, etc) and must use another company to help them sell.

Digital Distribution – More and more companies are popping up claiming to be able to place your music on digital download sites and ringtones. These companies have a reputation for telling the artist that they are going to get a lot of money, while the reality is that the creator and owner of the music makes about15% of all the money from online purchases. Phone companies get the money, take a percentage then send money to the phone carrier who takes money then sends it to the mobile aggregator who takes money then sends it to the company that represents your music. You are seldom told that you must pay for ALL marketing & promotional services online & offline.

Online Stores – The new online store model is for either digital delivery or physical delivery. Once again most online stores are either individually owned by the artist and label, or leased operations where the store owner does not control the product or the money from the purchase. One of the best examples of this type of operation is BurnLounge, by the way whatever happened to all of those people claiming that this was the wave of the future?

There are many adaptations on the above named new businesses, but one thing remains constant. The independent labels are disorganized, unfocused and not realizing the multiple revenue streams available today. Instead of making money labels and artists are supporting many new businesses.