TRUTHS ABOUT THE MUSIC BUSINESS 2008

TRUTHS ABOUT THE MUSIC BUSINESS 2008
Allen Johnston – The Music Specialist
www.asha.com

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.