Reported by Naddi Zschiesche
April 2, 2008
Last week we attended the Urban Network Summit in Newport Beach at the Hyatt Regency Hotel. The conference celebrated the best in urban music, and featured many experts who shared their knowledge about marketing, promotion and making a mark in the brave new world of the music business today.
Photo: Real Content Group CEO John Huffman, IV
GOSPEL MUSIC PANEL II: Staying Profitable in a Download World
Gospel music is a growing niche and occupies a unique space. Part inspiration, part Christian, all urban, it is a category that requires especially careful consideration in marketing. Even so, gospel music marketers and artists share similar concerns with artists from other genres, such as, the economic viability of 360-deals.
Don’t do it!
That was the essence of what entertainment attorney Barbara Graham (Eastman, Dillon & Graham) recommended, saying that the only time she would consider a 360-deal for her clients would be if it were with Live Nation. “Labels don’t care,” she said, indicating record companies just want to get a percentage but may not have the staff to support 360 degrees of effort. In practice, she said, a 360-deal “knocks a manager out of the box” because a label will take 25 – 30% under such a deal, and then the artist would still have to pay an additional 15% commission to a manager, which doesn’t make sense economically.
Marketing Symposium: Connecting The Dots Between Online & Physical Worlds
Following the Gospel Music Panel, we attended the discussion about connecting the dots between the online and physical worlds, which everyone is trying to do. Atlantic Record’s Senior VP of Marketing James Lopez said that most artists still earn more money from live performances and merchandise than from physical music. He mentioned the ‘good old days’ in which artists really put on a show, which is not so much the case anymore. Today, he said, artists “perform the single for 15 minutes and then hit ‘remix.’” Rhythm & blues and hip-hop, he said, have been to focused on getting the record deal, which leaves money on the table from NOT touring.
Giving examples of heritage artists such as the O’Jays, The Temptations and The Rolling Stones, he pointed out that these groups bring in millions of dollars in touring alongside with modest record sales. “I’ve seen our generation get spoiled with big record advances,” he said. “Those days are over.”
The big money is in touring and merchandise if run properly. Lopez pointed out the success of a group called Little Brother, a “well-oiled machine.” You may never see a video of them or hear their music on the radio, but they can tour anytime and sell out any House of Blues in the United States. Their merchandise sells “like crazy” and they put on a great show.
Mozes CEO Dorrian Porter chimed in here, saying the real question artists and their reps should ask themselves is, “how do I create a great experience for my fans?” and not “how do I monetize?”
Attendees were encouraged to sign up for the Linkin Park and Nine Inch Nails fan club lists as an example of who’s doing it right. Said one speaker, these groups are always giving away free goodies laced in with product for sale. They’re set for the rest of their careers because they’ve built a community, one fan at a time. This takes dedication and time, but it can be done and should be the goal of any serious artist.
Some artists are able to engage their fans with CDs that contain a special code, which register the fan as soon as he inserts it in his computer. Authors of the CD (whether it be artists or savvy marketing execs) then know who you are and where you are. To induce this automatic registration, the fan receives a special marketing offer such as pre-order of concert tickets, a special T-shirt or previews of new videos. This also encourages an ongoing relationship between the artist and fan, which hopefully results in sales of concert tickets and merchandise beyond the music.
I stood up and asked a question about the importance of visual impressions with digital music (which raised a cheer from the audience).
Media / Digital Panel & Breakout Session
Before the next session, I had a chance to speak with artists and industry professionals about our LAMN Jams and the state of the music industry in Germany (my home country). Next, we attended the Media / Digital Panel & Breakout Session which featured fifteen (!) panelists.
Act Like A Business
A few nuggets from this panel came from BFM Digital President Steve Corn, who said that one of the most important things about being in business is acting like a business. For example, it’s important to get your own UPC code (and not simply borrow someone else’s) or ISRC code which, like a fingerprint, is unique to every track (song). People who are serious about business take the trouble to do these seemingly small but hugely important things. In addition, he said that the “new” world [of distribution, etc.] is the same as the “old” world, but what’s worse is that now you don’t know who bought your music.
HipMode Founder Toby Morning talked about the real need industry standards in the digital world. All digital distributors track and account differently, which is maddening when trying to reconcile statements from more than one of them. If digital music companies tell you that you sold X many records and pay you, how do you know if you’re being paid the correct amount? How much money disappears or is left on the table, and how can that be known and controlled?
Panel moderator Ted Cohen said that major labels recognized the need for this early on and wanted to develop a universal system some years back but because of anti-trust laws, were prevented from doing so, hence the hodge-podge of standards.
Because of digital music companies like Tunecore.com, artists can make their music available much more easily than ever before, but the need for marketing is also greater. In fact, a return to regular old street marketing is not a bad idea.
One positive development is that in the past, there were perhaps 2 really good songs out of 20 tracks. Today a much higher proportion of songs are good, according to panelists, because they have to be – the competition is so fierce. Unfortunately, consumers also resist paying for one song more than once. They don’t want to pay for the CD and the MP3, ringtone and video if it’s the same song.
An Attention Economy
One of the greatest challenges of stimulating music sales in the digital world is capturing the attention of an audience and keeping it. Said Cohen, “We’re in an attention economy.”
Some good needs is that revenue splits are much more favorable to artists these days. In the past, the norm for label splits for 85/15 favoring the label, but today’s deals flip that ratio. Not the artist keeps the bulk of revenues and digital aggregator must put up money to market and promote. On the other hand, today’s artist must also assume far more responsibility for marketing than ever before.
Real Content Group CEO John Huffman IV talked about smart money and how to get it, giving an example of how his company contacted the iTunes Marketing Department and involved them in a $100,000 cooperative campaign on behalf of music client Rissi Palmer. Because of the smart execution of the campaign, 45 days after it launched Real Content had stimulated enough sales to pay for its half of the campaign ($50,000) and then some.
We relaxed at the end of the day on the outdoors patio next to a warm and cozy fire, and shared dinner with BFM Digital’s President Steve Corn and his partner Jayson Johnson who is also CEO of Royalty Entertainment Group. The talk turned to the effectiveness of various digital distributors, and how difficult it is for novices and experts alike to properly comparison-shop the various services each one of them provides.
With a full stomach we headed over to the energetic and uplifting Indie Gospel Showcase which featured Cynthia Jones, the City of Refuge Sanctuary Choir and many more, as a great end of the day. What an excellent way to end the day, it was packed full of good information and friendly new people! I had a great time at the Urban Music Summit, learned so much and before leaving, bought a CD of the City of Refuge Sanctuary Choir (highly recommended!).
James Lopez was right – there is nothing as effective as a great live performance to get me to buy a CD!
SOURCES FOR MORE INFORMATION:
www.atlanticrecords.com
www.bfmdigital.com
www.linkinpark.com
www.nin.com
www.realcontentgroup.com
www.urbannetwork.com