Good News

In December of 2007, I read a story that instantly became one of my favorite anecdotes for whenever I would find myself discussing quality. Ian Rogers (who was then the head of Yahoo! Music) told it. Greg Latterman of Aware Records (a Columbia label) had lobbed a tired old complaint: Kids don’t think music has any value. Ian disagreed, and won the argument, calling out the industry for not leveraging the massive scale of today’s music fans, who are out there recognizing and even creating value. “They’re writing blogs about your artists, putting bios on Wikipedia, documenting last night’s concert on Flickr and video sharing sites, showing what songs are most popular by their behavior on Last.fm, building “box sets” on community sites… How has the music industry leveraged this? What tools have you created to enable or encourage it?”

And Ian told a story about quality:

Every time I say “quality is hyper-efficient” someone asks me if I am saying that our kids aren’t going to watch and listen to crap anymore. Of course they are, but they are going to watch and listen to exactly the crap they want to watch and listen to. It’s not really quality we’re talking about here, it’s relevance…

Never was this more clear to me than when I spoke to a room full of teenagers at the National Youth Leadership Forum on Technology. I asked the kids how many of them had seen the “Lazy Sunday” clip from Saturday Night Live. Nearly 100% raised their hands. I asked how many of them saw it on television as opposed to YouTube. None had. I pointed out that in essence negative marketing dollars were spent trying to get them to watch the clip; NBC actively tried to KEEP them from watching it and yet they still all saw it.

Then I asked how many of them had seen the new Superman movie (which was out 2-3 weeks at the time). About 10-15% had seen it. I then asked them why they’d all seen something that had less than zero marketing dollars spent and on a relative basis none of them had seen something which had millions in marketing spent trying to get them to see it. After a short bit of silence one kid finally raised his hand and offered, “Because it’s funny?” YES! Because it’s good, and your friend said you had to watch it, and when you watched it you said the same thing to ten friends.

Our kids are going to watch exactly what they want to watch, not necessarily what’s marketed to them.

Now, Ian runs Topspin Media, a company dedicated to providing artists with interactive tools for marketing directly to their fans and building successful businesses. You’ve probably seen (and used) their widgets to get an MP3 from a band you dig in exchange for an email address. You’ve probably read success stories about their bands, maybe Metric, Fanfarlo, or Get Busy Committee. You may have seen the Wired interview with Ian we posted awhile back, and you may have read some of the reports Topspin are eager to share with the world with proof of a theory we all share around here: Fans are willing to pay for music. And more than the cost of a CD.

We recently caught up with Ian, and talked shop as he made it through town from an early morning session at the Venice Skate Park to LAX. We want to share with you the conversation, an optimistic one for a change, on the future of the recorded music industry.

At the labels, it’s all about SoundScan numbers. Online, it all comes down to comScore numbers. For you, what’s the progress report?

Our report card [is] just your return on investment. I think the main thing is that the model is changing from one success propping up 15 failures to being where you really can follow something from being really small through organic growth, and you can make money the whole way, or you can at least not lose too much money in the beginning and then you can make money if it has legs and it grows, sort of just like a start-up.

I think in a lot of ways, you know, artists are entrepreneurs, and some ideas are really good when you’re an entrepreneur, and… a lot of them aren’t. But you know, it’s just like in the investment world, it’s not like everybody goes and raises $100 million and then a few IPOs prop up a bunch of failures. In the investing world, the name of the game these days is bootstrapping and angel investing, and it’s sort of the same thing from an artist’s perspective.

Some people do really well selling from iTunes, some people have done well selling direct to fans, some people get a synch that sort of gets them their yearly nut… Your revenue comes from a number of different sources… I think the thing is that artist and managers need to just look at, ‘Alright, what are all of my possible revenue streams, what drives each of those revenue streams, and then how do i optimize each of those?’

Do you see wildly different ratios from band to band, in terms of… This band here collects a lot of email addresses but it’s not turning into sales, but then this band over here has a lot of sales, compared to emails collected, just from strong word of mouth…

You know, not really. There’s a lot of variability in different ways, but for the most part, the conversion metrics are pretty static. The X-factor of course, is quality, right?

Relevance?

Exactly. Relevance to the audience. On the Brian Eno record, we were seeing that 20% of everyone who listened to the record bought the record. But that was a great record, I mean it was an exceptional album. And the same thing with Metric… Fanfarlo we saw the same thing, high number of shares, lots of purchases, but you’ve got… With Metric, you have a really great record by a band who has spent 5 years building a loyal following and has sort of hit that tipping point, and then with Fanfarlo, you had an exceptional word of mouth record, where when you heard it, you couldn’t believe you hadn’t heard it before, and you wanted to tell five people about it.

So there’s definitely a lot of variability that has to do with the content, but really… What you see is people with more emails sell more. Those sorts of things are pretty universal. There are definitely some generalizations you can make based on what we’ve seen so far. The top two things that anybody should be doing is collecting email addresses and worrying about search engine optimization. Because as unsexy as that may be, those are always the two main drivers of sales, people coming in off of search engines, and people coming in from the email list.

[Yet] the other parts of the campaign definitely matter. With Metric for example, they see a large number of sales coming from MySpace. They say MySpace is dead, but we actually see a decent amount of purchases come out of there.

There’s definitely some generalizations you can make, which is good, because what you can often do then is use those generalizations to find where you’re underperforming and where there’s money being left on the table. If you have an artist who is doing really well with their email, and their SEO is okay, but only like 2% of their sales are coming out of MySpace, you can go hey, you know what, if you actually directed the MySpace traffic well and reached out to the MySpace fans in the right way, there’s probably revenue to be found there.

People are saying that streaming is the next step, that iTunes is already the past, and the future of music looks more like Spotify.

I don’t think there’s any question. The business models follow consumption, and consumption is clearly going to move from downloads to all-in access. Just think about it, who needs to buy a 99¢ download when your iPod could just stream whatever you want to hear? There might still be a la carte models, the way Lala does streaming a la carte, but you definitely won’t need to buy a 99¢ download and then connect your iPod to your computer and transfer it, that’s just kind of an absurd notion really when you think about what the future is going to look like, you know?

Well yeah, though what’s absurd now was revolutionary just a few years ago, and yet it’s still ahead of where the major label record industry seems to be, pushing plastic discs… But you know, with them, the what isn’t really as interesting to me as the why… Can you play devil’s advocate, and tell me why first week sales are so important?

It’s really, it’s the blockbuster versus the snowball, right? The blockbuster model is just, you get huge first week sales, everything that you do drives everything else that you do. When I can tell this radio station and that radio station that Sade sold half a million units, they go, ‘Okay, well people must be all over this, so I better jump on it too.’ That totally works for that model… and you know what? It works really well. It’s a nice gig if you can get it. I definitely don’t disparage anybody who wants to go that route. If you can have that limited distribution, then you can really get big numbers. I’d love to see radio play for every band I work with, because it works.

But I definitely think that for a lot of bands, it just doesn’t build that way. And it doesn’t need to. If you look at a Metric, or an Owl City, or et cetera, you build those things over time.

We’ve talked to a few artists who are on majors, but that maybe signed a little early in the game, who are not as well established as some of their labelmates, and they’re looking for artist development but not really getting it. And they’re like, ‘If we had the same shot as Sade, or AC/DC, if we got the same push, we’d deliver numbers.’ They don’t get it, don’t get numbers, and then find themselves on their own for that long term, more gradual build that they need to work for…

It’s all about resources. I just had this conversation with Mark Reiter from Q-Prime. And he works with everybody from Metallica to Josh Groban to Donovan, and the conversation we were having was, it’s just all about resources. A management company doesn’t have all of the resources that it needs to really launch a record. You’ve got to put a team together. And a lot of times that team is and should be a label. But a lot of times they don’t have the resources at the label. They say, ‘Oh my god, I’m working 13, 14 hours a day,’ and if you’ve got a Sade record going off, and you’ve got this baby band that you can’t get anyone to call you back on, you’ve only got so many hours in the day. So it’s all about getting exactly the right team together.

Sometimes you talk to some people, like you talk to the Flaming Lips who are on Warner Bros., and they’re like, ‘We love Warner. They do a great job for us.’ Because they’ve actually put the resources in, they went and made a psychedelic record, and Warner Bros. found the resources to do what they had to do to get it out there.

I think at the end of the day, it comes down to people. It’s not about big or small, it’s about: Do you have the right team, and is that team really working their asses off for you? Because the fact of the matter is it’s work. Putting a record out is work. And whether your team is people at Warner Bros., or people at Matador, or people that your label hired, what you need most is really smart people waking up every day going, ‘Alright, what are we going to do today to get the record to another X thousand people?’ And that’s what it comes down to.

Even at a big label, how many people are really working on your record, you know? I bet that there are no more people working on the Sade record than the Metric record, and Metric is 100% independent, and Sade is on Epic. It’s just, you know, in both cases you have really great people who are waking up every day going, ‘What are we going to do to get this record to the next place?’ When you hear an artist going, ‘Man, the label didn’t do shit for me,’ a lot of times that might be the case, maybe there was a lot going on, and they weren’t a priority, and the label just straight up made a decision to say, ‘We’re not focusing on this.’ But look, a shitty manager can do that too.

Well shit, I always just take that kind of talk and compare it to life in any other industry. If you’re a contractor, a landscaper, a plumber, shit happens all the time, you align with the wrong people, and you can get fucked in all kinds of big and small ways.

So. You’ve decided that you’re going to try and make a career out of being a musician. Maybe it’s not the 80s anymore, but what are your odds, if you just want to make a good living?

That’s a really good question. I think it really depends on what the audience for your music is. If your music has mass appeal, I think you have a better chance than ever at making a good living… Talking about the music and touring and everything earning you several hundred thousands of dollars a year. Of course you have to be careful about how many mouths you’ll have to feed there, right? It definitely doesn’t pay to be Parliament Funkadelic with 25 dudes on stage.

(Laughing) Yeah, and well… I mean, I see all that overhead as like, a guy in a garage going from just having a skill… Directly to running a business. Which is hard, no matter what kind of business it is.

Well also, it doesn’t need to be that way necessarily. Look at a guy like Joe Purdy.

A good friend of ours.

I mean he bought a house, and I mean, how many people have heard of Joe Purdy? When I say mass appeal, I’m not talking about Miley Cyrus, I mean even you know, Yeasayer, where you have something that a core group of people are going to be passionate about. Then I think you have a better chance than ever.

If you just compare new to old, with the [new school], you can get out there, you can sell 30,000 to 100,000 records, a good portion of them can be direct to fans, where you can make a majority of the money, you can have a good touring base, you can get some good synch placements maybe if you align yourself with the right folks (that’s a pretty limited audience too, and maybe not for everybody, but certainly something that if you’re a Metric or a Yeasayer, it’s very doable). And you can make a decent living, making art.

Now, look, at the same time, my estimations tell me there’s probably 40,000 to 60,000 people in the world to whom that applies. And there are, depending on your count, there are like 3 to 5 million bands on MySpace, and north of 450,000 I think on the ReverbNations of the world. So you can kind of do your odds that way.

Well, so let’s compare that to other industries. Let’s say you can fix a car. How qualified does that make you to earn a living as a mechanic? Are the odds of turning a passion into a career any higher or lower for musicians?

It’s a good question. I mean I think it’d be interesting to really compare it to how many successful entrepreneurs there are in the world. How many people that have an idea can then build a successful company? I’d imagine they’re pretty similar. I’d imagine there’s some kind of like, human constant, right? At the same time… You might have wanted to be an artist, but you might find out that you’re better working in a studio or something… There’s a lot of jobs out there; it’s a $60 billion business, music. Music worldwide is like $150 billion. [But] if you look at just recording music, and touring and publishing, it’s about $55 billion. So there’s plenty of money to go around. There is still a shocking number of people making a million dollars a year or more at major labels. I think those are even more once in a lifetime jobs than being a musician at this point.

There’s no better time to be an artist. I really believe that. It might sound… I mean, I am an optimist, to a fault, so you know, I’ll cop to that. But I’m also somebody who personally has always believed in niches. I grew up with Dischord and SST and Mordam and Alternative Tentacles, et cetera, and I just think the future looks like that. I think the future looks more like Matador than like the past, where you know… We’re moving from a mass market to a mass of niches, and people can run good businesses with low overhead and have great success. I think the things that people should be looking to are labels like Secretly Canadian and Jagjaguwar, and what Matador is doing, and the Beggars Group, Sub Pop even… There’s a bunch of examples out there of people who aren’t… I mean, they’re definitely being “hit,” but when you talk to them about their business, they’re like, ‘Look, the Fleet Foxes of today have a much better shot today, of reaching their audience, because of the way things have changed.’ They don’t need radio play to get the kind of success they have.