Redefining the Industry / Fan Connection at LMDS
Robert L. Doerschuk
July 11, 2009
As technologies accelerate, channels of commerce proliferate and issues undreamed of even a few years ago demand attention, the lessons of the fifth annual Leadership Music Digital Summit (LMDS) can be pared down to one simple but essential truth.
That would be that the music industry's prime mission is to service the consumer - and, while they're at it, to think of that person primarily as a fan rather than, at least initially, a targeted potential buyer. As stated by Duncan Freeman, President, Bandmetrics, at "Drastic Measures: New Metrics in the Music Business," "It's not mainly about sales anymore. Sales are a byproduct of that meaningful relationship" between artists and fans.
That idea occupied most of the panels during this annual assembly of music business innovators. Over two days in March, more than 850 attendees gathered in the Curb Event Center at Nashville's Belmont University for addresses, interviews and discussions.
The Summit opened with a debate over copyright law in the YouTube era, followed by proposals for creating a universal and accurate publishing database, passionate demands for prosecuting online pirates, a look at ISP liability for unauthorized music distribution and a guide to networking in Music City that brought the conference to a close.
In every context, the point was reiterated that today's listener harbors unprecedented power and high expectations. Conversations ensued over how artists, record labels and everyone else in the music business can monetize their relationship with that listener.
Current economic conditions make this challenge even more complex. In "Just the Facts: State of the Industry and Consumer Trends," Russ Crupnick, VP and Senior Industry Analyst, The NPD Group, cited figures from a survey conducted by his company last August in which older consumers, the most active CD buyers, voiced their intention to reduce entertainment expenditures by 35 percent even before the "economic meltdown" that would follow just a few weeks later. He noted among those who purchase entertainment products, CD purchases account for only 15 percent of those expenses.
These and other statistics indicate not that the consumption of music is down but the means by which it is acquired are in transition. There are encouraging signs that peer-to-peer file sharing has given way to paid legal downloads as the dominant means for moving music over the Web, in part because of apprehension over spyware, spoof music and other byproducts of unrestricted transmission.
Of greater concern to the pay-and-purchase model is a potentially significant trend. Crupnick reported NPD's finding that teens, while continuing to show great interest in attending live shows, are abandoning the idea of collecting music in favor of accessing it. This points toward subscriptions becoming an increasingly viable approach of monetizing the listening experience.
His point was echoed by Rio Caraeff, Executive VP, eLabs, Universal Music Group, who opened his keynote address by asserting that "the concept of selling music is antiquated. Access to music is more important than ownership of music." However alternate strategies may allow the industry to capitalize on this development, including one that harked back to the vinyl era.
Citing his father's work as a photographer and album cover designer, Caraeff argued that digital music has stripped a tactile element from the purchase of music that was vital to previous generations of consumers. "We've broken out the music and left packaging up to the retailer or device manufacturer," he said. "With music piracy, there's no difference between what you buy and what you can steal. The content, in this scenario, becomes worthless" and the presentation of music shrinks down to "a cold, antiseptic spreadsheet."
This opens the door toward adding value, even in the non-tactile online world, through engaging fans in artwork, offering lyric transcriptions and otherwise "reinventing the concept of the album" along the lines of what he dubbed a "Wiki-package."
Michael Masnick suggested the concept could be broadened to incorporate a more interactive physical component of experiencing music. In his keynote presentation, the Editor of the technology and business analysis-oriented Techdirt Blog and President and CEO of the "insight company" Floor64 examined recent campaigns that in effect trumped illegal music distribution, embraced fans and turned a significant profit to boot.
He focused on Trent Reznor, leader of the group Nine Inch Nails. For his album Ghosts I-IV the artist began by posting nine of its 36 tracks on his Web site for free download - but then added options for value-added purchases that rose to a $300 "ultra deluxe edition" that included vinyl as well as CD, personally autographed items and other incentives. Only 2,500 copies were readied - and all were sold within 30 hours, adding up to an immediate $750,000 in sales and helping to boost Ghosts I-IV to the top of www.amazon.com's best-selling MP3 albums of 2008.
Masnick cited a number of other campaigns, by artists less established than Reznor, all of which suggested that strategic giveaways of music, combined with involving fans creatively, have stimulated income streams for artists and record labels that include music sales. And in scanning the horizons, panelists under the spotlight and attendees mingling during lunch breaks agreed that mobile phones are well on their way toward becoming the critical medium for accomplishing this goal over the next few years.
Discussions of this topic veered often toward granular levels, such as the market for SanDisk's microSD cards that can store up to 1,000 songs in phones, and toward problems still to be addressed in establishing mobile phones as playback media. "Eighty-three percent of music listening today is still radio because all you do is that," insisted Dave Ulmer, Senior Director, Multimedia, Motorola, illustrating the point by jabbing his finger against an imaginary button during "Mobilizing Music: From Ringtones to Revolution." "Simplicity is everything - and we haven't done our part to make it easy."
Yet mobile phones have already made themselves the cornerstone of a rapidly evolving music industry model. At "Mobilizing Music, Part II: Cultivating a Fan Base on the Road," John Gusty, VP, Marketing and Artist Relations, echo, declared, "The best viral marketing an artist can possibly have is sitting right in front of them at a live show. It's the ultimate opportunity to grab data and with that data communicate back to fans, whatever the objective may be."
As tantalizing as this technology is, putting it to use requires a common-sense first step: You've got to have some people on your list to call. Luckily, it's easier than ever to attain this goal. Gusty gave one example of how even a new artist could get this ball rolling. "In the course of an interview on radio, the artist could say, 'If you text this keyword to this short-code, I'll give you a free download.' With that one sentence, that artist is creating a fan base through mobile data collection."
The job is even easier for major acts. In any case, once adequate numbers are achieved, a protocol of communicating with those fans has to be established, consistent with their perceived and real empowerment. In the uniquely personal dynamic of how artists and their fans relate, that lesson is already understood. Chris Stacey, VP, Music Industry, Mozes, told attendees at "Fan Base on the Road," even he was bowled over when he received a text message from Faith Hill, indicating that she had left him a voicemail message - not knowing that it was part of a campaign that his own company had just set up.
"I connected," he remembered, laughing. "The message was really cool. It was like, 'Hey, it's Faith. I just wanted you to know I'm so happy spring is coming. The weather is finally warming up. What are you doing right now? Call me and let me know!'"
Gusty amplified on the use of mobile phones to enhance the concert experience while also harvesting data. When LeAnn Rimes was opening on "The Poets & Pirates Tour" in 2008 with Kenny Chesney and Keith Urban, her latest single was "Good Friend and a Glass of Wine." "Each night in front of this enormous audience, she said, 'I'd like to bring some of you backstage to have a glass of wine with me and my husband.' You could watch the numbers just pour in. We picked the winners right there, and in 17 shows we went from zero to 25,000 on our database numbers - and she was third on the bill, playing in daylight."
The moral here, and of the Summit as a whole, is that fans who are approached with respect are more likely to become customers. Stacey described a campaign Mozes undertook in which 10,000 fans in Urban's mobile database received a phone message from him, inviting them to take part in a one-day discount sale of T-shirts. "We sold 435 T-shirts in two hours and generated $9,000 in merchandise with that one text blast," he remembered.
"That brand [Urban] is very respectful of fans," Gusty observed. "His e-mail isn't spam. I know of other clients who have lists just as big if not bigger than Keith's, and it wouldn't have monetized out the same way because those particular communities may have been either abused or neglected, so when there's a call to action it's not as responsive."
Or, as stated by Greg Estes, VP, Marketing, Mozes, at "From Ringtones to Revolution," "There's a time and place to monetize and a time and a place not to."
On the Web: www.digitalsummit.org
2009 CMA Close Up® News Service / Country Music Association®, Inc.
That would be that the music industry's prime mission is to service the consumer - and, while they're at it, to think of that person primarily as a fan rather than, at least initially, a targeted potential buyer. As stated by Duncan Freeman, President, Bandmetrics, at "Drastic Measures: New Metrics in the Music Business," "It's not mainly about sales anymore. Sales are a byproduct of that meaningful relationship" between artists and fans.
That idea occupied most of the panels during this annual assembly of music business innovators. Over two days in March, more than 850 attendees gathered in the Curb Event Center at Nashville's Belmont University for addresses, interviews and discussions.
The Summit opened with a debate over copyright law in the YouTube era, followed by proposals for creating a universal and accurate publishing database, passionate demands for prosecuting online pirates, a look at ISP liability for unauthorized music distribution and a guide to networking in Music City that brought the conference to a close.
In every context, the point was reiterated that today's listener harbors unprecedented power and high expectations. Conversations ensued over how artists, record labels and everyone else in the music business can monetize their relationship with that listener.
Current economic conditions make this challenge even more complex. In "Just the Facts: State of the Industry and Consumer Trends," Russ Crupnick, VP and Senior Industry Analyst, The NPD Group, cited figures from a survey conducted by his company last August in which older consumers, the most active CD buyers, voiced their intention to reduce entertainment expenditures by 35 percent even before the "economic meltdown" that would follow just a few weeks later. He noted among those who purchase entertainment products, CD purchases account for only 15 percent of those expenses.
These and other statistics indicate not that the consumption of music is down but the means by which it is acquired are in transition. There are encouraging signs that peer-to-peer file sharing has given way to paid legal downloads as the dominant means for moving music over the Web, in part because of apprehension over spyware, spoof music and other byproducts of unrestricted transmission.
Of greater concern to the pay-and-purchase model is a potentially significant trend. Crupnick reported NPD's finding that teens, while continuing to show great interest in attending live shows, are abandoning the idea of collecting music in favor of accessing it. This points toward subscriptions becoming an increasingly viable approach of monetizing the listening experience.
His point was echoed by Rio Caraeff, Executive VP, eLabs, Universal Music Group, who opened his keynote address by asserting that "the concept of selling music is antiquated. Access to music is more important than ownership of music." However alternate strategies may allow the industry to capitalize on this development, including one that harked back to the vinyl era.
Citing his father's work as a photographer and album cover designer, Caraeff argued that digital music has stripped a tactile element from the purchase of music that was vital to previous generations of consumers. "We've broken out the music and left packaging up to the retailer or device manufacturer," he said. "With music piracy, there's no difference between what you buy and what you can steal. The content, in this scenario, becomes worthless" and the presentation of music shrinks down to "a cold, antiseptic spreadsheet."
This opens the door toward adding value, even in the non-tactile online world, through engaging fans in artwork, offering lyric transcriptions and otherwise "reinventing the concept of the album" along the lines of what he dubbed a "Wiki-package."
Michael Masnick suggested the concept could be broadened to incorporate a more interactive physical component of experiencing music. In his keynote presentation, the Editor of the technology and business analysis-oriented Techdirt Blog and President and CEO of the "insight company" Floor64 examined recent campaigns that in effect trumped illegal music distribution, embraced fans and turned a significant profit to boot.
He focused on Trent Reznor, leader of the group Nine Inch Nails. For his album Ghosts I-IV the artist began by posting nine of its 36 tracks on his Web site for free download - but then added options for value-added purchases that rose to a $300 "ultra deluxe edition" that included vinyl as well as CD, personally autographed items and other incentives. Only 2,500 copies were readied - and all were sold within 30 hours, adding up to an immediate $750,000 in sales and helping to boost Ghosts I-IV to the top of www.amazon.com's best-selling MP3 albums of 2008.
Masnick cited a number of other campaigns, by artists less established than Reznor, all of which suggested that strategic giveaways of music, combined with involving fans creatively, have stimulated income streams for artists and record labels that include music sales. And in scanning the horizons, panelists under the spotlight and attendees mingling during lunch breaks agreed that mobile phones are well on their way toward becoming the critical medium for accomplishing this goal over the next few years.
Discussions of this topic veered often toward granular levels, such as the market for SanDisk's microSD cards that can store up to 1,000 songs in phones, and toward problems still to be addressed in establishing mobile phones as playback media. "Eighty-three percent of music listening today is still radio because all you do is that," insisted Dave Ulmer, Senior Director, Multimedia, Motorola, illustrating the point by jabbing his finger against an imaginary button during "Mobilizing Music: From Ringtones to Revolution." "Simplicity is everything - and we haven't done our part to make it easy."
Yet mobile phones have already made themselves the cornerstone of a rapidly evolving music industry model. At "Mobilizing Music, Part II: Cultivating a Fan Base on the Road," John Gusty, VP, Marketing and Artist Relations, echo, declared, "The best viral marketing an artist can possibly have is sitting right in front of them at a live show. It's the ultimate opportunity to grab data and with that data communicate back to fans, whatever the objective may be."
As tantalizing as this technology is, putting it to use requires a common-sense first step: You've got to have some people on your list to call. Luckily, it's easier than ever to attain this goal. Gusty gave one example of how even a new artist could get this ball rolling. "In the course of an interview on radio, the artist could say, 'If you text this keyword to this short-code, I'll give you a free download.' With that one sentence, that artist is creating a fan base through mobile data collection."
The job is even easier for major acts. In any case, once adequate numbers are achieved, a protocol of communicating with those fans has to be established, consistent with their perceived and real empowerment. In the uniquely personal dynamic of how artists and their fans relate, that lesson is already understood. Chris Stacey, VP, Music Industry, Mozes, told attendees at "Fan Base on the Road," even he was bowled over when he received a text message from Faith Hill, indicating that she had left him a voicemail message - not knowing that it was part of a campaign that his own company had just set up.
"I connected," he remembered, laughing. "The message was really cool. It was like, 'Hey, it's Faith. I just wanted you to know I'm so happy spring is coming. The weather is finally warming up. What are you doing right now? Call me and let me know!'"
Gusty amplified on the use of mobile phones to enhance the concert experience while also harvesting data. When LeAnn Rimes was opening on "The Poets & Pirates Tour" in 2008 with Kenny Chesney and Keith Urban, her latest single was "Good Friend and a Glass of Wine." "Each night in front of this enormous audience, she said, 'I'd like to bring some of you backstage to have a glass of wine with me and my husband.' You could watch the numbers just pour in. We picked the winners right there, and in 17 shows we went from zero to 25,000 on our database numbers - and she was third on the bill, playing in daylight."
The moral here, and of the Summit as a whole, is that fans who are approached with respect are more likely to become customers. Stacey described a campaign Mozes undertook in which 10,000 fans in Urban's mobile database received a phone message from him, inviting them to take part in a one-day discount sale of T-shirts. "We sold 435 T-shirts in two hours and generated $9,000 in merchandise with that one text blast," he remembered.
"That brand [Urban] is very respectful of fans," Gusty observed. "His e-mail isn't spam. I know of other clients who have lists just as big if not bigger than Keith's, and it wouldn't have monetized out the same way because those particular communities may have been either abused or neglected, so when there's a call to action it's not as responsive."
Or, as stated by Greg Estes, VP, Marketing, Mozes, at "From Ringtones to Revolution," "There's a time and place to monetize and a time and a place not to."
On the Web: www.digitalsummit.org
2009 CMA Close Up® News Service / Country Music Association®, Inc.
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