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March 16, 2008

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dml

for better or worse, this is a good thing for Birdmonster. they are a good band, but not a fantastic outstanding one and a little bit of support will help their cause.

Adam Wexler

Hey Chris,

Great to hear a success story like Birdmonster. They did it the right way, and now they're reaping the rewards.

I manage a band myself, and I always tell them that the music will speak for itself at a certain point. Until then, they need to do everything they can to promote the hell out of not only their band, but also their overall brand.

The music business may be in chaos, but MUSIC is thriving like never before! The accessibility channels are as great as ever and music consumption is at all-time highs. From the thought of that, I fully agree there's never been a better time to be a musician or a fan.

Peter Kohan

On the one hand, the Birdmonster example illustrates that a band doesn't have to leap into the label game as a reflex action. On the other hand, it also shows how, without proper care and feeding, the business of being in the music business can definitely affect the act's creative energies and output in a negative fashion.

I would be curious to find out if Birdmonster feels the terms they received with FADER are any more generous than the offers they were receiving from other labels. Do they retain ownership of their masters? Did they have to sign a "360 deal?"

Paul

I wonder what is behind comments like 'creative tools to share music'? Do bands like this suddenly start to cringe when they realize that they are indeed popular but keep having to give away their product for free? Sure they can make money touring, but all bands have, even pre the mp3 revolution. Touring and knowing you're at least getting a cut of CD sales has to be more comforting than touring and knowing every song can be downloaded for free.

It doesn't sound like being in a band like this is any easier than it used to be, and are there really more rewards with all this free music floating around?

I guess my basic question is is FREE always good? At the end of the evolution of this model, is the net worth of, say music bands, higher?

Lyn LeJeune

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Ria Kennedy

As a writer my main fear is being told I have to fit into a mold to be salable.

This means I'll have to take care of the business aspects.

But my books stay true to my vision, and to me that's what matters.

Jorge / Stormy Mondays

After many years of running my own label for my band, Stormy Mondays, and a few other artists, I can attest that getting involved in the "business" side of the "music business" does kill the "music" part of it.

After more or less folding the label to try and write some new songs, I would have loved to have someone step up and take care of the business side. I decided to do the opposite: no label at all and FREE songs for everybody. Let's see how it works!

Galen H. Brown

Hi Chris,

This is my first visit to your blog--I read the Long Tail Wired article when it came out a few years ago, and I'm in the middle of the book right now and loving it.

This story about Birdmonster has helped me clarify something I've been thinking about for a while about the changing role of record labels. Under the traditional model, in the Short Head, the Band exists to serve the Label, and to a large extent the Label calls the shots and reaps the rewards. The Label contracts bands to produce content (both musical and image) and then sells the content. In the new model, out in the Long Tail, however, the Label exists to serve the band, to provide, as Birdmonster puts it, management of the business end. Obviously the label only goes into business with bands it thinks can be profitable, but profitability is determined on a case-by-case basis rather than on an odds-making "does adding this band to our portfolio increase our chances of scoring a hit" basis. Furthermore, the new labels serve as aggregators for the market, and small niche labels are actually better at this than large ones. The top ten list for Warner or EMI is going to be meaningless, but niche labels can generate intense brand loyalty their top ten lists will be very meaningful within the niche they serve. The success for record labels in the future will be based on how successful they are as aggregators.

This shift from bands as service providers for labels to labels as service providers for bands is probably better for the overall quality of music being produced, too.

Paul Steed

In reply to Galen H. Brown [above, in comments]:

"Obviously the label only goes into business with bands it thinks can be profitable, but profitability is determined on a case-by-case basis rather than on an odds-making "does adding this band to our portfolio increase our chances of scoring a hit" basis..."

I don't see how profitability can be determined on a case-by-case basis, unless it means that that a band should already be profitable before it's signed? Otherwise, how is this different to the current model of signing a lot of promising bands and hoping for the hits to pay for the misses?

For the labels to really work as service providers for the bands I guess the bands would have to be paying them either a flat fee - as with a marketing company - or a percentage - as with an agent.

What I'm interested in is how the financial side is structured - but I couldn't find that in the main post [I'm tired, I may have missed it].

Before recordings, musicians made their money playing live, and plenty of good music was made. A small group of them saw a huge rise in income once there was a market for recordings, while a larger group of less successful figures suddenly became obsolete, amateurs. Why listen to the town opera singer when you had Caruso on 78? Now some people - perhaps the majority - will never pay for music again, and I'd bet strongly against any business plan that's based on selling something that can be had for free. The older folk might fall for it, but I doubt 'the kids' will.

Galen H. Brown

Paul-

Well, nothing is a sure thing, so you can't know for sure that the band you sign is going to be profitable. The model in the major labels, as I understand it, is that they spend so much money on marketing that they actually lose money on most of the albums they release, but it works as a business model because the heavy marketing produces a small number of huge hits which recoup the losses on everything else. This means that the actual business plan is to lose money on most of the bands you sign (which screws over the bands, too), since what hits and what misses is so random, so taken individually every single band is a bad bet but the statistics mean that a few of those bad bets will pay off hugely. The business model only works if you are a big enough company with a large enough portfolio that you are statistically guaranteed to have enough hits to pay for the misses.

But the hit market is drying up. Individual bands realize that a major label won't value them unless they luck out and become a hit, but smaller labels work on a different model. An inde label doesn't doesn't have the size to engage in the hits and misses model--they can't afford to lose a fortune in advertising on most of their acts in the hope in doing so they can create a few hits, because the odds are too low. So they are forced to treat each band as an investment with its own value and to make each one profitable. Since they aren't spending huge sums on advertising, the profitiability threshhold is much lower--thousands instead of hundreds of thousands of records. That threshold is even lower if the band finances its own recording or doesn't need financing because they record in their basement. For the bands, they get to work with a label that values them and get to be associated with a valuable niche brand. The cost is the loss of the opportunity to be a hit, but those odds were absurdly small anyway. The fee structure in my label-as-service-provider will probably remain a percentage of album sales and downloads.

To put it another, more susinct way, in the Short Head model the band sold its music to a record company because it was they only way they could get heard. In the Long Tail model, the record company sells its value as a business manager and as an aggregator to the band, and the band is interested because those are two things that are hardest for the band to do and they give the band an edge in the competition.

Peter Kohan

Re: Galen H. Brown

In essence - labels need to be companies artists outsource certain functions to. I can see how a record label could perform essential functions such as licensing, royalty payments, accounting, etc...

Look at a company like ADP - all it does is do payroll for businesses large and small. I could see a firm with music industry expertise starting up to just provide certain back-end services for artists instead of fully investing in the artist along the lines of a traditional record label.

But I think that would work better for bands with a certain level of financial backing and/or commercial success to begin with. Bands just starting out want someone to help them realize "the dream" of becoming a viable touring/performing/recording entity and often don't know what services they need or don't need to make themselves economically viable.

hyokon

It is called division of labor. There is a serious misunderstanding about the future of collaboration, free (not the free price) markets, and even democracy. The future is in introducing innovations that allow more opportunities for people who did not have access at all, not in going back to the self-sufficiency economy. I wrote a short post about it here: http://slowblogger.com/2008/03/division-of-labor-is-alive-and-well-in.html

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Tidbits

The Long Tail by Chris Anderson

Notes and sources for the book

FREE was available in all digital forms--ebook, web book, and audiobook--for free shortly after the hardcover was published on July 7th. The ebook and web book were free for a limited time and limited to certain geographic regions as determined by each national publisher; the unabridged MP3 audiobook (get zip file here) will remain free forever, available in all regions.

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