Off & On

 EDM is not defined as one single genre, style, or sound, but rather as a cultural movement. Its value comes by way of live/digital distribution and during the last eight years it’s blossomed into a movement for Millennial’s, but as of late we haven’t moved much.    EDM has been compared to the next RocknRoll movement, but so far it’s achieved only half its mission.  Millennials struggle to find jobs, have lots of college debt, and close to 30% of us still live at home.  Full disclosure, I’m an old Millennial, I turned 35 last month.

The world says we are stagnate, and the human body is an organic property, and to grow we need space, but today the space between rhythms & sounds are maxed, leaving the current EDM scene failing to motivate us further. “what is required is not a lot of words (sounds) but effectual ones.” Seneca

  The Generation X counterculture ravers of the 90’s should know the dangers embedded in Newton’s 3rd law of motion, which states “every action has an equal and opposite reaction”; concerning the most popular dance of “liquid”.   An individualistic style, it requires space to create the arm’s noodle-like effect; I’ve tried but can’t seem to grasp the technique. Millennial’s (me) also need space so we can move out of our parent’s house.  Interestingly enough  “house” music is very popular right now.

(Movement is motion and a lot of people have to be in motion to think clearly.  The “on” or  fouronthefloor  beats that were revived in 2007/2008 were introduced the same time that the Federal Reserve turned “on” their first round of quantitative easing. Coincidence, maybe. Pattern, definitely. )

The 2007/2008 brought a return of EDM (house, disco, the jig, fist pump, foot stomp,i.e. Mumford & Sons, Avicci/Aloe Blacc) Three years later (2011) the market tried to correct itself by awarding Dubstep artist @skrillex three Grammys,  but since this was ironically the 54th Grammy Awards, and ‘Studio 54′ focused on fouronthefloor dance music, the “off” beat was again repressed (we heard of nothing from the originators Rusko/Caspa). Everything that was Dub turned into Trap (to prop up the 20 year old classic genre of Hip-Hop).  In 2012 the “on” beat was (still) mainstream and a second round of stimulus was also turned “on”.   The “on” beat is important in rhythm, because we should always know where the “one” is.  It is also important in life because we should know ourselves before making commitments to others.

The Millennial’s EDM movement has legs & will be around for another 15-20 years, but are the brawls at festivals around the world pointing to fundamental errors regarding the state of the music economy?  (“When a system is too large it becomes more fragile.”  Nassim Taleb) Let’s imagine a festival of many thousands of people, the majority, male, ages 18-35, all crammed in the same space and all moving their arms. (someone is going to get hit) Probably the worst part about dancing with your arms (other than accidentally hitting someone) is that women don’t seem to find it attractive.  They don’t even consider it dancing.

dancing

~The above graphic is not to be rushed. The central part of the body is where growth starts.  People who put the emphasis on the brain first are missing that it is secondary for dancing (movement/growth ability). Plus, your mom was feeding you nutrients through the center (belly-button/umbilical cord) of your body, so, everything we are starts there, pimpin.~

Space is dark, and when we are in the dark (opacity), we should learn to trust our ears and not our eyes.  If men want to resume dancing with women they are going to need space to dance and the more danceable rhythm that allows for space stems from “off” or backbeat music (not the EDM stuff being thrown in our face)  An elliptical orbit consists of two bodies, one small & one large, and improvisational dancing is much better with a partner than going at it alone.  A sound wave has two parts (compression & rarefaction) and a rhythm can be defined as having two beats, one strong & one weak.   This two-part system is fundamental in understanding which rhythm motivates vs. agitates.   

(Technology can be described as doing more with less. Today we all have the ability to jump-start the recording process, but the goal isn’t to make more sound with more tools, but rather create more space with less sound. @joelbeckerman has been quoted as saying “The problem isn’t that there’s not enough sound. The problem is we are actually overrun by sound.” )

As Hip-Hop becomes the classic “off” beat form, a new backbeat rhythm must take its place and consumer choice can be very empowering.  Trap has had some time in mainstream sounds ,and fuzzy dub/synth gets a lot of play in live competitive sports.   A positive sign in the Pandora map shows audiences choosing “off” (chill) rhythms vs. “on”(forced) rhythms.  Today Dubstep is 20% more popular in the U.S. than its origins and a recent survey shows Drum & Bass (DnB) as the #1 genre.

  EDM is a revolutionary movement where we all feel free.  @BobDollNuveen says “I feel like 2015 will be the year where we will move from skepticism to optimism.”  I echo his sentiments.  The best part of EDM is that it promotes togetherness, unity, and an attitude of “we”.   The most popular songs are always sing-a-longs, but we can’t fall asleep during the change, we must be the change.

Just as RocknRoll motivated Baby Boomers to play instruments, Generation X has continued to show us that we can create. The stimulus of the last 7 years is a policy that relies on us (Millennials) to create new value, and today the Fed has turned “off” their bond buying program.  The only way to correct a bubble is to think for yourself.  So it is up to us to do something unexpected, something that leaves us space to think.  If we love freedom & we love one another we will continue to write and sing about it, but for this change to happen the “on” beat has to capitulate to the “off” beat.

Here we take a few moments to thank some of the founders, Rusko and his counterpart Sonny, for continuing their commitment to motivate our culture with “off” beat rhythms.  These backbeat grooves instruct us to swing our hips, not our arms.  (See: loco-motion)

Investors looking for sustainable businesses should expect the change to come from creative roles.

 “Some people need to write or speak, in order to know what they are thinking.” @thomasbeller   ~Thanks to Lucas for requesting I post something in my own words.   

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Artist & Repertoire

For every 10 films produced, 2 succeed.

YT Before continuing please watch the Youtube link and @peterguber’s distinction of technology & film @ 1:01:40.

From this data we assume that a film’s success stems from the perfect script, the perfect story, or perfect performance.  The 2 out of 10 data sounds like a fair market for a scripted film but let’s work with that last one, a film produced from live performance.

We can imagine that a remake of a broadway show, or theatrical play’s success at the box office was anchored in its critical acclaim and built in audience.  Meaning, since the word is already out maybe the studio would commit to a smaller marketing budget than a normal scripted film, thus giving it a green light. Takeaway: If a live audience loves it then others must see it on the big screen.   

In music there is a downward trend on succeeding in the recording business. In the major industry circa 2010 an artist was successful 1 in 5x’s.  Three years later, in 2013, the odds are worse than scripted films.  It’s now somewhere between 1 in 5 & 1 in 10.     

Michael Green of The Collective (who announced recently that the company would be shuttering its music-management division to focus entirely on the digital-video business) says “What we need to figure out is how to begin to better filter out the talent from the non talent…”  

There are different formulas for filtering talent so that the cream rises to the top, here is ours.

 The major music industry reinvests 15.6% of their revenue into researching the artist, and developing the repertoire, but that’s not enough if less than 20% of acts cut bait.   Today marketing is the single most spend in an emerging artist’s deal and the live space is the least.  From this we believe there has been more focus on process than substance.  Of the 7500 record deals, what happens to the 80% that fail?   Is anyone responsible for these losses?   The IFPI  does not delve into which artists missed the mark or how the record businesses lost money, but it does clump the costs of breaking an artist (marketing), with research & development.  The record business extends the role of A&R through the entire album cycle, but we need to see a more detailed report on the separate functions of R&D and marketing.

 A&R is the first step in the signing process and is a crucial first step to the 7500 major deals signed in an average year.   Great A&R understand artists that focus on their live show have greater confidence and are comfortable performing in just about any setting.   Those live stressors make us human and durable artists are more comfortable interacting with an audience.   This vulnerability does not extend to the recording studio where the intended audience are paid to provide commentary and the stress is usually over some sort of machine malfunction.  Why does this matter?  Because in the near future artists will not be able to fake it virtually if they plan to have a career in the physical. “Live events…now account for more than half of total music activity spending each year.” @Nielsen

 Marketing’s basic function is to get the word out explaining the benefits of a product, and we all want to experience a great product.  We can imagine the company that packaged this facial cleanser would be happy marketing the benefits of their ergonomically shaped bottle.   Cleans your face, reduces waste.

cleanser.1

 Marketing follows a green-lighted project and that green light should come only after a strong A&R investment.  If we focus our efforts on great writing backed by great performances, the concert becomes its own marketing & promotional tool.  Focusing the budget on the live space will not only make the artist’s career more sustainable, but will also help codify the 360 deal.  @meganbuerger  says “The tech lane with the most potential to impact the business is using tour-based “metadata…”  and Mark Geiger claims “It will also save marketing teams money on promoting an artist in an unfamiliar area.

A lot of businesses claim they foster a direct-to-fan marketing approach, but unless they have experience in the real transaction we should be skeptical.  The worst thing about the music industry are those who take up space in the business, but don’t care much about it.  

The live show remains the most direct scenario where fans engage with music and data is a tool that predicts the present, not the future.  Measuring the data outside of the real transaction returns results not based on actual response.  To paraphrase @jimhake  “In business, if you don’t understand where the real transaction takes place, you don’t understand anything.”

 On the occasion where a machine does capture a performance, it is still in A&R’s best interest to attend the show for themselves.   “I have always thought it’s simply not possible to fully experience something and be documenting/broadcasting it at the same time.” Graham Dugoni  

  The most relevant data exists in the real transaction, and the future of music rests on those who understand this transaction.  We’re long on performance.

   “Ain’t Nothing Like The Real Thing”

 Ashford & Simpson performed by Marvin & Tammi

Access & Exclusivity

“Everyone listens to music, but how we listen is changing.”  @Nielsen_Ent 

Now that we have access to the same pool of music, ownership has lost some of its value.  

 The monumental changes happening as records become bits are quite impactful, but as a fan of music we still own a few things; our interpretation of the song, the experience of the live show, and most likely the playback device.  These exclusivities suggest that writers, performers, and device manufacturers are the new revenue building blocks of music.  Today the playback device is primarily made by two companies, Apple & Google.  If history repeats itself these “do more with less” tech giants are in the most direct spot to deliver quality content to the music audience. 

It is good to know @cortneyharding isn’t the only person who feels we have been running in place.   For over a year artists have struggled to define a model that rewards them for their creativity and benefits the fans.   The term direct-to-fan is used everywhere, but the models we see do not represent a direct transaction between the artist and the fan.  The snag?  Currently artist’s intellectual property looks like this…

 StreamingMoney.0

We must not fret.  Interactive digital services and live transactions are meant to align and there’s no better proof of this than Jimmy Iovine joining the board of Live Nation.  Platforms with interactive models are growing, and as access to 40 million songs becomes ubiquitous, everyone is now basically a radio station.  Twitter, the defacto platform for music discussion, is now partnered with Saavn.  Their partnership compiles tweets and forms a user generated radio station.  Since the majority of music chatter happens on Twitter we can expect to see healthy growth in this consumer choice model.   It does leave two tough questions:   For Artists)  What sound do I capture?   &   Audience)  What song do I play?

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Access to recording and distribution channels boomed all categories of artist, but since no one pays much for recorded music, we will continue spending more for quality live transactions.  Nielsen

    The medium artist no longer relies on captive audiences in casinos, at conventions, or on cruises.   A rising tide raises all boats and if they budget properly they can make a good living touring.  As the success equation rightly confirms, performance artists with a high level of skill & luck have the best chance at succeeding.  

Though we have access to the same music, we can not all attend the live show.  The computer shrunk every process but live.  Performance artists are the new bread-winners.   If you can perform live you can have a promising career. The music is digital; the business is live.  As most Youtubers know, to gain a real following you have to perform in front of a crowd.  

 

Mobile & Touring

This July, Benedict Evans of Andreesen Horowitz stated  1) “A more competitive market in curation seems like it would be a net win for consumers.” and 2) “Talking about the ‘mobile’ part of your business will be as meaningful as talking about the ‘digital’ part of your business.”  

 The problems surrounding curation are obvious.  To parallel #2 with the music industry; “Talking about the ‘touring’ part of your business will be as meaningful as talking about the ‘recording’ part.”

Competition among artists (developers) has never been fiercer.  Every business is vying for the attention of the mobile consumer.   For an app to gain mass adoption across a mobile platform the iterated product has got to make usable sense for the consumer. And in music the song has got to carry some emotional meaning for the listener.   If consumers are going to use an app it has to fulfill a task or be a meaningful fit for their everyday use, and a song that reflects the audience’s tastes, ideas, or feelings will be listened to over and over.

Music’s interactive mobile platform for social is Twitter and therefore the reason Chris Sacca says “Twitter is not a hard scientific problem, it’s art.”  According to Deutsche –people are leaving Twitter… and there’s no shortage of info on Twitter so it must be a curation problem not a content problem-.  There’s certainly no shortage of musical acts, so the problem is definitively curation.

 The music industry loves Twitter because their platform is very much like being on the road for musicians.  Due to artists ever changing schedule they interact with fans using different platforms, and it remains that 1/4 of tweets happen around live events.    The audience is full of fans, but who will decide which get to go back-stage?

How consumers receive their music is digital, but the context of real-life is mobile.   At home or on a desktop, google search results will look quite different than if we were out-and-about searching on our smartphones.   If mobile is social then going to the live show is most definitely a social atmosphere.

The music industry is now a customer service industry and the industry that serves the customer is live performance.   Since the airing of ‘American Idol’ the consumer has been telling the market they are more interested in traveling to live concerts than buying records.   In this live platform the market decides the value based on a real transaction.  But the goal is not to secure more shows, but rather write better songs.  The Idols are rarely allowed to sing original songs.  Their choices revolve around hits.   The song decides if there is even a show to build from, and a solid performance of hits is the only way to grow your live audience.

To gain an audience, artists have to be able to create performance value, which starts with songwriting.  The space for live has grown but the deal remains the same, live concerts consist of a playlist of hit songs.

Non-Interactive & Interactive

The two types of digital music offerings available are Non-Interactive and Interactive.   

The interactive area is where music savants or enthusiasts hang out, and it is also the area which drives top down discussions about music.  The Interactive market is the most lucrative, but also the most misunderstood.

In a non-interactive service, the user is not allowed to rewind the bass-line lick in Gino Vannelli’s  ‘Feel Like Flying’, but interactive services give the user/fan a more granular choice.  We see then that the audience in an interactive service activates the music and the non-interactive follows it.

One in five millennials attended a music festival in the past year.   For investors this breaks down the 80/20 rule as such.  Eighty percent are interested in non-interactive services, twenty percent are interested in interactive services.  The 20% are the strategic piece which will help the computer separate quality from quantity.  Interactive music services want to develop artists for the new interactive market, but to everyone’s chagrin they consult with non-interactive players.  This incongruence in business operations is why investors of interactive services should proceed with caution.

The radio model depends on the rare event of someone purchasing an album.  A lot of people buy albums but the model can’t tell us “who” is making the purchase.  A healthy industry works in synergy to understand their audience.  With digital streaming we now know who is listening, who is buying, and who is attending the show.  The audience is out there and the fans are out there, and they INTERact on the platform called the INTERnet.  

It has become easy to listen, which makes it more difficult to share. 

We’re long on INTERactive streaming.