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

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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.

Engineers & Producers

Roughly 15 years ago, when music started shifting to digital, things started to change in all areas of music.  In distribution we lost audio quality, in production, music producers and engineers began using the same software.  Digital ideas produced with digital technology, it was inside this structure where EDM got its boost. This computing power afforded a producer the ability to engineer his/her own sound. And the engineer, who was great at adjusting sound with electronics, the ability to make his/her own music.  The greatest thing about this new technology is it made recording budgets feasible and do-it-yourself projects possible.

It is a fact that artists are recording more on the road, and this is a great thing for music fans.  Direct-to-fan, the stage has forever been the place where artists perform. Away from the fan, the studio has forever been the place where artists retreat to record.  The studio brings isolation.  This isolation cuts one off from the kind of knowledge on which life depends. “Retreat into isolation and one loses all contact with the sources of power.” -Robert Greene   In a world where we are distanced by technology, human interaction will continue to be craved. The live show is interactive and so is the new market for music.  That is, studio recordings have experimented with all sorts of production effects, and auto-tune is a great piece of technology, but it’s not the human voice.

It’s obvious everything is becoming digital, and touring is the major revenue stream, but I do not think that means humans will start paying for concerts sung by Siri. If the recording market is shrinking and live performance growing, that means the shift in music will begin to benefit top performers.  The EDM genre is doing great right now, but if you do not believe it is in a bubble then your idea of live performance metrics need some updating.   These performance evaluations are not taught by Universities, they are only quantifiable at the live show.  Live was never meant to be a playback of a recording. The live show is based around a playlist of hit songs or singles.

Some recording artists have a hard time translating live, and many signed acts turn out to be lackluster performers.  Is this because everyone is trying to deduce a hit from a youtube recording?  The average music fan spends roughly $46 per year on recorded music.  Compare that to the average ticket price and swelling number of concerts/festivals.  Labels of the past have not been interested in live metrics because the focus was on recorded sales, but today the live show is the major revenue stream.  With 360 deals cutting in to the artist’s all encompassing career, a label of the future will not be able to take a percentage from where they do not first invest.

The digitalization of music will continue to divide the role (17:17–17:45) of the engineer and producer.  In such a way that an engineer will be rewarded for his/her ability to navigate the ever growing software products for music and the producer rewarded for his/her ability to harness live performance metrics, and translate them to the interactive, direct-to-fan market.  

The future of music is live, don’t let anyone tell you different.   If it is not live, it’s a rerun.