Music 4.1: A Survival Guide For Making Music In The Internet Age

Music 4.1 – A Survival Guide for Making Music in the Internet Age
4th Edition reveals:

How streaming music royalties are determined and why your payout may be less than you expected

Why streaming music is considered the savior of the music business by many industry insiders

How money is being made from YouTube and how you can benefit from its current “Wild West” mentality

How to find your fans online and turn them into customers

The most up-to-date ways of marketing your music in this new world

Who are the new industry players and why they want to talk to you

How to discover your brand and then develop it

How Facebook, Twitter, and YouTube and other social networks are best used as marketing tools specifically for your music

The latest technologies being introduced that will influence how you sell and market your work

and much more!

What It's About

Music 4.1: A Survival Guide for Making Music in the Internet Age is a completely updated version of the best-selling Music 3.0, by Bobby Owsinski. With the addition of fresh interviews from several of today’s successful music industry innovators, Owsinski reveals new and proven pathways to success in the modern music world. Music 4.1 is for the musician, artist or band overwhelmed by the seemingly never-ending options of the fast evolving Internet, and provides with some new high- and low-tech tips for inexpensive marketing and promotion.

The paradigm has shifted and everything you knew about the music business has completely changed. Sales, distribution and marketing have reconfigured so much that even an artist located far away from a big media center can thrive without the help of a record label – if he knows how.

The book not only takes a look at the the music industry evolution and how we got to Music 4.0, but provides the exact information that today’s musician, artist, band, songwriter or music business executive needs to take advantage of the new music industry paradigm.

What has changed? Who are the new players? Why are traditional record labels, television and radio less of a factor in an artist’s success? How do you market and distribute your music in this new world? How do you make money in this new music world? How do you develop your brand? How do you use Facebook, Twitter and YouTube as marketing tools? What are the new technologies that are being introduced that will influence how we sell or market?

All these questions are answered in this Music 4.1 Internet music guidebook, along with some new low-cost high and low tech tips for marketing and promotion.

Included in this new edition is a chapter on the economics of streaming music, which includes information that distributors and record labels don’t want you to know and simply can’t be found anywhere else.

This book looks at the new music business – Music 4.1, an era which centers around the latest technology to deliver music – streaming. While Music 3.0 welcomed social media into the equation of selling your music, Music 2.5 encompassed the era of file sharing and digital distribution, and Music 2.0 was the old ways of big record labels, MTV and radio airplay. Instead of dwindling career opportunities, Music 4.1 now provides new ways to both start and sustain a career.

The Music 4.1 Internet music guidebook is aimed at musicians, artists, and bands who need to market and distribute their art but aren’t aware of the possibilities that Music 4.1 has available to them. But the book is for more than just musicians. Much of the material applies to any type of artist – from photography to video to writers, in any creative entertainment area. Just about any business involved in the arts can gain from its insight.

Kind Words From Readers

This book is cutting edge for marketing music in the digital age. It an absolute must have for artists that are trying to make it on their own. This book was a total fresh breath of air because it’s a marketing book that doesn’t read like a marketing book. I recommend this book to everyone I know who’s involved with music.
Thomas Jones

I own close to a dozen books on the topic of the changing landscape of music and how musicians of the new era might fit in; and while some of these books were helpful, “Music 3.0″ was by far the best and most useful of them all.
Sniff Code

I’ve found this book to be of great assistance and wanted to share that with GP readers, but I’m also interested in hearing from anyone that can recommend other materials—print or online—or has a personal experience to share that could benefit myself and others.”
Barry Cleveland – Guitar Player Magazine

…and dozens more like it!

Let's Look Inside

Table Of Contents

Introduction

Chapter 1: The Life Stages of the Music Industry
Music 0.5: The Precursor Business
    New Technology Drives The Business
Music 1.0: The Original Music Business
    A Look Inside The Original Music Business
Music 1.5: The Suits Take Over
    The Rise of MTV
    The Farm Teams Disband
Music 2.0: Enter The Digital Age
    P2P Makes Its Mark
    Piracy Takes Another Form
Music 2.5: Digital Music Is Monetized
    Enter the 360 Deal
Music 3.0: The Dawn of Artist/Fan Communication
Music 3.5: YouTube Becomes The New Radio
    YouTube Exposure Becomes Universal
    Streaming Catches On
Music 4.0: Streaming Becomes Profitable
Music 4.1: The Business Model Changes

Chapter 2: How the Music World Has Changed
Who’s In Control?
Where Did The Record Stores Go?
Why Traditional Radio Is No Longer The Factor It Once Was
    College Radio on the Brink
Why Television Is No Longer A Factor
The Trouble With Labels
    Where Digital Music Has Failed
    It’s the Music, Stupid
    The Death of Artist Development
    The Piracy Argument Dissipates

Chapter 3: The New Music Industry
The Music Industry Is Not Dying
The New Radio
    Internet Radio
    The Connected Car
    Satellite Radio
    What Is Radio’s Future?
The New Television
    The Effect of YouTube
    YouTube Gets Challenged
    The Broadcast Alternatives
    The Connected TV
The New Players
    Management
    The Promoter
    The New Record Label
The New Audience
Enter Music 4.1

Chapter 4: The New Masters of the Domain
Seth Godin’s Tribes
Radiohead’s Grand Experiment
The Wisdom of Trent
Chris Anderson’s Long Tail
Irving Azoff’s Steel Fist
Sanctuary’s Blueprint
Justin Bieber – The Socially Made Star
Amanda Palmer – The Social Celebrity
Psy – The Viral Star
Macklemore and Ryan Lewis – Turning The Record Label Paradigm Around
Jack & Jack Shift The Release Schedule

Chapter 5: The New Marketing – Part 1
Your Music Is Your Marketing
The New Release Schedule
Ten Music Marketing Ideas

Chapter 6: The New Marketing – Part 2
The New Importance of the Fan
The New Artist Online Strategy
    A Typical Artist Website
    The Steps To A Successful Online Strategy
Your Most Important Tool – Your Email List
    Mail List Services
    6 Keys to Building Your Mailing List
    Designing Your Email Blast
    Best Email Practices
    More Is Less
Another Useful Online Tool – Your Blog
    Other Music Blogs

Chapter 7: Marketing With Social Media
The Death of Myspace
Marketing with Facebook
    Eight Rules of Facebook Engagement
    Best Time of the Day for Facebook Posts
    Understanding the “Like” Button
    Facebook Ads
Marketing with YouTube
    Essential YouTube SEO
    The Half-Life of a Viral Video
    Making Money From YouTube
    Real-Time Streaming Video
    YouTube Measurement Tools
Marketing With Twitter
    The Secret of the Hashtag
    The Best Time to Tweet
    Twitter Tools
Google+
    Hangouts

Chapter 8: Social Media Management
Measuring Your Social Media Exposure
    Social Media Measurement Tools
    Advanced Social Media Analytical Tools
What Is a Brand?
    The Three Pillars of a Brand
    5 Easy Steps To Creating Your Brand
    A Quick Look At Sponsorship
Other Avenues for Social Media
Don’t Depend on Your Social Network
    There’s More to Social Networking than Facebook
Ten Low-Cost, High-Tech Promotion Ideas
But You Still Music Hit The Streets
    Ten Low-Cost, Low-Tech Promotion Ideas

Chapter 9: Making Money in Today’s Music World
Hit the Road, Jack
Merch is Your Friend
    Price It Right
    The Secret to the Merch Table
    Credit Card Transactions Made Easy
The Many Ways to Ask for the Sale
    Ten Sales Tips
Crowdfunding
    The Four Tiers of a Crowdfunding Campaign
    The Five Rules for Crowdfunding
    The Concept of “Fuelers”

Chapter 10: The New Distribution
Digital, Vinyl, or Bright, Shiny Disc?
    Digital Streaming
    Digital Downloads
    CD – The Bright and Shiny Disc
    The Round Piece of Plastic Known As The Vinyl Record
    Could The Cassette Make A Return?
Collectibles
Digital Music Distribution
    Paid Downloads
    Subscription Is the New Download
    The Digital Storage Locker (Cloud Music)
Music Aggregators
License or Distribution
Games – Hip or Hype?
The New Brick and Mortar

Chapter 11: The New Publishing Paradigm
The Three Basic Types Of Publishing Income
The Different Sources of Publishing Royalties
Publishing And The Indie Artist
    Getting Your Songs Placed In Movies And Television
    Music Supervisors: The New A&R?    
The Problem With Digital Accounting
Why Use a Publisher?

Chapter 12: When Music Is Your Product
Streaming Royalty Basics
The Different Types of Streams
    Non-interactive Streams
    SoundExchange
    Interactive Streams
Making Sense of Streaming Income
    A Million Isn’t What It Used To Be
    The Sound Recording Royalty
        Sound Recording Rate Variables
    The Middleman Factor
    The Composition Royalty
    The Streaming Mechanical Royalty
        Composition Royalty Rate Variables
    How Royalty Rates Are Set
Streaming Royalty Rate Examples
    1 Million Spotify Streams Example
    1 Million Pandora Free Tier Streams Example
The Reality Of The Situation

Chapter 13: Monetizing Video Views
Monetizing YouTube
    How YouTube Videos Are Monetized
    YouTube and the Labels
    Content ID
A YouTube Success Story
Facebook Video
    Facebook Video Pros and Cons
Other Video Platforms

Chapter 14: The Music 4.1 Rules for Survival
Developing Your Audience
Establishing Your Tribe
    The Leader
    Growing Your Tribe
    Marketing To Your Tribe
Sustaining Your Career
    The “1,000 True Fans” Theory

Chapter 15: Living In Music 4.1
Making a Living is the New Success
    There’s No Such Thing as a Demo
Major Label Deconstruction
    The Sad Case of EMI
    WMG Changes Hands
    The Major Label of the Future
When You Need a Label
Getting Along in Music 4.1

Chapter 1 Excerpt - The 5 Stages Of The Music Industry

The 5 Stages Of The Music Industry

Music 2.5 – Digital Music Is Monetized
Soon it became apparent that unless the music industry jumped onboard, it would be left behind in an ocean of digits. Ironically, it was the computer industry that threw the music industry a lifeline. While different digital-music services presented alternatives to the labels for paid downloads, it was Apple Computer’s iTunes that proved to be the business model that worked. Basically a closed system because iTunes initially required Apple’s iPod digital music player (the platform choices were later expanded), iTunes was a winner with consumers for its ease of use (a trait Apple is known for) and the iPod’s newfound place as a fashion accessory. Now the industry could finally monetize its digital offerings. But at $0.99 per track, there wasn’t a lot left for profit (see Fig. 1.2).

Released in January 2001, iTunes was an instant success that was followed by frequent and significant upgrades. In late 2001, iPod support was implemented, which started the snowball down the hill for the industry as digital music began to become the rage. In 2003, the iTunes store was introduced, and both the consumer and Apple have never looked back. In the years since, movies, television shows, music videos, podcasts, applications, and video games have been added to the extensive iTunes Store’s catalog. In April of 2009, the iTunes store went to a tiered pricing structure after much prodding by the major labels. Songs are now available for $0.69, $0.99, or $1.29. At the time that this book was written, over 25 billion songs have been downloaded since the service first launched on April 28, 2003.

While iTunes is the monster of the digital-music industry, other worthy competitors have emerged. From Amazon MP3 to eMusic to the upstart Google Play, there are now numerous places online to buy songs, and even more places to listen to songs if streaming services like Spotify, Pandora and Rdio are taken into account. Of course, iTunes has also entered the streaming ranks with iTunes Radio, which threatens to shift the entire digital music paradigm once again. We’ll go over these in more detail in Chapter 9, “The New Distribution.”

Monetized digital music also brought about another big change with the return to the singles business that was similar to the ’50s and early ’60s. Rather than being forced to buy an album of ten songs in order to get the one he or she liked, the consumer could now buy only the songs that he or she wanted. Since the entire economics of the music industry had been centered around the album format and the money it generated, returning to the single-song purchase was a major blow to the financial model that had been in place for 40 years. Overhead had been set up for sales that were in $10.00 increments (the approximate wholesale price of an album). That was suddenly cut to sales that were in increments of less than $1.00 (the sale of a download), and the labels’ financial structures were shaken to their cores.

Enter the 360 Deal
To make up for the lost revenue, the major label had to have income streams that went beyond the sale of the CD, and the logical place to get that was from the artist. Since it’s always been understood that 90 percent or more of an artist’s income comes from touring, the record labels saw that as a potential income source and wanted a piece, and so they launched what came to be known as “360 deals.” The term 360 deal means that the record label shares in the income from all income streams available to an artist beyond just the music recordings, including things such as publishing, merchandise, and touring. The label would, in effect, become an artist’s manager and share in everything he or she made.

While you can see why a record label would want to share in all of the income streams of an artist, you have to wonder why an artist would want to let them. The argument goes that if the label’s expertise is in selling music (which really isn’t selling all that well), then what kind of management experience does it have? While this may be the only way to do business with a major label these days, it’s yet another reason for an artist to ignore it under most circumstances.

In the meantime, traditional artist management was becoming even more powerful, because the manager was now required to make more decisions for the artist than ever before. With the influence of the record labels waning, it was now up to the manager to find new sources of income, deal with potential sponsors, handle social media, and make deals with online digital distributors, among other things. With much of the sales and marketing now in the hands of the artist, managers had incrementally larger responsibilities than in previous eras, and their guidance and impact became that much more valuable to the artist.

Music 2.5 Overview
Digital Music is monetized
Sales go back to singles (no album filler)
Major labels impose 360 label deals on artists
There’s a rise in the importance of management.

Music 3.0 The Dawn Of Artist/Fan Communication
The biggest change that came with Music 3.0 is that the structure of the business was reshaped. In M3.0 the middlemen can be cut out of the loop. The artist and the fan can keep in touch directly on any and every level they choose to be, from creation to promotion to marketing to sales. But merely staying in touch with a fan can be as fleeting as it sometimes is with friends or family. True fans, just like friends and family, want regular communication, and whether artists know it or not, so do they. The structure of M3.0 looks like this:

Music 3.0 allowed the artists to promote and market directly to the fans. If they can reach the fans, they can make them aware of their products (music, event tickets, and merchandise). If they can reach the fans, they can sell directly to them (although “offer them a product” might be a better way of putting it). Most importantly, Music 3.0 allowed the artists to have dialogs with the fans in order to help the artists with sales and marketing. What do the fans want? Just ask them. Do the fans want to be alerted when the artists come to town? Do the fans want remixed versions of songs? Would fans be interested in premium box sets? By the artists just asking, the fans will gladly let them know. And this is the essence of Web 3.0—communication between the fans and the artists.

Another factor in M3.0 is that the audience became niche oriented. From Swahili polka to Mandarin madrigal, if an artist searches long enough, he or she can find an audience. But although stratification of the audience means more opportunities for more artists, it also means that the possibility of a huge multimillion-selling breakout hit diminishes as fewer people are exposed to a single musical genre than ever before. Nearly gone are the days that a television appearance, heavy-rotation radio or MTV airplay alone can propel an artist to platinum-level success.

Music 3.0 Overview

The middleman can be eliminated
Direct artist–to-fan communication pervades
Direct sales can be offered to the fan
Direct marketing approaches can be offered to the fan
The audience is stratified

Music 4.0–Streaming Becomes Profitable
Music 4.0 is the era that the music business is on the cusp of entering as this book is being written. It’s an era where a tipping point is reached and streaming (or more accurately, the ability to “access” music) becomes profitable for the entire musical supply chain, from songwriters to artists to publishers to labels to the streaming services themselves. Let’s look at how this happens.

While the streaming market has been limited to Spotfy, Pandora, Slacker, Rdio, Deezer (outside the US) and a number of smaller services, they accounted for 29 million paying customers at the end of 2013 worth around $2 billion globally. A study by ABI Research predicts that figure will rise to 191 million worth a whopping $46 billion by the end of 2018. Considering that the total world-wide music revenue for 2012 was $67 billion (including touring and publishing), this is a huge increase, and since more than two-thirds of this amount goes back to the rights holders in royalties, that means that the music industry can be back at or beyond its highest revenue levels of 1999.

This may seem like a pipe dream, except for the fact that the major new entrant into the market is Apple’s iRadio, which has 575 million users world-wide, each with a credit card on file. Even prior to the introduction of iRadio, iTunes users spent an average of $12 a year on music (according to Apple), and $43 per account on software, apps, music, books and video combined. iRadio will be free with ads or add-free for $24.95 a year.

Other major entrants significant financial backing include Beats Music, which differentiates itself by professional music curators supplying playlists, Google Play Music, and YouTube’s new music subscription service. And these services are all global, which means that there are far more potential consumers that will be reached than ever before.

Couple that with the fact that consumers have already seen the light when it comes to streaming and are adopting it faster than previously anticipated. The first time a music fan runs out of room on a hard drive or storage device because it’s filled to the brim with music files, the value of streaming music becomes very apparent. After the consumer tries a service and realizes that 10 to 20 million or even more songs are at her fingertips anytime and anywhere, she’s sold.

What that means is that although each individual royalty stream might be small, there will be many more of them to make up the difference, much like music publishing experienced with the rise of the 200 channel cable television universe. Simply put, more users plus more streams plus more distributors equals more revenue, which every artist, musician and songwriter (labels and publishers too) should love. In Music 4.0, the “access” model revives the music business.

Music 4.0

Apple’s iRadio is introduced
Other new streaming services enter the space
More revenue streams come from different sources
A higher global revenue pool

Chapter 5 Excerpt - The New Marketing

The New Marketing

An artist in Music 4.0 requires an entirely new marketing plan than in prior periods because the techniques commonly used in the past certainly won’t work anymore, at least with the degree of success that they once had. Traditional media such as radio are no longer as much of a music-marketing factor, nor is television, unless you’re an artist whose image counts more than your music.

Your Music Is Your Marketing
The major marketing tool for the M4.0 artist is your music itself. It’s no longer the major product that the artist has to sell, although it still is a product, so it has to be used differently and thought of differently as a result.

Perhaps recorded music was never the product we were led to believe it was. In the M1.0 and M1.5 days of vinyl records and CDs, the round plastic piece (the container that held the music) was the product. While the songwriter always made money when a song was played on the radio, the artist never did (although artists might soon get their due, depending on the status of impending Performance Rights Act legislation), and even when it was sold, the artist made only a small percentage of CD and vinyl sales (10 to 15 percent of wholesale, on average). In order for the artist to make any money from the recording, the costs involved in the production of the music product and the manufacturing of the container that transported the music (physical material costs, artwork, and so on) first had to be recouped. The fact of the matter was that the artist made most of his or her money on concert tickets and merchandise sales while touring, not in record sales.

While this has been the system that artists and labels have worked under for years, if you look at music in terms of the advertising world, you see it in a different light.

If you’re selling a soap product, for instance, the production cost for a commercial to broadcast on television or the radio is trivial. It’s the total ad buy (the agency purchasing the radio or television time for the sponsor) where most of the money is spent. Even then, it’s considered part of the marketing budget of the product, which might be about 3 percent of total sales.

In M4.0, if you consider the music-production costs as part of the marketing budget in the same way as a national product, it takes on a whole new meaning.

Since the music is considered the major marketing tool for an artist, it could be considered a free product, a giveaway, an enticement. Give it away on your website, place it on the torrents, let your fans freely distribute it. It’s all okay. Since most millennials already feel that music should be free and have lived in a culture where that’s mostly so, don’t fight it. Go with the flow! Just as it was during the past 60 years, the real money in the music business is made elsewhere anyway.

Further, just because you’re giving it away doesn’t mean that you can’t charge for it, either at the same time or at sometime in the future. There are numerous cases in which sales have actually decreased for an artist’s iTunes tracks when the free tracks have been eliminated.

One such musician is Corey Smith. After six years, Corey has built his gross revenue to about $9 million, and free music has been the basic building block of his ever-increasing fan base. You can buy his tracks on iTunes (he’s sold more than 1.2 million singles and 250,000 albums so far), but when his management experimented by taking the free tracks down from his website, his iTunes sales went down as well. The free music Corey offers allows potential fans to try him out. If they email and ask for a song that’s not available for free, he just emails it back to them. He’s tending his fanbase!

Another example of reaping the rewards for giving it away for free is the electronic artist Moby, who’s “Shot In The Back of the Head” became the bestselling iTunes track after giving it away for free on his website for two months.

Of course, you can charge for your music with enhanced products such as box sets, compilations, special editions, and other value-added offerings. But to build a buzz, the initial releases for an artist on any level (except for the already-established star) must be free.

Your Music Is Your Marketing Overview

Music is a your main marketing tool
• Most of your income comes from elsewhere anyway
• Give it away for free, but charge for it too
• Value-added products are the revenue source

Chapter 6 Excerpt - The New Marketing Part 2

The New Marketing – Part 2

Best Email Practices
When it comes to emailing, there are good and bad ways to do it. Here are what you might consider “best practices” as revealed by Jed Carlson, founder and CEO of ReverbNation in his article on Music Think Tank.

1. Always respect a person’s desire to unsubscribe to your list. IMMEDIATELY UNSUBSCRIBE THEM if your mailing list doesn’t do it for you.

2. Always talk to them without swearing. It may be part of your ‘persona’ as a band, but some people don’t like that language. The Internet Service Providers (ISPs) like Yahoo mail, hotmail, AOL, etc don’t like it either, and your message will go directly to the junk box. You wouldn’t talk to your grandma that way, would you?

3. Always avoid ‘scam’ words in the subject line. Words like ‘Free’ and ‘Help’ will land your message in the junk box 100% of the time.

4. Always target them with messages that are relevant to them. If you have a show in Seattle, don’t message your fans in Miami. Keep your powder dry for a message to them later about something else.

5. Always give them the basics about the information you are conveying. Reporters call this the ‘who, what, why, when, where, how’ model. If you have a show coming up, do your fans (and yourself) the service of providing dates, times, locations, ticket links, and lineup of the show. Over 75% of Artists miss this essential piece when they email. If you want someone to respond and come to your show, for goodness sake, go so far as to give them driving directions if you can. Each ticket sold is money in your pocket.

6. Always link them to some place to find out more info about the band. This could be ReverbNation or a homepage or blog, but ALWAYS give them a way to find out more.

So don’t overlook the obvious. Your email list is your most important tool in M4.0 for reaching your fans, but you need a specialized application to use it to its utmost.

More is Less
In M4.0, “more is less” should be one of your main mantras. There’s a limit to what fans can absorb, and exceeding that limit can alienate them. Too much communication can be counterproductive. Once a week is about the limit, although once a month can work, too. More is okay if there’s a real purpose.

Mailing list blasts have a definite point where it’s too much. We like to limit those to a couple of times a month, or once a week at most if you’re really doing something special or have unique content. If it’s just announcing tour dates or trying to sell something, you shouldn’t do it more than once a week, but we find once or twice a month works best. If it’s unique content that could be cool to blast weekly. On the other hand, if you’re Twittering, the more the merrier because that’s the kind of minutia that people are into. That platform is great for 3 to 10, even 20 times a day.
Jacob Tell of Oniracom

Just as fifteen songs on a release are not necessarily better than eight even if they all might be great, there is a tipping point for email blasts at which fans go from feeling informed to being intruded upon. The leader of the tribe must have a feel for where that point is and be sure to never cross it. It’s just overload at that point and actually dilutes the effectiveness of your message and your marketing. The leader of the tribe must have a feel for where that point is and be sure to never cross it.

Your Email List Overview

The most important tool you have
To utilize properly requires a special application
Significant extra benefits from the use professional list-management services
Make your list sign-up easy to find and easy to do
Think through your email before you send it
Observe best practices
Fewer emails is always better