Evolution of the Artist Manager in the Digital Age: Social Media - Part 3 of 3

Another form of technology that is important to further explore is social media and how artist managers are using it to their advantage. The internet and social media in particular have completely altered approaches familiar to traditional managers, drastically changing the functions of how artist managers develop new artists, as well as keep veteran musicians relevant. According to Jeremy Rwakaara in an article discussing the role of the artist manager in this “DYI” age, “With fewer artists interested in record deals today, a managers’ role has evolved away from choosing which labels/publishers/attorneys to work with, towards finding ways to best help artists increase their fan base and generate more income”. The creation of social network sites such as Facebook and Twitter blended with a healthy mix of fan relationship management resources, like ReverbNation and FanBridge, allow managers to exploit their artists through connecting with fans firsthand rather than through a major label. In an article discussing breaking an artist, Chris Munro states, “A decade ago, any artist trying to make a name for himself would be doing so with the intention of getting signed to a major label…The typical model went like this: Record a three song demo…Mail it out to whomever you’re trying to solicit…Perform and play as many live gigs as possible to generate a fan base”. Technological advances have transformed the traditional model, which could have taken years to build a proper buzz, into a system that can produce massive results over night and in a much grander scale.

            Technology has shifted the dominance in the music industry towards the creators, as artists and managers alike began to realize the mass effects the internet has in assisting artists in reaching an infinite amount of potential fans. This is largely in part because sites such as Twitter, Facebook and YouTube act as an outlet for artists to display their music and videos for the world to see. Almost every major recording artist, as well as up and coming artists has their own personal website, which in its own holds much power. Many official sites include options for fans to buy merchandise, physical CDS, digital music, and even concert tickets. These sites also serve as a directory for fans to keep updated with upcoming performances, new music, new videos, and any relevant news related to the artist. Passman states, “In this multimedia world, record companies are interested in much more than how you sound…a major internet buzz can definitely attract record company interest”. Knowing who your fans are and being able to contact them directly seems to be the future of music marketing. These sites along with other music related ones such as Reverbnation and FanBridge “are marketed to artists as tools that enable them to engage with fans in a more direct and meaningful way”. These websites offer tremendous data such as  “Which of the artist’ products sell the most…Which campaigns are the most effective…Who the artists super fans are and how to leverage that relation to generate more sales” and much more. The job of the artist manager has morphed into that of an analyzer whose purpose is to evaluate these resources and data, constructing strategic recommendations based upon the information gathered.

            Although the rise of the internet has given artists greater firsthand access to fans than ever before, duties of the artist manager in fact have increased. This is because there are simply many more responsibilities a manager must partake in order to break a new artist. The traditional model came down to throwing together an EP or a single and hoping to get signed to a major label. In an article by David Mitchell titled, “Expanding the Role of Artist Management”, Mitchell mentions how the role of artist management has recently expanded.  Attorney Glenn Litwak states “Today’s manager has to know about a lot more than just music. They have to know about social networking, online music subscription services…things that didn’t exist years ago”. David Mitchell refers to the artist management role as “Project Managers” since managers are now forced to oversee all different aspects of an artist’s career. Artist managers are responsible for building the artist brand before a label will even be the slightest bit interested because of the “DYI “age we now live in. 

            Legacy artists have vaulted into the “DYI” train and in some cases are continuing to enhance their fan base and make more money than when they began. In an article by Blake Hannon titled, “The Sound of Change”, Hannon states that many legacy artists such as Radiohead and Madonna “Have left their labels high and dry…It appears that the artists are wising up and trying to claim what is theirs…What artists now are looking for is ownership”. Hannon goes on to say that, “These high-profile departures are just one more trouble for the struggling music industry, with sales steeply declining in recent years due to illegal downloads and the new digital age of music”. Due to these negative effects, artists and managers alike have adapted to the rough times and have created other alternatives to generate income. In the article, “Fan Base: Music Today Is Just the Ticket for Artists Marketing and Merchandising Needs”, Ray Waddell discusses some new models that companies such as Music Today deliver. Music Today includes but is not limited to, “Merchandising, ticketing, and Web-Based fan-club services from 500 clients, including bands at all career stages”. Music Today is the key for artists marketing and merchandising needs; a model that many in the business now believe to be a strong way to make a profit. Music Today is built off a grateful philosophy that believes the artist’s most vital asset is connecting with fans, and proper web usage can greatly expedite the process. 

            Technology has altered so much in the business of music in such a short amount of time that many traditional managers of established artists find themselves in need of constant re-education in order to keep up. According to Eric Galen, in an article discussing what makes a good artist manager he says, “Artists will continue to be disappointed by their traditional managers until they grasp the consequences of this necessary evolution in artist management”. The most successful managers in today’s business have a deep understanding of how these changes have effected how things work, along with access to strong resources. Managers have to be able to take advantage of social networking sites, as well as sites, such as YouTube and Soundcloud, that give admittance to anyone with internet access the chance to hear your artist’s’ song. According to a poll on a TuneCore Blog, when participants were asked what they feel is the main job of an artist manager, 54% said business development for the artist, while only 12% said getting the artist a record deal. It is clear to see that as technology has lowered the barriers of entry into the music industry for developing artists, the internet and all the services it has to offer, have completely evolved the strategies behind successful artist management.

Unsigned Rock Bands I found

Support creativity because it is the nucleus of great ideas.  I have scoured the internet and listened to many bands some good some not so good.  I found 2 out of 30 ish.

http://www.unsigned.com/areflectionofyou

http://www.unsigned.com/aurumstar

Evolution of the Artist Manager in the Digital Era - Digital Distribution - Part 2 of 3

          We can all acknowledge that technology as a whole has transformed into so much more, but some focus on digital distribution and how it affects the role of artist manager is a must. “Instant gratification and limitless choice”, sounds like heaven doesn’t it? To a consumer it does, and they don’t have to permanently rest their eyes six feet under to experience this self-governing digital Shangri-La. “Millennials”, also known as generation Y, which are the digital guru’s and the consumers of our industry today. They competently navigate through cyberspace scouring for different ways to consume more and more information for free or at very low rates. Also, they can expertly handle computer devices that readily provide digital content for instant consumption and they are constantly looking for ways to personalize or customize their cravings for new products, including music. Distributing music to this type of digital consumer and making sure they buy the product once they see it is one of the most difficult questions an artist manager can answer today. Do our current forms of digital distribution help our artist succeed and fulfill the needs and wants of today’s consumer? How do we secure the business of this generation in order for our artists to flourish in this vast world of free accessible content?

            In the past, traditional music distribution was tailored to a different generation with no access to digital music. In those times the only way to get free music was to steal it and believe it or not this is still illegal today, but much more socially accepted. From this we can see how the attitude of consumers has dramatically changed from an unimaginable concept to an expectation. Artist managers must understand that the dynamics between the artists, their music and their fans have not changed, but rather the shift is in the business model on how fans discover and access music. Music fans will continue to have and seek emotional ties to a song or artist giving the music industry a high demand for the music experience. How that experience is distributed and valuable to the artist is what the artist manager will have to figure out in order to provide revenue for their artists. A study done by Nettwerk Music Group reported that “The ways in which the music business will make money from this generation in the future will be with products that cannot be replicated - clearly, the live industry is already benefiting from that”.

            Simply focusing on generating revenue from a digital distributor will not make for a profitable career. Focusing on revenue streams that are hard to replicate is a start to making sure the artist is getting paid and building a fan base in order to effectively distribute their music down the road. An example of an artist manager that is already taking this mentality is Scott Rodgers, a manager to Grammy Award winning indie band Arcade Fire. Last year, he was accused by music mogul, Steve Stoute to have played a role in lobbying for his band’s Grammy Award. This was exploited because Arcade Fire played over the ending credits of the show after they won their award. Stoute argued that the Recording Academy knew they would win, so this is why they were given the final slot in the show. Rodger’s final response in an e-mail sent back to Stoute regarding the accusations said: “Arcade Fire is now one of the biggest live acts in the world. It's not all about record sales. It's about making great records and it's about building a loyal fan base. The band makes great albums; they're not a radio driven singles band. On top of that, they own their own masters and copyrights and are in complete control of their own destiny. Things couldn't be better”. This kind of success shows that even though the digital distribution train is very popular there are some managers who see the bigger picture and are not taking traditional steps to develop their artists’ careers.  

            Digital distribution deals are a big part of contracts with new artists today, but according to Whitney Broussard music entertainment lawyer, "Given that it's not one of the biggest sources of income, even at the superstar level, it's not one of the most important issues". This type of mentality is allowing the artist manager to focus not so much on sales, but on branding and live performance. This is the reason for the current rise of the independent artist because the music industry is no longer driven by record sales. Likewise independent artists, established artists, as well as the legacy artists already know just how hard they must work on live performances in order to stay afloat in this industry today. Artist managers cannot rely on record sales from digital distributors as their focal point for revenue, but mainly as a promotional tool with some kickbacks. After all, how much in mechanical royalties can an artist get if the song is being sold at $1.29 on the front line?

            As digital distribution continues to slip away many management companies have gotten creative and made deals with Live Nation in order to make up the difference in revenue through live performance. By some artists this is viewed in a negative way because they feel that their management should be defending their best interests and sticking up to the big record labels. “In 2011, Live Nation Entertainment and Universal Music Group's new management partnership invested an unprecedented amount of firepower in the concept of a management/label alliance. Under their joint-venture partnership, Live Nation's Front Line Management acquired a 50% stake in UMG's artist management companies, which include Trinifold, Twenty First Artists, 5B and Sanctuary”. The theory behind this is to have all the connections and advantages when it comes to live performance. Behind all the madness there is a method where digital distribution will for now play along with the idea of bundling. With bundling the consumer can get a digital album, backstage pass and other incentives through the purchase of a concert ticket exclusively through the providers’ website. This allows more revenue for ticket sales and digital distribution, but most important it allows the music labels to get closer to the end user.

            Currently, in this new age of digital music distribution we see roughly two major forms of distribution: on-line subscription/ free streaming music and the pay-per-download model. Some experts say the future of digital distribution lies in the hands of the ISP companies through a subscription based model similar to cable television. This might sound like a good idea, but is the music industry factoring in the devaluation of music and the purchasing attitudes of on-line content by generation Y? How much can record companies and ISP’s charge for a monthly subscription when the consumer can get it for free? The risk of another independent automated music streaming service popping up in the market is always a possibility. 

 

            Digital distribution is currently taking a backseat to live performances due to the lack of sales. If we can learn anything from digital music in history, it is that we must continue to move forward by finding new revenue streams and trying not to focus on fixing something that is not producing a significant amount of income. Artist managers must look at other creative ways to exploit our artists/brands in order to be significantly successful in the music industry.

Evolution of the Artist Manager in the Digital Age - Technology, Part 1 of 3

Technological advances have undeniably transformed the music industry. Many artists now turn to the Internet to kick-start their careers instead of depending on a manager to put them on the map. In this “D.I.Y” era, artists have access to more resources than ever before with the simple click of a mouse. From MySpace music to YouTube sensations, they can promote their music, gain exposure, and ultimately accumulate a fan base. Similarly, increases in Peer 2 Peer networking sites have music lovers in pursuit of new material to add to their ever-increasing storage space. While the music industry has been plagued by rumors of piracy, exploitation, and profit loss, technology has opened up huge new doors for innovative managers willing to think outside the box. Although the new digital era has given artists more opportunity to control their own careers, the necessity of a manager, as well as their increasing roles are more prevalent than ever.

            Traditional artist managers launched the career of an artist based upon a tried and true business model. Whether the artist manager owned the record label or secured the deal, they followed a stable business plan that promised a hefty profit for themselves and the utmost exposure for the artist. Labels owned the music and ultimately ensured their profit by maintaining that exclusivity and raking in royalties. “A record company’s value used to be measured by the acquisition, protection, and exploitation of copyrights”. Record labels dominated the supply chain fostering artists and distributing their music to record stores and then consumers. Record sales were the main source of revenue and copyright was used as a tool to enforce that.

            In 1999, at the onset of the digital era, new site MP3.com allowed independent artists to upload their music and generate an income based upon consumer downloads. Free downloads linked artists to consumers, while cutting costs and giving them direct access to their revenue. Record companies immediately deemed digital distribution an illegal entity that threatened the integrity of the music industry as a whole. Traditional managers and stakeholders allocated more time and resources into combating piracy and digital distribution than they did taking advantage of new lucrative endeavors. The digital era interrupted the traditional supply chain by empowering artists and leaving executives fearing the demise of their beloved record labels.

            Initially, the economic promise of the Digital Era was clouded by fear from traditional labels and managers. From ringtones, to movies, to commercials, music is everywhere and technology is to thank for that. Music can be transferred across networks at unimaginable speeds, leading to fast business and therefore faster profit. International markets are easily accessible allowing artists to tap into previously unreachable territory. Technology continually decreases the cost of production, as it is cheaper to record and create music. Portability has increased the market for multifunctional electronic devices with premium price tags, such as smartphones and iPads. For example, Motorola resulted from car radios and Sony from FM radios. Ringtones are a multibillion-dollar industry and subscription based services, such as Spotify, promise great long-term profit. Storage is increasing at unprecedented rates allowing consumers to carry more music with them, as well as maximize their library. The omnipresence of music only proliferates consumer demand and dependence on music in their everyday life, proving that the industry is far from lost.
            In the midst of this evolving business, music managers have less defined and more multifaceted roles. The modern manager is no longer solely responsible for getting their artist signed, but rather developing their artist as an individual business with multiple revenue sources. Digital distribution has allowed more artists than ever to break into the music industry, which in return has made it harder for an artist to stand apart and establish a long-term presence. New music managers need to have a deep understanding of online marketing, promotion, and distribution, along with the ability to recognize and execute strategic partnerships and alternative financing options. They need to identify their own shortcomings to construct a creative team that will make the best decisions regarding the artist as a business, not just a talent. LA based entertainment attorney Glenn Litwak adds that modern managers also have to know about social networking, online music subscription services, licensing, sponsorships, endorsements, and transitions from film and TV. Such skills leave traditional managers unequipped to handle the multiplicity of today’s industry.

            New artist managers need to be able to understand and evaluate each business opportunity and anticipate its consequences on the artist as a brand. Successful managers know how to strategically place their artist to gain maximum exposure, staying power, and brand equity. The digital era continually opens up new paths untraveled, whether it be reality TV or charitable campaigns, and the role of modern managers is to decide which to stay and which to stray. Traditional music managers acted based upon proven methods and a standard course of action. The role of new managers is less conclusive. Their role is to make educated decisions without knowing the ultimate outcomes, as well as using innovation to distinguish their artist from the rest. While talent is obviously a key factor in success, digital distribution has saturated the business with new artists increasing competition to an all time high. Talent alone is not enough to create a business that allows an artist to pursue their passion as a long-term career.  
         
            Despite conflicting ideologies, some traditional record labels have embraced the new digital era proving the two worlds can coexist. Specifically, Universal has profited off of technological advances and new means of distribution. For example, originally MTV gave their programming to record labels in exchange for promotional gain, which helped offset the cost of the music video. Up until 2006, Yahoo, which then boasted about 750 million video views a month, did not pay for the videos they displayed. They did not share their advertising revenues with the suppliers under the premise that it was “free publicity.” Universal argued that they deserved a royalty for their videos despite initially paying MTV to do a similar job. Yahoo agreed to pay the royalty and both companies profited from the new digital distribution. Universal embraced the changing industry and achieved success within this partnership. Similarly, they profited from an avenue that initially cost them money in the traditional business model.

            In 2011, Universal formed another successful partnership with Live Nation Entertainment, the “world’s biggest ticketing, concerts promotion, and artist management company”. In this partnership, Universal gave co-ownership to Live Nation, while taking advantage of their expertise in artist management, ticketing, and promotions. Lucian Grainge, the CEO of Universal, explains,” We are creating a series of platforms and global direct- to- consumer initiatives that will further expand the presence of our artists in the evolving marketplace while providing music fans with even more flexibility in how they consume music”. In collaboration with Live Nation, Universal is gaining greater exposure and expansion than ever imaginable. Technologically, they are embracing new listening platforms to meet consumer demand while increasing their profit and decreasing their liability. Live Nation in return is getting co-ownership of an already successful label, as well as the artists from Universals four management companies to promote and profit from. Much like the traditional and modern industry, Universal and Live Nation generate greater revenue when they collaborate, than when in competition. This example demonstrates how management companies have diversified their roles, while profiting from the new digital era. Through creativity and new partnerships, Live Nation and Universal set new standards for the music industry.

            The once simplified music industry has been turned upside down by advancements in technology. The traditional supply chain is no longer suited for the diverse and evolving industry. Although record sales have decreased significantly and free music dominates the Internet, the lost revenue from records does not reflect the flourishing music business. Music is now a part of everything that we do and there is a clear need for managers with a passion for artist development and an educated, entrepreneurial mindset. Where managers and record labels controlled the industry before, artists and consumers now hold more power. With intense competition, a manager is necessary to create an artist with staying power that generates multiple sources of income. In understanding this new Digital Era and the potential of the music business, it’s important to recognize that while the industry sells music, music sells so much more. From capitalizing on iPhones that play music, to using a song in a commercial, the power of music is at an all time high and the successful manager gets that.

 

Did Steve Job's Hurt or Help the Music Industry?

His good looks, charismatic personality, and success at Apple made him a multi-millionaire and a cultural legend before the age of 30.  Steve Jobs was a smart business man but some will argue that he had a big part in the economic fall of the record industry and the devaluation of music. 

Job's developed the first legal viable peer to peer music site that was user friendly and worked well with other devices.  Flexing his proven technology and wonderful charm, Job's was able to convince record labels to let his web site become the main distributor for music in the world.  During this rough economical time consumers were buying discounted music albums at Wal-Mart or Best Buy (Big box retailers) and downloading free music torrent files from the web in order to satisfy their music cravings.  At this point in time record labels were profusely hemorrhaging from their pockets, they needed a quick fix solution to get consumers to stop downloading free music.

I always say it's all about timing because Apple could not have come at a better time.  Record companies were now ready to take the leap into the digital age in order to stop the bleeding.  The answer was a fully integrated music software that allowed consumers to instantly buy and download music from the web at any time of the day.  Record labels bought the idea thinking this was the solution to their problems and got in bed with apple.

A fixed price of .99 cents per song was agreed by all parties in order to incentivize the consumer to move away from retailers and buy on iTunes.  The record industry has always been a volume business, the philosophy is sell as much as you can as fast as you can before the trends and fad's change.  .99 cents made sense to the record labels because once they hooked in the consumer they could eventually move to variable pricing.  Job's agreed to this price even though he knew .99 cents would not create much revenue in mechanical royalties.  In the music industry this deal was perceived as an abundant deal for the record labels and not so much for Apple Inc. but Steve Job's had something else in mind.

Today we now know who got the raw end of the deal and who really benefited from this collaboration.  Once the .99 cent song came out consumers were addicted and two things happened, the sale of single songs returned and consumers were now used to paying less for music.  Both were a problem for the record labels because consumers were only spending .99 cents for singles and no longer buying full albums on iTunes.  The single sales model was now beginning to show it's ugly face again.  Industry changing companies like Pandora began to show up streaming "free" music to our consumers. Remember the idea of eventually increasing prices on iTunes?  Well, this was no longer a good idea.

Clueless to the popularity of free streaming music record labels still increased a single song to $1.29 on iTunes.  This did not turn out to be profitable because most consumers began to migrate over to these free sites that provided on-line streaming music.

So how did Steve Job's benefit from this?
Well it's obvious he did not benefit from posing as a music distributor selling music to consumers on iTunes. Job's became successful from music consumers buying his hardware and software in order to listen to the music record companies were selling on his online store.  Job's was not in the music business he was in
the computer/technology business. 

What would you rather sell a .99 cents song or a $200.00 plus iPod, iPad, iPhone which requires apps and other add on's that create more and more revenue. 

Today record companies are beginning to see more revenue from on-line distribution due to the rise of other competing companies like Amazon.

The Future of Music Distribution

The start of musical distribution over the Internet was in play since the online release of Aerosmith's single ''Head First'' in 1996.  We went from retailers like Tower Records to online distributors like iTunes what does the future hold for music distribution. 

Technology and internet bandwidth only seems to be getting better and faster with time.  With faster internet speed consumers seem to gravitate more towards companies like Pandora and Spotify who instantly stream music to a device with few or no hiccups.  This type of distribution has become more and more popular with consumers today for economical and personalization reasons.  This business model is nothing new it already exists in a neighboring market called cable television.  Consumers pay a monthly subscription fee to the cable companies and they provide us with unlimited television. 

The birth of online distribution started with a company by the name of Napster.  Napster eventually was found guilty by federal court which resulted in an injunction.   Back in 1999 Sean Parker from Napster tried to make a last effort deal with the record companies to invest in Napster before the judgment was made by the courts.  Record companies refused the deal in order to shut down Napster and prove a point.  The deal was never made and all Napster users left and dispersed seeking new websites to download free music.

During the Napster age record companies did not want to transition over to distributing music through a peer to peer concept.  They did not believe that consumers would transition from CD’s to MP3’s as quickly as they did.  If record companies would have made the deal and bought Napster they would have had over 25 million users in the palm of their hands.  Fast forward Thirteen years later and record companies are spending millions to have over 25 million users on one site only if they would have made that deal with Napster they would be ahead of the game.

Who knows what the future of music distribution holds, will the record companies continue to devaluate music sales by pricing single songs on iTunes for $1.29.  Will companies like Pandora keep streaming music for free only to sit back and watch the consumer get used to not paying for music.  One thing for sure is that music distribution has definitely created a big problem for record companies.

How do you think music distribution will evolve in the future?

Re-inventing the record deal in a digital era: 360 deals, what’s that?

The collapse of our economy and the rise of the digital era introduced new business models to the music industry.  Lack of record sales from the record companies has allowed the concept of a 360 deal to be the primary practice in signing artists today.  This deal allows record companies to collect non-traditional revenue from the artist in other scopes of the entertainment industry like live performances, film/TV, music publishing and endorsements.

What used to be a 10 to 15 page signing contract turned into 60 to 70 pages depending on the artist and their clout.  The industry buzzword “360” has led many people to believe that this type of deal is partial to the artist and it only benefits the record companies.  What most people do not know is that this type of deal has long been around particularly with independent record labels and disguised in record deal contracts as a clause called cross-collateralization.

In order to understand cross-collateralization I will give you a very basic description of an artist contract.  Artist/songwriter deals usually involve a cash advance to the artist which in turn needs to be recouped by record sales in order for the artist to start getting paid.  If the artist gets a $50,000 advance, record sales must be high enough to pay $50,000 in mechanical royalties to the artist in order to recoup.  If the royalties only add up too $40,000 the record label can collect the additional $10,000 from the artist through other revenue streams like live performances in order to recoup the loss.  This cross-collateralization clause is similar to a 360 deal only difference is that the cat is now out of the bag.

Some suggest a 360 deal is beneficial for the artist because of all the resources that come with it, just take a look at the band Paramore.  Since Paramore started in 2004, the band members have worked their ass off by non-stop touring and building a fan base.  The demand to see Paramore keeps rising due to cross market promotion and marketing.  Paramore signed a 360 deal with Fueled by Ramen in 2005 and since has never looked back.  The advantage of a 360 deal is that most record companies are affiliated with many other companies in all spectrum's of business.   So it is much easier for an artist to get a fashion deal or a TV deal because of the affiliation.  Paramore’s management quickly landed deals with retail stores like Hot Topic (There is one in every mall) to showcase their records and merchandise.  Yeah, at the time they were only getting a very small percentage or nothing at all of the sales but if you step back to see the big picture you will be able to compute all the promotion and consumer awareness they receive from these deals which to their advantage turns into a longer career and more money.

In my opinion 360 deals are not as awful as everyone makes them seem to be.  I actually think record labels don’t go far enough.  Investing in an artist is one of the worst investments in business because you are entrusting all your money on a living thing and anything can go wrong.  The artist could croak at any time, maybe go crazy or find themselves incarcerated; there are plenty of circumstances that can devastate an investor.   Not only is the record company taking a big plunge by investing in the artist but they are also going to use all their resources to make them successful. 

Management/record labels like Roc Nation are great homes for artists since they are a subsidiary of Live Nation (LYV).  Live Nation report’s estimated revenue of $5,394,381,000 a year, they have close to 1,000 subsidiaries all over the world in all the different markets utilized to make an artist into a multi-millionaire.

Al Branch from Billboard said that “The full service entertainment firm of the future will not only bankroll the ideas of superstars, it will hire qualified executives to maximize the resulting profits”.  This type of business model is an extension of the 360 deal.  In the near future 360 will not just be a term used for record deals it will be defined as an encompassing business model for the record business.