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So Jeff and David’s last post sounds like a dare and a challenge. So this is what I am going to do. I am going to the liquor store, buy a case of RockStar, place an order for double pepperoni pizza with Italian sausage and a sprinkling of feta cheese and line up a bunch of obscure vinyl records, CDs and MP3s… sorry no iTunes s$%! or Microsoft DRM tracks

I am firing up the the Ubuntu desktop, and code some python, php, Flash and AJAX doo-dads. Here’s the functional specs:

1) Band or label (…or anyone for that matter) should be able to load up their MP3s or WAV files
2) They get to price it anyway they want as long as they pay some fees (…modest fees like we make in GoodStorm. Not like the moronic and usurious fees that some services charge)
3) Here’s the business rule, if you want to give it away you should be able to but if you make money, you have to pay me for the software, hosting, payment processing, etc…
4) Since some of the labels and bands are more “business-like” than others, I’ll code in revenue accounting, royalty accounting, fee split management, cost of goods (i.e. cost of recording, CD pressing, beer money, VW touring van rental, etc…), professional fees that needs payment: lawyers fees, publicist, videographers, graphic artists, lighting guys, writers, roadies, manager and bartender of course!
5) I’ll make it so it is easy to maintain… change prices, publish tour schedules, sell your merchandise ~ tshirts, posters, stickers and your tambourine man can actually maintain it without having finished high school.
6) I’ll make it so it’s easy to send in an email invite.
7) Ohhh… yes, yes… I’ll make so you can put it in a blog, mySpace or some other crazy site. I will make it so your fans can tell you if they hate or love your music.
9) I’ll make it easy for fans to tell others how good or bad the music is.
10) Oh yeah… an email and list blaster too. That would be wild and rockin’
11) I’ll even put in image management so you can store your contract PDFs or album and poster art
12) Oh… oh… must have fan management too (i.e. my friends and lurkers)!!!
13) Venue and road management so you’ll never have to create a check list of things to bring to a venue or road trip
14) I’ll make it so you can run your label from your mobile phone
15) Video of course, we must have a place where you can show your videos and fans can rave or blog about it or pan you to oblivion

Any more ideas???

Now I am going to hole up in my cave, crank up the tunes and see y’all on the Mar 14th Birdman showcase at the deVille.

In short, I’ll build a band, label or music company in a box for free! Just give me a vig when you sell some music or a tshirt.

But unfortunately, I can’t write the music.

Thanks for showing us your solution to the US to UK band release issues. It’s brave and I for one appreciate it.

For any label, indie or major, having the product long enough to recoup and potentially be lucky enough to earn money is the key. Indies understand that their financial input is limited, so term of the contract is limited as well.

But I can’t imagine how, unless the UK got lucky quick, they would recoup their investments and earn a check for $70K to offset the fact that they were only handling the license for 3 years. Can you explain the economics of that? Did the band tour to sell records there (often very important). Was the band already established? How much were they selling the CD for?

I’m looking at record deals right now where the artist/manager fund much of the initial marketing (which we jointly agree), and we take a limited financial role on the first record, but pick up full share on the second. That allows us all build a future together with our collective investments.

Though I understand your disgust at tying release commitments in the Uk to the US label, I don’t agree that the UK distributor’s only risk is printing CDs and putting sales sheet in their solicitation book. Most labels fund their own printing, and a distributors revenue is to earn income based on sales. They are motivated by what drivers the label creates to sell records into retail aren’t they?

Record labels are in many ways banking on the future of a band. But in your scenario, they only get a 3 year window. Shouldn’t they be able to reap some time in that investment?

And though some labels finance a lot of the recordings, plenty of bands bring finished masters to the table these days, so the label can put that money into marketing.

How can we build reasonable contracts that meet the needs of the band and their labels?

Maybe a longer term in the UK - ie: double digit years. Or a percentage on album 2 for the British indie, if it goes to a major?

I was particularly interested in the international distribution idea you brought forth. Is that real? Highly controversial but very understandable.

We are all talking about new ways of doing business, waiting for the overall business to reconstitute itself, staying afloat in the floodwaters while the top of the Capitol Records building goes floating by….

We are all talking about DOING SOMETHING to help the reiteration of the music industry. We are all talking about UNITING and SHARING our knowledge - and spreading more than a little HOPE.

I love all of that….

But with all this “new” stuff, there are still some basic elements to our business that don’t change: we need to do good deals with our artists. Good deals means, among other things, we need to get enough rights in our deals so that we can do business around the globe. And when we have those rights, we have to try like hell to exploit them. International exploitation almost always requires licensing our masters to another label, giving a record to a British label for outside North America, or licensing to different labels in any number of capitols around the globe.

Lately, an entirely different option has started to look pretty interesting: the worldwide indie distro option.

The indie distribution operations of the major label groups (Warner’s ADA, Universal’s Fontana, SonyBMG’s RED) are all racing to sort out a way to offer their US labels a worldwide solution. (I’m sure the UK branches of those companies are doing the same, but I can’t speak to that.) I’d love to see a legit turnkey alternative to the Olde Way of fishing the international license waters of London, Tokyo, Sydney and Toronto.

Some of what the major label indie distro operations are talking about is interesting - hell, at least they are now SET UP in the international capitols - and some of it is overly prohibitive to the repertoire owners. I have a wait-and-see view on this front. And here’s why….

Last week, I spoke with the UK head of one such American distribution operation. I explained my needs: that I would like to enter into a deal with his company where I could distribute my records, and have the option to, at any point in the life cycle of an album, pull the record and license it to another label. Up to the point where I laid out my needs and wants, the distribution exec was all ears. My label has a hit in the US, and, he thought, I might have more where that came from. But once I explained that I could not afford to pay the UK marketing and promotion and tour support for every release on my label, there was silence on the other end. And while I understand the explanation coming from Kensington, London, I don’t actually like it.

What I heard was that I had to do an exclusive deal, where each artist I release through the deal is tied to that distributor in the UK for the length of my contract with the artist. That only works to the benefit of the distributor, whose only risk in the situation is printing CDs and putting my sales sheet in their solicitation book.

My goal - and tell me if I’m crazy here - is to have the ability to heat up some of my records in the English market (call it UK limited release) under the Dangerbird banner, and get the attention of a fully-fledged British label to pick it up for a decent license.

Maybe I AM nuts, but something has to give.

A tiny US startup label can’t afford to put up the risk money on a secondary front. In the current currency market, America is expensive enough. (Of course, the currency exchange is EXACTLY why every successful UK label has a US office.)

So, we are faced with:

1. Shopping our releases in London ad nauseum, hoping someone will bite
2. Plowing part of our US operating budget into starting records in the UK, hoping we don’t lose our asses while building our assets

This leads me to the next step in this discussion. I can’t take credit for this part, cos a friend from London, a prominent manager who has a label and publishing company, proposed this structure to me. I have coined it “you show me yours, I’ll give you mine (for a short time).”

Here’s how it looks:

1. UK label wants to license a US label’s record - let’s call the band The Silverlake Reservoir Relay Swimmers
2. UK label details the costs for marketing, radio promo, press, retail and TV advertising to get the record to “X” shipments (the “YOU SHOW ME YOURS” part)
3. US label reviews the numbers, and agrees they look sensible, signs off on the budget, agreeing to up the budget based on performance/shipments
4. A deal is struck where the UK label pays $0 (£0) (the “I’LL GIVE YOU MINE” part) for the license, for a short term - three years (the “FOR A SHORT TIME” part)
5. The labels agree to a net 50/50 net profit split
6. The Silverlake Reservoir Relay Swimmers now have a record out in the UK
7. The UK label has much less risk money in the market, and, in fact, could recoup the entire M&P spend with one UK advertising license
8. The US label has fulfilled part of its international release commitment to The Silverlake Reservoir Relay Swimmers, and can now get on with
9. Continuing to break the band on its home front, and
10. Focus on signing another band, making another record, and breaking it
11. One year after UK release, a £35,000 royalty check is sent to the US label

Now, where this could get VERY interesting is if the UK and US labels EACH have a record that the other could put out. This kind of dual cooperative scenario could be amazing, easy and - get this - successful. And duplicatable.

You may have just read all the above and wonder “what the F is this guy talking about?” If you’re asking that, you probably haven’t been stuck with a stack of great records and a dearth of international licensees lately. Or, maybe you’ve been one of those lucky people who signs all your bands to major labels, and haven’t gotten iced in the international department.

The point is - we have to change our expectations about a lot of this stuff. Would I love to get a $50k advance from every major territory for each of my records? Of course. When is the last time that happened? Like David Bowie said in “The Man Who Sold The World”: A long long time ago.

Today, I am happy to just get another record company EXCITED to pick up one of my bands or records. And I am saying it here, in print: I’d be happy to license, for free and for a short term, one of my records to a reputable UK label - especially if we could put out one of theirs under the same terms.

Our masters are our assets. Our assets are only valuable to the extent that they are exploited. Great reward almost always requires great risk.

Someone please help.

Thanks for keeping it real, Dave.

I think we all probably agree that the future looks bright for the entrepenuer and the visionaries, but the real deal is staying in the game long enough to play when digital marketing and promotion pay big dividends.

We run the risk as an industry of mistaking passion for viable economics. And it would seem that our “forefathers” - that being the ones who actually built many of the systems our artists currently enjoy and reap real money from, may not have that same vision or entrepenuership.

Case in point. Last Friday, the Copyright Royalty Board, appointed by the Library of Congress chose to adopt a highly restrictive internet streaming royalty system, that will surely affect every internet streaming radio station in America. The royalty rates are based, not only on the song heard, but also on the listenership of the station or organization. And the rates are ridiculous. Absolute minimum is $500 a month but any station who has been successful will have to pay commercial radio internet royalty prices. They are not cheap at all, and they are retroactive to 2006. Think about stations like KCRW and KEXP. You can probably say goodbye to some of the most creative, interesting and viable music outlets for consumer discovery. Boy, that was smart, huh?

And how come we haven’t figured out how to monetize peer to peer downloads. There have been several suggestions made in public forums, but, again, the archeticts of our industry have chosen to maintain the idea that they are “winning the war” on peer to peer downloading. That’s pure fantasy. Big Champagne, the industry monitoring service says over 1 billion downloads are freely traded monthly. Try to calculate just how much of your artists’ money is left on the table because others are controlling the conversation.

If those two things don’t encourage us to get active, I’m not sure what will. Great that we are all talking about futures, but what we really need is an active voice now that speaks for us, at the table of decision making. We need an organization that cares about our artists future to build a platform for all labels, artists, publishers and related business to grow.

Anyone with me on this?

I want to start by saying how grateful I am to be moderating a panel/blog featuring such thoughtful individuals. This is the first of its kind, this blog/panel mash-up, and what is being talked about is so…what music biz folks need to be talking about. And with South By Southwest a little more than a week away, it is great to be going there with the ideas presented being in the fore-front of our yet-to-be-damaged-by-Austin minds.

We are talking a lot about THE FUTURE…the Internet…how to lasso this wild west beast and how to make it a friendly emissary for an artist. We are talking about the survival for the bankrollers of the music, and a wonderland where they are able to continue to work and develop artists and their art without feeling like idiots (Jon put it very nicely…and he is turning fifty this month, fyi). We are talking about empowering fans and giving them a cut of revenues earned from record sales. We are talking about how to support the artist, the label, the writer and the community. If everyone is supported, everyone survives.

I would like to step back from the future and talk a little bit about THE NOW (since we need to survive in order to reach the future)…and I focus the conversation on PRESENT opportunities and ideas.

One of the NOW concepts is the 2.0 phenomenon bubbling-up here in the great city of San Francisco, and how it might be able to be utilized to help connect some of the dots we are discussing. The initial internet bubble burst in the early part of this century, but as of the last year or so, it is growing again…in a more sober way. Gone are the days of 50 million dollars being thrown at late-night gacked-out concepts and the big blow-out launch parties that ensue.

This new “bubble” entitled 2.0 (to correspond to a condition when a tech company releases the newest, better version of a beta product (blah blah blah)) finds hundreds of companies that are ultra-focused on very specific concepts. And yes, there are many music-related companies growing like weeds in fields sewn with gold: iMEEM, Mog, Snocap, Goodstorm (Now is the time to let it be known, Yobie), SPOTDJ, Mozes, Revver, Live2Nite, Fuzz, Musicgy, Soundflavor and on and on and on. There are the digital distributors like IODA who offer new internet marketing tools as well as “traditional” digital distribution, and others like TUNECORE that have a more cut and dry digital distribution model.

There is a major opportunity here. There is an opportunity to very cheaply utilize all of these new music sites to help promote the artist and the label. Each site has a different function. SPOTDJ allows anyone (incl. the artist) to leave comments about songs, albums, influences…whatever…and plays the commentary in between music being listened to on one’s computer. Mozes is all about community development over the cell phone. iMeem: myspace community building on a hyper-music-meets-blog level.

It is up to the label/rights holder to spend time learning about these platforms, and developing a strategic plan for each. These sites all want content, and exclusive content: exclusive remixes, blog entries, top ten lists, photos, videos…will many times be rewarded with proper positioning and promoting on the site. These sites are new, some without much traffic yet…but hitting them all at once could be very powerful.

What is interesting in this modern age of the Music Internet Industry is that each site is, in a way, a magazine, radio station, record store and fan club all rolled into one. Each site promotes the direct relationship between the artists and the fan; each site is geared to educate, excite and enhance the music listening experience (and hopefully pay the rights holders, dammit!). Some of these sites will work, many will vanish into quiet digital dust. It is my humble opinion that out of the 2.0 phenomenon, a new paradigm might be created that will bridge the gap that Scott was talking about between the growing Internet world and the shrinking world of music sales; the tools are being manufactured right in front of us, and we need to struggle and experiment with them in hopes of building a new, successful aspect of the industry (note: an ASPECT of the Industry).

I love the idea of the subcription model. I myself am a fan of many artists. There are several that I would probably pay a monthly fee to get a song or two a month, plus what feels to me a more personal relationship with the artist. Much like the patrons of olde I see the subscription model as a way for “the fans” to be the patron instead of one person (or one record label) supporting the artist. I have asked several fans of bands I work with what they thought of the subscription model and it’s largely these “hardcore” fans that are holding on to the physical model - universally they still want a CD. My hesitation is that the exact person the digital model should appeal to are the hardcore fans. I think it is strange that the industry claims the CD is dead, but the fans still seem to want them. I think part of the problem with the lack of sales recently is that everyone that wanted to has finally replaced their old catalog of vinyl and tapes with CD’s and aren’t buying the third or fourth reissue of the new Elvis Costello catalog or David Bowie catalog.

The other side of it to me is that pop music has become something that is purely of the moment. In the past pop music “could” appeal to any number of people, not just a particular clique (like it does today). Radio has helped to create this monopoly of taste slowly over the decades. I understand that radio is advertisement driven - that’s fair - it’s a business. This explains a lack of taking chances with music (although to some degree - radio has always been advertisement driven and that didn’t stop them from taking chances with rock and roll when it first started, but I digress). Everyone is looking at the internet as the great saviour of new music - it will be, and is very close to being that - but it simply isn’t yet. I’m about as technically savvy as you get, but I still don’t stream audio from the web to the stereo in the living room (it’s hooked up to the Mac in the library - and I can stream itunes to my living room stereo - but I can’t stream Rhapsody or audio from any website to the living room stereo, unless I purchase even more equipment at quite an expense). My point being that there is a gap from where radio is losing us and the internet is gaining us (as LISTENERS).

Personally I can’t wait for the seemless integration of sound and the internet.

Orpheus with his Lute made Trees,
And the Mountaine tops that freeze,
Bow themselves when he did sing.
To his Musicke, Plants and Flowers
Ever spring; as Sunne and Showres,
There had been a lasting Spring.
Every thing that heard him play,
Even the Billowes of the Sea,
Hung their heads, and then lay by.
In sweet Musicke is such Art,
Killing care, and griefe of heart,
Fall asleepe, or hearing dye.

John Fletcher, William Shakespeare

Ahhhh the power of music. During these changing times that David, Celia, Scott, Yobie and Jeff have earlier commented on, constructed and deconstructed here, that is the thread that I see stitched through their commentaries, as we are all trying to figure out how to monetize/prostletyze/synthesize the new paradigms (please excuse the buzzword) for recorded music inherent in the evolution or de-evolution of the music industry, wrought in large part (but by no means exclusively) by the digital genie that emerged from the bottle just a few short years ago. Other factors making those darn paradigms shift: general economics, a maturing industry, immaturity in an industry, music “quality” and the effect of societal factors on forging the mores of music at certain periods of time (ex: The Sixties: Vietnam/Womens’ Liberation/Sexual and Drug Mores/Economic Prosperity and post Big War education/Civil Rights Movements, etc., etc., etc.–how could the music not have been great and crazy and captivated a generation to an extreme degree?), corporate ownership and centralization, increasing competitive pressures of related music industries such as touring and merchandising, and ever increasing competion for the fan/consumers’ dollars. Underlying David’s impassioned battle cry of “Idiot’s Unite” is his feeling, expressed and unexpressed, that the belief in the power of Orpheus’ lute may be, at this juncture in time, like Sisyphus pushing that damn rock up the hill, a futile and misguided attempt to fight daily battles in a losing war. So what keeps him, and so many others, going? On an emotional level, power and effect of the music on them, and on a pragmatic and darwinian survival level, the belief that there are still workable economic models, on scales both large and small, for selling recorded music. Or, to quote an ancient Punjabi proverb: “When their stores are full, idiots are considered wise”. Scott’s comment that he doesn’t want to see the “devaluation of the musician’s property-the song” resonated with me, and made me think of a part of the music universe that we don’t want to be a dying breed: the songwriter who is not out actively performing/making their living as a touring artist…just because someone is a great performer/vocalist/guitar player doesn’t mean that they will be or should be, or can be, a great songriter. We can create models where a music artist makes their real money from touring and merch and master/synch licenses and public performance royalties, with the recorded music being distributed only to help create the value in those other revenue streams, but that sucks not only because the artists should get paid, someway somehow for the sale of their masters and the publishing royalties that go along with it, but also because a non-artist songwriter who does not receive the mechanical royalties attendant to the sale of the master has just lost a portion of her/his income. Maybe subscription models with publishing performance revenues if deemed streams will help offset lost mechanicals. We shall see. I throw this songwriter issue out here as just one more example of the thorny issues involved in this variegated music business ecosytem.

Scott, I agree wholeheartedly with your recent posts. Last night at NoisePop in San Francisco, Celia and I began a discussion on the same topic and we largely agree on the premise that artists should be paid fairly, handsomely in fact if their work rocks.

That being all said, the challenge is how to confront the nature of digital’s inevitable rise to reality and dominance. The absence and demise of physical media is a foregone conclusion. Digital fidelity is here today. The only folks complaining about the lack of quality are audiophiles. Media is merely a storage issue. We are moving to an era where access to the internet will be ubiquitous and without wires. Quad processors for the home computer are on the horizon.

So now, where does the artist and his posse go? Technology has wrought this digital nightmare on all of us but the optimist in me also believes that technology will have us. The technology has to have key attributes ~ the ability to get paid or pay for the artists’ work, the fans have to be in the value chain, artists should be able to monitor and monetize the use of their work, provide licensing opportunities, and on and on and on…

One of my goals it to start an imagineering session on several items:

1) What do artists want in a digital world?

2) What do managers want?

3) What do labels want?

I am looking for specifics, i.e. “need the ability to monitor where my songs are being played”

I don’t promise solutions but technologists like myself work on precise functional specifications. Who knows? The idiots on this blog may be the ones to spark the elusive solution to the digital nightmare.

To be part of the solution, we need to figure out what we are solving first. There is rarely a information problem that can’t be coded. Understanding what we want is the down payment for the music industry’s future.

Yobie, I love the idea of the fan becoming a catalyst for awareness and sales. I have no problem (and even applaud) the idea of the fan sharing in the profits of selling an artists’ music. What I don’t want to see happen is the devaluation of the musician’s property - the song. I have absolutely no problem with all of the old ways of selling music going away. I personally will miss the physicalness of records (meaning vinyl) and CD’s. My first job at Sound Warehouse in Midwest City, Oklahoma was selling 8-tracks (I’m 41 now - so it was at the very beginning of my career there - but it does show what a difference 25 years makes) - so there has always been a physical side to music for me. That is changing, my 3 year old son will probably think of CD’s the same way I do the 45’s from my childhood when he hits his early teens. Already, there is a 2 terrabyte hard drive at my house over half way full of music (all from my personal collection by the way). What I’m hoping is that just because there isn’t a physical aspect to the music distribution now, that the value of music doesn’t disappear.

I wish it could all be free. I argued with WB to begin streaming (and even let people download) the last Lips record before the CD was even released. I believe that for every 20 people that download 1 or 2 will actually purchase it. But, just like people who design software, or write books, or make movies how do we decide on a value of the product that is passed on to the consumer.

The reality is just as Yobie described, “bands and musicians have to greatly expand touring, licensing and merchandising to make meaningful money.” Is that fair to the artists? Maybe it is. I don’t know. If we are talking capitalism - the consumer decides the value of the product. So, perhaps, the music is not valuable, but the business of music around it is. What does everyone else think?