Saturday, October 13, 2007

10 Tips for Music Labels on the heels of Madonna and RadioHead

On the heels of Madonna signing with Live Nation and Radiohead distributing their new album In Rainbows through their web site, here are 10 tips for music labels and bands going forward. I saved this post as a draft on Saturday and since then have seen much coverage of this issue both in the blogosphere and in traditional media. I pretty much disagree with almost all of it, as they mostly are preaching the labels are doomed. On the contrary, I think there is a great opportunity out there for labels or whoever has the chops to put the new pieces in place to take advantage of the new dynamics at work. IMHO, this post is a look at what labels can do now. Since Godsmack is one of my favorite bands I will use them as an example below.

1.) "Stay In My Life" - Yes the music is great and the concert that we can attend annually (if we are lucky) is cool - but it is not enough. Fans want more frequent interaction with the bands the love and want to be part of the experience. The music is really just a means to invite fans into a band's experience. The desire is there on behalf of the fans so why not serve the demand through multiple channels. Jerry Del Colliano (Professor of Music at USC) makes some good points here on the makeup of today's music fan and how they differ greatly from the recent past.

2.) "Let the Music Free" - Radiohead just set their new album free and already there are more bands announcing to do the same. I think the market will approve/reward this change in distribution because it releases forces that are much greater than the current model of pay as you go. The forces I am referring to are those of word of mouth. Allowing the power of word of mouth to operate freely with the music is very powerful. People that love a band's music will freely pass the recommendation and the music along at will. If people have no barriers to accessing and passing around music they love, then the creators stand to benefit handsomely - if they are setup to monetize the experience and not just the cd/digital file. Think of it like setting campfires. Letting the music out freely is like setting thousands or millions of campfires instantly. If the music is good, these campfires can spread into a wildfire. What band does not want a wildfire burning around its music?

3.) "Monetize Word of Mouth" - Prince just showed us that if you have good music, and seed the market(he gave 3 million free copies away in London) you can build tremendous momentum by leveraging the word of mouth forces to create significant demand. As a result of Prince's strategy he was able to sell out 21 concerts in the London area at 5x the usual ticket price. Prince was blasted for this activity until his critics realized that all the shows sold out. Prince just showed us how a band can monetize a word of mouth strategy by setting a London wildfire with free music and then cashing in on the experience.

4.) "Create a 2 way conversation with fans" - The common practice of one-way email marketing to fans and hosting text based forums on a band's web site site is the normal fare these days but things can be so much better. I would look at the technologies that are available. Try looking at using one of the most under-utilized technologies out there which is voice. At this point you can setup a voice platform where band members, fans, managers etc can communicate with each other frequently and engage in 2 way conversations. With text messaging, fan response and the flexibility to communicate at any time, the voice/mobile front is a great way to stay in the life of the fans between shows and establish 2 way conversations to boot. For an industry that sells itself on audio, the new technologies in voice should be exploited and pushed to the limit. For example, if I got a text message inviting me to hear Sully Erna's thoughts on his recent concert in New Jersey with a special riff from the band - I would connect to the 800 number and give a listen. This is just one small thought on the mobile front where bands and labels should be experimenting and becoming experts. Staying in my life by connecting with me via my phone is an ideal platform to support the experience of being a fan and gaining more of my attention in between major events like concerts or new releases.

5.) "Enable Socialization" - A band's web site is now the epi-center. But the sites should be set up to allow fans to socialize, connect and discover. This should be a de facto addition to all bands' web sites as the social components extend, enhance and bolster the interaction between the band, its fans and between the fans themselves. Like voice technology, social media solutions can be easily obtained, some right off the shelf and ready to go. For example, my friend, Evan Rifkin at FLUX Media, has a bolt on solution to enable socialization for any type of site, especially those of bands. Syndication is another great tool to allow fans to take their experience with them all over the web. Widgets, badges, samples, apis, open source code are all ways to draw more people into the experience.

6.) "Personalize the Experience" - If the music is distributed without barriers/cost then bands must make up the revenue in other areas. Aside from event admissions, bands and labels can be creative with other revenue generators. One key area of opportunity seems to be selling personalization at the events. For example, if Sully Erna announced at a concert that he was going to play a riff, and that the riff would be available as a ringtone for download at the concert for $4.99, how many fans (who are already juiced from being at the concert) would connect and purchase the ringtone? I think a lot. Getting creative by slicing the music in different ways based on the uniqueness of the experience is a money machine. People will pay a premium to feel authentic and ideas like this may work nicely.

7.) "Merchandising the personal experience" - The merchandising can be endless if planned right but for this post, let's look at the concert merchandising staple - the t-shirt. T-shirts should be designed and sold that cater to the individual events. Would more people buy a Godsmack t-shirt if the shirt was designed around a specific concert? absolutely. The standard black t-shirt, with the same design, that is sold all over the country can be improved greatly. What better way to make them feel special than to offer them something to buy that most other fans won't have.

8.) "Expand the experience with brand extension" - Extend the music and the band's brand into other areas. For example, can Godsmack sell a cologne or fragrance - yes. Can Godsmack sell cool sexy jeans with their logo on the ass pocket - you bet. Can Godsmack sell Harley's with their logo as the spokes in the wheels - probably. These are all ways to monetize the experience and get people talking about the band long after the concert ends.

9) "Think like an NFL team" - As audiences continue to fragment in all forms of media, bands are bringing highly desirable audiences together. These audiences are often made up of young, hard to target individuals. Monetizing these demographics both on the band's web site and at events is an opportunity. Big advertisers spend bundles to reach this demographic as bands can package online and event marketing together like a pro sports team.

10.) "Aquire the Intellectual Property" - I disagree with many bloggers and other media outlets that have proposed that the Madonna and Radiohead deals signal the end for the labels. Actually I think quite the contrary. In my view labels have something that is quite scarce, and that is deep relationships within the music industry. My prediction is that labels will change into multi-faceted agencies that are based on technology, events and community building. Right now, labels and artists still need to get things done and no internet platform, no matter how great has the relationships in place like labels do currently. The distribution model is changing and no label can stop that but I think they will have a place going forward if they can change as well. What the labels do lack seems to be the intellectual capital to help them find the new equation that works given the dynamics at work in today's market. I am a big fan of Amie Street as this is a great example of the kind of intellectual capital labels may need. Looking into the future, executives at labels may sport titles like "Word of Mouth Director", "Social Media Maven", "Brand Evangelist", "Mobile & Voice Director" , "Lead Developer for apis, widgets and source code" and "Band Experience Strategist". Here is a quick list of some companies that can serve as an example for the type of thinking that can support an "experience" type business model for labels:
Facebook - Online social media experts
Third Screen Media - Mobile marketing
Tell Me - Voice technologies
Brand merchandising - pick one - there are many
Disney - Event "Experience" Marketing
Word of Mouth Marketing Agency- go to for listings.

So in short, bands that don't have good or great music will weed out quickly. Those bands that do produce great music will still prosper and in doing so will create a better experience for their fans by staying in their lives more often. I think music label companies can contribute to this process greatly as there is one thing that will not change - musicians like to play music and labels like to do business. Nodoby wants to do both.

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