by : Interviews, May 2010

Steven Day of Skaggs Family Records

Grieving an Industry and Moving On

Illegal digital downloads started tearing the recorded music business apart after Napster, but the old model is not yet dead or obsolete. In this essay, I will look back at the history of the business and then look forward towards internet marketing. My source will be, primarily, Steven Day, General Manager of Skaggs Family Records. During my spring break, I visited Nashville and was able to attend a BMI sponsored panel where Day started by correlating the five well-known stages of grief to the recorded music business.

Stages of Grief

The first stage was denial itself. This happened at the birth of Napster in 1999 an immediately after. In the second stage, anger consumed the record industry, and lawsuits were filed against part of its customer base—seemingly to no avail, as record sales dropped by approximately 52% by 2009. Bargaining came next. For Day, a good example is the Sound Exchange initiative, as for the first time a performance right was recognized over master recordings in the internet—and payable to the labels, among others (Pandora, the internet radio company, sees this as a production cost, and has turned to using advertising spots on their website to generate more income). In the same vein, the Performance Royalty Act is now being debated in Congress, and if passed it would require terrestrial radio stations and other broadcasting companies to pay performance fees to the owners of the masters of the songs being played (nevertheless, Day cautions that there is a limit to the new charges the record industry can expect to make without bankrupting payees).

The last two stages of grief, i.e. depression and acceptance, were illustrated next. An instance of the first was the current drama experienced by a giant of the recording industry, EMI. The company, acquired in 2007 on behalf of Terra Firma by Sungate Securities, an English private equity group, is still mired with problems. Sungate Securities has taken Citigroup to court, alleging that the bank, which brokered the deal, misstated some points concerning the sell-off of EMI, leading Terra Firma to think that there might have been another bidder. Thus, Terra Firma’s claim states that they “paid a fraudulently inflated price”. On the other hand, Day points out that acceptance of the loss of the old music business order is now found among many music veterans. Brian Eno, for example, was recently quoted as saying that “recorded music equals whale blubber; eventually something else will replace it”. This view appears to be now industry-wide.

The Way Forward

For Day, the new business model will be primarily built on three platforms: Digital Distribution, Social Networking, and Live Performances.

I. In terms of digital distribution, the main concern on artists’ minds is how to get their songs on the Internet. Some of the top companies such as ReverbNation, CD Baby, Nimbit.com, Entertane.com can provide everything for the artist (with some companies charging for it, and others who for a free membership). Torrent sharing sites such as BIT Torrent or BTjunkie are being used too to upload and download data, and the more one does of one, the more one can do of the other and stay updated. A good example here is the gaming giant Electronic Arts, which has made all of its latest software updates available for users on Torrent sites. Internet radio stations, such as the Pandora, lastFM, Shout Cast and live365.com, are also gaining much in popularity.

Some of the digital media distributors with interesting models such as Lala, Spotify, GrooveShark and FreeALLmusic typically charge an artist for their services. They are able, however, to reach out to all the major terrestrial broadcasting companies. This can be a great launching pad for new artists. The power of video should not be neglected either. A great example here is the band “OK Go”, most known for its treadmill film – recorded in only one cut. The band made another ingenious video in which a toy truck with the “State Farm Insurance” logo on the side is being driven by a front man of the band. It so happens that State Farm Insurance sponsored the video and aided the group in creating an amazing and very technical video at a fraction of the cost of a big budget production—and just as effective for a viral media buzz.

II. Regarding social networking, Day suggests taking the following key steps:

(i)Have a plan before using any of the different social networking platforms, and know what should be on what site. For example, an artist’s website can be seen as an encyclopedia page for an artist’s fans to use in order to find out anything they need to know about that artist. The artist’s Facebook page can then be seen as more of a daily journal entry, with picture postings to albums and anything in between. If the artist is Twittering, then that can be seen as the notes that would be passed during class with the “good stuff” that is clear, concise, and very informative.

(ii)Respect your fans; never send them Spam emails and don’t try to sell them something whenever a new album is released– the idea is for them to get to know the artist so that they want to buy his/her products out of their own free will.

(iii)Be accessible and prepared to interact with any posting or gossip.

(iv)Be transparent, because the web has a way of finding out anything and everything that might have happened about you prior to becoming a celebrity.

One of the best examples of good social networking is Ashton Kutcher. At the recent People’s Choice awards, immediately after being announced as “Best Web Celeb”, Kutcher reached into his pocket, retrieved his iPhone, held it up in the air facing himself and started talking into the video camera. While he was doing this, he was thanking his fans for all their support and votes–and walking up to the stage to accept the award! That specific video was uploaded on the UStream before he even left the building. Why did he do this? He did it for the people who voted for him and got him the award, and not for the people sitting in the room. He felt obliged to pay his respects to his fan base, not just his peers.

III. The last of the three platforms of a forward-looking business model involves, for Day, live performance. The example of Ellis Paul was given. . This artist, originally from Boston, started out on the music scene about twenty years ago and took his show on the road. He has released sixteen albums and has over 150 concert dates per year. Last year, he grossed $270,000 just from playing any form of gig he could, whether it be in a coffee house or at a major music festival. In the past year, he managed to raise $100,000 from only 300 fans by constructing an immediate and personal relationship with them. His game plan was to reach out to some of his biggest fans to help raise money for him to record his album, and then offer multiple ways to “repay” them once the album was released. Some of these repayments schemes included fans receiving signed, dated, and numbered copies of Ellis’ album before anyone else–even before it was made available for download online. These fans were put on special guest lists for events and performances, given limited and signed edition versions of the EP that was played live, and, finally, their names were printed in the cover booklet of the album if they stood out as top contributors. The album eventually went on sale from his personal website and Facebook, and then became available as free single downloads from the online store (provided that download codes were supplied from a previous promotional event). To Ellis, it was about establishing a lasting connection with fans, not just gathering an e-mail list. He is known, in fact, for staying behind for the fans after every performance.

* * *

Steve Day ended with a provocative question. He asked everybody in the room who had either uploaded on Facebook or ever researched on Google if they would use either service for a fee. Everybody in the room answered “no”, even though a larger sample might have led to a different conclusion. He then asked us why we as musicians think that we can assume that people should pay a price to listen to our music when so much is available for free online. The music industry, in fact, may still be stuck in an outdated revenue-generating mode. The solution, for Day, lies in coming up with new inventive ways of marketing artists and bands in such a way that the artist’s recorded music is the smallest aspect of a much bigger picture. Only then will the spotlight shine again on the music industry.

By Mia Verdoorn

References

[1]Peoples, Glenn. “Second Lawsuit Filed Over Terra Firma.” Music Business | Music Industry | Record Sales | Billboard Charts | Billboard Hot 100. 5 Mar. 2010. Web. 23 Mar. 2010. .

[2]”Brian Eno: “Recorded Music Equals Whale Blubber” -.” Hypebot. Web. 23 Mar. 2010. .

[3]Scott. “Case Study: Ellis Paul.” Nimbit.com. 24 Feb. 2010. Web. 22 Mar. 2010. .

 

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