Rap Coalition

A HOW-TO RESOURCE FOR RAP ARTISTS, PRODUCERS, & DJs. Since knowledge is power, here is your best defense to succeed in the urban music industry...

Tuesday, January 26, 2010

In my last post, I posted an article Tom Silverman wrote about the indie music business. As a disclaimer, I must say that I set up and consulted the label for TMI Boyz--the group listed as the second most successful indie label in 2008 and 2009, AND the #1 successful RAP indie label of all indie releases in 2009. Of 200+ labels that year that released indie projects, only 13 sold above 10,000 copies. TMI Boyz came it at #2 accounding to SoundScan, but since our goal was NOT to ever sign to a major label, most of our sales were not SoundScan sales, and the group did faaaaar better than it would appear from the article.

Congrats to TMI Boyz. They are always Grinding For A Purpose. #1!!

More Bob Lefsetz:

The Tommy Silverman Debacle
Tommy’s larger than life, but so old school as to make Will Ferrell seem like a high school student.

Tommy’s a hustler. Who made it on his own ingenuity and ears. But does what he have to say today truly apply?

Maybe you’re not in the same network as me, but I’ve been e-mailed Tommy’s interview with musiciancoaching.com again and again in the past twenty four hours (musiciancoaching.com? Does that make you want to run or what?)

It’s just plain wrong. It states that no one breaks from the Internet, everybody needs the deep pocket of a label.

I’d say money helps, although I wouldn’t take the money of a usual suspect label…

But this is the kind of thinking that would have Kodak saying that they’re relying on film, or newspapers saying they’re relying on print, or labels saying they’re relying on CDs. Just because you can’t see the cliff from where you are, that doesn’t mean it doesn’t exist. Everybody said no one would read a book on a hand-held electronic device, and suddenly everyone’s saying the opposite, Kindle’s got many competitors and Apple’s unreleased tablet gets more press than a starlet without panties getting into a car outside a bar.

The old ways are history. But am I really going to respond to musicianscoaching.com? Actually, doesn’t matter what I say, that’s what I love about the Internet, you can’t steer, you can only jump in the river and keep your eyes open, and try to detect where the current is going. In other words, the public triumphs, it has control, the only way to possibly steer is to be so far out ahead, no one knows what you’re doing. That’s the Apple paradigm, not the major label paradigm.

Anyway, Jeff Price of TuneCore decided to respond to Tommy. And even if you don’t read Tommy’s ravings, you should read Jeff’s. They’re incredibly eye-opening. The labels’ advantage wasn’t their money, but their lock on distribution. TuneCore is the labels’ worst nightmare, for almost nothing your music can get distributed and you can get paid.

Read what Jeff has to say here:

January 21, 2010

How people use Neilsen to hurt musicians.

I read an article today at Digital Music News about comments by Tommy Silverman - founder of Tommy Boy and the New Music Seminar.

With all due respect, his information is wrong. But worse, the conclusions he reaches from this faulty information could be damaging to artists.

Some highlights include statements like:

Silverman counted 105,575 new album releases that year, and found that just 225 of those were new artists surpassing the 10,000 unit threshold for the first time. Of that, just 14 were do-it-yourself artists, unaffiliated with a major, indie, or other entity."


"What does this say about the Chris Anderson 'Long Tail' promise?" Silverman blogged in Musician Coaching. "Clearly the ease of making and distributing music does not benefit 'breaking' music. Breaking music requires mass exposure which requires luck or money or both. I can say with great authority that less new music is breaking now in America than any other time in history. Technology has not helped more great music rise to the top, it has inhibited it. I know this is a bold statement but it is true."

I wrote a response to the editor of the blog where the article appeared, I do not know if he will post it, but I feel so strongly about making certain word gets out, I am re-posting my response to Tommy's statements here


I hope this email finds you well. I am writing you in response to Tommy's information and posting - the good news, he is dead wrong. The truth is more artists and bands are breaking now in America, and around the world, than at any other time in history. Technology has absolutly helped more great artists and bands rise to the top.

The Nielsen data cited is not only incomplete, but also provides a false analysis.

Let me provide you some hard stats to back this up:

According to Nielsen and Tommy there were:
"...106,000 new (music) releases in 2008"

In 2008, TuneCore released approximately 90,000 newly recorded releases

This means, according to Neilsen and Tommy, almost every single new music release in 2008 was distributed via TuneCore.

I know this simply not to be true - the base assumption that Tommy is making is as dead wrong as his other statistics.

Another example, Tommy states:

" just 225 of those (the new releases) were new artists surpassing the 10,000 unit threshold for the first time. "

This is an empirically false statement for a few reasons.

First, in order for Neilsen to accuratly track sales, the UPCs for those albums must be pre-registered in their database. If the UPC is not registered in its database, Neilsen can not match the sales data to an album (or song). For example, if a digital store tells Neilsen it sold 100 copies of UPC # 123456789, and Neilsen has no idea what UPC # 123456789 is, it can not report the sales.

Next, the majority of the 90,000 releases via TuneCore in 2009 were not registered with Soundscan therefore making it impossible for them to track or report on the sales.

But these two points are actually kind of moot. Music is no longer bought by the album, it is bought by the song across an artist's catalog. Tracking album sales as the sole indicator to determine if something is "breaking" is analogous to tracking only vinyl album sales to determine if something is "breaking"

Some examples:

When they were unsigned, the following TuneCore artists sold the following quantities of songs across their releases:

Kelly sold over 2,000,000 million tracks
William Fitzsimmons sold over 150,000 tracks
Soulja Boy sold over 200,000 tracks
Boyce Avenue sold over 1,200,000 tracks
Ron Pope sold over 250,000 tracks
Colt Ford sold over 300,000 tracks
Secondhand Serenade sold over 250,000 tracks
Tapes N Tapes sold over 200,000 tracks
Nevershoutnever sold over 1,000,000 tracks
Drake sold over 300,000 tracks
MGMT sold over 225,000 tracks
The Medic Droid sold over 150,00 tracks
Nickasaur sold over 150,000 tracks
Harry and the Potters sold over 200,000 tracks

This is just a very quick partial list that goes on and on and on

Under Tommy's model, none of these artist sales count as they are not "album" sales.

With all due respect, Tommy might discount selling over 1,000,000 songs by an "unsigned" artist as not "breaking", but I do.

On a macro level, in 2009 alone, the internet allowed the "long tail" unsigned artists that used TuneCore to generate over $32,000,000 in music sales by selling over 42,000,000 songs - this is more than one song a second selling by a TuneCore Artist on iTunes. This "long tail" catalog that TuneCore's Aritsts represent is now one of the most valuable music catalogs in the world. And this all happened due to the net, social networking and access to the media outlets (like YouTube).

"Breaking" is not just about selling albums or even just the music - it is about generating revenue off of fame. This is done via merch, gig, publishing, music sales, ad revenue and more. Nevershoutnever sold over 35,000 t-shirts in a number of months via a regional sales program with Hot Topic. Surely Tommy does not mean to discount these sales and revenue simply because the artist is selling merch? How about if the band sold no music but consistently sold out 1,000 venue clubs and made $15,000 a night? Why does Tommy discredit bands for their success if they are not selling "albums"?

Another distributing and incorrect point suggested by Tommy is that music sales are down due to the fact that there is more music available to buy, share and discover.

As a matter of fact, its quite the opposite

In the late 90's - also known as the "golden age" of market share and revenue for the music industry - more music was being released and bought than ever before (as an example, Warner was releasing one new release a day). Despite this increase of releases, sales (not just revenue) went up, not down.

Or from a pure logic perspective, if iTunes had 2,000,000 less songs, would an artist that is not selling now as no one likes their music magically start selling. Or to flip it around, I would suggest more music on the virtual shelf causes more music to sell as it allows the music buyer to discover music via the digital stores own recommendation association engines.

Tommy's goes on to state:

"Breaking music requires mass exposure which requires luck or money or both."

This statement is also dead wrong - and he knows it based on is own experiences at Tommy Boy.

Historically, in the music industry, 98% of what the record labels distributed, spent hundreds of millions of dollars on to market and promote and get played on commercial radio and MTV did not "break". If "breaking" simply "required mass exposure", there would have been a 98% success rate, not failure rate. But music is not a math equation, and therein lies the problem with Tommy's statement. Yes, to break you need exposure, but that by no means guarantees success. The music has to cause reaction. For example, if "Smells Like Teen Spirit' was not a song that people liked, it would not have mattered how much money was spent on getting you to hear it.

And that's the excitement and beauty of the internet. The masses now have direct access to the media and "music discovery" social networking outlets. - i.e. YouTube, MySpace, Facebook, Twitter, Pandora, Jango and more. These new social networking and media vehicles allow mass communication in an instanteous fashion at a click of button. Suddenly one person's opinion does matter and can can impact a bottom line. Even the digital stores themselves provide a vehicle to market and promote yourself off off (i.e. iTunes iMixes or recommendations of other music to buy). Through these vehicles the internet has delivered the ability for anyone to "break", and they actually are. The masses now have access to the media outlets to get heard. The problem is the old school view that "breaking" is simply defined by selling albums. This could not be farther from the truth.

Tommy also goes onto say:

"I can say with great authority that less new music is breaking now in America than any other time in history. Technology has not helped more great music rise to the top, it has inhibited it. I know this is a bold statement but it is true."

It might be a bold statement by Tommy to help get headlines, but it's also false (and kind of silly). The truth is more artists and bands are breaking now in America, and around the world, than at any other time in history. Technology has absolutly helped more great artists and bands rise to the top.

The distressing part for me about this is based on Tommy's statements, if an artists' release is not counted by Neilsen than it is not actually released. If music does not sell as an album then it has not sold. In effect, he is de-legitimizing artists.

With all due respect, I believe an artist's release should "count" even if not recognized by Neilsen as this de-recognition closes off possible opportunities based on the perception that a release is not "real"

I also find it distressing that the media, and other outlets, turn to Neilsen as the definitive source to determine what is occurring in this industry thereby decreasing the opportunities for musicians and artists that are not part of this old school system.

The reality is the majority of music is now being created, released and sold outside of the traditional system. Ad agencies, music supervisors, video game manufacturers, radio programmers etc turn to Neilsen for information to discover music in an attempt to use/license it. They need to understand that the Neilsen information is an incomplete and an inaccurate portrayal of reality. This inaccurate perception is holding back opportunity and validation for others. Tommy needs to stop propagating this false perception as it hurts artists.

It's important that an accurate picture of what is occurring be presented to fans and businesses to provide additional choice and opportunity for musicians. They work hard enough as it is, the last thing we need to do is propagate a false reality to hurt them. Tommy's heart is in the right place, we are here to help musicians, but let's start with a more accurate description as opposed to a "bold" but false statement that helps promote an agenda.

Here's the Link to Tom's original article:

Tone Deaf
Forty years ago, if you worked hard and saved your pennies, you too could live the life of the rich and famous, if only for a night, or a weekend. Now the gulf between the worlds of the rich and the poor, between the haves and the have-nots, is so vast as to seem uncrossable, and the public is pissed. Not only right wing Tea Party members, but left wing Democrats. How did we get such a raw deal?

You need to read Frank Rich’s column in yesterday’s "New York Times". Because he nails it. It’s about jobs and foreclosures, stupid! How did Obama and his minions get it so wrong? Beholden to Wall Street, not in touch with the average man, the Administration has squandered its political capital.

Just like the music industry.

Once upon a time, it was a dream to work at a record company. Unless you knew someone it was impossible to get a job. Hell, it was impossible to get a job in music retail, far from the halls of Warner’s ski lodge and Black Rock. Music was where it was happening.

But no longer.

It starts with the acts. The acts were our beacon, pointing the way to truth, justice and the American way. Yes, if you were really good and worked really hard you could get rich, but nowhere near as rich as today’s Wall Street fat cats, even adjusting the dollars for inflation. Hell, you criticize the underprivileged for dreaming of playing in the NBA? What are the odds you’re going to work hard, get into Harvard and be accepted in the white corporate world? Not high. You’re better off shooting for the NBA, which might only pay for a decade or two, but it’s better than dealing drugs.

And let’s not equate athletes with artists. Athletes show their skill physically, artists radiate something intellectual, from the inside.

And suddenly, there are no artists.

Not in the mainstream.

It started thirty years ago, with the advent of MTV. First and foremost, you had to look good. And then you had to play the music MTV aired, because radio took its cues from the TV monolith. Suddenly, what was acceptable musically got really narrow. The opposite of the FM days a decade before. You used to listen to the deejay as he took you on an aural trip around the world, from folkie to metal monsters. The criterion was that something be good, not what genre it was made in. We had a very big tent.

The tent got smaller and smaller.

And those inhabiting it no longer played the game of Mo Ostin, but the construct of Tommy Mottola. Let’s homogenize it to the point where every media outlet will promote our wares for free. Let’s sell tonnage!

Sure, a lot of people liked it for a while. But they liked buying houses and watching them go up in value too. In other words, both paradigms were built on nothing but air, there were no underpinnings. Who wants the music that Clive Davis promoted in the nineties? Who wants any music from the nineties?

Those acts that remained, ironically aged classic rockers, could no longer get airplay in this new world. So, they toured playing oldies to great demand, raising prices all the while. Employing shenanigans like scalping their own tickets in order to book even more revenue. Hell, if the Wall Streeters could do it, why shouldn’t they?

And speaking of Wall Street, Robert Sillerman rolled up the independent concert promoters into what is now known as Live Nation, which just merged with Ticketmaster, and suddenly you’ve got a giant enterprise that needs to put on shows to make the whole thing work and is thus willing to overpay for talent, resulting in ever higher concert ticket prices. Indie promoters can walk away from a bad deal. Behemoths need to book revenue. Just ask Detroit, which produced cars whether people wanted them or not, it was easier to keep the factories humming then reconstruct, i.e. deconstruct. After all, it was all about market share.

But what does a fan care about market share? Hell, a fan doesn’t care who puts on the show, as long as the talent appears and delivers.

But with prices so high, you rarely went. And couldn’t understand how people wanted to see the evanescent pop stars at all. Why was the media trumpeting these stiffs, especially after MTV stopped airing videos, after radio crumbled, after the Internet destroyed the monoculture and the world split into niches?

Media doesn’t want to acknowledge niches, because then it has to reevaluate its own place in the landscape. But that’s the land we live in today, a zillion acts with their own audience. As for having contempt for another niche, for someone else’s music, does a fan of A&E put down people who watch Discovery, or Bravo? Railing against another’s taste makes no sense in this market, where everybody gets to listen to what they want, assuming they can find it.

But people can’t find it, can’t find the new music they want to hear. Top Forty is too sold out, and the hipster acts too far from center. Really, listen to the Dirty Projectors and tell me the mainstream cares. Please note, I’m not evaluating the quality of the Dirty Projectors, if you love them, great. All I’m saying is one listen will tell you that they’re niche, most people won’t like them. Yet, the Dirty Projectors have gotten the most media coverage of any new act, and the public that’s paying attention is throwing up its hands and saying huh?

The music industry is in deep shit. Not because of the Ticketmaster/Live Nation merger, but because of the gulf between the industry and the public, which is sick of overpaying for everything, meanwhile, not wanting much. To trumpet the success of Top Forty acts is like hyping the sales of Harley-Davidson. Sure, there’s a market for these overpriced American bikes, but most people want a much cheaper foreign job.

But at least Harley-Davidson has cred. Imagine if Harley-Davidson had the image of GM!

Enough with the analogies. The point is, music has squandered all its advantages. It no longer evidences truth, more quickly than any artistic medium. Radio is unlistenable. And the public has been ripped off for decades. You can tell people they shouldn’t steal, that music is a great value, but you’re just wasting your time, because the public is pissed!

I really don’t see how the usual suspects worm their way out of this one. Because to succeed in the future, you’ve got to develop, earn trust, give plenty and leave something on the table. And that’s anathema in the modern music world. Rather than argue about scalpers, make everybody show ID to get in. But most acts don’t want this, because really, they want that extra ticket revenue themselves, ergo platinum packages and American Express pre-sales.

The public wants good and affordable.

It hasn’t been that way for eons in the music business. It’s like we’re selling $60,000 Malibus. And you wonder why Hyundai has made inroads, it’s cheap and it’s good!

Music can come back. But the artists need to be about songs, not endorsements. You’ve got to want to play music first, and get rich…way down the line. And your handlers have to have this same philosophy. And you’ve got to stand for something. May sound easy, but looking at the landscape, it appears to be damn difficult.

January 24, 2010
Op-Ed Columnist
After the Massachusetts Massacre
It was not a referendum on Barack Obama, who in every poll remains one of the most popular politicians in America. It was not a rejection of universal health care, which Massachusetts mandated (with Scott Brown’s State Senate vote) in 2006. It was not a harbinger of a resurgent G.O.P., whose numbers remain in the toilet. Brown had the good sense not to identify himself as a Republican in either his campaign advertising or his victory speech.

And yet Tuesday’s special election was a dire omen for this White House. If the administration sticks to this trajectory, all bets are off for the political future of a president who rode into office blessed with more high hopes, good will and serious promise than any in modern memory. It’s time for him to stop deluding himself. Yes, last week’s political obituaries were ludicrously premature. Obama’s 50-ish percent first-anniversary approval rating matches not just Carter’s but Reagan’s. (Bushes 41 and 43 both skyrocketed in Year One.) Still, minor adjustments can’t right what’s wrong.

Obama’s plight has been unchanged for months. Neither in action nor in message is he in front of the anger roiling a country where high unemployment remains unchecked and spiraling foreclosures are demolishing the bedrock American dream of home ownership. The president is no longer seen as a savior but as a captive of the interests who ginned up the mess and still profit, hugely, from it.

That’s no place for any politician of any party or ideology to be. There’s a reason why the otherwise antithetical Leno and Conan camps are united in their derision of NBC’s titans. A TV network has become a handy proxy for every mismanaged, greedy, disloyal and unaccountable corporation in our dysfunctional economy. It’s a business culture where the rich and well-connected get richer while the employees, shareholders and customers get the shaft. And the conviction that the game is fixed is nonpartisan. If the tea party right and populist left agree on anything, it’s that big bailed-out banks have and will get away with murder while we pay the bill on credit cards — with ever-rising fees.

Politically, no other issue counts. In last weekend’s Washington Post/ABC News poll, 42 percent of Americans chose the economy as the country’s most pressing concern. Only 5 percent picked terrorism, and 2 percent Afghanistan. Obama’s highest approval ratings are now on foreign policy and national security issues — despite the relentless hammering from the Cheney right — but voters don’t care.

Does health care matter? Not as much as you’d think after this yearlong crusade. In the Post/ABC poll, the issue was second-tier — at 24 percent. Obama has blundered, not by positioning himself too far to the left but by landing nowhere — frittering away his political capital by being too vague, too slow and too deferential to Congress. The smartest thing said as the Massachusetts returns came in Tuesday night was by Howard Fineman on MSNBC: “Obama took all his winnings and turned them over to Max Baucus.”

Worse, the master communicator in the White House has still not delivered a coherent message on his signature policy. He not only refused to signal his health care imperatives early on but even now he, like Congressional Democrats, has failed to explain clearly why and how reform relates to economic recovery — or, for that matter, what he wants the final bill to contain. Sure, a president needs political wiggle room as legislative sausage is made, but Scott Brown could and did drive his truck through the wide, wobbly parameters set by Obama.

Ask yourself this: All these months later, do you yet know what the health care plan means for your family’s bottom line, your taxes, your insurance? It’s this nebulousness, magnified by endless Senate versus House squabbling, that has allowed reform to be caricatured by its foes as an impenetrable Rube Goldberg monstrosity, a parody of deficit-ridden big government. Since most voters are understandably confused about what the bills contain, the opponents have been able to attribute any evil they want to Obamacare, from death panels to the death of Medicare, without fear of contradiction.

It’s too late to rewrite that history, but it may not be too late for White House decisiveness. Whatever happens now — good, bad or ugly — must happen fast. Each day Washington spends dickering over health care is another day lost while the election-year economy, stupid, remains intractable for Americans who are suffering.

On the economic front, Obama needs both stylistic and substantive makeovers. He has stepped up the populist rhetoric lately — and markedly after political disaster struck last week — but few find this serene Harvard-trained lawyer credible when slinging populist rhetoric at “fat-cat” bankers. His two principal economic policy makers are useless, if not counterproductive, surrogates. Timothy Geithner, the Treasury secretary, was probably fatally compromised from the moment his tax lapses surfaced; now he is stalked by the pileup of unanswered questions about the still-not-transparent machinations at the New York Fed when he was knee-deep in the A.I.G. bailout. Lawrence Summers, the top administration economic guru, is a symbol of the Clinton-era deregulatory orgy that helped fuel the bubble.

The White House clearly knows this duo is a political albatross. After the news broke that 85,000 more jobs had been lost in December despite some economists’ more optimistic predictions, Christina Romer, a more user-friendly (though still academic) economic hand, was dispatched to the Sunday shows. This is at best a makeshift solution.

Obama needs more independent economists like Paul Volcker, who was hastily retrieved from exile last week after the Massachusetts massacre prompted the White House to tardily embrace his strictures on big banks. Obama also needs economic spokesmen who are not economists and who can authentically speak to life on the ground. Obama must also reconnect. The former community organizer whose credit card was denied at the Hertz counter during the 2000 Democratic convention now spends too much time at the White House presiding over boardroom-table meetings and stiff initiative rollouts instead of engaging with Americans not dressed in business suits.

When it comes to economic substance, small symbolic gestures (the proposed new bank “fee”) won’t cut it. Nor will ineffectual presidential sound bites railing against Wall Street bonuses beyond the federal government’s purview. There’s no chance of a second stimulus. The White House will have to jawbone banks on foreclosures, credit card racketeering and the loosening of credit to small businesses. This means taking on bankers who were among the Obama campaign’s biggest backers and whose lobbyists have castrated regulatory reform by buying off congressmen of both parties. It means pressing for all constitutional remedies that might counter last week’s 5-to-4 Supreme Court decision allowing corporate campaign contributions to buy off even more.

It’s become so easy to pin financial elitism on Democrats that the morning after Brown’s victory the Republican Senatorial Campaign Committee had the gall to accuse them of being the “one party who bailed out the automakers and insurance companies.” Never mind that the Bush White House gave us the bank (and A.I.G.) bailouts, or that the G.O.P. is even more in hock than Democrats to corporate patrons. The Obama administration is so overstocked with Goldman Sachs-Robert Rubin alumni and so tainted by its back-room health care deals with pharmaceutical and insurance companies that conservative politicians, Brown included, can masquerade shamelessly as the populist alternative.

Last year the president pointedly studied J.F.K.’s decision-making process on Vietnam while seeking the way forward in Afghanistan. In the end, he didn’t emulate his predecessor and escalated the war. We’ll see how that turns out. Meanwhile, Obama might look at another pivotal moment in the Kennedy presidency — and this time heed the example.

The incident unfolded in April 1962 — some 15 months into the new president’s term — when J.F.K. was infuriated by the U.S. Steel chairman’s decision to break a White House-brokered labor-management contract agreement and raise the price of steel (but not wages). Kennedy was no radical. He hailed from the American elite — like Obama, a product of Harvard, but, unlike Obama, the patrician scion of a wealthy family. And yet he, like that other Harvard patrician, F.D.R., had no hang-ups about battling his own class.

Kennedy didn’t settle for the generic populist rhetoric of Obama’s latest threats to “fight” unspecified bankers some indeterminate day. He instead took the strong action of dressing down U.S. Steel by name. As Richard Reeves writes in his book “President Kennedy,” reporters were left “literally gasping.” The young president called out big steel for threatening “economic recovery and stability” while Americans risked their lives in Southeast Asia. J.F.K. threatened to sic his brother’s Justice Department on corporate records and then held firm as his opponents likened his flex of muscle to the power grabs of Hitler and Mussolini. (Sound familiar?) U.S. Steel capitulated in two days. The Times soon reported on its front page that Kennedy was at “a high point in popular support.”

Can anyone picture Obama exerting such take-no-prisoners leadership to challenge those who threaten our own economic recovery and stability at a time of deep recession and war? That we can’t is a powerful indicator of why what happened in Massachusetts will not stay in Massachusetts if this White House fails to reboot.

Here are some Bob Lefsetz RANTS that I've been meaning to post over the past few weeks:

The recorded music business must switch to subscription, it’s its only hope of economic survival.

The iTunes Store is killing the music business. Sure, it provides a legal alternative to theft/copyright infringement, but the economics make no sense. Because instead of spending $10-$20 for an album, people are now purchasing $1.29 tracks. And it takes many $1.29 tracks to reach the equivalent of an album. Essentially ten. So, you’re asking the public to make ten purchases instead of one. Get it? Can you imagine someone saying yes ten times in a row? Imagine buying the White Album a la carte. How many people do you think would have purchased "Revolution 9"? But we did, as part of an album, there were no singles from the White Album, and therefore we know "Revolution 9", because oftentimes we were just too lazy to jump up and lift the needle past it, and we ended up hearing it, it’s in our DNA, like the rest of those album tracks.

But it makes no sense to complain that people should buy albums instead of singles, you’re pissing in the wind, the Internet has unbundled the album. That doesn’t mean you can’t try to get people to buy as many of your tracks as possible, it just means that the concept of paying once for ten tracks is something that no one has to do, and almost no one wants to do.

So, inherently, we’re selling less music, and making less money.

Who do we want to blame? Apple, the customer? That makes no sense, as stated previously Apple is providing an alternative, and without customers you’ve got no business. The key is to get more cash from each individual consumer, so in the aggregate, we end up with a lot of money.

The classic example is cable bundling. You cannot buy your cable channels a la carte. You must buy them in tiers. Which drives you nuts. Why am I paying for something I’m never going to watch? But economically, it makes sense. For if the channels were unbundled, the cable system wouldn’t be able to make enough money, so it would have to raise the price of each individual channel substantially, to the point where you’d be paying just as much. According to this article in the "New Yorker", at most you’d be saving thirty five cents. And you’d give up the ability to surf all those extra channels, and possibly find something interesting.

That’s what we want people to do. Surf the music and find something interesting. That was the old album paradigm. Since you paid four or six or ten bucks for the LP (the price went up with inflation), you listened to it, and found out you liked cuts other than the hits, to the point you wanted to see the act live, to hear it perform all these songs, and bought the next album not worrying about a hit, because you were a fan of the band.

I hope these days can return. But we’ve got to switch the game in the interim. We’ve got to make people fans of music!

Yes, instead of paying ten bucks for an album, you pay ten bucks for music. And technology allows everybody access, so instead of charging our good customers more, we charge everybody one low flat fee, kind of like cable television, the provider doesn’t care if you watch all day long or not at all, it’s the same price.

And speaking of price, we can argue whether ten bucks is appropriate, we can argue price all day long, but we can’t argue paradigm. The key to survival is charging everybody something. Not breaking it down by track, but providing the whole smorgasbord for a single price.

Now the Spotify trick is to get you hooked for free, then upsell you. That’s a good concept, works in sampling across all wares. Don’t think it’s about giving music away for free, it’s ultimately about getting a chance to convert many people. It’s just like a retail store. The first key is getting traffic, then, once people are in the store, you do your best to close them. Hell, sometimes you do giveaways just to get them in!

Not that Spotify is the only solution. But the labels must see they need to drive subscriptions, or lose the bundling war. That site allowing you to get tracks for experiencing ads? That’s economic death. As is Apple’s concept of letting you stream the tracks you own via the cloud. If either of these take hold, the odds of subscription winning go down, and you want them to go up, because the pool is so much larger.

Don’t see this as a music problem. Don’t see this as a value problem. See this as an economic problem. How do we get the most money? Certainly not by selling tracks. Definitely by selling low-priced subscriptions.

Furthermore, if the music is streamed (with thousands of tracks on your hand-held in case you’re out of range, Spotify provides this today), there’s no issue of someone stealing everything and then disconnecting. What’s there to steal? People believe YouTube clips will live in the cloud forever, very few people save them to disk. We have to migrate music to this same sphere.

Please read this article about bundling. It will make the concept clear to you. The cable companies and content providers are tempting unbundling by fighting their silly wars in public. We have the reverse problem in music. Our content has been unbundled. Only by bundling it again can the industry regain health.

New Yorker Bundling Article

Friday, January 15, 2010

The Ever-Changing Rap Music Business
By, Industry Veteran Wendy Day (www.WendyDay.com)

2009 marked the end of a decade and there were many changes that occurred in the music business.

When Don Diva called and asked me to write about the changes I’ve seen over the last 10 years, I started writing this before I even got off the phone. It’s easy to write about something you live and are passionate about. In fact, it almost wrote itself. I’ve been in the music industry for almost 20 years now (March 2010 marks the beginning of my 19th year) and there are very few people left who started back when I did or who’ve been in it as long as I have. I chalk that up to the continual changes and to insanity—ya gotta be a little nuts to stay in this industry any length of time. Especially the folks like me who do this for the love, and not solely for the money!

Since The Dawn Of Hip Hop

Before I talk about the changes over the past decade, there are two changes that have occurred over the past two decades that I need to mention first: the music and the industry people. The music went from being an art form in the 80s and 90s, to being a business. When Hip Hop began in the late 70s and early 80s in the Bronx, it was art. Artists made music to express themselves, tell stories, and entertain fans. And although artists today also do the same thing, the motivation has changed drastically. Artists rarely make music today solely to entertain fans, express themselves, or tell stories. Almost all well-known artists try to make music that is marketable, fits a radio format, and will sell to the masses thereby bringing revenue and income to the artist. It went from being an artform to big business. Many years ago Chuck D said “Rap is the CNN of the Ghetto.” Today, it’s the new dope game—everyone is trying to hit a lick and make a quick buck in the music industry, it seems.

This change in the music (from art to commerce) also brought about a change in the people working in the music industry. The industry originally went from people outside of the artists’ community pimping them to people inside their community pimping them. At one time, the folks coming into the music industry to work were people who loved the musical art form, lived it, and wanted to be surrounded by it. Qualified workers were attracted into the fray. This changed in the 90s, bringing in people who saw the music industry as a “come up.” It became an industry with a low barrier to entry (meaning you didn’t need any special training or knowledge to work in the music industry) and where anyone could believably proclaim themselves a specialist or authority within any area of the industry (marketing, promotions, etc). Access replaced aptitude. It went from being fun to being the cut throat, over crowded, greed driven business that it is today.

Spreading The Wealth

In the 90s, I watched (and helped) the music industry shift from being centered in NY to giving access to many other areas of the country (L.A., the Bay Area, Chicago, Houston, New Orleans, Detroit, Atlanta, etc). The music went from being lyrically motivated (artists used to HAVE to have, and prove, their skills) to being motivated by sales (measurement of success was whether an artist could sell Platinum as opposed to lyrical skill). It became a multi-billion dollar business by its height in the early 2000s.

That geographic change also changed the discovery of artists and distribution of music from national through the Major Labels, to regional through independent labels. This is when Rap-A-Lot, Cash Money Records, No Limit Records, Swisha House, etc, sprung up and began to make money and gain fame. Even in NY and L.A., the major labels began to sign production companies like Bad Boy and Death Row to focus on urban music. As long as they brought in more money than they spent, and let the Majors continue to own all the masters, it was all good. Even when wars broke out.

Change Gon’ Come

And then things began to change in the past decade, and the change happened pretty quickly. The internet came along, increased in popularity, and by the height of rap music sales, the labels were complaining about all of the free downloading and swapping of the music through outside web based companies like Limewire, Kaaza, and Napster. This also affected software companies and the film industry, but not like it impacted the music industry since what was being “stolen” was only 3 or 4 minutes in length per song...by the millions. As bandwidth got wider in the internet world, the problem increased due to the ease of downloading. Instead of labels embracing downloading and figuring out how to monetize it, they fought it. Unsuccessfully. Fans were happy to take songs for free because it was common knowledge that their favorite artists weren’t being properly compensated for it anyway.

The internet also leveled the playing field. At one time, the only way to “get on” in the music industry was through a major label based in NY or Los Angeles. They were the gate keepers who allowed access to the industry because they controlled the distribution and the radio promotion, so either an artist had to make a connection with a label employee to get a deal or they had to sell a large amount of their own CDs regionally and attract a record deal from a Major label (or a successful middleman label or production company that already had access like Bad Boy, Death Row, DTP, Grand Hustle, etc).

The Playing Field Is Leveled

The internet allowed any artist the opportunity to upload their music to a website or social networking site and reach their fanbase and consumers directly without going through a Major Label’s distribution system. This was especially attractive to many artists without any funding opportunities. With an influx of artists coming into the marketplace, there was an even larger absence of how the industry worked or how to market and promote music successfully. It seemed easy and was treated as such. In reaction, up cropped unsavory people ready to prey on that ignorance, and lack of proper funds—the “get a deal” websites, the marketing and promotion websites, the Ning social networking websites for “members only,” the A&R evaluation websites, the producer websites that help you sell your beats, the consultants, etc.

This past decade has allowed many artists to flex their entrepreneurial skills and become their own independent record label, uploading mixed CDs, EPs, and singles to the web and building a buzz. Hundreds of thousands of websites, MySpace pages, and eblast companies sprang up to give these new artists access to the fans. Ancillary companies sprang up everywhere to help market, promote, distribute, and educate artists about the new frontier—the internet. People with no experience and no track record were jumping into the fray because they had computer knowledge or ability to reach artists through the internet. Internet sites were hiring people on the fringes of the music business because they needed authorities on urban music but couldn’t tell who was who.

People who believe they have talent or who think it’s easy to succeed have come into the marketplace in droves. The mindset that music is free began to prevail—not only free to own through downloading, but free to market and promote. Poorly financed “record labels” began to spring up and sign artists to “deals” because they felt they could make money digitally without spending any money (or spend limited money). The focus became to look for one hit that could make them millionaires overnight. Artists signed to those companies in droves hearing affiliations with major labels like Universal and Asylum, for example. Some folks took songs to radio to land deals (for a fat fee whether the deal came or not). There was a rebirth of “one hit wonders,” especially coming out of Texas. The legitimate labels began avoiding Texas artists for fear that they’d only get one hit wonders, thereby hurting all artists in that region.

The Splintering Effect

The internet also leveled the playing field with the industry. No longer were the key players behind the scenes people with a track record of success, people with trained skills, or people that the industry chose to “let in.” Through the internet, anyone with a healthy email list or some blogging skills could post their ideas and opinions online and attract followers to their opinions. The music industry went from a gatekeeper basis (an inner circle of a few choosing who to let into their circle) to a popularity basis (whomever had the largest following on the internet became accepted in the industry). An entire blogging culture sprung up, and gossips like Sandra Rose, Nicole Bitchie, and Media Takeout, and urban news sites like AllHipHop, HipHopDX, and SOHH took the places of importance of XXL, Vibe, and Source magazines because they could spread information quickly. Sensationalism also found a place in Hip Hop with sites like World Starr Hip Hop and Vlad TV, and artists soon learned that if they do scandalous stuff on video, they will get millions of views within days. Fame began to rule the music industry as artists vyed for reality shows thinking it was the next get rich scheme, only sharing too much information with fans and pushing them away in disgust.

Until the blogging sites and websites popped up, fans had to wait til the next month to get news, new music, reviews, and gossip--and only in printed form. In today’s instant internet culture, we can almost find out that Keiysha Cole is pregnant the day she conceives the child, or we can hear the latest Young Buck/G-Unit dis the second Buck finishes recording. Also, the magazines were based in NY for the most part, as were the staffs, so the bulk of coverage seemed to center around NY artists and lifestyle. The internet opened the coverage up to the world, so now the artists and topics covered are more international and chosen by whomever controls the websites—so information is no longer based solely in NY. The sales now reflect that shift.

The downside of this easy access is that the bloggers are not trained in journalistic skills or ethics/integrity, nor are they backed by large corporations with legal departments that reel in the inaccurate content. These folks can pretty much say whatever comes to mind no matter who it affects. They also don’t have access to the bigger, more famous artists, so they write mostly about the newer and local artists, thereby splintering (and scattering) the coverage even further. They feed off of each other regurgitating the same information overloading viewers—the rush to be first outweighs the need to be accurate. The popularity of Blogs and Websites also changed the overall point of view in general from News to Opinion. So an industry that once had less than a hundred artists in circulation, now has thousands with everyone giving their own opinion about them. This is far too many for fans to absorb so they tend to tune out most of the superfluous information.

This same scattered approach also affected promotions and marketing. Gone were the days of people accessing music through one or two local radio stations, a handful of TV stations or video shows, and a few magazines. Now to advertise and promote, artists and labels have to reach potential consumers wherever they’re getting their news, information, and relaxation—and these fans could be playing video games, surfing any one of millions of sites on the internet, listening to terrestrial radio, satellite radio, or internet radio, etc. The ways to reach potential fans has become too fragmented, and therefore too expensive, to use for marketing and promotions purposes. Magazines began to shut down because they couldn’t afford the lost advertising dollars. TV shows switched to reality TV format because they were cheaper to film and had a “trainwreck” quality of viewership, as their viewer base (and therefore advertising income) reduced. The most scandalous and extreme seems to attract the most attention (see “Balloon Boy” for proof of this). The downside of this need for extreme measures to attract attention is that it often makes the urban music industry feel like the WWE.

Cash Rules

As recording equipment became cheaper and more widely available to the masses, the amount of rappers, singers, and producers increased. This over saturated the marketplace with music. Anyone could now make music inexpensively and upload it onto the internet. The quality of the music began to decline. The industry went from thousands of potential artists to hundreds of thousands of potential artists (as evidenced by the number of rap MySpace pages). As the necessity to be lyrically skilled disappeared, anyone could call themselves a rapper. The ability to develop a buzz switched from skill to funding. Anyone with an investor could promote themselves alongside successful artists. Where lyrical skill once made an artist stand out, now image and adlibs were the stand out features for many rappers.

Cash became king in the past decade—people began to buy their way into the industry both on the artist side and the label side. It became a joke amongst industry people how those without money had talent, and those with money had no talent. More and more unsavory people were coming into the music business with the intention of getting a share of that money, and the old adage “a fool and his money are soon parted” became the norm in this industry. With this new influx of people, it was hard to tell who was real and who wasn’t, so the instances of people getting jerked out of money soared and continue to soar today.

Anyone spending money at a club or spending money on wrapped vehicles and flyers became a target for folks trying to get a check from them. I watched D Boys give industry folks $125,000 in a duffle bag to guarantee record deals that never materialized. I watched a shady Atlanta radio promoter take $45,000 in cash and not secure one radio spin for an indie label. An indie label had a bunch of DJs on “payroll” for years to play records that never came out. A consultant set up a label and helped them spend over a million dollars to sell less than 1,000 CDs with no distributor in sight. A small distributor allegedly put mixed CDs by well known DJs into Best Buy and forgot to pay them til they got sued by the DJs and the Major Labels—and it appears Best Buy still sells those CDs despite the cease and desist letters while the indie retail stores selling legitimate mixed CDs got shut down by the Feds. Gotta love this past decade!!

Today, anyone can walk into any industry event and pass out business cards saying they are a manager, or a promoter, or even that they own a record label, and they will be treated almost the same as Chris Lighty (a real manager), Alex Gidewon (a real promoter), or Jason Geter (a real label owner)—three people with extremely long, proven track records of success. Anyone with good game can bullshit and get over easily in this industry, and most do. And rather than starting a business based on seeing a need and filling it, most people band wagon jump. When they see someone doing something, they take that same idea and run with it. Anyone with internet access can be a Blogger or own an Urban Website. Anyone with a $200 iFlip can run a website or DVD Magazine. Anyone with an email list can have an eBlast service, and anyone with access to a free Bridge line can offer conference calls. Anyone with access to a handful of DJs can start a DJ Crew. Anyone with access to a venue can set up an industry seminar or conference. Truth is, anyone who can see someone else doing anything can jack their idea and replicate it, and there seems to be no downside or consequence for this action. On a positive note, anyone with access to any of these things, who is willing to put in the time and hard work and build something real, can easily stand out in this industry. Whether or not they can make money from it is the question…

Greed Took Over

With major labels desperate for revenue, and desperate to have things go back to the way they were (an impossible dream), they cut expenses by firing key staff members or squeezing out staff with track records of success and experience, replacing them with new people who were willing to work for less money. As money became harder to find, and as the labels were downsizing (meaning salaries decreased while workload increased), many enterprising label employees began to make money on the side by signing artists willing to give them a kickback or a percentage of their careers. This changed the artists getting signed from a talent basis to a financial incentive basis. This meant that the artists coming into the labels’ pipelines were there only if they were willing to take less money, do a shady side deal, or sign a 360 Deal with the label. Talent no longer mattered. The attitude amongst labels was that artists are a dime a dozen and if one artist won’t agree to this, some other artist certainly will. And they did.

This greed spread into every area. Producers became a dime a dozen and were asked to give up a share of their ownership in the publishing in exchange for placements. Some management companies, like Roc Nation, made it a prerequisite to be placed on one of their artist’s albums that the producer has to give up a percentage of their publishing for the placement—even producers with Platinum hits under their belts. The albums have become about who benefits financially instead of making the best music possible.

Many of the labels only use producers that they have on staff to produce albums because they want a bigger ownership financially. For example, Young Jeezy albums (my favorite artist) have a plethora of CTE owned producers on each album so that CTE can collect the lion’s share of the publishing and income. The radio singles seem to be well known established independent producers, but the album filler seems to be mostly CTE staff producers. This is the new music business model and neither CTE nor Roc Nation are the only companies taking a bigger share of the pie as the price for doing business with them—they are actually the norm. Could this possibly be why sales are so low in the rap music industry? Is the music suffering from this need for ownership instead of using the best music possible? After all, it’s a business today, not an artform. The industry is run on a need for ownership and money (greed) instead of displaying the best talent. Capitalism at its finest….

In the middle of this decade, the Major labels changed the recording contracts that it offered artists. The standard deals went from artists getting a 12% to 15% share of the pie after they paid everything back out of their small share, to “360 Deals.” These oppressive deals take a percentage of everything that the artist earns while signed to the label. In 2005, I stopped doing deals with labels because the deals became so oppressive for artists. I’ve even seen Atlantic Records refuse to work an already signed artist until he agreed to convert his contract to a 360 Deal—a worse deal for him, even though his leverage and popularity had increased in the marketplace. His lawyer advised him to do so, as well.

Once used to a healthy profit margin that afforded grand lifestyles for those at the top of the food chain, the major labels became disgruntled as sales dropped while they missed the boat on less profitable digital sales. Taking on the role of dinosaurs fighting for survival, they tried everything from stopping the new digital revolution, to fighting it, to suing it, to band wagon jumping too late. Nothing worked for them. And they still haven’t learned from their mistakes—they still continue to fight the ways the consumers want to receive their music, even though they are willing to pay for it.

So to justify their continuing existence, the labels decided to take an even larger share of the pie from the ONLY aspect of the equation that they controlled—the artist (or the “content” provided for digital download). Back in the day, labels took roughly 88% of the pie while giving the artists 12% of the money AFTER the artist paid back everything spent on them from that 12% share. In exchange for giving up the lion’s share of the sales, the labels always told the artists that they’d make 100% of the touring. Any show money, was the artist’s to keep! Not today!!!

When the shit hit the fan financially for the labels, they decided to tap into the show money, and all other streams of income for the artists, as well. After all, if your profit margin is made smaller, you need to eat more of everyone’s income to keep the fat cats at the top, and the stock holders, happy. Most 360 Deals share in endorsement income (15% to 30% depending on the artist), performance income (10% to 30% depending on the artist), merchandising income (20% to 50%) and Film/TV money (15% to 40%), and as has always been the norm: 50% of the publishing income (ownership in the actual music and lyrics).

How do labels justify taking an even BIGGER share of the pie from artists? They complain that they are doing all of the developing, investing, marketing, and promoting. Their argument is that they believe in the artist when the artist has nothing, and they feel that assuming the lion’s share of the risk should result in sharing in a lion’s share of the profit. If the label is developing and building the artist to a level of super stardom, they feel they have the right to share in a percentage of everything that super stardom affords the artist. So if they drive the artist platinum, they feel they should get a piece of the tour that came from the fame the label helped the artist build, and a piece of the endorsement deal or film income that came from the fame that the label helped build. I guess I could see this argument better, if I actually agreed that the labels did their jobs well of building artists. No 360 Deal to date, has resulted in an artist becoming a SuperStar.

40 Is NOT The New 30

A major shift this past decade has been in demographics. The age of the fans has changed. They’ve grown up into other types of music than rap. Urban music is no longer the mainstream center that it once was. It got old and uncool. Hell, the bulk of our rap stars are older than 30 years old!! Jay Z and Puffy turned 40 this year. And even though their lyrics say that 40 is the new 30 (LOL), that’s the age of the average rap fan’s Dad! Who wants to follow a star that looks like somebody’s Dad!? We don’t have new younger Rap Stars replacing the older Rappers yet other than Soulja Boy. While sales have proven there still is a market for Jay Z, it’s not what it once was. We need a new crop of rap stars that are able to deliver what the mass audience wants….whatever that is. The folks controlling the music industry are all as old as the rappers. When I came into this industry at 30 years old, I was often the oldest person in sight. Today, the industry is made up of folks 30+. How can someone so far away from teenagers in age know what a teenager wants to buy? They are still the bulk of the music buying public. And the folks running most of the labels are my age or older! No wonder the music industry is so out of sync with the youth.

So, while sales have declined in urban music, the artists have been treated worse than ever. They’ve been asked to give up a larger share of their already limited income, and the labels rationalize this by the fact that there are more artists than ever to choose from. Talent doesn’t enter into the business decisions as it once did, or as it should. The music has suffered because it has been created to fit established radio formats (which are bought and paid for through payola) rather than made to be creative and artistic. Artists are controlled through money and financial incentives, and are quickly replaced when they don’t conform. Greed has taken over the industry and artists’ mindsets (most, not all), and drives the current urban music industry. The barrier for entry has been lowered and allows anyone with access and a business card a way in to make his or her share of the pie—usually without delivering what was promised. This industry is very shady and the majority of people can not, or do not, deliver what they promise. And it’s aging quickly.

Yet all in all, it is a fame based industry where glamour seems to reign supreme. People continue to want in and are willing to do anything to get in. It’s an industry that is built on smoke and mirrors and hype and sells dreams for profit. And the truth is, I can’t imagine doing anything else in the world than being right here in the middle of it all, trying to do what’s right and make sense of it.

In the past decade, overall, I’ve seen things grow exponentially worse even though the access has opened and the playing field has been leveled with the internet. I believe the key to on-going success in this music business economy is two-fold: 1) We need to get rid of the old guard—fire everyone who has played a part in getting us to this point, and start over. Everyone! We need to set the standard of doing good and fair business with a consequence for those who get excessively greedy or who jerk people. Those of us in positions of power for years are too set in our ways and remember the days of huge income too readily and we need to be replaced by folks with no expectations and who are willing to embrace the future no matter what it brings. And 2) we need to bring it back to the music and deliver what the fans want, how they want to access it, and what they are willing to pay for. With the internet it’s even easier to tap into research and development of the music and deliver what is needed and wanted. If it’s a customer based business, we need to treat it as such. The artists need to be talented and compensated fairly for what they bring to the table. Lil Wayne, Taylor Swift, and Susan Boyle have proven in 2009 that people will buy what they want to buy—by the millions. In the next decade, let’s give them what they want, shall we? Before the music completely dies.