Occupy The Music Industry

Bob Lefsetz has a worth-reading post that was inspired by the reporting on the clearing of Zuccotti Park.  He nails the reasons why people stopped buying recorded music and/or going to so few shows a year.  (Could this be a warning for the financial institutions?)  He chronicles it beginning with MTV and the advent of the CD.  CD's cost more than vinyl or cassettes for the consumer and the artists received less in royalties.  He points out something I forgot:  
they [the musicians] settled for a reduced royalty, under the rubric that money was needed to grow this new technology. Ain’t that a laugh.
It was a laugh and pouring salt in the wound, long after the technology was "developed", the labels continued to enact the reduced royalty.

Here is where the article hits it's stride:
The bankers were overpaid because of a destruction of regulation and oversight and a thin layer of people got rich, and they used their lobbying power, their money, to institute lower taxes. And you wonder why the rank and file are pissed off?

The rights holders [in the music biz] have done a good job of labeling the public as ungrateful thieves. But is this an accurate description? Almost definitely not. The public was fed up with past practices and angry because they could not acquire music the way they wanted to.

People are buying less and less music.  Will people rely less and less on banks and other financial institutions unless these institutions start listening to the consumer, instead of ignoring them?

Albums are for fans, singles are for newbies

Albums are for fans, singles are for newbies.

Don't make an album expecting to reach a new audience.  If you want to reach a new audience, focus on the single.
-Bob Lefetz

Bob is so spot on.  Consumers stopped buying music because they were sick of getting one or two good songs on an album and the rest were mediocre.  They still had to plop down $12-$15.  When you anaylize the cost, they paid about $7 per song, if there were two good songs on the CD. 

When I was growing up, all we really had were singles.  I did buy, or my parents bought for me Meet the Beatles and the rest of the Beatles albums through Help. I owned all the Monkees albums.  It probably wasn't until the 1970's when I started buying albums on a regular basis. Up to that point it was all singles.  When I bought Build Me Up Buttercup, do you think I was wondering if the Foundations had a whole album of songs like that?  No.  I had three Bobby Sherman singles, but no albums, same for the Supremes. 

I remember the lyrics to all those songs to this day, even if I haven't heard the song in years.  Music sticks with you whether it's a song or a whole album full of them.  Put out music when you make it.  Don't save it for an album.  There are only a few amazing concept albums that are meant to be listened to as a whole.  Keep your fan base active.  There should be no downtime when it comes to enlightening your fans.  No one is waiting three years for your next album. 

Read Bob's full post here. 

Zilch

If you have anything to do with the music business, read Zilch: The Power Of Zero In Business. Nancy Lublin, the founder of Dress for Success and the current CEO of Do Something takes the reader through a very organized and well thought out process of how to get more from your company with less.  Many times it’s the overlooked little things that when paid attention to, have wondrous results. 

Using a not-for-profit model to run a major record label may have prevented the labels from the decline they are experiencing.  Having worked with major labels for many years, I know that it’s not the piracy that’s killing them.  What has gradually done them in is ignoring the customers, losing site of quality music, excessive spending and having staffers and executives make decisions or indecisions just to save their jobs.  It’s no way to work. 

In the 15 years I managed bands, none of them saw a penny from record royalties.  This includes artists having both gold (over 500,000 units sold) and platinum (over 1,000,000 units sold) albums.  Making money from selling records was never part of the equation when mapping out a career path.  This is why I find it interesting that the “new” paradigm is being touted as touring, selling merchandise and licensing music.  That’s the way it’s always been as far as I’m concerned and I started managing bands in 1988.

Lublin’s practices can work for any company, but I see them as being so right for the music industry, especially major labels as they seem to have lost focus.   Each chapter closes with helpful questions that summarize what you’ve read and how to apply this knowledge. 

So many important and relevant points are covered, that it’s worthy of a long post.  The book is mainly aimed at company leaders, but it applies to everyone. 

Brand: Here’s a hard one, but so important: If a partnership doesn’t make sense for your brand and your goals, turn it down even if it means money.  Keep your brand simple and focused. Use your story. Image is everything. Bring your group together to discuss data and re-evaluate your brand. When someone buys your product what is she getting?   Answer in 3 words and do not describe the product.

After hearing Jac Holzman, the founder of Elektra Records at the 92Y, he hit on all of the above at his label.  His goal was to make available music that needed to be heard.  The original focus was on folk music.  His audience knew that and if you wanted to hear good folk music you brought the latest Elektra release, many times unheard before a purchase.  Jac spent hours each week looking for those special artists for his label and his audience.  There was a time when people bought music just because of the record label that released it.  That’s how much respect a label like Elektra garnered. 

Uniqueness:  Can your organization claim any of these?

1. First
2. Only
3. Faster
4. Better
5. Cheaper

Lublin calls these the five.  If you can use any of these words, you’ve found an all-important niche. 

Employees:  Include every level employee in the pursuit of purpose and make sure that each division has clearly stated goals.  When goals are accomplished, it builds morale. 

Stimulate people.

Endorse communal work places.  Don’t segregate employees by job title.  Eliminate executive floors.  Segregation encourages isolation for both executives through assistants. Celebrate employees’ energy.  If the energy lies in one direction, encourage that person to pursue that path.

External Believers:  Use external believers in your company and never forget that anyone could be your brand ambassador.   This is now easier than ever with social networking.  There is no much info and music out there, it’s almost easier to rely on your old tastes than to explore something new.  No one has that kind of time.  This is why external believers are so important.  You are always going to take the word of someone/company whose taste/ideals you respect.  See Elektra Record above. Take care of your fans.  Make them lifers. Turn advocates into staffers.  They won’t be paid, but they will be out there on your behalf. 

Sales Staffers:  Everyone is a potential sales staffer in a company as well as a brand ambassador.  When I interned at MTV in it’s infancy, we couldn’t keep MTV logo merchandise in the house.  Everyone at the company wore it (I still have my red pullover sweatshirt with the yellow MTV logo) outside the office.  Everyone was so excited to be working at MTV. Everyone was a part of the company.  It was new so there was an element of winging it.  My first day as an intern, I had to go to the studio to have Richard Butler of the Psychedelic Furs sign a release for his taped interview.  I thought I had died and gone to heaven.   Everyone felt like they were contributing.  Everyone was proud to work there. 

Ex-Employees: Why have ex-employees be resentful and hateful?  They should be excited about their time at your company.  Alumni can be useful. Use an alumni relations’ director.  Make them advocates.  Think of ways to reconnect with employees, send them coupons or concert tickets or discounts.

Gratitude:  Be responsive and show your consumers and fans gratitude.  Send updates, progress reports, photos, info, etc.

Innovation:  Do the culture and processes that are in place make it difficult to come up with breakthrough approaches and turn them into real products and services? 

Open your innovation circle of trust and it will set you closer to your end user. Employees must share a sense of purpose with their colleagues.  There must be a sense of urgency. Don’t let employees wilt in their cubicles.  Create pet projects.  I know there were flag wavers at the labels, but their take on file sharing and the internet were largely ignored. 

Community: Celebrate local elements. Get the community involved.  Partner for a purpose.  Grant all-access passes.  Is your brand important to a customer?

Do more with the corporate board, have them involved; tap into their resources and knowledge.  Communicate directly with staff and have them love your purpose.

Notes To Leaders:

Say thank you.

Be Consistent.

Remember your core idea and have guidelines. 

Be relevant to your audience.

Limit tedium.

Be transparent.

Find and cultivate passionate employees.

Use fun as an incentive. 

Give good titles that make sense.

Financial Considerations:

Live in fear of overhead.

Be disciplined.

Budget multi-year.

Diversify your revenue streams. How important is this for labels now?

Barter and make it a fair exchange.  Formalize the agreement.

Bob Lefsetz said the business started to die once a label exec (Doug Morris) hired his own PR person (Ron Shapiro). It was no longer about the music. The shareholders, board members and higher-ups became the focus. Nancy Lublin is saying put the focus on building a winning, happy team (how much did people love working at WB during the Mo Ostin/Lenny Waronker years?).  Connect with your fellow employees and audience. Make sure your goals meet their goals. Don’t hide from the truth.   Use common sense.  You catch more bees with honey than with vinegar. 

Apple Buys EMI

This was the headline on today's Lefsetz letter. It took me a minute to ponder why Apple would want EMI, then I realized it's April 1st. EMI will probably end up a lot worse than having Apple take over. It makes no sense for Apple, but the move would probably save the hanging on by a thread music company.

EMI will sink (or be turned over to Citigroup) if it doesn't receive about $200 million by June 14. It's new executive chairman Charles Allen rejected offers from Sony and Universal yesterday for the right to license (not own) the music for 5 years. Read more at the Telegraph.

The Lily Allen Saga continues

For those of you who don't get the Lefsetz Letter, he reprinted her reply to his recent postings on her Illegal File Sharing is Bad campaign. I'm assuming he posted it as she wrote it. Is she getting this much attention in the UK?

From: Lily Allen
Subject: Mp3's
Date: September 24, 2009 1:35:56 AM PDT
To: Bob Lefsetz

I think your piece today is a little unfair. I've never said that I side with the majors. And as you state, the website lilyallenmusic.co.uk is an EMI owned website, which I don't run. They own the copyrights of my songs, they can do what they like with them. You claim to have an in depth knowledge of the music industry, and if this is the case you've written a deliberately misleading article. I think that's a little irresponsible. I'd appreciate an apology. I'm not a hypocrite music , I pay for music that I want to listen to. I don't illegally download music and haven't done for about 7 years. Maybe your just trying to get a reaction and for me to publicise your website. That won't work. Besides It's unauthorised file sharing that I have a problem with, not record companies giving away music as a promotional tool. you're piece yesterday was mildly interesting, todays is insulting and I'll be consulting my lawyers on the matter.

My comment on all of this illegal file sharing: Who Cares? It's old news. I managed many bands who were able to sustain a very comfortable living by playing music. None of them ever saw a dime in record royalties from a major label, not even after selling 1.5 million units. Selling records and getting radio airplay were secondary thoughts for these acts. Making good music, keeping fans happy and keeping the live show and its highest level were the most important things. Selling records never put a cent in their pockets. Has Lily Allen received one royalty paycheck from Capitol Records? If not, why does this matter to her? Enjoy the label's marketing money and concentrate on putting out good music.

Mariah Carey and Def Jam Put Ads in Albums

Bob Lefsetz said he thought he was reading the Onion rather than Billboard. The headline reads:
The Monetization of Mimi: Mariah CD To Have Ads

The first deal, created for the Mariah Carey release Memoirs of an Imperfect Angel on Sept. 15, is a 34-page co-production with Elle magazine that includes lifestyle ads from Elizabeth Arden, Angel Champagne, Carmen Steffens, Le Métier de Beauté and the Bahamas Board of Tourism.

Is this grasping for income straws?