I am off to Seattle today to go to Bumbershoot and then host a member dinner on Tuesday.

There’s a number of Sonicbids bands that I am dying to see including Barcelona, Speaker Speaker and Ian Moore. (All in all there are 15 member bands are playing the festival this year using Sonicbids). If you see me, tap me on the shoulder to say hi (photo posted on the upper left for speedy recognition).

Panos

I just got my hands on a cool new book called The Indie Band Survival Guide.

I did not have the chance to read the whole thing yet but I love it. It’s the most comprehensive such book that I read in a while, very well written, and one of the first ones that really looks forward and talks about all the tools that an empowered band should have in their arsenal: blogging, selling music online, getting music into podcasts, learning what to pay attention to when designing your own site, etc. I am tired of all the books out there that talk about labels and managers and agents, etc. but don’t give you any practical advice that you can use right now and in today’s new environment.

There’s many of these “Indie Band” books out there but for me this is one of the best.

Panos

Back in the day, not that long ago, record labels served four distinct needs for the artists they signed, without which it was impossible to have a meaningful career out of performing original music:

Production: They paired artists with songwriters and producers and gave them money to record records in big, expensive studios that sometimes took months or even years to make;

Distribution: Once the record was made, they loaded up millions of copies in trucks and shipped those records to all the important retailers. Their tight relationships with all the important retailers (Tower, HMV, Virgin, etc.) basically guaranteed them all important shelf space. No distribution meant no sales;

Promotion: They hired publicists and radio promoters and got the word out there about the record and the artist through interviews in major newspapers, ensured heavy rotation in major market radio stations, and got the video played on MTV. It was unlikely that an artist would ever find an audience without radio airplay, MTV support, or a big publicity campaign;

Professional Connections (Touring & Publishing): They helped artists promote the record by pairing them up with an agent that helped them get on the road to build an audience. Labels also helped artists by hooking them up with publishers (often in-house) which in turn connected them with film music supervisors, advertising agency execs etc. to further each artist’s earning potential and hence the money that the label made from their investment;

Just a quick glance at the four areas I describe above, show you that the cost of offering these services was enormous (it took an army of people and a boat-load of money to get past all the gatekeepers), which meant that in order to recoup one’s investment the sales needed to be equally high.

But in the past few years three major internet-enabled shifts have taken place that have effectively brought down this entire ecosystem:

1.    The digitization of music has made it possible for recorded music to be distributed online, for next to nothing, leading to commodization and the expectation that it should be free;

2.    Audiences, spurred on by the abundance of music on the net, have shifted their tastes away from mass-marketed, mass-selling artists, to more personally-discovered, niche-reaching music (major label CD sales are down by more than 45% since 1999);

3.    The internet has entirely evaporated the cost related to offering these services hence eroding the fundamental value proposition of the average label (witness the demise of many recording studios and large scale record retailers) but labels, caught with the baggage that legacy brings have been unable to move quickly to adapt;

I’ll talk more in Part 2 next week about how these changes have contributed to the rise of a whole new class of artists that I call the “Artistic Middle Class”  — and how these artists are using the net and their low-cost advantage to totally remake the music market.

Panos

The biggest (albeit relatively low-key) news in the indie scene this past week was the acquisition of CD Baby by Disc Makers.  I know both of the guys that run the two companies and I’ll admit that I was caught a bit off guard, but not surprised. The thing just makes sense for Disc Makers.

I’ve been talking a lot about the modern indie artist tool kit (more in a subsequent post). Every artist basically needs to focus on four key areas that affect their career: Production, Distribution, Promotion, and Connections (the last bit is where Sonicbids comes in).

As the world changed in the past few years, Disc Makers was caught without a real stake in any of these areas, other than manufacturing, which at some point will move entirely away from CDs and even disappear. Buying a real player in the distribution area like CD Baby is a natural move.

The real surprise for me is the fact that the founder of CD Baby, Derek Sivers — who I know well and is a fellow Berklee alumn – is moving on. Like with all companies and groups (Pink Floyd?), when the founder moves on there’s a real void left that’s hard to replace (though not necessarily impossible to overcome).  Will CD Baby be the same without Derek?

I have no idea, but if CD Baby was destined to be sold, then Disc Makers is the best home for it.

Panos

I just learned about the sudden death of soul legend Isaac Hayes at age 65.

I had the privilege of booking Isaac for about three years in the mid-nineties and those were some of the most fun tours that I booked in my entire time as a booking agent. This was at the time when Isaac starred as the Chef on “South Park” and his career was on an upswing after many, many personal set backs. “South Park” was a great gig for Isaac and it introduced him to a whole new audience. (A shame that it ended rather ignominiously after he had a falling out with the creators.) Booking a whole Europe tour around a song called “Chocolate Salty Balls” (it hit Number 1 over Christmas in the UK) was one of those Spinal Tap moments in life when you have to pinch yourself to see if it’s happening for real (I was about 25 at the time and for a kid from Cyprus, this was just otherworldly).

For those of you not familiar with Isaac’s music and voice, you should head over to iTunes and check out his catalogue. Isaac influenced a whole generation of songwriters and was the first guy to blend modern pop music with the sound of orchestral strings. You’ll hear (and even see) Isaac in everyone from Jamiroquai to Prince and Jay Z.  He was one of the first black songwriters to win an Academy Award (for “Theme from Shaft”) and he wrote and played on many Stax Records hits from the 60s and 70’s including “Soul Man” (yes, that “Soul Man”). In many ways, he was the prototypical empowered artist, always marching to his own funky drum beat.

Isaac, may you rest in peace.

Panos

An admission. I’m a football (soccer) jersey maniac. I started collecting them when I was 11 and have not stopped since. I must own well over 150 and I own every Arsenal home and away jersey since 1983. My most recent one (pictured below) is the new Arsenal away jersey that I bought here in the States two weeks ago. The catch? Official release day is today. Pretty cool (kinda like getting a pre-release copy of your favorite band’s album.)

Back when I was a kid in the early eighties, all football clubs relied on gate receipts as their only source of revenue (insert music business parallel: record sales). Sport was not yet a big business and no one was thinking about “revenue diversification” exactly. People were just happy to win a few championships and players did not make all that much money. I still remember that shirt sponsorship was prohibited and even brandmarks like adidas or Puma had to be covered when a game was televised. Back in those days a club like Arsenal would pretty much keep the same jersey year in and year out for about decade. No one ever thought of sponsorship or shirt sales as a viable way to make money.

Then all of a sudden, Liverpool FC ushered in a new era when in the early eighties did a deal with Hitachi, the Japanese electronics company, to sponsor their shirts. Purists freaked out and other clubs scoffed at the notion of having their shirts sponsored, but pretty soon Manchester United did a deal with Sharp; Arsenal with JVC; Manchester City with SAAB, Bayern Munich with Commodore, etc. Within a short period of time if your shirt did not carry sponsorship, you were not a serious club (Barcelona the only exception until two years ago when it gave in to UNICEF).

By the mid-eighties, as hooliganism drove many fans away from stadiums, football clubs realized that replica shirts can help boost sales and make up for lost revenue — so they started marketing jerseys as both a great affiliation statement but also a fashion accessory that they sold to millions of fans — some of who never paid a penny to buy a ticket for a match. Since then, club jerseys have been designed to look great both on the pitch (field) and with jeans. The David Beckham LA Galaxy jersey sold in excess of 750,000 in just a few months (at roughly $100 a pop, that’s about $75 million in gross sales). And if you take a look at any big club’s financials, replica jersey sales, shirt sponsorship and TV revenue collectively account for much more money than gate receipts do. (Adidas just paid the German national football team $298 million for the rights to make their jerseys; Fiat paid Juventus $134 million to be the sponsor on their shirt.) There are millions of Manchester United and Real Madrid fans out there that watch these teams on TV every week and wear their jerseys, but have never, ever, actually set a foot at either Old Trafford (home of Man. U.) or Santiago Bernabeu (home of Real).

I think the parallels with the music business are pretty obvious. The record labels will have you believe that just because record sales are declining, the music business is about to vanish. Yeah, right. As football clubs discovered almost three decades ago, crisis can lead to opportunity. Just as a modern football club’s income statement has revenue generated from TV rights, sponsorship, fan clubs, jersey sales, merchandise, video games, concession stands, branded gear, etc., the income statement of the modern empowered artist will be far more diverse than just record sales and touring income.

That’s what I’m talking about when I refer to the Artistic Middle Class: artists that realize that their income will no longer be dependent on a record label but on everything from brand sponsorships, sync licences, fan donations, touring, publishing, merchandise sales, and yes, shirt sales.

People like me will line up to buy them.

Panos

P.S. Is this shirt the coolest or what?