I interned at Universal Records in the Motown Sales division the summer of 2005. One day that sticks out in my memory was when we were trying to decide the optimal street date to release David Banner’s record. Even then the industry was hungry for data to make these sorts of decisions. At that point all we had readily available was SoundScan numbers and terrestrial radio plays.
The Ying Yang Twins had just released USA (United States of Atlanta) and seen sales take off on the strength of The Whisper Song on urban radio. David Banner had a similar song, Play, seeing good pick up across the country. Knowing the overlapping demographics of their fans we wanted to time the release of Banner’s Certified album to hit the same point in the radio trajectory as the Ying Yang Twins had done.
I was in charge of creating the pretty Excel chart that my supervisor wanted to present to the label heads. I can only imagine how much longer it would take to put a similar chart together by hand nowadays. There are more data sources out there than ever before. The trick is knowing the right comparisons to make, which metrics are important, and being able to present it in a way that tells a clear story.
In the online echo chamber it is easy to forget that the main reason big media companies are slow to act is because they are still hypnotized by where their revenue is coming from.
The Wall Street Journal’s article Mixed Signals in Web Radio reported the percentage of total revenue the following formats generate from the internet:
Newspapers – 7%
TV – 3.4%
Radio generates only 2.4% of its revenue from the internet
Each week 42 million individuals listen to radio streamed over the internet, more than double the rate five years ago. Clear Channel reported a 28% jump in digital sales last year. Pandora is due to report its first quarter of profitability. Even so, traditional radio listeners, totaling an estimated 234 million, still dwarf the online audience.
We live in transitory times and speed of this transition will only accelerate.
Artist stats and comparisons now load much more quickly thanks to a combination of an optimized database and some wizardry that keeps you on the same page while you search for new artists and comparisons. We’re going to continue to tweak and tune this system as more data is added.
Alongside the speed improvements come a slew of tiny changes including an explanation for why we ask about who you are on sign-up (it’s just for survey purposes!), real-number values on network breakdowns, and a a few other tiny changes.
Last week Eric Czech became the first addition to the NBS engineering team. Beyond Eric’s ability to quickly complete super-human amounts of work, make databases go super-fast, and optimize every last bit of code, he brings an uncanny ability to forget the location of where he parked his car.
Eric has been working with NBS for the past few months on a handful of smaller projects and we’re excited to have him join us full-time in our Boulder, CO office. He’s currently working with Samir and Walter on our backend infrastructure and database optimization to make NBS sing.
For the first few years of television, advertisers continued to simply read their pitches on air like they had done for radio in the preceding decade. Although the internet has been around for many years I’d argue that the music industry is still only in the infant stages of adapting its strategy to the new medium.
Marketing, developing a relationship, and selling directly to consumers is the future of the music industry. The democratization of power, the measurability of actions, and the ability to communicate persistently are all characteristics that make this new medium unbelievably powerful for both business and music.
At Next Big Sound we know that by collecting all the social music statistics in one place that we are saving people a tremendous amount of time. In exchange for use of the free site we store what bands people are searching and comparing. We also allow individuals to sign up to receive free weekly email reports digesting the stats for the artists they work with. In exchange for getting this report they give us their email address and permission to come to their inbox every week. If we had put everything behind a wall we never would have started fascinating conversations with hundreds of high-level, forward thinking individuals and organizations in the business who will develop into customers in the coming months. Users are able to choose how quick and how deep our relationship develops based on how much value they want to derive.
This is completely analogous to where the industry as a whole is headed. I can check out a band’s website and connect with them on various profile pages. In exchange they can click through to my profile and learn more about who I am. If I want to download some music I can give them my email address and permission to contact me about future releases. If I want the ringtone, I can text them with my cell-phone number. Selling CDs at $15 a pop and refusing to give away a small amount of value in order to create, build and sustain a relationship with a fan is the old model. Huge CD software releases once a year with little or no trial period was necessary under the constraints of a different era.
So artists, stop reading your pitches over the airwaves. If you truly believe in what you’ve created, the songs you’ve written or the business you’ve built, then I’d argue that there is no better model than to give away a small part in order to start a relationship where you can then entice people to buy the whole thing.
On my last trip to New York City I had the pleasure of meeting with Mike McCready who runs a company called Music XRay. Prior to his current endeavor he was at the helm of Platinum Blue – a company that analyzed songs based on a wide range of structural components and could predict, with 80% accuracy, whether a song would be a hit.
As Gladwell writes in an old New Yorker column, Platinum Blue ran hundreds of CDs through their software and one album returned an impossible 9 out of 14 songs as probable hits. The artist at the time was an unheard of singer/pianist by the name of Norah Jones. The album was called Come Away With Me and, as you well know, it took the industry by storm selling 20 million albums worldwide and winning eight Grammys.
On Tuesday Norah Jones released her fourth studio album entitled, The Fall. As you can see in the Fans graph above she saw a nice spike in her social music activity despite having a slightly older fan base. She still has that low-key texture that makes her a great artist to put on anytime of day but retains the edge that catapulted her to fame to begin with.
If you have to print and ship physical CDs to retail locations around the country all marketing necessarily needs to lead up to the release date when consumers can first listen to the new material. But what about online when every album leaks in advance? In fact, if I were a major artist, I’d be worried if my album didn’t leak.
I was one of the millions of consumers who bought $20 CDs for years based on one single only to find out the rest was “filler” and I remember when Borders first allowed me to scan a CD and listen to tracks before I purchased the record. That was a complete change from having to rely on the radio singles I’d heard, mainstream media reviews and friend recommendations. Imagine if Border’s had been able to measure and report how people were sampling the music selection. Which of the CD’s within arms reach of the kiosk were people grabbing most? Did different album covers for the same release impact the % of people who scanned the album to sample? Which songs were being repeated? Skipped? Did this match with which songs were being pushed to radio? How did this listening behavior correlate to sales at the register? The beauty of the internet is its measurability. Artists no longer need to go completely silent in between cycles but can pre-release tracks consistently, use social media to give a glimpse into the creative process, involve the fans on a deep level and measure the results every step of the way.
In the old days, when you first heard about a new band there was a limited list of actions you could take. Most likely you heard about new music from friends and the mainstream media and if you liked the band you could do one of four things:
Borrow the record/tape/CD from a friend
Go to the store and purchase the album yourself
Call your radio station to request the song
Buy a ticket to a live show if the band was in your local concert listing
Only the last three actions are measurable. Nielsen SoundScan reports the number of physical units sold, BDS reports radio airplay by market, and companies like Pollstar report ticket sales. Despite the measurability, it was always difficult to gauge the level of interest in the band. The person who bought the CD and played it once was counted the same as the individual who played it so much it started skipping. Beyond this it was virtually impossible to tell which particular fan was sharing the music with their friends in the hallways, cars, and stereos and which fans’ musical tastes were well respected in their peer group.
The industry is currently straddling the old and new world where it can support businesses measuring old consumption patterns but the list of actions a consumer can take has grown dramatically. Nowadays millions of consumers take one of these actions after learning about a new artist:
Look the band up on Wikipedia
Stream their music from MySpace or any number of sources
Friend the band on Facebook and other social networks
Download their music (both legally and illegally)
Follow the band on Twitter
Heart a song on Hype Machine
Favorite a video on YouTube
Mention them in a blog post
Download their ringtone
Share a link with their friends
Give a thumbs up on Pandora
Vote in an online contest
Sign up for their mailing list
You get the idea…
All of these actions are measurable. While individually they might not indicate the same interest level as a $20 CD purchase, I’d argue that taken in aggregate they will be vastly more important in the new music business.
Although it feels like this change has been imminent for years, I can tell from first hand conversations with artists, professionals and labels throughout the industry that many players are only now being forced from the old to the new world by the harsh realities of where they see their income coming from. It’s easy for consumers to complain about how out of touch the major labels are, and just as easy for the majors to ignore them when they continue to sell millions of physical units, terrestrial radio still creates pop stars, and digital promotion is showing low returns. 10 years ago the list of four actions at the start of this post was all there was. Can you imagine where we will be 10 years from now?
We are back in Boulder after roughly three weeks on the road meeting with labels, managers, bands, agents, and music tech companies in Chicago, San Francisco, Los Angeles and New York City. We are more excited about what we are building and where we are headed than ever before.
We want to take a quick minute to highlight The Founders series shot this summer by Megan Sweeney. Here is a trailer of the series Megan posted this morning.
Megan’s artful encapsulation of the Techstars experience was elevated by the excellent music used throughout the video series. While the episodes profiled the entrepreneurial and business side of our lives, it did not capture the concerts we went to all summer, the music that is constantly blaring in our office, or the constant conversations we have around the future of the music industry and our favorite up and coming artists. A couple of the bands whose music was used in the series we’ve had the pleasure of seeing live and meeting in person.
The music really made the series unique and we want to highlight the artists themselves (that we are, of course, tracking in our system). If you are writing original music and looking for exposure you should contact Megan at Alpine Light Pictures.
So one last thanks to the Techstars teams and mentors for an incredible 3 months, thanks to Megan for capturing and presenting it to the world, and thanks to the bands for providing the soundtrack for the summer!
