Fan Funding Part 2

Fan funding through social media and websites like Kickstarter continue to prove successful for many but some artist find that they cannot drive their campaign to meet the need goal to cash in. Levi James of Music Think Tank wrote an excellent article highlighting the top five reasons campaigns fail. He notes that while 56% of campaigns succeed there is the 46% that do not. As one may expect setting one’s expectation to high is on the list, be realistic and set a campaign fundraising goal that is inline with your fan base. These five suggestions apply to any fundraising and are useful for any artist.

If you have found that you just can’t meet your goals other services like gofundme.com allow for the fundraiser to withdraw as the campaign is in progress and are not required to meet the target before the project is financed. Care must be taken with these types of campaigns to ensure that you a capable of delivering on promised rewards for the tiers that are defined.

Other methods of fan funding include offering ‘pay what you want/can’ on albums placed on Bandcamp.com. I am preparing to do this for my back catalog, by offering them in this format for MP3. If a fan would like to contribute they can and I can also sell high lossless files of the same album for those that prefer quality. I feel the key is to have a variable set of options for fans and potential fans. These can be everything from free digital downloads to limited edition vinyl. The ‘pay what you want/can’ model may just surprise you with a value high then you would have sold the album at from a dedicated fan.

A Free Grab for Tech Companies: Internet Radio Fairness Act

          Pandora Radio, according to sources is in need of higher profitability as costs outpace revenue. Instead of raising advertisement costs they have chosen to go after music creators pockets through litigation and political action. The current bill titled Internet Radio Fairness Act wants to set residual royalty payment to below market fair value.  What is the royalty rate right now? Remember that the Digital Millennium Music Act set the value at “fair market value” which is a value that is negotiated between licensing companies (ASCAP, BMI…) and content provider companies (Pandora, Spotify…) currently Pandora pays out 0.0011 cent per play. Even the most popular artist would be pressed to get a living wage just off those revenues.  Do the math 16.4 million plays are required for 18k of revenue. All the while Pandora is market cap is valued at 1.5 billion dollars.  If they are losing profitability due to rising costs of royalty payments is it the fault of the industry or just a bad business model, which never could reach the intended vision of the company. Pandora has further issues losing subscribers to competition like Spotify and their stock has taken a hit with announcement of iTunes Radio.

          Let us take a look at the proposed act before Congress. At the core they are arguing that it is unfair for digital streaming music to pay market rates when other broadcasters either pay zero as with AM/FM radio or below market rate as with satellite or cable radio. It is stated that it is unfair and restrict new technology development and profitability. Well my opinion is that the entire system has a problem. Why should we grant our copyrighted material to be used as a vehicle of profit for a large corporation, while we as owners and creators are not compensated. A fair bill to put forth would be to end the enacted laws that permit broadcasters to obtain below market rates and or free content which in turn they make billions through advertising.

          The following link will help generate a letter to your representatives and provides more information on awareness for fair wages for artists:

http://www.musicfirstcoalition.org

Music Industry 2012 Legal Issues

2012 has seen several legal issues in the music industry; this post covers three in particular. First in the aftermath of Stop Online Piracy Act (SOPA) and the Protect IP Act (PIPA) the large copyright holders in the industry like Universal Media Group and Disney have sought other methods on stopping illegal downloads. These companies, the US Government and industry agencies have engage a software company called MarkMonitor to scan peer to peer sites and record offending user internet addresses then engage volunteering ISPs to send warning and education on theft of intellectual property (IP). This plan also includes service disruptions or slowdowns for repeat offenders. A Wired Magazine article explains the six steps of this plan to discourage the user from downloading copyrighted material. It is my opinion that these measures do put undo burden on the end user through a 35-dollar fee to dispute any claim that MarkMonitor has identified your behavior as illegal. Also I have not seen provisions to protect the work of independent artists and labels. My assumption at this point is that registering works to be monitor would require a fee to MarkMonitor and thus be cost prohibitive to a small artist or label. After this is implemented I will also watch for potential legal issues of consumer privacy rights.

Another issue that has developed this year has been a trend of law suites where the artists are suing their labels over digital royalties. As a label this is a concern, as we do not want to be in a position of conflict over royalties with our own artists. Lee Simmons in his article for Hoovers.com identifies that this recent rise in legal cases as a product of new technology and regulations and the artists need to voice their position on how these profits should be divided. As a label open dialog with the artist roster is important and standards that are fair should be agreed upon. These court cases in particular will be on the rise as revenue streams have shifted to technologies companies leaving less of the profit share for label and artist.

Finally another legal issue to keep tabs on is the dispute of whether streaming videos illegal. Stephanie Rabiner writes about the subject in her article titled: Is Streaming or Watching Movies Illegal? While posting an unauthorized copy of a movie is illegal as is downloading (copying to local hard drive), there is a legal grey area being disputed about streaming the content as no copy is made in totality. This does not make copyright holders happy and we can expect more cases until the issue is resolved.

References

Kravets, David (October, 2012). Copyright Scofflaws Beware: ISPs to Begin Monitoring Illicit File Sharing. Wired Magazine. Retrieved from: http://www.wired.com/threatlevel/2012/10/isp-file-sharing-monitoring/

Rabiner, Stephanie (April 23, 2012). Is Streaming or Watching Movies Illegal? Findlaw.com. Retrieved from: http://blogs.findlaw.com/law_and_life/2012/04/is-streaming-or-watching-movies-illegal.html

Simmons, Lee (May 1, 2012). Music royalty litigation heats up. Hoovers.com. Retrieved from: http://bizmology.hoovers.com/2012/05/01/music-royalty-litigation-heats-up/

Artist Managers in a New Music Industry

George Howard in his article titled ArtistManagers Must Understand Their Role Is Now Business Development states that an artist manager’s role has shifted from a focus of finding a label to sign their artists to “developing and unlocking value for their bands; i.e. business development” (2011). 

What does he mean by this? Most would counter that the concept of developing an artist has always been about business and following those principles. Howard does mention several artist managers that do take this approach, but many do not and rely on labels to function as the business managers for the industry. Counter that thought with today and the state of the music industry where if you are not a profitable producer for a major label, your only course is to develop your brand through “indie” or DIY methods.  This means for the majority of artist that the importance of having an artist manager that is capable of running a business is a must.

Core competencies must exist within the manager that lends to the development of the business that is your band. But this person also must be able to work with the vision of the band to find how to capitalize and refine their product to generate further fans and increase revenue to meet the financial goals of the group. In the book The Product Manager’s Field Guide by Full Sail University describes the competency set “Ability to Deliver Results Through People” (2003), this set that is focused on the capability of a manager to work effectively in managing products through people. Building consensus, communication, building report and adapting to both internal demands of the band but external professional contacts and understanding the needs of the fan base are all examples of this competency.

Again the goals of the band need to be examined to understand at what level in the industry they are striving for. If the desire is to find a living with in the industry then the art of business development must be a part of the plan. Building a team with a good manager at the helm is a recipe for success, which in place the artist can focus on writing that hit.

Reference:

Full Sail University. (2003). Product Manager's Field Guide. Full Sail University. McGraw-Hill Create. ISBN-13: 9781121176843