Can Trent Reznor Reinvent The Video Game Business, Too?

from the expand-your-horizons dept

By now, plenty of people have understood the details of how Trent Reznor embraced new business models and has thrived online by doing so. But could he do the same thing in an entirely different industry as well? A few folks have sent in an interview with Reznor and long-time collaborator Rob Sheridan on Joystiq, discussing how they wanted to create a video game. While Reznor admits that he hasn't done enough research to fully understand the video game ecosystem, something did strike him in his first few meetings:

And as first time people in a pitch meeting, it was kind of depressing. Depressing to see that the people in control of those studios and publishers are much the same as the people sitting at record companies.

In a record company, they aren't musicians or people who love music, they're people who want to sell plastic discs. They think they have a formula where if they can eliminate the artist from that equation, even better. You see that in the case of the Pussycat Dolls and some of the other fabricated crap that's out there. What we tended to notice in the video game meetings was that it didn't seem that there were gamers there. It's business guys who want to turn the company into a profit making machine. They look at it in terms of numbers, like a Hollywood studio. If it costs "X" amount to make a game, to compete, then it has to be a proven franchise or it has to be similar enough to something they know is going to sell. They don't want to take the risk.

It certainly sounds like they're still just tossing around ideas -- not heavily committed to making a video game (so don't start rumors!) -- but they do appear interested in experimenting with a variety of different concepts once Reznor is finally done touring. It would be neat to see if Reznor can take his success and experiences with the music industry, and translate it to video games. There have been some companies that have started to figure this out, such as Stardock, who takes a very pro-gamer stance that focuses on providing more value, rather than trying to stop people from doing bad stuff. And not surprisingly, Stardock has seen quite a lot of success in doing so. In the meantime, for you Reznor fans, apparently the trick to getting him to hang out with you is to have an old time arcade set up with Robotron.

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Best Practices In Online Promotion Of New Music Offerings

from the worth-a-read dept

Bas Grasmayer alerts us to a paper he's written as part of the research for his thesis on the future of music distribution. This isn't the full thesis, but is a quick analysis of 5 different musical acts (pdf) and the new music launches they did. All five are ones that we've talked about here: Radiohead's name your own price deal for In Rainbows, Trent Reznor's tiered reasons to buy for Ghosts I-IV, Groove Armada's spam your friends EP sponsored by Baccardi, Danger Mouse's blank CD-R and book given out after EMI wouldn't release his latest project and Mos Def's t-shirt album. The paper gives a pretty good summary of all of them, and concludes with some key points:

What does NOT work (well)

• Not going all the way. Fans love free music and so do people that are not familiar with an artist's work, but if you're going to give something away then really give it away. If you don't, you won't get the attention you were hoping for and might even disappoint some fans instead of connecting with them.

Creating unnecessary mediums instead of utilizing existing ones. While the Bacardi B-Live Share application looked cool (now offline), it was completely unnecessary. Instead of creating a digital dashboard with meaningless graphics, it could have been executed in a much simpler fashion by utilizing existing social networks or filesharing websites. IF you're going to set up such a thing, then at least make it interactive, social (in terms of enabling users to interact with each other) and add value (with videos or a game for instance). You could even use it to sell other products of the band or artist.

Expecting people to pay for what they can get for free. People might pay, but most will pick whatever way is most convenient. Usually, this is by remaining seated at your computer and by avoiding complicated online payment procedures. Sure, people should use legal ways to buy music, but the reality is that people go for convenience.

What does work (well)

• Giving fans a reason to buy. Instead of expecting people to pay for something which they can, perhaps more easily, get for free, create added value. This is what Nine Inch Nails, Mos Def and Danger Mouse and Sparklehorse all did very well. Instead of expecting people to pay for the music, they all created something besides the music which people would be more willing to pay for.
• Freemium. By offering something for free, one connects with fans and they will spread the word about you (as long as what you're offering has value). Once attention has been garnered, and perhaps sympathy has been won, you can offer a premium product. This is how Radiohead and Nine Inch Nails have been successful with aforementioned albums. First you give something for free, then you market your premium; freemium.
• Understanding that the package IS the product. This goes for all of the cases, except for Groove Armada. In the case of Danger Mouse and Sparklehorse as well as Mos Def, the package was actually the reason to buy the product. In the case of Radiohead and Nine Inch Nails, they marketed the package as premiums, perhaps understanding that it's hard to make money if you have to compete with free, meaning music downloads.
• Buzz. By generating buzz, you can turn people just turned on to your product into fans. These fans can then later be marketed to when trying to sell premium packages (or subscriptions for example). Even if they don't buy, having them talking about your brand or product increases the buzz. This works best if they can give others free samples (free music) to see for themselves how great the brand or product is.
• Co-branding. By co-branding, the two brands can both benefit of each others' resources and skills. In the case of Groove Armada and Bacardi, the latter benefits mostly from Groove Armada's image and the ability to promote themselves on all Groove Armada-related products, this includes live performances. Groove Armada on the other hand, benefits from the resources Bacardi has, for instance to set up the website and network for the distribution of the music, as well as their marketing capacities. Both are connected to different audiences and by working together, they can promote each other to their respective audiences, perhaps new ones.

I think this is a fantastic list -- and the results of other experiments we've seen seem to support many of the points on this list as well. The rest of the paper is also worth reading, and I look forward to the final thesis. Of course, two small quibbles: the paper cites me a couple times, including claiming that I coined the term "competing with free." I can't take credit for that, though I have no idea who coined it. I was under the impression the phrase was in widespread and common usage prior to me ever mentioning it. Second, it claims that to get In Rainbows that the "minimum donation" was a penny. Perhaps that's technically true, but the real minimum donation was nothing at all -- and you could still download the album. Bas seems to recognize this, because later in the paper it mentions that many people got the album for free. Overall though, for folks who are paying attention to this stuff, this is a nice summary.

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Thom Yorke Dissing The Album Format Doesn't Mean 'Free' Business Models Don't Work

from the ok... dept

I believe that one of our frequent critics has been submitting a series of stories which s/he believes "disproves" the basics of what we talk about here. I don't know for sure that it's the same individual, as they always use different names, but the names are all of the same nature, and the comments are effectively the same mocking tone -- often included with a claim along the lines of "you'll never post this because it shows you're wrong." Later the same person (again, this is an assumption, but one with a high probability) has been posting comments insisting that "Mike always ignores my submissions because they prove he's wrong." The thing is, that's clearly not true. If you hadn't noticed, I often post stories suggesting something I've written about may not be true (and in some cases, I'd love to be proven wrong). The problem is that when you break down the stories, they don't prove anything of the sort. And, with this particular critic, s/he's either so incredibly misread the story or misunderstood what we wrote about, they didn't seem worth posting.

But since the onslaught continues, I figure why not spend one (and only) one post responding to two such recent submissions to explain. The first was the fact that, back at Bonnaroo, Trent Reznor announced to the crowd that it was Nine Inch Nails' last US show ever. The critic seemed to think this was proof that Reznor's brand of connecting with fans & giving them a reason to buy was a failure. Except... someone hadn't been paying much attention. First, the news wasn't new at all. Reznor had stated well before the tour even began that he was putting Nine Inch Nails on hold after the tour, but that he would continue with a variety of other musical projects. He also announced this same fact at other shows on the tour. The final statement was hardly anything new or anything of note. It certainly wasn't a sign that Reznor's efforts were a failure, but that he wanted to try something new -- a point he'd been making for quite some time. (Also, it's worth noting that since then, Reznor decided to do a few more NIN shows in the US, as he felt that Bonnaroo and the NIN/JA tour weren't the best way to go out).

The latest is a similar misreading, with a similarly misguided "nyah, nyah" comment from the critic. In this case, he pointed out that The Sun (hardly a standard for journalistic excellence) is reporting that Thom Yorke of Radiohead is saying the band doesn't want to do any new albums. Again, as with the statement above, this is not a new thing. Hell, just last week we linked to an interview with Yorke where he said the same thing. But, again, this critic seems to be confusing the fact that Yorke doesn't want to produce a certain product ("the album") with the idea that the In Rainbows experiment was a failure.

But that's not what Yorke is saying at all. In fact, Yorke has been complaining about the album format for some time. But that's a complaint about the format itself, not any sort of statement on whether or not In Rainbows was a success (which all the data shows it was a huge success). Furthermore, even the fact that Yorke wants to do something different doesn't mean the original experiment was a failure. Hell, in the very link this critic sent (the one above), Yorke states that In Rainbows was a success as an album. On top of that, in an interview last year, Yorke pointed out that it makes no sense to just keep doing the same thing, and even if they did another album, they wouldn't use the same method, because it had been done already, and they wanted to do something new. He was realizing, correctly, that you get more bang for your buck by doing new stuff, not just repeating the same old thing.

Nowhere does Yorke say that he won't still be producing music, or that they won't come up with new and innovative business models. But that he just doesn't like the album format. This is something a lot of artists agree with, and is hardly a condemnation of the original experiment.

There have been a few other submissions along these same lines, but rest assured, if I'm not posting your submissions (and we get about 50 to 100/day, and we only have so much time to write up stories), it's not because you've somehow "proved me wrong." It might be because the stories you submit don't actually say what you think they say... or... well... anything interesting at all.

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Trent Reznor Explains What A Musician Needs To Do To Be Successful These Days

from the good-job dept

Pretty much every other person who's ever read the site has sent this one in today, so I figure it's worth writing up. We've talked for a long time about how unknown/up-and-coming artists can embrace new business models to be more successful these days. In fact, five or six years ago the only artists who were doing these kinds of experiments were the up-and-coming ones. And when we did that, people complained that "well, sure, this works for the unknowns, because they have nothing to lose, but it's not a real business model." And then, in the last couple of years, with folks like Trent Reznor and some other well known artists embracing new models, suddenly the refrain changed: "well, sure, this works for them because they already have a huge following... but it'll never work for everyone else." What was silly was that they were both effectively doing the same thing: better connecting with fans, and offering them something of scarce value to buy. In my more recent presentations, I've been careful to show how artists big, medium and small are all successfully embracing new models based on this formula:

Connect with Fans (CwF) + Reason to Buy (RtB) = The Business Model
And those who are embracing it are finding that it works and works incredibly well in many cases. Yet, still people want to insist that it can't work. In fact, Reznor himself heard this when he mentioned that the Beastie Boys new offering (built on the Topspin platform) was "how you sell music today." In response, the second wave of naysayers listed above came out to complain, so Reznor decided to respond by explaining how new artists get noticed, build a following and build a business model these days. And the formula is basically: connect with fans and give them a reason to buy... and use free music to do both of those things. He does note, that if you want to be a superstar, you probably need to sign with a label, but doing so will mean giving up pretty much everything: control, profits, ownership. However, if you just want to be a success...

* Forget thinking you are going to make any real money from record sales. Make your record cheaply (but great) and GIVE IT AWAY. As an artist you want as many people as possible to hear your work. Word of mouth is the only true marketing that matters....

* Parter with a TopSpin or similar or build your own website, but what you NEED to do is this - give your music away as high-quality DRM-free MP3s. Collect people's email info in exchange (which means having the infrastructure to do so) and start building your database of potential customers. Then, offer a variety of premium packages for sale and make them limited editions / scarce goods. Base the price and amount available on what you think you can sell. Make the packages special - make them by hand, sign them, make them unique, make them something YOU would want to have as a fan...

* The point is this: music IS free whether you want to believe that or not. Every piece of music you can think of is available free right now a click away. This is a fact - it sucks as the musician BUT THAT'S THE WAY IT IS (for now). So... have the public get what they want FROM YOU instead of a torrent site and garner good will in the process (plus build your database)....

* Have your MySpace page, but get a site outside MySpace - it's dying and reads as cheap / generic. Remove all Flash from your website. Remove all stupid intros and load-times. MAKE IT SIMPLE TO NAVIGATE AND EASY TO FIND AND HEAR MUSIC (but don't autoplay). Constantly update your site with content - pictures, blogs, whatever. Give people a reason to return to your site all the time. Put up a bulletin board and start a community. Engage your fans (with caution!) Make cheap videos. Film yourself talking. Play shows. Make interesting things. Get a Twitter account. Be interesting. Be real. Submit your music to blogs that may be interested. NEVER CHASE TRENDS. Utilize the multitude of tools available to you for very little cost of any - Flickr / YouTube / Vimeo / SoundCloud / Twitter etc.

* If you don't know anything about new media or how people communicate these days, none of this will work. The role of an independent musician these days requires a mastery of first hand use of these tools. If you don't get it - find someone who does to do this for you. If you are waiting around for the phone to ring or that A & R guy to show up at your gig - good luck, you're going to be waiting a while.

Great stuff, as usual, and certainly reinforces the point: it's certainly hard work, but it is doable. If you're unknown, use this process to get known. Once you're known, you can start to implement all different elements of the business model, using the music to make scarce goods much more valuable and start earning that way. Great advice for artists big, medium and small...

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Trent Reznor Using His Fans And Tiers Model To Save A Life

from the using-it-for-good... dept

We've certainly talked a lot about the various ways that Trent Reznor has been exploring creative new business models that center around connecting with fans and giving them a reason to buy, but he's now using the same concepts to try to help save a life. On Wednesday, he announced a program to get people to donate money to help Eric De La Cruz get a heart transplant, whereby people who donate certain amounts to the cause will get to hang out/meet with Reznor and other band members during his ongoing tour involving both Nine Inch Nails and Jane's Addiction (which, by the way, hits Silicon Valley tonight, for those in the area -- though, they're not accepting any more donations for people going to tonight's show). As with the Ghosts I-IV model, there are different "tiers" of support available. In just two days, he's been able to raise nearly half a million dollars, once again showing the power of having a strong community and trying to do something good with it. It will be fascinating to see if there's more that can be done along these lines in the future as well -- turning some of these business models into helping out those in need.

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Apple's Arbitrary Rejects Hit Nine Inch Nails App

from the bizarre dept

We've covered plenty of examples of Apple's rather arbitrary decision/approval process for putting apps in the iPhone App Store -- demonstrating a huge opportunity for other phone providers to be more open and less ridiculous. We've also talked plenty about Trent Reznor and how Nine Inch Nails is doing all sorts of unique things to connect with fans -- including a fantastically well thought out iPhone app that got lots of well-deserved attention.

However, those two things clashed this weekend, when Apple suddenly rejected the latest version of the iPhone app for very murky reasons:

We've reviewed nin: access and determined that we cannot post this version of your iPhone application to the App Store at this time because it contains objectionable content which is in violation of Section 3.3.12 from the iPhone SDK Agreement which states:

"Applications must not contain any obscene, pornographic, offensive or defamatory content or materials of any kind (text, graphics, images, photographs, etc.), or other content or materials that in Apple's reasonable judgement may be found objectionable by iPhone or iPod touch users."

The objectionable content referenced in this email is "The Downward Spiral". Since the app is live on the App store, please make the necessary changes to the application as soon as possible, and resubmit your binary to iTunes Connect. Thank you

Except... it's not at all clear what the actual problem is. As Reznor notes, the album "The Downward Spiral" (one of NIN's most popular albums) is not available on the app itself, though the song "The Downward Spiral" is apparently found somewhere in a podcast that can be streamed from the app. But, as Reznor later points out, the same song can be easily bought on iTunes, so it's difficult to see what possible objection Apple could have.

I'll voice the same issue I had with Wal-Mart years ago, which is a matter of consistency and hypocrisy. Wal-Mart went on a rampage years ago insisting all music they carry be censored of all profanity and "clean" versions be made for them to carry. Bands (including Nirvana) tripped over themselves editing out words, changing album art, etc to meet Wal-Mart's standards of decency - because Wal-Mart sells a lot of records. NIN refused, and you'll notice a pretty empty NIN section at any Wal-Mart. My reasoning was this: I can understand if you want the moral posturing of not having any "indecent" material for sale - but you could literally turn around 180 degrees from where the NIN record would be and purchase the film "Scarface" completely uncensored, or buy a copy of Grand Theft Auto where you can be rewarded for beating up prostitutes. How does that make sense?

You can buy The Downward Fucking Spiral on iTunes, but you can't allow an iPhone app that may have a song with a bad word somewhere in it. Geez, what if someone in the forum in our app says FUCK or CUNT? I suppose that also falls into indecent material. Hey Apple, I just got some SPAM about fucking hot asian teens THROUGH YOUR MAIL PROGRAM. I just saw two guys having explicit anal sex right there in Safari! On my iPhone!

Come on Apple, think your policies through and for fuck's sake get your app approval scenario together.

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My Keynote At The (RIAA Sponsored) Leadership Music Digital Summit

from the fun-stuff dept

In mid-March, I had the pleasure of giving the second day keynote talk at the Leadership Music Digital Summit. It was a lot of fun, and generated some really fascinating discussions (as always). There was a lot of demand to get the video online, and I wanted to thank the team at Leadership Music (Kira and Abby) and Matt Houser who volunteered to put together the video with my slides, which you can see on the media page or embedded below:

Leadership Music Digital Summit 2009 - Mike Masnick keynote address, 3/25/09 from Leadership Music Digital Summit on Vimeo.

If you've seen my earlier Midemnet presentation, this is actually an extended and improved version of that, so part of it will already be quite familiar to you. However, the final 10 minutes of the presentation gives me an opportunity to respond to the biggest question that came after the original presentation: how does this work for less well known musicians. So, I went through five different musicians, who all come from different backgrounds and experiences, representing different "success levels" in the industry, to show that this basic concept of connecting with fans, giving them a reason to buy (and not freaking out about piracy) works quite well.

You'll note at the beginning of the presentation, I note that the RIAA was a major sponsor of the event, and there was a huge RIAA logo hanging over my head (not seen in the video). The RIAA also sponsored the lunch following my keynote. While I actually did end up talking to representatives from all four of the major record labels while in Nashville (with... um... very, very, very different reactions from reps from each label, from outright frosty, to curious, to very interested and engaging), no one from the RIAA itself actually said hello. Too bad.

In the meantime, there are a bunch of new events I'll be speaking at in the coming months (all doing very different presentations), and I'll be putting up a post detailing some of those in the near future as well -- and I hope to meet more readers and Techdirt/Insight Community participants at these events.

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Reznor Takes Connecting With Fans Mobile... For Free

from the nice-job dept

While my keynote presentation today at the Mesh Conference does mention Trent Reznor, luckily (for me) it's not the same presentation I did at MidemNet... because, if it was, I'd have to do a last minute update on the presentation to take into account the new iPhone app that Reznor is releasing, which basically takes all of the features from the NIN website, and enables it on the iPhone... and then adds in a neat bit of location-based info so fans can find each other, or know where other fans happen to be. And, oh yeah, despite all the fuss about charging for iPhone apps, he's releasing it for free -- realizing that better enabling fans to connect will only help him further monetize other things later. The overall article is a great read as well, digging deeper into Reznor's experiments, business model and thoughts on the process:

"I've said it before and I'll say it again: I don't think music should be free. But the climate is such that it's impossible for me to change that, because the record labels have established a sense of mistrust. So everything we've tried to do has been from the point of view of, 'What would I want if I were a fan? How would I want to be treated?' Now let's work back from that. Let's find a way for that to make sense and monetize it."

He's making the same point we've been making. It's no longer about whether or not music "should" be free. That doesn't matter any more. For most people it is free. So once you accept that, you start looking for ways to do more with it -- and Reznor is doing much more with it than just about anyone else.

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Lars Ulrich To Ask Trent Reznor For Music Business Advice?

from the wow,-didn't-see-that-coming dept

As most folks know, Metallica was an early "skeptic" of online music, with drummer Lars Ulrich leading the way -- suing Napster and complaining about iTunes. In many ways the band, and Ulrich specifically, became the face of the big anti-fan, anti-internet rockstar. More recently, the band has tried to change that image, working hard to embrace the internet a bit more, and even shrugging off the fact that the band's new album was leaked online. However, those early actions really hurt the band's reputation, leading many fans to boycott the band and refuse to buy any of its new music.

Still, even as the band (and Ulrich specifically) has been working over time to try to rebuild the band's online credibility, I didn't expect this: Ulrich is apparently excited to pick Trent Reznor's brain about music business models:

"We're doing a bunch of shows with Trent this summer in Europe. I look forward to sitting down and talking to him about what's on his radar."

That's certainly quite a shift, considering that Reznor has pretty fully embraced online distribution, including file sharing and things like BitTorrent. So, now we just have to see if Ulrich actually learns some of those lessons.

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Reznor Does It Again: Releases Free EP Of Unreleased Tracks From NIN, Jane's Addiction To Support Tour

from the go-get-'em dept

Trent Reznor sure has a way of releasing new experiments just before I'm about to give a presentation about him. He did it right before my MidemNet case study about his experiments, and now that I'm getting ready to an updated (and expanded!) version of the presentation at next week's Leadership Music Digital Summit, Reznor has launched a new website called NIN|JA 2009 in support of the new tour Nine Inch Nails is doing with Jane's Addiction (and Street Sweeper). The site has a streaming playlist from all three bands, along with the ability to download an entirely free EP of unreleased tracks (two from each band) in exchange for your email. And, not surprisingly, the page lets you get more info on the tour.

It's not particularly different than the release of The Slip, but shows that he's continued to combine these two factors of connecting with fans (often via free music) and immediately giving them a real reason to buy. Oh yeah -- and he still did it in a fun way for the fans. Last night, on Twitter, he alerted people that the site would be going live today, but then had fun with it this morning -- giving people a 3 minute countdown following by a bit of joking around, first backing it up to 5 minutes, saying someone had kicked the plug out of the wall, then geekily pretending to be a clueless Windows user:

• trent_reznor: So... anybody know what it means when your PC's screen goes all blue and wont do anything? Give me a sec here.
• trent_reznor: An exception has occured at 0028:C11B3ADC in VxD DiskTSD(03) 000016660. It may be possible to continue normally. ????
• trent_reznor: Come on, people - you know me better than that.

And with that, the site launched. Time to go update the presentation...

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Ticketmaster Collaborates With Artists And Promoters To Shove Scalpers Aside

from the nothing-at-face-value dept

Ticketmaster is the sort of company that lots of people love to hate. It's long been dogged by complaints that it is anti-competitive -- complaints which have gathered pace with its recent move to merge with Live Nation. The company has done plenty of things to try to drive scalpers out of business before, in hopes of sucking up their profit margins, and its latest move will further endear itself to fans. The WSJ reports that Ticketmaster is collaborating with artists and concert promoters to sell premium-priced tickets to shows on its TicketExchange site, and making them look as if they're being sold by fans. Trent Reznor explains the situation in the eminently reasonable way we've come to expect, saying that artists know they could charge much higher prices to some of their fans, but they "don't want to come off as greedy pricks asking that much, even though the market says its value is that high." So instead, they feed them to the reseller market, or as in this case, become the reseller themselves, but obfuscate that fact.

Ticketmaster execs decry the scalper market, and claim it's not fair to artists, who don't get any of the scalper's profits; under the TicketExchange deals, it divides the revenues with artists and concert promoters. This is all pretty bizarre: if Ticketmaster wants to jack up ticket prices, it seems like it would just raise them upfront. It's also not clear why the company thinks that it's abhorrent for scalpers to charge consumers high prices, but it's perfectly okay for Ticketmaster to charge them prices over the tickets' face value. This news will hardly endear the company further to consumers, and probably won't help it with government regulators, either.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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My MidemNet Presentation: Trent Reznor And The Formula For Future Music Business Models

from the cwf-+-rtb-=-$$$ dept

A version of this post has been crossposted to the MidemNet blog.

Embedded here is the 15 minute (trust me, it goes by quickly) presentation I did at MidemNet on January 17th in Cannes, France. If you're reading via RSS or another site like iGoogle, click through to see the full presentation. Sorry it took so long to get the video up. There were a few minor technical difficulties. Anyway, the presentation garnered an interesting reaction and a whole series of fascinating discussions over email, in person and over the phone since I presented it, and while I don't want to repeat what's in the video, I did want to discuss a few points raised by the presentation. The core of the presentation is the following simple "formula" that is the basis for making money in the music business (and, I'd argue, many other businesses) in the digital era:

Connect With Fans (CwF) + Reason To Buy (RtB) = The Business Model ($$$$)

There are many artists -- famous and not so famous -- who have been making use (on purpose, or not) of this formula to create successful strategies for building up a stronger fan base, creating wonderful new works of art, distributing them out to the community and getting paid for it at the same time. What made Reznor so interesting as a case study was the fact that he's done it so many times in so many different ways that he, by himself, represents a great example of how you can approach this simple formula in an infinite variety of creative ways.

One of the issues I've had in discussing recording industry business models is that we always hear excuses for why a, b or c won't work. "Well, that guy can make money selling t-shirts, but this guy's fans aren't t-shirt types." "That guy will sell concert tickets, but this guy doesn't like to perform." "Maybe some fans will pay upfront, but people are so greedy that most will just free-ride." It's all excuses. They all want a simple model that everyone can follow, but the point here is that while the model itself is simple, executing on any business model is difficult.

It's about applying that "simple model" in a variety of different creative ways -- which Reznor has done time and time and time again. Hell, I couldn't even include all of the examples of Reznor's successes in this single presentation, let alone successes by other musicians who have executed differently -- but all of whom connected with fans (CwF) and then gave them a real reason to buy (RtB).

A second point that needs to be discussed is that a true reason to buy (RtB) is a voluntary transaction. Too often we've seen musicians or other content creators think that there is some sort of obligation to buy. And, so they put something out with a price tag, but without doing a very good job convincing fans why they should buy. There was no real reason -- and then they seem to lash out at their fans for hurting them. The fault, however, lies with the musician (like any business) who failed to give a proper reason to buy, and falsely assumed that fans had some sort of obligation to buy. If an artist believes there's an obligation to buy, fans will often educate the artist very quickly.

One final point on this is the last question that people often raise: why should the musician be involved in any of this? Shouldn't they just be creating music. There are two answers to this. First, this is exactly where a smart record label, agent or manager can come in and be quite helpful. Let the musician create the music and let the "business guys" focus on applying this business model. Second, however, is that due to the way the industry is these days, the musician does need to be somewhat involved. You cannot connect with fans if you're in seclusion. If you don't want to make the effort to connect with fans, then that's fine: you won't have that many fans. It's a choice you make.

That said, there are tremendous opportunities allowed by new technologies, new communities and new methods of communicating today. They all enable better ways to connect with fans, and better ways to offer real reasons to buy. Those who look at the past and complain about what's been lost need to turn around and look at the vast open fields of opportunity in front of them. There's a lot more music to be made, a ton of new fans to make very, very happy -- and, yes, through it all, an awful lot of money that can be made as well. You just need to stop worrying about what was lost and recognize all there is to be gained.

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Reznor 'Leaks' 400 GB Of High Def Concert Footage

from the keep-it-up dept

Trent Reznor is making it awfully difficult for me to finish the presentation I'm giving about him next week at MidemNet, because he keeps on doing stuff that should be mentioned in that presentation (I may have to ask the MidemNet folks for more time!). The latest is a post on the NIN.com site (which, annoyingly, doesn't have permalinks for his posts -- though others repost it in the forums on the site) saying:

The internet is full of surprises these days.
I was contacted by a mysterious, shadowy group of subversives who SOMEHOW managed to film a substantial amount (over 400 GB!) of raw, unedited HD footage from three separate complete shows of our Lights in the Sky tour. Security must have been lacking at these shows because the quality of the footage is excellent.

If any of you could find a LINK to that footage I'll bet some enterprising fans could assemble something pretty cool.

Oh yeah, you didn't hear this from me.

posted by trent reznor at 12:56pm

It's stuff like this that makes fans love Reznor that much more. While bands like Radiohead tried to get people to pay just to remix their songs, Reznor makes it fun to be a fan. As the link above to the forum notes, the content is now available via BitTorrent, and everyone at NIN headquarters is looking forward to what comes out of it -- though, they point out that with so much high def video, it's really mainly targeted at expert users first, and amateurs are probably better off waiting a bit until other copies are made available in easier to handle formats.

Funny to see this in contrast to how Warner Music and the other record labels are dealing with online videos, where they demand money for every usage, pissing off the very musicians they're supposed to represent. Once again, Reznor is leading the way. I'm just hoping he takes a little time off so that I can get this presentation done and not have it be out of date on the day of the presentation.

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Amazon's Best Selling MP3 Album For 2008 Was Available Legally For Free

from the give-people-a-reason-to-buy dept

As some of you may know, in a week and a half I'm giving a presentation at the music industry MidemNet conference, focusing on how Trent Reznor's various business model experiments highlight the future of the music industry. I'll be putting the final touches on my presentation this week, and it's great to find one additional data point: the top selling MP3 download on Amazon last year was Nine Inch Nails' Ghosts I-IV album, which you probably know Reznor put under a pretty open Creative Commons license (and even gave away a bunch of the tracks himself). In other words, you could go on pretty much any file sharing system out there and legally download the music for personal use... and yet it was still the top selling downloadable album (this is on top of all the money earned by Reznor's other business models associated with this album). Certainly puts a nice little cherry on top of the theme of my presentation.

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Trent Reznor's Latest Trick: Reward High Scorers In NIN iPhone Game

from the keep-evolving dept

One of the things to understand when we talk about various business model innovations that companies can use, is the idea that successful implementation of these business models doesn't mean merely copying what someone else did, but continuing to come up with new ideas and new innovations. One of the common retorts to this, often found in our comments, is that if everyone's doing x then it loses all value. But, of course, that shows a fundamental misunderstanding of what we're advocating. The whole point is that everyone doesn't do x, but they keep innovating and doing different things. And, for those who claim that there really are only so many things you can do, I'll point you to the words of economist Paul Romer:

Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas. We consistently fail to grasp how many ideas remain to be discovered. The difficulty is the same one we have with compounding: possibilities do not merely add up; they multiply.

Or, even better, I'll just point you to the example of Trent Reznor, who, despite being quite far ahead of the pack on many attempted business models, doesn't seem to want to rest on his laurels. Instead, he just keeps innovating. We've covered many of the business model innovations made by Trent Reznor over the last few years (and I'm actually preparing a presentation on the topic for a music industry conference next year -- which I'll be talking about more in the future). His latest is to embrace the iPhone game Tapulous, which is sort of a rather simplified iPhone version of any "push a button to the beat" music game, a la Guitar Hero or Rock Band today (or Dance Dance Revolution in the past).

Now, the easy (boring) thing to do would have been to just create a Nine Inch Nails version of the game, which is now available. You can now play Tapulous to various songs from NiN's recent albums (whose releases we've discussed previously). However, much more interesting is tying the game even further to the band, such that those who score a certain level of points can submit the score back to Tapulous, and get entered into a contest to win floor tickets to see NiN perform or, for one lucky winner, a Les Paul guitar signed by Trent Reznor.

Despite the fact that many would say that Reznor has done much more innovating than many other musicians these days, the important thing to note is that he keeps on trying new stuff -- and each time gets more attention and wins over more fans with his actions. And the folks who complain that no new business model will work because everyone will be doing it? They're not getting much attention at all.

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Once Again, Give It Away And Pray Isn't A Business Model

from the but-it-doesn't-mean-free-doesn't-work dept

There's an odd article over at TorrentFreak, which is usually quite good and reliable. This one starts out with a title announcing that Nine Inch Nails' Donation Model Doesn't Work for Most Artists. That's a questionable assertion from the very start, because Trent Reznor and Nine Inch Nails, for the most part, haven't used a donation model. Instead, Reznor has very much focused on using free as a part of a business model built around giving fans scarcities to buy. Yet, TorrentFreak falsely states that Reznor made $1.6 million using a "donation" model. That's simply untrue. He made $1.6 million by selling scarce goods.

The rest of the article goes on to show that a bunch of unknown artists on some file sharing service that asks for donations didn't make very much money doing so. That should bring out a "well, no duh!" from pretty much anyone. As we've said for years, "give it away and pray" isn't a business model at all, but that fact is hardly a condemnation of using free infinite goods as a part of your business model. The unfortunate opinion out there, often repeated by those who want to trash those of us explaining the economics at play, is that we believe if bands just put their music out for free, they'll make money. Thus any band that doesn't make money that way is an example that the model we believe in doesn't work. This argument completely misses the target.

First of all, there will always be some bands that won't be able to make money -- and that's because they're not very good. No business model will work if you're not that good. So, seeing a particular business model not work for some bands is hardly a condemnation of that business model. Second, if bands want to make money these days they need to do a lot more than just give away their music for free. They need to get out there and cultivate true fans, which means working hard to build up a serious fan base. From there, they can begin to put in place any number of business models to make money, focusing on using the free infinite goods (music) to sell scarcities of some sort (concerts, access to the band, special limited edition goods, the creation of new music, etc.). So, the fact that a bunch of bands that used a poorly thought out business model didn't make money from it isn't surprising. It's the way it should be.

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Amazing What You Can Do When You Don't Sue Your Fans

from the you-can-get-data! dept

I was a bit surprised at how many people sent in the news that Trent Reznor had sent around a survey to fans who are on the Nine Inch Nails mailing list. After all, what's so surprising about a survey? There was some cool stuff, where Reznor suggested that as an incentive for filling out the survey he'd consider offering some sort of one-time prize such as flying the fan to a gig somewhere in the world, but overall, what's the big deal about a survey? But it appears Bob Lefsetz has put his finger on it. It's a big deal because it's exactly the sort of thing that the traditional labels simply can't do any more, because you can't ask your fans for a favor when you're suing a bunch of them. While the RIAA still seems to think that its battle against file sharers is some sort of epic necessity, Reznor is out actually connecting with fans and giving them a reason to feel happy about sharing information with him (not to mention paying him money as well).

Sounds like Trent's a real person. Like if you bumped into him at the mall, you could have a conversation. The Net has burned down the wall between artists and fans. You have to be accessible and human. You can't talk down to your fans, you must respect them. They'll do ANYTHING for you if you treat them right, if they think you're really listening.

If it's all about money, and the major labels believe this, telling us they want 360 deals and ringtone fees, then an artist like Trent has got the big boys beat. Because his fans won't buy only the single, but the album, the t-shirt, the concert ticket, the coffee table book, just about anything Trent can cook up! And the profit margin? ASTRONOMICAL! Not that Trent's afraid of giving away his music for free. Kind of like Google. Search is free, click on ads if you'd like. You feel GOOD when you click on Google ads. You want to pay the search company BACK!

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Big And Small Artists Alike Benefiting From Free Music

from the a-reminder dept

We've pointed out in the past the fact that every time we point to a less-well-known musician successfully implementing a business model that involves free music, someone (inevitably) says "but that will never work for big name musicians." And, then, when we point to big name musicians successfully implementing such business models, someone (inevitably) says "well, that's fine for a big name musician, who can afford to give away music, but it will never work for less-well-known musicians." In fact, after seeing this happen over and over again, one of our commenters jokingly referred to this phenomenon as Masnick's Law.

However, a post by Jim Stogdill over at O'Reilly Radar, shows both well-known and less-well-known artists supporting free music in different ways. He talks about going to a Nine Inch Nails show, where Trent Reznor encourages his audience to "steal" his music, noting that Reznor has said in the past that if music is free, he'll keep making money touring. Then, afterwards in the parking lot, Stogdill was handed a home-burned CD of music from the band Cube Head, who was giving them out at the show to encourage more people to listen to them. There, in a single snapshot was both large and small artists recognizing they could benefit from free music -- though in slightly different ways.

However, Stogdill seems to imply that touring is the only business model for musicians these days, and I'd argue that's not true at all. In fact, Reznor has shown that there are plenty of other business models that don't rely on touring, but, instead focus on giving people a reason to buy -- by giving them something scarce that can't simply be pirated -- such as exclusive signed copies of box sets. And, again, less well known artists have figured this out as well, with musicians like Jill Sobule who put in place a business model that worked well, without relying on touring for all of the money (yes, touring is a part of the business model, but not all of it). The focus, again, is always on using the infinite nature of the music to attract more fans, and then getting them to buy a scarce good that is made more valuable by the music. That can work for any artist, small, medium or large -- and can allow them to make more profits since they often won't have to rely on quite so many middlemen.

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Trent Reznor Gives People A Reason To Buy Latest CD Even Though It's Free Online

from the keeps-showing-how-he-gets-it dept

It's getting rather repetitive to show what a good job Trent Reznor is doing in showing how Nine Inch Nails is embracing the new business models available to the music industry, but he's doing such a consistently good job of it, it's so useful as an example. The latest move is that he's now releasing his last album, The Slip, which was offered as a totally free download, as a special limited edition CD/DVD and deluxe vinyl. In other words, like he's done multiple times in the past, he's giving fans a reason to buy the physical media beyond just the music. In this case, it's to get a numbered copy, limited to 250,000 that includes a ton of extras.

Sure, there will be plenty of people who don't want it and are perfectly happy with just the music. And Reznor seems perfectly fine with that. However, other fans will want this unique package for themselves. Given how well Reznor has done with "limited edition" physical media, it seems quite likely that this will also be a huge success for Reznor. And, of course, we're not even touching on all the money he'll make from Nine Inch Nails concert gigs. So why do we have the music industry running around like crazy saying that if music is available for free no one can make any money?

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Trent Reznor Continues To Show Different Ways To Connect With Fans

from the send-'em-on-a-treasure-hunt dept

Back when Trent Reznor was still signed to Universal Music, he tested out his own form of a promotional campaign for his latest album: he started hiding USB keys with songs off of the album in the bathroom at his various concerts. Fans would find the USB keys, bring them home and upload the songs -- making it into a huge event, generating much more interest around the album. Now that he's independent and testing out all sorts of interesting business model experiments, he's also doing plenty to connect directly to his biggest fans. Take, for example, this story in the LA Times about Reznor hiding concert tickets around Los Angeles, under rocks and in drainpipes, and then putting up coordinates and clues on the Nine Inch Nails website, sending fans racing across the city to see if they can find the free tickets. While it may be a little silly, it is yet another way for Reznor to build up a really loyal fanbase. He's making being a fan fun. Sure, it's not for everyone, but it's certainly adding value to the "true fans" that support Reznor.

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