Techdirt. Stories about "topspin"

Skateboard Legend Stacy Peralta Demonstrates His Latest Trick: Cashing In By Going Direct-To-Fan

Mike Masnick — Tue, 22 Jan 2013 20:00:50 PST

Last August, we wrote about an experiment by famous skateboarder and filmmaker Stacy Peralta to self-distribute his latest film, Bones Brigade, about the famous skateboarding crew Peralta himself had put together a few decades ago (the crew included some of the most famous skateboarders ever: Tony Hawk, Lance Mountain, Steve Caballero, Mike McGill and Tommy Guerrero). Peralta had shown the film at Sundance last year, which is where most filmmakers go to try to "sell" their film to a studio/distributor to go make something of it. However, Peralta turned down all such offers (some for significant money), and instead went the "direct to fan" self-distribution path, using tools like TopSpin, and partnering with companies like BitTorrent as well. That's what we wrote about in August.

Now, as the latest Sundance is underway, TopSpin's Bob Moczydlowsky has a post with some details of how it all went, noting that going direct to fan was massively successful for Peralta, allowing him to both make more money and still retain the rights to the film, rather than selling them off to some other entity.

And now, a year after the Sundance premiere and six months from the start of the direct-to-fan release powered by Topspin, Film Sales Company and our partners awe.sm and The Uprising Creative, Stacy has earned more from direct sales than he would have from the combined total of the domestic and foreign sales offers. And, because a Topspin direct release does not require licensing rights, Stacy and Andrew Herwitz from Film Sales Company were then able to do their own Transactional VOD and Third-party license deals. Stacy and his financing partners quickly recouped the budget of the film, and the copyright remains in their hands for the future.

That really is the key. “I self financed, got the investment back, am now in profit and I own the copyright and will continue to earn all other sales for the next ten years,” says Stacy. “And it is all because I was empowered for the very first time to really do it myself from start to finish. Topspin has done for distribution what the Handycam did for shooting or the Avid did for editing. Topspin put it all in my hands and suddenly everything I needed was within my reach: pure and simple filmmakers democracy.”

They also included a nice little pie chart (to scale), showing how much bigger the pie was with what Peralta ended up doing: This is not to say, of course, that the same thing is true for everyone who tries to go direct to fan. It's right for some people, and not right for others. But the key thing here is that there are more options and many of those options not only leave the actual creators with more control, but also allow them to expand the pie.

One of the more frustrating aspects of discussing these business model issues with some people is their assumption that the "pie" is static (or, worse, shrinking). It's a classic mistake in economics for those who think that everything is a zero sum game. But one of the great things about new technologies and services is how they enable a much broader audience and increase the opportunities, opening up wider possibilities -- especially for creators who really know how to engage with their fans.

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A Music Streaming Service That Builds In CwF+RtB? Built By Trent Reznor And Ian Rogers? Sign Me Up

Mike Masnick — Fri, 11 Jan 2013 12:54:14 PST

A few months ago in writing about my interview with Trent Reznor, I mentioned that what Reznor was working on with Beats by Dre would be much more interesting than most people thought (at the time, most people were guessing something having to do with headphones). More of the details are starting to come out. First off, there are the two things that everyone in the press is focusing on, the announcement that Trent Reznor has officially been named Chief Creative Officer and Ian Rogers has jumped over from being CEO of TopSpin to be CEO of this new project, called Daisy.

This is great news for a variety of reasons -- I can't think of two better people to team up on such a project (if you're unfamiliar with Ian, you should read this brilliant profile in Wired, and then know that many of us who know Ian think that the article wasn't nearly glowing enough). The fact that these two (and some others who know what they're doing) are teaming up to work on this project is, by itself, big news.

But those high profile announcements seem to be obscuring some of the other news that came out at the same time about the project, which actually reveals a bit more about where this is actually heading. Since Beats bought failed music service MOG for $14 million, many have been expecting a new version of that with some new paint, but it seems a lot more likely that the purchase was more about buying the licenses, and then building something new from scratch, without having to waste time negotiating. Last month, Reznor had hinted that the music service would add more value beyond what today's streaming services offer.

One way it may be doing so? By building the whole "connect with fans, reason to buy" concept directly into the service. While Ian left his CEO spot at TopSpin to take this new gig, there are some other TopSpin details related to this. Not only is he remaining the executive chairman of TopSpin, Beats has invested in TopSpin and Topspin is providing infrastructure for the service. TopSpin, of course, powers a bunch of artist websites and services for "direct to fan" efforts. Basically, they enable "CwF+RtB" (and, apparently, have even used one of my own CwF+RtB videos in explaining it to people).

So, if you take the guy who inspired me to come up with that formula in the first place, and pair him with the guy (and the tools) that have come pretty far along the path towards enabling it all... and what do you get? Well, TopSpin itself makes some suggestions:

Our plan is to set the standard for how consumer music services can integrate and benefit artists.

Here’s an example: When Trent Reznor uses Topspin to release music and merch on his website, his products should appear inside the streaming services, where the millions of fans listening to his catalog of songs should have the ability to connect and hear from Trent directly when he has new music, merchandise, and tour dates.

The core of this partnership, then, is a shared belief that streaming services should do a better job helping fans discover artists and connect with them directly to buy merch, tickets and other products. And so, Topspin GoDirect will become the way the Daisy service gets photos, videos and products from artists, and both companies will work together to make sure fans see those products when they listen to songs.

Three years ago, we suggested that this kind of thing was exactly what Spotify was missing: a platform to help artists do much more, both in terms of connecting with fans, but also in enabling new business models. While Spotify has tried to do some of that with its app platform, those haven't really taken off the way I had hoped. A system built from scratch with that concept in mind, however, gets very interesting very fast.

So you can see a situation where they build a service that actually is good for everyone: fans, musicians and the company itself. That seems like a pretty good deal. True, some of the other services have actually been pretty good for everyone as well, but there are still limitations, which are why there are so many complaints about services.

In the end, execution is everything. If you have a great idea and terrible execution, it won't matter. So it's possible that all of this goes nowhere, but it certainly has a lot of the right pieces to make something great. Now, if they figure out some way to bring on Zoe Keating to consult on some of her ideas about how online streaming music could create closer connections between musicians and fans, I think that would just turbocharge the whole damn thing.

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Filmmaker Using BitTorrent & TopSpin To Distribute Free Copies Of Older Movie To Promote New Skateboarding Documentary

Mike Masnick — Thu, 30 Aug 2012 00:04:00 PDT

Skateboarder and filmmaker (often focusing his films on skateboarding) Stacy Peralta is releasing his latest skateboarding documentary, Bones Brigade: An Autobiography, about the Bones Brigade skateboarding crew -- Tony Hawk, Lance Mountain, Steve Caballero, Mike McGill and Tommy Guerrero -- which Peralta helped put together in the first place. Rather than go the traditional route with releasing the movie (as he's done many times, including with the acclaimed skateboarding documentary Dogtown and Z-Boys), Peralta has decided to go direct to fans. The movie was shown at Sundance earlier this year, where it got some attention and had a bunch of opportunities to go with traditional distribution partners, but instead Peralta figured it was time to take control, noting that the DIY ethic of direct-to-fan is similar to the way skateboarding evolved in the early days:

As skateboarders, as people that have always lived on the outside, have always had to sneak over fences or through the back door, have always had to create our own terrain, we’ve decided to put that ethic towards how we release “Bones Brigade: An Autobiography.” We turned down all of the conventional offers for distribution when we came out of the festival in favor of doing it ourselves.

One part of this DIY approach is that to promote this new movie, Peralta teamed up with BitTorrent and TopSpin to help with direct-to-fan digital distribution and promotion. Via BitTorrent, people can download a "Bones Brigade Bundle," including a bunch of extras, and then using a TopSpin feature (either on the web, or directly in the uTorrent client), if you submit your email address, you can download an entirely free copy of the classic skate film, The Search for Animal Chin, which was released 25 years ago, and featured the members of the Bones Brigade. So the combined effort, from Animal Chin to the Bones Brigade documentary is sort of a "full circle" situation.

It's great to see more filmmakers really embracing both direct-to-fan, but also realizing that things like BitTorrent aren't automatically bad, but have a place in a marketing campaign as well. In this case, it's interesting to see Peralta using a combination of a few different tools to create an integrated and comprehensive campaign not only to market the new film, but also to distribute the old film (the first time it's officially available in digital format). Oh, and if you'd like to download The Search for Animal Chin, there's an embedded widget right below this sentence...

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YouTube Now Helping Artists Sell The Scarce

Mike Masnick — Mon, 17 Oct 2011 22:41:50 PDT

About two and a half years ago (soon after I did my first presentation about CwF+RtB), I was asked to stop by the YouTube offices, to talk about what things they might do to help artists earn more money. And the key suggestion I made was -- add more features that would allow artists to sell scarcities with their content: let them sell concert tickets, merchandise, access, whatever. I was thanked... and never heard from them again. So it's nice to see that, years later, it appears that YouTube is finally doing exactly that:

We’re launching a feature called the Merch Store that will allow YouTube partners to offer fans merchandise directly on your channel. Fans will be able to buy artists’ merchandise, digital downloads, concert tickets and even unique experiences like meetups. These features are made possible through affiliates like Topspin for merchandise, concert tickets and experiences; Songkick for concerts; and iTunes and Amazon for music downloads. We’ll be rolling out the Merch Store to music partners globally over the coming weeks

As YouTube has become a bigger and bigger source of music listening and discovery, I think this is fantastic. It will be interesting to see how well integrated it really is. As musicians get to test this out, we'd love to hear about their experiences, which they can provide over at Step2.

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Kevin Smith Shows The Importance Of Building A Brand As A Part Of CwF+RtB

Mike Masnick — Wed, 20 Jul 2011 19:07:00 PDT

For quite some time, we've used Kevin Smith as an interesting example of someone who seems to really grasp the whole CwF+RtB (Connect with Fans + Reason to Buy) concept that we focus on in explaining how to create success models (not just "business" models) these days. And while some may tire of hearing about the same person over and over again, as with Trent Reznor, Smith seems to keep doing more and more interesting experiments that really fit in with the general concept, and from which there's plenty to learn.

From early on Smith has embraced his fans, like very few others out there. He had set up a very active message board well over a decade ago, and has always been incredibly open with his fans. Of course, it's not just about talking to your fans, but doing interesting things with them (and, at the same time, opening up opportunities for those fans to support you in a variety of ways -- not just monetarily). We've talked about how he's branched out way beyond being a "filmmaker" to being an overall entertainer with a bunch of podcasts that presented lots of opportunities to practice CwF+RtB, called the Smodcast Network. A few months ago, he took it even further by starting his own internet radio, called Smodcast Internet Radio -- or SIR.

And, the latest is that he's teamed up with Topspin -- a company we've obviously talked about a lot, though mostly in the music space -- and totally relaunched his site that shows off a variety of CwF+RtB elements. You can see the whole thing at Smodcast.com. There's a premium "subscription" offering that provides additional benefits for true fans, though all the basic content is still available for free. There are ways to get tickets to live shows and other events. There's greater interaction on the website, allowing greater connections both between Smith and the various other folks involved with Smodcast/SIR, as well as between community members themselves. Separately, it also does a nice job showing off the fact that Topspin's platform works for way more than just music.

But I think one of the really key points is brought out in a blog post about this by Bob Moczydlowsky (bobmoz, to most folks) at Topspin about this offering:

But look past the offers and focus on the strategy: This site is more than podcasts and a fan club. Notice the brand name atop it all: SModCo. This is step one of a filmmaker-comedian-podcaster-talk-radio-host getting his house in order for the new day rising. Notice Kevin’s Twitter following. Look at the footer on the site.

I think this is an important point that often gets lost in all of these discussions. We've talked about the importance of actually understanding the deeper strategies rather than just focusing on the superficial cargo cult side of things. People who brush aside Smith's efforts as "it's just a podcast" or "he's just sitting around and talking" are missing the larger picture. They're seeing the surface, but missing the depth. This isn't just a guy talking. There's a larger strategy (one that is improvisational, but coming together nicely) here, and it's built around a brand -- a brand that is 100% focused on connecting with fans while still giving them plenty of reasons to support him. As Smith is fond of saying, this is about being where the puck is going to be, not where it's been. If you're not paying attention (or if you don't think this is a big deal), you're missing something big.

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Some Simple Concepts For Better Engaging With Fans At Shows

Mike Masnick — Wed, 4 Aug 2010 23:51:12 PDT

We recently wrote about the live music market, noting that lots of people seemed to agree that the massive additional fees and surcharges seemed to be a huge problem -- and most of those fees seem to come from Ticketmaster. So it's interesting to see that some are finally looking at ways to get around the old way of handling tickets. Shane Richmond at The Telegraph recently discussed his experience going to see The Pixies in London, where the band used some rather straightforward and simple tools to make the concert-going experience a hell of a lot more enjoyable:

As soon as I got the email I went to the Pixies' website and bought tickets. The tickets -- not a receipt but the tickets themselves -- were emailed minutes later in PDF form. I printed them off on the day of the gig and they were scanned at the venue by an iPhone-wielding staff member.

Apparently, this was all done via a new Topspin app. In this case, The Pixies had apparently used Topspin to put together an email list -- starting from scratch and got it up to over 100,000 pretty quickly -- and then sent a single email out announcing the show, selling the tickets directly. You can see the iPhone scanning operation below: At Hypebot (the link above) Rogers noted: "100% of fans acquired via Topspin, all marketing direct-to-fan via Topspin, every ticket sold via Topspin, and every person entering the venue after being checked in by the Topspin iPhone application." While that's nice buzz for Topspin, certainly other tools could be used to do the same thing (or something similar). The really interesting part is the lack of Ticketmaster.

But, perhaps even more interesting is some of the other aspects of how the band then took a few very simple steps to make the concert going experience even more enjoyable. Going back to Richmond's post:

Anyway, a couple of weeks before the show I got an email from the Pixies:
"If you're reading this email, it means we'll see you at TROXY London for two shows in June. We're looking forward to it. What songs do you want us to play? Reply and tell us."
Just before the show they emailed again thanking everyone who sent requests and saying that they had a setlist they thought we would like. Now for all I know, some guy who works for the Pixies might have dealt with all the emails and the band themselves may never have looked at them but it doesn't much matter. The engagement -- even if it was an illusion -- helped to build my excitement about the gig.

A few weeks after the gig, the band emailed again, this time sending me a link to a download of two songs from the gig I went to. So I now have a very nice souvenir of the show too.

Now, I'm sure that some will respond to this with a "so what?" There's no whiz-bangery going on here to make all this happen. This is all pretty straight-forward and simple. And, that's part of the point. None of this needs to really be "new," it just needs to be done well, and that means focusing on the stuff people like, such as making things convenient and making people feel like they belong, and minimizing the stuff people hate, such as excess fees and surcharges and feeling like an afterthought rather than a valued part of the community, and you can really do an amazing job connecting with fans (and, oh yes, giving them a reason to buy).

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Some More Data On How CwF + RtB Is Working In The Music Space

Mike Masnick — Tue, 9 Feb 2010 11:50:00 PST

While we keep presenting details of CwF+RtB working for various musicians, big, medium and small, some have complained that there needs to be more data to demonstrate that these kinds of business models can work. So, here we go. I briefly got to meet Shamal Ranasinghe from Topspin at Midem, but unfortunately wasn't able to go to his presentation. Thankfully, he's posted his slides along with some data from Topspin's own artists, who are making these business models work: Some of the key points they've found so far are that fans are paying greater than $20 on average per band on its platform (more than a CD costs) and with big name "branded artists" that number is more like $50. But.. but.. but don't we keep hearing that no one wants to pay musicians any more? Apparently that's not true.

Digging into some of the details, Topspin found that while many people do pay for digital downloads, the big chunk of revenue actually comes from physical scarce goods: And while the number of folks who buy cheaper packages is much higher, the total revenue earned on higher priced packages is much, much higher. In fact, more than 50% of the revenue was earned on price points higher than $25. The under $10 sales, while making up more than 50% of the volume, account for less than 18% of the revenue: Again, it becomes clear: if you offer things of value people have no problem paying -- and often paying more than they did in the past. The claim that fans just want everything for free is pretty clearly untrue.

I won't go through all the slides, but Shamal also spends a fair amount of time talking about converting fans into buyers, and (no surprise) suggests that it helps to have a real connection with the fans, as opposed to just putting stuff out and expecting people to just show up and buy. You can't give it away and pray, but have to provide a real connection and real scarcities. But part of making that work is getting widespread distribution (Topspin uses a music playing widget) that helps bring people to the purchasing options, if they like the music. Rather than trying to hold back and hoard access to the music, sharing freely, and connecting it to reasons to buy helps bring in a lot of fans who are happy and willing to buy.

He also highlighted two case studies of amazing conversion rates. The David Byrne and Brian Eno album widget (the very first launched on Topspin) had a stunning 20% conversion rate of plays to purchases. Yes, one in five people who listened to the widget then purchased in the first few weeks of the campaign. That's an astounding rate -- and one I doubt many other bands would see, or sustain -- but still an amazing data point. In their case, since the average transaction price was over $15, it meant that every play was worth about $3 in sales. And yet some still don't believe that music online has promotional value that can lead to sales?

The second case study was with Fanfarlo, who sought to build up its email list -- and found that for every 1,000 plays of the widget, 49 fans either purchased or signed up for the email list. The presentation compares that to paid advertising, which found that per 1,000 impressions, they ended up with 0.7 new email users. Once again: the music is a great promotional tool, much better than traditional advertising in actually driving a conversion.

And, taking it one step further, to highlight the massive power of word of mouth, Topspin found that (again with Fanfarlo), the "Shares to Sales" ratio was 1.1. Yes, this meant that for every one person who shared the musical widget, more than one person ended up buying something -- though, admittedly, this number was likely skewed greatly by a $1 promo offer that ran for three weeks. But, either way, it shows that if you offer something that people want, at a good price, and you let people share (rather than punish them for sharing), great things can happen.

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The Future Of Music Business Models (And Those Who Are Already There)

Mike Masnick — Mon, 25 Jan 2010 10:18:00 PST

I'm at the Midem conference this week, and in preparing for it, Steven Masur asked me to write up a chapter for a book he was putting together of thoughts from various thinkers for a gathering of the International Association of Entertainment Lawyers (IAEL) here at Midem. Below is what I submitted. If you're a regular reader of the blog, there's little that will surprise you, but even so, it may be a good read, as it's got a whole bunch of different things I've discussed about -- things like "CwF+RtB" all summarized in one single place. Later, I'll do another post on what I discussed this year at Midem, since it builds on what's written below, and digs in much deeper on how to create compelling reasons to buy.

It's no secret that there's a lot of concern these days about what the music industry will look like going forward -- especially from those who work on the label side of the business and have been around for a bit. A variety of things have caused rapid change in the market. Competition from other forms of entertainment, such as the internet, movies and video games, have put more pressure on the industry, as consumers have been presented with significantly more options for their entertainment attention and dollars. And, of course, there's the ever-present specter of unauthorized file sharing -- or, as the industry prefers to call it (accurately or not), "piracy."

While the industry spent many years fighting the rise of the internet as a distribution and promotion method for music, it was eventually forced to recognize it. The labels eventually licensed music to Apple and iTunes (as well as some other stores). It took them way too long to recognize that people wanted DRM-free music, but they've finally come around to recognize that as well.

But the big new questions are all about licensing. New services are starting to show up on the scene, such as the industry's new darling, Spotify. Then there are attempts, such as those by Choruss and Warner Music, to set up something that is somewhat akin to a blanket license. For the most part, the industry hasn't shown much willingness to do these sorts of deals in manners that allow the underlying companies to survive, let alone profit. Numerous innovative startups have suffocated under burdensome licensing terms -- and as each one fails, it just gives consumers fewer and fewer reasons to actually use these services, wondering how long each will last until it goes out of business.

However, there is another solution: stop worrying and learn to embrace the business models that are already helping musicians make plenty of money and use file sharing to their advantage, even in the absence of licensing or copyright enforcement.

In simplest terms, the model can be defined as:

Connect with Fans (CwF) + Reason to Buy (RtB) = The Business Model

Sound simple? It is, if you understand the basics -- and it can be incredibly lucrative. The problem, of course, is that very few seem to fully understand how this model works. However, let's go through some examples.

Trent Reznor, the man behind the band Nine Inch Nails, has done so many experiments that show how this model works that it's difficult to describe them all. He's become a true leader in showing how this model works in a way that has earned him millions while making fans happy, rather than turning them into the enemy.

Reznor has always reached out to his fans, and has an amazingly comprehensive website, with forums, chat rooms and many other ways of interacting. He encourages fans to better connect with each other as well. While companies like Warner Music forced all the music videos of their artists off YouTube for many months, Reznor actually aggregates all the videos his fans take at concerts (he encourages them to bring cameras) on one page on his own website. He does the same for photos. He released a (free) iPhone app that allowed fans to locate each other, and communicate with each other, while sharing photos and videos as well. It's all about connecting with those fans, and helping them better connect with each other, so they feel like a part of a club.

From there, he gives fans real reasons to buy. Lately, he's taken to releasing everything he records for free online, knowing that the music will show up on file sharing sites anyway, so he sees no reason to fight it. Yet, he adds many other options that people might want to buy. With his release of the album Ghosts I-IV, he released all the tracks under a Creative Commons license that allowed anyone to share them online for free. Yet, he also set up some cool "reasons to buy." You could get the two disc CD, if you wanted, for just $10. Above that, though, was a Deluxe Edition Package, for $75. It was, effectively, a box set, but around a single album. Beyond the two CDs, it also included a DVD and a Blu-ray and a photobook of images.

Where the experiment got even more interesting was that he offered up the $300 Ultra-Deluxe Limited Edition Package -- of which there was a limit of just 2,500 available. This was an even more impressive "box" that also included the songs on high quality vinyl, and some beautiful giclée print images. But, most interesting of all was that that limited set of 2,500 were all signed by Reznor himself.

It took just 30 hours for all 2,500 to sell out, bringing in $750,000 in just over a day.

For music he was giving away for free.

But, by connecting with fans, and giving them a reason to buy, they did. In the first week alone, combining all the other offerings for Ghosts I-IV, Reznor brought in $1.6 million. Again, this is for music he was giving away for free.

The idea that you "can't compete with free" or that free means there's no business model is a myth. As Reznor and others have recognized, when the music goes free, it opens up new opportunities for better, stronger, more efficient business models.

Reznor's next album, The Slip, was released just a few months later, and again, was given away entirely free, but it was released the very same day as he announced his next Nine Inch Nails tour. All he asked, if you wanted to download the music, was that you provide an email address. He then gave fans the option of what quality to download the songs -- all the way up to lossless FLAC files. All for free. But, if you downloaded the files, you also learned about the tour, and the tickets were quickly snapped up.

The free music didn't hurt Reznor's ability to earn money. It enhanced it.

By connecting with fans and giving them a reason to buy, he's been able to thrive.

Some have complained that Reznor is not a representative example. After all, that huge fanbase came about in large part because of his success under the "old" model, where he was signed to a major record label who helped promote his album and turn him into an international rock star. While some may quibble with how much the label actually helped Reznor, it's worth exploring how this model has also worked for many other artists -- from the superstars to new up-and-coming acts.

Josh Freese is a session drummer based in Los Angeles, who appears on well over 100 albums and performs with many different bands. He's played with (among others), Nine Inch Nails, Guns 'N Roses, Sting, Devo, The Vandals, the Offspring. Yet, outside of certain musical circles, he doesn't have a huge individual reputation with fans. So, when he released his first solo album, called Since 1972, in March of 2009, he decided to set up a system similar to Reznor's Ghosts I-IV experiment, but made it more fitting to his own personality -- which meant making the options extreme and hilarious.

There were cheap options to get the music and CDs, but at $50, you would also get a personal 5 minute "thank you" phone call, where he said you could ask anything you wanted (his suggestion: "Which one of Sting's mansions has the comfiest beds.") There was a limited $250 option to get lunch with Freese at a PF Changs or a $500 chance to get dinner with him at Sizzler. The lunches sold out in about a week.

Then Freese took the model to a different level altogether. At $2,500 (limit of 5 available), he would provide a drum lesson, where you'd get to keep one of Freese's snare drums. You'd also visit the Hollywood Wax Museum with Josh and one of a rotating list of his rockstar friends (depending on who was available). Finally, you'd get to take and keep any three items from Josh's closet.

At $10,000, you'd get dinner with Josh and a rockstar friend, before hanging out at Disneyland (where Josh's father worked for many years, and where Josh got his start as a professional drummer) with Josh. And at the end of the day, you would get to keep Josh's Volvo station wagon -- after dropping him off at home. Obviously, there was only one of those available.

There were also $20,000 and $75,000 options available, including many more offers, like having Josh join your band or be your personal assistant for a few weeks. You'd also get to go on tour with Josh. He would also write and record a five-song EP about you. A teenager in Florida actually purchased the $20,000 option, and spent a week with Josh, including a night on the Queen Mary cruise ship, a pizza party at Mark Mothersbaugh (of Devo)'s house and a game of mini-golf with the singer from Tool.

Once again, by connecting with his fans, and giving them something of scarce value, Freese was able to create a business model that worked.

Connecting with Fans (CwF) plus a Reason to Buy (RtB) worked again.

However, some still complain that he's a product of the "old" industry, even if he was little known outside of it.

The next example is Jill Sobule, who had a hit song in 1995 with "I Kissed A Girl" (not the Katy Perry song). Since then, however, she's been dropped from two record labels and had two independent labels she was signed to go out of business. When it came time to record her latest album, she decided to get her fans to help fund it. She'd already done an excellent job connecting with her fans, regularly interacting with them on Facebook, where she would hold fun contests each day and actually chat with them and respond to questions.

She launched a website called "Jill's Next Record" that -- like Reznor and Freese -- offered up many options for how her fans could support her to fund a new album. They could pay $200 and get free access to any shows for a year. They could get their name mentioned on a "thank you" song. At $5,000, she would do a home concert at your house. She even noted you could charge for that one, and maybe even make some money. She ended up doing five or six such concerts. At $10,000 (described as the "weapons grade plutonium" level) you could sing on the album. This was meant to be a joke, but a woman in the UK purchased it, and Jill had her flown out to LA where she did, in fact, appear singing backing vocals on the album.

Her goal was to raise $75,000, and she had no idea if she'd be able to reach that number at all. Yet, she broke through that number and ended up raising over $80,000 in just 53 days. With that, she was able to go into the studio and record a full scale production, including hiring famed producer Don Was to handle production.

CwF+RtB worked again.

Again, some complain that Jill is not representative, due to her hit song in 1995 -- though, again, they'll ignore her being dropped from two record labels and and having two others go out of business.

So, let's look at Corey Smith. In the earlier part of this decade, Smith was a high school teacher, playing open mic nights on weekends. But then, he started focusing on building his music career. He started playing numerous live shows, and really worked hard to connect with fans. He gave away all of his music for free off of his website, and used that to drive more fans to his shows. On top of that, he offered special $5 pre-sale tickets to many shows, which has a useful side effect: his biggest fans would convince many others to go as well, building up his fan base, and getting more people to go to more shows. He tried pulling his free music off of his website as an experiment, and saw that his sales on iTunes actually dropped when he did that. In 2008, mostly thanks to live shows, Corey was able to gross nearly $4 million. While giving his music away for free. Connecting with fans and giving them a reason to buy worked wonders.

Jonathon Coulton was a computer programmer. In September of 2006, he decided to write, record and release a new song every week for a year -- with all of the songs being released under a Creative Commons license, so anyone could share them. And share them they did. Coulton became a cult sensation, and was making a good living within months of this decision. His fans were supporting him along the way, even creating music videos for every song he released. He started using services like Eventful to more strategically target concert opportunities. If enough people requested a show in a certain location, he knew it would be profitable and started "parachuting" in to do shows that he knew would make him money. Again, by connecting with fans and giving them a real reason to buy, he was able to build up a great following and make a good living.

Moto Boy is a singer/songwriter in Sweden on the wonderfully named label "Songs I Wish I Had Written." Moto Boy and his label purposely put all of his songs on file sharing networks -- including The Pirate Bay (the label's founder, at times, has shared an office with one of The Pirate Bay's founders). But, Moto Boy has worked quite hard to connect with fans. He has a great website, where fans can interact, and he encourages sharing his music in creative ways. When a bunch of his fans started filming his concerts and putting them on video hosting sites like YouTube and Vimeo, his label found the best such vidoes, and put them all together into a "YouTube concert." Compare that to record labels like Warner Music forcing their content off of YouTube. While all of Moto Boy's music is free, he's continued to connect with fans in fascinating ways. Last year, he began selling wind-up music boxes, that play one of his songs. Just recently, he launched a limited edition (only 25) of those music boxes in beautiful, hand-crafted wooden boxes, signed by Moto Boy, with a CD and the music notation inside the box. Connecting with the fans and giving them a reason to buy beyond just the music has turned Moto Boy into a star in Sweden.

Amanda Palmer is a singer who made a name for herself as a member of the "punk cabaret duo" The Dresden Dolls. While she put out a solo album on Roadrunner Records (a subsidiary of Warner Music), she found that they had little interest in promoting her, and took things into her own hands. She reached out directly to fans on services like Twitter, often setting up "flash gigs" where people would show up wherever she wanted to perform. In June of 2008, one such flash gig at a beach in Los Angeles ended up with an impromptu, beautiful, music video for a song that Palmer had just learned that morning, due to a suggestion from a fan on Twitter. And she's doing a good job making money, as well. Bored in her apartment one evening, she started twittering with fans and came up with a jokey t-shirt suggestion, and set up an immediate store, selling $11,000 worth of t-shirts in days. Another night, she started a live video stream from her apartment, and started an impromptu online auction for various items in her apartment associated with a recent tour, often with a personalized twist. In three hours, she brought in $6,000. Connecting with fans and offering them something fun and unique to buy worked wonders. To date, she hasn't received a single royalty check from Warner Music on her album.

Matthew Ebel is a singer in Boston who started building a fanbase by playing live and actively participating in social networks and other sites. He started regularly performing in Second Life, for example. At one point, he decided to set up a "subscription" backstage pass offer, whereby fans could pay $5, $10 or $15/month to get various benefits -- including access to new songs every couple of weeks, as well as having new recorded shows sent to them. Depending on the level of support, they could get access to special shows, gift bags or other opportunities for unique offers not available to others. Ebel has discovered that he's making enough so that music is his full-time job. Subscription revenues represent nearly 40% of his income, which is about equal to live gigs and sales of CDs and digital songs combined. Connecting with fans and giving them a real reason to buy has made it so that he can have career as a musician.

Moldover is an electronic musician based in San Francisco. Being in such a high tech hub, he had an interesting idea for his next album. Along with the music itself, the CD case would be a working circuit board, with all the songs spelled out in soldered electric circuits. These connected various components to make the CD case itself an instrument. Pushing a button on the side of the case, would light up the center and make a noise, which could be modified through a pair of light sensors, creating a virtual theremin. The case even had a line out jack, so it could be plugged into a computer or an audio system. The CDs themselves were sold for $50, and Moldover discovered the demand was far stronger than he expected. Yes, even though we're told that no one will pay for music (without strict copy protection), this less well known artist is doing brisk business selling $50 CDs.

Of course, these are just musicians, but these sorts of models impact the wider ecosystem. Companies like TopSpin, Nimbit and Kickstarter are making this work today (for artists big and small). TopSpin has helped enable musicians to better connect with fans and give them a reason to buy over and over again -- and found that, when it's done right, people absolutely buy. One of TopSpin's artists recently had an average transaction price of over $100, and multiple artists have seen their average transaction price at over $50. The claim that fans just want stuff for free is not borne out by these examples. Across all of TopSpin's artists, they've seen an average transaction price well over $20 -- more than the cost of your average CD. By enabling bands to connect with fans while giving them something of unique value to buy, beyond just the music, these bands are thriving.

And, of course, there's a role for labels to play as well. Terry McBride runs Nettwerk, a Canadian-based label that has tremendous success embracing these sorts of models with a bunch of different artists. McBride has declared that copyright won't even matter within a decade, and he's acting accordingly. But he's making sure that his acts really do connect with fans. With a recent album release by the hip hop artist K-OS, before the album was released, they released all the stems from the songs to let the fans do their own mixes. These weren't "remixes" because the original mixes weren't even out! Rather than worrying about an album leaking, K-OS and Nettwerk purposely got the core of the music out themselves and let fans do what they wanted with it. They then set up a system to submit the fan mixes and to vote on them, such that the best mixes were then put on their own album, and both the "professional" and the "fan mixed" albums were released at the same time -- leading many fans to buy them both. Both albums, separately, but at the same time, ended up in the top 50 on the charts.

As you look through all of these, some patterns emerge. They're not about getting a fee on every transaction or every listen or every stream. They're not about licensing. They're not about DRM or lawsuits or copyright. They're about better connecting with the fans and then offering them a real, scarce, unique reason to buy -- such that in the end, everyone is happy. Fans get what they want at a price they want, and the musicians and labels make money as well. It's about recognizing that the music itself can enhance the value of everything else, whether it's shows, access or merchandise, and that letting fans share music can help increase the market and create more fans willing to buy compelling offerings. It's about recognizing that even when the music is shared freely, there are business models that work wonders, without copyright or licensing issues even coming into play.

Adding in new licensing schemes only serves to distort this kind of market. Fans and artists are connecting directly and doing so in a way that works and makes money. Putting in place middlemen only takes a cut away from the musicians and serves to make the markets less efficient. They need to deal with overhead and bureaucracy. They need to deal with collections and allocation. They make it less likely for fans to support bands directly, because the money is going elsewhere. Even when licensing fees are officially paid further up the line, those costs are passed on to the end users, and the money might not actually go to supporting the music they really like.

Instead, let's let the magic of the market continue to work. New technologies are making it easier than ever for musicians to create, distribute and promote music -- and also to make money doing so. In the past, the music business was a "lottery," where only a very small number made any money at all. With these models, more musicians than ever before are making money today, and they're not doing it by worrying about copyright or licensing. They're embracing what the tools allow. A recent study from Harvard showed how much more music is being produced today than at any time in history, and the overall music ecosystem -- the amount of money paid in support of music -- is at an all time high, even if less and less of it is going to the purchase of plastic discs.

This is a business model that's working now and it will work better and better in the future as more people understand the mechanisms and improve on them. Worrying about new copyright laws or new licensing schemes or new DRM or new lawsuits or new ways to shut down file sharing is counterproductive, unnecessary and dangerous. Focusing on what's working and encouraging more of that is the way to go. It's a model that works for musicians, works for enablers and works for fans. It is the future and we should be thrilled with what it's producing.

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Four Rules For Music Business Success

Mike Masnick — Wed, 30 Sep 2009 22:41:46 PDT

The Topspin blog has a story of one of the bands they've worked with, a lesser known act called Fanfarlo, that was able to reach some specific goals in promoting itself and building up its fan base, while getting many to commit to paying. From that, the post discusses a four step "formula" that the band used for success (listed here with my summary):

Don't suck: something that often gets lost in these discussions. The music still does need to be good. All of these business models are that much harder if the music isn't any good and fans don't like it. Playing good music is a definite first step.
Get others to introduce you to their audience: This is another good point. I've been talking to some musicians lately, who were trying to understand how to best apply some of this stuff, and I often suggest looking for other, more well-known acts, that the band can work with to get some sort of endorsement, or "opening" slot on a tour (or even just a gig) as a way of reaching more fans. The Topspin post points out that some people assume that this is the real story behind the success of Fanfarlo, but the numbers don't bear that out. It probably accounted for approximately 30% of the band's sales. Not shabby, but hardly the only reason for the band's success.
Make those audiences an offer they can't refuse: In this case, the band offered a download of their album, plus four bonus tracks for $1 for a limited time. Yes, all of the songs combined for a dollar -- not each of them for a dollar apiece. While I normally support just giving away the music for free, I can see a reason to offer them all for a dollar in some situations. In this case, it gets more people to commit to the music and the band, but at a price that is much easier to deal with. I'm still not convinced that $1 is better than free, but it sure beats regular album prices. While this offer was for a limited time, after it was over, the band still offered the download cheaply ($6).
Repeat: This is another important one. We keep hearing bands put in place business model promotions that are one time deals, rather than a fully thought-out continuous and ongoing business model. By repeating the process, not only can a band keep making money, but it lets them iterate and experiment, and find out what works (and what doesn't.).

In this case, it looks like things definitely worked. It was able to get 15,000 new fans on its mailing list, with a rather stunning 13,000 of those buying something (but fans just want stuff for free, right?). Of those who simply viewed the download offer, an amazing 22% made a purchase. That's an insane conversion rate. Also 30% of the download buyers came back and bought a physical product later (CD, vinyl or special edition).

All in all, yet another successful example of a band figuring out ways to connect with fans while giving them a reason to buy.

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Nettwerk, Topspin Show: Give People A Reason To Buy... And Many Of Them Come Through

Mike Masnick — Mon, 22 Jun 2009 13:59:00 PDT

In the last post, I showed the video of my presentation at the NARM event full of music industry and music industry retailers. I recognize that not everyone wants to sit through a 30 minute presentation (even though I promise that it goes quickly!), so I did want to highlight two parts of it separately, here in text, that I think are worth calling out. Both show companies that seem to (implicitly or explicitly) recognize what we talk about in terms of enabling artists to better connect with their fans and give those fans a reason to buy -- Topspin and Nettwerk. We've certainly talked about both in various posts, but execs from both companies were kind enough to share some data on some of their experiments that have not been reported elsewhere, and which I thought was worth sharing.

Topspin, of course, has built up a platform to better enable artists to both connect with fans and to give them a reason to buy, and has been able to work with some fantastic artists, both big and small, including Eminem, Paul McCartney, the Beastie Boys, Metric, Beck, Van Hunt, David Byrne and a bunch of others as well. The exciting thing is the level of success Topspin has found with these artists:

The average transaction price across all Topspin artists has been $22. Compare that to the average price of a CD, which remains between $12 and $14. If you give people a reason to buy, they're willing to pay more. It's obviously not just about "getting stuff for free" as some contend.
Even better, two separate artists using TopSpin have found that their average transaction price is between $50 and $100.
Finally, one artist using Topspin has found (amazingly) that the average transaction price from what was being offered was greater than $100.
And, on top of that, on one recent project, they found that 84% of the orders were premium offers (meaning above the lowest tier).

The idea that people just want stuff for free? Debunked. Give people a reason to buy in the form of real value they can't get elsewhere, and they absolutely will. About an hour after my talk, Ian Rogers, CEO of Topspin did a keynote interview at the same event. You can watch it here: Separately, we've definitely been quite impressed with what Terry McBride has done lately with some artists who work with Nettwerk, the indie label/artist management company. Terry's very much been a believer in the mantra of connecting with fans and giving them a reason to buy, and has even talked about how the whole concept of copyright has become outdated. His view isn't that this is necessarily a good or bad thing, but it's just the way it is, and in helping the artists he works with, they have to figure out ways to work with it. To date, that's included a lot of creative ideas for better connecting with fans and then giving them a reason to buy. One experiment he did was with the artist K-OS, who did a few different experiments, starting with allowing the fans to create their own "mix" of his latest album. Not a remix, but a mix. They released the stems of the songs before the album was released, let the fans create their own mixes, had them vote on the best, and then released two albums at the same time. One was the "pro" mix and the other was the "fan" mix. Then you could buy either one separately, or both together as a package.

The second experiment was the "pay on your way out" concert tour. Realistically speaking, this was a series of ten "free" shows. You could get in for free, but they asked you to pay what you felt was reasonable on the way out. Given the insistence by people that fans just want something for free, you would expect that very few would actually pay anything at all. Of course, that wasn't what happened.

Terry was kind enough to share with us some data from the experiment. Despite being free to come and go without paying anything, 63% of people attending ended up donating money on the way out. Now I'm sure some folks will mock this and say that he could have made more by charging everyone, but it seems quite likely that a lot more people came out to these free shows than if he had made people pay in advance. Almost two thirds of people ended up paying, totally voluntarily -- and their average donation was $6. Again, some will claim that this is low, but you have to look at the bigger overall picture. During this tour each of the two K-OS CDs were separately in the top 50 list of best sellers.

So, he gave a series of free shows that ended up bringing in tens of thousands of dollars combined (average attendance at each show was approximately 1,000 people) and it helped get a lot of people to buy both the CDs that were being offered in support of K-OS. Some people are going to nitpick the numbers, of course, but the evidence remains clear again: it's not that fans just want stuff for free. If you give them a reason to buy, an awful lot of them will absolutely buy.

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Last Chance For The Old Recording Industry... But Plenty Of Excitement In The New Music Industry

Mike Masnick — Tue, 19 May 2009 15:57:54 PDT

I spent Monday at the wonderful SanFran MusicTech Summit and I have to admit that I came away quite optimistic. You may recall earlier this year that my takeaway from MidemNet was how optimistic people were becoming -- but how much the old school industry folks then took that optimism and twisted it into something bad (saying things like "we have to stop treating our fans as criminals, but we need to stomp out piracy at any cost!"). In contrast, I have to say that after the SF MusicTech event, I'm back to the optimistic viewpoint, though I recognize there's still plenty of shaking out to occur.

Terry McBride, whose insights always are worth thinking deeply about, made a comment that this was "the last chance for the music industry" to stop screwing things up and pissing off customers, and that it was time to get it right: meaning stop treating customers as criminals, stop focusing on the sale of things that people don't want to pay for and stop worrying about copyright (he even agreed with David Bowie's comment that copyright was over). I agree with much of what McBride said, with one exception: this isn't the last chance for the music industry. The music industry is doing great -- with more music than ever before being produced and available to fans, and more musicians than ever before being able to connect directly with fans and put in place a business model that works for them, instead of getting worked over by a major label with a dreadful contract. Instead, I'd argue that it's the major labels who have one more chance... and even that may be iffy given how badly they've screwed some stuff up in the past decade.

But much of the rest of the event showed why there's so much reason for optimism. There are so many different startups entering the space these days that it's honestly difficult to keep track of them. And while the market is certainly confusing, we'll start to see some clear leaders shake out of the pack in the next few years. But, combine it all and these startups provide all of the tools that any musician today needs to record, perform, build a fan base, manage a fan base, tour, manage a tour, connect with fans, communicate with fans, transact with fans, promote, distribute, analyze and share. Basically, absolutely everything that you used to need a record label for is showing up from a hodge podge of startups. They don't all necessarily work well or work together, but that'll change over time. On top of this, there are additional tools that let you do things that simply weren't possible before, such as providing better, more detailed recommendation systems and analytics. Among the cool or compelling companies I saw or spoke with at the event were Band Metrics, Topspin, Bandize, 100000Fans, Instinctiv, Jamendo, Drop.io, thesixtyone... and those were just the ones that I'm remembering off the top of my head. There were at least two dozen other interesting startups as well.

Again, this doesn't mean there's no room for a label anymore -- but the role of that label changes. Some bands won't need labels at all, and will be able to manage everything themselves using these tools and services. Others will rely on label reps to help piece all of the different services together, so they can focus on the music. But the routes around the old system are growing at a phenomenal rate. On top of that, there were some major label representatives who actually seem to recognize all of this, even if not all of their colleagues agree.

So while I am still nervous about what the old guard and its lobbyists will do to laws around the globe, the next generation is clearly growing up from below. It's quite messy right now, but it's coming. Fast.

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Topspin Shows That Premium Offerings Get Sales: People Will Pay For Value Beyond The Music

Mike Masnick — Thu, 19 Mar 2009 05:42:00 PDT

It's really been great over the past year or so to see more and more bands adopting business models that involve tiered "premium" options that add real value for fans -- the key to creating a real reason to buy, as discussed in my MidemNet presentation a couple months ago. We've seen all different variations on the tiered theme from Trent Reznor to Kristin Hersh to Jill Sobule to John Wesley Harding and many others. Personally, I still think that the most creative of the bunch is Josh Freese's tiers that go from just fun to ridiculous (one option lets you keep his car -- after you drop him off at home).

One of the companies that's doing a good job helping some musicians make this model work is TopSpin, who we've discussed before. In fact, TopSpin has helped Reznor and Freese with their offerings (as well as the Beastie Boys, who recently launched something similar, as well). With TopSpin's platform coming out of beta this week, the company has released some data on its success so far, and it's impressive -- especially for those of you who keep insisting that fans these days just want music for free and are unwilling to pay for anything.

Its campaigns have certainly helped bands grow their audience and improved ways to connect with fans. One of its first major projects was the release of David Byrne's latest album, and it increased his email list by 3000%. (Update: Originally we said 37%, but that was wrong. It's actually 30x, or 3000% as per Topspin).
The various projects have shown that people are quite willing to pay if they're provided with real value and given a real (rather than artificial) reason to buy. The average transaction price is $22 -- significantly more than what people are paying for "just the music" and even more than what an average CD costs.
Perhaps the most appealing stat: on a recent project 84% of the orders were premium offers above the lowest tier. People will pay more for being given real value, rather than just being forced to pay for the music.

This is great news. Unfortunately, TopSpin is still rather limited right now to bigger name artists (they pick and choose who they work with). I think the world is open for another player to come in and disrupt the market by making such systems available for anyone. Also, in the various projects that TopSpin has run so far, I still think the pricing is a little off (Reznor's was the exception, and he only used TopSpin's backend, rather than its whole program). Also, it seems pretty rare for artists using TopSpin to offer a free option, which limits opportunity greatly (and drives folks to file sharing, rather than opening up a better relationship with those fans, and maybe gaining an email contact and the ability to create sales later). This is (I hope?) an issue from the musicians' side, rather than TopSpin's.

It's also worth noting that the company has also announced a program with Berklee College of Music to teach courses to musicians in how to leverage TopSpin for better business models. Hopefully at least some of that class will include an explanation of how using free as a part of your business model can extend it even further.

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The New Music Business: Enabling Musicians To Take Advantage Of New Business Models

Mike Masnick — Tue, 24 Jun 2008 05:32:55 PDT

It seems that whenever we write about various bands embracing new business models, one of the criticisms raised is this idea that we're somehow expecting musicians to also become businessmen to embrace these new models. Nothing could be further from the truth. In fact, we've pointed out that this is exactly the space on which record labels should be focused: helping musicians embrace these new business models, helping to handle the business and the technology, while the musicians focus on the music. Unfortunately, most major record labels still haven't figured this out, due to either legacy issues and contracts, an unwillingness to let go of old business models, or simple cluelessness.

Of course, the longer the major labels take to realize that this is where the market is headed, the bigger the opportunities there are for others to come in and fill that "enablement" gap. There are going to be more and more interesting startups entering the space. One that's starting to get some buzz is TopSpin, which just revealed its business late last week. TopSpin got some press a few months back by getting Yahoo Music boss Ian Rogers to join as CEO. We've written about some of Rogers' cogent writings on the music business before.

TopSpin isn't a record label, but it wants to basically enable all sorts of internet-based business models to work for musicians so that they can focus on making music. From the sound of it, that involves plenty of backend infrastructure, as well as front-end components, so that musicians can easily pick and choose custom, scaleable business models for their website with little effort. The company already has a nice headstart (and even some high profile customers). What may be most interesting, however, is to see how the business model opportunities evolve over time, as TopSpin may grow to have the best understanding of what business models really work, depending on what the circumstances are for the band. That could be incredibly powerful data by itself.

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