Another Band With Another Unique Business Model

from the turning-your-fans-into-promoters dept

Often, when we describe a certain business model put in place by one band that embraces the basic economics of the music industry, someone shows up in the comments to claim "while this might work for musician X, that's an exception... it'll never work for big/small/mainstream/niche/whatever artists." This sort of comment misses the larger point. We are not suggesting a single "business model" for the entire industry. In fact, we're just explaining the economic forces at play, and showing a variety of different business models that embrace those economics. It's those different business models that makes the market so interesting and dynamic and allows bands to stand out from the crowd.

For the latest example, reader James Saunders points us to the band Umphrey's McGee, who implemented a business model for their latest album that helped turn their fans into promoters. Saunders explains the band's "unique plan":
As more people pre-ordered, the band would add more "extras" to the release. There were eight tiers of potential content, each unlocked once a predetermined number of albums were purchased. The result was a massive effort by fans to promote the album for the band; if they got more people to buy it, their own purchase would have more value. I bought my copy over 2 months ago, and I convinced two friends to get it as well. Eventually, all eight tiers were unlocked, so a good number of albums must have been sold. The whole experience offered more to fans than just "music tracks" which could be pirated. Instead they were given a chance to help a band they love reach a wider audience, while at the same time "earning" more for what they were already willing to pay."
This is a neat variation on a similar model we've seen from musicians like Marillion and Jill Sobule to get fans to agree to pay up early in exchange for some benefit. The addition of having different beneficial levels "open up" just adds to the appeal, and it helps turn fans into promoters as well. Again, this is not "the" business model for all bands -- but yet another example of a band recognizing one way to implement a business model that really does focus on connecting with fans and giving them a real reason to buy.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Ima Fish, Jan 21st, 2009 @ 5:46am

    "while this might work for musician X, that's an exception... it'll never work for big/small/mainstream/niche/whatever artists."

    That is so incredibly asinine I just have to comment. Exactly where is it written that any business requires a single business plan?!

    Does every entrepreneur follow the exact same plan? Nope.

    Does every retailer follow the exact same plan? Nope.

    Do VCs all invest in the exact same business models? Nope.

    So why should musicians be any different? Like anyone else, they should come up with their own models to success.

    It's hard to think that way because the music industry has controlled nearly all music we've heard with an iron fist.

    As I've said before, the biggest obstacle for a new musician is obscurity. Before the internet, the only way a musician could overcome obscurity and become a famous/successful musician was via the music industry. You had to play their game by their rules. If you wanted to get your song on the radio and in the stores, there was no other way.

    With the internet, a musician can gain thousand, heck, millions of followers if he or she is good. You no longer need the promotional arm of a label to do that for you. And you no longer need radio to get expsoure. And you no longer need the label's LP or CD distribution system to get your music to your fans. The current music industry is completely irrelevant to new musicians.

    So what I'm saying is, now that the labels are no longer in control. Musicians are free to do whatever they want to find success. There no longer is one model because that one model is dead.

     

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  2.  
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    Anonymous Coward, Jan 21st, 2009 @ 5:55am

    Mike misses it again

    Until you have a basic business model that is generically transposeable, can be applied without much alteration to nearly any artist and is based primarily on a corporations ability to properly package and market the focus grouped creations of others, you do not have a REAL business model for the recording industry. Actually creating and recording music, is less then 5% of the music business.

     

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  3.  
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    Peet McKimmie (profile), Jan 21st, 2009 @ 6:09am

    Marillion

    This is a neat variation on a similar model we've seen from musicians like Marillion


    I thought Marillion's business model was "Buy any one of our tracks and hear everything else we've ever produced for free"...

     

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  4.  
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    Phillip, Jan 21st, 2009 @ 6:13am

    Re: Mike misses it again

    Anonymous naysayer misses it again:

    That's not the point. The point is that people say that it's impossible to run a business that accepts the economics of infinite goods. Mike shows time and time again examples to the contrary. He's not claiming it to be a panacea for the industry.

    Not to mention that your statement is based on false ideas. Why is it necessary for the entire recording industry to have one business model across the board? It's not, and it's silly to say otherwise.

     

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  5.  
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    Anonymous Coward, Jan 21st, 2009 @ 6:19am

    Often when Mike makes a post about a band using an alternative business model Mike begins his post with something akin to "Often, when we describe a certain business model put in place by one band that embraces the basic economics of the music industry, someone shows up in the comments to claim "while this might work for musician X, that's an exception... it'll never work for big/small/mainstream/niche/whatever artists.""

     

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  6.  
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    Xiera, Jan 21st, 2009 @ 6:30am

    Re: Mike misses it again

    *sigh* Some people will never get it.

    Mike isn't arguing that this a business model for the industry. He argues, quite well here, that these are business models for the individual musicians.

    A business model does NOT need to work for every brand in a market to be considered a good business model. Indeed, many different business models can work in the same market. This is what Mike is advocating. Forget the short-sighted and false belief that one business model should work for an entire industry and start fabricating business models that work for you.

    Does it take more work? Sure does. Is it more effective and rewarding? Sure is, and artists have been proving it time and again.

     

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  7.  
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    Peavey, Jan 21st, 2009 @ 7:15am

    another cool business model

    Another cool business model:

    coming up with unique business models that get you mentioned in Tech Dirt, which in turn results in hoards of readers checking out a new band they just read about on Tech Dirt!

     

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  8.  
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    betterthanthevan.com, Jan 21st, 2009 @ 7:44am

    or you could tour?

    Perhaps going on tour and selling things other than music would be a good business model too?

    betterthanthevan.com

     

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  9.  
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    mike allen, Jan 21st, 2009 @ 7:53am

    Re: Mike misses it again

    You have missed the point you dont need the recording industry at all a band or artist can produce a recording in excellent quality without a studio. put said recording on the web and (no matter if they charge or give it away) allow fans to download. as i have said many times on here i work in broadcasting over the air and internet i get at least 20 to 30 unknown bands send tracks a week hoping to get on the show. If i like i play them simple as that.

     

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  10.  
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    BillDivX, Jan 21st, 2009 @ 8:23am

    The post that never was...?

    As a musician who is intimately familiar with a musician's inside perspective into the record labels (i.e. what they offer artists, their mindset, their true failings, etc). I always want to respond to the people who think Mike is somehow off base about this. However, I always refrain, because the proper explanation would be a rather lengthy post. But, I have written it anyway. Mike, any interest in putting it up here if I polish it up a bit?

    I think a lot of people fail to realize that labels' business model is not failing just because of poor consumer relations, but because of poor artist relations as well. I think the perspective of a working songwriter who would not consider signing with a label (and has several friends who feel the same), might shed some light on the kind of serious trouble that record labels are really in. As I have said all along, It's one thing when consumers start to bail, but it's a whole different level of "oh sh*t" when your product itself gets up and walks out.

     

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  11.  
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    James Saunders (profile), Jan 21st, 2009 @ 9:07am

    Just to elaborate

    Thanks to Mike for posting my story. It is always good to provide new examples of the multitude of possible business models that spring up around free goods. I wrote a little more on the band's experiment here, for those interested.

     

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  12.  
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    Buzz, Jan 21st, 2009 @ 9:40am

    Nope

    But Mike, this plan would never work for ethnic minority bands consisting of all guitar players living in southern Nevada.

     

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  13.  
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    Ima Fish, Jan 21st, 2009 @ 10:16am

    Re: Mike misses it again

    "Actually creating and recording music, is less then 5% of the music business."

    If your stats about the current music industry is correct, then I have no doubt that the current music industry must die.

    You're essentially, nope, you ARE admitting that the current music industry is 95% BS. As I've written previously, the largest barrier for any musician to overcome is obscurity. The labels used to solve that problem. Now the internet can solve it. You no longer need labels to get your music on the radio and in stores. The internet can do that too.

    Let's cut out that 95% of admitted wasted fat and create a new infinitely more efficient music industry.

     

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  14.  
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    PaulT (profile), Jan 21st, 2009 @ 12:47pm

    Re: Mike misses it again

    Wow, I have to chime in here though the posts above me basically make the points...

    Your "points" are truly idiotic and miss every single point that Mike and others have been trying to raise. Always the ACs who do this, for some reason... If you're an industry shill, you should realise that there are several assumptions that you're making that are the things killing your industry. if not, you have a lot to learn young grasshopper.

    - Why does a business model need to be "generically transposable"? In fact, does such a model exist in any other industry? Microsoft's business model and Red Hat's are diametrically opposed, yet they still operate at a profit. Baen and Harper Collins publish books in wildly different ways, but both operate. McDonalds and El Bulli are both restaurants - but would you honestly suggest that they would be better off using the same business model? That would be utterly idiotic.

    - "can be applied without much alteration to nearly any artist ". I read that as "artists should be guaranteed a profit without doing any extra work". Not possible. Not every artist can be successful. the ones who make a living are those who are particularly good at what they do and/or gets their music sold in the right way. It's not the fault of those quasi-fictional "pirates" if they happen to fail at both of those criteria.

    - "you do not have a REAL business model for the recording industry". Please, using verified facts and figures why the business models suggested on this blog are not "real". Start with explaining how Trent Reznor and Jill Sobule are actually losing money, contrary to their own claims. If you can't do this, then the business model is "real", just not "universal". As stated before, no business model is "universal", including the one currently used by the RIAA.

    - "Actually creating and recording music, is less then 5% of the music business.". Well, maybe that's the problem, assuming you're not saying that the other 95% are touring and merchandise (otherwise, what's the problem with the new models?). If musicians are actually having to spend 95% of their time battling through legal loopholes, selling old recordings and the like, instead of creating and recording new music, it's no wonder the industry's in its current position.

     

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  15.  
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    Lonnie E. Holder, Jan 21st, 2009 @ 12:48pm

    Re: Re: Mike misses it again

    Youra Fish:

    I think you are correct regarding obscurity being a big barrier. Unfortunately, it appears that the artists with the most publicity are those appealing to the common denominator, which means those artists that sell the most music (CD's, downloads, etc.). The music business once encouraged obscure groups because they often built a fan base (R.E.M. is one example) or they turned into a supergroup over time (which happened often enough in the 70's that I am sure everyone can name several).

    It would be easy to be morose about this state of affairs. Instead, I choose to listen to classic rock and to search the internet, as you suggested, to find groups that are good that get little, if any exposure, and buy their music. Sometimes being part of the solution is to BE part of the solution.

    Some in the music industry "get it." Many others lament the current state of affairs, hardly realizing they are part of the problem (obviously they are not reading Mike's blog). However, markets may be slow, but eventually they will correct this problem.

     

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  16.  
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    Anon2, Jan 21st, 2009 @ 1:35pm

    their label is great, too

    While James and Mike give a proper tip of the hat to Umphrey's and their team, who all richly deserve the recognition (and I can remember the days when they were pretty much unknown outside of Chicago), I think something equally significant here is getting lost in the mix:

    Their label, SCI Fidelity, has been on the cutting edge of the shifting landscape in the music business since its founding, and has always worked primarily with artists who understood what was going on. The label was founded by the String Cheese Incident and their managers, and SCI was one of the few bands who not only permitted, but encouraged fans to bring high quality gear to record and circulate their shows by (among other things) establishing a dedicated tapers' section directly adjascent to the front-of-house board.

    From that start, SCI Fidelity focused on artists with big vision, true integrity, and serious devotion to their fans, and many who started with them as small acts now play to thousands of adoring fans every night.

    But notice something -- and this is part of the absolutely correct observations made here by some that there is no one-size-fits-all model for all artists -- none of the artists on the SCI Fidelity label give away their officially released studio CDs or tracks, nor do they permit their fans to circulate them. Many provide all kinds incentives for fans to buy their official releases, including access to unreleased material, full CDs of bonus material for those who buy early, all the way to great experiences like SCI's "golden ticket" promotional campaign, where a few hundred lucky fans who purchased the band's then-current studio release and found golden tickets inside the packaging were given a special private show at the relatively small Fox Theater in Boulder, CO, in advance of a longer run the band was headlining at Red Rocks.

    These are the kinds of things that keep fans jazzed -- and keep them more than happy to buy the band's official releases (and not upload them to torrents). Sure, you can find any of these bands' commercial releases on torrent trackers, but you will only rarely find any activity on those torrents, because most of the bands' true fans respect whatever policies the band establishes. In return, the fans know that not only will they get opportunities for the more obvious value-added things that Mike is frequently mentioning, but also some not so obvious ones (like band riders requiring venues to provide fresh and free water and to permit the fans to bring their own empty water bottles into a venue, among other things).

    Bottom line: bands that really care about their fans, who not only deliver the goods consistently on stage, but also off, will if they are also creating high quality music that enough people like, do quite well. And it's not all about giving away all your music for free; it's about honoring and respecting your fans, and offering them things that they value. I've seen it time and time again, from the incredibly nascent and primitive tape trading scene that the Dead encouraged and its insistence on having its own, lower-cost ticketing operation for fans willing to submit mail orders, to the updated and digitized versions of those things that really took off around SCI and Phish, to what bands like Umphrey's are doing today. It's all a very clear, and very direct line of evolution, as any member of any of these bands or their managers will acknowledge, each generation learning from and building on what the prior ones did.

    I'm glad these things are starting to catch on across a broader spectrum of artists and fan-bases, and I know I've harped on this before, but it's really true. These bands today aren't breaking any molds. They are only discovering, amplifying and improving on what other innovative bands have done before them (and that, mostly out of necessity -- had the Dead been offered the deal that was ultimately given to the Airplane, things might have turned out a bit differently, but the labels felt the Dead were too stubborn in their insistence on doing everything their own way).

    It's really not "labels always bad," nor is it "music must always be free." It's whatever works for that artist to enable him, her or them to create their art, feel good about what they are doing and how they are doing it, and in so doing achieving whatever level of success they can achieve. And for both the artists and the labels, it's going to be the ones who truly understand that there is no business without the fans who are going to spend the time getting to know and understand a particular artist's fan-base, interact with them, and deliver to them those things (tangible and intangible) that the fans really value.

     

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  17.  
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    Mike (profile), Jan 21st, 2009 @ 3:17pm

    Re: The post that never was...?

    Mike, any interest in putting it up here if I polish it up a bit?

    Sure, send it over so we can take a look at it. No promises, but if it's interesting, we'd be interested in publishing it.

     

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  18.  
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    Mike (profile), Jan 21st, 2009 @ 3:22pm

    Re: their label is great, too

    Their label, SCI Fidelity, has been on the cutting edge of the shifting landscape in the music business since its founding, and has always worked primarily with artists who understood what was going on. The label was founded by the String Cheese Incident and their managers

    Aha. Interesting. We've used SCI in the past as another example of a band that understood how these business models worked.

     

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  19.  
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    Anon2, Jan 21st, 2009 @ 7:17pm

    Re: Re: their label is great, too

    I've sent an email to your general feedback, Mike -- it's a subject near and dear to my heart.

     

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  20.  
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    Anonymous Coward, Jan 22nd, 2009 @ 7:00am

    Re: their label is great, too

    "and SCI was one of the few bands who not only permitted, but encouraged fans to bring high quality gear to record and circulate their shows by (among other things) establishing a dedicated tapers' section directly adjascent to the front-of-house board."


    The Dead did this for 30 years LOL and it certainly worked EXTREMELY well for them. Frankly any artist who doesnt do this is just stupid in my opinion . . . just dumb.

     

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  21.  
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    nasch, Jan 22nd, 2009 @ 10:17am

    Re: Mike misses it again

    Come on, this is a troll, right?

     

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