One of things that we stress to S&E Entertainment clients is that you need to be accessible to as many people as possible, both in person and online. The bottom-line: have a presence where your fans are and provide them the ability to interact with that presence. it is no longer enough to simply put the information out there and hope that someone enjoys it and spends their time and money following your musical career.
A recent article by Kyle Bylin highlights this advice:
"I was ten when I recorded "The Rockafeller Skank" by Fatboy Slim off the radio onto cassette tape. Twelve when “The Real Slim Shady” by Eminem premiered on TRL. The idea that I could reach out and connect with the artists that I liked didn’t exist yet or at least wasn’t familiar to me. MySpace didn’t become popular where I grew up – almost no one that I knew had it. Artists were perceived as unreachable. What you knew about them was based on the lyrics in their songs or maybe a brief interview segment in Rolling Stone. Even the concept of sending traditional fan mail was of no interest, because there was no expectation of the artist reading it or writing back. It was basically the equivalent of trying to actually send your Christmas list to Santa at the North Pole.
In the truest form, I, along with everyone I knew, were passive consumers of music and thought nothing of tuning into the radio and not getting to choose what songs were playing. Waiting through a few terrible videos on MTV in order to hear something good was commonplace and seen as a way to pass the time. Today that’s just not the case anymore. Music fans have set different expectations for artists and insist that they are met. While not everyone has interest in messaging their favorite artist, those that do, anticipate a reply back. Of course, no one is shedding tears when old hats like Metallica or Def Leppard don’t reply, but for Making April or Owl City, fans have come accustomed to the idea that they are able to reach out to these artists and make a real connection.
What does this mean for an artist? Think about it as the blurring of the line between the public artist and the private individual, at a time, when the boundary between home and studio has largely disappeared. On tour, thanks, by and large, to advances in digital technologies, the ability to stay in touch with their fans has become delocalized for many artists, so that it can be done at all hours from almost anywhere. Leisure time once spent doing creative things — where an artist could take time away from it all — has turned into work that ranges from learning how to market themselves online and off, answering an endless barrage of messages from fans, bloggers, and managers, and trying to keep all of their profiles, blogs, and social media tools relevant and up-to-date.
“It’s that the once disparate spheres have now collided and interpenetrated each other, creating a sense of “elsewhere” at all times,” writes Sociologist Dalton Conley in Elsewhere, U.S.A. He continues, “It is the plethora of economic opportunities created by technology that creates a dogging sense of loss, of needing to be elsewhere, doing something different.”1 Whether you liken elsewhere to the next social networking site that seems to have more promising opportunities or the idea that instead of making more music you should be figuring out how to better market the music that you’ve already made — the message is clear — that what it means to be an artist in the twenty-first century will be drastically different from what previous generations have experienced."
Friday, November 13, 2009
Thursday, November 12, 2009
Royalties -- Getting Paid In The Music Business
Some artists are truly inspired and moved to action by the music in their hearts. They would lovingly ply their trade on the street corner, adhering to a strict vow of poverty just to know they could have their music heard. However, most musicians want to be compensated for their talent and efforts – if nothing else to pay the rent and eat. They too are inspired and moved by their music, but fame, riches, and glory are also strong motivators – or more likely the fabled ultimate payoff for a lifetime of hard work. It is called the music business for a reason, but far too often artists jump at the chance to “get into the business” without properly protecting their art or even understanding how they are compensated for their music.
Without a doubt, the least understood and most overlooked sources of that compensation are royalties. Through a series of articles we will break down the Players, the Royalties, and the Payoffs.
PART I – The Players
Songwriter(s) – The person or people that wrote the lyrics and/or the musical notes for the song. Together, the lyrics and music are called the musical composition. Notably, the lyrics and music can be written by entirely separate people or groups that each have their own publishers, assigners, and performing rights organizations. Often the individual(s) responsible for the music are called composers.
Performer – The performer is the person or group that actually plays the musical composition at live performances and on recordings. The performer gets permission to perform the musical composition though a license. When the performer or someone within the performer’s group is also the songwriter, this license is usually not written down because if the song belongs to you, then you always have the right to perform it. As we explore a little further, it turns out that the songwriter does not always own his songs because part of the ownership is shared with a publisher.
Record Company – A record company employs performers to play and record musical compositions. In exchange for the marketing a performer, arranging for recording and production of a song, and occasionally a cash advance, the record company owns the master recording of the performer playing the musical composition. In plain English, the record company owns the recorded version of the performing playing the song. This is referred as the master or the sound recording.
Publisher – The publisher is a company that works with the songwriter to promote his musical compositions, encouraging performers to play the song, placing the song in movies and commercials, and pitching the song to record companies. Often, publishers pay the songwriter for partial or complete ownership of the musical composition (usually 50/50). Then the publisher charges a licensing fee to performers, film and television directors, and record companies for the right to use the musical composition. Occasionally, a publisher does not take ownership of the musical composition and the underlying copyrights but merely charges the songwriter a flat fee or percentage to promote and license the musical composition. This type of publisher is called a rights administration company.
Performing Rights Organization – A performing rights organization (PRO) is an association or company that works with songwriters and publishers to monitor and assign royalties any time a musical composition is performed. This includes radio play, live performances, and play on film and television. Very recently, PROs are monitoring and paying royalties on digital plays on the Internet, based on licenses. The major PROs are the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), and the Society of European Stage Authors and Composers (SESAC). Notably, songwriters can only register with one PRO.
Mechanical Rights Agency – A mechanical rights agency works with songwriters and publishers to license the right to record a musical composition to performers and record companies. When a performer wants to record a song for which he is not the songwriter, then he must obtain a mechanical license. The mechanical rights agency issues the license, tracks the usage of the recorded song, and facilitates payment between the performers and publishers/songwriters (the mechanical royalty). Of course, the mechanical rights agency charges a percent of the mechanical royalty for their services. The major mechanical rights organizations are The Harry Fox Agency and the Canadian Mechanical Rights Production Agency (CMRRA).
Now armed with the knowledge of the people involved in creating a song, you are now ready to understand the different ways that a musician can get paid for that song (i.e. revenue streams). Come back for Part II – The Royalties.
Matthew T. Nagel is an entertainment attorney at Wuestling & James in St. Louis, Missouri and an adjunct professor at Fontbonne University and Washington University School of Law. If you have questions, you can reach him at Nagel@wuestlingandjames.com.
* Articles are primarily educational and do not purport to constitute legal advice. No attorney-client relationship is created between the author and any reader of this article. If you have legal concerns or questions be sure to consult with an attorney licensed to practice in your jurisdiction.
Without a doubt, the least understood and most overlooked sources of that compensation are royalties. Through a series of articles we will break down the Players, the Royalties, and the Payoffs.
PART I – The Players
Songwriter(s) – The person or people that wrote the lyrics and/or the musical notes for the song. Together, the lyrics and music are called the musical composition. Notably, the lyrics and music can be written by entirely separate people or groups that each have their own publishers, assigners, and performing rights organizations. Often the individual(s) responsible for the music are called composers.
Performer – The performer is the person or group that actually plays the musical composition at live performances and on recordings. The performer gets permission to perform the musical composition though a license. When the performer or someone within the performer’s group is also the songwriter, this license is usually not written down because if the song belongs to you, then you always have the right to perform it. As we explore a little further, it turns out that the songwriter does not always own his songs because part of the ownership is shared with a publisher.
Record Company – A record company employs performers to play and record musical compositions. In exchange for the marketing a performer, arranging for recording and production of a song, and occasionally a cash advance, the record company owns the master recording of the performer playing the musical composition. In plain English, the record company owns the recorded version of the performing playing the song. This is referred as the master or the sound recording.
Publisher – The publisher is a company that works with the songwriter to promote his musical compositions, encouraging performers to play the song, placing the song in movies and commercials, and pitching the song to record companies. Often, publishers pay the songwriter for partial or complete ownership of the musical composition (usually 50/50). Then the publisher charges a licensing fee to performers, film and television directors, and record companies for the right to use the musical composition. Occasionally, a publisher does not take ownership of the musical composition and the underlying copyrights but merely charges the songwriter a flat fee or percentage to promote and license the musical composition. This type of publisher is called a rights administration company.
Performing Rights Organization – A performing rights organization (PRO) is an association or company that works with songwriters and publishers to monitor and assign royalties any time a musical composition is performed. This includes radio play, live performances, and play on film and television. Very recently, PROs are monitoring and paying royalties on digital plays on the Internet, based on licenses. The major PROs are the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), and the Society of European Stage Authors and Composers (SESAC). Notably, songwriters can only register with one PRO.
Mechanical Rights Agency – A mechanical rights agency works with songwriters and publishers to license the right to record a musical composition to performers and record companies. When a performer wants to record a song for which he is not the songwriter, then he must obtain a mechanical license. The mechanical rights agency issues the license, tracks the usage of the recorded song, and facilitates payment between the performers and publishers/songwriters (the mechanical royalty). Of course, the mechanical rights agency charges a percent of the mechanical royalty for their services. The major mechanical rights organizations are The Harry Fox Agency and the Canadian Mechanical Rights Production Agency (CMRRA).
Now armed with the knowledge of the people involved in creating a song, you are now ready to understand the different ways that a musician can get paid for that song (i.e. revenue streams). Come back for Part II – The Royalties.
Matthew T. Nagel is an entertainment attorney at Wuestling & James in St. Louis, Missouri and an adjunct professor at Fontbonne University and Washington University School of Law. If you have questions, you can reach him at Nagel@wuestlingandjames.com.
* Articles are primarily educational and do not purport to constitute legal advice. No attorney-client relationship is created between the author and any reader of this article. If you have legal concerns or questions be sure to consult with an attorney licensed to practice in your jurisdiction.
Monday, October 26, 2009
Trademarks: Building The Empire
Constructing a successful and sustainable career in the music industry is very similar to building an empire. An artist must establish a home base, gather his strength, and send out efforts until his influence expands – controlling more and more territory and conquering the hearts and minds of more people. However, it is equally important to build strong defenses to protect the assets that the artist’s empire is built upon. Specifically, a musician has to protect himself and his music if he wants to succeed in the music business.
Many different bricks go into building the foundation of a musician’s defenses, such as limiting his liability (LLC), securing his art (copyright), and establishing sources of revenue that announce his existence to the world (royalties and registrations). One of the most important pieces of this protection is the ability to protect the musician’s look and his brand or image. This image includes the musician’s name, both individually and the band’s name, his voice, and even the way he dresses on stage. Such protection is accomplished through a trademark.
What is a Trademark?
Under United States law, a trademark is a word, symbol, or device, used in commerce, which identifies the source of a good or service. As previously mentioned, this word, symbol, or device, can be your name, a logo, of even a particular look or display that is uniquely you own – i.e. your identifier. Most often this identifier is a musician’s band name and logo. When people see the identifier associated with a song or painting, they know exactly who made that particular piece of art. However, it is not enough to just think of a clever name or logo, but a musician must actually publically that name or logo it in a commercial manner before any trademark rights exist. This “use” can be playing a live gig under the band name or offering merchandise with the name and/or logo on it for sale. The band name is known as a service mark and the logo can be protected by both trademark and copyright law.
Much like copyrights, trademarks do not necessarily require registration. Trademark rights are established the first time the name or logo is used to sell something – the commercial use. Using “TM” next to the name or logo indicates that someone is claiming the trademark rights in an identifier but has not yet registered the trademark with the government. Once a band name or logo is registered with the government, the artist can use ® next to the name or logo. Notably, registering your trademark has several benefits: 1.) it announces to the world that someone has a right to that particular name or logo; 2.) it establishes a specific date when you acquired the rights in that name or logo; and 3.) it allows you to recover money and other remedies that are not always available without registration, such as filing a lawsuit in Federal Court. Often, just the threat of a lawsuit is enough to deter other bands from using your name or logo.
What is the Point of Trademarks?
Now, you should have an idea of what a trademark is, but the importance of a trademark is where things get interesting. If you hold a trademark in a name or logo, no one else can use that name or logo, with very few exceptions. Also, a trademark is a piece of property (intellectual property to be precise) that can be owned, bought, sold, or licensed. Musicians can even sell or rent the right to use their trademark for a specific geographic area. However, the place to start is choosing a name or logo that is not already owned by someone else.
For instance, a newly organized St. Louis rock band wants to pick a strong name that tells the public they love rock and Greek mythology. The group quickly picks “Minotaur.” However, before printing flyers, starting a website, or getting any new tattoos, the band realizes they need to make sure that no one else has a trademark in the name “Minotaur.” Otherwise, they run the risk of infringing that person’s trademark rights and open themselves up to a major lawsuit. The first place they check is the United States Patent and Trademark Office (www.uspto.gov), which reveals 30 different registered trademark records for the word “minotaur.” These registrations range from upholstery companies to engine parts. Next, the group checks Google (www.google.com), performing rights organizations (www.ascap.com – www.bmi.com), internet domains (www.internic.net), and any other source they can find where bands would list themselves.
Since there are so many people using the name “Minotaur,” the band consults with an entertainment attorney who helps them perform a comprehensive search and analyzes the options. He stresses that a band name cannot infringe another trademark but it also cannot infringe someone else’s copyrights. After careful review, the group decides to use “Minotaur” in a stylized format to make them stand out. They put the new logo and band name on their website, t-shirts, and file a formal registration with both the State of Missouri and the federal government Now Minotaur should be adequately protected, and the band can rest easy that one else can simply steal their band name without serious repercussions. In order to maintain exclusive rights in that name, Minotaur only needs to keep using the name when they sell their services or merchandise. Notably, if a musician does not use the trademark in commerce for 3 years, he loses his rights in that trademark, as it is considered abandoned.
Obtaining a trademark and using it to protect your music is a fairly simply process. However, much like any other area of music law, spending a little time and effort up front can save an endless amount of headaches and lost profits down the road. Trademark infringement leads to lengthy and expensive litigation, and “I didn’t know I couldn’t do that” is not a defense. If an artist is willing to take the take and put in the effort to understand the laws that affect his craft, then he can successfully build a sold protective wall around his music. Such protection forms the foundation of a long, sustainable career in a very chaotic and constantly changing industry. Everything starts with a song, but you must protect and nurture that song in order for it to grow.
Matthew T. Nagel is an entertainment attorney at Wuestling & James in St. Louis, Missouri and an adjunct professor at Fontbonne University and Washington University School of Law. If you have questions, you can reach him at Nagel@wuestlingandjames.com.
* Articles are primarily educational and do not purport to constitute legal advice. No attorney-client relationship is created between the author and any reader of this article. If you have legal concerns or questions be sure to consult with an attorney licensed to practice in your jurisdiction.
Many different bricks go into building the foundation of a musician’s defenses, such as limiting his liability (LLC), securing his art (copyright), and establishing sources of revenue that announce his existence to the world (royalties and registrations). One of the most important pieces of this protection is the ability to protect the musician’s look and his brand or image. This image includes the musician’s name, both individually and the band’s name, his voice, and even the way he dresses on stage. Such protection is accomplished through a trademark.
What is a Trademark?
Under United States law, a trademark is a word, symbol, or device, used in commerce, which identifies the source of a good or service. As previously mentioned, this word, symbol, or device, can be your name, a logo, of even a particular look or display that is uniquely you own – i.e. your identifier. Most often this identifier is a musician’s band name and logo. When people see the identifier associated with a song or painting, they know exactly who made that particular piece of art. However, it is not enough to just think of a clever name or logo, but a musician must actually publically that name or logo it in a commercial manner before any trademark rights exist. This “use” can be playing a live gig under the band name or offering merchandise with the name and/or logo on it for sale. The band name is known as a service mark and the logo can be protected by both trademark and copyright law.
Much like copyrights, trademarks do not necessarily require registration. Trademark rights are established the first time the name or logo is used to sell something – the commercial use. Using “TM” next to the name or logo indicates that someone is claiming the trademark rights in an identifier but has not yet registered the trademark with the government. Once a band name or logo is registered with the government, the artist can use ® next to the name or logo. Notably, registering your trademark has several benefits: 1.) it announces to the world that someone has a right to that particular name or logo; 2.) it establishes a specific date when you acquired the rights in that name or logo; and 3.) it allows you to recover money and other remedies that are not always available without registration, such as filing a lawsuit in Federal Court. Often, just the threat of a lawsuit is enough to deter other bands from using your name or logo.
What is the Point of Trademarks?
Now, you should have an idea of what a trademark is, but the importance of a trademark is where things get interesting. If you hold a trademark in a name or logo, no one else can use that name or logo, with very few exceptions. Also, a trademark is a piece of property (intellectual property to be precise) that can be owned, bought, sold, or licensed. Musicians can even sell or rent the right to use their trademark for a specific geographic area. However, the place to start is choosing a name or logo that is not already owned by someone else.
For instance, a newly organized St. Louis rock band wants to pick a strong name that tells the public they love rock and Greek mythology. The group quickly picks “Minotaur.” However, before printing flyers, starting a website, or getting any new tattoos, the band realizes they need to make sure that no one else has a trademark in the name “Minotaur.” Otherwise, they run the risk of infringing that person’s trademark rights and open themselves up to a major lawsuit. The first place they check is the United States Patent and Trademark Office (www.uspto.gov), which reveals 30 different registered trademark records for the word “minotaur.” These registrations range from upholstery companies to engine parts. Next, the group checks Google (www.google.com), performing rights organizations (www.ascap.com – www.bmi.com), internet domains (www.internic.net), and any other source they can find where bands would list themselves.
Since there are so many people using the name “Minotaur,” the band consults with an entertainment attorney who helps them perform a comprehensive search and analyzes the options. He stresses that a band name cannot infringe another trademark but it also cannot infringe someone else’s copyrights. After careful review, the group decides to use “Minotaur” in a stylized format to make them stand out. They put the new logo and band name on their website, t-shirts, and file a formal registration with both the State of Missouri and the federal government Now Minotaur should be adequately protected, and the band can rest easy that one else can simply steal their band name without serious repercussions. In order to maintain exclusive rights in that name, Minotaur only needs to keep using the name when they sell their services or merchandise. Notably, if a musician does not use the trademark in commerce for 3 years, he loses his rights in that trademark, as it is considered abandoned.
Obtaining a trademark and using it to protect your music is a fairly simply process. However, much like any other area of music law, spending a little time and effort up front can save an endless amount of headaches and lost profits down the road. Trademark infringement leads to lengthy and expensive litigation, and “I didn’t know I couldn’t do that” is not a defense. If an artist is willing to take the take and put in the effort to understand the laws that affect his craft, then he can successfully build a sold protective wall around his music. Such protection forms the foundation of a long, sustainable career in a very chaotic and constantly changing industry. Everything starts with a song, but you must protect and nurture that song in order for it to grow.
Matthew T. Nagel is an entertainment attorney at Wuestling & James in St. Louis, Missouri and an adjunct professor at Fontbonne University and Washington University School of Law. If you have questions, you can reach him at Nagel@wuestlingandjames.com.
* Articles are primarily educational and do not purport to constitute legal advice. No attorney-client relationship is created between the author and any reader of this article. If you have legal concerns or questions be sure to consult with an attorney licensed to practice in your jurisdiction.
Wednesday, October 21, 2009
MySpace Research
Neilsen Netview recently recent some statistics on MySpace. I think these are intriguing and can provide interesting fuel for marketing fires. Maybe MySpace isn't quite as dead as previously declared. Thanks to Bruce Houghton for the original post.
From comScore Media Metrix
- MySpace Music unique users have grown 169% since launch in September 2008 and1472%, year-over-year
- The site has nearly tripled its unique users since launch
- 12 -17 year olds are 2.3 times more likely than the average net user to visit MySpace Music
- People age 18 - 24 year olds are 2.2 times more likely than the average net user to visit MySpace Music
From comScore Media Metrix
- MySpace Music is the #1 site in time spent for the 18-34 demographic
- The site is #2 in total unique users
- MySpace Music has 18.95 million monthly unique users
Monday, October 19, 2009
Facebook vs. MySpace
If you have not already shifted your thinking about the big social networking sites, HitWise has released new statistics that should give you food for thought.
Facebook accounted for 58.59% of all U.S. visits to the top 155 social networking Web sites in September of this year - a 194% increase since September 2008.
MySpace came in second with 30% of all social networking activity.
Twitter grew 1170% in the last year, but it still accounts for only 1.84% of all social networking traffic.
Tagged.com grew 47% in the last year to stay ahead of Twitter with 2.38% of social traffic.
Facebook accounted for 58.59% of all U.S. visits to the top 155 social networking Web sites in September of this year - a 194% increase since September 2008.
MySpace came in second with 30% of all social networking activity.
Twitter grew 1170% in the last year, but it still accounts for only 1.84% of all social networking traffic.
Tagged.com grew 47% in the last year to stay ahead of Twitter with 2.38% of social traffic.
Friday, October 16, 2009
Distribution Models
A common question that many potential clients pose is "How can I get my music out there and make a few bucks in the process."
As a publishing company for independent musicians, a major part of S&E Entertainment's job is distributing our clients' music through various channels to maximize exposure and income. The music industry refers to each of these channels as a "revenue stream." Notably, a "revenue stream" is not just limited to the distribution of music but can also include merchandising, licensing, and sponorshops.
The current distribution models:
Legacy Sales. This distribution channel consists of physical goods such as CDs, cassette tapes, and vinyl records. It is slightly strange to refer to CD sales as "legacy," but some reports put online music sales at 95% of the market share. Although most independent artists still sell mos tof their music face-to-face, it is a very small amount of total sales. Notably, in terms of dollars, CD sales still exceed digital downloads. The Beatles recent physical release shows the ability of the CD to still bring in money.
Digital Sales. Without a doubt, online sales of digital singles accounts for the majority of music today. Apple and iTunes own 2/3 of the market, with Amazon, eMusic, and a few other services offering MP3 sales to fans. The bottom-line: if you are not on iTunes, you are missing out on 2/3 of the people who might have bought a track.
On Demand Straming. Several websites offer this service to its visitors, wherein the website buys a license from the artists and then allows the visitors to listen to the music. Importantly, people cannot download the tracks, but it is free to listen or involves a small fee for premium services. Spotify is one of the main players in this type of distribution channel.
Paid Subscription. Through services like Rhapsody and Napster, consumers can pay a monthly subscription and either stream or download as much music as they want. In exchange, the service pays the artists a fraction of the consumer's subscription fee. Interestingly, Spotify has started a freemium business model in this distribution channel, but little information is available yet as to its success.
Internet Radio. A new royalty rate agreement set the standards for internet radio stations in the summer of 2009. Basically, the radio stations pay a licensing fee for each song and/or catalog that they play online and visitors tune in for free. Artists recoup a fraction of the licensing fee, usually through their performing rights association affiliation.
As a publishing company for independent musicians, a major part of S&E Entertainment's job is distributing our clients' music through various channels to maximize exposure and income. The music industry refers to each of these channels as a "revenue stream." Notably, a "revenue stream" is not just limited to the distribution of music but can also include merchandising, licensing, and sponorshops.
The current distribution models:
Legacy Sales. This distribution channel consists of physical goods such as CDs, cassette tapes, and vinyl records. It is slightly strange to refer to CD sales as "legacy," but some reports put online music sales at 95% of the market share. Although most independent artists still sell mos tof their music face-to-face, it is a very small amount of total sales. Notably, in terms of dollars, CD sales still exceed digital downloads. The Beatles recent physical release shows the ability of the CD to still bring in money.
Digital Sales. Without a doubt, online sales of digital singles accounts for the majority of music today. Apple and iTunes own 2/3 of the market, with Amazon, eMusic, and a few other services offering MP3 sales to fans. The bottom-line: if you are not on iTunes, you are missing out on 2/3 of the people who might have bought a track.
On Demand Straming. Several websites offer this service to its visitors, wherein the website buys a license from the artists and then allows the visitors to listen to the music. Importantly, people cannot download the tracks, but it is free to listen or involves a small fee for premium services. Spotify is one of the main players in this type of distribution channel.
Paid Subscription. Through services like Rhapsody and Napster, consumers can pay a monthly subscription and either stream or download as much music as they want. In exchange, the service pays the artists a fraction of the consumer's subscription fee. Interestingly, Spotify has started a freemium business model in this distribution channel, but little information is available yet as to its success.
Internet Radio. A new royalty rate agreement set the standards for internet radio stations in the summer of 2009. Basically, the radio stations pay a licensing fee for each song and/or catalog that they play online and visitors tune in for free. Artists recoup a fraction of the licensing fee, usually through their performing rights association affiliation.
Tuesday, October 13, 2009
21st Century Business - Freemium Model
This blog will highlight some of the ideas and techniques that have worked for some bands in the music industry in the very recent past. My purpose is not to deride or encourage any one particular idea, but merely highlight what has worked for some and what may work for you. First - the freemium business model.
Generally, a business model is a framework or structure that a company establishes to place a value on its goods and services and then exchange those same goods and services for the established value from consumers. In short - a business model is a plan to sell your stuff to people that want to buy it.
The traditional business model in the music industry is selling recorded music on a medium that consumers can then listen to at home, and then supplement this product with related merchandise, live performances, and access to the artists. In the last 10 years the medium has shifted from physical goods like cassette tapes and CDs to a digital medium - MP3s and Apple's iTunes. While this shift has made music more accessible and portable, it is also more susceptible to theft and piracy. As a result, CD sales are steadily declining, record labels are going out of business or laying peole off (See WMG), and the overflowing well of money that fueled VH1's Behind the Music extravaganzas has run dry.
Under the freemium business model, a business offers its goods or services for free to the consumer. In exchange, tthe consumer provides contact information to the business (email address, phone number, etc.). The business then attempts to form a relationship with the consumer and offer a premium service for a fee.
Fred Wilson coined the term "freemium" in March 2006, saying:
"Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base."
You can see the freemium model in use everyday at Pandora and it has been used with great success by Trent Reznor and Radiohead.
The freemium model is a great way for independent artists to gain a larger following and increase their exposure on a national stage. Give an MP3 away in exchange for an email address or hand out a lo-fi version of your latest EP at a major sporting event, with the promise that a higher quality version is available for a small charge at your website or on iTunes. Essentially, the freemium business model is all about giving something away today in hopes of getting something of greater value tomorrow from a consumer that will keep coming back.
Generally, a business model is a framework or structure that a company establishes to place a value on its goods and services and then exchange those same goods and services for the established value from consumers. In short - a business model is a plan to sell your stuff to people that want to buy it.
The traditional business model in the music industry is selling recorded music on a medium that consumers can then listen to at home, and then supplement this product with related merchandise, live performances, and access to the artists. In the last 10 years the medium has shifted from physical goods like cassette tapes and CDs to a digital medium - MP3s and Apple's iTunes. While this shift has made music more accessible and portable, it is also more susceptible to theft and piracy. As a result, CD sales are steadily declining, record labels are going out of business or laying peole off (See WMG), and the overflowing well of money that fueled VH1's Behind the Music extravaganzas has run dry.
Under the freemium business model, a business offers its goods or services for free to the consumer. In exchange, tthe consumer provides contact information to the business (email address, phone number, etc.). The business then attempts to form a relationship with the consumer and offer a premium service for a fee.
Fred Wilson coined the term "freemium" in March 2006, saying:
"Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base."
You can see the freemium model in use everyday at Pandora and it has been used with great success by Trent Reznor and Radiohead.
The freemium model is a great way for independent artists to gain a larger following and increase their exposure on a national stage. Give an MP3 away in exchange for an email address or hand out a lo-fi version of your latest EP at a major sporting event, with the promise that a higher quality version is available for a small charge at your website or on iTunes. Essentially, the freemium business model is all about giving something away today in hopes of getting something of greater value tomorrow from a consumer that will keep coming back.
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