Choosing the Right Packaging for Your Music Career (Part Two)

This week we return to the importance of developing your image along with your music. Understanding this important aspect of the business side of your career can elevate your game considerably. It helps define who you are as an artist, connect with the correct audience, and establish a brand.

In marketing a brand is developed based on two core components – points of parity and points of difference. The concept of points of difference is easy to grasp. It is the item we all think about when someone brings up the idea of marketing. Simply put, it is what makes your product different. Points of parity is more psychological, and much more important if you plan to earn a fan base. This component deals with how you align your product with other products in the market so the consumer will feel confident buying from you. It is the reason why most computers come with a manufacturers warranty, why most dealerships offer test drives and financing, and why most cabs are yellow.  In the world of music business, establishing points of parity helps the artist appeal to the proper demographic of fans that will be more willing to buy into a particular style of music.

Contrary to what most music business professionals, dudes at Guitar Center, and panelists on indie-music discussion boards will tell you, not everyone wants to listen to your music. In fact, for the most part, fans are seeking more than just music and they don’t even know it. They are pursuing a sense of belonging with like-minded people. This is actually due to a fundamental psychological trait that is best defined by Maslow’s Hierarchy of Needs. In it, people generally follow a step process to ascertain their needs starting with physiological necessities such as food, water, and sleep, followed by safety; then love and belonging; esteem, and self-actualization. As a musician you cannot provide these people with the higher subset of needs, but you can provide them with a sense of belonging.

To achieve this task you must dictate to your potential fans that your music fits in with the other music they enjoy. People tend to listen more with their eyes than their ears, so, for example, if they are a die-hard country fan and walk into a bar and see that the lead singer of the band is wearing a cowboy hat, or cowboy boots there is a larger probability that they will stay to check out the group. By associating your image with your music you increase the probability of gaining more fans.

Please understand that I am not saying that you need to dress up like you are on the Grande Ole Opry if you are a country act or Run-D.M.C. if Hip-Hop is you thing. What I am saying is that you will stand a better chance if you adjust your overall brand to dictate to potential fans what kind of entertainer you are. It is all about probability and if stardom is your goal you need chance to work in your favor.

A second important aspect of brand image and points of parity is that it helps align you with higher-level entertainers. This is important if you seek to become a star, because the sooner the World starts seeing you as a star the more opportunities will come your way. In economics we always speak of scarcity. In this situation your fans have a limited (scarce) supply of cash. If you want them to buy tickets, pay for gas, parking, a babysitter for the night to come to your show you need to convince them you are a better investment for their limited funds than an evening at the movies, bowling, or catching another act. Anything you can do to sway their decision would be a wise move, and that includes your addressing your image.

Far to often I hear musicians tell me that they are “all about the music” and image shouldn’t matter.  As a musician I agree wholeheartedly, but as a music business marketer I disagree and as a booking agent I can tell you with 95% confidence it isn’t all about the music, so why stack the odds against yourself.

Next time I will give you some stage hints that can help elevate your perceived image when doing your thing under the lights.

Choosing the Right Packaging for Your Music Career (Part One)

 

 

In the marketing world we talk a lot about the marketing mix. These are all the items and processes used to “sell” a product or service. They include the design of the product itself; the package it comes in, including the fonts, colors, images, and logos; how and where the product is advertised; and where the product is sold (online, big box retail, specialty shops, or its own branded storefronts).

This is one of those “business” decisions that many artists overlook, and the problem begins in the “packaging” phase of their career.  This is because musicians focus on packaging the wrong element of their vocation.

You see, for years we have been accustomed to selling music. So when the idea of packaging comes up, we immediately focus on the packaging of our physical music products. We think about CD jackets, sales posters, digital artwork, ecommerce sites, etc. Now I am not saying that is a bad thing, but I AM saying that we are focusing on packaging the wrong piece of our marketing mix.

Listen, chances are, if you are reading this, you know that physical music sales are in the crapper. The consumers have spoken, and they have devalued what music is worth. They went from paying $16 for their favorite tune on a CD to 99¢ for just one track and now pennies to stream it online, if they choose to pay a monthly subscription in the first place. In today’s market, artists who succeed must focus on the other aspects of their career. These aspects include selling merchandise, concert tickets, and, for a lucky few, sponsorships. To achieve these newfound feats the artist must adjust the focus from their music to their overall brand, and with that the package design must shift from CD jackets to the artist themselves.

Truth is, even before the market shifted, the most successful artists understood the importance of promoting more than their music. Stop for a moment and think about some of the iconic entertainers of the last century. Think about Elvis, Michael Jackson, Madonna, Garth Brooks, The Beatles, Carlos Santana, Tupac, Tina Turner, The Grateful Dead, Frank Sinatra, and Bob Marley.

Now when you read their names do you just think about their music or does an image of what they look like pop-up in your head as well? I bet for about 98% of you reading this the latter is true. All of these icons have developed their image just as much, if not more, than their music, and that is still the case today.

I was recently speaking with a national DJ about booking him at one of my clubs and in the conversation we started to talk about his brand. He informed me that venues hire him for his image (which includes his name, his style, his sponsorship status) and not necessarily how many great mixes he put together. Don’t believe me? Take a look at Forbes 2013 list of the top earning DJ’s, and sitting at number 12 is DJ Pauly D who earned about $13 million from his DJ’ing gigs. Hell, Paris Hilton reportedly earns between $100K and $350K an hour for her beats, much to the chagrin of every other DJ on the planet.

I am not saying that Paris or Pauly are better or even bad deejays. I am saying that their image is a huge driving force behind their success. This part of the marketing mix called packaging goes a long way in any entertainment career.  So if you seek stardom, you need to start developing your image right alongside your musical prowess.

But the importance of your image development goes even further, and in my next post I will discuss how image helps you psychologically attract the right audience for your tunes. So stay tuned!

Was Beyoncé’s Release Really a “Game Changer”?

 

Last week Beyoncé released her album Beyoncé on iTunes without any notice. The move  shocked both fans and music business professionals alike. Many believed a new album was inevitable, but a sales date hadn’t been dictated via the usual recording industry marketing channels.  In fact, no one knew that she was actually working on an album, much less had a product ready to drop.

On Friday the 13th, Beyoncé released her first “visual” album, aptly named because the full package included fourteen new tracks and seventeen new videos in which she collaborated with superstars such as Timbaland, Pharrell, Drake, Justin Timberlake, Miguel, Sia, and Frank Ocean. Caught off guard, many industry writers and critics quickly dubbed the feat a “game changer”, but is it really?

There is no doubt that what Beyoncé and her team did was a spectacular marketing move. First, they managed to keep the lid closed on a major release from a major superstar. And not just any superstar, but one who recently played one of the industry’s largest stages – Super Bowl XLVII. Add in the fact that this bigger-than-life celebrity collaborated on this new album with a slue of other superstars including Pharrell, Timbaland, and Drake, it is amazing that the paparazzi, news agencies, or NSA didn’t leak word of this dream team in the studio. Regardless, was this really an “industry” game changer?

Sure Beyoncé’s team was able to drop the album overnight, but they did it on iTunes, which requires virtually no distribution. So was it really a game changer?

The press thinks so.

Many new agencies quickly hopped on the “industry game changer” bandwagon. USA titled their article Beyonce’s big secret is a music game changer, and the editor of Billboard, Bill Werde, was quoted as stating “I think on one hand what it really speaks to is the emerging power that artists have to go direct to fans”. Collectively the sentiment has been the same. With this release Beyoncé has changed the way we market music.

She really hasn’t

Truth is, for something to be an industry game changer it needs to affect the entire industry. This marketing move is not available to the entire industry.  It relies on motivating social media and the press to spread the word about an artist. The problem is, the press needs a reason to talk about a particular artist. They need a superstar that the World already knows about; a great name, a great face, a great brand that motivates news consumers to read their articles and that is exactly what Beyoncé provides. If an unknown indie band decided to mimic this same plan, I can almost guarantee they will not be as successful. Hell, if 80-90% of the artists out there today tried this, they wouldn’t be as successful as Mrs. Carter.

When you have already built a brand as powerful as Beyoncé,according to Forbes she is the fourth largest grossing female musician of 2013 at $53 million, you can afford to attempt new and unique marketing strategies. You can sell it off that you are trying to connect more closely with your fans, or that you are attempting to change the game, but the truth is you are just playing to one of your greatest marketable assets – your name. The best way to leverage that power is with a plan that attracts the attention of the press and creates a buzz around the release. That is what her team did, and quite successfully. By the end of the day she had the number one and number two albums on iTunes, had amassed 1.2 million tweets in 12 hours, and temporarily crashed the iTune store.

This was a widely successful calculated release, and kudos to Beyoncé and her team. However, it wasn’t a game changer. It is not a marketing move that can be copied by just any artist and it will not become the status quo for the industry, only for the select few with the same brand recognition and resources available to a superstar like Beyoncé.

Strategies for Pricing Your Music

From a marketing standpoint establishing your “price” is one of the cornerstones in the marketing mix.

The Marketing Mix

It is always a challenge for marketers to figure out how much they should charge for their products. Many questions must be asked including:  “How much did it cost to produce this item?” “How much are my competitors charging, and should I charge more or less?” “How will price play into our promotional efforts?”  And “what will the consumer be willing to pay?”

Due to the radical changes over the past decade in the music business, these questions have become more complex. Core components have shifted including the distribution model and the value consumers place on music, which requires musicians to rethink how much they should charge for their tunes.

In the past, when people still purchased physical albums, the process was easier. Artists could simply figure out how much it cost to produce, manufacture, and market their album then add a little mark-up and…”BANG”…problem solved.

In business this is called either cost-plus pricing or mark-up pricing.  Here is a simple break down of what this looks like for an indie band that has recorded an album with all original music (no royalty payments need to be made), and plans to have 5,000 CD’s produced and packaged:

Production and Recording Costs:               $10,000

Manufacturing & Packaging:                       $4,000

Marketing Budget:                                      $2,500

Total:                                                          $16,500

Costs per CD:                                            $3.30

Using a Mark-Up Percentage:

Desired profit:                                            50%

Required Sale Price:                               $4.95

 

Many indie-artists simply charge what the market will bear, or what other artists like them might be charging.  So let’s say the average indie album goes for $8.  If the artist above charges $8 they could stand to earn $4.70 on each cd, which equates to a mark-up of about 242%.

Today, the distribution model of music has changed. According to the International Federation of the Phonographic Industry (IFPI) 35% of music sales came from digital channels in 2013 and that number is only rising. This means you should be looking into digital distribution, if you haven’t already. If you would like to learn more about how to do just that read this article by Budi Voogt on Hypebot. In it, you will come to the realization that in the digital marketplace you have very little say in how much you can charge for your album, and if you do, don’t anticipate the huge mark-ups you would see with physical discs.

The changes in the way consumers purchase music have altered how your music sales can fit into your overall business strategy.  In the past, with such high margins, selling physical music was how you made money. When selling your music online, this is not the case. Depending on who your aggregator is and a host of other factors the average musician (without a label) makes about 60¢ per track on iTunes, and around 12¢ per 100 streams on most of the major streaming services according to sources such as Hypebot and Rolling Stone.

I know as artists we hate thinking about the “business” side of our careers, but it is important for you to keep in mind that as more and more consumers move towards digital channels of music consumption you will earn less and less from this aspect of your career. To continue a path of success you will need to capitalize on other aspects of your livelihood such as concert tickets and merchandise. As you move into this strategy you may find yourself using your music as a “loss-leader” to generate buzz and upsell your fans to other profitable products.

There are numerous choices in how you value and price your music. It all depends on your musical and business goals, the strength of your partners (be it a label, distributer, or parent), and how you measure success as a musician. Here are some pricing strategies to consider.

The “Full-Blown Sales” Approach: This is where you focus solely on generating revenue from your music. You attempt to sell both your physical and digital tunes for the highest amount the market can bear.

The “Tiered” Approach: Trent Reznor was a master of this, and even dubbed the term “Connect with Fans = Reason to Buy” (CwF=RtB).  He gave away select tracks for free on his website, then offers different album packages. You can purchase his digital album for $12; the digital album plus a physical album for $20; the digital album plus a vinyl record for $28; and at times limited edition autographed packages for upwards of $200.

The “What-Do You Think It’s Worth” Approach: Radiohead got credit for this idea when they released their seventh studio album In Rainbows and allowed fans to download it from their site and pay whatever they wanted for the album. The feat generated lots of buzz and sales, some estimate around $10 million. Just remember they already have an established name and were “first-movers” in regards to this business strategy.  And, o yeah, they turned off the promotion after about three months.

The “Pay Up-Front and Help us Out” Approach:  If you haven’t produced the album yet, you can always hit up a site like Kickstarter and ask fans to donate to the cause. Just remember to offer them a copy of the album as a reward to help boost sales. Just ask Amanda Palmer how this worked out.

The “Complete Loss Leader” Approach: This is when you don’t charge for your music and give it away to build your brand, generate buzz, and up-sell your customers. You may want to give music away to fans who help promote a show in their area, “Like” your Facebook page, buy concert tickets, etc. From a business standpoint, remember it is best to give away digital tracks and albums as opposed to physical units as your overhead costs are virtually nil. Your aggregator can help you set-up a download code that you can give out online or print onto business cards for under $30 to give out at shows and events.

These are just a few of the better-known examples and you don’t need to do one exclusively.  You could combine all of them to increase your distribution channels and the spread of your brand.  You might launch a Kickstarter campaign during recording, then offer the first 100 the album for free online, the next 100 to pay what they want for it, while also offering bundled sets that include a t-shirt, signed poster, or the bass players underwear; and finally continue to sell physical discs the band can sign after shows. You are only limited by your imagination and your budget.

On a closing note. One of the best pieces of advice I got early on was to keep track of your album sales and give-a-ways. You can use a notebook, Excel, or other computer program and record each album you sold and for how much. Also record how many you gave away and how much you would have received had you sold them. I received this piece of advice from a major label A&R manager who informed me that this shows the label how many records you can move on a limited budget. So for example if you sold 5,000 albums on a $17,000 budget they could ascertain that a $100,000 budget could move 340,000 albums. It also demonstrates that you take your career seriously and are willing to put in the extra work to make it happen, thus you are less of a risk and a better investment. For those not seeking a “deal”, keeping track of your sales and give-a-ways is great for tax returns and may help you secure a loan to expand your personal distribution efforts.

Miley Cyrus: Surviving the product life cycle

Miley Cyrus re-starts her product life cycle.

I am not going to admit that I am a Miley Cyrus fan. To be honest, she remained under my radar until her controversial “twerking” antics at the 2013 VMA’s, when, like the rest of the world, I took notice of her.

While some see her recent antics as nothing more than lewd “superstar” behavior, I see them as a calculated marketing risk that will help Cyrus overcome one of the largest challenges that music superstars face – their short product life cycle.

In business a product lifecycle generally goes through five variables: development, introduction, growth, maturity decline.  These independent variables follow your typical bell curve and affect the dependent variable of income, or sales.  The curve looks something like this:

Product Life Cycle

 

Cyrus started her development variable at the age of eleven when she was cast in Disney’s Hannah Montana. Her success followed the typical bell curve as the show, her name, and recording career took off under Disney’s marketing prowess. I will go out on a limb and say that Cyrus entered her maturity stage in 2008 with the successful release of Breakout, which, according to the RIAA sold enough albums to be classified platinum. That year she moved heavily into acting, even earning a nomination for a Golden Globe.  In 2009 she was featured in Hannah Montana: The Movie, which pushed her into her last remaining untapped markets of country and adult contemporary. In a typical product lifecycle this is when your product is “on its way out”.

She continued to exploit her brand between 2009 and 2011, but it was getting tougher as her marketed image of youth and innocence had reached its full product life cycle as both Cyrus and her fan base approached the twenty-year old mark.  By 2012/2013 the Hannah Montana image of cyrus had proliferated all the markets it could and the superstar could have walked away, as many do, extremely rich and highly satisfied.

In my opinion, this is when we witnessed either the true business genius of Cyrus, or some very serious luck. Cyrus left Disney and made her way to RCA Hollywood. Without the watchful eyes of Mickey she could freely change her image. She released the album Bangerz featuring two hits “We Can’t Stop” and “Wrecking Ball’. Both songs were promoted with highly provocative videos ushering in a new Miley Cyrus. Then on August 25th Miley introduced the world to her new “adult” image with her controversial VMA performance that got the whole world talking about her, buying her records, downloading her tunes, and seeking out tickets to her shows.

If this was intended and not a fluke, I would like to give Kudos to Miley and her team, because they have done something that all superstars dream about. They have re-started her product life cycle, which will equate to millions, if not hundreds of millions, of extra dollars for the Cyrus brand. In today’s music business marketplace, superstars overwhelmingly control the marketshare yet their product life cycle is extremely short. They must make their cash quick before time runs out, but for Cyrus it looks like her time is just beginning – again.