This week I had the honor to be published by A List Apart, one of the best publications out there about design and technology.
The article is called “Designing Contracts for the XXI Century” and it’s both an informative and opinionated piece where I start from ancient Roman Law and somehow finish on typesetting best practices for contracts. I also reveal some behind-the-scenes about Docracy’s HTML-to-PDF redesign, that should be credited also to John Watkinson and Robin Rosenthal.
If it’s TL;DR for you, here’s a takeaway: you don’t need to have a law degree to improve your contract. Rewrite the clauses in plain English, simplify, add white space, make it work for you. It’s time to bring contracts to this Century.
Bandcamp vs Soundcloud vs Official.fm (feature comparison chart included!)
The combo of digital music and internet radically changed the way artists produce, promote and distribute music. As Topspin’s Ian Roger nicely put:
The value chain is moving from what used to be artist-label-distributor-retailer-fan, to artist-marketing partner-technology-fan. There are a lot of people who are going to be in that technology box, and there are a lot of people who are going to be in that marketing box.
Let’s focus on the “marketing box”: how many services are out there to “help” artists market their music? I lost count. Which ones are worth the effort to subscribe to? Which ones are actually able to deliver value? I have decided to go deeper into these questions with Headliner.fm. Created by the founder of Nabbr, a music video channel that did not go that well, Headliner.fm is a very peculiar product. It is a pure marketing tool that (quoting the website):
lets you reach new music lovers on Facebook, Twitter and MySpace without making them Like, Follow or Friend you first. On Headliner, artists who make music similar to yours recommend you directly to their fans in their newsfeeds and timelines on Facebook, Twitter and other social platforms – for free.
Let’s skip the “for free” statement for now. In short, Headliner.fm builds a recommendation market among artists. Apparently (i.e. no scientific study to back this up, but music marketing people seem to agree) a very effective marketing technique is when artists recommend other artists to their fans. Partly because fans tend to follow their friends, partly because usually the recommended band has similar sounds that are likely to be appreciated by the same audience. A human version of Pandora’s algorithm.
Although you can add music to your page (via a connection to SoundCloud), all the features are about campaigns and promotion. Interestingly, your target are not listeners, but other musicians, that you can reach and “deal with” via Headliner. I’ll be extreme: the system is not that different from mafia, except that you use fake money (called “band bucks”) instead of life threats. As an emerging artist, you want to convince more established artists to give you a shout-out via their social networks. They might do it because they like you, of course, but you can also buy them out with band bucks (that you can purchase for real money, of course!). It is not super-intuitive, but this guide on how to make a promotion on Headliner.fm will give you the idea. Once the deal is made, Headliner.fm takes care of the rest, automatically updating Facebook, Twitter, and MySpace. Basic but nice analytics will tell you how your promotions are going and how many new fans you reached.
Headliner.fm uses elements of gaming (the fake currency, the internal ranking system) to incentivize and monetize a tendency that’s already present in the long tail of pro and semi-pro musicians. The question is, does it monetize for itself (via the paid accounts and the band bucks printing) or also for the artists? Headliner.fm seems to have a good traction. The counter in the homepage is impressing:
“136,678 Artists have been recommended to 2,664,106,293 new fans”. Or “SHEF was recommended by REKKHAN, The Homie G, DJBankrupt and 10 other artists and reached 72,107 new fans.”
But who are these “fans”? Aren’t they a simple sum of Facebook, Twitter and Myspace followers of other people? Clearly Headliner.fm is over-counting the same people, but even without this preliminary objection - are these people engaged? Do they actually check you out? From the analytics screenshots, it does not seems that Headliner.fm provide you with these crucial information. And how could they? All they have is access to your social networks.
Nevertheless, looking into the testimonials, you can read Jonathan Ori Big Management declaring:
“We were very pleased with Headliner.fm’s campaign for Kaci Battaglia. It drove thousands of clicks to her “Body Shots” video on YouTube, which has now amassed over 2 million views worldwide.”
Artist-to-artist promotion probably works, and it’s a valuable tool for the DYI musician. How long are you willing to play the band bucks game it’s a different story, but $30 per month might be worth a try (the premium plan allows you to target the promotions locally, that’s actually pretty smart) possibly inside a bigger marketing strategy for your new record.
As a last note, Bandcamp allows artists’ recommendations, too. In a very different way:
“fans only see it when they’ve decided they love your music enough to buy/download it (which also means they now consider you a trusted source), and while fans wait for their download is just the right time to send them off to do a little exploring.”
Bandcamp introduces the concept of “trusted source” to tell you they can be more result-oriented than the competition, since their website is a place where people download and buy music.
The shout-out itself looks more authentic, compared to Headliner.fm’s shameless marketing plug, which is not even written by the recommender:
Of course, Bandcamp does not offer any way to reach out to a great number of potential partner artists, that is, in the end, the core value of Headliner.fm. Bottom line: if you already have a strong network of Bandcamp’s users, it might be worth leveraging that rather than spamming other people’s Twitter (and let them spam yours). If you are a newcomer, and ready to play the numbers’ game of social media marketing, go grab the band bucks, and hope that the conversion rate of those “fans” gives you a decent return on investment.
The data above (source) shows how 94% of top grossing live tour revenues come from artists who are in their forties or even older. Here’s why:
And, of course, these are gross figures - who knows what really the artist is taking home after costs and the label’s cut.
Nothing really new here. A better conversation on the live music business took place last month in the interview to Nathan Hubbard (Ticketmaster CEO — Ticketmaster recently merged with Live Nation, a quasi-monopolist for big tour management) for This Week In Music. If you don’t have the time to watch, here’s a good recap.
Live music industry is consolidating, a clear sign of market maturity. When these older golden goose artists will retire, nothing will be left in this space.
In the golden years of MySpace, if you did not have a MySpace page, you did not exist as an artist. Things changed, but not the final goal: you need to put your music out there so that listeners can find you, listen further, and hopefully buy your stuff.
The first step of promotion is the audio embed, a tool popularized by MySpace itself, and redefined by companies designed around spreading music in the world wide web. We took a look at two solid players in this space, SoundCloud and Bandcamp, and a rising underdog, Official.fm, to see how they performed against each other.
All three services allow you to register for free and host your music. A single, or even a entire record can stream for free in any webpage via embeddable player. First ground of competition: how cool the player looks.
SoundCloud’s ‘soundwave” has been extremely successful, partly because any listener with a SoundCloud account can comment specific passages within the track.
Bandcamp and Official.fm have more minimal players, focused on basics like downloading and sharing the track. Have a look below.
So far, so good. But how much is this? Both SoundCloud and Official.fm run on a freemium business model: they offer the core feature (streaming and sharing) for free, and then try to convert users into paid customers with premium features, usually customization, hosting space and analytics. Bandcamp, instead, has a pure revenue-sharing model: they take a 15% (10% on revenue above $5,000) cut of revenues (don’t forget to add Paypal’s fee to that, though). For this reason, Bandcamp makes it extremely easy to set up paid downloads (supporting discount codes, pay what you want, etc.) and even lets you sell physical copies, turning into something close to a private record shop. That’s why it allows you to upload as many songs as you want, while the others have to cap hosted space, unless, of course, you pay.
The subscription fee is a hot ground of competition. Official.fm is much cheaper than SoundCloud, for a very similar offering. Of course, SoundCloud enjoys a more established presence, a richer community, and an infinite number of external apps that you can integrate with the service. Not everybody needs those extra features, though.
The market of embedded players is twisted: although the final product is very similar, there are a lot of differences, not only in user interface and experience, but also in branding and positioning. A close-up on each company is revelatory, particularly if we focus on weaknesses first.
Official.fm is supposed to be a tool for professionals. When setting up your profile, you have to specify if you are an artist, a label or producer, or a media guy. This strategy might actually help target a userbase that’s easier to convert to premium, at the expense of building a bigger and engaged community of mere listeners. Official.fm has not decided yet what it wants to be, and still lacks to give a compelling reason for artists to flock there from existing services.
The swiss company is getting some love from musicians since it does not transcode the audio files like SoundCloud, thus preserving their original quality, and the premium features are cheaper and easier to understand. Although it is clearly a work in progress, it already does an amazing job of integrating tour dates, searching for music via tags and location, and making the upload process smooth and easy (there is even a downloadable upload software). It mirrors common SoundCloud features like playlist building, following people, “hearting” songs, and the dropbox feature.
Their main weakness for now is monetization. Streaming is king on SoundCloud, and the buy button is nothing but an external link. If you have a Pro account, SoundCloud gives you information on who is listening to your music and where, but tells you little about who bought your stuff. The insanely complicated pricing plan also does not help, and reveals difficulties in making the economics work for the company.
SoundCloud has turned into a MySpace for an older and more sophisticated crowd, and being very product-focused and opening a powerful API into the developers’ world clearly paid off. SoundCloud is the technology leader for music streaming and it’s building a market of apps. The dropbox, a virtual mailbox for tracks, turned out to be an amazing feature for media channels and all the labels now have a SoundCloud account to showcase their latest releases. We are not at the point that everybody is on SoundCloud, but these guys claim 3 million registered users.
Bandcamp is behind where SoundCloud is ahead, namely in audience engagement (you can neither comment on nor “like” music) and in helping people discover the music they will eventually buy. Promotion and marketing is completely left to the user. And you know that’s a lot of work.
Bandcamp is the best at empowering users with sophisticated and insightful data, higher customization opportunities (url, format, pricing) and of course clear focus on downloads. Your Bandcamp page wants to become your shop and website, and gives you interesting tools like SEO features, SoundScan submission and a working shopping cart. It’s a different product and a different philosophy: their goal is to make it easier for people to buy music, and, by taking a percentage on the revenues, they perfectly align their interest with the artists’.
Choosing between SoundCloud or BandCamp it’s like choosing between people knowing you and people giving you money. In the end, you probably need both, although that can easily sum up to a few hundred dollars per year, ending up with a lot of overlapping features and duplicate data that are likely to drive you crazy. Official.fm has a lot of work to do, but it’s in a good position to grab the best of the other two competitors, if it plays its cards well.
A detailed chart of features can be found below.
Digital players killed the stop button. It does not exist anymore. A little history and a little eulogy.
Do you remember what was the difference between stop and pause? I do:
Why the stop button, one may ask? Why not the pause, which was clearly less used ? Why the old square had to go and not vice versa? The only answer I’ve found is that the enhanced speed of replay embedded in the “pause concept” was worth more to marketers than the centenary “stop” tradition. While CD players proceed toward extinction, the stop button will follow.
This is a symptom of something bigger that button space in a device. The concept of “stopping” the music is changing. The music never stops. Sound and noise are the standard. It’s always floating around the internet, you just have to grab it, pressing play in that cute embedded player.
Internet is making music unstoppable. That’s pretty powerful. Now decide if you like it.
I received an email from the guys at MixApp. MixApp was the first collective listening web app. It was founded at the beginning of 2010 by a group of friends who wanted to build the product for themselves, like Foursquare’s story. Now, they are closing shop:
Dear all, At long last the MixApp adventure is coming to an end. We’ll discontinue the service the evening of August 27, and hope that everyone will take this coming week as an opportunity to say their good-byes. We’ve been able to continue the service this far thanks to the extraordinary generosity of our premium subscribers. From all of us here at MixApp, a huge shout-out to all of you who believed in the community and helped build it. In future we may post a more entrepreneur-focused post-mortem to go into detail about why MixApp didn’t find its path to financial success (or at least stability), but to summarize the crucial factors in our decision to shut down: 1. Quite simply, we can’t afford the hosting costs any more! 2. With several newer services now available to offer shared listening experiences (check out http://listeningroom.net/ http://turntable.fm/ and http://mumuplayer.com/), we’re confident that the concept of listening together will survive, and thrive, even without MixApp continuing. Thanks very much to everyone who encouraged the team along the way, helped shape the product with their ideas and feedback, and especially to those who played so much great music.
See you on the tubes!
—Matt, Marc, Nick, Ben, and Geoff.
Clearly MixApp turned out not to be economically viable. Does this mean that the other listening rooms are doomed? Does this mean that Turntable.fm’s latest success is killing competition? What are the real challenges of monetizing this business?
To find answers, let’s have a look at MixApp. It’s pretty different from Turntable.fm, although they fix the same problem (building collaborative playlists to listen together with friends, remotely). Interface is very “engineer-style”, with a minimal, but not quite usable interface. Searching for music to add opens a pop-up window which gives access to YouTube, your hard disk, or friends’ shared hard disk (accessing third parties’ computers is a very napsterish approach, pretty common in pre-streaming era, and I must admit I like it: nothing tells you more about a person than his/her music collection). Turntable.fm does not stream or connect to YouTube. The ability to watch video while listening to music is actually a requested feature, that only MixApp had.
In MixApp, everybody is a DJ, and everybody could add song to the room’s playlist, and even move them up in the queue. Chat is in central position: this is where you look (in TT.fm the DJ stand and the song data scrolling are in this position). Let’s talk about the similarities: same technology, same Facebook Connect access to speed up the social experience, same purchase and share buttons, same price: free. You could become “premium user” for $3 a month. They came up with this number to cover costs:
the machines and bandwidth for our production system (on Amazon EC) cost ~$650/month. Development host, domains, and other services run another ~$100/month. Add to that various administrivia (e.g. annual filings) and some unpaid bills, and you get another $150/month, for a total of $900/month.
Note that licensing is not a cost for MixApp: they let users upload their own stuff (or use YouTube) and cover the legal liability with the classic DMCA disclaimer. There’s a top bar in MixApp which constantly monitors what’s left for the $900 breakeven goal, Wikipedia-style. On average, they raised around $700 per month, accounting for around 230 paid customers. The churn was probably heavier in the latest months (for August they only raised $630) Interestingly, the premium users did not have access to any additional feature (and MixApp needed a lot of extra features). In their words:
By becoming a VIP, you’re supporting MixApp, and helping to build the future of hanging out online. VIP status is how we (the development team) express our gratitude.
The “wikipedia” model di not work well for MixApp. They chose to rely on a freemium model, without advertising, and they could not convert a sufficient percentage of the user base. They could have tried something similar to Spotify, whose free version is partially subsidized by advertising, which acts also as an incentive for users to go premium and get rid of the ads. They didn’t. They also did not have any of the game mechanics of Turntable.fm, that might justify paywalls.
Another competitor, Listening Room, is more similar: focused 50% on chat and 50% on music, no games, user-generated catalogue, no public rooms (they used to have a couple, but I don’t see them anymore, and I suspect they were killed because there is no system to boot users). But they pay a non-interactive license, i.e. $2,000 of annual minimum payment to SoundExchange. If this does not make sense to you, don’t worry: you are not alone. Listening Room has ads, too, but they are not working that well: the ad rate was cut from $5 to $2.50 per 1,000 impressions. Very unobtrusive ads do not pay well.
Some people like Listening Room:
people who want to focus on music and listening with real friends, rather than playing games in something that’s very close to a disco room, even in terms of people interaction. and former MixApp user are more likely to flock to Listening Room than to Turntable.fm.
Takeaways from this analysis: the huge difference is not in the cost structure (MixApp had the lowest costs by far, but it was the first to fall), nor the pricing (which nobody has figured out yet): it’s the public vs private choice. Although you can make private rooms there, the success was dragged by the crowded, messy public rooms full of strangers. “Listen with your friends” might sound good, but it is very hard to scale and monetize. After all, the friends who you share music with are not a lot, because, let’s admit it, most of your friends have terrible music taste. If I have so many “music friends” to need a place like MixApp, I am a music nerd, and you are in a niche market. And that’s bad. Prediction: Listening Room is falling next.
Every now and then I read about labels, usually indies, who decide to pull their catalogue from Spotify. The latest one is Century Media, home of some relatively popular metal bands like Lacuna Coil, Sick Of It All and Napalm Death. But there are precedents, notably Merge Records (home of Arcade Fire) and Bob Dylan. Century Media explains its move:
While everyone at the label group believes in the ever changing possibilities of new technology and new
ways ofbringing music to the fans, Century Media is also of the opinion that Spotify in its present shapeand form isn't the way forward. The income streams to the artists are affected massively and thereforethat accelerates the downward spiral, which eventually will lead to artists not being able to record musicthe way it should be recorded. Ultimately, in some cases, it will completely kill a lot of smaller bands thatare already struggling to make ends meet.
At the same time Century Media also believes that Spotify is a great tool to discover new music and is in
the process ofreintroducing their bands to Spotify by way of putting up samplers of the artists. This way,fans can still discover the great music released by the label.
Physical sales are dropping drastically in all countries where Spotify is active. Artists are depending on their
incomefrom selling music and it is our job to support them to do so. Since the artists need to sell their musicto continue their creativity, Spotify is a problem for them. This is about survival, nothing less and it is timethat fans and consumers realize that for artists it is essential to sell music to keep their heads above water.
Obviously it is ultimately up to the music fan and consumer, how they access their music, whether it is buying,
streaming or stealing. There needs to be awareness though, that how you will consume your music has direct
consequences for the artists, who we are all trying to support.
I find this interesting because the label is not making the usual argument that the artists’ revenues from on-demand streaming are insufficient. A lot of rumors are circulating on this aspect, starting from the famous $167 paid to Lady Gaga for 1 million plays – a figure denied by Spotify, as well as other stories of ridiculously low royalty payments even for unsigned artists. The truth is, nobody knows what this figures are, since the distribution of royalty payments from Spotify is a complicated game, as explained by Daniel Ek himself in a recent aswer on Quora. It is not even granted than non-freemium services like MOG, Rdio and Rhapsody pay more than Spotify (although Century Media did not pull off the catalogue from them as well), since Spotify is bringing a lot of money to the labels, and paying advances to access the catalogue.
Century Media does not make this point. They only accuse Spotify to cannibalize sales, physical sales in particular. Are they right? Daniel Ek denies “clear evidence” of this, but his “music like water” model looks like a credible alternative to purchase music, converting not only “pirates”, but also record collectors into music subscribers (I am one of them: why buy a CD/mp3 when I can listen to a record anytime, anywhere via Spotify?). I can see the label point. If their artists heavily rely on CD sales, the music format with the highest margin, and consumers are considering access to music a substitute of physical records (sounds unilikely for metal fans who usually appreciate elaborate artworks and lyrics booklets, but it’s possible), they have economic reasons to avoid the streaming channel – at the expense of the consumer’s welfare, of course!
But the argument might be flawed, as Anthony Bruno points out, since the free alternative is right there, a couple of clicks apart. Best case scenario, Century Media is losing the potential extra revenue of those people wouldn’t have bought the CD anyway, worst case scenario is also losing the opportunity to limit illegal downloads of their catalogue (although Spotify claims to have reduced piracy, there’s no scientific evidence). Not to mention the marketing advantage lost in pulling the music out, that the label is trying to fix by leaving samples to stream (some songs Arcade Fire are actually available on Spotify, but not the most popular singles – the tracks that would be streamed the most!).
Ultimately, I agree with Brendan:
It really comes down to thinking long-term vs. short-term. If you view Spotify (or other social playlist
services)as a passing trend that will be eclipsed in 5 years, making your music availableon such a platform just kills short-term sales. If you view Spotify as a future, lasting service, havingthousands of users sharing playlists with your music, and recapturing money from bootlegs is of hugevalue, especially if the streaming licenses are renegotiated in favor of rights holders.
Century Media placed its bet. What would be yours?