As usual, Lefsetz has it right on the money. Yes, this is a blatant repost but you really have to read this. Read more »

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original post: http://news.dmusic.com/article/2543 Read more »

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First of all, the music business really sucks - some of the time. Fortunately, once you get a taste of success, it’ll sustain you for years and keep you smiling - even if it’s only a prelude to getting your teeth kicked in. Why the hell am I telling you this? I want to illustrate today’s point - that our ability to overcome negative thought will keep us fresh and idealistic in a business that feeds on misery. Today I’m going to give you some ideas that will help you counter some of your typical frustrations and keep you not only thinking creatively, but thinking positively. Read more »

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The Federal Trade Commission filed a lawsuit June 5 against several operators of the online music retailer BurnLounge.com claiming that the website, which allows subscription-paying members to sell albums from personalized profiles called “Burnpages” in exchange for a small commission, is a pyramid scheme. The recent move by the FTC comes on the heels of a year-long investigation by the state of South Carolina into BurnLounge’s questionable business practices.
A majority of the site’s profits, according to a statement released by the FTC, stem not from sales of digital music, but from exorbitant subscription fees, which range from $30 for a basic membership to $600 for “Mogul” status and selling privileges. Among those accused are BurnLounge CEO Alex Arnold and former USC football star Rob DeBoer, who claims to have made $300,000 with the website since leaving his former job with the USC sports marketing department.

“It’s a life-changing experience and I honestly believe we’re just beginning,” argued the athlete-turned-music mogul in a statement to The State, South Carolina’s largest newspaper. DeBoer said he recruited 45 new users to BurnLounge and earned a cut from subsequent sales off their profiles.

Despite the accusations of fraud, BurnLounge hopes to fight the charges leveled against them. So far, the law has ruled in the website’s favor. Sheldon Sloane, attorney for BurnLounge, told CMJ that The United States District Court Of California has blocked the FTC’s attempt to levy a restraining order against the business.

“The court’s denial of the FTC request is a significant victory and furthers the company’s belief that it has conducted business lawfully,” says Sloane. “The company’s business continues uninterrupted and it will defend itself vigorously in subsequent court hearings.”

…and in other news…

As we reported earlier this week, the U.S. Federal Trade Commission has filed a complaint (pdf) against download store BurnLounge accusing the company of operating an illegal pyramid scheme and is asling that the site be shut down immediately.

The complaint, filed in U.S. District Court for the Central District of California on June 6th asks the court to permanently shut down the alleged illegal pyramid practices, the FTC said in a press release. The FTC alleges that Burnlounge operates an illegal pyramid scheme, make deceptive earnings claims, and fails to disclose that most consumers who invest in pyramid schemes don’t receive substantial income, but lose money instead.

The FTC asked asked the court to freeze Burnlounge’s assets. At a hearing on June 8th, BurnLounge’s attorneys asked for more time to respond and Judge George Wu ordered a full hearing for June 19th.

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The great P.T. Barnum - yes the circus guy - was an expert at the BIG SELL. Even though he was a marketing genius he was incredibly diverse in his methods and a real model of creative thinking. One of the masterful things Barnum always managed to do was to make his “product” NEWSWORTHY. He created a story behind the product that contained excitement and emotional content - things that struck a real chord with news agencies and individuals alike.

My old guitar player, Mike Jacobs was our P.T. Barnum and used this principle to make our band, Evil Jake, newsworthy. A brilliant Internet marketer, Mike knew from the beginning that we needed something to set us apart from the hundreds of other bands touring and scraping it out all over the country.

Anyone remember Mountain Dew Red? Well, here’s the short version of this story. Macy Gray was featured in this commercial set in Central Park. Mike and I, as part of the crowd standing around the filming, got some face time on film - approximately 1 second.

Mike saw 1 second in a commercial as a golden opportunity to get some press for the band. He sent out a press release highlighting Evil Jake’s “appearance” in the Mountain Dew commercial which resulted in thousands of hits on the website and a huge amount of internet coverage which still exists today. Just search Google for “Evil Jake” and “Macy Gray” and you’ll see.

Why would news agencies even care? Because they’re STARVING for news! That’s right! Most “news” outlets don’t create their own news. They get their stories from Reuters, or in this case, press releases. Mike Jacobs used the power of the press release to repeat this success on a number of occasions to increase Evil Jake’s visibility and make it easier for the band to exist on the same level as other bands with 100 times the ad budget.

Listen, we’re surrounded by spin. Use the machine to put your music in the spotlight by making it newsworthy.

For more information on press releases, check out http://www.prweb.com/ or Google “press release distribution”.

For more information on how to think big like P.T. Barnum, check out Joe Vitale’s new book, “There’s a Customer Born Every Minute” on amazon.com

An idea:

1. Use your band to break a world record.
2. Tie in a local charity for support.
3. Release a free limited edition EP in honor of the event.

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The RIAA would like you to believe that you are participating in the Recording Industry. Be advised, you are not.

You are in the Touring (Gig) Industry, make no mistake.

Your mission, should you choose to accept it, is to get as many bodies through the doors of your show as possible.

Then, get them on the list. Then, give them things. Then, sell them things. Then get their friends on the list…

Friends? Yup.

What do you do if you want to see a movie? Most people will read a review or ask a friend’s advice. Most people want an endorsement of some kind before they can get into it. Even if they’ve never heard of the movie, chances are they’ll go based on the buzz generated by someone else’s opinion.

You have your list - your targeted group of consumers. Lets use these people as marketing “hubs”. Think of them as the center of a bicycle wheel and their friends as the spokes. It will be a good idea to incentivize your list to get their friends in the fold as well.

Now that we got the lingo down…

The best way to incentivize your hubs will be to either a.) bring them closer or b.) give them things.

Try offering a free t-shirt for each fan that gives you the mailing address of 5 friends. You can then send these 5 each a free CD. From there, the process will continue with these people as well as you continue to incentivize THEM in turn.

So, how long do your keep doing this? Let’s stop the giving at 1000 and get into marketing a solid product for purchase - which I’ll get into later.

If you’re wondering if the cost of 1000 CDs and 200 T-shirts are worth 1000 fans, the answer is YES!

What I do is consider the LIFETIME VALUE of each fan. If you treat them right, their investment in your music won’t end with just 1 CD or show, or t-shirt. It will be helpful to think of Lifetime Value in order to draft your long-term marketing plan. And NO, it’s not as dry as it sounds - it just makes good sense to do a little thinking, if not planning.

A Little Math
1000 promo CDs, copied and printed at home: $1000
200 T-shirts @ $3.50 per: $700

Total fan investment: $1700 / 1000 fans = $1.7 per fan.

You can call this your Aquisition Cost.

We’ll now have to do a bit of estimating in order to figure out each fan’s Lifetime Value:

Let’s say you play 1 show every 2 months in your town. It’s safe to think that if you communicate with your fans effectively, 7-10% may show up at each show.

6 shows per year, 70 fans per show, $5 cover charge: $2100

$2100 / 1000 fans = $2.10 per fan.

That’s without merchandise sales, without marketing A SINGLE ITEM to your fans. You’ve turned a profit - albeit a small one.

Hell, your break even point is only $1.70 - that’s only 57 bodies a show. ONLY 5.7% OF YOUR MAILING LIST!!!

Meanwhile you’re building goodwill and loyalty which will last alot longer than you realize.

Fan Incentive Idea

Make sure this gets out to as many non-fans as possible. Hopefully before each show, you’ve hung posters in as many places as you can, advertising the gig. Hold a contest where you give away (free is good!) something cool to the person that takes a photo of themselves doing something crazy in front of your poster. (Pick a few winners) Let them know that they can email the photos to you, or send them via postal mail. Either way, you now have a form of return addresss in which to contact these people again because you’ll need to now where to send their prize. More fans, more marketing hubs, more goodwill, more loyalty, more people at your shows, more fans, more LIFETIME VALUE per fan.

Folks, that’s not how you build a band, that’s how you build an enterprise.

That’s how you make a LIFE in the New Music Business!

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…or if I had to give it another title it would be, “If I Had It To Do Over Again”.

This will be the first in a multi-part series on how to navigate the waters of Music 2.0 using the limited financial resources available to a new band, indie or management company. What I’m hoping to do is to formulate an action plan for the new artist using real business techniques as well as emphasizing the limitations of the “old” music biz and it’s methods - such as the reliance on CD sales and inflated importance of chart rankings. We’ll explore why these things just aren’t relevant anymore, and why this is good for you.

For this first entry, I thought it would be appropriate to highlight some core values - my strongest recommendations - before you begin to put yourself out there and begin your venture:

#1. Your mailing list is PRICELESS!!!

Begin constucting your mailing list - emails, addresses, phone numbers, screen names - NOW! Do not wait. These are going to be the people you work for. This is your core fanbase. These are the folks that will keep your career afloat because they believe in you! Treat the list like GOLD and keep building it. Your list represents a targeted list of consumers who have already expressed their apprecIation just by signing up. They know who you are. They’re into you. These are the people you will OVERDELIVER to - beyond their expectations!

#2. Build community before commerce. The Trust Component.

In music, you’re in the business of hearts and minds. Build a relationship with your fans FIRST, and everything else with follow. Invite their input - give things to them for free - make them feel exclusive. You are building a town placing yourself as the mayor. Make sure to get the support of your constituents by any means neccessary.

#3. Songs should be forever - but not recordings.

When it finally comes down to recording your music, look at the big picture. The CD is dying (dead.). Why? Hell, there are so many reasons that I can barely conceive of them all. My opinion? The labels intent was always for you to RENT the music, not to OWN it. [I’ll be sure to explain this later.] Give your music away. Once you record it, send out the MP3s to everyone on your list for free. If you insist on printing CDs, hand them out for promotion too. Make sure you use this valuable opportunity to GROW your mailing list. Free music is not only a great incentive for an email address, but it helps build community and goodwill with a new potential fan. It’s probably the best way to bring people into your circle!

—————

By now it should be obvious what the common denominator is: FANS!

Treat them like family - ignore them at your peril.

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New bands - don’t get fleeced. Lately, there have been a new crop of internet “marketing” companies specializing in online music promotion. A major selling point of these services has been to outline the decline in CD sales - Down almost 20% in Q1 2007, down 4.5% overall in 2006 while digital downloads have grown 65% since 2005. Sounds impressive, yes?

Now the reality check - CD sales still count for 90% overall. So, don’t discount the impact of physical product.

The drop in album sales and rise in the purchase of individual tracks highlights the popularity of a la carte music selection, whereby music fans can choose to purchase just to two or three songs from an entire album rather than buying every track. From the perspective of the music industry, however, these track-by-track purchases create a significant revenue shortfall: where in the past those consumers would have generated revenue equivalent to an entire album’s worth of sales, now they only offer a small percentage of that revenue. The trend may signal a fundamental shift for the music industry, away from album-based marketing and sales and into a system driven by the sales of individual tracks, promoted aggressively in online communities and services.

This is what scares the hell out of me. Yes, I know the album format is dead but if the biz further transitions into a singles-based medium, individual acts will lose out.

Who wins?

Labels.

Why?

Big-ass Catalogs

Labels will make out like bandits on the Long Tail rule.

What to look for:

Indie Label Consolidation - The grand MERGING of record labels catalogs.

Big box retailers have still cornered the market on CD sales. (Best Buy, Target, Wal-Mart) CDs sold in these stores sell at worse margins than anything else in their stores with the exception of milk. However, they happen to dominate quite a bit of floor space. What’s gonna happen when they need that space for something else? I’d say the removal of CDs - maybe even DVDs next - but I won’t get ahead of myself here.

This would lead to a HUGE - and I mean HUGE - drop in product sales. CDs will then have become loss leaders and practically disposable.

For me, I pray for the day this happens and the bottom falls out of the market. Seriously. Music should be free. It’s a sales enticement NOT A SALE.

http://www.aarontrubic.com/free-music-philosophy-case-study/

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Earlier today one of BurnLounge’s army of zealots spammed TDMW with a press release entitled ‘Public Enemy’s New Track Exclusively Available on BurnLounge’ yet again demonstrating its questionable conduct in the music industry by trying to associate Public Enemy as an entire act with their dodgy service.

Closer examination reveals that the track available on BurnLounge is by Professor Griff, with no involvement at all by core band members Chuck D., Flava Flav, DJ Lord or Terminator X. Not to take anything away from Professor Griff, but anyone with a passing knowledge of Public Enemy knows that his primary role is about managing the hype not writing the music.

EXTRA, EXTRA - Burnlounge is still a scam. Check out the Google ranks for “burnlounge review”

http://www.google.com/search?q=burnlounge%20review&sourceid=mozilla2&ie=utf-8&oe=utf-8
Result #1: MLM…Exactly!

If you look at the rest of the search results, it looks like BL has launched a full-on PR campaign meant to address the complaints from sites like this one. Farming articles out to directories and soliciting favorable reviews - what a bunch of crooks!
BL is STILL the Amway of music.

There is no indy spirit here, just exploitation. Hey BL, if you were serious about music advocacy, you’d offer the service for free. Don’t rely on subscription fees as a capital base.

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technology + paradigm shift in thinking = options

I think the age of the rock star is over. Or at least for the forseeable future.

I don’t think it’s possible anymore to dominate every possible media channel - there’s just too many ways to reach out to people. This is good - and bad.

I call it Music Industry Fragmentation. For those of us on the middle tier, this could be beneficial.

big label money + too many ways to spend it = occasional relative equality

cool idea for tv:

Make a mock late night tv infomercial for your album. Buy cheap tv time on a national cable network. I’ll bet your return on investment will be higher than you think…

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