Monday, October 14, 2013

That David Byrne article about the Internet

Over the last few days the email inbox has been filling up with references to, or comments on, a piece written by David Byrne in The Guardian. The headline pulled no punches. "The internet will suck all creative content out of the world", Byrne contends in the piece. As we approach the 14th anniversary of peer-to-peer file sharing services such as Napster, we have unprecedented access -- legal and illegal -- to pretty much every piece of content that can be digitized. We also have a music industry that is worth approximately half of what it was in 2000. In the place of the old system of labels with A&R departments and marketing priorities, physical products in record stores, and radio stations with playlists, we have streaming services such as Rdio, Pandora, Spotify, and Rhapsody, and online retail outlets such as iTunes and Amazon. Those are the legal options. We also have the less than legal options, such as Pirate Bay, MegaUpload (RIP), and similar torrent sites, which are so popular they're said to be responsible for 40% of the Internet's traffic. Maybe that makes it less surprising to learn that as recently as 2009, 95% of music downloaded was done so illegally. The only thing that stemmed the tide, it turns out, was the rise of legal streaming services. The problem there is that they pay out miniscule sums to artists, fractions of pennies per stream, and hence all the debate. On the other hand, we went from zero to something; cold comfort perhaps, but at least it's a little bit of something.

From David Byrne's article:

As people know I spend a lot of time thinking about the nature of Internet economics, I received numerous emails on the Byrne article, and with the permission of those with whom I exchanged comments, I include them here (in other words, I'm not wiki-leaking).

First, from the producer of a successfully syndicated reality TV show.  He sent me the link to the article and I wrote:

i think people need to give up the ghost that things are going back to how they were in the 'good old days'. for better or for worse, they're not. low to barriers to entry, abundance of content (much of which is bad, but that's the nature of volume), and distribution systems made up of both market and increasingly non market actors. there will always be an 'industry' and there will always be things that are bona fide hits but i think that outside of that corner the systems and rules are just starting to be figured out, if not rewritten. time will tell i guess.

His response:

I think it's too easy to dismiss this as wanting to go back to the "good old days". It's like people realizing that they can't make any real money on youtube and trying to do "conventional" tv deals. I bet most of what's listened to on spotify was created under the "old" system. I don't mind "giving away" old episodes of my shows for cheap streaming because I've long since monetized them and at this point it's just gravy. Am I interested in creating more eps for youtube to make a thousand bucks? nope. It's easy to run netflix when there is a bunch of stuff that you can license cheaply but what if it's not being created any more? You going to want to subscribe to see old reality shows? Where are the new Beatles?

And back to me:  

it's a huge topic, obviously...and no easy answers. who knows...maybe we'll go back to  some combo of the mainstream industry as it stands, patrons of the arts, like they had in renaissance florence, people kicking in for kickstarter type things because they get special perks and limited edition things, and overall fewer people making big money and more people making less money.

And then...

do you really think the thrift shop guy or psy are going to leave the same kind of legacy as bob dylan? neil young? both of the latter required a huge investment of time, expertise and money to develop. it's not happening any more. what are people listening to on spotify? especially over a life time...seems to me they keep going back to the stuff from the "old system". My kids have recently discovered Floyd, the Stones and the Beatles and it had zero to do with me.

And back to me, one more time:

artist development takes time, and money, and expertise...whether it's in publishing or painting or music or wherever. i think one of the things we've been seeing is that the desire/impulse to be creative is so strong that millions are happy (enough) to participate either for free or for a little. i never would have predicted that. i never thought wikipedia would work as the world's greatest encyclopedia, written by nobody in particular. interestingly the ratio of crap to non-crap / hit to non-hit is about the same on platforms like youtube as it with labels, publishers, etc...i.e. at best in the low single digits. and even psy was not an overnight sensation. he'd been making albums for 10 years, as had macklemore. i don't think virality = success. in fact i think virality often means you can only do it once. and you can't build a career on doing it once. what interests me is the ways in which new systems can co-exist, with various levels of success (some are admittedly slim), in the same world as blockbusters and bruno mars. that's what's new and different and that's why i'm chronicling it.

And then from another friend, a veteran of the broadcasting industry, who also sent me the article. My response:

whether right or wrong i don't think it's going to change much. there has been a huge shift in where the value resides and i just don't see it going back to the 'old days'....content now equals marketing. the value of it has sunk to a fraction of what it once was and that's because you can't control bits and that it's better for bits to circulate as they then reach more people. so i'm kind of torn on the sucks that the $ have been drained from the content businesses (and repositioned with aggregators...a future blog post i'm working on), but stamping our feet and pounding our fists isn't going to change it as far as i can see.  what do you think?

I agree with you.  It seems useless to call for a return to the good old days because they're gone.  I also don't think it will kill creativity. Culture has always been 99.5 percent crap anyway, but somehow the good stuff always gets out. Plus it seems like most semi-successful musicians have horror stories about getting ripped off by record companies. Maybe there are positives to all this.  You should try to find footage of Roger McGuinn testifying in hearings about file sharing and talking about how he never made more than 10 thousand dollars on any of the Byrds albums.

Having talked to people about this topic over the years I'm more interested than ever in collecting more viewpoints, or data points, as researchers like to call them. Whether you're a musician or fan or just a vaguely interested civilian, do chime in. I think the situation we have, whether it's a question of music or podcasting or blogging or whatever the creative pursuit may be, is one in which so many people want in and it's never been easier to get in. That's both the reality and the problem. Or is it a problem? Will that which has some inherent quality make its way through the flotsam? And/or are we looking at a situation in which value has been radically that what has been considered the locus of value for hundred of years i.e. the piece of work and the right to reproduce it, has been replaced in this next phase of evolution by distribution and aggregation functions? Just as sites like Craigslist have had their effect on the business models of newspapers, perhaps the creative industries are being similarly, permanently, reconfigured, with the closest thing to an 'answer' being crowdfunding one year, some sort of group investor model the next, maybe throw in some patrons of the arts. More questions than answers, for sure, but to blame the Internet and think that we're somehow going to be able to go back to how things were seems like a waste of everyone's creative talents.

Saturday, October 5, 2013

Life after major labels: The case of Sloan, Part 3

Welcome to what I hope you find to be the thrilling conclusion of my conversation with Jay Ferguson of Sloan, with a special visit from Jay Coyle (aka JC in today's interview). Yes, stereo Jays today on the blog. If you missed the earlier posts in this 3-part series, you can see Part 1 here and Part 2 here.

Let's pick up the story where we left it off in Part 2, which was talking about how the band has charted its own sustainable course outside the major label system. Yes, they were on a major, briefly, in the early 90s, and yes, they did distribution deals with majors from the mid 90s on, but today theirs is largely a story of using readily available technologies for direct-to-fan engagement, and, of course, leveraging the benefits that accrued to the band from their days of being affiliated with labels and their marketing and promotional muscle.

One of the key figures in getting the band set up online has been Jay Coyle. Since 2009 he has been assisting the band with the various facets of their online presence and also goes out on the road with them, as the affable merch guy. I've seen him in action a number of times and gosh darn if people don't happily leave the gig loaded down with t-shirts, toques, and scarves.

LK: How would you characterize the bigger changes in the way the band has been operating in the last few years?

JC: The direct to fan route has really opened up the fan base while allowing [Sloan's own label] Murder Records to become more active, with the bootlegs, box sets, etc. So I feel that part of the story changed in 2009 when I came on board. Having this as my focus makes it much more about building a bigger bridge to both the fans and the band’s future legacy. I would even note that the labels would never know how to do direct-to-fan fully nor could they do it as authentically as Sloan does. Today, the band is now more focused on serving the fans than ever before.

LK: And how do you divide up the work? Who does the tweeting, facebooking, website updates, Instagram, etc

JC: Patrick does Twitter. Mike (Nelson, tour manager/business manager) generally updates the website, often with items written by himself or Chris or Jay. I handle a lot of the direct-to-fan conversation via e-mail. I get pretty busy with that around the tours and the limited editions releases and reissues, and on the road at the merch table which is the original direct-to-fan tool.

LK: What other online tools or platforms do you use?

JC: We use a variety of things. Topspin for fan engagement, Kill The 8 for merchanding.

Using direct-to-fan tools from a marketing perspective, like the Sloan singles collection we gave away through NoiseTrade, that's a perfect example where offering music to a free download/streaming-minded culture actually allowed the band to benefit by capturing the conversation with these fans, both old and new. I am a firm believer that some form of piracy and the rising streaming options helps fans move from casual listeners to core fans and that offering music 'for free' is actually speeding up the conversion process from first listen to music buyer/show attendee/merch buyer.

Thank You Jay Coyle. We now resume our conversation with Jay Ferguson.

LK: If you think of what we’ve been talking about as a pie chart…of the ‘old day’s of the music business of the 90s versus today, how would you say things break down, in terms of percentages for CD sales vs touring vs merchandise, etc?

JF: To be really general, I would say touring has opened up way bigger for us. Not bigger than in, say, 1996, when things were really big for us…

LK: Yes, I remember those days… getting mobbed on Front Street (in Toronto), with you and Chris.

JF: Really?

LK: Yes, by a group of 14 year-old girls…I have pictures somewhere …in a box somewhere, in storage, in Vancouver.

JF: Good. We’ll be calling you for those pictures when we do the One Chord to Another box set. But I would say that touring has taken over. The piece of pie that was albums…someone on a diet would take that piece now. But we have more songs getting played on the radio, the more records we put out. And we’re almost at the classification of ‘classic rock’ on Canadian radio.

Sloan rock pies, then & now, developed in consultation with both Jays

LK: Are you going to be like Five Man Electrical Band soon?

JF: Like being played every hour, on the hour?

LK: Yes.

JF: I hope so. It’s funny, the airplay portion has really grown…because back then, in the mid 90s we had three albums, now we have ten. Merch has always been good…but now we’ve got more to offer. Also, the t-shirts that were $15 or so in 1996 are now $25. Still, I would say the merch piece of the pie is about the same.

LK: But touring is expensive, isn’t it?

Sloan tour bus, Fall 2012, decorated for various band members' birthdays
JF: It’s expensive...we tour on a bus, and maybe we shouldn’t. but it also keeps our band alive, and sane, so we can tour for longer. If we were all in a van we wouldn’t tour, or not as much as we do. Chris says he would happily tour in a van…but…

LK: How many days in a year do you tour…roughly?

JF: I would do a ballpark of about 90 days or so..but it changes year to year. If we have an album out we’ll give ourselves a reason to tour. It’s almost like we’re putting an album out so we can tour. Which is another thing that’s good about running your own business. Because people in the band have families now. It’s not like being on a major label when you’re basically told when the tour is because ‘we got traction at a station in Kentucky’. We don’t have someone telling us we have to do this at a certain time. We can tell Outside or Yep Roc [Canadian and U.S. distributors] when we’re touring. They might say can you wait a month or two, because they might have congestion at that time. And we want to give the album to them at a good time for them so they can promote it properly. It’s like business planning. We knew we had a lot of goodwill coming from The Double Cross [Sloan's 2011 album release], so we said why not present the fans with a Twice Removed reissue so we’re thinking why not do a new album every other year and leapfrog with a reissue.

LK: How much of an anomaly are you guys, in terms of operating the band in the ways we've been talking about?

JF: I think it’s a matter of interest…like, how interested are you in your band? For some people it's a matter of how the money is split up. If the bass player makes less, why would he put effort into the band? Our band is run democratically, everything is split evenly. I’m so happy with the band, happy to promote it, to talk about it, and I’m a fan of the band. It’s something I’ve wanted to do since I was a kid. So it’s fun to do all these projects. To create the artwork, to do the boxsets. I love that stuff. And also…no one else is going to do it. Am I going to wait until somebody else does it? History or vanity, like I said….which one will tell your band’s story…and I guess vanity wins in this case (laughs). I’m doing it because I enjoy do it…but also…and I don’t want this to sound obnoxious…but there’s also money to be made. We can make 300 or 500 or 1000 of these limited edition things, and we can sell them out.

Chris and I will sit on the tour bus, looking through graphics annuals from 1968…and say 'let’s make an EP that uses that kind of cover'. We’re fans of art and graphic design and it’s fun to apply it to what you do. It’s fun to make things. It’s fun to engage with fans. It’s almost like imagining what would a fan like? Do I want Paul McCartney to make a box set of Band on the Run? Yes! We’re also lucky because we own our masters and we don’t have to talk to anybody about doing these things. I’m sure there are bands who would love do things like that, but they don’t own the master, they don’t own the publishing, and there would be so much red tape to go through, and they wouldn’t end up making very much, so they just say ah, forget it. With us, 90% of the stuff we need to do these projects is in my basement or in Chris’ attic.

LK: You had to buy back some of your publishing, right?

JF: For the first two albums, Smeared and Twice Removed, there’s a publisher that still owns those two, but all the rest of the catalogue is ours. And there was a deal with EMI for a while, that went sour. We ended up paying back the advance and I’m glad we did because Money City Maniacs was part of that and that paid for itself, just by licensing it to Future Shop and a beer commercial, and hockey games. That one song ended up paying for that whole deal.

For us it’s a combination of interest and survival…and ability, yes, but I think anybody can have the ability to operate Illustrator, and Chris learned how to do Photoshop and InDesign, and he has trouble using Google. But seriously, Chris went to NSCAD (Nova Scotia College of Art & Design) and he’s studied, for example, how books are laid out. Like the math of how layouts work…measuring the margins and columns and how that makes things look beautiful. (Ed. Note: Andrew Scott of the band also attended NSCAD , continues to be an artist today, and continues to exhibit. You may know his design work from things such as a band t-shirts, and now you can see his paintings here.)

Barney Bubbles exhibition, Chaumont, France, 2012
I have a great graphic design book by Barney Bubbles who did all the Stiff Records stuff…for Nick Lowe and Elvis Costello and all those people. It's gorgeous. And we used that as a template for the Twice Removed booklet. Chris basically mapped out the grid based on that. He’s highly motivated and he’s patient doing that kind of legwork and both of us are fans and we’re interested in the same things and we work well together. People just need to take things apart, learn how it’s made, and then you can do it yourself.

End Part 3.

To play catch up:  See Part 1 here and Part 2 here.

For a related post from Ari Herstand about the new tier of middle class musicians, working primarily as their own bosses, click here. 

Tuesday, October 1, 2013

Life after major labels: The case of Sloan, Part 2

Welcome to Part 2 of my interview with Jay Ferguson of Sloan. (You can find Part 1 here.) Today we'll talk about working the supply and demand angles as an independent band, Carly Simon's yard sale, and staking out a career in the middle ground of the 'long tail'.

The conversation continues with Jay talking about the turn toward self-curation in the Internet era.

JF: I do find that due to the Internet and artists curating their own material, their own websites, it’s more common. Take Beck, for example. His website is about communicating directly with fans. He’s got such a big fan base worldwide that he can curate fun things…like albums of covers, or an album of sheet music. And that’s something you can’t really do on a major. (Ed. note: Beck no longer on Geffen). He's curating fun things. And I find that’s what we’re trying to do…the hardcore 7”, with a digital hardcore covers album or limited edition vinyl bootleg albums. And they usually sell out in a day or in 2 days. It’s the stuff we’re doing in between album, and it's direct to the fans.

Sloan "1985" limited edition t-shirt
LK: You’re really tweaking the supply and demand; you know there’s an audience for these really cool things…like limited edition t-shirts and vinyl, and you seem to be able to figure out exactly what the size of that market is.

JF: Well, we made 1,000 of the Twice Removed box set. And it was a bit of a gamble. We made it in the fall and thought…okay, maybe people will buy it as a Christmas gift. We’ll do the tour behind it. I bet you we can sell 1,000. We’ve done some bootlegs before. We did 300, it sold out in an hour, then we did 500, it sold out in a day. So we wondered, if those went that fast, how many people are there who would buy a $90 album that’s actually curated by the band?  And we gambled on the 1,000.

LK: At that level is it profitable?

JF: Yes. It’s expensive to make each of the units but your profit margin is still about 40%. Plus it gives us a reason to tour. We went out and did all of Twice Removed…did you see it?

L to R: Chris Murphy, Jenn Hollett, Me, Jay Ferguson, Boston Oct. 2012
LK: Yes! I was there in Boston.

JF: Right! And in Canada the tour brought out a lot of the older fans out that hadn’t come out to see us in a while. We found a lot of couples who were struck by that album when they were in high school or in university and this time around they’re saying ‘honey, let’s get a babysitter and go see Sloan’. So when this came out they said we have to go see this. I had people come up to me and say: “I haven’t seen you guys play in 10 years but I had to come out and see this.” If you can measure how many people you can sell to, it's do-able. And I feel like there are a thousand people out there who will pay for anything we do that is of high quality. We won’t put out a piece of junk and charge $100 for it.

LK: I think you should try to do that…to test your theory.

JF: Yeah (laughs). I found that Carly Simon was selling an old DVD that didn’t sell, with things from her house…like she was getting rid of junk she didn’t want.

LK: Kind of like a yard sale?

JF: Yes, kind of like Carly Simon’s yard sale. Here’s my DVD…and… something from my trunk that I didn’t want.

LK: So who watches over the business concerns of the band? There’s no ‘manager’ per se…Mike (Nelson) is your tour manager, right?

JF: Yes, Mike is the tour manager, but does a lot more…and Chip Sutherland was our manager but he still handles some business stuff when it comes our way. If there’s something with a contract attached to it, or a licensing opportunity for a movie. He’s a lawyer, so he’s a bit of the overseer, even though he’s very busy with Leslie Feist, who he manages. Mike has, over the years, grown into more of a management role.

LK: I’m interested in the band's ‘org structure’. Who’s the CEO of your business? For example, who, at any point, knows what the inflows and outflows of cash are?

JF: That would be Mike. Sometimes, he has to be like a parent, like if something is going bad he won’t always tell us (laughs). He’ll say ‘oh we have all these theatre shows in the fall' because he doesn’t want to stress us out. If we have projects we want to do, like the Twice Removed box...we decided we wanted to do that in early 2012, and tour it in the fall. Chris & I thought "what do we want to put in the box set?…A 7”?  A booklet?" And then I went to a company that does vinyl manufacturing and asked how much it would cost and I got some numbers and said Mike, here’s the amount, and then we all decide if it’s a good idea. We dream up the project, figure out how much it’s going to cost, and tell Mike. And then it’s either yes, we can afford it, or can you scale things back…but usually it’s fine…and we just do it.

LK: We talked about this before we started recording this interview…You began to say “If I were starting out today…” and I said ‘wait!…hold onto that thought’…so now is the time for that thought. We’ve talked about the benefits of the ‘old system’ and now, how the members of the band can perform some of the functions of the label. What comes after the dot dot dot after “if I were starting out today...”

JF: I don’t know…I know how to record…I could make a professional sounding album in this room with the right microphone...I have all the tools to make cool graphics. I feel like oh great, I could do all that…and using Illustrator, and In Design, and finding the vinyl or CD manufacturer…but beyond that I don’t know how you get attention. You still have to get out there and play shows. Unless you “go viral”…but then look at the Lana Del Rey story…you go a bit behind the scenes and you see it’s not a new artist at all. She’d had an album out before, under a different name. So it’s all been hatched by some label people. If I was an indie artist today I don’t know how I’d get attention…other than Pitchfork randomly picking up on things. That’s what happened with Broken Social Scene. Pitchfork wrote about them, some guy at Polygram UK saw it, then thought ‘hey this is cool’, saw them at SXSW and then signed them to a UK deal. They had also been touring and they had a live show that really communicated with people and I think that was a big thing. But that’s something that happens 1 out of every 500,000 times.

For us, now, we have the benefit of doing our own thing, having been tied to a major label that took us to a wider audience. That audience has fluctuated over the years but it’s still enough of an audience that we can do stuff online, we have a mailing list of 20,000 people that get our email blasts. And when we did the limited edition box set 1/20th of them ended up buying it.

And in the states, where our audience tends to skew a bit older than in Canada -- where we still get kids who are just finding out about us, kids as young as 14 -- but in, say, Boston, we can play a club show to 200 people, and we can play to 700 people in Calgary and the merch numbers can be the same. It doesn’t happen all the time, obviously, but I’ve found that we can play a smaller place in the states and end up taking in $1000 at the merch table.

LK: Have you heard of the theory of the long tail?

JF: The long tail?

LK: OK, I’ll draw it out for you….(starts scribbling out diagram showing the ‘head’ of the market being approximately 20%, and where most the activity occurs, with the tail being the 80% where less activity occurs.) And people argue about this…about whether or not you can make a living in the ‘in between’ area…where before it was pretty much impossible. How much of a myth is it, the staking out of a career in this middle area?

JF: I feel like I only know our experience. Even though I know other bands that have dropped off, because with the new paradigm so few records are being sold…by anyone. Lady Gaga sells, like, 1.5 million and it’s a big deal. That would have been at least a 10 million seller in earlier decades. Sales have dropped so much that some artists are making more money from touring…and a lot of artists are taking over their own career. Some, like us, have benefitted from the marketing they received in the 90s, from the majors, or wherever they got it. But I think you can also utilize the goodwill of the audience, the interest of the audience, and somehow propel a small business using things like Topspin, by recording on your own. We recorded our last 4 albums at our practice space. But for us, our bread and butter is still touring. In the 90s when we were selling 90,000 copies of One Chord to Another, we were making a lot of money from CD sales. [Ed. Note: As broken out in this post, in the absence of a major label's involvement the percentage of an album sale that the band keeps jumps from about 10-15% to approximately 60-70%. Also note that in Canada, which is approximately 1/10th size of the US, albums go gold at 50,000 and platinum at 100,000.] Now it’s a fraction of that, for everyone, so a lot of people are turning to touring and you don’t need a major label to do that. So I think the long tail is true, especially for bands that have had attention from radio, and that have been exposed to a wider audience.

End Part 2. Click here for Part 3.