Count me among those instantly skeptical of any new business startup that has anything to do with the music industry, particularly as 2009 approaches. Heckfire, I was instantly skeptical of these nebulous businesses in the late ’90s, when, as a music industry professional and a musician, I was bombarded with offers of liaising and support systems and synergizing by companies that probably had basketball courts in their offices and went bankrupt six months later. So when I read something like this on the site for the digital-music startup Topspin, it’s hard not to get a high reading on the BS Detector:
Topspin is a media technology company dedicated to developing leading-edge marketing software and services that help artists and their partners build businesses and brands. We help artists manage their catalogs, connect with fans, and generate demand for music.
Ian C. Rogers is at the “helm” (their wording, not mine) of the aforementioned company, and he was the keynote speaker at *ahem* the GRAMMY Northwest MusicTech Summit 2008. Doesn’t that sound exciting? Nothing gets me more excited than uselessly crammed-together words like “MusicTech” combined with GRAMMY written in ALL CAPS. But Mr. Rogers actually had some interesting stuff to say about the state of the industry, particularly in relationship to the recent David Byrne/Brian Eno collaboration, Everything That Happens Will Happen Today.
Rogers is a former Yahoo! Music GM, but I wouldn’t hold that against him. He sees the writing on the wall like most people (well, except those in the executive suites at major labels) do:
The backdrop, of course, is one we know well, a story we’ve heard ad nauseum at this point. Physical sales are decreasing (~20% Y/Y). The “two hit songs for $17 at Best Buy” business is over. Digital sales are increasing (~40% Y/Y) but it’s not making up the difference. Not only is digital not making up for physical sales, as the tracks are unbundled and the model is a singles-driven iTunes business, the actual value of a unit of music continues to plummet.
Indeed. Rogers says that the death of the CD is different than the death of the cassette because the power is transferring to artists and fans rather from one big company to another. While I might quibble about this a bit–I would never count big media conglomerates out of anything–I appreciate him putting this power shift in terms of artists instead of the usual mouth-breathing “music should be free” Digg crowd. I also appreciate his sanguine outlook on music consumption, though he seems to be upselling people’s willingness to pay for music, given that he’s not examining long-term interest. Ask some teenagers if they ever pay for music and they will scoff at you. Trust me. I posed that question last week at a high school, and I was met with a quick, simple, and derisive response: “Why?”
No matter. What interested me most about Rogers’ keynote were his observations on Everything That Happens Will Happen Today. Topspin created a page where interested listeners can stream and embed the album anywhere, which is pretty doggone neat. They offered a free track to fans in exchange for an e-mail address, and then gave three album-purchase options for people who wanted to buy the album before it hit iTunes and brick-and-mortar retail: a digital download for nine bucks, a digital download/CD combo deal for $13, and a fancy boxed set for $70. (Those prices are a tad high for my tastes, but I’ll let ‘em slide.)
And the project did quite well, thank you very much. Topspin asked Byrne’s manager how he’d define success and he gave a figure (unfortunately not revealed here) for what a theoretical record advance would be. That amount was grossed after eight weeks, well before the physical CDs were available. Also, the permission marketing campaign of gathering e-mails worked as well: 50% of people who received them opened them, and, even better, the plays of the embedded album led to purchases 20% of the time. I know what you’re saying: this is a unique circumstance given it’s Byrne and Eno’s first collaboration in 30 years and only the super-fans probably bought it. But isn’t that the point? Shouldn’t you target the superfans first? Rogers mentioned the movement from high yield, low margin sales (like albums discounted really deeply at big-box stores) to low yield, high margin sales (like specialized packaging options for people willing to plunk down a lot of money), and noted that should artists target these superfans, they’ll likely take more money home doing so. Forget the pay-what-you-will model for Radiohead and Nine Inch Nails. That stuff was fun and all, but it’s not the real shift in business. The important aspect of those schemes was that they allowed fans and artists to cut out the middleman.
Regardless of whether Topspin Media succeeds or not (and I like this embeddable player thingy), I suspect this early preorder/order-directly-from-the-band model will keep growing. I wonder if superfans are wary of participating in traditional retail schemes because we don’t want to see our money going into the hands of the same people who have been feeding us crap–and screwing artists–for years; it’s satisfying as a fan to know that your money is going directly to the band you support. People aren’t consciously sticking it to the man, per se, but there is a lingering bit of that in their economic decisions, coupled with the ease of attaining free music out there.
One of the problems with the “$17 for two songs at Best Buy” model was always the hubristic pricing of the product sold, regardless of quality. When CD burners went mainstream, people finally understood how cheap each CD was to produce. A nation of music-buyers stood up and asked, “I can buy a spindle of 50 CDs for $15 and the new 50 Cent is $18.98 at Borders?” Consumers aren’t that stupid. They knew they were staring right at the price of myopic management, crazy accounting, and out-of-control egos. As an artist and someone who understands that records still cost money to make, even in the home-recording era, I hope that this breakdown of middlemen and labels does mean larger yields for artists. Certainly these numbers give me a bit of hope where my conversations with teenagers do not.
GRAMMY Northwest MusicTech Summit Keynote [Topspin Media]
* By the way, don’t Byrne and Eno both look great?!
@RaptorAvatar: I was thinking more about the first two. I’d go more 8/12, or even 7/10. It’s not outlandish or anything. Just a tad high. The box set is fancy, so whatevs on that one.
@troybulldogs21:
I think it depends on your definition of an artist’s success, which you didn’t really expand upon other than to say that a successful artist is heard and read about by outsiders. Does that mean the artist is successful? Ask that question to an artist - the answer would be a resounding NO. You’d be hard-pressed to find an act that’s happy to say, “Well, they got me on MTV, but I’m homeless.”
I’m happy to break down how a label financially ’screws’ the artist, but it’d be a long read and most you may already be aware of.
A question for you, Mr. Lucas Jensen - did Ian Rogers give any explanation in his presentation about how Topspin generates revenue for themselves? I’d love to know what his biz model is…
I think it’s funny that he talks about how dead the CD business is, and how they’re going to change the paradigm…and then TopSpin/Byrne & Eno sold…a CD.
But you could get it in a REALLY fancy box if you wanted. Or not.
Also they sold downloads.
Last time I checked, that’s what everybody else is doing (and has done).
If anything this looks like a self-help kit for major labels. You’ve got a cool new platform with options where the band can potential make more money, but the label could create something similar and still make some dough also.
I too would love to know how much Topspin is going to make from each artist?
I like the idea, but ultimately shouldn’t the artist just do it themselves instead of paying a fee to Topspin? How hard is it to start your own blog, sell downloads and merch, and market to other taste maker blogs?
Great post, Lucas.
Step 1: Be David Byrne
Step 2: Record with Brian Eno
Step 3: …Profit!
/Deadspin meme for a Topspin post.
@Jinsai: Of course that’s nothing new, but that’s not the point of this. The point is that more artists are cutting out middlemen and communicating more directly with their fans for higher yield sales. What else would you have them sell?
@scottmcd: I think you are right here about the potential irrelevance for Topspin, but these tools are still not readily available to everybody not named Brian Eno or David Byrne. Who knows what Topspin’s model is, but I’d give them a cut if they created that embeddable player with me that also linked to a store and gathered emails for an MP3 download trade. This is all stuff I can do on my own, but doing so takes a bit of time. They said the Eno and Byrne got a “majority” of the profits, and I suspect that Topspin’s cut is probably comparable or less than iTunes.
@owenmeany: I don’t know what the business model is other than getting a cut of sales, I think. To be honest, it wasn’t the focus of the article for me. I was more interested in the idea of fans engaging in commerce with the artists themselves, with minimal interference.
And y’all have to admit that the embeddable album player is pretty snazzy.
Finally, someone seems to be getting it right. Out of curiosity, why does the $9/$13/$70 scheme seem high to you? A CD costs ~$2 to manufacture with artwork, ~$1.50 to ship, and maybe a little <$1 in labor time for handling so I don’t see the problem with paying a little more for it. Maybe $70 is high for the box set but I personally spend in that ballpark on my favorite artists each album cycle, so I don’t think it’s that big a deal (assuming you like Eno & Byrne as much as I like The National).
this may not be the correct place to ask, but what is the evidence that major labels/labels in general/management were truly screwing bands?
i’m aware non-established artists aren’t likely paid commensurate with their success/overall profitability, but isn’t that just a result of their hedging their futures by signing with a label in the first place? by signing, they get the guaranteed revenue of the advance/signing monies (plus marketing power), but give up the potential to reap the massive rewards of great success, yet also don’t have to worry about leaving the business empty-handed. this is what i’ve come to understand, but please correct me if i’m wrong.
assuming the previous paragraph is true, aren’t we more likely to see the successes than the failures? successes are the bands we listen to and constantly receive space in music news/reviews. failures are likely to be unheard and unseen. thus, outsiders (myself included) are more likely to conclude that the ‘industry’ is screwing the artists, when in fact its possible that only the successful artists are being harmed when they in fact chose this path to avoid ending up like failures. in the face of their new found success, they believe they should be more highly compensated and then the image of ‘being screwed’ is created.
i’m not saying the ‘industry’ is not culpable, their excesses have been detailed enough it’s tough to disagree with the assessment of poor management. i’m only wondering if they truly did ’screw’ the artists, as i don’t believe major label financial success and artist compensation are as necessarily related as they are made out to be.
if anyone with more info could please critique this (”you’re wrong” will suffice), it would be appreciated, i’d really like to have a more educated opinion and idolator seems to be the only place i frequent that is truly interested in educated opinions.