MySpace to Acquire iLike

August 17th, 2009

So Techcrunch is reporting that an acquisition of iLike, is imminent and will likely close this week.  Back in June, I wrote a blog post entitled “What I’d Do as MySpace CEO” and in it, I said I would want to acquire iLike, but was worried about the price I’d have to pay.  According to Techcrunch, the acquisition that it’s being done “at around $20 million.”

This number seems quite low to me and I suspect (just a complete wild guess) that Ticketmaster’s investment structure (whatever it was) might be cramping the deal or that MySpace was able to articulate that despite a significant user community, the value and activity of the user community was a lot lower.

In a conversation I had only a few weeks ago with a Facebook Executive, I asked point-blank about whether Facebook had intentions of building its own music player and despite rumors to the contrary posted last October on Techcrunch, the executive though somewhat ambivalent was clear that pursuing its own music player wasn’t part of it’s current plans.

Here’s why Facebook & MySpace can play nice over this deal:

Facebook allows a track uploaded through iLike to be easily shared and distributed through its network but its add-on features to a Facebook Fan page are still limited and offer little ability for customization.  A MySpace page is still the default “online profile” for many musicians (especially the indy long-tail) and still a more accepted & understood place to maintain a digital presence than Facebook and iLike.

So music gets shared and people discover new music better through Facebook but when the majority of listeners wants to get more info, they go to their MySpace page or official website.

There’s already been plenty of ink about why it would be a bad move for Facebook to be seen as competitive to iLike, so I’m not going to cover that here.

Here’s what MySpace needs to do post-acquisition:

1) Consolidate the players: This has to be priority number one.  Having a single player whereby music is uploaded and distributed to MySpace and Facebook is huge for any artist.  They need to offer a single embeddable player that can take care of streams, commerce and free downloads.  I know artists who have experienced tremendous pain with uploading songs to iLike, so the actual platform and server capacity might not be that strong;

2) Position iLike as the artist dashboard: iLike has started to build-out some analytics tools that are “O.K” but could be a lot stronger.  Nevertheless, I willingly paid $99 a year to get deeper data for an artist client.  As I have said in my previous blog entry about MySpace, there is good revenue to be maid in selling artists a set of tools to help understand and connect more meaningfully with their fans.  The acquired product team from iLike should be focused exclusively on the dashboard side.  Maintain iLike.com as the portal for artist dashboard, but consolidate the profile pages to the MySpace profile.

3) Hire a bunch of Artist Liaisons: Once you’ve done 1 & 2, MySpace needs to hire a bunch of local reps that are part old-school “label” model mixed with online evangelist and customer support.  In the major music markets throughout North America, MySpace needs to have reps who are going out and seeing a lot of shows and supporting bands in understanding how they can use the MySpace/iLike toolset.  They also need to actually be responsible for addressing customer service issues in a timely fashion.  Reward these liaison reps with bonuses based on the amount of plays, downloads, revenue, fans etc that “their artist” get.

Owen, you’ve been doing a good job listening to my advice so far.  Keep it up! j/k

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Two lines from a Songwriter.

July 13th, 2009

Last week, I had the opportunity to talk with a fantastic songwriter who over the past few decades has penned a ton of hits and today is still hitting them out of the park.

When discussing how much has changed and continues to change in the music industry, he verbally drew the picture of two lines:

One line was the business, the other was his career as an artist.

Picture a chart of the stock markets over the past year but ten times as erratic.  That was how he described the music business.  Digital downloads, declining album sales, relevance of terrestrial radio, social networking, Twitter, and sometime soon - if Conan O’Brian’s predictions are to be believed - YouTwitFace.

The second line was a steady-line, with barely a dent or a bump.  This was his career as an artist.

He went on to say that over the course of his career, the two lines have intersected and it’s those points on the chart that have given him the most success.   And that the only thing he has 100% control over is his artistic output.

As an artist, you can spend so much time chasing the latest trends, the latest social network, the latest whatever, all to the point of distracting you from what you’re chiefly responsible for.  Your first priority must always be to make great content.

None of the stuff I advocate doing in terms of digital strategy matters if your artistic output isn’t Grade A+.

Hopefully I’ll manage to post something later this week that tries to adjust the expectations of what a well-managed online strategy means for a live performer.

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THE WINDS OF CHANGE

July 2nd, 2009

I’m looking back at the events of the last few weeks in the music industry…the latest developments about the 3 strike initiatives, the RIAA lawsuit fiasco (was this set up to fail?), cut backs at MTV, Virgin closing stores, PopKomm cancelled, XM Sirius still teetering on the edge, LiveNation trying to win back the hearts (surely not the minds) of the concert fan, Virgin and Universal in a new venture in another attempt to hold back the tide. the big story of Spotify and here in Canada, the ongoing tussle about whether our government should be intervening in ensuring that Canadian will get (must get) Canadian content on the Internet which, no matter how you slice it, means censorship and forced feeding.

It’s been my experience that most artists and musicians don’t follow the industry news and a damn good thing that…for surely if they did, they would throw up their hands en masse, abandon their craft and talent and pursue less noble paths than the ones that light their fires and that reward their public with delight, hope and memories.

No, lucky are they because not only are they more occupied with things that really matter but they are focussed on today and tomorrow, not the past and not with trying to bend the past into something that might fake its way into the future by pretending to be something it isn’t – new and necessary.

It’s sad you know, watching the death throes of an industry that thought it would last forever (I know, I was there) yet still incapable of making a heroic leap into the future, abandoning in the process ways of doing business that are no longer sustainable…

I often wonder if it’s a matter of people who I grew up with in the industry just wanting to hold on – some of them really don’t know what else to do, and others just want to go to sleep and wake up and find that the last 10 years was all a bad dream. Maybe the lucky ones were the ones who got packages over the last few years when their companies were downsizing and no longer have to deal with the daily dread of going in to do a job that sooner or later will be gone…not terribly motivating.

Three years ago I believed and publicly stated that the music industry we had known was headed for a marginalized role if not outright oblivion and made the decision to invest my time and energy in the music landscape of the future. To be honest, I thought the place we’re in today would still be 1-2 years away…shows you what can happen and it’s a lesson in staying nimble and alert.

I am astounded at the amount of artists and musicians I meet who still seek the Holy Grail of the Label Deal to the exclusion of all else. Maybe they should be reading the industry news.

I am perplexed by parts of the industry that still believe in adopting strategies of exclusion or of entitlement.

But most of all, I am heartened to have met and to be working with some outstanding and courageous people on both sides of the border who look at the future of music with a glimmer of joy, hope and sometimes mischief. We may not know exactly what lies ahead, but we sure know that it’s not what we had in the past.

With the spawning of CreativeReef.org we’re hoping to be part of the new environment, bringing together ideas, solutions and discussions that will inform and support those who aspire to making music their life.
We look forward to be educated and informed along the way by the music community as it continues to evolve and shape itself.

Great times indeed.

Twitter: Plunko

Twitter: ski4ever

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Step 1 - Admitting the Addiction.

June 25th, 2009

Note:  If you don’t want the rhetoric and want just the bottom line, scroll down to the header that reads “Bottom Line”

Two weeks ago, I became addicted.

Since then, I’ve become more reclusive, declining social invitations to stay inside with the windows drawn to feed my addiction.  My sleeping patterns have changed, even the way I talk seems to be affected by my admitted addiction.

I’m talking about Deadwood, the HBO show that I discovered and subsequently became incurably addicted.  Unfortunately, it lasted only three seasons and so I know my supply is finite and dwindling fast.

My addiction to Deadwood can - I think - be clinically explained as owing to a genetic anomaly found in most of HBO’s programming:  A heavy emphasis on “B-line” story development, meaning that while some part of the “A-story” wraps-up in the alloted time of one episode, far more is being contributed to the B-Story which means that without watching each episode of the series in sequence from beginning to end, the viewer is likely to be missing out on a lot of the story.  Film School friends, be kind.   If my technical description is inaccurate, suffice it to say, the general point stands.

While some prime-time basic cable shows like Lost and 24 have done this, it seems almost a requirement at HBO that each show of theirs is structured with this B-Line emphasis.

What does this have to do with this blog?  Nothing other than my prediction on the future of how we consume television.

Deadwood stopped airing August of 2006.  Close to three years after it goes off the air, I see my first episode, and within the first week, rent and watch every DVD of the first two seasons.  Each DVD containing usually two episodes is rented at about $3-4.  (Blockbuster changes its rates and terms more than I change underwear).   Had I known early in Season 1 how good the rest of the show was, I would have bought the DVD box-set for $101 on Amazon.

In the United States, Deadwood is already on iTunes, but in Canada, the license has yet to be worked out.

I can’t seem to find up-to-date PVR/DVR penetration rates, but this article from last year predicted that DVR Penetration would reach 35% of US TV Households by 2012, and that seems about right, which would put the total number of DVR units somewhere just under 100m units in the US alone.

Now, let me paint you this picture:  I’m at home with my DVR, TV, and fat pipe.  Bandwidth pipe that is.  I find another show just as addictive as Deadwood.  Let’s call it, Bullock & Co.  The broadcast premiere on HBO Canada is tonight.  I watch it and am instantly hooked.

At the end of the episode, either a message is pushed straight to the DVR or an ad appears at the end of the broadcast, letting me know that already, the entire first season is available for download on my PVR.  I can download each episode at $3.99 per episode or download the entire 12 shows for $39.99.

I download 3 episodes that night, watch them back-to-back, and the next day buy the entire season.

The show is still being broadcast by subscription episode-by-episode on HBO for those that want to tune-in each week, and for those that don’t have a DVR or download their shows.

The DVD box set gets released within days of the series finishing (not unlike 24 this season).

The studio producing Bullock & Co then assesses the revenue from each of the three platforms:  digital downloads, broadcast license, and DVD sales and quickly calculates that the show is “on the bubble” as to whether it gets renewed or not for a second season.

It’s loyal fan-base, led by yours truly, starts to circulate a petition on the web to save the show.  The Studio that produces Bullock & Co, responds by offering fans that if 1.2m fans (exactly half the number of viewers that tuned in to the premiere of the third season of Deadwood) were to pre-buy the DVD of Season II, or pre-buy the digital download pack, that the second season will go into production.

Who knows?  If the studio was really wanting to engage their fans, maybe they’d also sell 1000 experience packages at 10,000 per person inviting 80 or so fans on set, allowing them to be extras, a special meet & greet with the crew, and acknowledgments in the credits.  That’s $10m in low-dollar cost (though medium energy costs) revenue for the show right there.

1.2m pre-orders of the DVR downloaded season generates $47.98m in revenue.

The Bottom Line
In summary, what I see is an evolution in how studio/network developed will be delivered.  A broadcast channel will be more a testing ground for what captures audience attention, and that DVR’s will enable consumers to get their fix of an entire season the very next day of the broadcast premiere of the first episode.  The Cable provider’s revenue stream will increase significantly, and there will still be more margin to the studio and other creative stake-holders than DVD sales provide.  Advertising will still power “mass audience programming” and should actually get more embedded in the programming.  Sponsored presentations and product placement fits well with reality television, sitcoms, and pablum dramas.  But B-line heavy shows that require their audiences to pay attention will reap the real rewards.  And this is good news for the creative industry.  Make exceptionally good content, and you will be paid hansomly.

It wasn’t until about three or four episodes in to the first season, that I was truly hooked.  The word-of-mouth that I started spreading when I got hooked was significant (at least within my small social network).  When a show gets a season right, the number of fans who will be excitedly telling all of those people still watching the broadcast how good the season gets, will drive viewership of the broadcast and convert into unit sales.

I’ve seen the future my friends and in it, Deadwood has a 4th season.  Maybe that part is the addiction talking.

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What I would do as MySpace CEO

June 17th, 2009

Before even writing the rest of the post, it doesn’t matter that Facebook is as big as MySpace in the US. It doesn’t.  They used to be competitive but now they’re not.  Facebook is an all-purpose social networking site and I believe it will retain that status for many years to come.  Line-ups outside a club tell you one thing:  There are people wanting to get into this place, and that means I should too.  If the bar next door has a “ladies, no cover!” policy you know it’s not exactly the hottest spot in town.  MySpace is an unruly house party.  Facebook was/is the exclusive club that people wanted to get into.   If MySpace stays focused on being an all-purpose social networking site, it will falter.  It’s time for an about-face.  And so here’s what I would do:
Number 1

“It’s not you.  It’s me.”  The first thing I’d do is “fire” all of the models, actors, porn stars, and other wannabe’s from MySpace.  Your “profile” is no longer accessible.  Why pay the bandwidth and tax the infrastructure to host most of these pages? For most of these accounts, it’s closing time, the lights are up and no one is buying what you’re selling. Keep their account active, but delete their profile unless they want to pay $9.99 a month to keep it hosted (which I actually believe a not insignificant percentage of users would do).   Relaunch free user profiles more as a means by which to facilitate music discovery, then to broadcast to the world.  Change “Friends” to “Fans.”  Who cares that you have 10,291 “friends.”  Are they actually LISTENING to your music?  Are they coming to your shows?  Are they talking to their friends about you?  Or are they just vainly friending you to increase their own friend list, given that at some point, the number of friends a MySpace account had was supposed to mean something.

Number 2
Focus.

I’ve learnt the hard-way that most businesses can only do one thing exceptionally well.

I’d argue that MySpace should ONLY be about Music at the expense of comedians, filmmakers, etc.  Sure the services recommendation I’m about to make could apply to filmmakers and comedians, Movieset.com is a far better place for filmmakers and comedians?  I get the opportunity but I’d be willing to sacrifice it in favor of single-purpose excellence.

MySpace Music is doing well.  Courtney Holt has a lot of respect in the entertainment industry and has done a great job managing the relationships (a LOT of hand-holding is required) with her record label partners.

Number 3

In the ideal scenario, I’d buy iLike.  But they’re cash-flow positive, they essentially power Facebook’s music profile so buying them could cramp Facebook big time.  But because of this, the amount of money I would have to spend for iLike would make this a hard pill to swallow for Rupert & Co.
So instead, buy Reverbnation or replicate the toolset.  I’m not a huge fan of ReverbNation’s site (from an interface perspective) but what they are doing is offering useful tools to engage the artist’s audience.  MySpace truly has the long-tail of the music industry captured.  Courtney’s music label partners will continue pressuring her to convert the free streams of their artists to sales but after Amazon and the labels have been paid, the net revenue to MySpace from selling music is probably pretty thin.

I’d argue that there is more revenue to be made from selling artists subscription services such as email list management solutions, a simple ecommerce solution for indie merch, and deep analytics on your fan base.

FreshBooks.com has done an amazing job of offering a “menu” approach to its business model, starting with free and then migrating its users to pay for what they need.  Start demonstrating that a better email management tool is getting even a few more people to a band’s local gig, and they’re going to look for other tools that take them to the next step in their career.

Number 4

Having executed on all of this really well, I’d then get Courtney to make a deal with MTV for a MTV/MySpace American Idol show, but instead of gong-show auditions, do the first few rounds of competition entirely online. Same thing with voting, all powered at MySpace.com or a MySpace mobile application.

That’s about it.  I thnk Rupert & Co would be pretty happy with the results.

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Yes We Can - Experienced another way

June 8th, 2009

My Mom was diagnosed with Stage 4 lung cancer in August last year.  For those of you who don’t know or haven’t had to experience a loved one going through the ordeals of cancer, this is almost as bad as it gets – a virtual death sentence…much sooner than later.

That being said, she pressed her oncologist for what she called “the numbers” – how long, options. After visually looking at us for an indication of how truthful he should be, he told her that at best she had 3 -4 months, perhaps 5 -7 if she opted for treatment yet to be determined – chemo, radiation any combinations of treatment.

Without hesitation, she chose to go for the treatment option.

Not only that, she decided she was going to win…

She signed a 1 year lease so she could be in the city for her treatments – probably would have signed a 3 year lease had we not intervened.

And truthfully, up until her final 2 weeks, she really thought she was going to beat the odds. Not once did we or her treatment team ever see a waiver in her confidence.

My Mom never met Barack Obama – but she so lived “Yes We can”

And now…the point…

In these uncertain times, where artists, musicians and others who understand that their futures are in their hands, their entrepreneurship being in large measure what will shape their destinies…the need to be believe in themselves and in their abilities is real and undeniable.

Maybe you don’t think the stakes for you are as high as they were for her…but yes, they are.

It’s about quality of life…and your quality of life is undoubtedly going to be affected by being able to do and succeed at something that makes you happy and fulfilled.

We want to help…and with your help, we hope to be part of your journey, supporting you, informing you and sharing with you what we have learned and what we are learning.

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The good old days are here again but not for long

May 5th, 2009

Tuesday morning Prediction: Services like Facebook, Twitter and YouTube will all start charging for services within 2-5 years.  And while there will be some attrition and a crop of replacement sites to flee to, a strong percentage of those sites’ users will stay and they will pay.  There will be protest groups on Facebook, and the media and pundits will predict it’s demise, but they will stay.

And here’s an added prediction:  The popularization of pay services for these sites in particular will cause these sites to increasingly mimic our conventional class structures with community ghetto’s, middle-class hang-outs, and an elite that will be experts in monetizing their content.

We are in an orgiastic sixties era of free.  Zuckerberg, Ev & Biz et al are hippies today but soon they’ll have to pay the bills, buy a reliable sedan and pay for that new 4 bedroom in the Burbs.

Mark my words.

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A better way to price your music

May 4th, 2009

I’ve been thinking a lot about the move towards tiered-pricing for songs and it’s a good start but has a whole bunch of flaws that I’d like to see corrected.

Glenn Peoples (@coolfer on Twitter) is doing some interesting research on Per-Track Revenue of iTunes since the Tiered model took effect.  He tweeted today that for traditionally strong-selling catalogue songs, he’s seeing some “evidence of considerable sales drops after raised to $1.29.”

I haven’t been in the room for any labels figuring out how to price their artists songs at which price-points, but it seems to be that - for the most part - they have used a simple current popularity ranking for which songs are priced at $1.29. Interestingly enough, they seem less committed to which songs (and artists) belong at the sub $0.99 price-point.

Services like Bandbox allow artists to sell their music through a widget and set their own pricing.  But how does an artist know how to price their own music?  Heck, artists valuing their music is an altogether different conversation.

So imagine this scenario for pricing a new, yet-to-be released album.
An artist posts their songs to fan-club members.  In the case of a free fan-club membership, at least 5-10% of your fans will pay to attend an exclusive listening party.

Fan-club members are given a 7 day listening pass.  I would tie it to a specific IP address.  Some fans would groan and some would say it’s better to have as many people be part of the process but we can debate this another day.  Fans have 7 days to listen and price each song using a simple voting mechanism.  Once they have priced each song, they can see where they stand based on other fans’ votes.  Fans could of course pre-order and even use “limit orders” to not download certain songs beyond a certain price.  The other benefit of this model is that it also tells you what your single contenders really are, based on what people are willing to pay for each track.

Fans are being used to determine album artwork, why not set prices?

I’ll avoid discussing “depriciation” and how that should figure into a more dynamic pricing model. Let me know your thoughts on this.

Twitter: @edwardelgar

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The ‘New’ New Artist Development

April 28th, 2009

About six years ago, I started to drop back into orbit on the ‘mainstream music industry.’

My compelling reason? A son who perhaps, not surprisingly, declared his passion and quickly started on his journey to become a young, hopeful, professional musician. Connor was already playing Bass. While flipping through liner notes on Ixnay on the Hombre one day, he asked me what a “volo-calist” did.   A short grammar lesson later, Dexter Holland and the lads from The Offspring became his single greatest influence, nay, — a driving force in his young development.  A couple of guitar lessons later, instead of Connor toodling out, Greg Rumple (Mount Royal Conservatory) came out and invited me back. Greg says, “…watch this!” Connor proceeds to play and sing a Green Day tune without missing a beat.  He stops with a great big grin. Greg says, “… you’ve got a singer and musician on your hands.”  

Connor was 10 and I was down for it.

I had worked in radio and ’the biz’ in the early 90s and left (–in disgust, it would be fair to say) to pursue my interest in the arts, a couple of venture start-ups, ultimately landing in higher education teaching both entrepreneurship and marketing.  When Connor was really wee, and I an uncertain parent, an educator friend of mine provided some great advice … just stay involved in what your child does and they’ll be fine.

So happily, I embarked on this journey with him. 

Sadly, I learned that unlike hockey or soccer, music and artist development for the under 18 set (U18) is seen as a ‘pipedream’ by far too many folks.  There are exceptions of course — young classical and jazz musicians are nurtured and have healthy opportunities to develop their talents. On the contemporary and popular fronts, however, the development opportunities are comparatively are few and far between.

I watched carefully in those early days, wanting to find the best ‘fit’ with vocal coaches and guitar instructors. Job 1 - Making sure the instruction of music promoted a broad love of music rather than narrowing towards the ‘acceptable.’  Job 2 - Creating the conditions for him to pursue his interests rather than what was available — someone did in those early days suggest we send him to the local boys choir I was quite sure this would have marginalized the music he was most passionate about and killed his spirit. Instead we found what we were looking for, albeit in California. Job 3 - Find a community of other young musicians and their families on a similar journey, protecting similar boundaries. Job 4 - Recognize that any musician, regardless of age but especially the young up- and comers, need to think like entrepreneurs.

FFWD six years and where are we at? My estimation . . .  in pretty good shape.  In addition to having a “singer and musician,” this young turk has evolved to become a songwriter, composer, arranger and performer. . . 50 shows in 2008, two EPs, a song on commercial radio, a team of amazing mentors, a small venture start-up with 3 great friends, a kicking group of peers, and a happy-happy-happy professional musician!!! He’s not quite 16.

So aside from being proud, what’s my point? This is all DIY (Do-it-yourself) and somehow I think there is no way this should be the case. A young person with talent and commitment should be able to access the developmental assets they need to pursue their passions in mainstream music.

The most persistent mystery to me is why some parents, community leaders, professional and government organizations, etc. consider a young person’s interest in mainstream or contemporary music as ‘less than’ an interest or commitment they would easily a) make to sport or, b) support in a young athlete’s pursuit of excellence? 

I like hockey just fine, so I’ll stop singling it out, but I go see my 5 year old niece with 100 other 5-year olds, all of whom have a parent with them on the ice for over an hour, once-a-week. No one in that rink is questioning why they do it.

I’d love to hear from and share with anyone who like to explore these and related questions and/or work towards these kinds of solutions.

My dream on CreativeReef is to build out the kinds of resources and support present with my niece for young and aspiring musicians of any age (– and the team around them) interested in any genre of music.

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Welcome to the Reef!

April 21st, 2009

Hi Everyone,

We’re very excited about today’s launch of the CreativeReef.org site.  Our goal is to facilitate an online conversation that leads to tangible solutions throughout the music industry.  We all know the problems.  Lots has been discussed there.  But we feel like now is the time to start moving past the problems and into solutions.

We hope you’ll join the conversation.  It will begin shortly after 1000 members signal their readiness to join the conversation.

In the meanwhile, we’ll be posting to the blog and always twittering.

Talk soon!

Patti (@spygirlc), Shelley(@plunko) and Tom (@edwardelgar)

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