Case Study: How Dave Matthews Band Has Embraced The Modern Music Industry In Extraordinarily Profitable Ways
from the but-that's-impossible... dept
Over the last few weeks, we've noticed a few of our usual critics attacking the basic claims concerning successful music business models, because some of the bigger concert tours this past year ran into trouble, and because some of those tours seemed to realize they were charging too much. Of course, it's unfortunate when people misunderstand basic statistics and what data shows. First of all, we've never claimed that concerts were the only way to make money in the music business. There are lots of ways to offer scarce goods that have nothing to do with touring. Second, the fact that some big tours had trouble -- and misjudged the market is hardly a condemnation of touring as a money maker. It just means that some tours misjudged the market. This is hardly a surprise. For years, many tours had underpriced tickets, leading to a valuable aftermarket for scalpers. But over the past few years, major acts and venues have tried to capture more of that for themselves, leading them to push the market ever higher. There was obviously a limit as to how high those prices could go, and people have started to figure that out. This is a good thing, not a bad thing.But the key point to recognize is that just because some acts misjudged the market, that's not a condemnation of these other ways to make money. This claim reminds me of similar claims back in the early 1990s about the productivity of computers in the workplace. A few companies did massive implementations that were done poorly, and turned out to be way too costly. And with poor implementation and poor planning, the end result was that these new computer systems didn't increase productivity. Suddenly, there were claims and press coverage about how computers didn't lead to any productivity gain. The mistake was conflating a bad implementation with what would happen if you implemented stuff properly. No one here has said that "just touring" automatically is a successful strategy. That's because it's not true. Instead, a properly implemented multi-prong strategy, that fits with both what the musicians want and their fans want, can work quite well.
A perfect example of that may be the Dave Matthews Band. Slate recently did an article on the massive success of the band. A big part of that, not surprisingly, is a relentless touring schedule. However, as the article notes, DMB is making a lot more money touring than most people realize. It's consistently one of the top earning touring acts in North America, despite not being as "big" a name as the others on the list. In 2010, for example, DMB was the 3rd largest grossing tour in North America, after Bon Jovi and Roger Waters, and ahead of such names as Paul McCartney, Lady Gaga and The Black Eyed Peas. And they did this with significantly lower prices than most of the other acts in the top 10. While tickets to Lady Gaga concerts averaged $98 and Sir Paul's concerts went for a staggering $138.49, DMB's average ticket price was $57.38. And, as the article notes, they did this in a massively profitable way, unlike some concert tours which cost so much as to have them losing money. On top of that, the band uses the famed Grateful Dead model for keeping fans coming back for more: changing up their songs each time, and having fun going off on different jams, that make each concert unique.
But, of course, it's not just about touring. The band has done its own version of CwF+RtB, with over 80,000 fans paying $35 per year for its fan-club (and the 80,000 number is three years old, so I'd imagine the real numbers are now much higher). That's $2.8 million from the fan club alone. Similarly, the band appears to sell a ton of merchandise. The article notes that, back in 1998, the band would sell $200,000 in merchandise per day, while on tour. Obviously, that data is way out of date, but the band seems to have little trouble coming with good "reasons to buy" for its fans.
I have no doubt that the usual critics will mock this, claim it's an exception, or somehow complain that this is somehow "bad." But it seems clear that it's working great for the band itself, and they're quite happy with it. And, really, in the end, that's what these business models are about. Finding the right mix for bands to connect with fans in a meaningful way, while setting up the structure that allows those fans to support the band. DMB seems like a perfect example of a band doing this on a massively large scale.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: business models, concerts, cwf+rtb, dave matthews band
Reader Comments
Subscribe: RSS
View by: Time | Thread
E X C E P T I O N
[ link to this | view in chronology ]
Re:
Every success is an exception, from the exceptional.
[ link to this | view in chronology ]
DMB managed to pull it off by writing some material that was strong enough to score a record deal, get airplay and label support, and go from there to drive grass roots support. Their willingness to tour and do 250+ dates a year for more than a decade is an indication of how hard they are willing to work to get it.
I find that the story as presented is all over the road, as the $200,000 date swag sales are nice, but 13 years out of date. It also happened long before they were giving away their music in any form, which suggests that they aren't so much an internet success story, as again one of those huge label success stories of taking a risk on a marginal act, and having them take off.
Re-writing history is amusing, but not entirely honest.
[ link to this | view in chronology ]
Re:
I personally think DMB is missing out most in their merchandising - I mean, how many t-shirts do they sell? Do they even push their t-shirts much? As Techdirt always says, cotton beats plastic any day.
[ link to this | view in chronology ]
Re: Re:
Also, every show has its own unique poster. This follows the scarcity idea. I believe that the average run of a poster is about 500 per venue. The really big shows have 1,000 tops I think. Each poster is high quality, silk screened & signed and numbered by the artist. People have been known to line up 3 hours early to make sure that they get a poster.
They also have a series of Live Albums (19 albums at the moment) that with the exception of 2 volumes is only available from their website.
There is also a DMBLive series that is only available for download from their site.
Coran Capshaw is a genius when it comes to merch and i wouldn't be surprised if the $200,000 is much much higher these days.
[ link to this | view in chronology ]
Re:
Articles like this aren't meant to say, "Okay, we found THE FORMULA that WORKS! All bands must now follow this formula OR PERISH!" They're pointing out that there are many roads to financial success as an act, and there are working examples to prove this.
There are individual components of the DMB setup that have made them very successful, and these ideas could be -- and have been -- used by others. The core ideas (evolve the structure of existing music for live shows; tour as frequently as possible; cultivate a strong stable of incentives for a paid fan club; keep stage shows as low-frill as possible; connect with fans) are well-known and have each been discussed here at Techdirt.
It's unlikely that every single band could use that same formula -- but then, music isn't a strictly commercial entity. There's some artistic expression. So the Lady GaGas of the world who prefer to mount massively expensive tours charge more at the door but take away the ideas of connecting with fans, playing a large number of shows, and retooling songs for live performances.
Picking nits is annoying and barely relevant to the topic at hand. It's a case study, not a definitive road map to success.
[ link to this | view in chronology ]
Re:
ps. they had grass roots support long before they got a record deal. they self-released a ep and a album before they got their record deal.
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re:
Officially, no. However, GD and Phish tours routinely are posted on unofficial websites. And a couple enterprising folks have even taken those postings and dumped them to disk for the folks who cannot find them (and they don't charge that much...) Dick's Picks tends to take the music and put it on discs for sale for cheap...
Plus he has torrents up for his later CDs.
And Grateful Dead/Phish have never had any problems with Dick's Picks or any other taping efforts...but neither has Gov't Mule or a number of other bands I follow.
I just picked up Gov't Mule tickets for $29.50 (and that includes the service charge.) I've been to Phish concerts that were ~$40. Their concerts are usually 3-5 hours of extreme goodness, compared to the 2 hour crap most artists give you, at $100-130 a pop (with a 30 minute break somewhere in there.) I wish I could pick up DMB tickets...they are always sold out before they are offered to the general public here.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
Of course, I'd pay $100 for a 5 hour concert...I figure $20 an hour for 5 hours of their time is a great deal, compared to $65 an hour for 2 hours of Sir Paul's time...I don't even get paid $65 an hour, and I cannot see how an entertainer feels his time is more valuable than mine. Then again, I feel the same about NFL prices, which is why I go to baseball games (at $11-18 a pop) than football games (at $200-400 a pop.)
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re:
[ link to this | view in chronology ]
Re:
Just like 90% of all acts signed to a major label.
The plain fact is that no matter what business model you use, only a minority of musicians are ever going to make a living through music.
On the other hand, even if you don't make a living, you will still do better financially if you follow a CwF + RtB model than you would otherwise. (A model which has little to do with the internet, by the way.)
[ link to this | view in chronology ]
Re:
Thats the key here. Who wants to spend $70+ for a concert ticket to see a lipsynced album cover show?
Modern popular music rarely is conducive to live performances, unless you're one of those weird exceptional bands that play music you can enjoy live and also cross over to mainstream.
[ link to this | view in chronology ]
Re: Re:
There are exceptional "non-artists" like Britney Spears, for whom actually performing the music is such a hassle that they don't even bother trying. She shows aren't concerts, they are shows. It is about the overall performance, and not about music, which is too bad.
It would be horrible to think that the entire music industry is broad brushed and meaningless because one artist made a bad choice.
[ link to this | view in chronology ]
Re:
Where did Mike say they were, again?
[ link to this | view in chronology ]
To pretend what they are doing (which is the same thing they were doing in 1995) in any way reflects a "new business model" is ludicrous.
But what's new there. This is TechDirt after all.
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
Ah, I see your confusion.
We've *always* supported pay-for-access, because access is a key scarcity. We've highlighted many versions of "fan club" type offerings. Paying for access makes perfect business sense.
What we don't think is a smart move is pay-for-content, because content is not scarce.
I'm sorry if the difference is not clear to you.
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
If a band like them who has sold so many platinum records and filled out so many arenas can only get 80,000 subscribers, how does that bode well for an average indie band with no big budget promotion, no expensive tour tickets to discount, and no record sales?
I am well aware there are some artists who have resorted to using their popularity to sell "access". I know of at least one band that profited off their fans by running an escort service, offering themselves for sale one lunch date at a time.
I don't oppose their doing so. But I can hardly see how anyone would consider that a good blueprint for young and upcoming bands.
[ link to this | view in chronology ]
Re: Re: Re: Re:
I really want to believe that you're not, since that would be just the worst kind of stupid...
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
It all depends on how you look at it.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re:
Imagine a surgeon who only likes to do the fun stuff --> operate. He doesn't like to make himself available to meet and talk to people--> see patients in the office.
For lawyers, the fun stuff might be quick-witted public argument, but she still has to do the grinding backoffice work of research and writing.
Cops don't get to be the public face of authority on the street without having to slave at the desk on the reports.
The point is:
In many(most) professional careers, you have to play multiple important roles at different times.
If you don't do all of the things you have to do, then you very often end up not getting to do any of the things you like to do.
Other professional people reading your comment don't have any sympathy for you at all. It just sounds whiny.
Oh, and one last thing... What are you calling your fans? Johns?
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re:
You've been watching a lot of "House," haven't you?
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re:
'nite nite troll...
[ link to this | view in chronology ]
Re: Re: Re: Re:
http://www.antsmarching.org/forum/showpost.php?p=469748&postcount=20
[ link to this | view in chronology ]
Re: Re: Re: Re:
The Band could easy do a two night stand at Cowboys stadium and sell out no problems at all. How many bands do you know that could do that?
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re:
Yes. And they're quite successful at it. Why is that not noteworthy at a time when people are insisting there's no way to make money as a musician.
To pretend what they are doing (which is the same thing they were doing in 1995) in any way reflects a "new business model" is ludicrous.
Or accurate. Your pick.
But what's new there. This is TechDirt after all.
Yes, and we highlight business models that work. I'm amazed that the same people who insist that there's no way to make money in music these days then always get so upset when we point out those who are making music.
Funny.
[ link to this | view in chronology ]
Re: Re:
Ridiculous.
The music industry is still a ~$6 billion a year industry in America. Everyone knows there are many bands, labels, tours, and artists still making money.
The point is it is literally half what it used to be, that decline in profits has directly correlated with piracy.
This example is no different than talking about how Radiohead are (still) making millions. If you cut a $5 million dollar income in half, you're still a millionaire. If you cut a $30,000 income in half, you may end up below the poverty line.
So what is your point? Insanely successful bands from the 90s who already have millions of fans and have always made millions from touring can still do so despite piracy?
I don't see anyone disputing that.
[ link to this | view in chronology ]
Re: Re: Re:
This is incorrect. The *recording* industry is half of what it used to be. The *music industry* is actually bigger than what it used to be.
The point is it is literally half what it used to be, that decline in profits has directly correlated with piracy.
This is also not true, but if you wish to believe in fairy tales.
So what is your point? Insanely successful bands from the 90s who already have millions of fans and have always made millions from touring can still do so despite piracy?
If that's what you got out of this, you're beyond being helped.
I've already gone through how these models can help bands of all sizes. Pulling out the "only works for big bands" argument is a waste of time.
http://www.techdirt.com/articles/20091119/1634117011.shtml
[ link to this | view in chronology ]
Re: Re: Re: Re:
The problem is, Mike, no one is disagreeing with the above. Sure you can make money just from relentless touring (if you are popular enough to finance it). Yes, you can sell souvenirs. Yes, you can monetize your fame by offering yourself as an escort.
Why does any of that have to preclude the ability to continue to sell downloads? For every band making a living by selling dinner dates, there are going to be many more still making a living by selling downloads or CDs.
I am not opposed to an artist selling dinner dates. Why should you be opposed to the artist who wants to sell downloads? Or a movie, book, or video game producer that wants to do the same?
Selling downloads is a major and growing part of the digital economy. If people instead want the 'free promotion' of piracy, they can release it for free themselves.
Just like with the dinner dates, it should be the creator's choice which suits them best.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
The creator's choice has to match with the customer's choice as well. If the two don't meet, then money isn't exchanged. That's the way the world works.
If "piracy" is growing exponentially, Digital sales dropping, and the only way to "preserve" that cash flow is by pumping hundreds of millions of dollars into the legal system...well, it looks like selling music won't work.
No one is saying you can't try to sell CDs or Digital content. What you CAN'T do is butcher other industries with half-assed laws, and sue blue-collar individuals for millions.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
Those business models don't preclude selling downloads. Reality is what's making that difficult.
Look, I'm not against selling downloads. I'm just dealing with the fact that all you people keep complaining that not enough people are buying downloads, so I'm explaining how to make more money elsewhere and stop relying on downloads.
For every band making a living by selling dinner dates, there are going to be many more still making a living by selling downloads or CDs.
I always know when someone missed the point when they think that the business model is "selling dinner dates." When you reduce it to that, it means you missed nearly everything that was important about the new business model, and you deserve whatever failure is facing you.
Again: if you CAN sell downloads and CDs, more power to you. But then stop bitching about "piracy." I'm just explaining how to make money if there is "piracy."
I am not opposed to an artist selling dinner dates. Why should you be opposed to the artist who wants to sell downloads? Or a movie, book, or video game producer that wants to do the same?
I'm not "opposed" to it. I just don't think it's a really good strategy right now.
Selling downloads is a major and growing part of the digital economy. If people instead want the 'free promotion' of piracy, they can release it for free themselves.
That's the point I've been making. You agree with me, and you have so misread what I say you think you disagree with me.
Just like with the dinner dates, it should be the creator's choice which suits them best.
Okay, no, you don't get it at all. NOTHING is the creator's choice. The MARKET decides. Once you learn that very basic lesson in economics, you'll be on your way to actually moving forward. Until then, you'll always be looking backwards.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
Graph the start of the lawsuits and the decline in sales and you see, pay special attention to the sharp drop after years suing people and chase the date that labels turned tail and run and started to lobby congress to pass some more laws and try to make others get the bad publicity.
[ link to this | view in chronology ]
Re: Re:
More to the point, it's noteworthy at a time when people are insisting there's no money to be made from touring.
[ link to this | view in chronology ]
Re: Re:
Most of the time I object because you are looking at the current circumstance and ignoring how it happens. DMB can make a substantial living (and more) performing concerts not because they just got up this morning and decided to do it, but rather because they worked the system for more than 20 year, and in part because they profited from the record label system to get them introduced to listeners worldwide, and got them exposed.
They aren't the only ones out there doing it. Other "great musical acts" such as Bon Jovi and AC/DC spent a while on the road last year, maybe you heard? They had the two top grossing concert tours of the year. In fact, there was such a flood of acts on the road in 2010 that they exceeded the public's ability to pay, which lead some tours to cancel and ticket sales to drop 12%. But you don't want to discuss that.
we highlight business models that work
No, you highlight small parts of business models that work the way you want them to, and tend to ignore the rest. DMB is here because of the label system, because they were able get airplay, because they were able to have enough money to afford to tour in the early years. Combine that with their relentless desire to tour, and some really great marketing (because all of this is marketing), and you have a great end result. You cannot have B with A in this case, so if you are going to highlight a business model, perhaps you should highlight the whole model, and just not parts of it, as the parts often won't stand up alone.
[ link to this | view in chronology ]
Re: Re: Re:
You can't have it both ways. If people are pirating a musician's music to the extent that he is complaining about not being paid, then he is already "exposed" and could use a business model based on his popularity.
If a band is complaining that they aren't well-known enough to rely on those business models, then piracy isn't a problem for them.
[ link to this | view in chronology ]
Re: Re: Re: Re:
In fact, TD quotes a merch sale number from 1997, or 3 or 4 years before Napster.
DMB has continued to expand their fan directed offerings as time has gone on. But they wouldn't be here without the label system. We really still don't have the major, massive, top selling act out there that has not come through the label system.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re:
I don't recall any part of the post saying this is a new business model, only that is is a very successful one. Nice strawman attempt.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re:
Because people go for the atmosphere, rather than the show.
[ link to this | view in chronology ]
Re: Re:
You probably meant "bitch." But since your typo resulted in me picturing the members of Dave Matthews Band in leather bondage gear, I'm going to let it slide. (So to speak... crap, now I'm doing it again.)
[ link to this | view in chronology ]
Armchair quarterbacks...
You guys don't know JACK about the music industry, the recording industry or bands in general and what they REALLY go through.
I come from a family of musicians. Everyone in my family of 8 plays at least one instrument (most of the them more) and we all sing - I am the exception to playing an instrument due to nerve damage in my hands from 3rd degree burns.
Not only did we have a band (think Patridge Family) back in the 70's... but after all of the kids got older, several of them were in other bands or started bands of their own.
Two of my brother are extremely talented, writing songs, teaching themselves different instruments. One had a band that was touring several states on a regular basis, but he eventually decided a family was more important and shelved his music career.
The youngest is currently playing on cruise ships. He's lived in Nashville, played with different bands, recorded music and has been trying to promote himself.
His most successful time was when he was touring around the country with a fairly agressive schedule. He was selling CD's, T-Shirts, etc. and making a decent income by connecting with people - talking to them after the show, jamming a little longer than they were paid for, etc.
The fact is, there were many more ways they COULD HAVE connected and marketed themselves and their products to make even more money, but they had a poor manager who wasn't open to new ideas.
I think Mike is right and that connecting with fans is what it's about. Connect with people, share what you have and you will develop a fan. Nuture that fan and they will want to connect back to you.
I've seen it alot with the different bands I and my family have been involved in. The ones that failed are always the ones that failed to make a connection. The ones who showed up to collect a paycheck.
And I think that's the point Mike is making. Too many in the current recording industry want to show up and collect a paycheck, without actually connecting with the fans.
It doesn't work that way.... it never has.
[ link to this | view in chronology ]
Re: Armchair quarterbacks...
[ link to this | view in chronology ]
Re: Re: Armchair quarterbacks...
[ link to this | view in chronology ]
What up-and-coming bands must deal with
Everything costs more now, so why is it still $5 to see a local rock show in Nashville? | Nashville Scene: "'As far as local, up-and-coming bands cutting their teeth, three bands for five bucks has not changed in 20 years,' says Mike Grimes, co-owner of The Basement."
Alt Press | Feature | Expensive White T’s: The Politics of Price Matching This article explains that an opening band is often not allowed to price their merchandise lower than the headlining band. So they can't offer their fans a bargain and therefore may not sell much merchandise.
[ link to this | view in chronology ]
Perhaps the real truth is that the complainers defending old business models need to move and find something else to do
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Of course
[ link to this | view in chronology ]