We've written a few times about the rather awesome The Humble Indie Bundle folks who have built a business out of bundling up a few (independently produced) video games, and offering them in a simple to buy pay-what-you-want format, with certain incentives to get people to pay more. Each bundle has been more successful than the last. Today, the Humble Bundle folks are trying something new: music. Launching today, they're doing a similar offering, but rather than video games, it's music by They Might Be Giants, Jonathan Coulton, MC Frontalot, Hitoshi Sakimoto and Christopher Tin. And, if you pay more than the average price, you also get music from Ok Go. And, as always, there are options on how to allocate the funds you spend, including options to designate a portion to go to various charities.
I'll be interested to see how well this does, but they sure chose an amazing group of musicians who are really well known to the geek/gaming crowd. We've written about or mentioned Jonathan Coulton, OK Go, MC Frontalot and TMBG before. Christopher Tin and Hitoshi Sakimoto are well known for their work in video games as well. It certainly seems like a really well-suited bundle.
The bigger point, though, is seeing how the Humble Bundle is expanding its model to see how it works in other fields. If I were running an "affinity label" of some sort, where you have a bunch of different groups that attract a similar audience, I'd be watching pretty closely to see how this works out, because there's no reason you couldn't do something similar with a select group of artists.
The band OK Go has made quite a name for itself over the years as a pioneer/innovator in a number of different ways in the music world. The group has become incredibly famous for their videos, each one of which seems to up the difficulty level. Years ago, they had a simple dance video (filmed in one of their backyards, if I remember correctly), which went viral. Then they had the famous dancing treadmill video. There have been a few others, including a massive Rube Goldberg machine, and now they've taken it up a notch with their latest video, which was part of Chevy's Super Bowl commercial for its new Sonic vehicle. They basically used the car -- and a massive amount of setup -- to have the car help them perform a song:
In case you're wondering, there were 55 pianos, 288 guitars, and 1157 of what they describe as "homemade instruments" to make that one work. Also, the video took four months to prepare and four days to shoot... and all of the car driving is actually done by lead singer Damian Kulash, who actually took stunt driving lessons (kinda neat that he can probably write that off as a business expense...). The video description also notes that "each piano had the lowest octaves tuned to the same note so that they'd play the right note no matter where they were struck." Just in case you were wondering.
Of course, beyond just being kinda cool, this hits on a few points that we talk about regularly. First off, it shows how OK Go has continued to do what it set out to do when it freed itself from its EMI contract. Despite their videos getting millions upon millions of views, EMI was too clueless to know how to actually monetize such success. The band figured it could do a better job itself, noting that if you have the fans, there are always ways to make money. The band has also been pretty vocal about being against things like DRM and for things like making it easier for fans to get their music. And, here, they're making money by getting sponsors to help them create their crazy music videos. This isn't a first. The big Rube Goldberg video was sponsored by State Farm.
And, no, no one is saying that every band should get corporate sponsorship (though I'm sure some critics will accuse me of saying exactly that!). It's just that there are all sorts of creative ways for artists to make money these days, and getting some corporate sponsorship is one that gets little attention, but has been growing massively over the past few years. In fact, it was one of the key themes at MIDEM this year, including a fascinating interview of Mark Ronson with Wendy Clark of Coca Cola by Ian Rogers from TopSpin, all about Coca Cola's efforts in the music space.
One of the key things in this is the recognition that content is advertising. Lots of people have recognized the reverse: that advertising is content... but things really open up when you realize that content itself is advertising. And that's something that a lot of brands are recognizing by tying themselves to different content creators, and letting them do cool stuff around their brands. I know that some people find this to be some form of "selling out," but as Ronson points out in the video linked above (and, as I'm sure the folks in OK Go know well) that's pretty silly. Most consumers today know that artists need to make money, and as long as the brand gives them the freedom to be who they are and do what they do, most fans have no problem with these kinds of deals.
Mike's recent post about OK Go is just crying out for some Mimi & Eunice cartoons. Rather than make him go back and edit it, I'll just illustrate it here:
Actually this miniseries began with this strip, which sums up an argument used by many copyright advocates:
Over the last few years, we've covered many of the moves by the band Ok Go -- to build up a fanbase often with the help of amazingly viral videos, ditch their major record label (EMI), and explore new business model opportunities. In the last few days, two different members of Ok Go explained a bit more of the band's thinking in two separate places, and both are worth reading. First up, we have Tim Nordwind, who did an interview with Hypebot, where he explained the band's general view on file sharing:
Obviously we'd love for anyone who has our music to buy a copy. But again, we're realistic enough to know that most music can be found online for free. And trying to block people's access to it isn't good for bands or music. If music is going to be free, then musicians will simply have to find alternative methods to make a living in the music business. People are spending money on music, but it's on the technology to play it. They spend hundreds of dollars on Ipods, but then fill it with 80 gigs of free music. That's ok, but it's just a different world now, and bands must learn to adjust.
Elsewhere in the interview, he talks about the importance of making fans happy and how the band realizes that there are lots of different ways to make money, rather than just selling music directly:
Our videos have opened up many more opportunities for us to make the things we want to make, and to chase our best and wildest ideas. Yes, we need to figure out how to make a living in a world where people don't buy music anymore. But really, we've been doing that for the last ten years. Things like licensing, touring, merch, and also now making videos through corporate sponsorship have all allowed us to keep the lights on and continue making music.
Separately, last Friday, Damian Kulash wrote a nice writeup in the Wall Street Journal all about how bands can, should and will make money going forward. In many ways the piece reminds me a bit of my future of music business models post from earlier this year -- and Kulash even uses many of the same examples in his article (Corey Smith, Amanda Palmer, Josh Freese, etc.). It's a really worthwhile read as well. He starts by pointing out that for a little over half a century, the record labels had the world convinced that the "music" industry really was just the "recorded music" industry:
For a decade, analysts have been hyperventilating about the demise of the music industry. But music isn't going away. We're just moving out of the brief period--a flash in history's pan--when an artist could expect to make a living selling records alone. Music is as old as humanity itself, and just as difficult to define. It's an ephemeral, temporal and subjective experience.
For several decades, though, from about World War II until sometime in the last 10 years, the recording industry managed to successfully and profitably pin it down to a stable, if circular, definition: Music was recordings of music. Records not only made it possible for musicians to connect with listeners anywhere, at any time, but offered a discrete package for commoditization. It was the perfect bottling of lightning: A powerful experience could be packaged in plastic and then bought and sold like any other commercial product.
But, he notes, that time is now gone, thanks in large part to the internet. But that doesn't mean the music business is in trouble. Just the business of selling recorded music. But there's lots of things musicians can sell. He highlights Corey Smith and Smith's ability to make millions by giving away his music for free, and then touring. But he also points out that touring isn't for everyone. He covers how corporate licensing has become a bigger and bigger opportunity for bands that are getting popular. While he doesn't highlight the specific economics of it, what he's really talking about is that if your band is big, you can sell your fan's attention -- which is something Ok Go has done successfully by getting corporate sponsorship of their videos. As he notes, the sponsors provide more money than the record labels with many fewer strings:
These days, money coming from a record label often comes with more embedded creative restrictions than the marketing dollars of other industries. A record label typically measures success in number of records sold. Outside sponsors, by contrast, tend to take a broader view of success. The measuring stick could be mentions in the press, traffic to a website, email addresses collected or views of online videos. Artists have meaningful, direct, and emotional access to our fans, and at a time when capturing the public's attention is increasingly difficult for the army of competing marketers, that access is a big asset.
...
Now when we need funding for a large project, we look for a sponsor. A couple weeks ago, my band held an eight-mile musical street parade through Los Angeles, courtesy of Range Rover. They brought no cars, signage or branding; they just asked that we credit them in the documentation of it. A few weeks earlier, we released a music video made in partnership with Samsung, and in February, one was underwritten by State Farm.
We had complete creative control in the productions. At the end of each clip we thanked the company involved, and genuinely, because we truly are thankful. We got the money we needed to make what we want, our fans enjoyed our videos for free, and our corporate Medicis got what their marketing departments were after: millions of eyes and goodwill from our fans. While most bands struggle to wrestle modest video budgets from labels that see videos as loss leaders, ours wind up making us a profit.
Of course, that only works if you have a big enough fanbase, but that doesn't mean there aren't things that less well known bands can use to make money as well. He talks about an up-and-coming band in LA that doesn't even have a manager that was able make money:
The unsigned and unmanaged Los Angeles band Killola toured last summer and offered deluxe USB packages that included full albums, live recordings and access to two future private online concerts for $40 per piece. Killola grossed $18,000 and wound up in the black for their tour. Mr. Donnelly says, "I can't imagine they'll be ordering their yacht anytime soon, but traditionally bands at that point in their careers aren't even breaking even on tour."
The point, Kulash, notes, is that there's a lot of things a band can sell, focusing on "selling themselves." And, the thing he doesn't mention is that, when you're focusing on selling the overall experience that is "you" as a musician or a band, it's something that can't be freely copied. People can copy the music all they want, but they can't copy you. "You" are a scarce good that can't be "pirated." That's exactly what more and more musicians are figuring out these days, and it's helping to make many more artists profitable. And, no, it doesn't mean that any artist can make money. But it certainly looks like any artist that understands this can do a hell of a lot better than they would have otherwise, if they just relied on the old way of making money in the music business.
Recently, we've noted some similarities between Amanda Palmer and the band OK Go, in that both had been signed to major record label deals, both had built up an amazing (and amazingly loyal) group of fans through various means (different for each) using methods totally outside of their major label marketing effort (which was somewhat lacking in both cases)... and last month, both were officially dropped from their label deals.
In the past, getting dropped from a major record label deal was seen as a bad thing -- a sign of trouble for the band. But in both of these cases, the process of getting dropped was initiated by the musicians themselves, who realized they could do much more outside of the major label system, than within it. So it seemed like a bit of serendipity, that both acts had aspects of their ongoing tours overlap in San Francisco this week -- leading to an event put together by Creative Allies at the Ex'pression College for the Digital Arts, where both acts performed and did some chatting about music and the music business as part of a webcast. Thanks to Amanda, I was able to attend in person with a small group of folks in the studio, and it was a fun time -- as both acts basically celebrated their freedom from their record label deals.
You can see the webcast in two parts below (not sure why it's two parts, and it was not easy at all to find the second part):
It's yet another reminder of how the role of the major labels is totally changing. Historically, the only way to be successful in the music business was to get a major label deal. They were the gatekeepers, and without a deal, you were out of luck. Being dropped from a major was effectively the end of your career as a performer with a very small number of exceptions. But, these days, artists are realizing that there's so much more that can be done without major label help, and that actually being on a major can hinder or block those opportunities, that it's become a cause for celebration when you get "dropped" -- or, perhaps, more accurately, freed!
While there's plenty of music, there were two key points on the whole business model side of things that came up that are worth repeating (in case you don't feel like watching both videos -- though, you should, since they're pretty cool). The first is that during the interview session between acts, Amanda was asked about "direct to fan" stuff, and she made a point that I've been trying (perhaps unsuccessfully) to highlight for quite some time: and that's that each act needs to do something that fits with what works for them. Her fear is that there's so much talk about "direct-to-fan" offerings, that people are going to start just trying to all do exactly the same thing, rather than charting a course that's unique to them.
We've tried to point this out as well, in noting how different the various success stories are. Inevitably, of course, someone says that we're saying everyone should do what one of these artists are doing (a favorite of critics is the false idea that we've said everyone should go to Disneyland with some fans, like Josh Freese). But that's not the case at all. For Freese, it was a part of his personality (and his life, as he basically grew up at Disneyland, and performed there as a kid). The whole point of learning how to better connect with fans and giving them reasons to buy, is not that everyone has to use Twitter, or that everyone has to offer "tiered" offerings. Or that everyone has to tour, even. It's that there are many different ways that each artist can connect with fans and give them a reason to buy directly, and that each artist has to figure out the way to apply the concept in a way that fits with their own personality and sensibilities. It's great that Amanda was able to really drive home that point during her interview.
The second part is actually an amusing exchange between OK Go and Amanda after OK Go's second song. Lead singer Damian Kulash asks the audience for questions, and if you listen closely on the video, you can hear Amanda ask about how the band was able to not just get dropped by Capitol/EMI, but also to take the last record with them (something she was unable to do with Roadrunner/Warner Music). Kulash tries (not all that successfully) to dance around the legalities by setting up a hypothetical version of EMI -- but basically admits that with EMI more or less fighting every day to avoid defaulting on massive loans -- while at the same time fighting with the Beatles and other top acts, the label apparently found the fact that Kulash might occasionally pen
op eds for the NY Times that made the label look totally clueless on digital things, that it was better to just usher the band out the door as quickly as possible. And, as such, the band had a bit of leverage, which was used to not just get out of the contract, but to take the last record with them.
Of course, the business model stuff was a minor part of the overall evening, which really was very much about music, and a rather celebratory mood from both acts about their freedom to stretch out creatively -- as both demonstrate beautifully in their separate performances. Among the many highlights, there's Kulash forgetting lyrics and later getting a case of the giggles in the middle of the band's hit song "Here It Goes Again" -- plus a rendition of "What To Do" performed entirely by the band using a table full of hand bells... And Amanda playing a song from her upcoming EP of Radiohead covers played on the ukulele because, as she noted, she can.
The fantastic NPR podcast, Planet Money, interviewed OK Go frontman Damian Kulash, discussing the music industry, record labels and management secrets. In the interview, Kulash reminisces about the success that they had with their now-famous treadmill video -- and then contrasts that experience with the ridiculous policy against embedding forced upon by them by their label, EMI. This battle, of course, ultimately resulted in the band parting ways with their label. Since distribution channels are no longer tightly controlled solely by the record labels, once an artist has established their fanbase, it is now much easier for them to go it alone. This story is becoming increasingly common. From Trent Reznor to Amanda Palmer, dropping a label has become the new reason to celebrate for the latest generation of musicians.
That said, OK Go left EMI amicably, and Kulash is quite appreciative of the music labels. He calls them "risk aggregators" and commends them for funding the initial monetary investment necessary to get his band off the ground. However, with the costs of music production plummeting in recent years, the days of needing huge advances just to cut an album are numbered. Couple this fact with innovative funding models, like what Jill Sobule and Ellis Paul have been doing, and then the opportunity for new bands to find success looks bright. Kulash recognizes this opportunity for new bands to find new paths to success:
There's no known way from point A to point C or D or F anymore. ... There's all sorts of room for people to try new ideas and try innovative things. If people make cool stuff, and people are savvy in the way they deal with their cool stuff, I have no doubt that young bands will continue to rise to the top
The important takeaway here is that the new models of success may yet be discovered. Innovation by savvy people is still paramount. So, to succeed, the music industry needs to cultivate the entrepreneurial spirit and get out of the way of artists, instead of acting as a restrictive gatekeeper.
There's been lots of talk about the band Ok Go lately, with its latest album coming out and two viral videos (of the same song) in the last few weeks. Of course, the whole thing has been a bit of a mess between the band and its label. When the first viral video came out, Capitol Records/EMI decided to ban embeds of the video, which seems like the best way to totally kill off a viral video. The band responded with a mild, but still somewhat exasperated note about how the label didn't fully grasp the situation, but while also partly blaming YouTube for the way it (supposedly) handles payments on music in embedded videos. Later, Ok Go's lead singer, Damian Kulash, penned a NY Times Op-Ed again suggesting the label was out of touch, and highlighting how much damage was done by not allowing the viral videos to go out. EMI/Capitol, for its part, tried to replace this with a faked viral campaign where you could get a free track if you blindly retweeted a message. Finally, somehow the band (and EMI?) were able to line up a sponsor in State Farm to allow for its latest video -- a rather stunning Rube Goldberg machine timed to the music -- to be offered up as an embed:
However, reports are coming out now -- still in rumor stage, but apparently with quotes from both -- that the band has been dropped from the label and is free to promote the latest album as it sees fit:
The band has formed its own independent label, Paracadute Recordings, and will take over all distribution and promotion for their latest album, Of the Blue Color of the Sky, which came out in January. "We'd like to thank the people at EMI Music who have worked so hard on our behalf," said the band's Damian Kulash. EMI Music said: "We've really enjoyed our relationship with OK Go. They've always pushed creative boundaries and have broken new ground, particularly with their videos. We wish them the greatest success for the future."
Fascinating. The report also claims that:
Unfortunately, the huge traffic their videos generated never quite translated into album sales. The band's best seller was 2005's Oh No, their second, which included the treadmill hit, "Here It Goes Again," and sold around 200k, while their latest is languishing at 20k.
This was the same point that was made back last year by someone from Billboard in dismissing online viral sensations as being unimportant for "real" sales. But, as the band itself noted, the success of the video brought out huge crowds and made the band quite profitable to the label. This is the problem you run into when you only think about the music industry as if "album sales" are everything. Selling music directly is not a very good business model, and focusing on how many album sales there are totally misses the mark these days.
The question now, is what will the band do when freed from the record label. It will be interesting to see, since the band seems to relish its reputation as being creative well beyond the music. Hopefully that means taking on some of the basic principles of successful cool music business models and taking them to a new level. At least I hope that's what we'll see...
Update: As noted in the comments, this has now been confirmed, and Damian has put up a video explaining:
We were just writing -- yet again -- about EMI's short-sighted decision to block all embedding of Ok Go's videos (even ones that the band produced entirely on their own). This is despite the fact that it was the widespread embedding of the famed treadmill video that helped Ok Go become as well known as it has -- earning EMI a lot of money. Now comes the news of a "resolution" to the issue, as EMI will allow an Ok Go video to be embedded thanks to an as-yet-unexplained "sponsorship" by State Farm. While this shows, in some way, how different business models can step in and help pay for content, it worries me that EMI now seems to think a video needs to be directly sponsored to allow for embedding. Does EMI truly not understand that embedding is what helped Ok Go become so well known? There's no reason why they couldn't have allowed the regular embedding to remain and still have done a sponsor deal on top of it.
As he's done before, Ok Go's lead singer Damian Kulash has taken to the NY Times Op-Ed pages to discuss the fact that his own record label seems a bit clueless. Basically, he's repeating what he said a few weeks ago on the band's website, claiming that YouTube only pays royalties on videos streamed on site, rather than embeds (someone from YouTube told me this is untrue, but when asked for specific confirmation I got no response). However, what is interesting, is that Kulash highlights two things:
Their original video (the treadmills one) was made entirely on their own outside of EMI's influence, and the success of that video has helped make EMI and the band a lot of money:
In 2006 we made a video of us dancing on treadmills for our song "Here It Goes Again." We shot it at my sister's house without telling EMI, our record company, and posted it on the fledgling YouTube without EMI's permission. Technically, this put us afoul of our contract, since we need our record company's approval to distribute copies of the songs that they finance. It also exposed YouTube to all sorts of liability for streaming an EMI recording across the globe. But back then record companies saw videos as advertisements, so if my band wanted to produce them, and if YouTube wanted to help people watch them, EMI wasn't going to get in the way.
As the age of viral video dawned, "Here It Goes Again" was viewed millions, then tens of millions of times. It brought big crowds to our concerts on five continents, and by the time we returned to the studio, 700 shows, one Grammy and nearly three years later, EMI's ledger had a black number in our column. To the band, "Here It Goes Again" was a successful creative project. To the record company, it was a successful, completely free advertisement.
Once EMI disabled embedding on that video, the number of views dropped drastically, harming everyone's bottom line:
When EMI disabled the embedding feature, views of our treadmill video dropped 90 percent, from about 10,000 per day to just over 1,000. Our last royalty statement from the label, which covered six months of streams, shows a whopping $27.77 credit to our account.
Clearly the embedding restriction is bad news for our band, but is it worth it for EMI? The terms of YouTube's deals with record companies aren't public, but news reports say that the labels receive $.004 to $.008 per stream, so the most EMI could have grossed for the streams in question is a little over $5,400.
Now, I'll quibble with Damian's final point there. First, it's still not entirely clear if it's true that YouTube doesn't pay for embed streams, but even if that's the case, I'd argue that of the 10,000 views per day, it also increased the number of direct views (I quite frequently will click through on an embedded video to see it at YouTube itself -- often to see more about who posted it, or sometimes the comments on the video). Second, if you recognize that embeds and things that get passed around are quite a bit like radio used to be, you have to imagine that some percentage of the 10,000 streamers per day went on to buy something from Ok Go that resulted in EMI making money. Cutting that by 90% just doesn't make any sense. Perhaps it's no wonder that EMI is on the verge of going out of business.
Damian does go on to claim that record labels are an important part of the business in funding new acts, and helping them do more expensive things early on, while aggregating risk. Indeed. I don't deny that at all -- and, as I've said plenty of times before -- there's still a place for labels that wish to do things like that. The problem is that the labels have set up their business models to rely on a single revenue stream, album sales, that is increasingly less important. The rest of the music ecosystem is thriving and will continue to do so, and if it's not the old record labels giving advances and aggregating risk to promising bands, others will step in to fill that gap. There's too much opportunity and too much money for it not to happen.
Well, well. We've written about the band Ok Go a few times here, as a band that definitely does seem to "get" what's going on in terms of how to connect with fans and promote their music well. Many years ago, the band had spoken out against DRM, and, of course, they produced one of the most popular music videos of all time -- the famous "treadmills" video. I would have embedded that video here, but Ok Go's label, Capitol Records/EMI decided somewhere along the line that no one should want to share one of the most viral videos ever, and disabled all embedding. Brilliant.
So, when Ok Go put out a new album with a new "viral video" EMI once again banned embedding, apparently not realizing how this viral stuff works. Ok Go wrote about it, and basically made it clear that they'd tried over and over again to explain this stuff to Capitol/EMI, and the folks at the label simply didn't get the value of making the video viral.
Well, now, instead of allowing a real "word of mouth" viral campaign with the video, it looks like EMI/Capitol has decided to bootstrap a fake viral word of mouth campaign, by sending around emails (and even submitting directly to us) a request to "get a free Ok Go" song if you just Tweet about it. Seriously. So rather than letting people organically share what they wanted to share, EMI is trying to bribe people into promoting something else.
EMI, you're doing it wrong.
In the meantime, the platform that EMI is using for this is easily defeated. You have to log in to Twitter Connect via a special promo page, and it asks you to send a specific twitter message about how you just got a free Ok Go song... but you can edit the message to say whatever you want. And, here's a little trick: if you edit the message to be more than 140 characters, it doesn't actually send to Twitter, and you still get the free song.
And wait, didn't EMI insist in court that it never authorized free MP3s to be available online?
Anyway, the problem here is that EMI is trying to force people into doing things a specific way (not embedding, must tweet), rather than simply being open, sharing and (perhaps) suggesting they share things if they like with a friend. That's much more authentic and real. This feels very fake and corporate. You build trust by actually putting stuff out there and seeing how people respond, rather than bribing them and limiting how they can share.
