Case Study On How An Indie-Rock Composer Musician Makes Money

from the breaking-it-down dept

We've talked about the Future of Music Coalition's excellent Artist Revenue Streams project for a while now, and over the last few months they've been releasing more and more results from the project. At some point in the future I'll have to dig more into some of the earlier results, but I thought it was interesting that at SXSW they released some specific financial case studies on five (anonymous) musicians in particular, digging with great detail into how they make money. I found the "indie rock composer-performer" case study particularly interesting, given some of the regular debates around here.

While this is just one performer, and clearly not a "representative sample" or even a composite sample of how such musicians make money, there's still plenty to be learned from the report. What comes across is that it certainly takes work, but an indie artist such as this guy has been able to increase both his earnings and his profit over the last four years. Of course, that doesn't mean that each of his multiple revenue streams was increasing, but that he was continually altering his approach to maximize his own revenue and net income. For example, after a few years of relying heavily on income from one band that he was in (and he's in a few), he's been able to successfully shift to being a solo artist. Of course, the revenue shift there is pretty clear. While he made a salary from the previous band, as a solo artist, a large chunk of his revenue now comes from live performances: One thing that struck me as interesting, and which corroborates similar stories I've been hearing from other artists, is that while touring can be tough, the ability to "tour smarter" these days means that it can be profitable. Frequently, critics insist that touring can only be profitable for the largest bands, but we keep hearing otherwise, and this report suggests something similar. Yes, there is significant expense involved in touring, but it can be done well and profitably. Either way, the entire case study is worth a read.

Filed Under: business models, case studies, independent musicians, revenue streams
Companies: future of music coalition

Finding Success In A Wasteland By Being Open, Human And Awesome

from the kick-it-forward dept

If there is one sure way to succeed in the modern age, it is by being open, human and awesome. This is something that we are learning over and over again in the entertainment world, and it is especially true for those running successful Kickstarter campaigns. What started with the success of Double Fine's adventure game campaign has lead to the success of a number of other games. One of those games is inXile's Wasteland 2 project. This project is on track to raise over $1.5 million and as Brian Fargo has learned, this is all because the people behind the project have been open, human and awesome with their fans.

In the opening statement of the latest project update, Brian expresses his gratitude for the outpouring of support the project has received.

I continue to be overwhelmed by the positive feedback and enthusiasm from the support I have gotten from Kickstarter. The groundswell of people cheering us on and the evangelism - people spreading the word - is unlike anything I have experienced. In fact, I would say the last week was the high water mark of my career.

This is one of the best statements of gratitude I have ever read from an artist. Brian recognizes that this success is due completely to those who have shown support by donating and sharing the project with others. Without those two actions, there would be no Wasteland 2. As Brian further notes, all this came from being open and human. He shares the story of two people in particular that show the power of that philosophy.

On the next day I get a short tweet from an individual that confesses he pirated Wasteland as a kid and was donating to help make up for it. I of course forgave not knowing he had donated $10,000 dollars. An incredible gesture... now if we could get every pirate of Wasteland 1 to donate we could really beat the Kickstarter all time record.

This is the true power of openness and humanity. The power to turn a pirate into a paying customer. While not all pirates will turn around and pay $10,000, many will turn around and pay full price for later content made by an artist they love as well.

In the next story, Brian notes just how long lasting this openness and humanity lasts in the hearts and minds of fans.

And just today I got an email along with a donation from a kid who lived down the street from me when he was a teenager. His note was as follows:

"This message is intended for Brian Fargo. Brian, I was your next door neighbor when you used to live in Laguna. I was a pesky 15 or 16 year old kid that would come around and ask you about games. You would sit down and take time to talk to me about games, and the industry, and I just wanted you to know how cool it was that you didn't blow me off. It meant a lot to me. Recently, I found out about your Kickstarter movement for Wasteland 2, and I contributed to it because I believe in you and your ability to resurrect the glory of the franchise. I wish you the best of luck in your endeavors, and thank you again for creating some memorable memories for me during my teenage years. Take care!"

It shows that being nice creates goodwill 20 years later.

If that kind of attitude toward his fans created a lasting effect of 20 years, just imagine how much more goodwill he has built up during that time and what he will now build up. This is not some get rich quick scheme but a way to find lasting success. Success that will last 20 years and beyond.

All of this success has led Brian to further express his humanity and gratitude. Rather than hold to this success and keep it all for himself, he has decided to help fund future Kickstarter projects. In a plan he calls "Kick It Forward", he will donate 5% of the profits made from Wasteland 2 toward other Kickstarter projects and asks that all other successful projects do the same. While the money he pledges won't come until after the completion of Wasteland 2, there are many other Kickstarter projects already making money that can really get this campaign rolling. What a wonderful way for artists to further express their humanity and awesomeness.

Filed Under: awesome, brian fargo, human, open, video games, wasteland
Companies: inxile, kickstarter

More Comedians Following Louis CK's Path... But They Don't Need To Copy It Exactly

from the branch-out-a-little,-experiment dept

We've talked a lot about Louis CK's success with being open, human and awesome in going direct to his fans with a DRM-free offering. It's not surprising now to see a few other forward-looking comics follow suit. Last month a few folks passed along Jim Gaffigan's plans to do something really similar to Louis (with a hat tip to Louis for inspiring him). The latest is that Aziz Ansari has decided to do the same thing (worth noting for our crowd: Ansari was also a vocal opponent of SOPA -- and he's been known to occasionally tweet Techdirt stories, not to mention the fact that he's really, really funny).

In all three cases, while the "deal" is the same -- $5 paid direct off the website -- they're also are done in a very personable and human way. They weren't announced with press releases, but direct appeals to true fans. As I've been saying, that's a big part of the reason why Louis's offering was such a success. It also helps, of course, that all three of these guys are well-established comics who are known for being at the top of the game, and are widely considered some of the best comics out there.

The one thing that concerns me a little about this is the fact that the deal terms are identical. I can understand why they're doing this. It's basically "don't mess with what worked for Louis." But I worry that the message people are getting is "$5 direct offering off a website is the secret." I don't think that's it. Lots of people have offered up a product for download off their website for a variety of prices. The key to making it work is not just the pricing. It's the way the offering is presented. I think it would be even cooler if some of these comedians experimented a bit more with branching out creatively around this business model. It wouldn't be hard, for example, to build on what various musicians have done, and offer up different tiers of support. Or something else. The real opportunity here is in how it's presented -- in a way that treats fans as fans, rather than assuming they're criminals or that there needs to be a big impersonal gatekeeper in-between the fans and the artist. But, unfortunately, some are going to look at these experiments and say "the lesson" is "$5 off your website is the secret." And when that doesn't work for some content creators, they're not going to understand why.

Overall, however, I'm really excited to see more content creators going direct, cutting out gatekeepers, and recognizing that treating fans well is a good start to any smart business model.

Filed Under: awesome, aziz ansari, business models, comedians, human, jim gaffigan, louis ck, open

Valve's Comprehensive Strategy Shows How To Go From Fee To Free... And Increase Revenue Twelve-fold

from the nicely-done dept

We've writen about Valve's approach to the market many times before. The company believes strongly that "piracy" is a service problem not a legal problem. It knows that it can easily compete with piracy by offering a better service, something that it regularly succeeds in doing. However, On The Media calls our attention to an absolutely fantastic case study found on Gamasutra, not (directly) about how Valve competed with infringement, but how it turned Team Fortress 2 from a fee-based game to a free-to-play game and increased revenue twelve-fold.

Of course, over the years, we've covered other online games going from fee-based to free and making more money for it, inspiring more and more other games to do the same. But what's most interesting here is the level of detail. In the case of TF2, it's clearly not about "give it away and pray," but a careful strategy that really does seem focused on connecting with fans and being awesome while giving fans a good reason to buy.

For example, the team at Valve connected with fans in a really cool way. It put out "teaser trailers" with product updates, and then scoured feedback to come up with ideas that fans might like in the game:

[Valve's Joe] Ludwig showed TF2's Sniper-focused update as an example. Each content update started with a teaser trailer that hinted at several possible new items or features, and Valve developers would monitor the community reaction in the forums to determine which aspects caught the players' attention. "We found people in the forums talking about how cool it would be if the Pyro could light the sniper's arrows on fire. To be honest, we hadn't considered it, but we were able to implement it by the time the update shipped," Ludwig said.

In another instance, players picked up on a blueprint displayed in passing within the teaser trailer for the Engineer-focused update of a mechanical hand item. Ludwig explained that "[The players] didn't realize it, but they were indirectly voting on the content of the update. When the update shipped, it included that robot hand."

Separately, Valve was very careful and deliberate about how they "went free" and moved to offering in-game purchases. Recognizing that there's an unfortunate incentive to then make in-game purchases make the actual gameplay worse (such as by making it "pay to win") the team made very strategic choices about how they would have in-game purchases, such that they were never required to play the game how you wanted:

Once Valve rolled out the in-game item system, it needed to get the players used to the idea of paying for them. "This wasn't a change we made lightly, but it was something we had to do to get our game into the free-to-play business model," Ludwig said.

"They had never paid for an item in TF2 at any point in the past, and we weren't sure how willing they'd be to pay now."

Ludwig outlined the players' possible objections to the item store, the first of which was TF2 turning into a "pay-to-win" game:

"We dealt with the pay to win concern in a few ways. The first was to make items involve tradeoffs, so there's no clear winner between two items. But by far the biggest thing we did to change this perception was to make all the items that change the game free. You can get them from item drops, or from the crafting system. It might be a little easier to buy them in the store, but you can get them without paying. The only items we sell exclusive to the store are cosmetic or items optional to gameplay."

In other words, this was entirely designed around the idea of giving people a good reason to buy rather than a negative reason that makes them feel forced to buy. Too many companies (hello most newspaper paywalls!) seem to think that "forcing" people to pay is a "reason to buy." It's not. It may get some people to pay, but it pisses off lots of people. Valve carefully structured its business model here to make people want to buy.

But the real key here is just how much this effort increased revenue. Many people have assumed that taking a fee-based game and going free-to-play is really an "end of life" strategy to try to squeeze the last remnants of revenue out of a game, but Valve is showing it's not that at all. It was a strategic choice to maximize revenue. This is the same point we've made for well over a decade in talking about how to use free as a part of a business model to increase your market. When properly applied (which is not just "give it away and pray"), free becomes a revenue multiplier, and Valve's example of TF2 is really a perfect case study of how to do it right.

Filed Under: business models, connect with fans, fee, free, reasons to buy, revenue, team fortress 2, video games
Companies: valve

Will 'Matter' Matter? Startup Proposes New Model For Long-Form Journalism

from the media-heavyweights-slug-it-out dept

Over the last couple of weeks, there has been growing buzz about Matter, a startup that is proposing a new business model for long-form science journalism and is raising funds on Kickstarter. Their approach is fairly straightforward: each week, they will produce one piece of ultra-high-quality journalism on a science or tech issue, and sell it for 99 cents on as many platforms as possible. It's less a paywall around a publication, and more an attempt to commoditize articles as discrete, sellable objects.

Will it work? The big debate has been between Felix Salmon (who likes the idea, and has been quite sanguine on paid content ever since the moderate success of the New York Times paywall) and Stephen Morse (who called Matter a "scam" and its creators "snake oil salesmen"—though he later said those terms were intentional hyperbole). Yesterday, they took to YouTube to hash it out in person:

There are a lot of good points both for and against Matter. For one thing, they've already doubled their $50,000 funding goal on Kickstarter, which at least demonstrates that people are willing to part with their money for something like this—but Kickstarter backers aren't necessarily representative of the broader consumer crowds they will need to court with the actual product. One of Salmon's key points is that since they are raising funds there, instead of going to venture capitalists, their business goals are less daunting: they just need to build something sustainable, not something that will make millions of dollars. The creators have said they don't plan to pull salaries unless the company is a massive hit. They've put a lot of focus on keeping their costs down, so, overall, their financial goals are very different, and a lot more attainable, than the average startup.

On the other hand, as Morse points out, there is plenty of great content out there for free. He doesn't believe there is truly an untapped demand for this kind of content, so Matter won't be able to compete. Salmon thinks the Kickstarter numbers say otherwise. Either way, the question is the same: can Matter produce content that is so good and so unique that people will want to pay for it?

I'm reminded of News Corp.'s iPad-only product The Daily, which launched last year to a lot of hype but quickly began losing engagement and talent. People were asking the same question: could The Daily manage to include such great content that people will need to read it in order to stay in the loop? Obviously, it couldn't.

Matter is more focused than The Daily and is targeting an entirely different audience with a higher standard of journalism, which gives it a leg up in that regard—but I still doubt its potential for one key reason that isn't getting much attention: the sharing barrier. The problem with putting a price tag on online content is that it actually reduces the appeal of that content, because one of the things people value most about good content is the ability to share and discuss it with their social circle. Exclusivity is a minus, not a plus, with most kinds of content (financial news being an exception, which is why most of the more successful paywalls online are on financial sites). Some people will be willing to pay 99 cents for an article, but a lot of them won't be willing to ask their friends to pay too by posting a link on Facebook, Twitter or their blog. Those who do are sure to get a lot of confused replies asking "wait, I have to pay?" Moreover, with a pay-per-article model instead of a subscription model, readers are going to have to decide each week if they want to keep paying. The mental transaction cost of 99 cents may be extremely low, but it adds up when you multiply it like that. These factors are going to make it very difficult to grow and retain their readership.

If Matter streamlines their costs enough, and their content is good enough, it's entirely possible that they can build a small core group of readers that keeps the one-article-a-week model afloat—but if that's the best possible outcome, is this really the best possible approach? Journalism online needs more than small-scale sustainable models, it needs ways to grow and expand, and that is never going to happen without advertising dollars. As Salmon says, Matter is trying to do "something which has historically been extremely rare, in the world of journalism: selling stories to readers, as opposed to selling readers to advertisers", and that means they are tackling the wrong problem. They still plan to include some advertising in the articles, but they should be putting a lot more focus on that side of the equation. There are companies out there that want to support this kind of content, and Matter's low-cost, VC-free model puts them in the perfect position to experiment with innovative sponsorship models—an approach that would be bolstered by opening up the content instead of locking it down, ultimately creating much bigger opportunities to fund quality journalism and turn a profit.

Filed Under: business models, funding, journalism, matter, pricing
Companies: matter

Isn't It Time Artists Lost Their 18th-Century Sense Of Entitlement?

from the brave-new-world dept

One of the common assumptions in the copyright debate is that artists are special, and that they have a right to make money from their works repeatedly, in ways not granted to "ordinary" workers like plumbers or train drivers, thanks to copyright's reach through time and space. Of course, when modern copyright was devised in the early 18th century, artists were special in the sense they were scarce; offering them special monopoly privileges "for the encouragement of learning" as the 1710 Statute of Anne puts it, therefore made sense.

But the Internet has changed everything; it has allowed hundreds of millions of people -- soon billions -- to become active creators rather than passive consumers. That, in its turn, challenges the assumption that "professional" artists are special, and deserve special treatment. One prolific creator who seems to have accepted this is Seth Godin, who featured in Techdirt at the end of last year.

In an interview for Digital Book World, he is asked the classic question about how artists can make money if they share their work freely:

Rivera: Many authors hear your message about being willing to give away their books for free, or to focus on spreading their message but their question is: “I’ve got rent to pay so how do I turn that into cash money?”

Who said you have a right to cash money from writing? I gave hundreds of speeches before I got paid to write one. I’ve written more than 4000 blog posts for free.

Poets don’t get paid (often), but there’s no poetry shortage. The future is going to be filled with amateurs, and the truly talented and persistent will make a great living. But the days of journeyman writers who make a good living by the word -- over.

As he notes, although he is a hugely-successful author and speaker today, and hence presumably well paid for both, he started out by giving away stuff -- lots of it. It was only after he had established his value in the market through that free content that he was able to to start asking to be paid for future work. In other words, just because he was a great writer and lecturer didn't mean he had an entitlement to be paid from the start; he had to prove he was worth paying before people did so. And even then, they paid not for what he had done, but what he would do -- just as you pay a plumber or train driver.

Some might dismiss Godin as an outlier, or a provocateur saying outrageous things in order to whip up a little publicity for himself and his projects (and he probably is, to a certain extent.) But as Matthew Ingram pointed out in a piece analyzing the same Godin interview, Godin is not alone. Here's Francis Ford Coppola expressing much the same views a year ago:

This idea of Metallica or some rock n’ roll singer being rich, that’s not necessarily going to happen anymore. Because, as we enter into a new age, maybe art will be free. Maybe the students are right. They should be able to download music and movies. I’m going to be shot for saying this. But who said art has to cost money? And therefore, who says artists have to make money?

That's not to say artists shouldn't make money from their work in some way, just that the long-held assumption that artists must be paid directly for everything they do, again and again, and even after they are dead, because they are "special", simply isn't true any more -- assuming it ever was.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Filed Under: artists, business models, entitlement, right to get paid, seth godin

The Secret To Brand Engagement Is For Brands To Support The Creative Process, But Not Meddle With The Creative Process

from the that-would-be-ideal dept

We've talked an awful lot about the intersection between advertising and content over the years, and have been especially interested in how brands can and do interact with various content offerings. But, we always hear fears about how this can equate to "selling out" or somehow weakening the content for creators. And, it should be admitted that this is a legitimate fear if the brand demands too much control. For our media partner, Say Media, I recently wrote up a column pointing out how the problems for brands and content come in when the brands get involved in the actual creative process. However, when they let the content creators create what they want, and simply act as supporters of that process, rather than drivers of it, the creators can retain the artistic integrity, and there's no issue of "selling out." Then it becomes a case of brands supporting an artist -- which fans love -- rather than co-opting an artist, which fans hate.

Over the years, we've noticed that this is definitely a struggle for some brands. As soon as they dump money into a campaign, it's their natural inclination to want to control every aspect of the content that comes out of that campaign -- and that's a huge mistake. We've seen that the more involved a brand is in the campaign, the less effective the campaign is for absolutely everyone. Brands sponsor content creators because they know those content creators have built up a following and can create great content. They need to extend that trust to the point that if they sponsor content creation, the give the creators the free will to do something amazing. Brands may be good at "branding," but if they meddle directly in content creation, the end result doesn't really help anyone.

Filed Under: brand engagement, brands, content creation, marketing, sponsorshiop

If You Want To Compete With Free, This Is What You Need To Know

from the not-just-cash-money dept

When it comes to competing with piracy, one of the talking points of copyright maximalists is that content creators "can't compete with free." These people complain that because pirates don't have to cover production costs, competing with them is a losing venture. What these people have not learned, despite our many attempts to teach them, is that price is not the only cost considered when consumers choose between buying legally and pirating. Over at Gamasutra, one expert blogger, Lars Doucet, has shared a very profound look at four "currencies" people consider when making such a choice.

The problem with most piracy debates is that the only "cost" they discuss is money-dollars.

This is wrong because there are at least four currencies involved here, not just one (money-dollars).

I propose the following: 

1. ($M) Money-dollars
2. ($T) Time-dollars
3. ($P) Pain-in-the-butt-dollars
4. ($I) Integrity-dollars

Lars explains what these are as follows:

For the purpose of this article Money-dollars will be denominated in USD, Time-dollars will be denominated in hours, and Pain-in-the-butt-dollars will be denominated in SI standard units of "amount-of-aspirin-I-have-to-take-after-beating-my-head-against-the-wall-for-an-hour." Feel free to measure Integrity-dollars in Hail-Marys, or hours spent lying awake at night.

Using these new variables in the consumer decision-making process, we can see quite clearly that even though the pirates have content creators beaten on the money-dollars aspect, there are still three other currencies through which content creators can compete. So let's take a look at these other currencies and see exactly how content creators can leverage them.

First, we have Time-dollars. This is how long it takes the consumer to get from deciding he wants the product to enjoying it. Any road block in this process increases this cost. So the goal as a content creator is to reduce that time. The easiest way to reduce the time cost is to take your content to the consumer. The internet is an amazing tool to do just that. People spend a lot of time online and use a variety of tools on it. For movie and television, people are spending their time on Netflix, Hulu and Youtube. For music, they are spending their time on Pandora, Spotify and Grooveshark. For games they spend their time on Steam, Kongregate and Impulse. These and many other places online are where the customers are. If the content is not there, they have to spend time looking for it elsewhere, thus driving up the cost in Time-dollars. If they can't find the content they want quickly and legally, they will be more inclined to find it quickly and illegally.

Next, we have Pain-in-the-butt-dollars. This is how hard it is to get from wanting the content to enjoying the content. When most content creators attempt to compete with pirates, they often choose to battle through this currency. This is where laws like the DMCA and SOPA come in. These laws are conceived as a way to increase the $P cost of piracy. Unfortunately, by creating these laws, the $P cost of legal content has also risen. With the DMCA came the anti-circumvention clause, which prevents owners of legal content from bypassing DRM which increases the $P cost of content. We have learned repeatedly over the years that the $P cost of DRM is often far too high for legal customers and pirates have been able to bypass it, thus dropping the $P cost of the illegal offerings. If content creators truly want to compete through the $P cost, then they need to offer convenience for their paying customers. The more barriers put between the paying customer and the content, the less likely they will value the legal offering.

Finally, we have Integrity-dollars. This cost is probably the most ethereal of the four. This is based on how the consumer feels when either buying the content or pirating it. If content creators want to compete through this currency, then they need to learn how to be more human and open with fans. If the consumers would rather support pirates than the content creators themselves, then those content creators certainly have a $I cost problem. Along with being the most ethereal of the four currencies, this is also one of the easiest to be swayed by the costs in the other three currencies. For example, if the fans like a content creator, but they feel he charges too much and it takes too long to get the content legally, the $I cost of the content has just gone up. Even worse, if the content creator lashes out at fans and treats fans as criminals, the $I cost of the authorized content goes way, way up, because people don't want to support the artist.

While this is definitely not an exhaustive look at the currencies used by consumers when making their purchase decisions, it is one of the most spot on analyses of the topic. So when we ask content creators to compete with piracy, this is what we mean. To leverage the non-money currencies at their disposal. After all, the content creators are the ones who actually control these costs.

Filed Under: business models, compete with free, currency

Vending Machine Sells Books For Whatever Price You Want

from the i'll-buy-that-for-a-dollar dept

While we've seen pay-what-you-want models work quite well for digital goods, it's still uncertain as to whether the model works for tangible goods where the marginal cost of each sold item does not approach zero. However, that doesn't mean people shouldn't try. A Brazilian company launched a line of vending machines that sell books without a set price, allowing customers to decide what they want to pay for the book. That said, it's not entirely pay what you want, since the machines require that customers put a minimum of a 2 BRL note (equivalent to about $1.17 USD) to get a book.

Initial reports claim that "sales at the promotional machines had already more than doubled within just over a month after the program’s launch, and most purchases are indeed paid with a BRL 2 note." While this sounds promising, there's no mention of how much more the books were priced before the new model was implemented, nor the profit margin beforehand. Furthermore, in looking at the vending machine, it's not apparent that customers are given any real reason why they should pay more than the minimum for the book. The books are just placed in a normal looking vending machine -- customers can't leaf through the book or even look at the back cover until after they've bought the book (and decided what to pay for it). This seems like a lost opportunity. Especially in a pay-what-you-want situation, it's still about giving customers a reason to pay more.

Filed Under: books, pay what you want, vending machine