Announcing Step2 -- Our New Platform For Helping Creators Succeed

from the join-in-the-fun dept

Today we're extremely excited to announce the launch of Step2, our discussion platform for helping creators, fans, techies, business folks and anyone else work together to help creators figure out ways to better succeed with their efforts. It's been nearly three years since I first did my MidemNet presentation that discussed the idea of Connecting with Fans + a Reason to Buy = Business Model -- better known as CwF+RtB=$$$. Since that time, I've spent plenty of time writing, speaking, consulting and thinking about this concept and have tried to outline it in as much detail as possible. Still, I can't even begin to say how many times I've had content creators -- be they musicians, filmmakers, authors, software developers, photographers, poets, painters, etc. -- reach out and ask what should they do to better connect with fans? What should they do to come up with better reasons to buy? I've tried to help them whenever possible to the extent that I can, but each situation is unique. Nothing in CwF+RtB was supposed to about "here's the exact path to success." It was a set of principles, and each person/organization could apply it appropriately to their circumstance.

In thinking about this, we realized that what's really missing out there is a true community to help people figure this stuff out. There's really no great place for a content creator to ask people how can they better connect with a fan base. There's really no great place out there for an artist to compare different store hosting platforms to see which ones might serve their needs better. There's really no great place out there for someone to figure out just how should they set up this business model/online store/crowdfunding campaign. And there's no great place for fans to reach out and help the creators they love as well with these same sorts of questions.

So we built one.

There's a famous internet meme out there that began with a South Park episode many years ago, which has become known as the "Profit!" meme, which goes something like this:

• Step 1: Do something
• Step 2: ??????
• Step 3: Profit!

At times, I know that's how many content creators feel about the range of opportunities that the digital age presents them. So, our Step2 platform is hopefully designed to help creators make those question marks in their own "Step 2" a bit more clear and useful.

So how can Step2 be used? Well, that's partly up to the community to decide! But here are some suggestions:

Content Creators:

• Ask the community how to better succeed -- whether it's to better connect with fans or to come up with unique and compelling business model ideas.
• Discuss challenges or choices you're facing and get feedback. What platforms make sense? Should you focus on touring or build a local fan base? Should you self-publish or try to get a publishing deal? Can you really crowdfund this movie? etc.
• Share your experiences as a case study. To get feedback and to help others learn from and be inspired by your experiences. In a little while we'll be posting about a contest we're launching in conjunction with the Step2 launch, where we're offering up a total of $10,000 to people for sharing their case studies. For a few great examples of case studies, check out:
  1. Amanda Palmer discussing her recent experiences with Kickstarter in funding a new project in conjunction with her husband, Neil Gaiman.
  2. Or, check out Andy Richards of the indie band Uniform Motion (whom we've written about a few times), discussing how his transparency about their revenue may have given fans additional reasons to buy, complete with detailed stats about how his transparency resulted in traffic and sales.
  3. Or you can jump over to Zoe Keating's discussion over the question of whether or not doing art for purely strategic reasons is evil... while she also shares a bit of the secret of her success.

Fans:

• Share your own case studies as a fan. Show artists how it feels to have an artist treat you well, and highlight cool examples of artists that have connected with you. Inspire more artists.
• Want to help out your favorite artist? Start a discussion about cool things they're already doing and encourage more people to check them out.
• See someone you like who you think could do better? Make some suggestions about ways they could do even better.
• See someone you like doing something you don't like? Maybe present some alternative ideas

Everyone:

• This is a community project. Even if you don't know some of those participating, you'll be amazed at how gratifying it is to try to help people succeed with their work. While I haven't had time to help as many content creators as I would have liked, every time I'm able to spend some time helping artists, it's always been a very rewarding experience.
• Help people recognize that there's a world of opportunity out there, and there are all sorts of great ways to embrace it and to succeed. Talking to folks who succeed today, you almost inevitably hear a variation on the theme that they saw someone else succeeding and were inspired to know that they could do that too.

To be clear: while we often talk about music, this is about all sorts of creators. Music, movies, videos, software, photographs, poetry, web pages, companies, blogs, magazines... whatever. Jump in and start discussing, sharing and spreading ideas.

Special Thanks!:

First off a special thanks to our awesome sponsors for this project, from whom you'll be hearing more as Step2 moves forward. TopSpin provides an amazing platform for content creators to connect with fans and give them a reason to buy. Its platform is used by big name artists like Eminem, Lady Gaga, the Beastie Boys and Paul McCartney, as well as tons of up and coming artists. And it's not just for music. They're powering sites for the likes of filmmaker Kevin Smith and are working with authors as well. We'll be seeing more details and case studies from folks associated with TopSpin in the near future. Then we have the Future of Music Coalition, who has been doing all sorts of wonderful things helping musicians deal with a changing market. Their latest project (again, which you'll be hearing more about) is the massive artist revenue streams project, in which they're gathering data from tons of musicians to better understand all revenue streams for artists these days. SongKick is an amazing new platform that is really doing cool things for the touring industry, and has some amazing insight into that important revenue stream for musicians, which we'll try to delve into on Step2. And last, but certainly not least, is Bandzoogle, a website platform for content creators that makes it easy for creators to build extremely powerful (and profitable) websites. As we recently noted, artists using Bandzoogle are making a lot of money, and we're looking forward to finding out more about how they do that.

Also, a special thanks to the crew here at Floor64 for the hard work in putting all this together and iterating on the original idea and turning it into a reality. Finally (and perhaps most importantly) an extra special thanks for the community of folks out there who have bandied about many of the ideas about how to connect with fans, and how to build cooler, better business models that inspired us to put together this platform.

So go ahead, jump in, join some existing discussions, start some new discussions, and let's help create and document as many success stories as we can.

Filed Under: business models, content creation, cwf, cwf+rtb, rtb, step2, success models

Author Dumps Publisher At Book Launch Party

from the cold dept

We've discussed a lot lately how we've reached the point at which many authors have realized that self-publishing is a better deal than going with a big publisher. This is leading some to turn down huge advances from publishers to go it alone. And some are now asking if it makes any sense for authors to bother with publishing deals any more.

As with record labels, I've always thought that there are a variety of factors at play here, and for some authors, it can absolutely make sense to sign a publishing deal -- though I would be very careful to understand what's in the deal. For example, I've noted that for an author that isn't that well known, it's possible that doing a deal with a publisher can help with the marketing and getting the book in the right hands. Of course, some recent authors have pushed back on this, noting that publishers often expect authors to do much of their own marketing anyway... and that the marketing that they do contribute often is a total waste.

Indeed, it appears that some more authors are agreeing with that. Novelist Polly Courtney, who had successfully self-published a couple of books a few years back, leveraged that success into a three book contract with HarperCollins. However, now she's made the news because at the launch party for the third book... she announced that she's dropping HarperCollins and going back to self-publishing. Part of the problem? The "marketing" that HarperCollins provided. In her mind, they tried to pigeonhole her book in a category where it didn't belong.

"My writing has been shoehorned into a place that's not right for it," she said this morning. "It is commercial fiction, it is not literary, but the real issue I have is that it has been completely defined as women's fiction … Yes it is page turning, no it's not War and Peace. But it shouldn't be portrayed as chick lit."

[....]

"I'm not averse to the term chick lit," said Courtney, "but I don't think that's what my book is. The implication with chick lit is that it's about a girl wanting to meet the man of her dreams. [My books] are about social issues – this time about a woman in a lads' mag environment and the impact of media on society, and feminism."

Apparently, the issue of the covers has been going on for all three books, so she's dropping HarperCollins at the first opportunity -- and doing so in quite a public manner. The final straw was apparently the positioning on this final book.

The jacket, which displays the chick-lit staple of a pair of slender legs, misrepresents the novel, Courtney believes. "The titles and covers have been a problem with all three of my HarperCollins books, right from the start," she said. "If I had my time again I certainly wouldn't have signed with them. There's a feeling that any author should be grateful for any attention they can get from any publisher – that they should take what they can get. But I don't think they should have looked to sign me on the basis of what I'd written so far."

Her decision to publicly ditch her publisher was the result of "three years of pent–up frustration", she said. "People are looking at my books and saying 'you've turned chick lit'," she said. "The irony is that what's inside the books hasn't changed. To give Avon their due, in terms of the editorial process they didn't try to change what's inside into something different. It's the packaging. From the reader's perspective, they'll see it on the shelf and think this is chick lit, and it's not."

What this highlights is that some of the benefit of a big publisher might also be its biggest weakness. And that's scale. Book publishers can do scale well, but in order to handle scale, they try to run things through the same formula. You classify and then you follow the playbook. But that keeps you away from doing anything really creative, and creates problems when a book doesn't necessarily fall into a pre-defined area. I think if publishers are really going to serve authors usefully going forward, they're going to have to become a lot more flexible, and a lot less about marketing-by-the-numbers.

Filed Under: books, business models, polly courtney, publishing, self publishing
Companies: harpercollins

More Evidence That If You Give People A Reason To Buy, They'll Spend More

from the no-more-analog-dollars-into-digital-dimes dept

For years, when we hear old media execs complain about new media, they talk about turning "analog dollars into digital dimes." But, of course, as we've seen, that ignores the reality, which is that the overall market continues to grow, not shrink. We saw this a few years ago when TopSpin -- a provider of a direct-to-consumer platform for content providers to market and sell -- provided some numbers on the artists they worked with and found that the average transaction price for people buying from musicians was much higher than the price of a CD. At the time, across all their musicians, the average transaction was $22 -- and some artists were seeing $50 or higher, with one having an average of over $100.

It appears that this is not limited solely to TopSpin, but other such platforms are seeing the same thing. Bandzoogle, a platform that provides a similar website/marketing platform for artists, has just announced that artists have made over $5 million via its platform, and noted that the average transaction price is $28.02:

• The average sale amount by Bandzoogle members is $28.02. That's an impressive number, and means that usually folks will by more than one album, or a CD and a t-shirt, etc. Those who think they are now in the business of selling 99¢ downloads can revise their assumptions.
  
  
• A bit less than half our members use our store features. Some don't have a store, or they integrate another store into their site, or outside of it. On average, Bandzoogle members that use the store feature make more revenue from it than they pay us in membership fees. This is wonderful.
  
  
• Digital sales (albums or tracks) amount to about 17% of sales. This means that physical items (CDs or merch) still sell a lot more than digital downloads. At least from a band's website. Maybe iTunes and other digital stores are where fans buy more of the digital goodies.
  
  
• There have been close to 200,000 transactions on Bandzoogle powered stores. Two hundred thousand times, fans have clicked on that "buy" button, and gone through the Paypal checkout. That's a nice number that proves that there are still fans out there that are willing to pay for good music and contribute to their favorite artists' careers.

It's not analog dollars into digital dimes if you do it right.

Filed Under: business models, reason to buy
Companies: bandzoogle

Indie Game Developer Posts Game on Pirate Bay, Sees Positive Results

from the it's-an-inside-joke dept

While many large game development and publishing houses complain about and attempt to fight piracy and torrents of their games, smaller, more flexible studios are attempting to use such avenues to their advantage. Such is the case with No Time To Explain developers tinyBuild.

TorrentFreak points out that tinyBuild saw an opportunity with the Pirate Bay to spread word of their game. The developers posted their game to the popular torrent site after adding pirate hats to all the game characters. A lot of people laughed and ended up buying the game. As tinyBuild told TorrentFreak:

We thought it’d be funny to leak a pirate version ourselves which is literally all about pirates and pirate hats. I mean, some people are going to torrent it either way, we might as well make something funny out of it.

We saw very positive WTF REALLY feedback from users, and saw reactions that people bought it simply because they liked the joke. So we don’t see it hurting sales in any way.

While such a move might not work for everyone, it does show that if a developer is willing to connect with fans, they can garner a lot of good will and possibly some extra sales. Even if that connection happens on one of those dirty pirate websites.

Filed Under: indie, sharing, video games
Companies: the pirate bay, tinybuild

How Much Does A Band Make From Various Music Platforms?

from the and-here-you-go... dept

My friend Tom alerts us to a blog post by the indie European band Uniform Motion (which he found via a blog post by Jason Weinberger), in which the band lays out clearly the cuts they get from selling their music on various services. It's pretty detailed, and since the world is often starved for this kind of data, we're going to share it, though, we also suggest that you check out the band's own Bandcamp page, and will embed the streaming player from there right here, before the content, so you can hit play and listen to the (excellent) music while you read the rest of the post.

Unfortunately, you will not find our record in any record stores. The reason for this is because we do not have a record label, which means we have no access to distribution. Without a distributor, you cannot sell your CD’s in record stores. If you work for a distributor and you’re interested in carrying our CD or Vinyl, or both, feel free to contact us! 

If you choose to purchase our music or use one of the ‘legal’ streaming services, here’s an overview of where the pennies go. 

SPOTIFY:  With Spotify, we’ll get 0.003 EUR/play. 

If you listen to the album all the way through, we’ll get 0.029 EUR.

If you listen to the album 10 times on Spotify, we’ll get 0.29 EUR

If you listen to it a hundred times, we’ll get 2.94 EUR

If you listen to the album 1,000 times (once a day for 3 years!) we’ll get 29.47 EUR!

If you use the free version of Spotify, it won’t cost you anything. Spotify will make money from ads. If you use any of the paid versions, we have no idea how they carve up the money. They only disclose this information to the Major record labels...

DEEZER:

Deezer seems to pay a little more.

We’ve been getting 0.006 EUR/play from them. That’s 0.052 EUR/album play. If you listen to the album 10 times on Deezer, we’ll get 0.52 EUR. If you listen to it a hundred times, we’ll get 5.2 EUR. If you listen to the album 1,000 times (once a day for 3 years!) we’ll get a whopping 52 EUR! 

If you use the free version of Deezer, it won’t cost you anything and Deezer will make money from the ads. If you use any of the paid versions, we have no idea how they carve up the money either.

eMUSIC:

eMusic is a subscription service. The cost of the album will depend on the plan you have. We get roughly $0.29/song or $2.60/album (9 songs).

AMAZON MP3:

You’ll pay 7.11 EUR to download the MP3’s. We will get 4.97 EUR of that. That’s a 70-30 split.

iTUNES:

The album will cost you 8.91 EUR to buy from Apple.

There’s a 70-30% split there too, so we will keep 6.28 EUR/album.

That being said, it costs us 35 EUR/year to keep an album on iTunes, Spotify, and Amazon (105 EUR per year for all 3 of our albums!) so we don’t make any money until 24 people have bought a digital copy of the album on iTunes, or 150 single songs, or if we get tens of thousands of listens on Spotify! In most cases, it’s actually more economically viable not to sell the music at all.

But what about if you buy the Digital version directly from us?

DIGITAL:

We allow people to pay what they want for the digital version. If you choose to pay 5 EUR, Paypal takes 0.37 EUR, Bandcamp takes 0.75 EUR. Uniform Motion keeps 3.88 EUR. it doesn’t cost us anything to have a page on bandcamp

If you decide to pay nothing, well, we get nothing, but at least you didn’t give money indirectly to major record labels, which seems to be the case with Spotify!!

CD: 

If you buy a CD, directly from us for 10 EUR, Paypal takes 0.515 EUR, Bandcamp takes 1.5 EUR. So there’s slightly less than 8 EUR left for us. But hold on a second, it costs a fair bit to make the CD.

The CD itself costs 1.2 EUR, the booklet costs about 50 cents, the CD packaging is 1.8 EUR and the sticker on the front costs 35 cents.

That’s a total of 3.65 EUR

So in reality, there’s 4.34 EUR left for us.

VINYL: If you buy a 12” Vinyl from us at 15 EUR, Bandcamp takes 2.25 EUR, Paypal takes 0.646 EUR so there’s 12.10 left. The cost of the Vinyl itself is 3.06 EUR

The labels cost 1.3 EUR. For a total of 4.36 EUR

So there’s 7.75 EUR left for us.

However, we had to press 250 of these (because that’s the minimum order), so it’s very unlikely we’ll make any money on them.

We need to sell 72 copies before we break even on the vinyl edition. We’ve sold about 30 so far.

If we break even, we’ll lower the price a little bit. :)

Always nice to see this kind of detailed info shared so people can get a better sense of the wider economics. What really comes through from all of this is that, as has pretty much always been the case with all but a handful of top acts, musicians don't make much money from selling music. At least, as an indie band, Uniform Motion actually does make some money from all of these methods. If it was a signed band, they'd almost certainly be making zilch on each play or sale, because the label would keep it until they "recouped," which for nearly every signed act is approximately never.

However, it does drive home the need for ancillary revenue streams -- such as performances. Performance revenue has issues too, but to make a living making music, it seems pretty clear that most acts need multiple revenue streams.

Also, shame on Spotify for keeping the details of what happens to subscription revenue secret from all but the big labels.

Filed Under: business models, streaming, uniform motion
Companies: apple, bandcamp, deezer, spotify

Kevin Smith Explains Why He Had To Waste $9,316 On Movie Ads That He Didn't Want Or Need

from the the-broken-system dept

We've been covering for a while entertainer Kevin Smith's business model experiments, which rely heavily on his wonderful ability to connect with fans. We've also been fascinated with his more recent decisions to buck "the old way" of doing things and to focus on marketing his latest film, Red State, in a way that he thought made more sense. So far, that's meant a very cool (and quite profitable) plan for Smith to tour with Red State and to combine his usual (wonderful) Q&A sessions with showings of the film. Another part of the plan is getting the film out there in as convenient a way as possible, meaning a video on demand release before the wider theatrical release.

One of the key points of this plan was that he wasn't going to fall into the trap of wasting money on advertising. So far, everything that he's done has been built off of word of mouth -- in large part from his Twitter feed and his growing network of podcasts (I used to listen to nearly all of them, but can't keep up any more). And it's worked out great. Crowds continue to flock to see him, and the movie is getting plenty of buzz among the folks its targeted at. However, he's finally made an exception to the "no advertising" rule, though he's somewhat annoyed that he had to do this. If you've heard him speak about Red State, you've heard him talk about a few of the top notch performances that came out of the film, and Smith and some others think that perhaps some of those performances are "Oscar-worthy." But... the Motion Picture Academy is not known for changing with the times or being willing to adapt to the way films are watched these days. So it "requires" certain things to happen to have a movie "qualify" for the Academy Awards, and that apparently includes a week's worth of screenings at a "real" theater... and newspaper advertising. Why? Who the hell knows. Just don't question the Academy.

So, in a blog post detailing the financial results of the week of shows at Quentin Tarantino's New Beverly Cinema, he also explained why they had to totally waste $9,316 on ads that didn't bring anyone new to the theater:

Per the AMPAS rules that govern the qualification for the Oscars, paid ads needed to run in conjunction with a seven day, official theatrical engagement. This was a bitter pill to swallow, as we’ve sold lots of Red State tickets all year long without running a single paid ad. But a rule’s a rule, so after the AMPAS folks signed off on the New Beverly for the home of our Los Angeles run, we spent $9,316 on newspaper ads.

It still makes me queasy – solely because it’s money not well-spent. We’d sold out all of our weekend screenings before the ad ever ran in either of the three papers we bought space in: the LA Weekly (six inch ad), the LA Times (same), and the west coast edition of the NY Times (1/2 page ad).

Comparing the take on various live showings that he's been doing, Smith notes that two shows he did last week in Texas basically "covered" the cost of the ads, which seems pretty silly. You're supposed to be advertising to make more money, not making money to pay for the ads you don't want. But such is the legacy structure of the movie industry these days.

Separately, we greatly appreciate the fact that Smith is willing to be so open about the financial results, which helps give more people the details needed to understand how these industries work. It's so rare that people doing these kinds of experiments are willing to reveal any numbers, so it's refreshing to see him being so open. The only thing that would be even better is if he could also open up about some of the costs, so we can get a better idea of the net results, rather than just the gross. Obviously, the theater takes a cut of some of this stuff, and that would be useful for others contemplating following in his footsteps. But, still it's great to see this kind of openness:

we ran the flick for a week at Quentin Tarantino’s New Beverly Cinema in Los Angeles (big thanks to Julia!), where we did two screenings a night, which I followed with 30 minute Q&A’s. Tickets were $20 for the Friday to Wednesday screenings and were followed by post-show Q&A’s with Fatty McNoFly, scourge of the skies.

Since few movie sites ever wanna include us in their box office wrap-up pieces (nor mention that we had the highest per screen average for the last two weeks), here’s the financials for how Red State performed that week…

Friday August 19th
6:30PM 215 – tickets sold $4300
9:00PM 215 – tickets sold $4300
Total for Friday, 8/19: $8600

Saturday August 20th
6:30PM 215 – $4300
9:00PM 215 – $4300
Total for Saturday, 8/19: $8600

Sunday August 21st
6:30PM 215 – $4300
9:00PM 215 – $4300
Total for Sunday, 8/19: $8600

Monday August 22nd
6:30PM 154 – $3,080
9:00PM 215 – $4,300
Total for Monday, 8/19: $7,380

Tuesday August 23rd
6:30PM 168 – $3,360
9:00PM 215 – $4,300
Total for Tuesday, 8/19: $7,660

Wednesday August 24th
6:30PM 215 – $4300
9:00PM 228 – $4560.00 (oversold)
Total for Wednesday, 8/19: $8,860

Friday to Wednesday total: $49,700

On Thursday, I didn’t Q&A after the screenings at all, as per AMPAS rules (regarding leaving filmmaker-free screenings open for Academy members so they can watch the flick without influence). Thursday’s ticket price was only $7 for the movie only ($7 is the normal New Beverly admission price, although usually that’s for a non-first-run double-feature). Even that did solid numbers…

Thursday August 25th
6:30PM 175 x $7 = $1225.00
9:00PM 191 x $7 = $1337.00
Total for Thursday, 8/19: $2,562

Friday to Wednesday total: $49,700
Thursday total: $ 2,562
New Beverly Total: $52,262

Of the 2,675 seats available from Friday to Wednesday, we sold 2,580. From Friday to Wednesday, over the course of twelve screenings, merely 95 seats ever sat empty. Had our start time been 7:30 each night, we likely would’ve sold those seats as well (it’s a bitch getting anybody out in L.A., let alone at 6:30 at night; folks are still getting home from work).

Ah, but isn't the movie industry dying? That's what the MPAA keeps telling us. And yet, if you connect with fans and give them a real reason to buy, it seems they don't mind buying... Shocking, I know...

Filed Under: ads, business model, funding, investment, kevin smith, profitability, red state

A Response To Felicia Day On How Video Gets Funded In A Fragmented, Digital World

from the all-sorts-of-ways dept

Mark asked us to weigh in on an interesting post on Google+ by Felicia Day, wondering about the future of video content. Day, of course, has been quite successful in embracing the online community as well as new and different business models. She lays out the question in response to the news of Fox and others deciding to delay legal options and how that's likely to drive more people to unauthorized file sharing. She notes that, from a business perspective, this seems scary, but she also seems to recognize that it's reality (rather than denying it, as some people do):

There is a basic principle working here (scary, if you're in the TV business) that I've personally been dealing with on The Guild with a mere 2 DAYS! delay of releasing content: People want content immediately, wherever they like to view things. They don't care if you're trying to pay production bills, they don't care if it's the only way to fund things, they want it NOW, they want it CONVENIENT to them personally. Whether this is a reasonable attitude or not, it's what people are used to in this day of streaming on demand, and it's only going to get worse, because cord-cutters are getting more and more common. Long view=not good.

From there, she picks up on the trend of cord cutting we've been discussing, echoing to some extent Wil Wheaton's recent comments about the backwardness of many in the TV business today:

To me, the cable box seems like Tower Records 10 years ago, or Borders just 2 years ago. Look at how music and books have shifted to digital, on-demand purchasing. Cable companies are the "brick and mortar" place for video, and that business is dying. People don't have enough time for 140 channels, they have enough time for maybe 10 shows, that's it. Why pay 140 bux a month to watch that many shows when you can buy them individually? Or stream The Wire on Netflix for 8 bux a month, because you missed it the first time? Or play a video game? Or just surf the net?

But then she asks a final question, which is basically, "but how will we continue to produce videos" in this world? I should be clear: she doesn't seem to be doing this in the same "but you must save us" way some in the industry have done. She's just asking an honest question she has about where the world is going, because she's unsure:

So my question is: What happens to all those shows when they fragment like that? Who is gonna pay to produce them? What is the future? (And "funded by viewers" model is not the answer, only 1% of people ever really contribute, and the up-front costs of producing video are WAY higher than making a record or a book, etc. Believe me, I understand this personally.)

First off, one quick point before delving into the larger question: the whole "only 1% of people ever really contribute" claim is a common one, but I think it's a misleading one. While it lets some people write entire books on evil free riders, it's really meaningless. If you can get more than production costs out of that 1%, the fact that it's just 1% really doesn't matter, right? And, no, I'm not saying it's easy to cover production costs from 1% -- it's not for most productions. But I'm just showing that 1% by itself, without context, is meaningless. What if, for example, that 1% is made up of super wealthy patrons who are happy to fund the full production? Or, more realistically, what if those 1% are people who represent companies willing to buy advertising? Just because it's 1% doesn't mean you can't have a viable business model. The % is meaningless. All that matters is the absolute dollars.

But on to the larger point of what happens to video in a fragmented world? Well, I sense that it's going to be awesome. As with music and books, it will allow all kinds of niche productions to show up, which would simply never make it at all in a "network" world. In fact, this is already happening -- and Day's been a part of some of that with things like The Guild and Dr. Horrible. As for how to fund it, well, again there are a variety of options. One of the things that changes is that there's no longer "one clear path," but that hardly means there's no way to make money. It may take more experimentation, but there are all sorts of options, mostly involving a hybrid of models.

For years, of course, we've talked about how the new business models are built off of the formula of connect with fans, while giving them a valuable scarce reason to buy, and that certainly applies to video as well. In the past, for example, we've listed out 10 forms of scarcities that can help you figure out good "reasons to buy," and most of them apply to video as well. Let's take a look:

1. Access: This remains a huge one, of course. We mentioned a study in the past where 19% of music fans said they would pay anything to meet their favorite star. That's hyperbole, of course, but people are willing to do crazy things to meet their favorite stars. With a video, you could make it even more interesting by doing things like offering up the opportunity to be "an extra" on a shoot or something. How much would fans of The Guild pay to show up in an episode, even if briefly?
2. Attention: Here's an obvious one. When you have an audience, their attention is a scarcity that can be sold. Day, for example, has had success selling sponsorship deals for The Guild. That's an example of selling attention, and is basically the way lots of video (hello, network TV) has been funded for ages. Just because that attention is now online, it doesn't mean that the value of that attention goes away. Yes, it's absolutely true that online video attention isn't valued nearly as high as attention on TV, but it doesn't always have to be that way. And, there are even a few examples of shows online being able to command higher rates than shows on TV.
3. Authenticity: This isn't necessarily something you sell directly, but the more authentic you are, the more people will respond to that. Again, it's something that Day has mastered as well (as you can even see in the post that she wrote and her discussions on the matter both on Google+ and Twitter). Follow Day on either platform and it's just oozing with authenticity, and what that does is really build up her core and loyal audience. While she may say that only a small percentage will actually pay, never underestimate the ability of truly loyal "true fans" to help you figure out how to make money. Authenticity has a way of increasing such fans.
4. Exclusivity: This can be a tricky one, because some people think it means "locking stuff up" to make it exclusive. But we're talking about other forms of exclusivity, which don't involve pissing off other people. How about the ability to buy an old prop from a show? Or a chance to play WoW with the cast of The Guild. These are things that can very reasonably be exclusive. Day has done some stuff with offering The Guild slightly earlier, and as she notes in her post, that just seems to upset people. Doing anything that involves this kind of artificial exclusivity can be tricky -- especially when it's something that has a social component. While The Guild is a broadcast video, part of any really successful cultural content is the fact that you share it/discuss it with others. That's what makes it culture. Limiting when people can see content can actually take away value in that it harms that form of "sharing" (no we're not talking about "piracy" here). The ability to discuss a favorite show with others is, in many ways, part of the appeal. Taking that away through fake exclusivity can backfire.
5. (New) Creation: Any work before it's created is still scarce. Another way of looking at this is effectively the ability to do custom or commissioned creations. Imagine an offering where you could write a "fan" script of your favorite shows (within reason, of course). How many people would jump at the chance?
6. Tangibility: A scarcity that still sells. Never doubt the potential for tangible merch to sell. While it's something of a joke that people (falsely) claim that the business model we suggest for everyone is "sell t-shirts," that doesn't mean you should ignore the potential of t-shirts. They can be quite lucrative (and, yes, for all the people asking, we really will be restocking our own t-shirts soon).
7. Time (saving or making): If you can help people save time or make more time, people will often pay. This is one that may be a bit tougher to apply to TV, but I'd be interested in hearing suggestions. I know that some podcasting products have things like "double time" that let you listen to the same podcast at a (pitch-corrected) sped up pace. I wonder if there would be a market for "sped up" video too? Perhaps not, but just tossing it out there for brainstorming.
8. Convenience: Day mentioned this in her post. People want convenience above all else. This part is less about what an individual show can do, probably, and more about the platforms. If Netflix/Hulu/YouTube/BitTorrent/some-other-platform can make a work more convenient, then it becomes important to figure out how to embrace it... or else your fans will go there without you.
9. Belonging: Never, ever underestimate how important a sense of belonging can be to a group. This can be manifest in a variety of ways (including some listed above). But it certainly opens up opportunities for things like fan clubs, where a small subscription fee gets you cool "extras." This also goes back to the tangible merch as well. One part of belonging is showing off that group you belong to.
10. Patronage: This one is still looked down upon by some, and it's rarely a good option if you're betting entirely on it, but serious opportunities can come out of just asking people to support an artist -- especially one who really connects with the fans in an authentic way. Sure, perhaps only 1% of the people will be willing to act as patrons, but combined with other things listed above, you can build a really strong business model.

That's just my quick pass on thinking through some ideas for where video goes. Will some video productions fail as the market heads in this direction? Absolutely. But that's the nature of what happens when platforms and markets change. Radio stories more or less went away in an age of television, and TV found certain types of stories worked better on TV than they did on radio (and some worse). So things changed. And that will certainly happen online during this transition as well. But I can't see how it's likely to be worse or more limited. There's a ton of opportunity out there, and I have no fear that all sorts of unique and workable solutions are coming about for video.

Filed Under: business models, felicia day, reasons to buy, video

Dubstep Producer Bassnectar Talks Piracy, Leaks And Making It Easy For Your Fans To Support You

from the it's-CwF-and-RtB-all-over-again dept

California dubstep/bass artist Bassnectar has built a solid following over the past decade, culminating in appearances at major music festivals, including Lollapalooza, Bonnaroo and the Ultra Music Festival. Despite his loaded touring schedule, Bassnectar (a.k.a. Lorin Ashton) still keeps in touch with his fans (30K on Soundcloud, 550K on Facebook) via his regular Fan Bass Q&A feature.

An anonymous fan recently asked a question that's on the minds of artists all over the creative spectrum:

What do you think about the people that leak and download your music (or any music) without paying?

Bassnectar's thoughtful (and amazing) response runs an entire page and is quotable all the way through. He begins by addressing the "leaked album" situation:

When we sent out promos of "Divergent Spectrum" we knew without a doubt it would get leaked. It is kind of an honor that enough people care, that they want to get it and share it as soon as possible. Instead of worrying about it, we just figured "Let's let people decide what they want to do." If they want to support me, let's make it easy for them to do so. We created a presale option, and added a stack of exclusive Bonus Material (loops, bits, outtakes, sketches, ...kind of like the "Special Features" on a DVD) as a gift to everyone who did this, knowing it was an act of love and support for them to pre-order something they could just download for free.

There are two key points to this statement, points that other artists (or more often, their default representatives -- label spokesmen, royalty collection agencies, etc. ) tend to ignore when discussing piracy. One: a leaked album is a sign of interest. Very few people will track down a leaked album from an artist they have no interest in. Two: make it easy for fans to support the artist, preferably directly. The more paranoid you are about leaked albums and "lost sales," the less likely it is that your music is easily found and purchased.

Bassnectar goes on from there, letting his fans (both paying and non-paying) know how thrilled he is with being Bassnectar:

For me, I am so incredibly grateful for everything in my life right now, i can't really ask for more. We have sold out nearly every single show in the past year, and the legion of bass heads is growing every day. I am honored that people want to explore my music. I am honored that they want to share it with their friends. I am not worried about being supported, because I feel so much support each day, in so many different forms.

On principle though, I do think it is important for ALL ARTISTS to make it easy for people to support what they love. And it is important for those who love the art to decide how they can support art and artists, and allow it to continue.

There it is again: "make it easy for people to support what they love." Hitching your music to major label's whims, proprietary systems, various rights agencies and digital rights management "tools" does nothing but make it harder for fans to support you, much less share the experience with others.

He also hammers home a point made over and over again here at Techdirt: spending time and energy attempting to prevent piracy will only leave you tired and frustrated. The music world doesn't work the way it used to, relying on "top down" distribution. At the same time, he makes a genuine request: if you love an artist, find a way to support them.

In 2011, art and culture exist as DIGITAL MEDIA, and it is naive to think it will not be leaked or downloaded or shared or "stolen" repeatedly. It is just a fact of life. People need to decide for themselves if they want to steal or not. And if they *DO* then they can decide if and how to follow up with support. If you download leaked music, and you enjoy it, why not go buy an official copy? It seems fair. You are not obligated to do this, it is just a choice. Do you enjoy the artist? IF YOU ENJOY, THEN SUPPORT. If not, then simply carry on. It takes a LOT of time and energy for artists to create their craft, and even more time and energy for them to prepare a release, and to distribute it. You can support what you love in many ways, and in a sense you vote with your dollar.

It's that simple. An artist's best weapons against piracy aren't takedown notices and legislation. The best weapon is still an honest connection with your fans (paying or not). Simply talking to them directly about you and your work does more for your bottom line than a million anti-piracy screeds. Even better, give them a reason to buy and as many ways to buy as possible.

I'll leave you with this choice clip of Bassnectar in action, sporting the finest head of heavy metal hair to ever find itself in front of a tableful of electronic noisemakers:

Oh, and his discussion has spilled over onto his Facebook page as well, which is worth checking out.

Filed Under: bassnectar, connect with fans, fans, piracy, promotion, sharing

Blink-182 Rewards Fans Who Uploaded Unauthorized Clips On YouTube

from the nicely-done dept

Nearly two years ago, we wrote about an interview with Tom Delonge from the band Blink-182, in which his views on the music industry seemed very closely aligned to exactly what we've been saying for years:

The one thing I've learned is that, like any other type of art, it evolves. So if you're a business that supports a type of art, you need to evolve with the art. Now, a lot of things have happened that have made creating art a lot easier with the computer. And it's also made the distribution of art a lot easier.... What I have chosen to believe is that if you look at your band with a modern filter, your band has so much potential to have all these different elements about it. You can create all this really cool merchandise and concert/live experiences. You can create a really cool portal on your website. You can mix all these elements together and I always believe that if the tools are available, you can monetize all these other elements, and not really worry about selling the record. In fact, I believe that, you should take down every barrier and put as much music out there for free...

In my mind, the way the music industry is changing is that music is easier to make and it's easier to give away for free. And that will enable the band and the music and the art and everything to be bigger than it's ever been. It's just how do you collect that and how do you build your business...

So it comes as little surprise to find out that the band has decided to do something cool with fans who "infringe." As a whole bunch of you have been sending in, the band created "the film festival you didn't know you entered," in which they (with the help of AT&T who appears to be sponsoring the band) collected a bunch of unauthorized YouTube clips and put them together in a montage to launch their first new single in eight years: The key is in the opening text: AT&T helped us search YouTube for every instance of fans using our music without our permission.

And then we rewarded them for it.

Thanks for being a fan. Always nice to see yet another band who recognizes the importance of connecting with fans rather than treating them like criminals.

Filed Under: blink-182, fans, rewards
Companies: at&t

Another View Of The Netflix Price Hike: It's Speeding Up The Shift To Online Streaming

from the killing-the-cash-cows dept

When Netflix dramatically increased its prices for some subscribers, we immediately suggested that the ridiculously high licensing deals that Hollywood has been demanding were to blame, and wondered if Hollywood was killing the golden goose, by strangling it with high fees. I still think there's something to that, but Ken Doctor has an alternative take that's quite compelling. His argument, supported by Netflix CEO Reed Hastings, is that the price hike -- mainly focused on those using the physical DVD rental business, is designed to speed up the shift to online streaming.

When Netflix shocked everyone by pricing way up DVD-by-mail subscriptions — up to a 60-percent increase — that’s what he was doing: forcing the digital shift. The digital shift is what Hastings wants to happen faster. Right now, 60 percent of his 25 million subscribers are DVD takers, and the majority of the revenue is on that side of the business. He knew when he started the business that he would start with DVDs, but that the long-term business was streaming (“Six Lessons for the News Industry from Reed Hastings“). He just had to wait for the rest of the world to catch up to that vision.

The economics of his business is clear. Charge consumers less (for now) for streaming ($7.99 a month) — and profit more. As he shifts the business, the cost of revenues has already decreased almost two percentage points in a year, from 64.6 percent to 62.8 percent. Lower cost of revenues means higher cross margin, and that’s what investors have loved about the company.

In other words, the price hike isn't necessarily about the higher fees from Hollywood (though that's still there), but about speeding up the company and its customers' shift from relying on DVDs to digital. In some ways, that's really quite a forward-looking view. Most businesses that deal in having to shift their businesses from analog to digital tend to go in the other direction: seeking to delay the shift as long as possible, continuing to squeeze out the cash cow part of the business for as long as possible. You hear that all the time with people in the music, movie, TV and news business, whenever they say things like "we'll shift when there's a proven revenue stream." That's cop-out talk for "we're going to hang onto our old business until it's too late and others have taken our market."

Netflix, on the other hand, may be going in the other direction, actually seeking to be ahead of the curve for many of its customers, and then using the pricing wedge to nudge them forward to going digital only. I'm not sure I fully buy it, but it certainly puts a different spin on things.

Filed Under: digital, disruption, movies, price hike, streaming
Companies: netflix