Brian Mazzaferri, lead singer of independent rock back I Fight Dragons, has made a post on We Are Listening about how he and his band made $10,000 in 48 hours by selling ‘Lifetime Membership USB Drives’.

The band, which is only 9 months old, has focused on building a fanbase and giving their fans lots of free music through their mailing list. When they reached the point where they were starting to think how they could monetize off their music, instead of going the traditional (and outdated) route of recording an album and selling it, they came up with an idea that would not only give their fans a lot more, but them also.

The idea they came up with was to sell ‘Lifetime Membership USB Drives’ which were basically USB drives preloaded with all of the music they’ve ever released and they guarantee the owner a free digital copy of anything they ever release, as well as free admission to any live show of ours now and forever. And there were only 100 made.

Needless to say, they all went quickly, but the question is; why?

Brian puts it down to 3 reasons:

We gave a lot of free stuff away. A LOT.

The upside is infinite.

We’re selling Memberships, not Products.

These are all things we’ve discussed before and Brian’s story, once again, proves that you can build a successful business model around free content.

My point is this:  we started our relationship with our fans by giving.  And then giving more.  Then more.  This is the first time we’ve really tried to sell anything to our mailing list, and it’s been 9 months!  Fans jumped at the chance to support us, and many many more were disappointed that we sold out so quickly, because they didn’t get a chance to buy.  We’ve shown our fans that we respect them and support them, and now they want to do the same for us.

This quote from Brian is almost identical to something Amanda Palmer said a few months ago. If you show your fans that you care, they will want to support you in any way possible. Brian even goes on to say that many of their fans felt guilty as they know they are getting way more than $100’s worth of value from the Membership, and they will continue to purchase any future releases, even though they have free access!

Yet another example of Mr. Masnick’s CwF + RtB business model in full effect.

On September 8th, Apple unveiled its latest ‘innovation’ to help prop up the recorded music industry – the iTunes LP. For only seven bucks more than a regular digital album, you can get some pretty pictures and liner notes. Facepalm!

But the story doesn’t end there.

Last week, Brian McKinney of Chocolate Lab Records told Gizmodo that Apple was charging record labels $10,000 in production costs to release an album in the iTunes LP format – and indie record labels need not apply. Apple later denied that allegation and said it is working on releasing the specs for the LP format and making them available to all, indie and major labels alike.

Regardless of the outcome of this “he said she said” tempest, it amplifies the silliness of the iTunes LP format itself.

Several web developers have dissected the format to find that it is essentially HTML, Javascript, CSS, and multimedia content – a website. For a little more than the cost of an actual physical CD, you get to save files to your hard drive that largely mirror content you can find online, from the artist’s website itself to Wikipedia, YouTube, and others.

I’ve been unable to find sales figures for albums released as iTunes LPs, but I’m curious to see how successful (or unsuccessful) it has been to date. Until then, the question remains whether Apple’s initiative – jacking up prices to include nicely designed text and album art with digital music files – can connect with fans, especially as consumers are shifting away from the album as a default container for music.

Until Apple opens up the specs to the iTunes LP format, indie artists who wish to bundle additional content with their albums can stick with a tried and true format: the zip archive. For years, netlabels and some independent artists have simply added media and documents to zip files of album tracks and offered the complete package to fans.

Bandcamp (one of the best music hosting/distribution sites out there IMHO) recently began offering this feature to artists on their site. Types of content you can include are limited only by your imagination and file-size concerns – videos, images, pdfs, etc. And with a little web development skill, artists can replicate a centralized user interface for interacting with the album’s content just like the iTunes LP.

It’s always nice to hear success stories from artists who put out their own indie releases, but this year I was able to witness first hand, and be a part of, such a project. I want to share with you how hip hop artist Cambatta and DJ Nice released and promoted ‘The Visionary’.

In 2008 Cambatta was an unsigned artist who was was trying to get his name out there, particularly on the mixtape circuit. With the help of old school friend DJ Nice, he decided to start work on his debut release, titled ‘The Visionary’.

DJ Nice was already an established name on the mixtape scene as both a DJ and producer, and with his experience and contacts Cambatta was granted access to many talented producers and artists to work with.

Before the album was released, Cambatta and DJ Nice did a number of things to create a buzz. They released a few collaborations with more well-known artists for free in order to raise Cambatta’s profile. These songs made appearances on many top hip hop websites, enabling Cambatta to reach a wide audience.

One of those songs was ‘True Magic’, featuring signed artist Skyzoo. This track did a great job exposing hip hop fans to Cambatta’s music, Skyzoo was already an established artist with a big following, so his name garnered a lot of attention for the song. In order to capitalize off this attention, DJ Nice decided to run a remix competition. Producers were given access to the acapella of the song and were asked to come up with their own remix, the winning remix was to be featured on the album. They received a huge amount of submissions for the contest, and as a result, created a lot of buzz for the album.

They also shot a couple of music videos and released them online.

During the recording of the album DJ Nice remained very active in certain online communities, he updated people on the progress of the album as well as getting them involved.

So when the album was released in January of this year, for free, Cambatta and DJ Nice had already built up a lot of hype, gotten various hip hop publications’ support and connected with their fans. In no time at all, ‘The Visionary’ had spread all over the net and, with the help of some viral marketing, the album has racked up over 8000 downloads (and that only includes downloads that were tracked).

A few months after the release they decided to re-launch the album on CD and digital download services so that fans could have the option of paying for album. For this they hooked up with clothing company Narcocorrido Brand and arranged a cross-promotion deal, in which a free t-shirt was bundled with every album sale, and a free copy of ‘The Visionary’ came with every t-shirt sale.

The reason that this project succeeded is one which we talk about here all the time. They connected with their fans, and gave them a reason to buy. Their presence on online communities during the recording and release of the album made people feel like they were a part of it, so of course when it was eventually released they were excited to hear the final product. The album was released for free, this was important because it was Cambatta’s debut effort. Had they released it initially as paid only, they wouldn’t have seen the success they did. Not because the music wasn’t good enough, but simply because it wouldn’t have spread as it did.

For a debut album I don’t think the two could have done much better. They handled everything themselves, from the recording and the album artwork to the marketing and the sponsorship deals. It’s great to see that new artists are coming out with a clear understanding of the current music business and what the future holds.

“We are currently looking to do more promotion deals with sponsors in the coming months such as; cross promotion with another clothing sponsor in a to-be-filmed professional music video, branding/merchandise from a sponsor to be given to fans via contests and giveaways etc.” DJ Nice told me. “Overall we are looking to give people a chance to interact, support, and most importantly feel they are supporting an artist who they can see growing and succeeding.”

‘The Visionary’ is available to buy now from iTunes, Amazon, Rhapsody and CD Baby.

In 2007, Radiohead released its album “In Rainbows” with an interesting twist – along with traditional CD and vinyl versions, as well as 99 cent tracks on iTunes and other digital retailers, the band offered its own digital downloads of the album on a “pay what you want” basis.

While solid numbers are difficult to come by, the experiment appears to have paid off for Radiohead. Along with the huge amount of press the move generated, the band reported over 3 million combined sales (physical and digital), and “rumors, polls, and inside sources” suggest that the average person paid around $4 to download the album. It is also very likely the pricing model itself drove demand for the band – the deluxe edition box set of “In Rainbows” sold over 100,000 copies (at $81 a pop) when it was released three months after the digital release, and Radiohead went on to its most successful tour to date.

But what’s most interesting is how the music industry responded to this experiment – it didn’t.

Over at Music Think Tank, Keith Jopling asks, “Why didn’t ‘In Rainbows’ open the music floodgates?” He frames the question in a broad sense – why haven’t established bands followed suit with their own foward-thinking, innovative strategies? But for now, I want to focus only on Radiohead’s specific strategy of using the “pay what you want” pricing model.

Established bands are unlikely to adopt such a strategy – Radiohead had left EMI/Capitol and was on its own when it released “In Rainbows.” Call it inertia, risk-aversion, comfort with the status quo, the major labels and the artists they represent move at their own pace.

Emerging bands, on the other hand, are resistant to the “pay what you want” model for other reasons. The only reason it worked for Radiohead, they argue, is because Radiohead already has a huge and loyal fanbase – they could release paper plates and still make money.

So the “In Rainbows” experiment remains an anomaly. But does that mean that the “pay what you want” model itself is necessarily an anomaly? Or can indie musicians learn from Radiohead and find some success from asking fans to choose their own price?

Some have, actually. Magnatune, a hub for independent musicians, offers monthly subscriptions at a “pay what you want” price (although with minimums above free for streaming and downloading) – and splits its proceeds 50/50 with its artists. Again, recent sales numbers are scarce, but based on past numbers, the site seems to be doing well and growing, with several of its artists earning close to 5 figures a year.

Over at Music Think Tank again, Derek Sivers today offered this anecdote illustrating a band using the “pay what you want” model:

Terry McBride of Nettwerk told this story at a recent conference:

A band he was managing was doing the usual thing of selling CDs for $15. They’d mention it once or twice from the stage, and sell about $300 per night on average.

He asked them to try a completely different approach:

1. Say to the audience, “It’s really important to us that you have our CD. We worked so hard on it and are so proud of it, that we want you to have it, no matter what. Pay what you want, but even if you have no money, please take one tonight.”
2. Mention this again before the end of the show, adding, “Please, nobody leave here tonight without getting a copy of our CD. We’ve shared this great show together so it would mean a lot to us if you’d take one.”

It changes the request from a commerical pitch to an emotional connection. (Replace market mindset with social mindset!) Allowing them to get a CD for no money just reinforces that.

Terry said that the band did this for a while, and soon they were selling about$1200 per night on average, even including those people who took it for free! I think the average selling price was about $10.

But the important part came next:

Because every person left each show with a CD, they were more likely to remember who they saw, tell friends about it, listen to it later, and become an even bigger fan afterwards.

Then, when the band came back to a town where they had insisted that everyone take a CD, attendance at those shows doubled! The people that took a CD became long-term fans and brought their friends to future shows.

My advice for independent musicians is to not dismiss the “pay what you want” idea right off the bat. Keep it in your toolbox of business models. It very well may be viable, and may actually lead to more success than going the traditional route in certain situations.

Image courtesy of BockBilbo

I saw Mike Masnick post this on TechDirt a few days ago but only got around to reading it this morning. This is a paper written by Bas Grasmayer as part of the research for his thesis on the future of music distribution. Bas analyses 5 musical releases that used new business models; Radiohead’s ‘In Rainbows‘, Nine Inch Nails’ ‘Ghosts I-IV‘, Groove Armada’s ‘Drop The Tough‘, Danger Mouse and Sparklehorse’s ‘Dark Night of the Soul‘ and Mos Def’s ‘The Ecstatic‘.

Click here to read.

After analysing each one he draws the following conclusions:

What does NOT work (well)

• Not going all the way. Fans love free music and so do people that are not familiar with the artist’s work, but if you’re going to give something away then really give it away. If you don’t, you won’t get the attention you were hoping and might even disappoint some fans instead of connecting with them.

• Creating unnecessary mediums instead of utilizing existing ones. While the Bacardi B-Live Share application looked cool (now offline), it was completely unnecessary. Instead of creating a digital dashboard with meaningless graphics, it could have been executed in a much simpler fashion by utilizing existing social networks or filesharing websites. IF you’re going to set up such a thing, then at least make it interactive, social (in terms of enabling users to interact with each other) and add value (with videos or a game for instance). You could even use it to sell other products of the band or artist.

• Expecting people to pay for what they can get for free. People might pay, but most will pick whatever way is most convenient. Usually, this is by remaining seated at your computer and by avoiding complicated online payment procedures. Sure, people should use legal ways to buy music, but the reality is that people go for convenience.

What does work (well)

• Giving fans a reason to buy. Instead of expecting people to pay for something which they can, perhaps more easily, get for free, create added value. This is what Nine Inch Nails, Mos Def and Danger Mouse and Sparklehorse all did very well. Instead of expecting people to pay for the music, they all created something besides the music which people would be more willing to pay for.

• Freemium. By offering something for free, one connects with fans and they will spread the word about you (as long as what you’re offering has value). Once attention has been garnered, and perhaps sympathy has been won, you can offer a premium product. This is how Radiohead and Nine Inch Nails have been successful with forementioned albums. First you give something for free, then you market your premium; freemium.

• Understanding that the package IS the product. This goes for all of the cases, except for Groove Armada. In the case of Danger Mouse and Sparklehorse as well as Mos Def, the package was actually the reason to buy the product. In the case of Radiohead and Nine Inch Nails, they marketed the package as premiums, perhaps understanding that it’s hard to make money if you have to compete with free, meaning music downloads.

• Buzz. By generating buzz, you can turn people just turned on to your product into fans. These fans can then later be marketed to when trying to sell premium packages (or subscriptions for example). Even if they don’t buy, having them talking about your brand or product increases the buzz. This works best if they can give others free samples (free music) to see for themselves how great the brand or product is.

• Co-branding. By co-branding, the two brands can both benefit of each others’ resources and skills. In the case of Groove Armada and Bacardi, the latter benefits mostly from Groove Armada’s image and the ability to promote themselves on all Groove Armada-related products, this includes live performances. Groove Armada on the other hand, benefits from the resources Bacardi has, for instance to set up the website and network for the distribution of the music, as well as their marketing capacities. Both are connected to different audiences and by working together, they can promote each other to their respective audiences, perhaps new ones.

This was a great read and I love the conclusion. I highly recommend you read the entire paper, it’s only 20-odd pages, check it out here.

Image by Gary Simmons.

On GrindEFX we’re always talking about fan relationships. Connecting with your fans is a vital component of marketing your music. If you have that personal relationship with your fans they will want to support you by buying your music, merch, concert tickets etc.

“But what does that mean?”

Well, here are 7 ways you can start connecting with your fans today.

Social Networking

The obvious first step is social networks. Hopefully you already have a Twitter, Facebook, Myspace etc. But are you using it in a productive way? I see a lot of musicians that I follow on Twitter only interacting with friends and associates, never their fans. To me that makes them look like they think they’re above conversing with their fans, interestingly enough it’s often the artists who are struggling to stay relevant.

So how can you use social network sites effectively?

• Be yourself. It’s easy to spot a fake on Twitter.

• Tell fans what you’re doing and ask them what they’re doing. Show an active interest in their lives.

• Ask your fans for their opinions on certain matters. Maybe what they think of so-and-so’s new album, or what their view on a political matter.

• Give them something exclusive every now and again; share a photo with them or a snippet of a new song you’re working on.

• Answer fan questions. If you have a lot of followers/friends/fans then just answer a few, show them that you are making an effort.

• Ask for help or advice. This will strike a personal connection with your fans, espcially if you take their advice and thank them for it.

Webcasts

Live webcasts have become quite popular over the last year or so, I see more and more artists using sites like Ustream.tv and Justin.tv to connect with their fanbase. Allowing fans to watch you live in studio sessions, band rehearsal, interviews or just having a general natter is a great idea.

Webcasts are probably better for a Q&A with fans than Twitter because you can answer more questions and it’s a more personal way of doing it.

Something that has become very popular lately is artists doing live broadcasts of their music making process, whether it be songwriting, beatmaking, recording, mixing etc. Giving fans an insight into how you make your music, and even asking for their contribution, is an excellent way to strike a connection and make you fans feel a part of your music.

Free Music

Why not throw your fans the odd free track? This is very common practice in hip hop, where artists often release “throwaway” or unfinished songs to the public. Or tracks that were made for a specific record but didn’t make the final cut. Why keep them locked up? Let your fans hear them: “Here’s a track me and the fellas were working on the other week, never got finished. What do you think?”

Of course they don’t have to be “throwaway” tracks. If you’re a regular GrindEFX reader you’ll know I’m an advocate of free as a business model. I.e. giving the music to your fans for free and encouraging them to spread it around, then making money in other areas.

Fans appreciate free music. If the music is free they are much more likely to share it with their friends, which creates new fans, who will then share it with their friends. Before you know it your website traffic has increased ten fold and you’ll have fans knocking down your door trying to buy merch, concert tickets, CDs, collectors items etc.

Blog

Blogs are free, easy to use and extremely popular with music fans, so it amazes me how many artists don’t have one. Blogs are a great way to share things with your fanbase and keep them updated with what you’re working on.

“Why do I need a blog if I have Twitter?”

Twitter is great for instant messaging and giving quick updates. But your tweets are usually only relevant to those who are online at that very moment, which will always be a small percentage of your fans. Blog posts are more permanent, fans can log on at any time and see what you’re talking about. And with the 140 character limit on Twitter blogs are better for sharing more detailed stories. Having both will ensure all your online followers have something to connect with.

You can set up a blog very quickly, here are some links; Wordpress, Blogger, Tumblr.

Newsletter

In my opinion a mailing list is one of the most important things an artist should have. It requires no effort from your fans and you can update them whenever you like.

All of your fans won’t watch your webcasts, or follow you on Twitter, or read your blog. But they all will have an email address, so communicating with them via email is a very strong tool. Set up a mailing list on your website and promote it on your blog, Twitter, Myspace, Facebook, YouTube and wherever else you can. Try to get as many of your fans email addresses as possible.

It’s up to you how you do your newsletter. You can send a weekly update or you can just email them when you have an announcement to make. One thing I will say is don’t send them too often, if you update your fans everyday with crap they don’t really care about then they’re likely to stop reading them, or certainly not read all of them. Then they might miss something really important that you have to say. Keep the emails valuable, so when a fan sees you in their inbox they know it’s something worth reading.

YouTube Videos

YouTube is another great tool that is very popular among musicians. Video blogs (vlogs), like live webcasts, give your fans a visual interaction, making them much more likely to engage. We’ve seen YouTube catapult people to fame and revive careers.

You could argue that having a vlog is more effective than having a blog. First of all it requires very little effort on the fans’ behalf, you can watch a video whilst doing other things, whereas when you’re reading something you have to focus 100% on it. It is also much more likely that a non-fan will stumble across the video and maybe even become a fan. Over a billion YouTube videos are watched every day, that’s a severe amount of traffic and potential viewers. And finally a video is a lot more personal, people can get a far greater sense of who you are through a video than they can through text.

I think it’s perfectly reasonable to have both a blog and a vlog too, as long as they both serve their own purpose. You could turn your blog into more of a diary and just vlog on special occasions, or vice-versa.

Competitions and Polls

Competitions and polls are a great way to get people actively participating and interacting. Set up a bi-weekly poll on your website asking fans for their opinion on something. You could even relate the question to your music, this way you connect with fans and do a bit of market research. When each poll is finished you can post the results on your blog and share your own thoughts.

Competitions are another great way to get fan participation, and I’ve seen them work really well in the past. Try and make the competition and prize unique, for example; ask fans to write a song. You choose a winner, record their song and release it for free download on your website.

Another concept I’ve seen work well are remix contests. Release the acapella for one of your songs and ask fans to make a remix.

Conclusion

I come across aspiring musicians every day, some of them close friends of mine, and when I ask them how it’s going most of the time I get a response such as; “we’re submitting tracks to record labels” or “we’ve got a good connection over at We Will Rape You Records, we’re just waiting for them to call us back”. “Industry” relationships don’t mean shit in the current music business, you should be focusing on fan relationships and doing everything you can to connect with them. They are the ones that decide your fate, not managers, not A&Rs and not record execs, so make them your top priority.

Earlier today I spoke about Apple’s “reason to buy” fail, now I’m going to show you “reason to buy” done well.  It comes from a indie rap group that consists of Dood Computer and Stir Crazy and there new album “Penny Dreadfuls”.

The group have released their new album on cassette which is available for $6, you also get a download card so if you want it on your mp3 player you can.

A lot of you are probably thinking; “what good is a cassette? I haven’t seen a cassette player in years”. Well that may be true, but the cassette isn’t there to be played, it’s there as a piece of memorabilia to encourage people to buy the album. Dood Computer and Stir Crazy have made flyers and a video (see below) promoting the cassette tape, it’s different, it’s fun and it grabs your attention. I haven’t ever heard of the band before, but I would assume they have quite a niche following that would appreciate this kind of humour.

I think it’s a great idea and executed very well, check out the promotional flyers and video after the jump.

Forrester Research recently released a report that lays out a “radical vision” to “save the music industry from the current Media Meltdown it finds itself in.”

While the actual report is only available to Forrester customers, the company’s blog reveals that the plan involves broad “music release windows,” similar to the chart on the right. “Premium” content is released first, followed by a “mainstream” release at a later time, and eventually wide dissemination to free and “feels like free” services.

Judging by comments on the Forrester blog and elsewhere, many scoff at the idea of regaining content scarcity through this staggered release approach. “What about pre-release leaks?” they ask. True, the industry has increasingly bumped up release dates of albums – Jay-Z’s latest came out three days early today – in part to combat the problem of early copies leaking onto the internet. But it’s important to keep in mind that large swaths of music listeners are not running around downloading leaked copies of albums off torrent sites.

It is also counter-intuitive when one looks at the movie industry and how the release cycle of a typical movie – which has been staggered between theatrical release, dvd release, and television release – has shrunk over the last decade or so.

I’m guessing, though, that the example illustrated in the graphic above is just that – an example. Rather than a one-size-fits-all solution, Forrester is suggesting an approach to music that doesn’t revolve around the traditional album release cycle (release an album – tour – repeat next year). They propose shaking off the “strait-jacket” of the album and thinking of all content generated by musicians and bands as product (backstage footage, mobile apps, merchandise) in order to create a “continual artist-fan relationship with artists delivering a steady stream of creative output.”

Sound familiar?

It sounds a lot like what the major labels had been talking about earlier this year at a 2009 NARM panel. And that discussion sounded a lot like what we here at GrindEFX have been saying.

Ditching the album format as the default container for music and releasing smaller blocks of music more often – that’s the 3P concept.

Building a continual artist-fan relationship to make money outside of selling non-scarce recorded music – none other than CwF + RtB = $$$.

So, while not exactly radical, Forrester’s report does indicate the direction the big players in the industry are heading toward, as well as validate what many of us on the sidelines have been saying.