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Business question for Seb, PaulB and other business model experts?
Hey guys,
After reading some of the business ideas presented in the Different Drummer thread, I realized that there were many similarities between the challenges/opportunities that Apple presented for app developers and songwriters ( I know many of you are both ) and wanted to get your opinions on how musicians/performers/app developers can make a living?
Obviously distribution is no longer a challenge to creators but getting people to know about your song/app and also earning a fair compensation for your work is still a challenge.
Something specific for musicians is that many are no longer relying of actual sales of songs for income but rather giving them away for free to market themselves to earn income from live performance. Sounds nice in theory but reality is unless you know the right ppl in every market, you won't get the best gigs and instead of playing music, you'll be busy networking and even spending money to network (the right ppl aren't always at your neighborhood bar) Take for example MIDEM, an international music conference, costs around $1000 but it's in France, so unless you're already in Europe, tack on another $1000 for airfare and possibly another $1000 for hotel. You could also try to get your music to the right ppl electronically but either they're probably inundated with demos from millions of other ppl and once again, unless they know you already or you are referred by someone, chances are slim they'll respond. Not saying it's impossible, but that's still sorta like the old model where you are still dependent on the "industry gate keepers" for your success.
Lastly, for any of you younger kids who happen to be reading this, I grew up in a very metropolitan area where there is a very lively music scene where there were TONS of talented bands/musicians from diff genres of music who played out for years but you probably haven't heard of any of them. I then spent maybe a year in LA and in that short amount of time, met several ppl who had started playing music for maybe less than a year, and already some of them had their songs in movies/TV shows, etc. LMFAO for example, are related to the guy who started Motown Records. The singer of Maroon 5 went to a high school in Brentwood which is where all the celebrities live (they DONT live in Hollywood, only tourists go there)
Anyways, this isn't necessarily a bad thing, everybody had advantages. Just like how Loopy was one of the first apps on Audiobus which obviously helped it become famous compared to other similar apps.
BUT GIVEN THESE RULES, HOW DO CONTENT CREATORS MAKE A LIVING?
Thanks in advance!
Comments
I'm no expert. I don't make any sort of living from my creativity. I also doubt that many people do.
I chuck in ideas that occur to me regarding the discussions on this forum, but they're only ideas.
You're kind of all over the place, gj, but I think I get a feel for what you are asking.
I can give my scattered half assed answer for musicians, though-
When I was growing up, a record was something that came from a magical place where only the "best" bands etc could exist. Now that I'm older, I realize that was just my own small town ignorance, but there is some truth to it. In order to have a record pressed and be able to reach pimply kids in small towns, you had to have someone willing to throw some cash at you, as vinyl was (and is) expensive to press, and the big five had control over distribution(and vinyl was expensive as hell to ship, too!
Of course cassettes were around, but recording your material for distribution on those was like releasing your stuff on burned cdr's in the 2000's. just not "official".
The whole time I am dreaming of the day when it's possible to make quality recordings at home, and got a four track cassette machine. Obviously the quality wasn't there, but it was a way to get my ideas down as well as torturing my friends with my sack of tapes I carried around everywhere.
Fast forward to more recent times, and things have changed dramatically, to say the least. I guess in a way my (and many others) dreams have come true, but there was a catch....Companies realized they could create a whole new market, aptly titled "pro-sumer", which meant everyone from the joe six-pack who enjoys recording some guitar strumming to seriously hungry musician struggling to make their mark. Everyone has 100 times more power sitting in their lap than most mid level studios in the 80's could dream of. Everyone is online and has worldwide distribution at their fingertips. These things combined have essentially turned everyone into a "hobbyist" due to the shear amount of music thats available now. Supply has far surpassed demand in music, and the toothpaste is out of the tube so to speak. For example, it can be an exhausting task to actually find something good on soundcloud. (I miss the old GarageBand.com from the early 2000's where you had to review 5 tracks to have one of yours reviewed). Lets be honest, unless you know where to look first, you need to immerse yourself in communities that only send you the links to good stuff. It's all about networking.
Now enter the modern consumer, who still remembers how awesome it was stealing every song ever made on napster. They don't have hours to sift through the insane amounts of crap online made by the people who would probably do a better job flipping burgers.
So what do they do? There has already been a precedent set for the price of music (as close to free as possible), and given the amount of time they are willing to spend searching for good music they just say fuck it and buy their Maroon 5's and such.
So basically both realms of music have suffered. The "big time", where the material has never been more predictable and stupid, and the near infinite "underground", which is clogged with "hobbyists" (yes, me too) and those just imitating the "big time" guys for a chance at whatever being a rock star means right now.
Okay, to answer your question, (regarding musicians making money), the consistent money is in live performance, provided you can do something which people are willing to pay to see and hear). If you saw the recent episodes of "master of the mix" you'll see that the show certainly pushed the view that iOS musicians are kind of a joke. This is a view which I think is held by the "serious" pro audio community, and for them it's simple- they've already invested thousands in gear so why would a little tablet and a $50 app make all of their gear obsolete?
But in order to survive as an iOS musician, you probably have to play SOMETHING. No one wants to see someone tapping on glass once and awhile. Make it interesting, and maybe there will be a whole new market for the diverse landscape of iOS musicians.
Whew. Sorry gj for the long winded response.
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@dubhaus - thnx for the post man! I agree with a lot of what you said and it is interesting whats happened since days of tape.
It's weird, I remember this one day walking down Hollywood blvd on my way home and reading that Ted Leo the punk/indie artist decided to retire because he couldn't earn a living for his family from music. (dont quote me on that but it was something along those lines). I'm not really into his stuff but he's been around for years, performed at Coachella, etc. That same night I walked past one of the many popular clubs that line Hollywood advertising some DJ who I had never heard of. And there was a packed house with lines coming out of the door. I also remember some Forbes article where they had like a top ten list of DJs who make lots of money and they were pulling in millions. Now Im actually a fan of all genres of music and can dance/rock out to house, hip hop, drum n bass, dubstep but id say there are maybe only a select few who are really doing anything groundbreaking for me at least, but DJs it seems can make a decent living from live performances whereas bands can't. Unless youre hooked up with maybe LiveNation but even thats not guaranteed. (I have two friends who play sorta punk folky stuff who were connected with LiveNation opening for big bands but they're still broke as hell)
@PaulB - Your opinion is every bit as valid and welcomed. I think many ppl on this forum are open-minded and forward thinking so even a random perspective is valuable as it's not constrained by old paradigms.
@Simon - so true
@devs - is it actually a better time for you guys now? I remember a few ppl mentioning that Apple messed up the software industry by making us civilian folks spoiled by $5 apps. Is that true? Were many of you raking in more cash pre-Apple or was it similar to the music industry that yes, margins were higher but getting access to the masses was still difficult?
@gjcyrus - good point- a Dj can make a lot of sound compared to a band, who may or may not suck. A Dj is one, and a band are some, so the profits on a band are minimal unless you're a known act with a following... I think just like back in the late 70's "disco sucks" times, the players of instruments will make a fuss out of having to compete against machines, but musicians simply have to adapt and make the music that the Dj needs to survive.
It is certainly true that it has never been easier to make your own music and make it available worldwide. But it is probably just as difficult to make money from it, certainly "serious" money. Your talent and the quality of your output is only one of many factors. The rest is about promotion, creating a "buzz", networking, having a visual image, etc, not to mention a fair dose of luck. Who knows what makes something go viral? If I did, I could make a fortune!
@PhilW - its funny you mention viral. I dont know if you remember the DangerMouse mashup of the Beatles White Album and Jay-Z Black album. It was def cool but coincidentally, his record label is in NY and many of the first newspapers who wrote about it were from NY. and whether you like it or not, if NY writes about anything, small town, Boondocks USA cares, not the other way around. You can also pay promoters who have relationships with the press to review your story. It soon went viral over Kazaa.
There's this DJ called Kascade who on the opening night of some electronica movie in Hollywood decided to throw an impromptu outdoor rave at the chinese theatre where all the hand prints by movie stars are. Tons of ppl came, police were called out, party and the street shut down. whoa, wild times right? Man, that shit was calculated. Talk about free press, next thing ya know he's on tour on some EDM festival.
Youtube - Gangnam Style - I have no hard evidence to prove this but im guessing somebody paid somebody at google to give placement to that song on top pages. Youtube is not truly fair i think in that Vevo owns much of the content and can dictate what pops up in searches under keywords (like SEO) etc.
sorry starting to ramble again but so called "buzz" in my opinion is usually a well calculated, well connected and well funded marketing campaign. Just curious if those smarter than me here think it is possible to be decently financially stable doing creating or if there has to be all these other creatively "un-pure" (is that a word?) tactics. As others mentioned on DD thread, his app did get attention for the outrageous price.
Hell, I love the Beatles but even they had radio promoters ready to go when they invaded America. Im sure there were equally talented bands in the US at that time who just didnt have those connections but who created just as brilliant music.
I think it is a combination, a number of factors coming together at one time to create the hype. Sure, some of that comes from well funded marketing campaigns, but I think it is also possible to break through as an individual with minimum budget but a creative and innovative approach. But if you just put your music out there with no thought of promotion, no image, etc then I think you are very unlikely to "make it big". You need a reason to get people talking about you, and many times, that isn't the actual music.
Wrt whether it's a better time for devs now than before - it's certainly "better" than pre-App Store because back then I had no chance on earth to make something by myself and get it distributed to so many people around the world. But of course lots of other folks got the same opportunity, so supply outstrips demand, prices fall, low-quality stuff floods the shelves and people become cynical and cautious about spending money.
A lot of developers believe that Apple pricing GarageBand at $5 hurt the music apps market. I didn't have much experience in the pre-GB era, but I suspect it is true for entry-level apps (not for something like Audulus, for instance). GB raised the table stakes sky-high.
As for the "non-content" aspects of getting distribution (marketing, viral, image etc) this has perhaps always been important but it's becoming more so. I'm curious to see how Amidio does with OMGuitar's new update, as they've typically been pretty savvy about this stuff. Not sure what the app developer's version of "live concert performances" is really. Merch? Wonder how well AB's done on that front...
If there was a sure-fire approach to making a living in music, most musicians would be able to make a living. The reality check for me is Steve Morse -- phenomenal guitarist, and he has a much-better-than-average music career, but he had to work as a commercial airline pilot to pay the bills. A handful of people make a fortune; the rest scrape by. There's simply not enough "music revenue" to keep all of the people who want to be musicians afloat. My guitar skills are nowhere near those of Steve, which is a good thing. It forced me to have a normal career, and not get delusional about becoming a pro musician.
For the app store business model -- it's a very strange universe. Lone developers who hack code in their living rooms (or camper vans) are on a level playing field with major corporations. IMO, this is a huge benefit to small developers -- and it benefits users too, because there's a lot of apps to choose from. I'm not convinced that low prices hurt developers. My theory is that if the price of every app were to double overnight, revenue would not double; people would buy half as many apps (and maybe less). There's a finite amount of app revenue pie for the developers to slice up. Apple wants the pie to be as large as possible, because they take a cut of the sales. Low pricing may also cut down on piracy.
The music business is a very ugly beast...getting signed to a label doesn't = $$$$ like it used to. Most major players in bands have a hard time getting endorsements from instrument manufacturers, and while they might get a discount...rarely are they supplied for free. A great way in this day and age to get noticed is YouTube videos. Put your stuff out there...and be consistent. I do this with my music and also mix it in with other musical aspects of my life (testing gear, apps, tutorials, etc). I've done ok with album sales on iTunes but you're not going to get rich. However, someone might notice things you've done and other opportunities may arise that become lucrative. ( I've been sought out by several different app developers to test, create demo songs, record sounds, etc...and some pay quite nicely). It's not going to happen overnight....so if you're doing it just for the money, you'll probably burn out before you see any real cash...if you do it because its something you love...and the talent is there...there's a possibility that you can make a living. Musicians....hire a manager and publicist....
One more thing. Education helps...however, this is one industry that is all about "who you know"
Gillian Welch - Everything is Free
The music industry took a big hit post-Napster. Industry numbers collapsed in a matter of years. iTunes helped save it a bit but things never got back to where they were in the 90s. The allure of free was great enough that people weren't about to pay more than 99c ever again. Consumers smirk and say that those $20 CDs were way overpriced back then, and that today's pricing is more appropriate. But this is easy to say in retrospect. The fact remains that they were happily purchasing those $20 CDs back then.
The videogames industry has taken a similar hit in the post-iOS/Android era. People just aren't buying as many $50-60 games as they used to because there are so many free / $1 options now. Videogame developers and publishers that used to make a healthy revenue are now shutting down everywhere. Gamers smirk and say that those $60 games were overpriced to begin with... but they used to buy them without any complaints before.
My point is that just because the prices are lower doesn't mean that revenues are higher. It's quite the opposite. As a result, I'm pretty sure that if all apps had been priced higher from the start, overall revenues would be higher across the board. That said, doubling an app's price today won't do much unless it's done across the board, along with an education campaign to explain to people why it's happening, and is sustained for a significant period of time.
No, Rhism, we used to buy them at that price because we had no choice. We were always aware, particularly in the UK that we were being ripped off: a $15 cd would cost £15. Didn't mean we liked it. The economy being the way it is, I can't see those prices, and therefore income streams, returning.
@Ian You're making two related points here: (1) if all CDs were $15 (or £15) no one had a choice but to buy them, and (2) given the economy, those prices would be unsustainable today. I disagree with your first point because I agree with your second (the second is a very effective argument against the first).
You always have a choice - the choice to spend your money on something else. Read a book, watch a movie, go have dinner at a restaurant etc. To put it another way, the same people who bought CDs at $15 would not have bought them at $150 because $150 would be "too high". So clearly $15 was not "too high" by the same standards. Similarly, videogames priced at $500 would have been too high and people would not have bought them in any economy, but at $50-60 people did buy them, even if some complained they were overpriced. When things become more favorable (Napster, iTunes $1 songs, App Store free games) it's easy to look back on the less favorable era ($15 CDs, $60 games) as unfair and overpriced, but the fact remains that in today's model musicians and videogame developers are going broke all around the world.
The current price levels don't seem to be sustainable for the health of these two industries. So creators/publishers are learning to make money other ways, whether it's by becoming airline pilots or by selling merchandise and live shows (which not all musicians can truly pull off) or using distasteful freemium IAP strategies in games to hook their users and then try to extract money. I hope software, or at least music software, can buck that trend. So far, it has been. Average app prices in the music creation category are higher than most other (or perhaps all?) consumer-facing categories. This to me is a very good sign. The fact that Different Drummer is making good money at $50 is a very good sign to me.
@Rhism - The FTC agreed that CDs were overpriced when they sided with 39 states which sued the Big Five labels and some distributors for price-fixing to keep the price of CDs artificially high. That was in the early 2000s. Shortly after that prices did come down some.
While consumers did like CDs, the demise of the (less expensive) LP was hardly natural. The labels drastically cut down the number pressed and then claimed that the decreased sales showed that people did not want them. I managed a mom'n'pop record store from 1990 to 1995 and I got to witness the industry's greedy shenanigans from a good viewpoint.
As for artists making money - this has never been as clearcut as many people seem to think it is. I would love to see some factual studies on this. One thing that many people don't understand is that under the "old" model most artists rarely made money. Actually most lost money. The labels do not pay for anything per se (promotion, pressing, recording, etc...); they loan the artist the money. If an album/single makes any money, and that is a big if, the label recoups its investment first. Then, if there is anything left, the artist/band starts to get some cash. I remember reading about the Goo Goo Dolls when they "hit it big". They owed the label huge bucks by that point and even though they had a hit song and hit album they were poor. The whole system is set up to benefit the few who actually move a ton of product and not do much for the others. My question is: Overall (recording sales, touring, merch, etc...) is there less money for artists/bands overall (meaning all artists combined)? And is there now a more "equal" distribution of the money? Paradigm shifts are nothing new in the music industry; before recorded music the money was in sheet music, then the big money was due to jukebox operators and the single ruled, then came the album and home sales, the CD era with its bounty for labels as they reissued tons of product and now we are in the full-on digital era.
As for software/app development I don't know anything about the industry. As with many things, the answer is probably somewhere in the middle.
Let's start with the stuff I know most about:
How do app developers make a living?
There are two ways:
1. Get a job as a developer at some other company.
2. Be very good at development, design, and marketing and be a one-man company.
Number 2 is hard. Number 1 is easy.
How do musicians make a living?
How do performers make a living?
@Sebastian
you missed out:
How do musicians make a living?
3 Be beautiful, talentless and appear on X factor. Then go to stage 1
@MrNezumi It's been a while since I did any research on this. I suspect there is less money for artists overall but perhaps someone here has data on this. It's true that even in the old days artists didn't make much from a CD sale until the loan was repaid. But today you read stories of how much someone makes from an iTunes sale or a Spotify play, and it's even lower.
Napster and Pro Tools kind of happened around the same time. Would have been interesting to see how things would have played out if the democratization of music creation (Pro Tools and its ilk) had happened without a Napster in the picture. If more musicians were recording their own stuff and reducing the role of the labels, but still able to command the pre-Napster price points (perhaps post-lawsuit that you referred to). Of course we'll never know
Just found this article on new biz models:
http://www.techdirt.com/articles/20091119/1634117011/future-music-business-models-those-who-are-already-there.shtml
@gjcyrus Awesome article! This rings true. Interesting to note that a lot of the revenue-generators are physical things or time-based things, essentially scarce goods which can't be digitally replicated and distributed by the millions