Ok Go Explains There Are Lots Of Ways To Make Money If You Can Get Fans

from the everything's-possible dept

Over the last few years, we've covered many of the moves by the band Ok Go -- to build up a fanbase often with the help of amazingly viral videos, ditch their major record label (EMI), and explore new business model opportunities. In the last few days, two different members of Ok Go explained a bit more of the band's thinking in two separate places, and both are worth reading. First up, we have Tim Nordwind, who did an interview with Hypebot, where he explained the band's general view on file sharing:

Obviously we'd love for anyone who has our music to buy a copy. But again, we're realistic enough to know that most music can be found online for free. And trying to block people's access to it isn't good for bands or music. If music is going to be free, then musicians will simply have to find alternative methods to make a living in the music business. People are spending money on music, but it's on the technology to play it. They spend hundreds of dollars on Ipods, but then fill it with 80 gigs of free music. That's ok, but it's just a different world now, and bands must learn to adjust.

Elsewhere in the interview, he talks about the importance of making fans happy and how the band realizes that there are lots of different ways to make money, rather than just selling music directly:

Our videos have opened up many more opportunities for us to make the things we want to make, and to chase our best and wildest ideas. Yes, we need to figure out how to make a living in a world where people don't buy music anymore. But really, we've been doing that for the last ten years. Things like licensing, touring, merch, and also now making videos through corporate sponsorship have all allowed us to keep the lights on and continue making music.

Separately, last Friday, Damian Kulash wrote a nice writeup in the Wall Street Journal all about how bands can, should and will make money going forward. In many ways the piece reminds me a bit of my future of music business models post from earlier this year -- and Kulash even uses many of the same examples in his article (Corey Smith, Amanda Palmer, Josh Freese, etc.). It's a really worthwhile read as well. He starts by pointing out that for a little over half a century, the record labels had the world convinced that the "music" industry really was just the "recorded music" industry:

For a decade, analysts have been hyperventilating about the demise of the music industry. But music isn't going away. We're just moving out of the brief period--a flash in history's pan--when an artist could expect to make a living selling records alone. Music is as old as humanity itself, and just as difficult to define. It's an ephemeral, temporal and subjective experience.

For several decades, though, from about World War II until sometime in the last 10 years, the recording industry managed to successfully and profitably pin it down to a stable, if circular, definition: Music was recordings of music. Records not only made it possible for musicians to connect with listeners anywhere, at any time, but offered a discrete package for commoditization. It was the perfect bottling of lightning: A powerful experience could be packaged in plastic and then bought and sold like any other commercial product.

But, he notes, that time is now gone, thanks in large part to the internet. But that doesn't mean the music business is in trouble. Just the business of selling recorded music. But there's lots of things musicians can sell. He highlights Corey Smith and Smith's ability to make millions by giving away his music for free, and then touring. But he also points out that touring isn't for everyone. He covers how corporate licensing has become a bigger and bigger opportunity for bands that are getting popular. While he doesn't highlight the specific economics of it, what he's really talking about is that if your band is big, you can sell your fan's attention -- which is something Ok Go has done successfully by getting corporate sponsorship of their videos. As he notes, the sponsors provide more money than the record labels with many fewer strings:

These days, money coming from a record label often comes with more embedded creative restrictions than the marketing dollars of other industries. A record label typically measures success in number of records sold. Outside sponsors, by contrast, tend to take a broader view of success. The measuring stick could be mentions in the press, traffic to a website, email addresses collected or views of online videos. Artists have meaningful, direct, and emotional access to our fans, and at a time when capturing the public's attention is increasingly difficult for the army of competing marketers, that access is a big asset.

...

Now when we need funding for a large project, we look for a sponsor. A couple weeks ago, my band held an eight-mile musical street parade through Los Angeles, courtesy of Range Rover. They brought no cars, signage or branding; they just asked that we credit them in the documentation of it. A few weeks earlier, we released a music video made in partnership with Samsung, and in February, one was underwritten by State Farm.

We had complete creative control in the productions. At the end of each clip we thanked the company involved, and genuinely, because we truly are thankful. We got the money we needed to make what we want, our fans enjoyed our videos for free, and our corporate Medicis got what their marketing departments were after: millions of eyes and goodwill from our fans. While most bands struggle to wrestle modest video budgets from labels that see videos as loss leaders, ours wind up making us a profit.

Of course, that only works if you have a big enough fanbase, but that doesn't mean there aren't things that less well known bands can use to make money as well. He talks about an up-and-coming band in LA that doesn't even have a manager that was able make money:

The unsigned and unmanaged Los Angeles band Killola toured last summer and offered deluxe USB packages that included full albums, live recordings and access to two future private online concerts for $40 per piece. Killola grossed $18,000 and wound up in the black for their tour. Mr. Donnelly says, "I can't imagine they'll be ordering their yacht anytime soon, but traditionally bands at that point in their careers aren't even breaking even on tour."

The point, Kulash, notes, is that there's a lot of things a band can sell, focusing on "selling themselves." And, the thing he doesn't mention is that, when you're focusing on selling the overall experience that is "you" as a musician or a band, it's something that can't be freely copied. People can copy the music all they want, but they can't copy you. "You" are a scarce good that can't be "pirated." That's exactly what more and more musicians are figuring out these days, and it's helping to make many more artists profitable. And, no, it doesn't mean that any artist can make money. But it certainly looks like any artist that understands this can do a hell of a lot better than they would have otherwise, if they just relied on the old way of making money in the music business.

41 Comments | Leave a Comment..

6 comments:

Alan Mairson
at 3:03 pm, December 15, 2010

Spot on, Mr. Winer.

My only question: Do you think the Groupon model would work only for *local* news organizations?

Since June 2009, I’ve been championing the idea that National Geographic magazine could organize an international Groupon-like buying club that would equip & empower an army of digital Davids — and give them a reason to join the National Geographic Society.

That is, instead of selling 5 million pairs of eyeballs to Nikon for a magazine advertisement, National Geographic should say to Nikon: “We just polled our members, who are fully networked, and 2,500 of them want to buy a new Nikon D-40 this month. How much per unit if we buy in bulk?”

Members would not only get a great deal. They’d be connected to other people learning to use the same gear AND they’d have a platform where they could contribute their work to the journal-ism of the organization.

You think that could work? Please see:

http://societymatters.org/2010/12/02/opportunity-awaits/

Ted
at 6:00 am, December 16, 2010

It all comes down to that last graf. But it occurs to me more and more that as news organizations still think of themselves as content creators, we’re ill-equipped to execute the next idea, no matter how simple, when going up against startups that take the best ideas and run with them from Step 1.

For example – the Groupon concept was out there before Groupon, and a lot of news organizations were offering half price discounts on any number of items – food, sporting goods, etc. They were on the cusp on executing exactly what Groupon has done.

Except for two things – they were outsourcing almost all of the execution to third parties, and because they were focused on their own localities, usually, they never really pondered the offerings on a larger scale. (Why would they? They were already outsourcing the parts they’d need to execute on a larger scale.)

Seems like we need to move from new business development to new business development. (Easy to say – hard to do.) And until we are more able to do that, we’ll continue to miss the opportunities that might be right in front of our noses.

Tom Crowl
at 10:36 am, December 16, 2010

RE “That’s the question news people never seem to ask. How can we create something that has a market? If they asked that question instead, they would restructure their activity. Because there are things similar to news that have generated huge wealth. Not hidden, in plain sight.”

The Market IS THERE! The problem is that the mechanism hasn’t been there to address the transaction problem.

This problem (which extends also into the political participation sphere especially) is directly linked to neglected scaling issues in this new landscape… and the capabilities required for Commons-oriented transactions in that space… and why that requires a viable, simple and secure MICRO-transaction.

The Commons-dedicated Account Network:

A self-supporting , Commons-owned neutral network of accounts for both political and charitable monetary contribution… which for fundamental reasons of scale must allow a viable micro-transaction (think x-box points for action in the Commons).

(I note that journalism is often a for-profit enterprise and that this presents a complicating factor. I believe this is an addressable issue.)

Re-Igniting the Enlightenment: On Building Landscapes for Decision

http://culturalengineer.blogspot.com/2010/12/re-igniting-enlightenment-on-building.html

LinkedIn http://www.linkedin.com/in/culturalengineer

At its root, a civilization (or any social organism) is a product of individual and group decisions (ideas+actions) operating within the confines of the physical environment and natural law. we then see culture as the expression of this “social energy”.

Money was developed originally as a technology for the allocation of excess social energy where complexity (and loss of various forms of proximity) required conventions beyond the less formalized methods of a hunter-gatherer group.

I believe this suggest some re-thinking about the nature of money and capital (and capital creation) but that’s another story…

The point here is that the nature of this “social energy” in a scaled organism requires that the exchange of this energy NOT be bound by transaction costs or other complications IN AREAS RELATED TO COMMONS-DEDICATED FUNCTIONS ESPECIALLY…

These particular areas of exchange actually pre-date the need for or existence of the commercial transaction and require special attention.

Trackbacks:

Why a digital first strategy is important
at 3:16 pm, December 15, 2010

Dave Winer has a great analogy about the way News companies are fighting the wrong war.

Why NGS should embrace the Groupon model (cont'd) | Society Matters
at 4:09 pm, December 15, 2010

part of the Nieman Journalism Lab’s preview of 2011, web pioneer Dave Winer hits a note that’s a favorite of ours here at Society

Why did news organizations not build Groupon before Groupon? — YANKEE 2.0
at 6:20 am, December 16, 2010

his “There’s no good place for a new Maginot Line for the news”, he concludes with a line that resonated with me. It seems there’s still time for a philosophy

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Thursday, December 23, 2010

Online Money Making Opportunities

Ok Go Explains There Are Lots Of Ways To Make Money If You Can Get Fans

from the everything's-possible dept

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