Posts Tagged ‘peer to peer’

Music Is Free–Let It Loose… and Reap the Benefits. PART 1

December 3, 2010

Intro: Back to the Future

I recently tee’d up final group projects for my Principles of Marketing classes this semester. Since I started doing classes in 2002, I have had students attack the music industry and break up into teams that represent major or independent record labels with the goal to create marketing strategies to grow their business from these two perspectives.

This is no small feat when you consider that the music industry was disrupted by peer-to-peer and other technologies that have empowered listeners with capabilities to distribute and secure music for FREE, and it committed suicide by suing customers and refusing to adapt. Who could have predicted in 2002 that a computer company, Apple, would operate the most successful legal digital distribution system, iTunes? Extraordinary!

How do you compete against FREE?, and make money at the same time?, is the knotty challenge, and there could be no conversation about this in class without taking a look at the visionary band that understood it all so long ago, and built a business and marketing model that made it happen, and happen on a grand scale.

A Bit of Historical Perspective

In 1969 I had the great good fortune to get a job at the best rock club in town called The Boston Tea Party. How I got the engagement is the story for another posting. It was a winter weekend in January that I started and the band, a little combo from Britain, was making their debut in Boston.

For the next year and a half or so, I had what I would describe as a front-row seat to one of the most creative periods in music, at least in my lifetime. Artists I was able to see, hear and hang out with ran the gamut from Ricky Nelson, The Who, Jeff Beck and Pink Floyd to B.B. King, Rahsaan Roland Kirk, Big Mama Thornton, Eric Clapton and yes, the Grateful Dead, the band that redefined marketing for me.

Since one of my duties was to help these bands load in (up two flights of stairs!!!) and set up their gear, I would really get to know the roadies, road managers and other behind the scenes facilitator of the music, as well as the artists themselves.

The Dead were unusual even then. They were as far out as you can go… very smart and very unique, obviously. More than anyone else they embodied the “be ‘hear’ now” hippie spirit… and expressed many dimensions through the music.

Their road manager whom I got to know a bit was a fellow named Owsley, otherwise known as the Bear. Bear was also a world-famous chemist and from what I now know, an all around Renaissance man and resident genius.

Looking back I don’t know how The Dead could play sometimes, especially once Owsley had done his thing. And yes, there were moments when they really couldn’t, like the first they night they followed the The Bonzo Dog Band (another story) in the Fall of ‘69. There was no way to follow this rock and roll musical circus, which was part of the extended Monty Python family, that had the audience freaking out and running for the exits by the time they finished.

Then there were the nights, when it all came together… and the music, created on the fly just for and with the audience, transcended everything. Electrifying. So when it worked, it worked… and when it didn’t, oh well, there was always tomorrow.

Hippie’est to Highest Grossing Concert Band of All Time: An Amazing Transformation

So how did The Dead go from hippie’est of the 1960’s hippie bands, to the highest grossing concert attraction of its era well into the 1990’s?, an era of Rolling Stones, Michael Jackson dare I say Neil Diamond, another huge draw?

Leesons for us all, 40-years later!

Of course it’s the marketing!

David Meerman Scott and Brian Halligan give us great insight into this with their recent book, Marketing Lessons from The Grateful Dead. They identified the genius level marketing developed and adopted by the band… best practice and learn’able lessons that are applicable to all products today.

I will argue that what The Grateful Dead understood, perhaps intuitively at first, was the sense of community they were a part of and had the power through the music to create, nurture and grow.

A 360-degree business perspective

As you can see from this pie chart, from the article in Rolling Stone*, A New Life for the Dead: Jerry Garcia is Checking Cash Flow Charts, from way back when in the November 22, 1973 issue, they were able to see themselves not only as a concert band, but as a business from a 360 degree perspective that included concerts, importantly, but also the totality of their business. They then created a variety of companies including a record label, a sound design and production company, a travel agency and much more to support the enterprise.

Building Demand

Around & Around It Goes: More demand = Larger Halls, More Equipment, More Gigs, Larger Overhead, Bigger Organization -- Repeat

At its center or core, was the live music itself, the concerts. As it turned out, this was where when the 60’s ended and the 70’s and beyond began, the overall Dead experience could be monetized as they played bigger and bigger concert halls.

They consciously realized that since each performance was basically improvised and different, it was possible that demand for tickets could be increased, where fans would come night after night, market after market, and invite their friends to share a unique musical experience each and every time.

The other, was the understanding that the music once played was no longer theirs alone. In other words, the notes once in the air, were no longer owned by the band or anyone for that matter. This was and still is counter-intuitive, in stark contrast to how the rest of the concert/music business views it – where the music in all forms is still considered the property of the artists themselves and fans are prohibited from “capturing” it in any and all forms, except for artist-authorized versions, and of course in our memories.

Live Music Creates a Connection between Artists and Audience

In creative terms, the one thing I learned by having had the opportunity to watch bands play multiple night engagements at the Tea Party over a two-year period was see how instrumental the audience is to the creative process.

There would invariably be a night, THE night when the connection between the artist and the audience would be at a more intense level. Bands were “on”, and we the audience didn’t just passively hear the music, we actively listened and a two-way connection was made that fed off and built on each other.

These were the nights we lived for and there was no doubt that the audience was integral to the creation of that night’s music. The Dead always understood and respected this connection and surrendered control.

Who Owns It?: Let “Remarkable Content” Loose…

Knowing this also allowed them to open up the concerts themselves freely to “tapers,” die-hard fans who wanted to record a living document of the show. These tapers, were then free to share the recording with friends and other fans as well, and in doing so foster and feed a community of friends and fans, who in turn would fuel more demand for the live, real thing and so on, round and round it goes, growing all the time.

Yikes!

You would think that considering their extraordinary success, other bands, and even products and services would surrender control and follow down this road. But sadly, this has not turned out to be the case, at least not yet.

…And a Community Flourishes

Today we need to understand that music is in a way like “information is free” (to quote Stewart Brand) and by that I mean not necessarily free relative to cost, but free in terms of being un-tethered by artificial restrictions. The marketer’s way is to let it loose, let the audience control it and in doing so give them a reason to share, to connect and then experience the real thing for themselves.

As the Dead proved with music, letting it loose unleashes the marketing power of the music (information), the more compelling and in today’s terms “remarkable”, the more the demand, the audience will grow and the more opportunities to monetize the total experience will emerge.

In today’s world with tools like social media where such a strategy based on collaboration with the audience aligns perfectly with transparency and customer control, who knows how much “further” the Dead could have and would have taken it!

Part II to come: How it all worked… From What I Could See, Owsley was The Guy who made it happen.

* I wanted to acknowledge the Rolling Stone: Cover to Cover, the DVD set that includes every issue, every page of Rolling Stone from 1967 to May 2007. You can read it all, as it happened, and see music and music journalism evolve from those heady days of the late 1960’s to today. If you love the music, you will love this!

I also wanted to call out the Grateful Dead Archive now housed at the University of California in Santa Cruz. They are in the process of digitizing massive amounts of the Dead’s memorabilia and making it available to all, in the same spirit that made this all happen to begin with.

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Radiohead Surrenders Control and Makes a Bold Move

October 3, 2007

The big news on the music marketing front this week has to be the upcoming release of Radiohead’s 7th album “In Rainbows.” The reason is simple… the extremely popular band is no longer affiliated with a major label and releasing the music direct to the public themselves… no label, no itunes. This alone is fairly radical. Some great artists have been unaffiliated with a label and releasing product for years quite successfully.

 

One example that comes to mind is one of the most successful jazz artists today, composer Maria Schneider and her constantly touring “big band”. She is a part of a cooperative record label called Artists Share and is able to offer her fans a variety of levels of participation with her recording projects… from simple album purchase to tiered access to the project’s creative process all the way to Executive Producer level for higher financial contributions… audience choice. She has been so successful with this that not only has she been able to take on and fund ever more ambitious projects, she even received the first ever Grammy for a pure digital album.

 

And others such as Prince who take the long view of their business have distributed their latest recordings for free, in his case as in insert in a newspaper or at concert events.

 

Radiohead is taking this thing to new level because customers are invited to pay what they wish for a download version of upcoming album…directly from them!

 

If you follow Marketing 2.0 Win you know that one of our 5 laws of marketing for the 21st century is “Surrender = Victory.” In essence what this law indicates is that in our topsy turvey world, like it or not customers have control and the more we as marketers are willing to surrender control to them, the more successful we will be.

 

Radiohead is doing just this…surrendering maximum control. We can argue that they can afford to, especially when you consider that they are one of the world’s most popular bands with a huge fan base and they have in effect disintermediated most of the middle men in the process. But the inverse is also true, one could also argue they have the most to lose.

 

One outstanding question what will fans do?

  • My sense is that some will choose to pay nothing… which is totally acceptable.
  • Many will base their choice based on the digital retail price which, depending on how you look at it is 9.99 on iTunes and 8.99 on the new Amazon MP3 service.
  • And assuming people like the new album, many will probably pay more based on its emotional value.

This “feeling” will also be driven by the fact that fans will be dealing with the band directly and my guess is this will be perceived as a righteous act, worthy of support.

 

This is all good, but there is one more factor in the mix of this bold act that excites me the most. We know that iTunes has been the most successful legal distribution channel with 3+ billion tunes downloaded. This represents a tiny fraction of music that is downloaded… for free every day however.

 

This what some would call “underground audience” is in the hundreds of millions of individuals worldwide. They have contempt for licensed content and labels and believe it is their right to get the music they want for free. Like it or not, they feel entitled to it.

 

By surrendering control, I figure Radiohead is making the first real and legitimate move to capture some of this audience. If they can pay whatever price they wish, I will guess many will. The only question then is how much? No matter what, Radiohead wins… consumers win… and a whole new way to engage the largest possible audience may emerge… an audience that is empowered to dictate their own terms in the transaction. Welcome 2.0 a new day!