This week In the Hot Seat with Larry LeBlanc: Benji Rogers, founder/CEO, PledgeMusic.
With direct-to-fan business models being the talk of the music industry, PledgeMusic has been getting significant international traction.
Founded in the UK in 2009, and headquartered in London and New York with offices in Boston, Los Angeles, Berlin, and Toronto, PledgeMusic has overseen campaigns including Ben Folds Five, Slash, Sevendust, Bring Me The Horizon, the Lumineers, the Libertines, Minus the Bear, Carbon Leaf, Ryan Starr, Ginger Wildheart, Killing Joke and others.
Today, in its quest of a sustainable digital-based music economy, the music industry continues to be fixated upon the media-generated buzz phrase, “data is king.”
While still evolving to potentially generate significant revenues, fan data has become an invaluable commodity as companies look to find new and different platforms to serve music to music buyers, while seeking ways of making money from their web habits by offering access to artists’ music, visuals and offering social networking enticements directly engaging music fans.
PledgeMusic’s growth and popularity makes it clear that the inherent ways to monetize the fans’ musical experiences has widened, allowing artists to not only identify but to engage directly with fans who can play a major role in a targeted marketing campaign. It also indicates that sources of artist income is broadening largely due to music consumers wanting to feel special.
As Hypebot senior contributor Clyde Smith recently pointed out, “Now that the novelty of the web is wearing off, people don't want to have to go through a complicated process of picking out the best service-as-a-feature for each aspect of a campaign, and then integrate the pieces themselves. That's one reason I predicted that we'd see more partnerships between artist services companies.
Part of the reason PledgeMusic is assuming a prominent position in the current landscape is that they take a whole group of features and partner services and connect them as parts of a whole campaign rather than as a simple series of tasks.”
PledgeMusic allows artists and fans to share in the music-making experience in fairly direct ways. Fans can get higher-priced deluxe versions of an album with bonus material limited edition items and autographs, music and merchandise bundles, and take part in such activities as fan firsts, tickets, fan contests and sweepstakes.
In a nutshell an artist can let their fans be a part of the record creating process, beyond pledging money to help fund the recording the recording.
A fan can help fund a project, but more importantly, a fan can follow the progress of the project closer than ever before. This leads to, according to PledgeMusic, to the fan feeling a closer connection to the music and, as a result, placing a much higher dollar value on it.
PledgeMusic CEO Benji Rogers comes from a notable UK music industry family and, a musician himself, he released five albums. He founded PledgeMusic In 2009 to fund and release an independent record under the name Marwood.
Following this, Rogers partnered with attorney Jann Tossato (who later left) and built the company with two friends, Rupert Selby and Jayce Varden. Prior to launching the platform, Malcolm Dunbar joined PledgeMusic.
PledgeMusic has since launched PledgeMusic Recordings, and PledgeMusic Publishing to further serve its clients.
How many current users does PledgeMusic have?
We don’t publish our numbers.
The figure has been mentioned in articles.
(Laughing). We just hit the half-million mark. We are adding about 25,000 users a month.
Did you start PledgeMusic in the UK?
I did, yeah. I had the idea in 2008 and we started building it in February of 2009, and the platform launched in July of 2009.
How much start-up funding was there?
It started off with half a million dollars. We are still privately owned.
How much staff does PledgeMusic now have?
There are 40 full-time (staff) now all over the world.
What fees does PledgeMusic charge?
PledgeMusic commissions 15% of whatever comes into the platform. In that, we include the credit card processing fee as well as our set up and customer service fees.
You have also launched PledgeMusic Recordings.
We have put out the fourth Damnwells and the first Firehorse albums.
Are you also overseeing publishing?
It is something we started awhile back, but we haven’t done anything bigger with it yet. It’s not off the table. We are kind of in a big growth mode for the core business and so the publishing has been on the back burner for quite awhile. I haven’t found the model yet.
PledgeMusic is usually lumped into the same group as crowdfunding platforms Kickstarter, indiegogo and RocketHub. However, PledgeMusic is not a fan funding service. It enables artists to tap into their fan base.
That’s correct. One of the reasons I created Pledge was that the crowdsourcing, and crowdfunding sites out there just did not do what I wanted them to do.
What was then available?
The original ones we were looking at were Sellaband, SliceThePie and BandStocks and the early version of indiegogo. What those sites primarily focused on was the financial value of whatever it was being crowdsourced, or crowdfunded.
You developed PledgeMusic after years as an independent musician. After your 1997 tour, “So Indie That It Hurts Tour.”
That was a brutal tour.
So you tried to figure out another way to market yourself and others?
It was at that time that the idea started to come into my head because nothing was working, but it wasn’t until I was literally at my wit’s end at my mom’s house living on an air mattress. It was like, “Hang on a minute. Artists, fans, charities.”
I remember sitting down on the South Bank (in London) with the bass player (of Marwood) and a whole bunch of people, and I was just saying, “I have this idea. Imagine if…..” and they were like, “That’s a really cool idea. You should do that.”
I also remember starting to build the prototype for Pledge on my computer, and thinking, “This is going to require proper development and what not.”
Were you savvy about marketing via the internet?
I got obsessed by social networks early on. I was like, “This is the future.” I also remember watching how early hip hop would influence culture. The way they (rappers) would work with grassroots promotion. It always stunned me that the opportunities were so huge when things were starting to come through technology. Part of my brain switched on (to technology) in around 2000 or 2001. it was like, “Hang on a minute, there’s a much easier way to do what used to take me hours and hours to do with postcards. It just makes sense.”
There were already crowdfunding platforms out there.
Sellaband was the first one. The first thing that I did was that I looked to see if there was anything like what I had in my head. The reason that I decided to build it was that I would never put my music on something called Sellaband. Wouldn’t happen. Forget it. Then it was a question of, “What is it that these platforms didn’t have.” They were all about raising money. They were only about the financial transaction. There was no pledgers only the updates section, and there was no social networking strategy other than you have funded something, share it.
What was the basic premise of Pledge?
The genesis of how Pledge started was with this core idea that when we (the band) were on tour people wanted to hang out with us. People wanted to meet, and chat with us. They wanted to go to the after party. When I went into the studio, people were asking, “What are you working on?” Some demos. “Can we come down to the studio?” That is what kind of what led to the idea that fans would love this process sometimes even more than they would like (going to) the shows themselves.
How did you then develop PledgeMusic?
When I first had the idea for PledgeMusic, I took it to my stepfather (promoter/manager Tony Smith), and I said, “Tear this apart for me.” For about three hours, he just hammered me on it. Then he said, “I like it. It’s a good idea.” He was kind enough to introduce me to some entrepreneurs.
Why did you need others to develop PledgeMusic?
I had never built a business before. I hadn’t gone to business school. I had no idea what to do. I had left high school when I was 15, and went straight to music college. It was really a learning curve for me. But I found that entrepreneurs—and the music industry people I spoke to—were so willing to give of their time, and their knowledge. It was able to come full circle. One of my favorite moments was (in 2012) when one of the artists we work, Ginger Wildheart, received an award at the Classic Rock Awards in London (at the Roundhouse), and my stepfather received an award (the V.I.P. Award). He talked about us, saying, “it’s very odd that I am accepting an award here, and so is my stepson for his company.”
[On Nov 13th 2012, Ginger Wildheart was awarded the Event Of The Year award for his PledgeMusic campaign which raised over £250k towards the recording and release of the former Wildhearts front man’s triple album “555%” which was available exclusively via the PledgeMusic platform.
The album was named after the fact that Wildheart hit the original target within six hours, and went on to exceed it by over 555%.
Wildheart beat off stiff competition from Black Sabbath, and Status Quo.]
Ginger Wildheart is certainly a Pledge success story.
One of the smartest managers out there looks after Ginger, Gav McCaughey, who is totally reinventing how Ginger does his business. And it really shows up. The things those two have been able to achieve together has been truly remarkable.
I was introduced to PledgeMusic early on with the Danish artist, Tina Dico. Was that successful campaign?
It was amazingly successful. What was phenomenal about that was it was for a soundtrack for a Danish film that Universal was going to put out in Scandinavia. The first project we launched was my own Marwood EP to prove that it could be done. I figured that, “If this is all going to go wrong, it should go wrong on friends and family.”
[Pledge Music raised around $89,000 for Danish artist Tina Dico. Dico who had recorded with U.K. electronica act Zero 7. Via Pledge Music, fans were offered a series of premium and exclusive packages for her album, "The Road To Gävle,” a movie soundtrack based on the musical score she'd written for the Danish feature film, "Oldboys."]
The emphasis on crowdfunding platforms is on raising funds to pay recording costs of an artist or band or underwrite some of the costs of touring. Preorders eliminate the risk normally associated with recording, and releasing music.
Exactly. When I launched the first campaign for Marwood, there was a financial goal attached to it. And that was the bit that they (the artists) couldn’t reconcile. What it brought me back to was when I made my first album as the Ben Rogers Band, which was before Marwood, I remember I got a thousand CDs shipped to my apartment. I was like, “Wow. Now I have to sell these.” The concept of being an artist, and being a salesman was very uncomfortable to me. What Pledge was really seeking to do was to address that balance. To say that if you offer the (music) experience, you don’t have to be a salesman. With the experience, you are actually selling is what you are actually giving. It’s a natural thing.
Crowdfunding merely attempts to replace what labels had been paying out in advances for recordings and touring. In effect, PledgeMusic is trying to maximize the marketing of Twitter, Facebook, YouTube and so on.
Exactly because the roots to monetization of a sale is simple. What kills me—and, this is a classic example of it, is that so and so announces that they are going into the studio. That is the most interesting part, but is purely funding the problem that we are trying to solve? The answer for me was no. Just to fund things is one way to look at the business. Going to your fans, and saying, “Please give me money, then I will go and do something” is a business, but that can also be achieved with a PayPal button on your website. The dirty little secret is that it doesn’t work very often.
Also it can create donor fatigue if it happens again and again.
Yeah, exactly. So what we try to do at Pledge is to completely strip that part of it away, and make it about the experience of the making of the music which to me is the last frontier available to us. If you think about it, live is pretty saturated. Live is kind of its own animal, and does its thing. It’s where fans can truly be a part of something. But outside of that arena, all of the magic, the excitement, the interesting parts, the bits that super fans, in particular, can engage in all happen behind closed doors.
As a super music fan myself, and a power user of our own website, the most exciting parts to the music-making process to the super fans can be the recordings as they are being made. I am very much a fan of (British-American journalist) Nick Bilton who wrote the book “I Live in the Future & Here's How It Works: Why Your World, Work & Brain Are Being Creatively Disrupted.” The book is basically talking about the fact that the consumers of yesterday are not coming back. He puts it that, “I’m not going to wake up tomorrow, and think that to myself, ‘The internet isn’t really for me.’”
It’s not an option anymore.
What I’m obsessed by with is narratives that happen while an artist you love and admire are making an album in the studio which are far more interesting than the narratives that a label can provide for you about the band’s album simply being out (released).
Did the impact of Amanda Palmer's Kickstarter campaign in 2012 awaken people to the power of crowdfunding-styled marketing?
I’m not sure.
Or was it a whole series of different things?
It was a whole series of different things. What happened with the Amanda Palmer thing was really interesting. I remember that our team was a little bummed out. We were bummed by it all. I remember saying. “This is our biggest opportunity.” There was a lot of head-scratching about it.
[In 2012 singer/songwriter Amanda Palmer’s campaign on Kickstarter raised $1.2 million in 30 days from 24,883 backers. A sizable feat for an artist without a record label, radio airplay, or even significant touring success. When her campaign passed the $1 million mark, Palmer tweeted a photo of herself with the words "one fucking million" scrawled on her naked torso.]
Why were the Pledge team bummed out?
The Pledge team felt that if it had gone on Pledge it would have done better. It would have far exceeded it (the $1.2 million mark) and it would have taken a lot of the focus off of the financial amount and onto the album itself. Afterwards, we started getting calls from managers saying, “We want to do something. We just don’t want to show the financial amount.” We said, ”Well, we don’t do that. it’s not about money.”
When you ask for money, when you crowdfund, you go to the well and you take from the well. Inevitably, we get asked by so many artists, “How do you go back to the well?” You don’t create a well. You create a series of experiences which lead to the making of an album.
Would you not agree that Pledge works best for established artists?
It depends on the expectations of the band, and management. If a new band sells 110 (units) of their album, that’s not going to tip the needle. But 110 pledges at $70 each, that will tip the needle for what that band’s next move is.
Still, an established band is going to make more money.
Oh, absolutely correct. But also, and this has been one of the most encouraging thing for me is, I have seen bands start with an EP, do an album, and that album will be double the number of pledges of the EP. Then they do another album after that which will be triple the number of the first. So it is a way of growing (a career) because fans can grow with the artists as opposed to being just shoved into the mix with all of the other bands.
(Success with) established bands with a big fan base is relatively easy to achieve. Small bands with a growing fan base is always an incredible one (when successful), and when it works it shows that this band has potential and reach. Some bands will launch a campaign, and 30 people will pledge. That might be the extent of their fan base. But that doesn’t mean that their first EP shouldn’t get made. If it means that the band can play 10 more gigs or get two more days in the studio, that’s worth it to me. Some of my favorite artists that I have found via the Pledge system, and had some of the best records that I’ve heard, have been with debuts.
Give me some example.
Mieka Paukey did an amazing pledge campaign for us. I love Firehorse which I discovered through a Pledge campaign. Hawk Eyes is a great band out of the UK. Really cool. Their first record came through us. I Like Trains are really cool.
Luscious Jackson is back with a new studio album plus a children's album made possible through a PledgeMusic campaign. The studio album “Magic Globe” was released Nov. 5th, 2013 but, interestingly, the Pledge campaign launched last year.
Yep, we got connected with Jill (Cunniff) before Luscious Jackson even had a Twitter account.
The band didn’t even own its website.
That’s true. I went over to Jill’s apartment in Brooklyn, and signed her up for Twitter, and taught her how to use it. There’s lot of love for Luscious out there and no one was doing anything about it. They have a great heritage with the Beastie Boys. It was a perfect thing. A lot of it was, “There’s no press photo.” It was virtually like starting again. What was amazing was that when we activated the Twitter account, we saw fans start to get involved. Had Luscious Jackson just done an album, tried to find a label, and put it out, it really wouldn’t have had much impact because it (a release) requires some momentum behind it.
[Following the release of 1999's "Electric Honey" on Capitol Records, Luscious Jackson called it quits. Band members, singer/bassist Jill Cunniff, singer/guitarist Gabby Glaser, and drummer Kate Schellenbach, then pursued solo projects. Cunniff and Glaser eventually began collaborating on a children's album, but nothing came of it until learning about PledgeMusic.
The PledgeMusic campaign for “Magic Globe” launched Feb. 9, 2012, offering an array of rewards for fans, including a tour of downtown Manhattan with Cunniff and Glaser, and an acoustic living room concert for The campaign kicked off with a new song, "Are You Ready?," the first new Luscious Jackson track in over a decade. The band reached 100% of its funding goal two days later.]
As directly shown by the Luscious Jackson campaign, PledgeMusic provides personalization within a campaign which is an important marketing component.
If Jill had just sent (consumers) to a website, with sign here, and select your items, and select your information, I don’t think that it would have worked in the same way. When we approached Luscious Jackson, we had a customized written proposal, saying, “These are some things that we think you should offer, and this is how we think it should go roll it out.” We even recommended a press person because we felt that it (the campaign) needed it, and we know good people in that realm. We also recommended a booking agent because Tom Windish (owner of The Windish Agency) is a friend. It isn’t that we can do this for everybody but, if we are engaged, we do have all of these resources that we can bring to bear.
On a global scale, any artist that comes into us—whether they sign up organically on the website wherever they are in the world or they meet us at a festival conference or gig, if they engage with us, we respond, “We don’t just want to be a website.”
Pledge offers an à la carte service, and it is not a crowdfunding platform, or a direct-to-consumer service.
Absolutely. There’s a lot of technology behind it (the platform) which makes it easier for us. We seek to refine that. This year I was on a panel with three artists at Folk Alliance in Toronto with crowdfunding campaigns who were giving advice to artists on how to run them. The advice was along the lines of, “You should spend two weeks reading all of these blogs. You should look at 15 other campaigns. You should research shipping. You should do all of this stuff.”
Artists forget how valuable their time is, and they also forget that what they do, while they are making music, is infinitely fascinating to people who have never seen it. They think, “I have to disappear, and come back with the greatest thing ever.” But the “reveal” is over. If I know an artist is in the studio, and I can’t be part of it, I’m missing out, and I’m watching what I’m missing out on and it’s driving me nuts. If I am part of it, I have a front row seat to the experience, and everyone else can watch me watching it.
Artist forget how valuable their time is, and they also forget that what they do, while they are making music, is infinitely fascinating to people who have never seen it. They think, “I have to disappear, and come back with the greatest thing ever.” But the “reveal” is over. If I know an artist is in the studio, and I can’t be part of it, I’m missing out, and I’m watching out what I’m missing out on and it’s driving me nuts. If I am part of it, I have a front row seat to the experience, and everyone else can watch me watching it.
In essence, providing backstage access.
It’s all about getting behind that curtain and seeing that little bit that is just for you. It is of immense value to a majority of fans when they get to it, but they also get to evangelize. They get to say, “This is what I’m watching. This is what I’m doing.” And they will drive marketing to an artist, if the artist lets them; otherwise, they are just going to get spoon fed it (the music), and that’s the best they can do.
If you read the books by Seth Godin who talks about permission based marketing, it’s clear that these fans want to connect. They want to belong. They want things to do. They just don’t need more things to buy. That’s the problem. When you are trying to sell somebody something they can literally play on a streaming service infinitely, they look at you like that would be crazy. Why would I buy something that I can just play on?”
You can't beat the backstage access experience.
I will give you an anecdote that I love. I met with this journalism student who said to me, “You have ruined CD buying for me.” This kid was 20 or 21. I was like, “Oh, sorry for ruining your love affair with CDs.” He said, “No. I pledged on a band that I love, the Damnwells. I watched them make the album. I heard 14 unreleased songs before the album had come out. When the album landed in my hands, my name was in the album credits. So how do you go back?” Go back to just buying a CD in a shop. Once you have had that (experience) how is it possible to return? And he’s right. Once the cat is out of the bag, it’s over. YouTube and Facebook let the cat out of the bag. The problem is that the labels haven’t realized that.
Labels and management can provide artists with the tools, expertise and money they need to release and market music. Will they not have the same impact as PledgeMusic?
No. Direct-to-consumer tends to have an average spend to a fan of $22 and $24. The high is $26. It plays to, “Preorder the album now, and you will get it before anybody else will.” That’s its message. It also forces people to buy things on the band’s website which seems quite logical. But if I go to a band’s website and enter my credit card details through some source (like PayPal), it’s not a true direct-to-fan (experience).
What happens is the band puts something up on their website, and the third party ships it to them, and that’s experience. It is actually a very unnatural thing for a fan to buy it (the music) from a band’s website. A label owns hundreds of thousands of websites and they are trying to send millions of people to hundreds of things. Why are iTunes, and Amazon so prominent? It is because they are easy to use, and because they focus on it (selling). You have a one-click buy, and there’s a reason to go back which is that you have other things (to buy).
So if you say to me as a fan, “Go to my website, and buy my CD.” I’m like, “But I buy my stuff from Amazon or iTunes. Why do I need to go here?” The second thing here is that you can’t interact (that way) any more than, “Okay, I bought it. I have to wait two, three or six weeks.”
Also if you go to a band’s website, and you buy something, you are agreeing to a third party’s Ts & Cs (terms and conditions). If you go to “Bandname.com,” it will direct you to go to the store named (for example) “service.BandName.com” as you are checking out. Then it takes about a minute and 45 seconds, and an average of 14 clicks, and 22 options there, and will ask, “Would you like us to store your information for da da service.com?” I’m like, “No. wait, I’m not on the band’s website. Where am I?”
What we tried to do at Pledge was to bridge that gap. If you pledge on a campaign for Ryan Starr, Slash or Sevendust, whether it’s a presale or whatever, you are unlocking a process that is built for you. You are getting to see the experience as it happens, built for you, and curated by the band. So if you don’t pledge day one, and three or four updates go buy, you are missing something. And that’s the key. On direct-to-consumer platforms, you aren’t missing anything because it’s simply buy it here, and it comes later.
So PledgeMusic’s intent is to involve fans from the very beginning of fundraising through the production of an album, all the way through to the full release? PledgeMusic provides regular updates for presale campaigns so that fans are more involved than they would be simply putting in an order for future product.
If fans are engaged in the process, it means more to them. They cherish it. They will buy two copies. One for to put on the wall; one to play even if they stream it when it comes out. Even if they don’t even want to touch the damn thing, they want to say that there were there.
Making something available for preorder doesn't quite provide a sense of connection between artist and fan implied by direct-to-fan.
We have seen a couple of bands that have done a pledge campaign and thought to themselves, “I can do this on my own.” I’m just going to put it up for presale on my website. What’s the difference?”
The answer is that people don’t go to a band’s websites to buy stuff. It’s not the natural place.
There was an article recently in Hypebot about one of the bands Carbon Leaf that we work with. Their feedback was that their Pledge campaign outperformed the D-to-C (direct-to-consumer) by 80%.
What we were seeing is that fan for fan Pledge campaigns are unmatched fan for fan. There’s definitely a place for direct-to-consumer sales, and an artist should always have music available to buy on their website, but the key to what we built at Pledge is not just the tools to preorder the album, it’s also the tools to allow fans to be part of its making by the pledgers only updates, and by their social syndication technology.
So when a fan pledges, the second screen that they see after pledging is, “Would you like to share these updates by way of your Facebook and Twitter feeds?” That means that every time the artist posts there’s also posts to the fan’s Facebook and Twitter feeds as well. So if you get 20 to 30 pledges on the updates over the course of the making of the album, that’s 20 to 30 things that the fans are also sharing. What is interesting is that is roughly 22% of our inbound traffic coming from fans sharing what artists are doing in real time. So if you just put up a D-to-C store what’s the most that can be shared? I bought it and it has landed.
[For its current album, Carbon Leaf conducted a PledgeMusic campaign even before they even had an album title. The five-piece indie rock band from Richmond Virginia went from a six-week presale to a four month album campaign, and quadrupled revenue.] What’s the attraction of major companies like Universal Music Canada and INgrooves Fontana now working with you?
The label business has traditionally been a very risky one in that, “We invest, say $100,000 or, so we can make back X on top of that selling albums.” What we found was that a lot of deals were getting worse and worse because the risk was all on the label which sounds like an odd thing to say from the artist perspective. But still if you put down $100,000 for something, you aren’t doing it for free. You are doing it to make money back. Earlier we saw a few bands in the UK who would raise $50,000 or $100,000 in presales, and they would go to a label and say, “Will you put this album out? We have already have presold this many of them.” So the label would look at it and say, “My risk is half.”
The way I view this is that, in its entirety, we are de-risking the music industry (with PledgeMusic).
Frontline releases on record labels don’t need funding from fans. Financial risks for most albums is in the marketing.
Absolutely, but what it’s about is how to assess the popularity, and the financial viability of this record when it has to appeal to radio, and appeal to press and so on.
What ancillary services can you bring to the major labels?
What we bring in most cases, particularly globally, is that we de-risk that album to some extent; or if the album is already profitable or there’s enough sales to count toward first week SoundScan to give it the chart position and that the labels want market share. The last element is our social syndication technology. The label has phenomenally talented marketing people who don’t have this tool available to them. And they want it. The label has a direct-to-consumer route, but no direct-to-fan route. And we can become the direct-to-fan route for the labels that de-risks, engages the fans, and significantly increases the label’s market share on the first week of sales which is important to them because that leads to increased radio and press and so on.
We have probably pushed 50 to 60 bands up into labels but we also launching campaigns for labels all of the time. They are using our technology in the presale three, four, five months before the album comes out. That is something that they can’t do themselves.
Universal Music Canada is the first major you are working with on an on-going basis. Dipping your foot in the pond?
It definitely was. We had worked with labels before that. Randy Lennox (president & CEO of Universal Music Canada) was one of the first people to recognize the power of this. He wanted to be the first in the door. To his credit, he’s really been driving this on his end.
It (the Universal deal) is definitely the start of something, but we have worked with lots of labels. We did Lissie, and Bring Me The Horizon for Sony and Ben Fold Five with Sony Legacy.
[In June, 2013, it was announced Universal Music Canada was partnering with PledgeMusic to give its artists access to the direct-to-fan platform and its team. The deal is the first between a major music company, and a direct-to-fan service.]
The recording industry was the first media sector to feel the full impact of the Internet. After peaking in 1999, it was side-swiped by a technological revolution, and almost overnight faced a borderless global ecosystem that defied control or, for years, monetization.
Yeah. I think the most famous quote was from Doug Morris who (as Universal Music CEO) said, “We didn’t know who to hire.” There was no one you could ring up. The original label model was that you would buy the High Street, as they call it in the UK. Basically buy ads in every window shop, and basically you would own the dissemination of it (the album). The problem with dissemination now is that there are millions and millions of ways to buy things. The problem is that there are no reasons to buy things. If you are competing with free….the labels didn’t understand that was coming. What Napster, Limewire, and these technologies should have showed us is that if we are going that way, our job now is to create stories, to create narratives, to create reasons (to buy).
Today, a lot of labels still employ the exact same tactics that they used to, but now they are leveraging brands to try and fill the gap in sales. So you’ve got books like “Blockbusters” (“Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment” by Anita Elberse) talking about this concept of the brand being really interested in being part of the artist’s life. No they are not. The brand is interested in selling shoes. They know that a massive artist will do that and, in exchange, for that the artist will get them sales. The problem is that it’s not solving the underlying problem which is music fans—there are far more casual fans than there ever have been. And those casual fans will get a lot for free in any shape or form that they choose.
People have grown up with television and smart phones where everything is available at a click of a button.
Yeah. We can lament that or we can say, “What’s the opportunity?” The opportunity in that if fans are used to getting everything off Facebook, YouTube and Twitter. What they are really used to is getting things in real time. What is the heart and soul of the future of the business? It is watching things being created? Remember VH1’s “Behind The Music” series where you watch classic albums being developed. Why can’t you do that in real time? When an artist that you love sends you a demo, it gives you a tingle. Why can’t fans feel that?” Because they get everything else disseminated to them as finished, glossy, shiny types of Coke can branding where there’s no engagement.
The majors can’t provide that engagement because they don’t have the same levels of revenue they once had, and their staffs have been slashed to the bone. Meanwhile, managers and artists are more focused on the live side of the business.
Yep. In a world where we are seeing massive declines in CDs, massive declines in, basically, the purchasing of music, one of the things that I found so fascinating is that the pledges are 82% physical. People are buying physical products as kind of a badge to say, “I was there. I saw this happen.”
Despite digital music now displaying robust growth, and with inherent ways to monetize musical content rapidly growing, there are still very few countries in the world--India, the U.S., Norway, and Sweden among them--where digital income has crossed the 50% threshold, and accounted for more than half of all revenues.
Sure, but I think that a balance can be struck. When we did the study with Nielsen when we asked the fans who do you want to see with these types of campaigns, the answers from the fans were Beyoncé, Rhianna, Coldplay, and Kings of Leon. What music fans have been saying to us is, “We want this from everybody. We want this (content) from all angles. They are going to buy the experience of the music, and they going to show their ticket stub--their backstage pass—which will be the album that they saw coming to be.
[Nielsen unveiled the survey of 4,000 music consumers, which included PledgeMusic users and South by Southwest attendees, at a 2013 SXSW panel titled. "The Buyer and the Beats: The Music Fan and How to Reach Them." The survey examined the degree to which different types of consumers want to connect with artists through exclusive music merchandise. Nielsen found there could be potential incremental revenue of $450 million to $2.6 billion if artists, managers and labels offered a better set of products and experiences to fans.]
We have to give the physical product a meaning beyond just being a replicatable item in the same way that every show is different. Every release of an album is different and should be an event, and not just another dissemination point. If you talked to a direct-to-consumer company they will tell you 90% of their income comes in the presale. Why because it’s the one moment that the super fan can truly go to town because they are getting it first.
When we started to work with labels, one of the big concerns was how, “How is a Pledge campaign going to affect us at indie retail?” As in “is retail going to penalize us or how is iTunes going to feel about it cutting into their presales?” We haven’t seen any detrimental effect. We have still been able to get good chart positions and good sales post pledge because (the recording) was building to that point.
You have indicated that 8% of PledgeMusic users shop at big box stores.
Correct. But even more interesting than that is only 50% of people who pledge actually download the digital album even if they are getting it first. We have to remind them to do so we can count them in the charts. Most of them will still stream it or buy it post pledge anyway which is a real odd phenomenon.
According to the Recording Industry Association of America (RIAA), the U.S. music industry generated $7.1 billion in sales in the U.S. in 2012, down 0.9% from 2011. Driving growth, according to the RIAA, was "access models" up 15% of the industry's total revenue, up from 3% in 2007.
Streaming and those types of things, we are definitely going to see growth, but the question is are those models going to scale in time to get a lot of that lost revenue in the meantime? Any artist who wants to drive 12 hours on tour in a bus is going to need the money to do that. The question is, “How do they get that money? How do they get to the point where streaming would be monetizable for them? It takes a long time and a lot of spins.
There seems to be three types of music consumers: A casual consumer who enjoys a band’s music, might go to the show, but will not necessarily purchase anything else; the super fan that looks for a lifestyle or community around their chosen artist; and a background consumer who may buy into both the artist and their music on a random basis.
I believe that what the Nielsen study actually pulled out was the fact that a majority of fans are categorized as casual consumers because they have no access point into any of the industry that they know. To any music that they know. The example I will give you is that if you live in a town in America which doesn’t have a music store, your access point to music is Amazon which is the coldest experience with music that you will ever have. If you buy one DVD or CD a year—where you used to buy 50—you will never see that on a graph because that customer is just lost. So they would be considered background consumer or whatever it is. Another example I would give you is that my uncle Jeffrey who started the first blog of Bruce Springsteen and Emmylou Harris. He once said to me, “What new music is there? Where would I go and find it?”
America doesn’t have a significant music retail base anymore. What outlets there are you might find only one or two albums of most artists. A compilation and, perhaps, a new album.
You are absolutely right. I was talking to someone quite high up at a record company about a boxed set. I asked, “When does it come out?” He said, “It’s out already.” I said, “Where can I get it?” He looked at me like I was asking him a stupid question. “Seriously, where would I go, and get one, right now.” He had to think before he said, “Amazon.” That was his route to market. I used to go to Tower Records in New York, and I could browse the boxed sets section which was a huge amount of money in (profit) for labels.
Virgin, HMV, and Tower used to be in Manhattan and are now gone. Last month, Rough Trade NYC opened on North Ninth Street, near the East River
I used to go to Tower Records in New York and browse the new releases, and listen to them on the listening posts and then choose to buy.
You are British?
I was born in London. I lived there until I was about 15, and then I moved to LA. I went to a music college, the Dick Grove School of Music, there. Then I went to Berklee (Berklee College of Music, located in Boston) when I was 17.
Your mother, father, and stepfather were all in the music business.
My mother Susan Rogers managed some R&B artists. My father is Mike Rogers. My stepfather is Tony Smith.
What part of London did you grow up in?
I was born in Hammersmith, and lived in Notting Hill for most of my life.
Did you grow up on tour buses?
When I was a baby I used to tour in the back of my father’s—my father was in country bands—and I used to tour with them in the back of a bread van. He was in the Hank Wangford Band.
The singing gynecologist.
Exactly. And I believe a nude mountaineer as well. He was also the (British) physician to Gram Parsons.
[National Health Service physician Samuel Hutt, known by the stage name Hank Wangford, is an accomplished a celebrated alt.country performer in the UK. He is also reportedly president of the Nude Mountaineering Society.]
Music was obviously a big part of your life.
Like I said, I used to sleep in the back of a hollowed out Marshall with the foam on it. That was literally how life was for me. When I was 9, I went out on A Def Leppard tour with my father who was their guitar roadie at that point. Then I started doing Genesis and Phil Collins tours doing any kind of job that I could. Those were my summer gigs. Load ins and load outs. Then I decided to play music for a long, long time.
I recently did an interview with your stepfather’s former partner Harvey Goldsmith. Tony’s father John did the first Rolling Stones’ tours in the UK. Tony went on to manage Genesis.
One of the most frustrating things was that we would go to the 606 Club too see someone play or to Albert Hall to see someone play and my stepfather would say, “I remember seeing Jim Hendrix here.” Okay, fine. At one point my stepfather’s old partner was Gail Colson. The first time her and I sat down to talk about Pledge, she said, “Hold on a minute, I can’t take this seriously” because she knew me from when I used to skateboard around empty arenas and stadiums like with Def Leppard in ‘83. I did some skating on the Genesis, and Phil Collins’ tours too.
One of PledgeMusic’s core components is raising money for charities. Is that because artist may be sheepish asking their fans for money?
It was a core part of the platform when we started. I did work with refugees in 2004 in the Middle East. When I came back, I wrote songs about that (experience), and asked myself, “What else could be done?”
Originally, when I had the Pledge idea, I had multiple thoughts. The first was every time I was asked to play a show for a charity, I would do it. No questions asked. The second was that every artist that I knew had a charity that they loved. The third element was that it would be really hard to steal the music—and this was back in 2009—of someone who was not only making their album in conjunction with fans but also giving part of the profits to a charity. I thought that would even be too mean to do. Pledge ties these three forces together. The artist wins because they get to make the album the way they are choosing with their fans. The fan wins because they get the best experience and, at the end of the day, a charity wins because someone shows up with a check. Even if it is for only $100, it wasn’t there yesterday. I love it (the charity aspect). It is something we are going to focus on in 2014 as well.
Larry LeBlanc is widely recognized as one of the leading music industry journalists in the world. Before joining CelebrityAccess in 2008 as senior editor, he was the Canadian bureau chief of Billboard from 1991-2007 and Canadian editor of Record World from 1970-89. He was also a co-founder of the late Canadian music trade, The Record.
He has been quoted on music industry issues in hundreds of publications including Time, Forbes, and the London Times. He is co-author of the book “Music From Far And Wide.”
Larry is the recipient of the 2013 Walt Grealis Special Achievement Award, recognizing individuals who have made an impact on the Canadian music industry. He is a board member of the Mariposa Folk Festival in Orillia, Ontario.
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