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.

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Interview by Jenisha Watts

It’s usually said that to make something happen all you need is a dollar and a dream. But what if all you have is the dream? If you talk to Yancey Strickler, he’ll tell you to turn to Kickstarter. A year ago, he co-founded the social fundraising company, which has already generated millions to aid independent artists in developing their projects. One user posted an idea for a device called the TikTok+LunaTik Multi-Touch Watch Kit which could turn the new iPod Nano into a watch using two wristbands; the idea went on to earn over $786,806 through the site. Then there was the group that was committed to keeping classical music open to the public. They only needed $11,000 and went on to receive $68,000 from online support. But it takes more than just a great idea to be successful on Kickstarter. We caught up with Strickler to talk about the importance of thinking creatively, why you should never approach Kickstarter from a business mindset, and what the music industry can learn from the start-up’s business model.

Complex: Let’s get straight into it. What’s your pitch for why Complex readers should be involved with Kickstarter?

Yancey Strickler: Kickstarter is an amazing way to turn your artistic dreams into reality. It’s a way to work directly with your community and to build a little economy around your work and make the thing you always wanted to make. We are focused solely on creative projects. If you are an artist of any kind, this is a great reason for you to use Kickstarter. The opportunities of working with your audience is very filling—the relationships are very real.

Complex: What have been some of your favorite projects and why did they work?

Yancey Strickler: I like projects that involve bringing the backers into the process. A really good one was this woman painting a giant mural of a crowd—for $30 you got to be one of the people in the crowd. The comic projects are really cool. We have a lot of documentary films and a lot of people making records.

Complex: On that note, a lot of musical artists who are popular now made their music independently. How can musicians best benefit from using Kickstarter?

Yancey Strickler: The music industry has really been focused on how you monetize content after it’s made—how you sell things—to try to make as much money as possible. Our perspective is that people need to make the records in the first place. The other is a question for the music industry, not for artists. I don’t think artists really care about piracy that much, they just want people to hear their music. We want to make it possible for artists to make the type of records they want and to do things that they want to do without giving up all the rights of their work or having to compromise their vision for someone else’s desires.

Complex: So ownership is king?

Yancey Strickler: Absolutely. I think it’s a very strange thing that we all just agreed to these terms, that for the privilege of my work to exist in the world, I have to give up my ownership. And that’s a really important part of Kickstarter. I love the fact that, no matter where you are in the food chain, whether you’re a huge star or young and just starting out, you’re able to own your own thing—to control how you distribute it and where it goes. That shouldn’t be the privilege of the elite, that’s something that everyone should have the opportunity to do. I think that’s been vital to our success and to our future.

Complex: So you wanted Kickstarter to have an “anybody can join” feel, not exclusively for netizens?

Yancey Strickler: Yes, we just wanted anybody to use it. From the very beginning we thought, “we don’t know where this could go,” and we just wanted to work with the idea. The purpose of Kickstarter is to help more artists exist in the world in whatever form that takes; we want to be open to whatever direction that goes, while staying pure to the spirit of why we started this thing.

Complex: Speaking of being exclusive, any thoughts on how people of color have a harder time securing funding for various start-ups?

Yancey Strickler: We’re starting to reach a point where we’re all entrepreneurs, and I think that’s important. Because a lot of these traditional systems are either starting to break down or just not easing as well into what the world is now. Its created a lot of space for anybody to make something for themselves, and I think that those opportunities are going to grow in all kinds of ways. For the last four or five years, that’s really been restricted to the geeky start-up tech world, but I think that’s starting to change because of the recession and the way the world is changing. It’s not only easier but it’s also more urgent for everyone to build their own thing and the opportunities there are very real, so I think those demographics will change over time.

Complex: Can you dish out some advice to future users looking to raise funds for a project?

Yancey Strickler: You’ve got to be true to yourself. You want to present yourself as to who you are. A lot of times people are backing the person behind the project just as much as the project itself. They see someone’s video and they’re like, “I trust them, I can see they’re passionate and good at what they do.” It’s all about communicating back and offering people good things in exchange. If you come here thinking about “how can I get as much money as possible while giving up as little as possible,” that’s the wrong way to go. I think [you'll do well] if you come in not thinking about this as some kind of business arrangement, but thinking about it as “what’s the ideal way for me to share my work, and what’s the ideal way for me to get people involved?” If you approach it honestly and thoughtfully, anybody can do this. For every single project that’s succeeded on Kickstarter, that’s exactly what they’ve done: approached it honestly and openly and were vocal about what they were doing. You do those things, you have a very good shot at success.

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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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