Virtuality is Reality: Mainstream Music Artists Go DIY - Levi Shapiro

David Broza is a successful singer-songwriter, with hits spanning three decades, a "Royal Medal of Honor" from King Juan-Carlos of Spain and nominated for Univision's 2011 "Man of the Year". So why would an artist with gold records in Spanish, English and Hebrew use the internet to fund his latest release? "I want other artists and record labels to know- virtuality is reality. Artists have to explore the medium and the internet brings us closer to the fans. Established artists like Broza are embracing online tools for funding, distribution and promotion."

Funding: Broza used crowd-sourced funding site Kickstarter to raise $65,000 for his current album, "Third Language". In two years, Kickstarter (which retains 5% of funds raised) raised $77M for 10,626 successful projects, primarily in the music and film categories. The most common contribution is $25.

Packaging: Icelandic pop princess Bjork released her latest "album", Biophilia, last month. Instead of the CD format or selling singles on iTunes, Biophilia is a free app. Fans get a much more immersive experience, including participation in the creative process, real-time updates and video games accompanying the music. Each song sells for $1.99. Bjork commented to Spin Magazine about the new opportunities with innovative packaging: "With laptops and the Internet, you just have to re-evaluate physicality. You aren't limited to a guitar. It doesn't matter how well you can play piano. That physicality is not limiting you." Below is the introduction to Biophilia, narrated by David Attenborough:

http://www.youtube.com/watch?v=o8AELvVUFLw

Promotion: Artists are using online tools, notably Songkick, to inform fans about upcoming live events. According to Broza, "there will never be a stream that replaces the emotion of a live performance". Songkick correlates tour dates at local venues with bands in your iTunes music library. Indie music fans have a similar service (currently only in New York, Chicago and LA) but with more editorial, at Oh My Rockness.

Ian Hogarth, CEO, Songkick:

Distribution: Bands recognize the power of social networks like MySpace (www.myspace.com), Facebook and Twitter. For example, Canadian rockers Metric Band  released a documentary about the band for free on their Facebook page. These efforts contributed to tripling of sales for their most recent album.

Anther direct-to-fan, online sales tool isBandcamp. This offers Indie hit-makers like Sufjan Stevens merchandise sales and artist management services. Vibedeck is a free eCommerce tool for bands to sell their music across the major social media sites, including Facebook, YouTube, SoundCloud or any other third party site. SoundCloud uses a Freemium model in which users upload, record, promote and share their music across the web and thousands of applications. However, advanced features such as statistics, controlled distribution and custom branding require a subscription.

Streaming music services like Pandora, Slacker and Spotify (which already has over one million paying subscribers in Europe) represent a growing revenue source for labels and established artists. For example, last year Sony Sweden reported more earnings from Spotify than iTunes. Similarly, independent artists can reach new audiences through sites such as Indie Rock Café, New Indie Bands, SomaFM  and Our Stage.

The message from established artists like David Broza: "I found out (the internet) is profitable and more rewarding artistically since it allows you more contact with the fans. I have not yet figured out the secret and the magic of internet distribution but I love the fact that it is not immediate. It will all take time".

Levi Shapiro is a Partner at TMT Strategic Advisors, a research and strategy firm focusing on the technology, media and telecom sectors. He can be reached at levi@tmtstrat.com or via twitter: @levshapiro

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