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For the sake of round numbers, let’s say that all of the $100,000 came from iTunes, so the artist sold a nudge over 100,000 unit sales. Under a conventional record deal, those true fans will have returned a fraction, maybe as little as 10 percent, of that sum to the artist, after costs, deductions and recoupment. An even smaller fraction would be collected on behalf of the publisher and writer. Now of course Kelly is referring to the artists’ option of going it alone, but this form of independence will inevitably be dependent on other "aggregators". Even in the digital world, you need these to get product to, and collect revenues from the market - and they take commission that will often be priced at the margin. Someone, somewhere, takes a cut.
A Monopoly of Obsession
According to Kelly, your 1,000 "True Fans" could each give you $100 a year. No doubt some fans do just that - if not more - but most of us are not such obsessive compulsives; we reward lots of the artists we're passionate about with the limited resources we have.
No artist therefore has a monopoly on the fan, no matter how obsessive they are. Competition takes place both in the market for artistic creation, and in the market for the fans' attention. For sure, having fan clubs is a great way to try to monopolize those markets (the rock band Kiss mastered this trick way back in the seventies and continue to do so today) but is this really the way "fans" and "artists" could or should interact? Surely the artist should, if he or she is any good, need to compete for those 1,000 fans every time they sit down to pen and perform their new album. If the money (or fans) were guaranteed, would that actually impair the level of creativity that would otherwise have taken place?
Similarly, if a portion of the fans’ musical budget was "ring fenced" to one artist, then that would hinder the ability of the fan to discover and reward other new artists, and vice versa. And besides, what sort of artist would be 'content' with just 1,000 fans anyway? Again, once you start thinking about n+1, the marginal costs and benefits kicks in.
Fast and cheap means more fans are needed
It does no harm to shed some light on the practical challenges in accommodating the "Long Tail” that broad-brush generalizations like Kelly's tend to ignore. Indeed, on reading his much-hyped blog, I wondered at times if he was applying yesterday's "unit price" to today’s market place. At the basic level, if the "duplication and dissemination" of small quantities of stuff becomes, as Kelly states, "fast, cheap and easy", then if price tends towards marginal cost, then it will be sold cheaply too, suggesting that you need higher volumes to make up for the reduced price. Which means you will need increasingly more fans, not fewer fans!
At a more detailed level is the issue of cross-subsidisation which is embedded throughout the music industry, and how that holds up (or breaks down) when you have a tail as long as the one we’re currently dealing with and a head that ain’t hitting like it used to. Concepts like "micro payments" have been banded around as a panacea for years, but ultimately the market will provide a role for intermediaries, be they labels, digital aggregators or collecting societies, who seek to apply economies of scale. In many ways, the fact that the long tail leads to lots of granular transactions from lots of retailers to lots of niche artists makes the case for collective licensing stronger, not weaker.
The role of the 'rational' mediator
In a rare acknowledgement of reality, Kelly concedes that "not every artist is cut out, or willing, to be a nurturer of fans” and therefore need a "mediator" to manage their fans for them. Presumably, those artists to which he refers present a bigger challenge to "compete" for those fans, than those who would otherwise have been an "instant hit".
Given the relative toughness of the task of managing someone who was "not cut out", a rational ‘mediator’ would surely be seeking marginally more than the market average in terms of commission, or more in terms of upfront investment – advances, to you and me - to get them to this nice round number of 1,000 true fans. Either way, more cash up front or more cash in terms of commission again affects Kelly's overly simplistic math - and questions his view that expenses will be "modest".
At this point, it’s worth reminding ourselves of another (Scottish) economist’s reference to the ‘invisible hand’, and wondering if this brave new Web 2.0 give-it-all-away-for-free world has come full circle, only to be undressed to reveal the same old rules of supply, demand and economies of scale.
Perhaps it’s about time the new school got to grips with the old rules - if the long tail is to really succeed in significantly affecting demand, not just supply.
Next page: Does better music mean more fans?
COMMENTS
Most budding musicians prefer fame over Fortune ....
If they could be arsed to do the real work, bizmomusic.com is one of the many pieces of good advice they could be reading. To many kids watch American idol and think everyone in the cue actually gets to play in front of the judges.
Bands like Rocket from the Crypt and Local H prove his point.
Can a thousand fans sustain a band? If the band is smart, you bet. It doesn't matter the complexity of the recording or the amount of personnel in the band; that's a red herring. The only thing which matters is how wisely you spend your money and at this point, the largest expense any band faces at the moment is the cost of gasoline which is easily off-set by poster, sticker and album sales at the show which are very high margin.
Once again, any other point made by anyone is simply a red herring, trying to distract away from the fact that they either missed or out-right ignored the "1,000 fans" statement. The point here isn't that you can be a famous, rich rockstar off a thousand people; it's that you can survive solely off making music with a thousand fans. Studio fees have bottomed out; every good musician should have all the gear he needs before he tours (or make due). If you need some quick cash you record an EP and sell it as a "limited release" on the road.
Radio play and marketing are often the two most cited benefits of having a label and distribution. Yet all the bands on Swami Records (run by John Reis of Rocket from the Crypt), Touch and Go, Sympathy for the Record Industry and numerous other small labels have managed to survive without big label money and distribution. Some of these bands are more famous over in Europe than they ever could be in the States, and I guarantee they received no promotion or radio play. Dan Sartain even had an interview on German television; here he can hardly get gigs at real venues!
So, again, I think people need to pull their heads out of their asses and stop creating such ridiculous straw-mans: This guy isn't saying that getting those 1,000 fans would be easy, or that you'll be living like a Prince once you do. He's simply saying probably one of the most reasonable statements ever said about independent bands: find your niche, find your fanbase, treat them well and you won't ever have to work again. You might have to work harder than a big label band, release more music, come up with more creative t-shirts and knick-knacks and push them at your shows, but it is do-able. If you do those things, though, I guarantee you won't only have a thousand fans following you as word of mouth is still the greatest promotional tool any band has at their disposal.
Reverend Horton Heat are a prime example of this. They never stop touring, they know what pleases their fanbase and they never stop giving it to 'em.
Is his math probably a little off? Yeah, really, it is. Who gives a band a hundred bucks a year? But like most assertions, he's exaggerating to make a point. If your band is good enough to have a thousand "true" fans then you bet that there'll probably be a few thousand more that are just your fair-weather fans. "Oh, so and so is in town? Haven't seen them in a couple of years. I should get a t-shirt and a poster. They have a new album out and it's cheaper than at cd shops? Awesome! I'll pick one up." What do most musicians, nay, artists who are willing to put this much effort into their passion of choice consider "making a living?" I'd bet you every instrument I own that "enough money to pay rent, support the bands I like and eat better food than Ramen" will probably be your response.
Guess what? You can do that now working a part time (30 hours or so) job at minimum wage if you live with roommates and shirk a lot of the supposed "luxuries" that, really, most artists couldn't care less about anyway so it's quite amusing (and wrong) to say that a hard-working band with a thousand fans couldn't do it. Then again, this is a tech website, so I can't imagine there are a lot of knowledgeable musicians here...
I have a lot of respect for the commentators on this site but I have to respectfully disagree with your analysis of his comments, Will. You are completely right to point out that most internet tools can be used only for promotion, although I will say that many bands have had success with linking eMusic and iTunes (and even using the snocap tools) on their myspace or facebook profiles. I think you sort of missed the point and, as I've said before, are applying rules that really only have any right being applied to major label signed bands. Independent bands are free of many of the restrictions larger bands are; they don't have as large a percentage of ticket fees taken away by the venue or ticketing agency; minus overhead, merch is almost pure profit; managers cost less; etc.
Aside from this nitpicking I agree with a large majority of your points. Are most bands cut out for it? Not really. Are most bands smart enough to manage their money intelligently? Not really, but the Butthole Surfers proved in the 80s, without any hits under their belt, that you can buy a house, live in it and convert it into a record studio to keep band costs down if you choose. The Presidents of the United States of America had their hit and invested the cash into the same; a house with a modern studio in it, and as such keep their overhead very, very low. So, it is doable. But, I think your perceptions are exactly what they are: that of an economist coming from an agency which probably has little interaction with bands which Kevin Kelly's theories are aimed at.
If someone is more willing to work in a factory than tough it out in the industry trenches then I'd say they were never in it for the long haul anyway. Punk as a whole proves that Kevin Kelly's theory can work, easy.
You wouldn't have much of an article if you simply said "Well, he's one of those freetards (which he is), but he does have a point, even if it takes a lot more work than he thinks," now would you?
Making a living
I'm a novelist (unpublished) and I make a living by working a nine-to-five job. This is true for the vast majority of novelists... even the ones who write lots of books before getting a proper writing career. A great many of the really good books you've read will have been written by part time or amature authors. Hopefully, I will become a published author... but look at the sums, if I write a book every three years as a hobby over a remaining working lifespan of thirty years, that's ten books. How many novelists do you know who have written ten really good books you couldn't live without?
My feeling is that the music industry has become like a Communist command economy where the politicians have conspired to protect out-dated, inefficient organisations on the basis that they create jobs and increases national productivity. Compare the big selling artists of the seventies with the big selling artists of this decade and tell me there is even a quater of the creativity today as there was back then, and this despite the huge increases in income seen in the industry over the last three decades. Protectionism kills creativity - and that is what we are seeing now in the music industry.
Look at it this way; as the back catalogue of music grows, the amount of money made from old music as a proportion of the income of the record industry grows. Thus, the importance of new music decreases whilst the importance of controlling old music grows. Because governments like tax revenue and jobs, they pass laws to help the companies protect the income derived from old music. This sets up a feedback mechanism whereby the investment in exploiting old music is more rewarding than the investment in new music. By perpetuating old music through sampling, through producing a continuous stream of 'best of' albums, and through regenerating old musical styles the industries keep up sales without needing to innovate, and the low innovation level of modern music simply pushes up the value of old music. As the typical music listener becomes used to the sounds from years past, they start to actively seek out the new music that sounds like the old music and this stifles novelty.
The only way to break this cycle is to kill off the right of companies to make money from old music. There are many industries that manage to survive simply by the direct pay-off from investing in new ideas, and there is no reason why music should be any different. New musical movements come through grass-roots creative movements, not from record label employees, and forcing comanies to discover new musical movements rather than perpatuate old ones would create a huge explosion in innovation. That would then remove the moral justification for P2P file sharing, would increase access to old music (whilst simultaneously devaluing it), and would give control of the industry to the talented musicians rather than the professional musicians. Would you rather have the choice between the albums of a hundred sound-alike artists or ten genuinely creative artists? Perhaps that's the choice we have to make.
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