But just how much investment is happening today?  The IFPI just released a report pegging current label investment at $5 billion annually, worldwide.  That is roughly 30 percent of broader revenues, a serious reinvestment on early-stage artist development and marketing.  On top of that, the IFPI estimates that labels commit more than $1 million to break artists into newer markets.  Money for advances, recordings, marketing and promotional activities are the largest expenses, often tipping hundreds-of-thousands of dollars, according to the group.

The findings are part of the just-published Investing in Music report.  The broader agenda is to promote anti-piracy measures, reaffirm the importance of labels to artists, and convince lawmakers that labels play an important role in the economy and culture.  “No other party comes close to the levels of investment committed by record companies to developing, nurturing and promoting talent,” said IFPI chief John Kennedy. 

But other parties are also starting to fill that role.  As the hype surrounding ‘DIY’ dies down, artists are realizing that teams and financial support are important for growth, though the partner itself can vary. Indeed, labels are not the only ones capable of bankrolling talent, and artists have more sidekick options than ever before.

For its investment, Power Amp gets 50% of gross revenue from Church’s recordings, publishing, merchandise and touring for an undisclosed period.

“[The deal] provides me with a financial commitment equivalent to that of a major record company but with a much greater degree of control and ownership over my career,” Church told FT.com.

Church parted ways with her former label Sony Music in 2006, after selling 10.5 million albums worldwide.

Authored by Mark Hefflinger on March 10, 2010 - 8:16am.

- What is the FanBridge story?

First, I want to say that we really believe we are just in the beginning of the full story of FanBridge. There are so many things we want to do, we can’t move fast enough (and we move really really fast). But okay…the story of FanBridge begins a few years ago when my Co-Founder Spencer Richardson and I were graduating from college. We met about halfway through our senior year, and quickly realized we both had entrepreneural genes in our DNA. As we were heading towards graduation, we already had day jobs, but we decided it would be fun to get together and work on a project in our spare time.

We talked a lot about what we wanted to do, and looked at a bunch of different ideas. One area that was very interesting to us was the music industry, because it was going through a huge amount of chaos…and with chaos breeds opportunity. Technology was breaking down barriers to entry, and more people were creating music than ever before. At the same time, more music was being consumed than ever before. It was really the middle where established companies, procedures, and ways of doing business were crumbling. We looked at what was going on, and both of us agreed that the most important piece of the music business is the relationship between the artist and the fan. Artists that had long and sustainable careers more often than not had been the ones that had built the relationships with their fans, rather than trying to win the ‘hit song lottery.’ To us, this relationship is the hub of the wheel, and everything else spokes out from there. As we researched, there really was nobody enabling a direct relationship between the artist and the fan, and infact, a lot of people were getting in the way, preventing that relationship from happening (on several levels).

I knew from my experience as an artist manager that a fan email list was incredibly valuable, yet artists were often horrible at collecting the list, managing it, and communicating with their fans via email. They practically would beg for someone else to do this for them. And remember, this was back in the day when the first words out of any artist’s mouth were, “I have a million/billion/trillion friends on MySpace, what do I need their email addresses for?” We knew email was a very valuable channel for communication and commerce, so we decided to build an email list manager for bands. We talked with musicians to learn what they would really want from something like this (such as key features like geo-targeting by zip code and radius), and then each put in a few hundred dollars and built v1 of FanBridge. We didn’t have Google size aspirations for this, it was a hobby on the side and we had no idea where it would go.

Fast forward a few years and we are here today with a platform that makes it really easy for artists to get more fans, manage their fans, and then communicate with their fans. Artists can communicate via email, mobile, and social networks, and we collect a massive amount of data around all of that to make the platform more intelligent and help the artists make those fan relationships more valuable. We obviously are doing this full time now (alongside a rockstar team of people), and work with a huge number of artists ranging from tiny developing musicians to international superstars. We are growing in every key metric and having a great time doing it.

- What is unique about FanBridge compared to its competitors? What do you think your competitors are doing well?

There are a bunch of things that make FanBridge unique compared to other companies in the same space. The first is we are very intouch with what musicians are actually looking for, and we satisfy a core need. There are a bunch of companies out there that I would put more into the category of “cool things, but you don’t really need this” rather than something that is core to a musician’s career. We’re not a bunch of technology guys who started a company because we thought it would be cool to work with musicians. We constantly talk with our clients and conduct surveys to learn what they like, don’t like, and what would they like us to build. This client focus allows us to have a very strong value proposition, high utilization rates, and a truly easy to use platform.

Another differentiator is our awesome client service. We use Zappos as our example of super premium, over the top client service, and strive to be like that every day. Everyone who signs up with us gets a personal account manager, whom they can email at any time. We have a phone number you can call, we don’t hide it (it’s on every page of the site). If you have a problem, question, or want advice, we are happy to help. We try to be very proactive in helping out, and not just reacting to inbound questions. Search Twitter for FanBridge. Clients rave about our service, unsolicited. I think there are very very few companies in this space whose clients will shout from the mountaintops how great the company is, and we are proud to be one of them. This personal touch also means we have tremendous client loyalty, and happy clients are the absolute best marketing we can have. We don’t just say this like most companies do, we live it every day. We spend $15 a month on paid marketing, and that is spent buying misspellings of the word FanBridge on Google Adwords. That’s it. The majority of our new clients are referred by existing clients, and we are growing at a pretty healthy pace against other companies that are spending thousands, if not tens of thousands of dollars a month on marketing.

In terms of what our competitors are doing well, it really depends which one you are talking about. Some are great at getting press, others are great at widgets, and others are great at acquiring huge numbers of signups. We wish them all the best because there is still a lot of education that needs to go on in the industry around the fan relationship management area, and we all are fighting that battle together everyday. The more that musicians understand the importance of their fan relationships, the more we all win.

- What surprised you most about starting this business and what continues to surprise you?

I think one of the initial surprises for both Spencer and I was the sheer number of people our platform touches. In addition to a huge number of musicians (large and small), we have well over 50 million fans under management, which is an insane number when you think about it. There are very few other services on the internet with more than that number of people in one place, and that number is growing large amounts every day.

I am still often surprised at how well we are doing against other companies that have millions, if not tens of millions of dollars more than us. Pretty much everyone gets more press than us, spends more on marketing than us, yet we continue to grow in a big way each month. This isn’t something I think about every day, but every now and then the thought comes across my mind and it makes me smile.

One other thing that was surprising was how long it took many other people in this world to catch on to the importance of the artist-fan relaitonship. Years ago, we went around trying to partner with people saying “hey! this fan list stuff is really important, we should partner” and a lot of people didn’t really care because they were focused on whatever their company did. Sure we were a lot smaller back then, but I think it was a combination of both our size and the fact that they didn’t really see much value in what we were doing. I’d say in the last 12-18 months, a bunch of companies have woken up to this piece of the puzzle, and are now scrambling for some sort of solution (which puts us in a great position).

- What are new features you intend to offer?

You will see a lot of iteration from us around existing features. We are always trying to get more feedback to make our existing features more effective and easier to use. In terms of new features, I won’t go into anything specific right now, but our tagline (Powering Valuable Fan Relationships) should provide some insight. We are all about making fan relationships more valuable…which is a combination of value from data, revenue, and other sources.

- How do you measure the value of a fan, an email address or of a mobile number?

First, the industry is still in the very early stages of general awareness of the concept of Fan Lifetime Value (FLV). This pretty much didn’t exist in music until very recently, and it still is just starting to gain a little bit of traction. Once more people start to understand the concept of FLV, we think many new types of marketing will come into place.

In terms of the value of a fan, value can come in a few different ways. The most obvious is dollars…basically how much did this fan spend on me. Another type of value is viral value…does this fan tell all their friends about your music, or is this a trusted person for music recommendations. Both provide value to an artist, and neither is easy to measure (as things stand today).

You will start to see more from us in this area this year, because understanding the value of each of your fans is the key that unlocks a lot of doors.

- What role does a manager play these days? What about a publisher, label or a distributor?

Here is how I see these roles:

Manager: Managers create the plan to grow an artist’s career. I believe managers are in the best position of all these players, because they sit directly in front of an artist. The whole world can change, but as long as you are right in front of an artist, you will always have a role. Because of this position, they also participate in all the income streams of an artist, and are in the best position to do creative deals to further the common goal of building an artist’s career (and income). That said, I think we will see some creativity in the way managers are compensated, as it isn’t easy to make a living making 20% of the income of developing artists. The other side of this is managers with access to a pool of capital will be in a great position as they will be first on the scene to invest in opportunities (around their artists) quicker than anyone else.

Publisher: Publishers are also in a relatively good position, largely because of the legal protections around their IP (copyright) ownership. It is already happening, and I think we will see more publishers play a more active role in developing talent (through investment of both time and dollars).

Label: Large labels are becoming banks, and their problem is the one income stream they have traditionally participated in (sales of recorded music) is steadily decreasing. They’ve tried to compensate with 360 deals, but the issue is they don’t have competencies in all the other areas of an artist’s career. I think labels need to move more to the model that financing has gone, with many little labels (angel investors), fewer mid size labels (VCs), and a few large labels (late stage VCs/private equity).

Labels have proven they can’t predict what artist is going to be a hit, so I think the solution is to setup essentially a farm-team/feeder system where a ton of little bets are spread out over a large number of artists, and then as those artists show strong key metrics, they move up the ladder. Once an artist reaches a major label, the label is just throwing a ton of gas (dollars) on the fire to make it a massive success. The financial reward will be less (because they had to pay more to get the artist), but this tiered system also means the risk will be far less than it is now. It is really about coordinating the risk/reward ratio.

The problem here is a few things. First, major labels believe they can identify a diamond in the rough and build something from the very bottom up. Not only has history proven this to be untrue, it is also a really expensive (read: unprofitable) game to play. Second, nobody has figured out what the key metrics to look at are yet. It will take a lot of data mining and research, but I do believe the data is there to find the correlation that will tell you what are the right early indicators of success. I don’t believe it is sales, plays, pageviews, or any of the other things that people have been looking at. I will posit that the # of engaged fans (and at which levels of engagement) is the best metric I can think of, which is another reason why I believe FanBridge is in a really good place given that we have this data.

Distributors: I think distributors are in a very tough place. They are becoming a commodity, and unless they can turn into a highly automated, efficient, and scalable solution, there really isnt a good future ahead.

- What advice can you offer other music entrepreneurs?

I am by no means the expert in this area, but if I were to pick a few things, they would be:

- Talk to your core users, whether they are musicians or fans. Find out what they NEED, not just what would be nice to have. This is an industry with plenty of areas that need fixing, and spending some time with musicians (or fans) will open your eyes to many opportunities.

- Try to avoid needing big content deals for your business to succeed. There are many accounts (from all sides) of the issues/difficulties in dealing with large content holders (major labels, publishers, etc). While they are doing deals with startups and things are changing, you will likely be facing an uphill battle from the start, and things may not move at the speed which you had hoped.

- Understand the music industry. This industry has many intracacies that most ‘outsiders’ don’t understand, and you will be at a great advantage if you can understand who does what, what their motivations are, and why irrational things are the way they are.

- What role does a social network play in music today and in the future?

It really depends which social network we are talking about, but today they are great because they are large destination websites with huge numbers of people who can all find out about your music. Whether they find your music because you were featured, their friend shared a song with them, or they were browsing the charts, they give you an opportunity to be reached by a huge number of people. Our view now is that social networks are great for finding fans, and then you should use a sign-up form or link to get the fans to sign-up for your direct fan list. Essentially the social network is a feeder to a list that you own and control.

In the future, it is really hard to say, because social networks are changing. With Facebook Connect, Facebook is getting woven into the fabric of the internet outside of facebook.com proper. This brings social features to sites that were never ’social’ to begin with. Similarly, email is a ’social network’ that has more penetration than any other, has been around longer than any other, and continues to evolve with technology. Many are quick to dismiss email as a thing of the past, but we would disagree. I don’t think ’social networks’ in the future are going to be what we think they are today.

- What new models might appear?

I don’t think anyone knows the answer to this question. Everyone continues to debate a la carte vs subscription vs cloud vs ISP licensing vs free vs bundled vs ad supported vs 12 other ideas, and I don’t even think I’m set on which one I think will win (if one even ‘wins’). One thing regarding business models I do believe is that there is a tremendous amount of data around music, and only very recently are people starting to release this data and use it in interesting ways. I think we will see a lot more of this in the future, and this could drive some new business models that we haven’t even thought of yet today.

By Angel Gambino on Mar 09, 2010

This is the first official filing by the independent label organization, though Bengloff has rifled off open letters to the Obama administration and the FCC, among other support activities.

On its face, the issue of net neutrality seems fairly straightforward.  After all, who wouldn’t want equal access to content from every site, big or small?  And, on the net right now, users enjoy that very privilege, including the ability to consume music from bands of every size, style, and genre.

So what’s the issue?  That is exactly what ISPs are asking, raising the issue of why governmental oversight is needed at this juncture.  Perhaps government involvement is redundant, or worse, meddling and expensive.  It may also make certain bandwidth management chores difficult, and ultimately slow the net.  But neutrality proponents fear a world where a handful of ISPs can effectively handpick their favorites, including their own horses.

Openness is what the internet was designed for, though on the music side, the open internet has been a mixed blessing.  Fans currently enjoy the greatest levels of access and connectivity, though the beast is incredibly difficult to monetize.  Still, A2IM prefers the wilds of openness.  “Despite the many unresolved questions surrounding the protection of intellectual property online, we remain optimistic that open internet structures are our best means through which to do business, reach listeners and innovate in the digital realm,” Bengloff noted.

Amazon debuted its Daily Deal feature in June 2008, and has more recently been asking labels for a one-day exclusive on sales before an album’s official release date, as well as label marketing support for the Daily Deal on an artist’s website and social media pages, the head of sales at a major label told Billboard.

“When that happened, iTunes said, ‘Enough of that shit,’” the executive said.

Due to Apple’s pressure, sources told Billboard that label executives had decided not to promote recent releases from Lady Antebellum and Ke$ha as Amazon Daily Deals.

Authored by Mark Hefflinger

The musicFirst Coalition - whose membership includes the RIAA, A2IM, and the American Federation of Musicians - held a morning press conference on Capitol Hill to reinvigorate its performance-focused campaign.  The push is coming from an expanded coalition that now includes the NAACP.  “Being paid fairly for your labor is one of the most basic civil rights,” said Hilary Shelton, director of the NAACP Washington Bureau and senior vice president for Advocacy and Policy.

Of course, the NAB was also blowing its own special-interest horn.  The group is currently corralling local station owners on the Hill to protest what it terms a ‘tax,’ and pushing hot-button topics like foreign ownership (a reference to EMI, UMG, and Sony Music), jobs, struggling artists, and taxes.  “The unfortunate truth is that this legislation benefits foreign-owned record labels to the detriment of ’struggling artists’,” NAB executive vice president Dennis Wharton said.  “This is a job-killing bill that threatens a musician’s number one promotional vehicle while transferring hundreds of millions of dollars into the coffers of companies based in Tokyo, Paris and London.”

Report by Alexandra Osorio.

Thumbplay is best known for its ringtone service, a completely different delivery proposition.  Thumbplay Music, which quietly enters beta (from a private beta) on Thursday, instead offers roughly 8 million tracks (major, indie, unsigned artists) for $9.99 a month, all cloud-enabled.  Theoretically, that means access from anywhere, and the ability to construct playlists from a seemingly endless collection.  Other bells-and-whistles include the ability to cache content for offline listening, the ability to import playlists from iTunes, and the ability to create on-the-fly playlists around a favorite song (powered by the Echo Nest).

The Thumbplay Music app is currently limited to the Blackberry, though development will eventually encompass the iPhone and other devices.  On the mobile side, Thumbplay Music currently rides on AT&T and its 3G network, though available WiFi is the preferred connection.  A PC-based version complements the mobile offering.

Testing occurred across two Blackberry Bold 9000s, across several weeks and two major metropolitan areas (Los Angeles, New York, and a plane ride in-between).  The testing also involved discussions with the Thumbplay engineering team.

A large percentage of the time, collections could not be accessed, for a variety of reasons.  In fairness, this is still a beta-level release, though Thumbplay is probably pushing the marketing and release schedule too fast.  Thumbplay executive vice president of Business Development Chris Phenner was promoting the service aggressively at the Digital Music Forum in New York last week, and the company offered private beta invites to conference attendees.

Actually, the best results happened in New York.  In Manhattan and the surrounding Queens, access was mostly uninterrupted, and a cloud-produced soundtrack lasted for hours.  Genres were accessible, and even smart playlists could be constructed on-the-fly. 

The Blackberry itself may offer a good starting point from an engineering perspective, though the iPhone and Android are arguably better entertainment and music platforms. The Blackberry gets the job done, but a smaller screen, a business-like environment, and scroll-wheel reliance dampens the romance a bit.

On top of that, it seems harder to just ‘fly around’ across the Blackberry app, though an iPhone comparison is still forthcoming.   Either way, once humming the Blackberry Bold can crank the music, and its speakerphone can even be modulated to offer a small personal boom-box without distortion.

In New York, issues could mostly be blamed on mobile connectivity.  When 3G dropped out, so did easy access, a major vulnerability for Thumbplay.  Here, a major problem emerges - for Thumbplay and every other competitor.  Even a perfect execution still relies on the vagaries of mobile broadband, though users are unlikely to forgive the dropouts (regardless of the source).  In the end, a daunting competitor is the grounded, mobile-free iPod, a massive collection with no dropouts whatsoever.

In dead zones, one simple solution is to jump into a cached selection, which Thumbplay Music makes easy.  Even auto-playlists can be saved ahead-of-time for later access, and Thumbplay performed quite solidly on a coast-to-coast plane ride.  Battery life performed moderately well, though anyone needing all-day phone access will have to limit playback, at least without recharging.

In the endless spread of Los Angeles, the story was entirely different.  A buyer in this market would almost certainly demand a refund, at least at this early stage.  Thumbplay understandably struggled on non-3G, regular AT&T connections, though it was then unable to recover on 3G and even WiFi replacements.  Instead, the app mostly produced top-level menus but white screens otherwise, across both testing handhelds.  Other functions, like phone calls and texting, performed as normal.

The disparity in results could be attributable to a number of factors.  Perhaps the denser New York simply offers better connectivity, though the Los Angeles problems were happening in densely-populated communities (through several hours of testing in Santa Monica, Venice Beach, Manhattan Beach, Hollywood, and LAX-surrounding). Thumbplay is also based in New York, potentially offering a better testing and feedback loop for the development team.  But these are just guesses.

Review by publisher Paul Resnikoff.

A source at the proceedings told The Telegraph, “There will not be one massive product launched which make the site more recommendation focussed – it will happen across all the verticals in smaller steps…MySpace’s ability to help people discover content and material they will genuinely like can set it apart from Facebook. It is trying to make the site have more of a pulse”.

The new “discovery” tactic is not only for music, but also for introducing new movie trailers, games, and users for others to check out. All of this should be integrated into their new “Stream” feature which shows up on a user’s main page, posting real-time friends’ status updates, bulletins and music they’re linking and listening to. When or how though, is unknown.

The details, as well as any kind of timeline, are hazy but sources say MySpace is due to continue to quietly roll out new features. Out of everything that needs “revamping”, a better MySpace Music must be near the top of the list. Being one of the first major added features since News Corp took over, its expectations to be the go-to haven for streaming music have fallen flat in the past year.

MySpace Music president Courtney Holt told Billboard back in October, “Social recommendations are a big deal, and we haven’t done enough to expose them on the site…If you and I have similar tastes in music, the delta between us is of interest to both of us. Figuring out a way to expose that…is going to be a big focus for us in the future”.

It’ll be interesting to see if an announcement comes soon about said recommendations. “Exposing interests” between users has already become increasingly popular in aggregate services like Mog, which has been a great advantage to the content industries. Rising competition however has not been as advantageous to MySpace.

In fact, this whole movement seems more like an act of desperation with the growing popularity and proliferation of streaming services like Pandora and Spotify, as well as the strengthening of music services by Google and Facebook. Many have reported MySpace’s descent against Facebook as MySpace “has fallen 55 percent to a market share of only 30 percent — about half of Facebook”.

Also, “In the UK in January 2010, MySpace had 3.9 million unique users compared to the 23.9 unique users visiting Facebook during the same month. In the US, where MySpace has always been historically bigger, 51.6 million unique users visited MySpace last month – versus the 116.3 million using Facebook” .

There is also a trend change of importance on one’s social profile to simply sharing links and thoughts to others. Twitter is growing exponentially, turning the tide to focusing more on the stream of conscious self, and following thoughts instead of content. Also, while Facebook emphasizes people connecting and then sharing content, MySpace looks to be going against the grain and doing the opposite. While this is risky, they don’t have much choice.

The recommendation algorithm isn’t adding much to what was already on offer, but rebranding it seems like a move to show that in the face of constant upheaval MySpace is still trying to move forward. The barrage of hasty departures obviously hasn’t done the company any favors in the press, nor was slashing staff and closing abroad offices last year.

The most recent drama happened early last month. Worries spread for MySpace’s future when CEO Owen Van Natta stepped down after holding the spot for only less than a year, which bumped up chief product officer Jason Hirschhorn and COO Mike Jones to the positions of co-presidents.

While these small roll-outs of features are slightly primping and revamping the site, it seems a bit like they’re simply arranging the deck chairs on the Titanic. With the sinking of MySpace Music as well as the ill-fated “remakemyspace” project which disappeared into oblivion, MySpace don’t have many aces left up its sleeve.

As much as MySpace is still a go-to site for looking up information on already established bands, will discovery really make the site stickier? Having a quiet but steady build seems like the safe way to go, but if people aren’t visiting the site now how are they going to know about said features?

Also, by the time they have all the features lined up and in the open, will it be too late? At this time it seems like MySpace either needs to go big and make a fuss about its new system and ethos or simply go home.

On Friday, the European Commission flatly dismissed an EU-wide, three strikes provision. “We are not supporting and will not accept that an eventual ACTA agreement creates an obligation to disconnect people from the internet because of illegal downloads,” EU trade commissioner Karel De Gucht told ZDNet UK in a statement.

Drafts of ACTA, or the Anti-Counterfeiting Trade Agreement, are being debated, and some versions may have leaked.  At present, it remains confusing whether top-down, three-strikes provisions have been written into versions, and some reports suggest they have not.

Either way, the prospects for a blanket-level, EU-wide disconnection policy are dimming, though individual countries (notable the UK and France) are forging ahead with their own solutions.  “The ‘three-strike rule’ or graduated response systems are not compulsory in Europe. Different EU countries have different approaches, and we want to keep this flexibility,” De Gucht continued.

Report by Alexandra Osorio.