Music business 2013[This article was written by guest contributor Budi Voogt, and it originally appeared on his website at]

Just about a year ago, I started doing this music thing professionally, and launched my first company.

I was 20 years old, overly enthusiastic and had absolutely no clue what I was getting myself in to. Together with a partner, we founded artist management agency Heroes Management. We started out with two acts, and were absolutely dead certain that they’d make it big in no-time. And that we would be able to make that happen… easily.

Oh boy, were we wrong.

Looking back at a year of trying a bunch of stuff, working with a variety of artists, hosting events, starting a label and generally getting the gist of the business, there are some key lessons that I learned. If only someone had taught me these, or told me about them. But maybe that would have been impossible, or maybe I just needed to learn the hard way.

I’ve written down the most important ones. Hopefully these will resonate with you and save you the trouble of having to fall on your face to figure them out yourself.

This is a marathon, not a sprint

So our plans of achieving overnight success didn’t exactly pan out as we had hoped. We figured our guys would just make a hit record, we’d make it go viral on the web, and that would be that. Or that we’d approach a bigger label with promising tales and interesting tunes, and that they’d just pick us up.

Dream on.

For the majority of musicians, it’ll be a long and relentless journey of under-appreciated work, until that ‘breakthrough’ moment comes. If it ever does, that is. Once it’s there, it’s all about hanging on and building from there.

There is just so much competition. In any genre this holds true, but for electronic music more than any. No longer is the barrier to making music the purchase of instruments and gear. All that’s needed now is a computer and an internet connection. With this low entry barrier, the supply has become insanely huge, and with that, the amount of both crap and good music has increased drastically.

Thing is though… good isn’t going to cut it anymore. There’s good music all around us. Attainable for ‘free’ (if you have a bit of wits on you). We hear so much stuff that the only thing you’ll really pay attention to is something that is absolutely-astoundingly-great, or surprising.

Now I think there are different ways for musicians to attain success. The most praiseworthy are the ones that make superb music, but also innovate. The ones that create stuff that hasn’t been made before, crossing boundaries and inventing new genres. Then, you have the superb musicians, whom through great music and marketing manage to build a name for themselves. And lastly, there’s the ‘hype’ artist, who pulls off a shocking gimmick to get people talking about them.

Logically, the innovators are the ones that lead the pack. These are your Beatles, Daft Punk and Skrillex’s. The guys that do something that hasn’t been done before, and tap into a totally new market. They’ll attract fans from existing genres, but also new listeners. All in all, they won’t be competing as much with the acts focused on saturated markets. Usually, these innovators manage to form a truly dedicated community of fans, whom will forever associate that artist with the genre they created.

In terms of musical greatness, I’m sure you guys have heard about the theory of mastery. Basically, it’s based on scientific research which shows that on average, one reaches mastery of a skill after putting in 10.000 hours of work. They claim that the ‘greats’, such as Mozart and Beethoven, have created their true masterpieces around the time when they’ve hit that 10.000 hour mark. Practically, this amount of work comes down to about 10 years, if you’re doing 5 hours of music-making every day. Sure, there will be some super-talented exceptions whom are able to produce great works before investing so much time, but on average it holds true. And chances are that a non-talented but persistent artist will outperform the one that is talented but lazy.

What I’m trying to say is this:

You’re in this for the long run. If you truly want to be great, innovate. Do something that hasn’t been done before… create a new genre. Cross boundaries. When marketing, shock and surprise people. Not through a gimmick, but by integrating those element in your total proposition. And in terms of honing your craft, true quality will only come if you put in the necessary hours. There is no quick fix.

I’ll bet you 100 bucks that a Miley Cirus, Martin Garrix or any other formula or gimmick artist’s success will only be temporary, and will never affect people in the way that the innovators have.

It’s all about who you know

Just like any other industry, the music business is all about networking. It’s all about who you know.

The deeper and higher up the scene you get, the smaller the group that’s truly calling the shots is.

It’s about establishing relationships, creating goodwill and adding value. You scratch my back, and I’ll scratch yours. Everyone is doing favors for one another, and only if you give at least as much as you’re willing to take, can you really expect to foster that much needed goodwill.

This is true to the extent that I’ve seen multiple labels sign qualitatively not-so-great artists, just because they have a good relationship with them, their management or publishers. It’s the people you have on speed dial, or that owe you a favor, that can really make the biggest difference.

For me as a manager and label guy, as much as for my artists, this means that we’re always connecting with people. And when we do, we try to foster real relationships. Add something to the table… share some knowledge, give feedback, discuss possibilities and help each other out. That’s what will lead to the trust and goodwill that will make the difference at some point. And I believe the only way to genuinely do this, is if you’re in it for the love. Not the cash.

The majors are largely toast, and only sign things that are radio compatible

During the course of this year we’ve sat down with a number of majors, and their A&Rs. Our pitch and music was good enough to get the sit down, but not right enough to close a deal.

Reason for this is because the majors are only looking to sign things that will get played on the radio.

Their total business model has taken a huge hit with the rise of digital, piracy and particularly streaming, and they’re having to rely on 360 deals in order to keep making a profit. For those of you unaware of what a 360 deal is, it’s when a label takes a certain percentage cut from revenues other than record sales. Think publishing, touring, merchandise, etc. They’re doing this to make up for the drop in record sale revenues, and to compensate for the expenses they’re making for marketing and records being made.

This shaky financial model is because they weren’t quick enough to adapt to the change that the internet was bringing. And they’re not really to blame for that. Bureaucracy and everything tends to make the big machines slow.

Regardless, there are still few things as powerful for achieving market penetration as the marketing and financial support of a major label. Look at Lorde for example… came out of nothing, pushed to every possible place by Universal, and now a worldwide success.

For us EDM and dance people, there’s still hope when looking at the majors. EDM is becoming more and more mainstream, particularly in the USA, and is getting more airplay than ever. Avicii and Guetta have paved the way, and with a ‘cross over’ or ‘Beatport top 10′ compatible dance record, producers are now able to reach a bigger crowd than we could ever have imagined ten years ago.

Now we’ve come to conclude that a major label deal isn’t something we should be aiming for. Our music is not compatible, and even if we were to deliver a track that’s fitting to their style, it would because we intentionally made it that way, and not because it naturally came out like that.

For you others though, if you want to score a major deal, take a good look at what’s being played on the radio. That’s what your stuff should sound like, if you want to have a shot at landing that deal.

Content is king, but distribution is queen

We’ve all heard the saying that ‘content is king’. Sure, it’s true, but it’s not all.

Distribution is queen.

Why do I say this?

Because we have access to nearly infinite amounts of music, of which a good portion is great. Not superb, but great. Now to truly stand out, you need to either be significantly different and surprising, or be supremely great. Otherwise, people simply don’t pay attention.

You get one shot at proving yourself once someone checks out or discovers your stuff, and if you can’t instantly impress, you’re done.

Now from how I see things, people discover music either by stumbling across it, or by checking it out on someone’s recommendation. We tend to be more favorable to the latter, but for both cases, whatever content it is you’re seeing, it needs to prove itself, QUICK.

Distribution is queen, because even if you have superb and surprising music, people aren’t going to find it if it isn’t made available to them in the right places. After all, a great song you find on Spotify beats a superb song which never leaves the producer’s bedroom studio. You need to improve the odds of people stumbling across your stuff, so that you can then leave that lasting mark.

That’s why I argue that distribution is queen. Be everywhere. iTunes, Spotify, Pandora, Shazam… and most importantly, utilize the content-focused social media platforms to really reach the masses. Blogs are powerful, but I find that curated YouTube and Soundcloud music channels even outperform those.

If you don’t agree, take a moment to think about all the indie artists whom are getting hundreds and thousands of plays on tracks that haven’t even been released on a label, let alone a digital store. That’s the power of these content communities (YouTube, Soundcloud etc), and sure beats just getting a track to show up on iTunes.

Have great content. Then get it out EVERYWHERE. It shouldn’t be missed.

Names do not matter

This is a lesson we truly learned the hard way.

One of my bands had reasonable success using an alias which was only understandable if you were Dutch.

We figured, if we’re going to take this music thing more seriously, we should professionalize the artist name too. Internationalize it.

So, we ‘killed’ the older alias in order to re-introduce them under the new name. The new one being English of course, to that everyone got it.

Here’s what happened: we lost a good portion of our existing fan base, because of social-platforms not allowing us to change the URL and channel names. Only Soundcloud and Twitter allowed us to adapt, whereas Facebook and YouTube forced us to create new pages. Big mistake there, particularly as we weren’t yet collecting email addresses of our fans (which I now believe is the best way to keep in touch with a core following). Also, the people that had followed and supported us earlier, but that weren’t hugely involved, lost the association with the music that the guys had made earlier, simply because it wasn’t linked to the name anymore.

In the end, it took us far longer than expected to re-build a following of the size we had earlier, and the benefits of having a new name, and a fresh start, were hardly recognizable. It’s the music that does the talking, and a name that sounds familiar but isn’t understandable, is more precious than a non-familiar one that is.

The money is in the rights, and events.

Out of all the lessons, this is by far the most important. If only someone had told me.

The majority of money in this business is coming from exploitation of rights, and events.

With record sales increasingly becoming a thing of the past, it is no longer something artists and labels can rely on to pay their bills. Maybe the big shots can, but the small guys definitely can’t.

We’re all just too used to listening to whatever we want, whenever we want. Platforms like YouTube and Soundcloud have spoiled us, and as a result we’re just not used to paying for music anymore. Maybe there’s still the odd baby boomer that purchases a track or album now and again, but the younger generation definitely doesn’t.

What the kids are willing to pay for, however, is an experience. Something that’s live, with friends, that sticks in your memory. With the huge rise of EDM in the USA and other western countries, the events business is booming. So there’s definitely some money there.

And then there’s licensing. This is the biggest cash cow. Intellectual property laws assign rights to content creators, and allow them to grant the rights of exploitation to other parties, often in exchange of a part of the copyrights. This creates incentive for many parties to collaborate on exploiting a creation. Royalties from public performances (radio, / TV and public usage), mechanicals (sales and streams) and synchronization (adding music to advertisements and film) can be huge. For independent musicians and labels, this is a great field to focus on, as the flat fees from a single synchronization of a track behind a commercial, can easily result in a €5000+ flat fee. Now that’s quick cash.

Luckily, I now know this. We’re not expecting to make a big buck from record sales until the label or my artists have become huge, but we’re really focused on exploring our opportunities in licensing. There’s good money there, and potential exposure for our music. Also bookings will help pay the bills, but acquiring them is time intensive until the artists are in demand, and not so much in supply.

That’s a honest synopsis of the most crucial things I learned about the music business this year. Hope you are able to take some of that insight and apply it to your own scenario, whatever that may be.

I’m very curious to hear feedback from you guys. Does any of this resonate with you? Or do you totally disagree? Feel free to leave a comment, or to drop me an email if you wish to discuss.

Author bio: Budi Voogt is “a music lover, fitness freak, and uber-geek.” He is the author of The SoundCloud Bible, founder of Heroic Recordings, and co-founder of artist management agency Heroes Management.

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