All the reasons that you won't ever make money with music on the internet.

Posts: 1831
From: Bowling Green, KY, USA
Registered: Mar 2000

posted 04-18-2001 02:13 PM     Click Here to See the Profile for KennyLee        Edit/Delete Message

http://www.zeropaid.com/news/news.php3?id=04162001b

quote:

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Does P2P mean profit?
by Raj Singh, Founder of Terazima and panelist for many p2p events

This past year, we have witnessed dramatic changes in the way financially-backed p2p clients attempt to make money. I have seen p2p companies completely revamp their technology and business position to show potential revenue opportunities. I have seen other p2p companies making huge strides from their client offerings to an enterprise piece. As this technology sector becomes even tighter in cash flow, many of those p2p clients and p2p technology companies that you love may run into some serious financial hurdles.

Don’t get me wrong, I do believe that many of the leading p2p companies exist and will continue to exist out of passion for the technology. But at the same time, assuming that p2p conquers the legal crunch that it is in, its next obstacle will be to generate money.

To solve this financial problem, I have seen file sharing clients take some pretty unique approaches in trying to make some cash. Let’s review a couple of them:

1. Advertising – This revenue model has been endorsed by many shareware applications. Although, most file sharing clients have avoided advertising in their clients, don’t be surprised if you begin to get hit with popup advertisements and that rotating banner we all love. In terms of viability, advertising as a source of revenue can barely fund the hosting of a website, let alone an entire programming team.

2. Session Tracking – I know a couple companies who actually track what you do when you download and share your files. These companies hope that someday, someone will actually pay to know that John Doe downloaded a Rock song at 6:00 PM on the 6th of April. I don’t want to be a pessimist, but give me a break. Until someone can figure out how to mine this data and produce some relevant reports, session tracking will definitely not be the savior for those p2p companies.

3. Licensing – Licensing, what’s that? Well, many p2p clients are attempting to license their protocol / technology to enterprise in a move to sell to business. Although traditionally, business offerings usually resulted in positive cash flow, today, anything is possible.

4. Resource Sharing – I don’t know if this is what they call it, but this is what I think of it; there are some p2p clients that will attempt to make cash by allowing the user to sell their resources. Essentially, I login to the p2p network and they will let me share and download etc. As payment, I give them some of my processor cycles, disk space etc that they can sell off to some company that requires distributed processing. Interesting idea, but will it fly when people give their cycles for free with the distributed SETI screen saver and the new Cancer research screen saver. Who knows?

5. Amway Model – I like to call this the Amway model aka pyramid scheme. I sell you my music; you sell your music to someone else and so forth. Essentially, we keep passing the costs until someone takes the hit. What happens when I go all the way around, well, I guess its time to start encoding some MP3s.

6. Price line Model – I have even seen some p2p clients considering the “name your own price” revenue model. Now, you may wonder, how does this work? Essentially, you bid or offer a price for a particular file. Somebody will response and share that file with you. The p2p company will then take the cut. Sounds like somebody needs to visit IRC.

7. Ecommerce – As much as people say ecommerce is dead, it is still well alive and active. Some p2p clients have even tried matching your files with ecommerce websites that sell similar items. For example, if I search for Rap, it may link me to a Rap store selling clothing gear etc. As much as I want to believe that people will buy, I think not.

8. Subscription-based – Subscriptions, including pay-per-month, pay-per-use and pay-per-file appears to be the next wave, or that’s what the media industry thinks at least. I do expect many file sharing clients attempting to move here but unless you can capture all of the users, you are not going to have a positive cash-flow. Let’s see what happens.

Above, I have listed several of the possible ways to make money that I’ve seen p2p companies consider and even try. Don’t be surprised is you some of what’s above in your next version.

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This guy does not go into what the internet actually is to the musician. Which is like a radio station. A place to get people to hear your musical creations for free, so you can make some money through other means.

The history of music has shown that musicians that do not play live have a tough time making money. I mean, Britney Spears does live shows and appearances, for God's sake.

Our ideal business model is the Grateful Dead. With or without the drug addiction.

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Posts: 1831
From: Bowling Green, KY, USA
Registered: Mar 2000

posted 04-18-2001 02:33 PM     Click Here to See the Profile for KennyLee        Edit/Delete Message

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Posts: 274
From: Raleigh, NC, USA
Registered: Mar 2000

posted 04-18-2001 02:51 PM     Click Here to See the Profile for Davey Boy Crocky        Edit/Delete Message

Jam Bands allow concert goers to tape shows and trade those tapes for NON-COMMERCIAL purposes only. This creates an underground, grass-roots kind of promo thing.

The Grateful Dead do not allow their commercially released Albums or CD's to be freely traded. Nor do they allow the show recordings made by tapers to be distributed by for-profit companies.

The fact of the matter is that the Grateful Dead does not support Napster, and they have stated so publically.

I'm not sure where you are going with this, but please understand that the Grateful Dead's business model does not include support for For-Profit P2P companies.

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The Shakedown Wizards - A Psychedelic Jam Band
Real,WinMedia,MP3: http://www.listensmart.com/shakedown
HiQuality 256k mp3: http://www.musicbuilder.com/The_Shakedown_Wizards
Euro-jam fans: http://www.besonic.com/shakedown

Davey Boy Crocky's Solo Project
http://www.listensmart.com/daveyboycrocky

Posts: 77
From: Niagara WI USA
Registered: Feb 2001

posted 04-18-2001 06:56 PM     Click Here to See the Profile for ATom2        Edit/Delete Message

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Posts: 1831
From: Bowling Green, KY, USA
Registered: Mar 2000

posted 04-18-2001 08:06 PM     Click Here to See the Profile for KennyLee        Edit/Delete Message

quote:

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Originally posted by Davey Boy Crocky:
I'm not sure where you are going with this, but please understand that the Grateful Dead's business model does not include support for For-Profit P2P companies.

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Well, let me state my point as clearly as I can.

Historically, pre-internet to present day, musicians who made money played LIVE. In front of people. In several different locations. Clubs, opening acts, maybe one day a headliner in a big hall.

They would do a recording and then tour in support of that recording. Be it Garth Brooks or the Rolling Stones or Lesley Gore or Britney Spears or BB King.

Those that did not develop a LIVE performance business did not do well. Otherwise known as one-hit wonders (seen on VH-1 sometimes as an insurance salesman or guidance counselor or something)

The Grateful Dead became the biggest drawing LIVE act of their time through LIVE performance. No top ten hits. Their concept of encouraging people to tape their LIVE shows was RADICAL in it's time. The Grateful Dead is not a RADICAL BAND or a LIVE band now. Hence, their stance on Napster and other issues. Also, Jerry is DEAD.

Now the thought that bounces around is that people can make money on the internet with their music. Making quality recordings on their computer. We talk about it or read about it a lot. (I'm doing 2 for 1 trades this evening, by the way)

What this article points out, is that there is NO MONEY MAKING BUSINESS MODEL for internet digital music transfer, at this time. Making the internet an exposure medium for artists to boost up their LIVE performances and other sales opportunities. Like radio.

But not a money maker in itself.

This particular article has little to do with Napster and copyright infringement and everything to do with the fact that all the business models in existence do not bring enough money to pay for content.

And I think that this article is very good for us to read and ponder on the implications of.

Where am I going with this, Davey Boy Crocky?

I'm just trying to read the signs.

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Posts: 77
From: Niagara WI USA
Registered: Feb 2001

posted 04-18-2001 08:48 PM     Click Here to See the Profile for ATom2        Edit/Delete Message

quote:

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Originally posted by KennyLee:

Those that did not develop a LIVE performance business did not do well.

[/B]

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Can anyone say, Steely Dan? Studio band for the most part.

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Posts: 1831
From: Bowling Green, KY, USA
Registered: Mar 2000

posted 04-18-2001 09:02 PM     Click Here to See the Profile for KennyLee        Edit/Delete Message

quote:

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Originally posted by ATom2:
Can anyone say, Steely Dan? Studio band for the most part.

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Let me see. Stee...ee.St..ee.ly...D..d..D..D..Dildo!

There, I said it!

Studio band? Not originally. They started as a live band. As they became a duo they stopped playing live. And then they stopped recording.

But now they are back as a live touring AND recording band.

Plus, you know that the Dan HATE touring. So they are only doing it cause they gotta.

Now, once an act is established, they can quit playing live. Just do studio. But as Steely Dan, and the Beatles, and untold others have found, you got to get on the road to support that record.

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Posts: 77
From: Niagara WI USA
Registered: Feb 2001

posted 04-19-2001 09:09 AM     Click Here to See the Profile for ATom2        Edit/Delete Message

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Posts: 242
From: wethersfield,CT, hartford
Registered: Jun 2000

posted 04-19-2001 09:20 AM     Click Here to See the Profile for dond        Edit/Delete Message

Using the internet as strictly a free music sample distribution system is a huge mistake. If you give away all your music, there is no inducement to purchase anything musical. Why buy the cow when the milk is free?

FREE is still a 4 letter word for the music business. Subscription sales will be extremely difficult when so many muscians give away their music. Unlimited downloads are self defeating.

Live events are still the best way to sell product. We sell 95 CD's at live events, for every 5 sales off the internet.

Right now, technology and history are merging together. No one has the answers yet to make the net the sales medium that all the traditional avenues generate. It's a new world. This is the beginning to an adjunct marketing venue. This is the learning curve.

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Posts: 1831
From: Bowling Green, KY, USA
Registered: Mar 2000

posted 04-19-2001 01:17 PM     Click Here to See the Profile for KennyLee        Edit/Delete Message

quote:

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Originally posted by ATom2:
The Beatles? I guess they must have toured like hell for their latest all time best selling CD (1)

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Well, the Beatles never did play Mars.

But they sure were a live band.

1 (the album) is a greatest hits compilation.

How did those songs get to be number 1? Screaming teenage girls at sold out live shows. The Beatles were one of the great live bands of all time.

Just not on Mars. Or Betelguese.

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Posts: 1831
From: Bowling Green, KY, USA
Registered: Mar 2000

posted 04-19-2001 01:31 PM     Click Here to See the Profile for KennyLee        Edit/Delete Message

quote:

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Originally posted by dond:

Using the internet as strictly a free music sample distribution system is a huge mistake. If you give away all your music, there is no inducement to purchase anything musical. Why buy the cow when the milk is free?

FREE is still a 4 letter word for the music business. Subscription sales will be extremely difficult when so many muscians give away their music. Unlimited downloads are self defeating.

Live events are still the best way to sell product. We sell 95 CD's at live events, for every 5 sales off the internet.

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My ratio of live sales to internet sales is more like 999 to 1, dond.

I don't agree with you that giving away your music FREE on the internet is self-defeating.

Because it is based on the assumption that people do not become fans of music and artists they like.

How did you first discover your favorite artist, dond? Odds are, you first heard it free. On radio. On TV. Maybe a friend shared his copy.

If you became a fan? Odds are, you saw the artist live. Odds are, you bought his poster for your room. Wore his T-shirt. Turned other people on to the artist.

But, for most of us, we first heard the music free.

This is 2001, dond. Any artist that is making money is being heard free on the internet.

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Posts: 10
From: Union City, CA. USA
Registered: Nov 2000

posted 04-19-2001 07:23 PM     Click Here to See the Profile for Phil Frazier        Edit/Delete Message

OK, in order for someone to be interested in buying music that someone must have heard it or gotten recomends then heard it. I agree with all that. Do I have to offer all my songs for free full DLs in order for someone to have the jones to buy the CD which contains these songs?

Many people still buy a whole CD based on a song that is being rotated ad nauseum on the real world radio, right?
If they can go on the net, DL all the songs that are on my CD onto their own CD will that make them have the urge to buy the actual CD? Maybe my CD will sound better on their CD player system? Maybe they would like the photo & the insert stuff?

Maybe I shouldn't allow anyone to DL my songs or maybe just the one I deem is the "hit"? Should I let them preview all the songs on my CD, like lo fi? Should I just put up one for preview? Should I charge for full DLs?

That doesn't work because no one will go through the hastle to pay 50 cents or a $1 for one song. My preview stats on BeSonic keep rising but not one DL since I started charging 50 cents per DL. Also, some have said that it's impossible for anyone to buy a DL there.

The challenge is to get people to buy CDs. The easier it is for them to do so, the better. CD sales may be at a low ebb but it is possible. I am a hard head. I work on the possible.

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http://www.cbh3.com/phil

Posts: 77
From: Niagara WI USA
Registered: Feb 2001

posted 04-19-2001 10:01 PM     Click Here to See the Profile for ATom2        Edit/Delete Message

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Posts: 1831
From: Bowling Green, KY, USA
Registered: Mar 2000

posted 04-19-2001 10:22 PM     Click Here to See the Profile for KennyLee        Edit/Delete Message

quote:

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Originally posted by Phil Frazier:
Hasn't this topic been discussed before?

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Yes. and No.

Because this time we are down to business. And this time we know what the business actually is.

This article lays out every existing internet business model. You know? Where da mothafokn money comes from. And explains why there ain't no money to pay for content. You and me being "content".

You see, Phil, the money has to come from somewhere. Some business has to be making a profit to pay us. People ain't buying. You know why? They don't know you. They don't know me. Unless they have seen us live. We ain't getting on radio and TV unless we play live somewhere.

Now, before people buy Britney Spears album they hear it free first. At least one or two cuts. With a titty popping video around it. Britney Spears tours (Milli Vanilli style) and appears live to pump up her fans and her record sales.

People are buying stuff off the internet. They do it every day. But they ain't buying shit they do not know.

From before 1950 to past 2001 all the big acts hit the road to promote their new album. Those that don't are coasting on past success from live appearances. Knowing they got to hit the road or break up the band if they don't.

But on the internet we have a bunch of people who have the idea that think they can be Steely Dan and the Beatles. Create an opus on your home computer and the world will listen to 30 seconds and reach for the charge card.

Forgetting that people heard Steely Dan and the Beatles live when they were starting out. Heard their music free for a long time before they actually decided to buy it.

So it is not all doom and gloom. And it is not all bad.

It is actually same as it ever was. With the internet being a new form of radio.

Maybe a new business model will come forth and change things. But this article does a pretty good job of explaining why it is like it is right now.

Look Phil. It's not all bad.

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Posts: 242
From: wethersfield,CT, hartford
Registered: Jun 2000

posted 04-20-2001 09:25 AM     Click Here to See the Profile for dond        Edit/Delete Message

I agree that some free sampling is necessary to generate listener interest. However, putting all your music on the web is crazy!

Since my web sales percentage is better then yours, by a big chunck, according to you, my method for web sales has an advantage over yours. This is how we pick what goes on the web:

For actual CD's: We use short clips of the songs, in album order. Our production philosophy is that a CD has to flow, and, be a comprehensive musical experience beyond a collection of singles. It has to work as a total unit.

We also use live versions of CD songs on the web. These are edgeier and raw, compared to finished CD's. Gives the CD material a very different context. The arrangements are very different from the recordings we're selling. If the listener likes the live version, they'll really like the album version's finesse and finishing.

We incorporate artist interviews, and, other music not adaptable to CD's as a way to make our performers people the audience feels they know.

We match our music CD's with companion products that have real value to consumers, and, bundle the CD as an additional product sale. We attach our CD's to books, wine bottles, childrens activity boxes, etc. If the other product sells, the CD sale is included. This is our best idea so far.

Internet sales are different. You need to establish a personal relationship with the listener. Trust is the biggest issue we face!

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Posts: 289
From: earth
Registered: Mar 2000

posted 04-20-2001 03:45 PM     Click Here to See the Profile for deel        Edit/Delete Message

first off nobody is forcing anyone to give away your music. yet last year when napster was in full swing piracy you didn't have a choice if your music was out there in on a cd and in the hands of a pirate.
looks like the courts have cleaned up a bit of that but napster isn't complying without a fight, like a child whining about having to go to bed, dragging the feet down the hall..

secondly, napster is the new industry, and is being run by the hand of bertlemann and cronies, so there is no real difference between the two factions anymore, they are both geared to make money out of this new napster, independents not welcome.

so if the big labels are backing this new napster and all of it potential, why is there an outcry of "you'll never make a dime from the internet" ?

perhaps they want you to believe that there is no hope.

i'm with dond, you have to be creative and learn to adjust to the new future of music,
there is no reason to give away all your music, unless you have been brainwash by the napsterites that it is selfish not to share and to share with vigor.

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Posts: 10
From: Union City, CA. USA
Registered: Nov 2000

posted 04-20-2001 06:51 PM     Click Here to See the Profile for Phil Frazier        Edit/Delete Message

Maybe I shouldn't allow anyone to DL my songs or maybe just the one I deem is the "hit"? Should I let them preview all the songs on my CD, like lo fi? Should I just put up one for preview? Should I charge for full DLs?

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http://www.cbh3.com/phil

Posts: 600
From: Los Angeles, CA
Registered: Mar 2000

posted 04-20-2001 07:20 PM     Click Here to See the Profile for notesleb        Edit/Delete Message

quote:

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Should I let them preview all the songs on my CD, like lo fi? Should I just put up one for preview? Should I charge for full DLs?

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Should you answer these questions yourself?

Posts: 1831
From: Bowling Green, KY, USA
Registered: Mar 2000

posted 04-20-2001 08:27 PM     Click Here to See the Profile for KennyLee        Edit/Delete Message

quote:

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Originally posted by dond:
Since my web sales percentage is better then yours, by a big chunck, according to you, my method for web sales has an advantage over yours.

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Well, to be honest dond, I quit pushing my music on the internet over a year ago. Mainly when AMP3.com died. The only concept I thought had potential. Still the only one I believe in. Attach the ad to the song. Let people have the song free.

And it looks you are attaching your songs to wine and cheese, etc. So maybe you got something there.

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Posts: 1831
From: Bowling Green, KY, USA
Registered: Mar 2000

posted 04-20-2001 08:32 PM     Click Here to See the Profile for KennyLee        Edit/Delete Message

quote:

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Originally posted by deel:
so if the big labels are backing this new napster and all of it potential, why is there an outcry of "you'll never make a dime from the internet" ?

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Big labels operate by controling all the major distribution points for music. Napster is the biggest in the world right now. So the labels want to own it.

That doesn't mean they are going to make money from it though.

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Posts: 77
From: Niagara WI USA
Registered: Feb 2001

posted 04-21-2001 08:54 AM     Click Here to See the Profile for ATom2        Edit/Delete Message

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Posts: 242
From: wethersfield,CT, hartford
Registered: Jun 2000

posted 04-21-2001 12:07 PM     Click Here to See the Profile for dond        Edit/Delete Message

When we bundle our CD to that bottle of wine, the music isn't free. It adds $15 to the cost of the bottle, or $10 to the cost of the book, because there is less packaging required. Our way, we still get paid to create our music, and, the consumer getting our music invests in our future.

I like our way better then free. I like to eat!

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Posts: 10
From: Union City, CA. USA
Registered: Nov 2000

posted 04-21-2001 03:47 PM     Click Here to See the Profile for Phil Frazier        Edit/Delete Message

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http://www.cbh3.com/phil

Posts: 1831
From: Bowling Green, KY, USA
Registered: Mar 2000

posted 04-21-2001 07:58 PM     Click Here to See the Profile for KennyLee        Edit/Delete Message

quote:

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Originally posted by dond:
Kenny,

When we bundle our CD to that bottle of wine, the music isn't free. It adds $15 to the cost of the bottle, or $10 to the cost of the book, because there is less packaging required.

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Well, I'd say you are being pretty creative about selling music, dond.

Why do people buy your expensive wine + CD package? No reflection on your music since I haven't heard it, but it seems to me that the people that want wine would just buy wine.

Seems to me.

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Posts: 242
From: wethersfield,CT, hartford
Registered: Jun 2000

posted 04-22-2001 12:58 PM     Click Here to See the Profile for dond        Edit/Delete Message

Kenny,

When you select a specific music CD, to match a particular wine (usually 2 bottles), put it in a nice basket, with a couple of glasses, and, some cheese, you're now selling a romantic evening experience, instead of a few commodities. The winery also features our music in their tasting room, to create ambiance for all their visitors. We become their Muzak.

Deel has one of our children's books. With a kid's CD mounted in the book, it sells for $17 bucks, at retail. You can ask him if it's worth the money. He has a sample of the artists, from an older album, so he can tell you if that music is a hit with kids.

Our latest product is a cookbook, based on old ocean liners, and, it comes with everything you need to create an elegant dinner, with music provided by one of our CD's. It's another way to convert CD's to a total experience, not just a single download.

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Posts: 1831
From: Bowling Green, KY, USA
Registered: Mar 2000

posted 04-22-2001 03:08 PM     Click Here to See the Profile for KennyLee        Edit/Delete Message

quote:

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Originally posted by dond:

Kenny,

When you select a specific music CD, to match a particular wine (usually 2 bottles), put it in a nice basket, with a couple of glasses, and, some cheese, you're now selling a romantic evening experience, instead of a few commodities. The winery also features our music in their tasting room, to create ambiance for all their visitors. We become their Muzak.

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Well, like I said, dond. Pretty creative marketing.

Maybe I will package my tune "Big Fat Girlfriend" with some Mogen David, cheesecake, and a pack of Trojans.

That would be a total evening experience.

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Posts: 242
From: wethersfield,CT, hartford
Registered: Jun 2000

posted 04-23-2001 10:26 AM     Click Here to See the Profile for dond        Edit/Delete Message

You can make fun of my methods for trying to sell our music a different way, but, if you look at the big picture, IMHO, bundling music into other more valuable products, and, creating music event marketing programs, is the only way indies like us, will prosper in the future. If you have a better idea, I'm all ears!!! Frankly, the free mentality of the internet scares the crap out of me!

It took me two years to create a product structure to generate internet income. This is the first year it's starting to work! I've got orders for 6,000 CD bundled products this year, spread between 7 musical acts. Small sales for each act, but, it's a beginning, and, it's more money then a few cents per download. For the first time in 7 years on the web, we're getting real money from the internet. We're betting our future on this concept!

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Posts: 274
From: Raleigh, NC, USA
Registered: Mar 2000

posted 04-23-2001 12:13 PM     Click Here to See the Profile for Davey Boy Crocky        Edit/Delete Message

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The Shakedown Wizards - A Psychedelic Jam Band
Real,WinMedia,MP3: http://www.listensmart.com/shakedown
HiQuality 256k mp3: http://www.musicbuilder.com/The_Shakedown_Wizards
Euro-jam fans: http://www.besonic.com/shakedown

Davey Boy Crocky's Solo Project
http://www.listensmart.com/daveyboycrocky

Posts: 1831
From: Bowling Green, KY, USA
Registered: Mar 2000

posted 04-23-2001 02:29 PM     Click Here to See the Profile for KennyLee        Edit/Delete Message

quote:

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Originally posted by dond:
Kenny,

You can make fun of my methods for trying to sell our music a different way....

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Hey, I'm all for whatever works, dond.

The humor was to make the point of how difficult it would be for many of us to find a way to do that.

From your description, I am assuming that the music (or Muzak as you describe it) you put in your wine and cheese package is romantic melodies ala Ernesto Cortazar.

My package would have to be a keg of beer and a large pizza, I guess. Or maybe a couple of joints, a bottle of whiskey, and a burger. I don't know.

But I agree with your concept. Music is generally packaged with something else anyhow. Generally a mind altering substance like wine. And some food like cheese.

I mean, when people go out to hear music? That is what they do. Get a buzz on and eat. And if it all works? They have sex.

Which is what I take to be the point of your romantic evening package. Right?

[image not archived]

Right?

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Posts: 1831
From: Bowling Green, KY, USA
Registered: Mar 2000

posted 04-23-2001 02:49 PM     Click Here to See the Profile for KennyLee        Edit/Delete Message

quote:

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Originally posted by Davey Boy Crocky:
Hey, prehaps Father Time could bundle his CD with a TV Dinner, some of Kenny's Pictures and a box of Kleenex.

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More like a barf bag and a box of Qualudes.

I do enjoy taking on Father Time, though. And all Thug Posters on the internet.

Look, Davey Boy.

[image not archived]

KenGirl has a roommate.

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[This message has been edited by KennyLee (edited 04-23-2001).]

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