I was in college when Mark Zuckerberg began his little experiment. Now, it is arguably the most significant contribution of my generation, and has subsequently molded the world of my successors—Generation Z. For millennial youth, life is online, and thus, the worlds of entertainment and marketing have shifted to accommodate. More so than others, the music industry has been almost completely redefined by new technology. Countless websites have erected to stream music, download music, and this week, host music in a cloud, while trends are being set by anyone with an opinion. The biggest downside to this is the value of music is often diminished. When Napster made the mp3 the standard of excellence, the brilliant sound of vinyl became a relic of the past.
“The new generation could really care less about the quality of music and how it sounds,” comments Richie Abbott, publicist for recording artist, Tech N9ne, and former VP of Publicity for Warner Brothers Records. “iTunes uses a lower bit rate than CDs, but most people can’t even tell the difference…If you listen to DJs in clubs now, what they’re spinning on Serato, every track sounds different. Going from one song to the next, it’ll be muffled or distorted because they got some of their music from iTunes and some from Limewire and the blogs…That drives me crazy.”
Grooveshark is the latest reincarnation of P2P distribution. The site, an enormous database of music uploaded by users, is considered an online radio station, similar to Pandora in that it allows listeners to create stations tailored to their tastes. It also enables them to handpick songs by dropping them into a playlist, the caveat being none of the tracks are available for download.
“The idea came from this landscape where music [is] so available,” explains Ben Westermann-Clark, VP of Communications for Grooveshark. “It’s good and bad because piracy still eats up sales, yet it gives any band or DIY artist the chance to be heard… Our aim was always to cut piracy, to make it irrelevant, so we developed this huge catalog of songs that are free and instant…We track our music and streams, and there’s no money we make that doesn’t get shared with artists.”
According to Westermann-Clark, Grooveshark has made deals with multiple labels and publishers along with PROs like ASCAP. He believes it’s beneficial to recording artists because it not only prompts the breakthrough of new music, but incorporates assets within its interface. Users can read artist bios or follow trending bands. There’s a feedback box so artists can test out new music and receive criticism directly from listeners. The platform also produces its own creative content, like live studio recordings from a mobile bus at SXSW this year.
There is no charge for using Grooveshark, and the company shares ad revenue with its licensed affiliates. From a legal perspective, Westermann-Clark compares Grooveshark to a site like YouTube. Though it doesn’t hold rights to all its content, if asked by copyright holders to remove songs, Grooveshark will willingly do so, or else they’ll strike a deal.
“Our biggest competitor is piracy,” observes Westermann-Clark. “It’s an elephant in the room. You can’t ignore the bigger picture that music is free somewhere, and people don’t care whether that’s legal or illegal …We are working to help artists.”
Despite its questionably benevolent aims, they’ve only secured licensing agreements with EMI and a handful of indies, meaning the three major labels and publishers who control nearly all popular recordings are not on board. Navigating the network is relatively simple, but the audio quality of its player is poor. Transitions from one track to the next are marked by noticeable differentiations in mastering levels, as the music derives from many sources. Additionally, with no method of quality control, playback errors are common.
Westermann-Clark admits Grooveshark has no immediate plans to remedy such issues however, as “no one has complained yet” (except for me). “For the nonchalant music fan, it’s beneficial,” says Abbott. “Those people that only want to hear Katy Perry, catalogs provide easier access…They’re sacrificing the sound of music, but you know what, that’s the new generation, so it’s irrelevant.”
The next phase of advancement in online media concentrates on recommendation services, as millennials rely on trusted sources to traverse oversaturated markets. Topspin Media has recognized such an evolution and is rapidly using it as a moneymaking avenue for the music industry. A marketing platform, Topspin aggregates the emails addresses, social media accounts, and demographical data of a recording artist’s fan base and uses that information to exponentially increase their online presence by consolidating music, merchandise and concert tickets into distribution platforms. Topspin has also created analytical devises, which track trends in sales, streams and shares used to formulate marketing strategies. Essentially, Topspin has taken the art of online marketing and distribution and packaged it, facilitating promotional schemes for both independent musicians and commercial acts.
The key principle to its success? Recommendations.
“The entire recorded history of music is at our fingertips now,” notes Bob Moczydlowsky, VP Product and Marketing at Topspin. “It’s great for creators, but it creates a new problem: control. Our choices are predicated by control outlets and distribution channels…I make my decisions based on sources I trust: blogs, Facebook friends, tweets. Word of mouth marketing has become the most powerful force.”
Topspin approaches marketing like a funnel. On its outmost layer, an artist acquires a bunch of people who know of them; at the next level, these people actually pay attention; after that, they learn the music, they are engaged; last and most importantly, comes “permission marketing.”
“You don’t want to blast 100,000 people to get 2,000 interested,” explains Moczydlowsky. “We care less about the masses, more about those who are really interested and are likely to develop a connection. We find that bundle and that’s who we reach out to.”
That, at its core, is Topspin’s strategy: Create a niche marketplace, accrue a stack of devoted followers, then give those people the utmost attention. Industry folk have quickly taken note. Topspin presently assists direct-to-fan efforts for artists like Beastie Boys, Lady Gaga and Linkin Park, along with several record labels. They’ve created bundles with CD releases to include t-shirts at a higher price point; they’ve put vinyl records out with free downloads and sold concert tickets at flat fees to chosen fans. For Lady Gaga’s last album, Topspin devised an exclusive offer for fans to pre-order the record with bonus tracks and merchandise (something difficult to do on iTunes). Ultimately, the goal is investment.
Likewise, retailers have observed Generation Z’s admiration of its peers. Says Kathy Savitt, CEO of Lockerz.com, “Generation Z is the most curatorial generation in modern history, and what I have found is the growing power of content to stimulate economic results…Lockerz uses content to drive consumption. You tell your friends what you love to watch and what you listen to, and you earn points when they click on it.”
Lockerz appeals uniquely to millennials, providing a prime example of how commerce, advertising and merchandise can be fused to the advantage of both users and merchants. At Lockerz.com, members accrue points for sampling new music, watching videos, sending invitations to friends, and checking out what tastemakers like and follow. These points allot them discounts on electronics, fashion brands, and music, which they can purchase directly from the site. The company splits ad revenue with its partners, and is not marketed outside its membership community. In fact, the growth of Lockerz has solely been the result of P2P recommendations, making it all the more impressive that 19 million people worldwide have signed up in less than two years.
In the era of constant connection, where our own opinions are valuable and we, ourselves, have followings, Savitt is capitalizing on power of the people.
“The three things Generation Y and Z love to do are shop, consume content and social network,” comments Savitt. “Even in ancient times, in rural areas, people came to the marketplace to gossip, trade goods and news with other villages. That hasn’t changed. The internet has redesigned what community is and accelerated our passions.”
So, what does this all mean for music? Monetization.
Compelling fans to buy merchandise, buy records and buy tickets. Today’s artists are creating packages and building foundations. Fans can purchase exclusive vinyl releases or receive downloads when they get show tickets. They can enter sweepstakes, gain entry to secret performances, and participate in contests. Everyone loves a giveaway, and by generating platforms where recommendation services drive attention to creative works, musicians can finally see a return. Though the quality of recordings may have been reduced, the Internet has given thousands of unknown talents a name and vehicle for their music.
Going forward, as the internet becomes a larger palate for us to share, sample, and critique, those who see music’s value, will find a way to keep it alive.
“Someone I really look up to, who taught me about music was DJ Quik—he’s one of the few geniuses in mixing and mastering,” recalls Abbott. “I remember several years ago, I was with Quik and he was so excited because Prince was coming out with a remastered album of greatest hits, and he couldn’t wait to buy it…The day it came out, we went to the record store, and he immediately put it into his car stereo, but was too disappointed in the quality to even listen to it. We went back to his studio and he spent four hours working on it, leveling out the audio, mixing it….The difference was incredible.”