First Class Alliance (FCA) is the music industries hybrid entertainment marketing agency specializing in digital and entertainment marketing for corporate brands and music artists worldwide. We represent both, companies and music artists; an advantage in creating brand partnerships and entertainment experiences that consumers love. Our mission is to help our clients build strong, long-lasting brands that are meaningful to their audience and drive their business’s growth.

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Check out this great video showcasing the company’s claim of “The G-Form Extreme Edge™ provides extreme in-use impact protection for your tablet from drops and falls in any orientation, including flat surface drops to the exposed screen” to the test. Great use of creating content to highlight your products features and benefits in a unique fun way. Kudos.

- Hollywood Henry

- Hollywood Henry

So an explosion of new ways to listen to music on Spotify is just around the corner.

– Hollywood Henry

So here is a robot I am currently fascinated with, QBO. In this video Qbo see’s himself in a mirror for the first time, and learns to recognize himself for the future.

QBO Robot in front of a mirror

Phenomenal work TheCorpora company is doing.

–Hollywood Henry

The service includes such features as music store, social implementation, free music cloud for up to 20k songs, artist hub, T-Mobile on board as a mobile partner, share on Google+, and the ability to upload content.

This is just for starters, you can bet they will tightly integrate artist music and information within the search results of Google search engine. The fight is on between Apple, Amazon MP3 & now Google Music for digital music supremacy.

– Hollywood Henry

While Sony Music Entertainment will take control over EMI Music Publishing for $2.2. billion. This leaves only 3 major record company’s as the industry continues to consolidate operations and divisions in hopes of plugging up the leaks in losses. The remaining recording company’s that in essence control the music industry are Sony Music Entertainment, Warner Music Group and Universal Music Group. Universal’s global share of music should rise to 37% with the acquisition.

Interesting times indeed.

-Hollywood Henry

While this is good news they also point out that physical cd sales will fall to 10 Billion from 15 Billion, so again as my previous post mentioned while we are seeing revenue from digital mediums rise, they are patching up the holes in the boat but not giving us a new ship (yet). 5 Billion dollars is a lot of money for any industry to lose.

Excerpt from their report is below.

- Hollywood Henry

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“But sales of CDs, hurt by piracy as well as paid-for online distribution, will continue to decline faster than can be made up for by digital sales, as the music industry struggles to adapt to consumers’ changing behaviour, Gartner predicted.

By 2015, Gartner forecasts online music spending will rise to $7.7 billion from $5.9 billion in 2010. In the same period, consumer spending on CDs and other physical music forms is seen falling to about $10 billion from $15 billion.

“The music industry was the first media sector to feel the full impact of two major forces — the Internet and technology-empowered consumers,” Gartner analyst Mark McGuire said in a report.

“It has staggered through the first decade of the 21st century and entered the second bedraggled financially and facing a powerful set of intermediaries, which are creating borderless global ecosystems that defy the industry’s previous notions of control and monetisation,” he wrote.

Many consumers took early advantage of the Internet to illegally share music through services like Napster, hurting music labels like Universal, Warner and EMI that still dominate the industry.

But the convenience of legal purchasing from stores like iTunes is increasingly encouraging consumers to pay for music and the big labels are also raising more money from live music, sending many stars who had given up touring back on the road.

In addition, a host of subscription services to streamed music like Spotify, Lastfm.com and Pandora are gaining popularity. These are often offered by third parties keen to exploit a new market, including Facebook and mobile operators.

Gartner expects subscription services to be worth $2.2 billion by 2015, accounting for 29% of all online music spending by consumers.

Consequently, this digital revolution is giving the power back to the artist and cutting the chord of dependency on the record labels. This sounds great in theory for artists to have complete creative control over their own music, artistic direction, artwork and promotions, while keeping the largest share of the profits. Who wouldn’t want that? Especially with advances in digital marketing platforms giving artist and managers the tools necessary to help them promote their music to the masses.

We’re hearing stories of ”Do It Yourself” becoming recurring themes in the industry. With the digital music era upon us, let’s look at the numbers and see if all these great stories the media displays of artists taking their careers into their own hands are accurate or just fairy tales.

The federal minimum wage in the United States is $7.25 per hour. Let’s take a look at the info-graphic, which breaks down how many units an artist would have to sell to earn a US monthly minimum wage of $1,160.

If you take an artist with a major label deal but with, “low royalty points,” meaning they are a new artist and have signed an agreement entitling them to a low royalty profit on their CD sale (possibly due to not having leverage during the negotiation process) It would take the sale of 3871 units to equal a minimum wage salary.

Now, let’s look at a self-pressed CD. It would take 145 units (the info-graphic says 143, but that is incorrect) to equal the same $1,160 minimum wage salary for the month (145 units x $8 profit = $1,160), A profit ratio of 27:1 in favor of the indie artist.

So a major label artist selling a Gold album which is 500K units would make roughly $149,832 if he/she is on the low end royalty scale, while the independent artist would make $4,000,000. A major label artist with a, “higher royal point,” meaning a contract more suited in his favor would make $499,562 for selling 500K units of his/her CD.

Gold Selling Album (500K Units)

$150,000 in revenue generated for a major label artist with low royalty point deal

$500,000 in revenue generated for a major label artist with high royalty point deal

$4,000,000 in revenue generated for a indie artist self pressing his CD

While on paper this looks great and would have you believe indie is the way to go, who can resist the lure of 4 Million Dollars? Pundits will argue you can never make that kind of money selling your CD through a major label just based off CD sales. Unfortunately, the real world is not as black and white. While in theory the indie artist on paper should be making this figure, in reality, indie artist do not sell even half of that figure.

The likelihood that an independent artist will sell that many units is unrealistic. As it takes mass-market penetration, mass media, & mass awareness to reach sales of those heights. The indie artist will have to pay for various items out of that $4 million as well such as video, radio, publicity, marketing materials, distribution to get product carried by retail, and all the other departments a traditional record company would be providing.

Traditional, physical CDs are dying as a medium, so what’s even more telling of future revenue projections for musicians is the digital distribution models. As new artists whether on major labels or indie musicians are selling fewer physical albums than their previous counterparts, they are relying more and more on digital sources of revenue whether it be ITunes, digital sales or music streams through online radio stations such as Pandora or Spotify.

Again, using $1,160 minimum wage as a benchmark for artist revenue, let’s analyze how many streams it would take an artist just to make a minimum wage salary.

Rhapsody  849,817 streams

Last.FM  1,546,667 streams

Spotify 4,053,110 streams

A whopping four million plays for an artist to see $1,160 in revenue!

Yet countless articles speak about the digital music era ushering in new prosperity in revenue for musicians, unfortunately I have yet to see these new digital mediums make up for the loss in physical sales. Though to be fair, it is early in their life stages, but it also marks the shift in consumers mind from ownership over to a renting model.  A great example is Netflix where consumers buy into the idea of no longer needing to own a movie, they can merely stream it whenever they want from multiple sources.

The future of the music industry will revolve around creating experiences with the brand of an artist, as well as figuring out new methods to extend that brand beyond traditional thinking. It will be a fragmented industry, with no model working for every artist, which makes what we’re doing all the more exciting, as we position ourselves to help artist/managers, labels, brands, and products make sense of this new industry. It will be a process for artist/managers to learn how to properly reach consumers, create new revenue streams and cut the fat in cost, FCA will be your partner in this endeavor, as we provide services and departments that you would  receive from a traditional record company, we will be helping you do more with less.

This info-graphic just looks at income from one source, the sale of music as a commodity. Artists make money from multiple sources, but some areas remain exclusively reserved for major artist. Indie artist do not typically receive the brand, endorsement, commercial deals that major artist do. As brands look toward notable artist that can have a big influence on their product, thus requiring artists with strong brand recognition and loyalty, but there are other ways independent artists can begin to gain their share of cross promotion revenue.

That is a subject for another day.

- Hollywood Henry

We will be having various executives of the company sharing their expertise, ideas, and insights into our would of Digital Marketing, Branded Entertainment & Brand Strategy.

I hope you will find my post to be enlightening, entertaining, educational, and perhaps at times emotionally charged with passion, thoughts from a music industry executive. My professional music industry career spans many, many years. I’ve had the privilege to have worked hands on with some of the biggest artist and camps of todays industry. As well as having the honor of being present in countless recording sessions with the likes of T.Pain, Trina, Rick Ross, Gym Class Heroes, Scott Storch, Jim Jonsin, Rico Love, Young Money, and so on & on. I’ve been a student of the business since I began my major, I’ve never stopped learning, now more important than ever. In this blog I will cover various convergence happening in digital marketing, digital distribution, artist branding, technology, social media, and all the other areas that are constantly shaping and re-shaping the landscape of the new digital music era. This shift has affected both independent artist as well as the remaining major recording company’s, Universal Music Group, Warner Music Group, Sony Music Entertainment & EMI Group. I’ve also had the opportunity to deal with each of these majors in various capacities and projects, working along numerous senior level executives. Which has granted me the opportunity to attain valuable knowledge from multiple sources across multiple company’s. To put it blunt, “The dust has not settled”.

These are both scary but exciting times for the industry. We are in the midst of a revolution in media & entertainment.

Though some will emerge from this, big winners. Will You?

– Hollywood Henry