As Chairman of the MidemNet Visionary Chair Committee, Ted Cohen discussed ways of achieving music ubiquity and instant access for consumers.

It’s two weeks before the end of 2010 and three of the major digital music services continue to find themselves in varying degrees of chaos. I would have hoped by now that the smoke would have cleared for two of them, but I have little sympathy for the third.

Spotify’s co-founders, Daniel Ek and Martin Lorentzon have, ostensibly, done everything the right way. To properly secure their European launch, they approached labels & publishers, paid the required advances, established strong ties with the digital marketing teams and promoted theirdebut with both fanfare and class. It seemed, at the time, that an imminent U.S. coming-out party was a no-brainer. Who couldn’t like these guys and the world-class service that they had crafted? Apparently, almost everyone in a decision-making position in the American music industry. At the same time that senior label & publishing execs were requesting Spotify U.S. test accounts to amaze and impress their friends, they were refusing to let Spotify roll out in the States, citing concerns that conversion rates from the ‘freemium’ service wouldn’t be high enough and that Spotify would continue to erode the value of music. Warner Music Group Chairman Edgar Bronfman sated back in February, “The ‘get all your music you want for free, and then maybe with a few bells and whistles we can move you to a premium price’ strategy is not the kind of approach to business that we will be supporting in the future.”

While WMG just renewed Spotify’s European deal, they have yet to provide a U.S. license. Universal Music Group has been one of Spotify’s biggest supporters in Europe yet remained uncommitted in America. That may change now with the U.S. arrival of Rob Wells, UMG’s former European digital wizard. He has been consistently bullish on Spotify, “Spotify is a very sustainable financial model – full stop,” Wells said in January. I would predict that when UMG comes on board in the States, the rest of the pack will follow. I certainly hope so, Spotify is an excellent consumer offering that, with a few tweaks, can give Apple some serious competition for the U.S. music fans’ mind and wallet. There is continuing concern over Spotify’s cashflow, as a private entity it’s hard to get a good look under the hood. While the debate over their viability rages on, they deserve their chance to compete in the West.

Grooveshark is in a different position: Having started out as an unlicensed service, they now struggle to clean up their act. While they have achieved some success in going legit, they face what appears to be an insurmountable uphill battle with UMG, who has been heretofore unwilling to forgive and forget. At this time, it’s not looking very promising for them, and that’s a real shame. They’ve got probably the best UI/interface of any of the services. On more than one occasion, I’ve been on a flight or in a restaurant and noticed someone nearby happily grooving on Grooveshark. I’ve leaned over to ask why & always get the same answer, “it rocks!” According to Digital Music News, Google Zeitgeist 2010 concurs, listing Grooveshark as the 9th-fastest-rising search in the Entertainment category, in the company of Justin Bieber, Netflix and Lady Gaga. They’ve indicated they are sorry, that they want to be a good partner, it’s time for the music industry to show some corporate wisdom and compassion, this could be a win-win outcome.

In August of 2006, LimeWire hired me to “take them legal”. I proceeded to set up meetings with the majors and others to advance that goal. In February of 2007, I wrote a guest editorial for Billboard Magazine. It was a plea for the industry to get past its prejudices and license LimeWire in its then-current state, monetize consumer behavior on the service and not fret about its validity, but accept the fact that fans were flocking to it. It had quickly filled the void left by the demise of Kazaa and Grokster, it needed to be reckoned with in a different way. I stated that LimeWire wanted to pay, the music business should evolve, take the money and embrace change. I had buy-in from some industry execs, wholesale rejection came, however, from an unexpected source. Mark Gorton, LimeWire’s owner, called me to express his displeasure with my editorial position. He said he had no intention of paying a dime to artists, labels or publishers & I should not be stating anything to the contrary. When I reminded him that he’d hired me to get LimeWire agreements with the rightsholders, he said all he wanted me to do was to get them to leave him alone. I told him that wasn’t going to happen & wished him well, though I knew it was not going to be a happy ending.

I will concede that there were some good efforts over the past two years by LimeWire executives George Searle and Zeeshan Zaidi to salvage the situation, but they were never fully empowered to do what was necessary. The eventual legal outcome was expected, and LimeWire subsequently announced that they will shut down on December 31^st.

It’s a bit sad, it didn’t have to play out this way.

See all of Ted’s Midem blogs at: http://blog.midem.com/category/ted-cohen

Congratulations to TAG Strategic’s Karen Allen for being selected as an Advisory Board Member. Karen will participate in the nomination and selection of judges and startups for the Music-Related Technology portion of the competition.

Accelerator at SXSW 2011 Advisory Board

Andrew Perliman, Vringo
Mobile Entertainment Executive
New York, NY

Brian Zisk, SF MusicTech Summit and Collecta
Music/Tech Loving Entrepreneur
San Francisco, CA

Bruce Houghton, Skyline Music and Hypebot.com
Music Entrepreneur, Pundit
Roanoke, VA

Daniel Oakley, Sony Music – Jive Records and @danieloakley
Persistent, Charismatic & Friendly
New York, NY

Duncan Freeman, Band Metrics and indiemusictech.com
Music Technology Professional
Atlanta, GA

Francis Preve, francispreve.com and @francispreve
Music Technology Expert
Austin TX

Ian Rogers, Topspin
Technologist, Father, Skateboarder
Santa Monica, CA

Jacob Mullins, Microsoft BizSpark and @jacob
Excited, Passionate, Bon Vivant
San Francisco, CA

Jared Gutstadt, Jingle Punks Music
Music, Tech, Guru
New York, NY

Jennifer Masset, American Association of Independent Music
Forward-Thinking, Motivated, Fun
New York, NY

Karen Allen, TAG Strategic
Digital Music Executive
Los Angeles, CA

Mellie Price, Source Spring and Front Gate Tickets
Maker of things!
Austin, TX

Paul Lamere, The Echo Nest and Music Machinery
Music Technologist
Somerville, MA

Steve Mack, LUX Media
Musician, Author, Technologist
Seattle, WA

The third annual SXSW Accelerator will take place March 14 – 16 at SXSW 2011 in Austin, Texas. New for 2011, the Music-Related Technology category competition will take place on Wednesday, March 16 during the Music Conference.

Enter your project and be part of the competition, or register to attend SXSW and be a part of the action. Catch a glimpse of the future and make solid industry connections at the 2011 SXSW Accelerator. Click here to learn about the SXSW Accelerator as it relates to the SXSW Interactive Festival.

As I’ve expressed on many occasions in this and other forums, I believe strongly that the days of the need to own music are rapidly coming to an end. That’s not to say, however, that music is now or should be free, far from it. Music had traditionally been paid for by a very small segment of the audience. There is now the real opportunity for artists, songwriters, labels and publishers to be compensated in a meaningful way through revenues derived from on-demand and user-influenced models that are finally taking center stage.

Yesterday evening, MIDEM and TAG Strategic held a networking event at the Sunset Marquis in Los Angeles. The topic: “2011, The Year of the Music Service”. There were over 50 digital and music industry execs in attendance, along with a few artists. The debate, as expected, was heated, but the consensus was stronger than ever. The growth of music services such as Spotify, Pandora, Napster, Rdio, Rhapsody, We7, MOG, Slacker and others will continue exponentially. The $0.99 download from Apple, Amazon, 7Digital and others will continue to decline. The need for ownership will be marginalized by convenience.

Yesterday, we spoke with Ted Cohen, the founder of TAG Strategic, a digital branding strategy firm that serves tech and media companies. Prior to founding TAG, Cohen worked in artist development at Warner Brothers in the ’70s and ’80s, working with artists like Prince, Pretenders, Talking Heads, Fleetwood Mac, and the Ramones. He also has close to 30 years of experience working on digital music strategies.

Everybody is talking about how artists need to think of themselves as brands. But this is hardly a new idea. Haven’t labels like Warner Brothers viewed artists in a similar way for a long time?
We were really focused on building the artist as a brand. We realized, early on, that there was a big difference between having a hit record and having a brand that gave you a career beyond that hit. A lot of artists, and I don’t want speak ill of anybody, but someone like REO Speedwagon, if they had a hit single, they could tour stadiums. If they didn’t, they couldn’t fill a club. They didn’t have that brand credibility that Chrissy Hynde developed with the Pretenders or David Byrne developed with the Talkings Heads, where you’d want to go see them even if they hadn’t put out a record in three years, because you thought they had substance.

It’s true that David Byrne and Chrissy Hynde have that substance, but a lot of it is non-musical. What else besides music goes into a successful brand?
Do they have a story that people will gravitate to beyond the music? Is it something that fans in the demographic they appeal to can have a relationship with? Do they have a point of uniqueness?  This is what prevents somebody from saying, “She’s the next Taylor Swift,” or “She’s the next Gwen Stefani.” You don’t want to be the “next” anything.

I’m working with an artist named Rana Sobhany, and initially she was the first iPad DJ. Gizmodo featured her, WIRED featured her; Mac Life, Huffington Post too. And this was all her work. She’s relentless about building the brand. With every artist, the idea that “I’ll put my music up through Tunecore, and I’ll make it available on iTunes and Amazon, and I’ll build a Facebook page and a Myspace page, and I’m set”…Those are just the basics. It’s creating that relationship, really creating a bond.

Rana Sobhany, the first iPad DJ

So when starting out, is there any sense in an artist thinking about those non-musical aspects before making music?  Is there any sense in saying, “Maybe it’s better for me professionally to just focus my first release on the angry songs, it’ll help me stand out,” as opposed to saying, “These are my ten best songs, I’m going to put them on an album”?
There is no imperative to publish albums at this point. If you have three great songs, create a three-song bundle and put it online. This thing of having to fill up a silver disc with 12 songs is over now. If you’ve got four great songs right now, you can put up four great songs. Or if you write a song a week, you can put them up that way. It’s whatever you want to do. There’s no longer a reason to get 12 songs together, get them to the label, wait months for them to hit stores, then try to feel fresh about them when you finally get on tour.

The freshness of music today is what’s most appealing to me. If I’m listening to a lot of indie music that’s been delivered digitally, then a lot of it is very fresh –20 to 30 days old at most.

Changing gears a bit, one of the things that Tag offers advice on is venture capital sourcing. Could you talk a bit about why investment in music has gone up recently, and where it’s gone up?
One of the sectors where you see a lot of investment in is things like Nimbit, Reverb Nation, and Tunecore because they don’t depend on licensing from the major labels. The big resistance that VCs (venture capitalists) have had toward music ventures has been they don’t want to invest ten million dollars in a start-up, only to see eight of it going to the labels [in licensing fees]. It’s just not smart business.

Do you foresee more direct investment in artists down the line? Something between VC investment and crowdfunding in terms of the size of the investment?
Those kinds of funds are already underway. There’s a few out there, if the numbers are right. On a very big scale, there’s a company in London called Ingenious that will fund an album, that will fund a video project, that will fund a number of different things. They’re the guys who backed Avatar. But they’ve also backed albums by various artists and they’ve backed video projects by various artists.

So you foresee that as something that’s likely to grow.
Yes, if the economics prove themselves out; if the people in there early start making some money, other people will start to take notice and get involved.

Let’s talk about licensing. It seems like that’s all anybody can talk about now: “Band-brand partnerships! That’s your new stream of income!” But often, the artists are basically these ripe fruits that larger companies just pluck off trees, take a few bites of, then drop to the ground. Is there a way for artists to defend against that, or strengthen their position?
It has become commoditized now, because there’s a lot of music out there. It used to be really hard to license music for film and television because the major artists were very expensive. But then some great indie music came along, and you wind up with shows like The OC, and The Hills, and Grey’s Anatomy, which are filled with it.

There’s a new company called Hello Music, and one of the things we’re helping them do is build relationships with music supervisors. One of the biggest issues is filtering through this stuff. What Hello Music is doing is sending packages to music supervisors at film and TV studios that say, “Of the 10,000 songs that passed through our site, we think these 200 are great.”

But is this combing going to be done by humans? Or do you think we’re headed toward a future where everybody at Hello Music has uPlaya on their desktops, and they’re just running user submissions through these algorithms? Should musicians be cognizant of that?
I don’t think algorithms are the answer. I’m not saying that it doesn’t work. Echo Nest uses algorithms and social behavior – what kind of music do your friends like, what’s happening on the music blogs, etc.  The combination of the two, the algorithm approach and the social approach, turned it into a winning system.

So you see it as a combination, in the future?
The problem with the algorithms is that by design, they find similarity. They don’t find uniqueness. If something is truly unique, it’s not matched to anything.  In the algorithmic approach if a band sounds a lot like Fall Out Boy, they’re going to get a high rating because of that similarity. But how do you find a band that doesn’t fit into those things? It’s challenging. It’s a great opportunity.

Finally, what aspect of the NMS are you most excited about?

We’re doing the tech summit, and we’ll be talking about what’s working and what isn’t. The most important thing to come out of this edition of the New Music Seminar is, really usable transactional advice. Not theoretical “in the future it’ll all be like this.” No, what’s happening NOW? How do you gain a competitive edge? We’re trying to make it so that in a competitive environment, people have the best weaponry.

Permalink: http://weallmakemusic.com/tag-strategic-founder-ted-cohen-on-branding-your-band-and-investments/

by Ted Cohen

By Ted Cohen

In the Holy war over copyright, the last few days have been pretty interesting. According to my scorecard, there have been two big wins for the content owners/copyright crusaders, with one major battle yet to be decided.

Let’s start with the battle that is playing out right now. On Monday, the announcement in the Hollywood Reporter that Voltage Pictures, the studio that produced the Oscar-winner, “The Hurt Locker” had signed on with the U.S. Copyright Group sent shockwaves through the BitTorrent file-sharing community. From the USCG website: “The US Copyright Group is a company owned by intellectual property lawyers that has one singular mission and focus: to stop movie copyright infringement and make illegal downloaders pay damages for the content they have stolen.

From Washington D.C. to Los Angeles, technology companies and a conglomeration of intellectual property law firms work hand-in-hand with each other to end unlawful downloading and illegal file-sharing of films.” This organization has already filed over 20,000 federal lawsuits against individual BitTorrent downloaders, with 30,000 more filings in the offing, making them an extremely formidable mercenary on this battlefield. According to The Hollywood Reporter , “The genesis of this legal campaign occurred in Germany when lawyers from the US Copyright Group were introduced to a new proprietary technology by German-based Guardaley IT that allows for real-time monitoring of movie downloads on torrents.”

And now the war has a very photogenic poster child in “The Hurt Locker”. This film won early critical acclaim, became a must-see in the Indie circles, and ended up besting James Cameron’s “Avatar” by taking home the Best Picture Oscar at this year’s Academy Awards. However, the film has been a financial failure, grossing just over $16 million dollars, making it the lowest grossing Best Picture ever by a wide margin. The picture leaked onto file sharing sites five months before release then had a major download resurgence after the Oscar win. While admittedly a challenging film for the mass market, the studio pegs a lot of its financial shortcomings on illegal downloading. From their perspective, they did everything right. They made a great movie on a tight budget, were recognized by the industry, but not rewarded at the box office. It’s a bitter pill and someone must be to blame. The film’s creators place a great deal of that blame on piracy, the courts will decide if they are right.

Meanwhile, the seamingly-endless battle between the music industry and LimeWire appears to have come to an end yesterday, with Federal Court Judge Kimba Wood handing down a summary judgement against both Lime Group, parent of LimeWire, and personally against founder Mark Gorton. Her 59-page decision stated, in part, “The evidence demonstrates that [Lime Wire] optimized LimeWire’s features to ensure that users can download digital recordings, the majority of which are protected by copyright, and that [Lime Wire] assisted users in committing infringement.” CNET’s Greg Sandoval wrote yesterday, “The court decision could represent the biggest threat to online file sharing in years. According to a survey by the NPD Group, LimeWire users account for 58 percent of the people who said they downloaded music from a peer-to-peer service last year.” While this battle isn’t over, LimeWire has been dealt a seemingly mortal blow. The next encounter will occur at a June 1st status conference with Judge Wood.

Lastly, there seems to be a truce in the long-running skirmish between the music industry and Project Playlist/Playlist.com, with the announcement of deals with both Universal Music Group and Warner Music Group, rounding out deals with all four majors, as reported by CNET News.com. While the financial terms were not disclosed, the general consensus is that this was a very expensive endeavor for Playlist, given the litigation and rhetoric that has surrounded the venture for the past two years. It’s also unclear whether they have settled with the formidable indie community, or with the publishers. There may need be a few more field maneuvers before this battle draws to a close. And will there really be a winner? Michael Robertson gets the last word:

“I wonder which of the following Playlist has in their settlement:

A) Multi-million dollar payment for past infringment.
B) Multi-million dollar upfront, non-recoupable payment to the labels
for future royalties.
C) Agreed to pay 1 cent per song stream.
D) Gave equity to the record labels.

If history is a teacher then it’s E – all of the above. Playlist bought themselves some time so they can stay in the game, but sadly I think they will go the way of Imeem.”

by Ted Cohen

By Ted Cohen

As I sit here at the end of an eventful year, it feels like we’ve made a lot of progress in digital music, but we have such a long way to go. My wish is that the gains we’ve made are the basis for the digital music landscape we’ve all dreamed of.

Digital services and devices I’m grateful for this year:

· Spotify
· B&W Zeppelin
· Motorola Droid
· Pacemaker Pocket DJ
· Twitter
· The Beatles on USB
· MOG’s $5 subscription service
· Roku
· The Flip HD
· Zune

Some of the people I’m grateful for, in no particular order:

· Peter Kafka
· Ann Sweeney
· Jeanne Meyer
· Jeff Pulver
· Karen Allen
· Peter Brodsky
· Mark Piibe
· Rio Caraeff
· Chad Hodge
· Sara Haze

All I want for Christmas is:

· Spotify availability in the U.S.
· A revamped Rhapsody (it’s really time for a make-over!)
· A streamlined licensing process from both labels and publishers for new
services
· ISP-based revenue streams for creators and rightholders
· More funding for innovative music start-ups
· Transparency in artist & songwriter royalty payments
· More communication, collaboration and coopetition between stakeholders
· 4G data service
· A digital music conference in Rio during Carnival
· The Apple music subscription service we’ve all been waiting for

A Happy Holiday break to us all, let’s get back to changing the world on January 1st!