Subject: Cracker/camper van Beethoven and Groupon. Strange but true.

Read your article bob.  Nice piece. Largely you are right about the risk averse bakwards thinking folks who run the music business now. But strangely music types played a small but important role in the history of groupon.  In particular myself and my two bands.

In 2008 I was appointed to the board of advisors of a small web startup called www.the point.com. The site the brainchild of Andrew Mason was a " tipping point" mechanism, a social networking site that allowed people "commit" to take group action. In particular the hope was they would take group action for social change.  The investors quietly noted there was not a clear way to monetize Andrew’s experiment. However they hoped that by watching the way users used the tipping point mechanism,  a viable way to monetize this website would present itself.

I was asked to start a campaign on www.thepoint.com."To get a feel for it".  Not being very socially conscious I decided that I wanted to use The Point for my own narrow self interests.

Cracker and Camper Van Beethoven have a festival,  The Campout.  It’s rather remote and since we produce the small festival ourselves we take considerable financial risk.  While the previous years had been marginally successful we were worried about the rapidly deteriorating economy (I believe Bear Stearns had just gone bankrupt).  So I started a campaign to get a "break even" amount of CVB and Cracker fans to commit to attend the festival. In this way our fan’s promises to attend would become a sort of promissory note. no pun intended. While you couldn’t exactly peg it’s value,  these collective promises to attend at some point seemed to be worth enough to go ahead and book the flights, PA, lights, and port-o-potties.  

Other successful "campaigns" on The Point also involved similar commitments for  group purchasing.  It wasn’t long before The Point became Groupon.

Okay so that’s a story about Groupon, that has smart music people and smart techies helping each other and they all live happily ever after.

Now here is another story about Groupon that illustrates YOUR point that the modern music business is run by risk averse technophobe idiots.  

The financial backers of Groupon as well as CEO Andre Mason are big music fans. They wanted to demonstrate the power of the now wildly successful Groupon by putting on a series of concerts.  There was a significant element of altruism in their efforts,  but it had not gone unnoticed that most concerts have a lot of empty seats.   And Groupon works best when the "incremental" cost of adding clients/patrons is very low.  Adding concertgoers to a half full arena is a perfect example of low incremental costs. So concerts were seen as a natural fit for Groupon.  I was enlisted to try to get a Groupon only concert going. Twice!  Both times artists agents managers promoters all failed to understand the concept.  Even my wife who is a brilliant concert promoter didn’t really get it.

(editiors note this: is not quite true. concert promoter and groupon user Lucy Lawler seemed to understand the concept)

(Due Diligence requires me  to point out that there may be a strange mathematical logic to having consistently half full arenas. The theory is that in the long term the artists will bear the brunt of the inefficiencies of half full arenas while LiveNation reaps outsized rewards on the sold out shows. It’s a complex argument and it involves what options and derivative traders call Volatility Trading Theory, but it at least partially explains why LiveNation has been supposed to go out of business for the last 8 years yet has not. But alas I divagate).

In general,  this is the story of the last 25 years of the music business.  Everybody now thinks they are geniuses if they have one artist that is a hit. They think you can take something and make it a hit. They do not understand the roll of luck in this business. Instead they expect certainty and take no risks.

They no longer understand the need to make MANY risky bets.  They have forgotten that most bands and artists  will be commercial failures.   They have no longer have the stomach for failure  therefore the  modern record company spends 63.4% percent of it’s time trying to figure out who to blame for the failure, instead of moving on, getting back to work and searching out the interesting artists and new ideas.

After Virgin America signed CVB president Jeff Ayeroff told me " Just keep doing what you do.  one day you guys will write a hit, maybe even by accident".  exactly.  

It’s now the Venture Capitalists and tech entrepreneurs who understand how to take risks,  how to use their gut instincts, how to stomach the failures in search of the big hits.  

Ahmet Ertegun was a  Venture capitalist. A brilliant risk taker, and he knew how to stomach failure.  He also signed artists purely on gut instinct.  In many ways these new VC’s and Tech entrepreneurs resemble him.

thanks for letting me spew my observations at you. and keep writing.

regards
david lowery.

David C Lowery
www.crackersoul.com
www.campervanbeethoven.com
www.davidlowerymusic.com
www.300songs.com

How does an artist go from being the most hated man in America to #1?

By ignoring conventional wisdom.  By giving away music.  By utilizing Twitter.  By leaving his rough edges on, wearing them as a badge of honor.

You’ve got to read the story about Kanye in today’s "Los Angeles Times".  I’ve been flirting with canceling my subscription, but they were the first newspaper to chronicle the decline of the wii

Once-hot Nintendo Wii now struggling for sales

and the first to get the Kanye story right.

Even the President called Kanye a jackass!

Last week the story was TSA pat-downs.  Right before the Thanksgiving Day holiday.  But when everybody went to fly, nothing, nobody really cared.

And it seems that nobody really cared that Kanye interrupted the VMAs.  The mainstream media needs a story.  If you do this and you’re under contract to a TV network, you go to rehab, which used to just be for substance abuse, but now covers stupidity.

Kanye was fucked up about his behavior.  He said so.  He canceled his tour and exiled himself until…

He emerged on Twitter with tweets so fascinating, you couldn’t help but pay attention.  His July 31st tweet:

"No seriously … I said my teeth are real diamonds… these are not fronts… I replaced my bottom row of teeth with diamonds"

became as famous as any song lyric, part of the fabric of popular culture.

And throughout the entire episode, Kanye was never soft and fuzzy, was never lovable.

Sure, Kanye got some mainstream exposure.  But, he’s considered to be really damn good and he did it his way.  Isn’t this how the classic rock artists triumphed?

So, once again:

1. Be really damn good.  Great art makes up for a ton of ills.  One can argue strongly if Mel Gibson makes a movie on his own dime and it’s great, he can reemerge from the depths.  We’re a forgiving populace.

2. Don’t fall on your sword.  Your crime doesn’t mean as much to people as the mainstream press says it does.  Kevin Smith sat at home, depressed as the man labeled "too fat to fly", but eventually Tiger Woods crashed his car and Smith’s foibles on Southwest, which were inaccurately reported, faded away.  A career in the public eye is first and foremost about persistence, and perseverance.

3. Play the mainstream media game, die by the mainstream media game.  News outlets don’t care about you, they care about advertising, they care about ratings.  Don’t let the tail wag the dog.  Katy Perry is in the news every damn day, but she still can’t sell out an arena.  Get your perspective right.  Katy’s handlers have got it totally wrong.  What does showing off your tits have to do with music?  Kanye’s not the best-looking dude on the planet, but it doesn’t matter, because people believe he’s good.

4. If you’re not willing to give away something for free, you’re not willing to have a career.  If Kanye can give away free tracks, why can’t you?  It’s about your relationship with your fans.  The song doesn’t have to be on the album.  You’ve got to know where in the food chain to charge, and it’s not at every contact point.

5. Maintain contact.  You’re doing your own act.  Now, with the Internet, you don’t need permission to do it.  You can perform on YouTube, you can tweet, less is more is history.  Now you always give more, and the public decides how much it wants to graze in your neighborhood.  Fans come and go, but you can’t let it impact your art.  You’ve got to do what you want to do, not what you think the audience wants.

6. Have a personality.  If no one hates you, you’re not doing it right.

7. Don’t focus on the album release.  Your marketing’s got to go on for years.  The Doobie Brothers released a new album.  Straight to the dumper.  There was no Twitter presence, no fan engagement, just a record most fans don’t know exists and don’t want anyway.  And I only use the Doobies because they’re an ancient act, and all the ancient acts don’t know how to do it.  You don’t need a label and you don’t need an album.  You need fans, which you’ve got, and you need to know how to reach each and every one of them.  Pat Simmons should have played acoustic in someone’s house.  The band should have done live performances of classics on YouTube.  They should have gotten their fans involved.  If Paul McCartney wants to sell a new album, he’s gonna have to do it this way too.  Unless you want to be a recluse, if you want to survive in the new world, you’ve got to get yourself out there.  Don’t pooh-pooh it as marketing, it’s performing!  And isn’t that what you do!  And it can be as much about music as you want it to be.

8. In a chaotic era you’ve got to go your own way, you’ve got to forge your own path.  No one knows, certainly not the mainstream media guys or those at the label.  They know how it used to be done. It’s incumbent upon you to do it your own way, for yourself.  The Eagles can’t sell every ticket?  How come Don Henley’s not on Twitter, he’s got opinions.  Just putting tickets on sale is no longer enough.  Hell, how do people even find out about the gig?  Most people complain they didn’t know you were playing.  And if you’re a new act?  You’ve got to be good.  And if your goal is to connect with the mainstream and have it do your bidding, you’ve got it wrong. It’s about a career.  And you build it.  And it works because you’ve got fans.  Your label doesn’t own your fans, nor does the radio station, only you do.  Start there.

Read this article, it’s really well done:

Kanye West shapes the message his way

@butterflyylost I hope that fixes it. If not send me an email at schiller@apple.com and I’ll forward it to AppleCare.

HE’S GIVING OUT HIS E-MAIL ADDRESS?

Isn’t it funny that music executives think they’re moguls, gods who function separately from their customers, and the tech guys are readily accessible.

And the story is not only Phil Schiller.  It’s Tiger Woods too.  Who’s now opening up about his personal life on Twitter, acknowledging his divorce and even stating that he loves "Caddyshack"?

Irving Azoff went on Twitter.  The only problem was he brought his backroom personality into the agora.  Twitter is not the place for petty beefs.  And if you’ve got a problem with haters, you can’t participate online whatsoever.  Because there’s always someone out to get you, because they’ve got a chip on their shoulder, they’ve been overlooked or…

But if you’re relatively secure, you should play.

And you should give out information.

Sure, put in a bit of your personal life to show your humanity, but reveal some of the inner workings of your company along with the hype, and solve a few problems.

People can’t believe it when Steve Jobs responds in e-mail.  And he does.

People can’t believe it when they tweet someone powerful in an industry with a problem and it’s addressed, INSTANTLY!

In other words, you’re a traffic cop.  You’re the connector.  The hot link.  You know both parties.  You know who to direct the question to.  And when it’s answered?  IT BLOWS PEOPLE’S MINDS!

Everyone should be on Twitter.  With their real name.

And I’m not only talking stars.

How much is someone gonna hate a record company if the CEO tweets.  Lyor Cohen’s got time to take to the street to respond to the Lupe Fiasco fracas

Lyor Cohen Responds to Fiasco Friday

can’t he dash off a few lines on his BlackBerry Twitter app?

Don’t say this isn’t your business.  IT IS YOUR BUSINESS!  You’ve got no company without customers.  You want to bond customers to you, you want them to spread good will.

Apple is hotter than any musical artist and the number two face is on Twitter and reacting to feedback?

Maybe that’s why Apple’s stock is in the stratosphere and the major labels’ is in the dumper.

It’s him, it’s verified: http://twitter.com/#!/pschiller

When Google starts from scratch, it’s a disaster.  Like Google TV, Dead On Arrival, have you been reading the reviews, even the tech superstars can’t figure it out and Sony’s already lowered the price!

Then there’s Google Wave…

But when they acquire a company, watch out.

Look at YouTube.  A category killer as well as a cultural phenomenon.  And then there’s Android.  Which is growing phenomenally.

Now Groupon?

People want their Groupon.  Tie it into Google search and watch it truly blow up.

This is like when a label signs an already successful band, as opposed to starting one from scratch.  Then again, there are a lot more zeros involved.  Supposedly $5.3 billion, with a $700 million earnout

Google’s Groupon Offer: $5.3 Billion, With $700 Million Earnout

And you’ve got to give kudos to the investor, Eric Lefkofsky, who surely picked a winner.  A winner that paid more dividends than Lady GaGa ever will.

That’s creativity, that’s truly something new.

GaGa is just a rehash of what came before.  Elton John’s outfits on hyperspin and music that sounds just like everything else.  The Beatles sounded like nothing else. Imagine trying to break the Beatles today!  You’ve got to add beats, you’ve got to work with Dr. Luke, you’ve got to synthesize your voice…work with will.i.am, he knows how to do it!

And Groupon did not achieve this success, nor this buyout offer, via the mainstream media.  If anything, the mainstream media was last.  Cataloging the Gap Groupon offer success long after the company had achieved traction.  And isn’t it fascinating that Groupon accelerated into the stratosphere so quickly.  It caught fire and then..!

GaGa caught fire that fast.  And that’s one of the upsides of the Internet.  If you’ve got something hot, something that’s got mainstream appeal, you can reach everybody so much faster.  And if you want to credit one person for Lady GaGa’s success, give props to Perez Hilton, he spread the word, he wouldn’t give up.

So anybody with any creativity, anybody who wants to get rich quick, is in tech, not music.  All we get in music are the uneducated wanting to make it on bravura.

But what if those taking chances in tech got traction in music?  What if the rights holders stopped saying no and started saying yes? Then what?

Spotify might become ubiquitous and sell for billions.

But that’s not that bad, the rights holders have an interest in the company.

And if it’s Spotify, suddenly people stop stealing and the RIAA is no longer the enemy and everybody goes music crazy.

You’ve got to unlock the innovation.  Not only on the business side, but in music too.

If one more jerk tells me that radio sells records…  Yes, it does!  But it’s so formulaic and laden with ads that more and more people are tuning out and it’s hard to break something new and different.  Something new and different has to be broken online.

One can argue quite strongly that copyright is holding music back.  That the fat cats who controlled it in the last century don’t want to let go and therefore innovation is stifled.

We’re never going back to the past, can we at least move into the future?

And I don’t want no pussyfooting.  You can’t succeed in tech by playing it safe, by taking baby steps.  If you could, Sony and Microsoft would rule digital music.  But they don’t, because they were so worried about rights holders, they forgot about users.  And it’s all about users.

The users used to be excited about music.

Now they’re thrilled with offers on Groupon.

Shopping has become exciting!

Music is boring.

And don’t get me started on concerts…