SXSW: Evolving Business Models In the Post-Napster Age

March 19

During a Friday panel, several entertainment lawyers discussed evolving business models in the music industry since the advent of the Napster revolution.

Some of the discussion centered on the difference between indie- and major-label models. Doug Mark, a lawyer with Mark Music Media and Law, said the economics of independent record labels are based on break-even points and artist recoup points. “The major labels really had to adjust to the new economy,” he said.

If an independent label sells 50,000 to 100,000 records, it’s a success –but, for the majors, that threshold would be considered a failure, according to Mark. “This new world is working greatly for independent artists in my view,” he said.

Bob Donnelly, an attorney with Lommen Abdo, said the music business was the “poor step-sister” to books and film, until the arrival of CD technology. Donnelly also noted at one point that digital sales flattened last year. “It scared the bejesus out of all of us,” he said.

March 18

There are myriad ways for musicans to get screwed by the music business, and Martin Atkins of Invisible Records rattled those ways off with hilarity during a presentation Thursday afternoon.

Misuse of technology, shady business models and living in the wrong town are potential threats to artists, Atkins said.

Atkins’s overarching message was to wage war against cliché and change the context of music presentation. In the age of Internet, send a postcard, he said. If you play country, move to Dublin, not Nashville.

According to Atkins, many artists fall prey to the trap of the “bogus buy-on,” where bands pay money to share a bill with a big act, when, in fact, they’re getting taken for a ride.

“Are you buying the slot right before Motorhead, or two days before Motorhead?” he asked.

Atkins also warned againt a nauseous enterprise called myspacerevo, where artists can actually pay money to have their “listen count” inflated on their MySpace homepage. The practice might get a band gigs, according to Atkins, but it doesn’t translate into fans. “There are no shortcuts,” he said.

March 17

Panel discussions for SXSW kicked off Wednesday, featuring a host of cutting-edge topics that included social networking for artists and the power of direct-to-fan marketing.

During one panel discussion, a Facebook employee offered tips to musicians on leveraging the site’s capabilities. “If you understand the Facebook environment as a user, use those same tools as an artist,” said Rachel DiSabatino, the site’s director of experiential marketing. “Think like a superfan.”

Recently, Facebook has emerged as a major marketing tool for musicians, with artists currently making up ten percent of the site’s three million active pages, DiSabatino said.

The site’s popularity among musicians is a partly a result of the fact that artist updates pull into a “fan”’s news feed, in the same way a “friend” update does, according to DiSabatino.

At another panel, a Nashville businessman said many artists fail to appreciate the importance of marketing to fans. “You should care for that person…almost the way you care for your ‘64 Martin,” Mark Montgomery, entrepreneur-in-residence at Claritas Capital, a private equity firm, said. “It is your livelihood as much as the guitar is your livelihood.”

Montgomery said he considers e-mail the “holy grail” of direct-to-fan marketing.

Patrick Faucher, CEO of Nimbit Inc., a direct-to-fan sales and marketing firm, called e-mail a “targeted message,” adding that it is the most important tool in a musician’s marketing arsenal.

Faucher said musicians also need to harness the power of their core fans. “They want to evangelize for you,” he said.

March 16

“There is no such joy in the tavern as upon the road thereto,” Cormac McCarthy once wrote. And while we’re enjoying the road trip to Austin a great deal, we’re hoping for more fireworks upon arrival. It’s been a long haul so far. We pulled out of Nashville at 6 a.m. in the Xterra, a fine set of wheels that is hell on gas but has the heart of a lion.

In Memphis, we stopped at the Briggs house, where we dined on a smorgasboard of scrambled eggs, country ham, and buttermilk biscuits, topped off with a plate of strawberries and confection sugar.

Arkansas, God bless it, has not been as kind. The state of Clinton, Cash and Joey Lauren Adams has offered little more than loblolly pines and Charlet cows. No wonder Levon Helm got out.

The staff, somewhere in Texas.

Outside of Arkadelphia we decided to “eat fresh” and grabbed Subway for lunch. The experience left us wondering what happened to Jared, the once-mighty poster boy for the famous sandwich chain. Had Jared gone off the cold cut combos –and college lecture circuit– and succumbed to his former ways? After tweeting the question to our followers, we were informed that Quiznos made Jared a better offer and offered him prime rib to boot. Who can blame the boy?

In Austin, we plan to freshen up at America’s Best Value Inn, where we’re registered under the name Bebe Rebozo. Be sure to stop in for some pickin’ and a chat if you’re in the neighborhood. After that we’ll hit the town for a night of the devil’s music. Shows by Turbo Fruits and Thee Oh Sees could be in the offing…

March 15

The ides of March are here, and with it the whirlwind that is South By Southwest.

Each year music junkies from all over the country descend on Austin for the movable feast of music, panels and technology that has defined the festival for more than a quarter century. We plan to be in the thick of it, and we couldn’t be more pumped.

For weeks the American Songwriter office has bubbled with enthusiasm about the trip. The winter has been a long one, for sure, and it’s high time to overdose on live music, barbecue and whatever else the week might offer.

We’ll provide daily blog coverage and photos of artist’s showcases and conference panels, not to mention the bedlam we’re sure to find. We’ll also separate the wheat from the chaff, and give you the skinny on the best of the 2000-odd bands that are taking the stage this week.

In keeping with the indie spirit of SXSW, American Songwriter will be making the (14-hour) trek this year by car. The oil has been changed, the tires rotated, and the Red Bulls purchased. AAA, please keep your lines open.

So stay tuned for what promises to be a week of great music and fun.