SF Music Tech October 1st 2013

Music, Tech & Money

Larry Marcus: I like investing in music startups because no-one else does, but I avoid where you have to do label licensing

Larry Marcus: I think people want to pay artists, but have had less access to do so.

Larry Marcus: BandPage is helping to empower bands in a new way, but not by making money form the selling of music

Larry Marcus: The big challenge for the music industry—the content holders—is to generate a friendly environment for innovation

tim chang: Music is historically about an aspirational industry or story. EDM is not selling music but experience, a story

tim chang: If you can sell an experience, or the dream of an experience, you have something

hnada: If you look at what the game industry has become, the top 1% is >50% of yur revenue, the bottom 50%<1%

hnada: unlike games music is still charging the whales and minnows the same for each song, which is why you need experiences

Larry Marcus: the venues own advertising

Larry Marcus: I think there is a business coming in a streamed live show, expanding the live audience online

Katerina: There is potential with a mobile app attached to a live performance, so you can do it without the venue

hnada: If you have a large enough audience, fans out there are willing to give you a lot of money - Kickstarter shows this

Katerina: I'm not sure a bigger artist would take $10,000 to have dinner with them

tim chang: If you spend $10,000 to have dinner with an artist, you're buying a story to tell your friends about

hnada: A chinese startup that lets you throw flowers ($1) or tomatos ($10) at amateur karaoke artists. Artists get 30%

tim chang: Minnows aren't worthless. Without them there, the whales have no-one to show off to.

tim chang: people either have time or money. You can charge money or get them to do something for you with their time

hnada: I got to play soundcheck drums with a band, and have a Bud with them backstage. I was a god to my friends

hnada: I bought this backstage for $50 a head on bandcamp - I'd have paid more. I'm a whale, hit me up.

hnada: We need to work out how to get these platforms to make more money for themselves and for the artists

Larry Marcus: There are 50k-70k angel deals done each year. They are relatively easy to get. Maybe 600 VC GP's exist

Larry Marcus: When you try to get to the series A, there aren't enough VCs; more angels ease this crunch

Larry Marcus: Angelist has made it easier to get funding, but there's lots of danger in those waters. Do it if you really care.

Katerina: Angelist just introduced syndicates, which makes it easier for some apps to raise money faster

tim chang: It's cheaper then ever to launch a company, but more expensive than ever to scale a company

tim chang: be careful of VCs - we will push you off a cliff trying to get to 500M scale business in music

tim chang: music is a great place for a lifestyle business, but VCs can mess it up fast

hnada: I don't think we need more artists, I think we need more managers. many artists don't know how to run a business model

Larry Marcus: Music is as important as sport to kids, band+team, practice, etc. Music as an expense, not a job

Larry Marcus: Free guitar videos on YouTube isn't always the way (hi @soundslice)

tim chang: People want to feel like being a musician - RockBand did that. EDM is another form of this - mixing and producing

Katerina: YouTube has become a huge platform for artists to grow big enough to need a management company like us

hnada: Even though app discovery is horrible, it's still better than music discovery. We can learn from app stores


I think there si lots to learn from other media markets like apps in the music industry

I think you're going to see a lot more data analytics and insights in music

tim chang:

think how much revenue apps get from cross-promotion adverts. Music doesn't even think of this

Larry Marcus:

discovery is poor, search is terrible, playlisting is messy. We need statutory licensing fro on-demand streaming


every time I hear the word licensing I put my hands over my ears and go "la la la"

the Jobs act? you mean the Ponzi scheme act? It's great for companies, tough for investors

Larry Marcus:

There isn't a lot of oversight and knowledge in the crowd funding area. We're going to need that

tim chang:

How are the dynamics different overseas? @hnada: most musicians in china make nothing form recored music


we've learned from China about how artists make money without selling recordings and are bringing that back

Larry Marcus:

everyone should have 20,000 apps on their phone


when you have an artist app you have access to all kinds of info you don't know from iTunes or spotify

tim chang:

most apps for artists have just been glorified websites. What would Uber for artists be like?

we need something other than news, content and ads in that app

Larry Marcus:

to make a Brand great takes a huge amount of effort. When you white label that, it gets very expensive

It's very painful to have bunch of these artist apps. It's not their business doing this right


I have 26 music apps on my phone, none of them are artist apps.

I have 20 top ten bands. I don't want an app for each, but one app to rule them all

remember when every website wanted to give you an email address? that sucked ass. I like my gmail

tim chang:

it's all about properly segmenting and scaling all these different tiers of experience - scarce and price

check out tspring - a t-shirt that si a token to show I supported an artist - everyone wants to tell a story


to monetize an audience, you need to know psychology, economics and merchandising. game co's have econonomists on staff

you need a lot of expertise to make money on these offers. I've seen bands lose money on kickstarter rewards

tim chang:

I think the future of music is in selling STEM tracks - next gen will work this out and charge more

the future of musicianship will be grabbing STEMs on the fly to mix into their own versions

Larry Marcus:

There is so much gear that is going to get replaced by an iPad or a tablet. Except subwoofers. They're still good


think about the NFL - half the audience doesn't pay, but they charge more and more for boxes, on-pitch etc Segmenting

the average american spends 4 hours a week watching sports, 40 hours on music, yet we're 1/6th the size


there are very few celebrity investors who are worth investing with. Align with one who makes sense for you

Larry Marcus:

a broad array of tools is needed for managers. Dealing with tech isn't what you value [@ev's convenience rule?]

a management tool dealing with unsold tickets and filling up shows would be really valuable. Increase shows attended


data is really valuable. There is a real gap for data analytics int he music space, We need visualizations

tim chang:

you should manage your artists like startup, because that's what artists are like now.

you should be able to segment your entire audience like Vegas does- whale/minnow split

the best bands work where there is one dictator, not an equal split so you can just convince one person

Monetizing YouTube

Alex Pham:

YouTube makes adsense $ - what else? Sponsorship; UGC publishing your covers; Subscriptions; merchandise sales

Kevin Grosch:

instead of thinking of a site as just a place to upload random stuff, think about longform content

Jeff Price:

on your own videos when you control the copyright, you can earn ads; on songs there are other rightsholders too

Jack Conte:

a lot of people make a living off youtube videos - a generation of them. Patreon is a way other than clickthrough ads

Patreon lets you say "will you give me $5 every time I make a video?" - instead of CPMs it pays on engagement

A creator with 100,000 subscribers has a football stadium full of people. doesn't pay enough with ads to make a living


when people upload your content without your permission, there is a huge opportunity to make money from that

there's about $300M a year going out of youtube to music rightsholders Isaac Bess: it's even more than that

Jeff Price:

i want you all to make lots of money, but you aren't all hit artists, so you won't

Jack Conte:

I'm not talking about future lady gagas, I'm talking about the emergent middle class of artists you haven't heard of

there are a lot of companies that take advantage of engagement to make artists money


there are bands that make significant money just from the ads on fan-uploaded videos

Alex Pham:

artists are releasing tracks specially for fans to remix and post video from them to YouTube so they get ads

when you're watching the 100 hours of video uploaded to YouTube every minute, what mistakes do you see?

Kevin Grosch:

Use they advice in the Youtube playbook: http://www.youtube.com/yt/playbook/


people aren't always watching the videos on youtube, they're using it as a way to bring audio to their ears.

Jeff Price:

Three is a band called moones that have buttons across their video that shows them more+more drunk as you click

Jack Conte:

I saw someone make a choose your own adventure out of YouTube annotations, with different dance moves conneceted

Jack Conte:

the creator community has been in an uproar about certain things. we miss video responses, for example

Changing subscriptions to be no longer chronological is a problem for creators wanting people to see their newest

YouTube is one of the most incredible platforms for audience building - monetising can come after that.

nothing is like youtube for building audience. If you have 25,000 views at a $2 CPM you can make money other ways

small business creators didn't exist before free publishing and distribution

Jeff Price:

you never know what is going to be a hit, from Zoubi Zoo to Harlem Shake. Tech makes more lottery tickets

Alex Pham:

Does madison Avenue want to have individual conversations? Won't they buy in bulk rather than contact @jackconte?