Freeconomics took another step into the mainstream this week, as Multiplatinum-selling pop group McFly announced they would be giving away their new CD with The Mail On Sunday on July 20th.

Now, in terms of brands that combination is enough to make me vomit (I hate McFly and I hate the Daily Mail/Mail on Sunday’s small-minded right-wing bigotry), but putting my personal hatred aside, it’s got to be said that it’s another big step forward for the mainstream adoption of new business models.

Taking a (probably well-deserved) shot at their former record company, Universal, McFly said that “Setting up our own label allows us to rip up the rulebook and find new ways of reaching an audience.”

Adapting a freemium model most famously championed by Nine Inch Nails, the band are giving away the basic CD to an estimated 3 million newspaper customers (for which the newspaper will obviously pay McFly a hefty lump sum), then selling a deluxe version of the album a month later as a CD, featuring four extra new songs, a bonus DVD and a 32-page booklet.

Obviously the record companies hate this (just like they hated the same newspaper’s free giveaway of Prince’s last album).

The BBC reports Music consultant and former Sony executive Neil Cartwright saying “The record industry invests in new artists, and if that money disappears you’re going to find it a lot more difficult if you’re a young band to find support. That really is the danger the industry faces.”

Well, yes, the record industry does face disaster if it refuses to engage with new business models (other than suing music fans), but musicians—both new and established—can easily continue to make money, and music fans can continue to enjoy new music.

It’s just the middle men who won’t be taking a big fat cut any longer (unless they start engaging with the internet and new business models in a positive way rather than ranting against them, and even turning against their biggest promotional tool – music radio).

Anyway, that’s far more than I ever wanted to write about McFly & The Mail On Sunday.

I was chatting to a good friend of mine yesterday about business strategies for her music.  She’s not planning on chart-topping super-stardom, she just wants to have a plan for getting her music out there and hopefully making some money on it.

So, I thought I’d put together my ideas for a good start-up web strategy for a musician or band.

1. Create a website.

This is about getting your web presence set up.  For your own website I’d recommend getting some cheap (but not free) hosting space with your own domain name.  Hosting space will cost you less than £50 / $100, and a domain name is frequently thrown in for free in your first year of hosting.

You’ll need web space with PHP and MySQL because you’re going to need to install WordPress—the same blog software that runs this site—along with a couple of WordPress plugins created by Illinois developer Dan Coulter.

Dan has two “must have” WordPress plugins for musicians:

• The Discography plugin, which lets you upload your MP3s, publish a list of albums and auto-generate a WordPress page for each song, so that fans can comment, save links to your songs and share them with friends, and
• The Gigs Calendar plugin, which lets bands and musicians manage and display a calendar of their gigs within WordPress, even managing venue data complete with mapping and ticket links.

The normal “blog” section of your blog should be regularly updated to keep your fanbase up to date on forthcoming gigs, progress on new tracks, inside info on the writing/recording etc.

Some sort of email newsletter plugin is also required.  I don’t have any recommendations for a particular plugin here – just one recommendation for strategy: don’t spam anyone.  The only people you want to receive your email newsletter are the people who want to receive your email newsletter.

When you’ve got all this set up (it’s about a 1 hour job for your neighbourhood geek) then you need to get a decent theme for your site – there are plenty of free themes on the WordPress Theme Viewer or you can get one designed specially for you by a decent web designer.

You’re now ready to upload all your MP3s and make them available for free on your website – you’re not going to make any money selling compressed digital files so set them free.  To quote Tim O’Reilly: “Obscurity is a far greater threat to authors and creative artists than piracy“.

2. Create associated social network profiles.

The next stage is to create a MySpace band profile page, a Last.fm profile…  There are other good social networks for music – I hesitate to name them here because in 6 months my list will be out of date.  Search them out and get on them.

Andrew Dubber has some very good suggestions for what to do on your MySpace page, as has Wired magazine.

Your aim (at this stage, anyway – perhaps always) is not to be able to afford a guitar-shaped swimming pool, but to get 1000 True Fans. Or perhaps it’s 500 or 5000 true fans – whichever figure is correct, the point is that you’re looking at an achieveable target, not a dream of superstardom.

3. Keep making music & playing gigs.

No matter how cool your website, how interactive your blog, or how many friends you have on MySpace, you need to keep creating music and making it available as free MP3 files on your site.

Keep playing gigs.  You could try giving away CDs at gigs (make sure your website address is clearly mentioned on the CD or case!) – I wrote about this strategy back in February explaining the rationale behind it.

4. Your first pay-for product.

Now, apart from getting paid to play gigs—and let’s face it, the money you get for paying gigs at this stage barely covers your gig overheads—you’re not getting any money from your music yet.

I think that a good starting strategy is to put together a good CD.  Spend time and money on the packaging (I love card-stock digipacks – they’re so much more appealing as objects than jewel cases).

Seek out local artists who might be prepared to create artwork for your CD.  Seek out graphic designers to put the artwork together with the text.  You might think you can do these things yourself, but the work of a good artist and a good graphic designer makes the difference between something that looks OK and something that looks great.

Small Limited Editions are almost a necessity (after all, you probably can’t afford huge print runs) so make a feature of it.  Hand-number them as limited editions, make the packaging really, really attractive, and sign them all to make them special.

5. Make more music and play more gigs.

You can’t sit back and just wait for your CD to sell.  You need to get out there, make more music, play more gigs, get on the latest social networks and music sites…

Don’t wait for your CD to sell out before you make the next one – otherwise it never will. The more CDs you make, the more opportunities you have to sell both your frontlist (your new CD) and backlist (your previous CDs).

In every industry I’ve worked in, people have been obsessively concerned about underpricing their products.

Underpricing, they say, devalues the products (because, as Chris Anderson pointed out recently, they make the mistake that “the only way to measure value is with money”).

This “underpricing=bad” argument might have some mileage for products made of atoms, but when your products are made of ones and zeroes it becomes obsolete. That’s why it’s a nonsense to charge the same price for your ebook as you charge for the paperback (or, even worse, the hardback).

Of course, the ultimate underpricing is to make something free. Making something free doesn’t devalue it. I find a lot of value in Google, Flickr, Slashdot, numerous other websites and blogs, the Kubuntu installation on my computer, Mozilla Firefox, the WordPress software this blog runs on, PHP5 & MySQL, the NHS, Channel 4, free-entry to the collections at the Tate Modern (where I can gaze, without paying, at the Bacons, Picassos, Matisses…), even the free copy of the Metro newspaper I read on the bus every morning on the way to work. I value these things.

Telling people that you believe some things should be free can generate some aggressive criticism (as you’ll know if you’ve ever read the comments on, for example, Chris Anderson’s Long Tail blog). You can feel like you’re being accused of being a communist/hippy idealist with no idea about business models in the real world. I’m sure that those naïve hippy idealists at Google—who are making a killing with their business model in the real world—would disagree.

Why is it that so many people who see themselves as “traditional hard-nosed business” types are completely clueless when it comes to the internet, especially the more recent trends in social networking?

Because they’re desperately trying to impose yesterday’s business models on today’s business. Umair Haque points to the twin obsessions of “product” and “monetization”:

When you try and “monetize your users”, you accept the almost obscene assumption that people are meant to be pimped out, sold to the highest bidder, resources to be slashed, burned, and exploited.

Umair is certainly not against businesses making money. In fact he highlights the fact that many businesses’ attempts to make money on the internet can’t make any sustainable income (because they are so clumsily contemptuous of their customers in the pursuit of profit).

Actually he summarises his argument most succinctly while replying to a comment on that same post:

as for figuring out how to capture value – the point of the principle is that when we figure out how to capture value, we must do it in a way that doesn’t destroy any value we create.

How long would Google remain the search engine of choice by such a huge margin if it sold out its users and “monetised” its clean, clear, front page (which must be the primest piece of real estate on the net) by cluttering it with ads?

Meanwhile earlier this week Trent Reznor just grossed $1.6 million in the first week of sales of Nine Inch Nail’s new album. My friend Barry examines the pricing policy in more detail, but the pertinent point here is that Reznor gave away a 9-track download of the new release for free.

$1.6 million says that his fans didn’t think that the free tracks devalued his music…

The 2006 blog post Five mistakes you’re probably making with your MySpace page (on Andrew Dubber’s blog New Music Strategies) applies equally to visual artists as it does to musicians.

The five mistakes (expanded on in much better detail in the blog post itself) are:

1. Using MySpace as your website
2. Using MySpace as your email
3. Having an impressive background image
4. Embedding lots of media
5. Writing lots of text

All of these points are absolutely correct. MySpace’s “My Pics” should not be your gallery. By all means, put loads of examples of your work in there (if they comply with MySpace’s image content rules) but don’t direct people there instead of to your own site.

Andrew Dubber reminds us:

Remember: MySpace is a tool. It’s one of many. It’s not your only shot at engaging with your audience or prospective market. It’s an important one though, and it’s one that it’s very easy to make mistakes with. Use it well.

MySpace, like any social networking site, should just be one of many outposts of your main website. In no way should it be your website (and nor should Flickr, deviantART, Artbreak, or any other social website).

1. Start with a website

OK, here’s the easy-to-follow three-point guide:

1. If you are a competent web developer then create your own site.
2. If you have a friend who is a competent web developer then ask them to set you up free blog software (e.g. WordPress) on a web-host with your own domain name in return for a few free beers. Don’t ask them to set you up a non-blog site because otherwise you’ll have to keep harassing them to update it – a blog allows you to take control and regularly update your site without needing to be a web developer.
3. If you don’t know any web developers who can help you, then sign up for a blog hosted on a free blogging service (e.g. Blogger or WordPress – personally I recommend WordPress).

The Artist’s Web Wiki gives a good overview of what content to create, but I think it makes a strategic error when it says “Resist the temptation to display every piece you’ve ever created. Show off your best!”. I think this is totally wrong – it’s viewing the web in the same way as the limited space on a gallery wall (which it certainly is not).

Only displaying a small selection of work presumes a scarcity of space – and space on the web is anything but scarce (digital storage and bandwidth are abundant and their cost is increasingly tending towards zero). The only scarcity is people’s attention.

I would suggest putting every single piece of artwork/music/writing you have on your website – every finished piece, work-in-progress and preliminary sketch/demo/note. This strategy is based on the economic model explained by Chris Anderson in his book The Long Tail:

The theory of the Long Tail can be boiled down to this: Our culture and economy are increasingly shifting away from a focus on a relatively small number of hits (mainstream products and markets) at the head of the demand curve, and moving toward a huge number of niches in the tail.

In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly targeted goods and services can be as economically attractive as mainstream fare.

With the unlimited space available on the web, you don’t need to restrict yourself to a small edited selection of pieces which (you desperately hope) will accurately capture the entire range of your creative œuvre. You can put your entire œuvre on your website and let Google et al. bring in the niche customers who are interested in what—to you—is a half-forgotten piece of work, but to the searcher is the very thing they want to see – and, perhaps, to buy.

The important thing with this strategy, however, is to make sure that it’s all organised in an easily-findable way. Again, Anderson sums this up succinctly in his book:

1. Make everything available.
2. Help me find it.

When you move from displaying a carefully curated/edited selection to making available the entirety of your life’s work (so far) then you need to think about navigation, taxonomies, hierarchies, folksonomies, inter-linking, cross-references, personalisation, search, multiple-categorisation…

2. Set up outposts on Social Networking websites

Setting up shop on a variety of social networking sites enables you to take your work out to your potential audience.

MySpace, Facebook, DeviantArt (for visual artists, writers and film-makers), YouTube (for film-makers), Flickr (for photographers and visual artists)… I won’t list them all here because Mashable has a list of 350+ social networking sites with details of their niches and specialities.

You can’t just create an account and leave it, though—the very nature of social networking sites means that they work best if you work at them—you need to network with the communities that use them.

And by that I don’t mean send out thousands of spam “friend” requests – you need to actively engage with the community in the manner that the network in question encourages and respects.

This is a community you’re trying to be part of, not a crowd of passing anonymous shoppers to blindly hand-out flyers to.

3. Set up your communications

This means an email newsletter of some sort, an RSS feed (if you’ve gone for a blog then this will come as part of the blogging software), and an easy way for people to contact you (anything from your email address or a contact form to a discussion forum or the comments section under a blog post – the more ways the better).

In part two of this article I’ll be looking at how to use your website to help your art.

There’s been a lot of analysis about Radiohead’s “pay what you think it’s worth” new album digital release at the tail end of last year.

Much of the comment was positive – which I’m generally in agreement with because I think Radiohead made a good move.

Most of the handful of detractors (mainly people who had a financial interest in propping up the dying business model of the music industry, it has to be said) made the argument that while this was all very good for Radiohead because they had already benefited from the mass-marketing machine of the music industry – in other words, the buzz required to generate the critical mass of fans prepared to gamble money on a collection of mp3 files (when they could pay nothing if they wanted) could only have been possible because the music industry had already done all the necessary work over the past few years.

This argument is based on a number of false assumptions.

Firstly, it presumes that a “critical mass”of fans is a requisite for this business model. Well, only if you’re still stuck in the world of blockbuster hits being the only indicator of “success”. The music industry requires blockbusters because that’s the only way it can get a return on the phenomenal amount of cash it burns on marketing, because it needs a blockbuster hit… it’s a vicious circle. Of course, if you stop concentrating on trying to manufacture a blockbuster hit and look instead at long tail economics then all this becomes obsolete.

Secondly, the music industry is fixated on marketing product to consumers. What Radiohead did was to offer music to fans and invite them to contribute. That’s not just a pedantic change in terminology, it a fundamental paradigm shift (although not a brand new one – many small bands have been doing this for decades. Buskers rely on it.)

So, after all the focus on Radiohead, let’s look at a small unsigned band who are creating their own business model:

Left Hand Red are a Brighton-based indie-rock quartet (whose bassist happens to be my friend and web-design colleague Barry Bloye) who are trying a number of strategies.

They’re using the obvious tactics – their own website, a MySpace page, discussion forum, permission-based email mailing list, and a selection of free MP3s to download – but Left Hand Red don’t want to remain penniless musicians for ever so they’ve put their 3-track CD Voyeur on sale on their site (using Google Checkout, which doesn’t take too large a cut of micropayment-sized transactions) for £1 plus 80p P&P.

But the ingenious part of this strategy is that:

We’ve agreed to charge for the CD to recoup costs, but to give them away at gigs, as anyone who comes to see us deserves something for their time (and hopefully it will encourage people down). No-one’s mentioned downloads, but as they don’t have any overheads, I will sneak them up on the site free of charge.

Looking at this strategy, the essential calculation that Left Hand Red have made is that a person who comes to a gig is worth investing in (the cost of this investment – a free CD). This comes from three realisations:

• A fan is a customer who has invested their time and attention in you, and you should invest in them.
• A fan is worth more than 100 customers.
• A fan participates in your community (whether that community is a discussion forum or the crowd at your gig) and recommends you to their friends.

There are also some immediate financial benefits to this model. Like most small bands, Left Hand Red get paid to play gigs. If they get paid a fraction of door-takings or bar-takings, then encouraging fans to come to gigs by offering them a free CD when they get there gives the band an increased income due to larger crowds. And then they have the opportunity to turn the people in those crowds into participating fans (much easier when they’re already participating by attending a gig!).

Digital piracy doesn’t disrupt this business model – in fact, the “piracy” of their MP3s is good for the band. If digital copies of their new CD are circulating on P2P networks then that increases the chance that people will hear them and come to a gig, and become participating fans.