In our new series Independent Days, Hayato Imanishi of Cyclamen and Withyouathome, who lives as a completely independent full-time musician, will talk us through running a musical endeavour as a business
All of us musicians dream of making a living with music, yet so few of us actually manage to do so. More often than not, I think that is because we severely lack understanding of the relationship between the music we make and the money around it.
In this series of articles, I’ll try to explain how we may be able to get better understanding of the relationship between money and music, as a completely independent musician working full time on music.
1. Know the basic three attributes of a business
I have never studied business or worked as management in a company, but here’s the very basic of a business anyone can derive from our daily life:
Business has three important parts: Production, Advertising and Retail – You lack any one of these and your business won’t work.
This is where you make a product – the object you will be exchanging with the money with the consumer. Without a product there is nothing to sell, hence we make no money.
This is where you make as much noise as possible to tell consumers that your product is worth their money. Without advertising no-one will know your product is available, hence no sales.
This is where you exchange your product with consumer’s money. Without retail, no-one will be able to buy your product, even if they are aware of it.
These three things are something a business MUST have in order to generate any sales. The better each attribute is, the better the sales will be, however we must remember no matter how good one of these three attribute is, if any one of them lacks totally we’ll have no sales.
Now let’s put this in music context:
Production (In music context):
This would be CDs, t-shirts, concert tickets and digital downloads for the most bands. Some bands may have more unique products they can offer (I’ve seen an all-girls band sell instant camera photo with the band members for $5 a picture. Some bands sell recordings of the live show that the audience just witnessed at the end of the show with a USB drive, or download codes – Creativity is the limit!).
Advertising (In music context):
This would be Facebook posts, blog and webzine reviews/interviews (like on The Monolith!), magazine coverage, gig flyers, music videos, word of mouth…pretty much anything that makes consumers remember your band name. (Again, creativity is the limit – Look around you while you are out walking and you’ll see many creative ways of advertising!)
Retail (In music context):
This would be online music stores (iTunes, Bandcamp etc.), merch tables at the shows, your Facebook account (where your friends can directly meet you and give you money for the products), at the university fair…Where the money actually moves.
Up till now is pretty obvious, we know we need all that, but what I wanted to make sure you know is WHY we need them, and which three parts of a business they belong to.
2. What makes a good business attribute
Now that we know what attributes are needed in business, let’s talk about how to make each attribute good.
We can actually summarise this pretty simple. They all need to be: “Demanded“, ”Unique“, ”Memorable” and ”Simple“. Priority of these depends on what part of business it is, but they are the four points we must always ask ourselves when you think of music as a business. I’m going to focus on “Product” here to demonstrate, but this applies to “Advertising” and “Retail” too.
2.1 Being in demand
This is probably the most important factor out of 5 for products. Even if a product doesn’t satisfy other factors, if there is enough demand it can give you enough sales. The good measurement of the demand of a product is what I call Domestic Penetration Rate. Probably this isn’t the official term I should be using, but this is theprobability of finding a specific product in a selected area.
Here’s example: think of your house, and the 99 closest houses from where you live. How many houses would have a light bulb in their house? – Most likely 100. Most of them at least have 5 or more. This gives light bulbs a Domestic Penetration Rate of roughly 500%. It’s a product highly in demand.
On the other hand, think about a vinyl player. Out of 100 houses, how many houses would have these? In case of Thailand (where I live) it would be 0 in most places. This gives near-zero domestic penetration rate for a vinyl player. This makes that in order to earn the same profit of selling light bulb with a vinyl player, you need to set the profit margin 500 times (or more) higher than that of a light bulb.
Of course, If there is no limit in population, this may not be a problem – even if only one vinyl player sells every 1000 houses, you just need to set the profit margin to 1000 times more of a light bulb. One vinyl player sale will be worth 1000 light bulbs sales – but here’s the problem: Thailand has the population of 66 million. This means that even if the entire population is aware of your product (this is impossible), with no competition (also highly likely), the maximum sales you could achieve is 66000. On top of that, considering the product life time of a vinyl player being so much longer compare to a light bulb (ignoring the LED light bulbs), it’s highly unlikely that selling vinyl players would be successful in Thailand.
Thinking in music terms, digital downloads have a pretty high domestic penetration rate nowadays, and for physical products, t-shirts and CDs are pretty high (depending on genre though). Vinyls are gaining their share slowly but surely as a collectibles (I have 3 vinyls and no vinyl player). Band socks and underwear, I’d imagine, have pretty low domestic penetration rate (I can’t think of any friends who have one).
Whenever you produce a new product, you must ask how demanded your product is, especially in the community of your fan base.
*There ARE such things that bring money even though it’s not in demand, such as tax and penalties – but since the music industry is an entertainment industry, the consumer always chooses to be entertained, rather than be forced to, hence every product bands make needs to be in demand.
This should be pretty obvious, but if your product is unique, that means there is nowhere else you can get the same thing. The more unique the product is, more percentage of the sales you can get. There is one point we mustn’t forget though: it must be in demand also. No matter how unique it is, if there is no demand, there will be no sales.
It’s pretty simple: if your consumer forgets about your product, they won’t buy it, so your product must stick to consumers’ brains somewhat. In another word, your product must be able to be purchased before it goes out of consumers’ mind. This means two things: long memory duration and short access time to the purchase.
You can provide long memory duration by providing unique advertising or strong association to certain things (e.g. limited edition sold on Christmas Day). Associating your product to something very memorable often gives you great result. Short access time to purchase is often achieved by pre-orders or crowd funding: If the consumers can instantly pre-order the new album when they see the adverts, there is much more chance for the consumers paying than asking them to remember to buy when the album comes out.
This doesn’t mean album songs need to be simple, or package design need to be simple. By a simple product, I mean that it’s obvious to the consumers what they are getting for the money. Even if you have a great product idea, if the idea is very challenging to grasp or not obvious for them to understand what it is, it’s unlikely that they’ll purchase it. Your product must be pretty clear from the first glance of what consumers will be getting for the money.
These principles apply for advertising and retail too. For instance memorable advertising would mean having particularly memorable theme tune, or entertaining promoting video that will keep the consumers remember of your product. Memorable retail would be a short URL address or good location (e.g. near the entrance to something).
In next article I’m going to break each point above with case study of my own band Cyclamen (shameless “advertising here) to explain how they can be applied in practice in more details.
About the author
I manage and am a part of the bands Cyclamen and Withyouathome, and I’ve been trying to make a living as a full time musician since 2008. Currently I live half my time in Tokyo and other half in Bangkok, with live bands in both countries. Both bands are self-managed with no association to any labels or management companies.