Music Business 101:The Future of Global Music

Dave KusekCEO Berkleemusic.com

Vice President Berklee College of Music (USA)futureofmusicbook.com

dkusek@berklee.edu

© 2011 David Kusek

The Traditional Music Business

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+Recording

+Writing

+Performing

+Licensing

All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

What kind of Music Business are we going to have in the Future?

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+The label model is no longer dominant.

+CD sales have collapsed.

+Where are the new formats?

+Digital recording revenue is not enough.

+Touring profitably is a challenge.

© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

The Good News:

People love music

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+We just can’t get enough.

+Music consumption is at an all time high.

+More music is being produced each day.

+Illegal music channels are drying up.

+Legal digital channels are expanding.

© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

The Bad News:

Recorded music is no longer the driving force

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+New ways of thinking about music and commerce are required.

+Economic engine of the past 70 years has run out of fuel.

+This is a big change for the entire music ecosystem.

© 2010 David KusekAll courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

A band this big will never happen again.

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© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

How Artists make Money

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+Live performances.

+Distribution of recordings.

+Publishing of songs.

+Selling merchandise.

+Licensing intellectual property.

© 2010 David KusekAll courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

Who Controls the Revenue?

+ Recordings - Master recordings and distribution.

+ Songs - Composition and publishing.

+ Performances - Live and recorded.

+ Merchandise - Branded articles.

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© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

Copyright Law Grants Rights to:

+Reproduce the work.

+Make derivative works based on the original.

+Distribute copies of the work.

+Publicly perform the work.

+Publicly display the work.

+Publicly perform audio recordings by digital transmission.

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© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

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Performance

© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

11Performance

+Clubs and concerts

+Sponsorships

+House parties

+Streaming

+DVDs and digital events

© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

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Challenge:How to make touring less expensive?

© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

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Challenge:How to transfer the energy of live music digitally?

© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

What kind of new digital products and experiences will we create?

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© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

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RecordingInterest in music Production is at an all time high and is reinventing what we call “music.”

© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

Recording and Production

+Create recorded masters.

+License, work for hire or DIY.

+Sampling, remixing and mashups.

+Royalties and advances.

+Production and distribution.

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© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

Distribution

+Physical - CDs, DVDs, memory.

+Digital - Files and streams.

+Downloading kiosks and public access.

+Embedded into products.

+Mobile delivery.

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© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

Mobile Music Apps and Games

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© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

PublishingOwnership and Rights

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© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

Publishing

+Mechanical royalties on recordings.

+Public performance: live, radio, TV, digital transmissions.

+Synchronization – TV, film, games, ads, ringtones.

+Print - sheet music, lyrics.

+Royalties and advances vs DIY.

+Copyright and administration.

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© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

Merchandising21

+Clothing

+USB/digital products

+Posters/art

+Food

+Collectibles

+Stuff

© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

Licensing

+Name and likeness

+Endorsements

+Commercials

+Sponsorships

+Entrepreneurial ventures

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© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

Alternative strategies at work

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© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

24Pomplamoose and the Videosong

All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

New Artist Model 25

+Create a business around yourself.

+Own your masters and publishing.

+Secure sponsors to generate cash.

+Purchase the services you need.

+Connect directly with your fans.

+Use interactive and integrated marketing.

+Create multiple revenue streams.

+Control your career.

© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

26New Artist Model

© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

Top 10 Truths that will Guide the Future of Music

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Music matters more than ever. The record business is not the music business.

Artists are the brands and entertainment is the attraction.

Artists and their managers will shape the future.

Publishing income is crucial for the future.

People discover new music online and from each other.

Digital niche marketing outperforms mass marketing.

Customers demand and get increasing convenience and value.

The pricing model goes out the window.

New models will embrace a more dynamic view of music.

© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

New Areas of Opportunity 28

Direct to Fan BrandingInteractive Marketing Artist Management

Curation/Discovery LicensingAnalysis/Data Live Events

Distribution MerchandiseArtist Networks Artist Services

Streaming EducationDigital Products Soundtracks

Games SponsorshipsMobile Apps Fan Clubs

© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

29Funding Sources

+Advances and royalties

Label or Publisher

+Patronage - fan funding

Kickstarter Artistshare Pledgemusic Slicethepie

© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

Businesses to watch30Apple Pitchfork

Aweditorium RdioBandcamp Red Light

Berklee ReverbnationBig Champagne Rightsflow

CD Baby Root MusicEchonest SongkickFacebook SoundcloudFrontline Spotify

Google ThumbplayMerchluv Ticketfly

Mobile Roadie TopspinMOG Tunecore

Next Big Sound ViinylPandora We7

© 2010 David KusekAll courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

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+Mobile apps

+Interactive video

+digital/hybrid collections

+digital events

+digital episodes

New Digital Products

© 2010 David KusekAll courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

What kind of Future will you build?

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© 2010 David KusekAll courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

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Thank You!Dave Kusek

dkusek@berklee.edu@davekusek

futureofmusicbook.com

© 2010 David Kusek All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2010 David Kusek © 2011 David Kusek

Dave KusekCEO Berkleemusic.com

Vice President Berklee College of Music (USA)futureofmusicbook.com

dkusek@berklee.eduDave Kusek is a digital music executive with a successful track record of starting new music businesses. Kusek is responsible for helping to create the market for digital music. In 1980, he founded the first music software company, Passport Designs, which made it possible for musicians to record and produce their music at home with its award-winning software.

Kusek is a co-developer of the Musical Instrument Digital Interface (MIDI) industry standard that opened up electronic music to millions of people. His efforts, along with others, set the stage for the multi-billion dollar digital music market that exists today.

Kusek is the co-author of The Future of Music: Manifesto for the Digital Music Revolution – a best-selling music business book. Kusek also provides advisory services to the the music and media industries via Digital Cowboys.

Dave Kusek created a hugely successful online music school berkleemusic.com for the prestigious Berklee College of Music in Boston. Berkleemusic has become the world's largest music school teaching over 15,000 students a year globally. Kusek and his team are currently at work developing an online network for professional music makers.

All courses to be available on: www.midem.com/academyMIDEMNET ACADEMY 2011 - Strategy Module© 2011 David Kusek