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Hitting Rethink

Music industry bright lights gathered in Boston in April to discuss new directions and trends in the business of music.

 
  David Hyman, the CEO and founder of MOG music service (center) talks with Rethink Music participants after a panel discussion on access and music "in the cloud."
  Photos by Phil Farnsworth

In April, Boston's Hynes Convention Center played host to the inaugural "Rethink Music: Creativity, Commerce, and Policy in the 21st Century Conference." Berklee and MIDEM presented the three-day event in collaboration with Harvard University's Berkman Center for Internet and Society and Harvard Business School. The conference engaged an impressive roster of creators, industry experts, policy makers, and academics who seek a course correction for the music industry.

Speaker Lyor Cohen - the onetime tour manager for Run-DMC and the Beastie Boys and current North American chair and CEO of Recorded Music for Warner Music Group - was optimistic about the industry. He said he wakes up every morning wondering whether it's the day he'll discover a piece of music so exciting that it will take him "on a magic carpet ride."

Revitalization

If the music business has lost sight of such transcendence recently given the changes that have dominated the industry, the "Rethink Music" conference generated proposals on how to get it back.

Over the course of daily interviews, presentations, and panel discussions, more than 100 industry participants offered imaginative new visions for the music business. Ideas ranged from the coming wave of customized sound to exploration of social media to the "direct to fan" business model.

 
From the left: Ben Folds, Amanda Palmer, Damian Kulash, and Neil Gaiman wrote six songs in single session that was webcasted live.  

The first panel discussion - a survey of the technological advances that have transformed the creation and distribution of music - helped set the tone of the conference. And, Berklee President Roger Brown kicked off the three-day event, saying he hoped that participants would refrain from the usual hand-wringing about the "demise" of the business and focus on solutions for music and musicians.

During the "Financing Creativity" panel, venture capitalist Peter Gotcher described the emerging direct-to-fan model, in which recording artists let listeners sample music free of charge before convincing fans to become minority owners in an artist's career. The music industry is digging out of a self-made rut, he said: the "one-size-fits-all product, the $15 plastic disc."

Gotcher, a Berklee trustee who was instrumental in Pro Tools' development and the direct-to-fan platform Topspin, argued that the "freemium" model represents "the cheapest customer acquisition cost ever," given how inexpensively musicians can now record themselves and deliver their music via computers. The idea is "to get as many people in the funnel as possible," he said. "Then you manage the conversion process. And suddenly, the $10 fan becomes the $100 fan."

 
  From the left: Assistant Professor Allen Bargfrede, NuevoStage cofounder Maxwell Wessel, and President Roger Brown. Wessel's company won the $50,000 prize for their innovative business model.
  Walking Away a Winner

by Margot Edwards

As part of Rethink Music, Berklee College and the Harvard Business School ran a music industry business model competition seeking proposals for businesses that provide novel ways to stimulate and monetize creativity in the music industry. After receiving hundreds of entries, the judges narrowed the field to three finalists who presented their plans on April 27. As the final event of the conference, NuevoStage was named the winner of the competition.

Boston-based NuevoStage was cofounded by Harvard MBA candidate Maxwell Wessel and Dartmouth College graduate Chris Allen and was awarded a $50,000 cash prize from Berklee. The company will also receive $10,000 in in-kind legal services through a donation by Duane Morris LLP.

NuevoStage enables artists and fans to work together to book venues on nights when these facilities would otherwise be empty. By proving there is demand for a performance by a particular artist through advance ticket sales on its website, NuevoStage can open stage space that otherwise would not have been profitable. NuevoStage's mission is to help connect venues, artists, and fans in hopes of putting more musicians on stage, bringing more fans to venues, and providing more live-music experiences.

"More than the check, the award from the music industry and Berklee especially will improve our chances of making a huge impact as we go out and market our business," said cofounder Wessel. "Our company is made up of tech heads and MBAs. The award is like a stamp of approval and will help us establish our credibility with club owners and others in the industry."

Eliot Hunt, a Berklee alumnus who founded BigLife Labs Inc. to facilitate the online collaboration of music performances, was the first runner-up and received a $5,000 prize. Ian Kwon, creator of Fanatic.fm, an album-publishing platform connecting bands with brand sponsorships, was a finalist in the competition.

The proposals were evaluated using three criteria: value creation, innovation, and viability. A panel of venture capitalists, faculty members from Harvard Business School and Berklee, and industry executives reviewed the live presentations to determine the winner.

"In the initial phase of judging, we reviewed nearly 200 submissions," says Allen Bargfrede, the executive director of Berklee's Rethink Music Initiative and a Berklee Music Business/Mannagement Department assistant professor. "It was very difficult to narrow them down to a single winner. Many of the proposals showed real promise, but NuevoStage did the best job of solving one of the biggest problems of being a developing artist: booking live performances. And they communicated their product very effectively."

Margot Edwards is a publicist in Berklee's office of media relations.

Discussing on - demand music - or subscription services that offer subscribers unlimited access to vast libraries of music "in the cloud" - Jon Vanhala, an executive at Island Def Jam Digital Development, seconded the notion. He characterized the industry mindset of "How do we compete with free?" as "the wrong question" to ask. Clearly, consumers will continue to access free music, but many panelists agreed that the challenge is how to build a superior experience, with convenience features that persuade a user to subscribe to a service.

In one of several demonstrations, RootMusic's founder described his company's product, which helps recording artists create an effective presence on Facebook. In another presentation, Alex White - the cofounder of Next Big Sound, an Internet analytics company that recently helped Billboard create its "Social 50" chart - explained his vision for identifying success in social media. "Data has already transformed the worlds of finance and sports," White explained. "We believe the music industry is next."

More Than a Business

But the conference wasn't all number crunching. Keynote speaker Tod Machover of MIT's Media Lab showed footage of the lab's latest developments, such as the "hyperinstruments" and computer programs that allow musical novices to create full orchestral scores intuitively. Machover said he envisions personalized music as the future of the industry, with implications for mental and physical well-being. Machover and his colleagues envision what he called the "composer-physician hybrid."

In the highest-profile component of the conference, an ad hoc band of musicians pledged to lock themselves in a recording studio together and create eight new songs in eight hours during a live webcast. After staying until 4:00 in the morning and producing six songs on subjects from origami to suicidal squirrels, Amanda Palmer, Ben Folds, and OK Go's Damian Kulash took the stage later that day to discuss the experience.

Folds likened the "eight in eight" challenge to his first experience with Myspace, when the record business was still leery of artists interacting directly with their fans. "You were always told what wouldn't work," he said. The rapid changes in the industry brought about by the Internet have been "liberating."

Author Neil Gaiman (Palmer's husband), took part in the session as the lead lyricist. "We like the way it demythologized the process" of songwriting, Gaiman said. When the group recalled an Internet post that belittled the project before they'd even gotten started, Gaiman joked that the jab "compressed the process" of record reviewing. "Brilliant!" he said with a laugh.

The artists released the six-song album titled Nighty Night the next day. Within a week it had generated 5,319 downloads. The group donated the proceeds, $21,403, to the Berklee City Music Program.

During his Q&A, Cohen stressed that the only way for major labels to remain relevant is to create what he called "buoyancy," or "flexibility." "We have no natural barrier of entry anymore," Cohen said. Anyone can now record his or her own music and make it available online. If the major-label music industry is to survive, it must streamline - fewer artists, fewer releases - and focus on the development of the acts it retains, he opined.

It's misleading to continue to use CD sales as the sole measure of the industry's health, he continued. The overinflated pricing standard of the CD's heyday made everyone in the business "sleepy." For Cohen, the challenge now is to help artists develop their product: the music and their image.

It's still a vibrant field, Cohen insisted: "I believe we're in the magic-capturing business." The participants at the "Rethink Music" conference proved they are committed to building better butterfly nets.