They say the music business is about who you know, and they’re right.

The deals you make with other people will shape your music and your career, and you can’t make a deal with someone you don’t know.

This series is about how many musicians are moving their small businesses away from a system of copyright exploitation, and back toward the original music model: patronage. When thinking about deals, we’re thinking about fans first.

“Wait, I thought we were talking about networking for business success?”

Our model is based on fans. The deals you make with your fans are the ones that will lead to bigger deals in the music business, because fans = value.

It wasn’t this way in the “moving units” copyright exploitation business model, when artists signed their rights over to far bigger businesses when the value of their music was low. It was a gamble at best, not really a sound or sustainable small business strategy.

Today’s smart musicians are building solid fan bases on their own so they can generate value around their music and be in a more advantageous position to attract a business team, negotiate, and form lasting professional relationships and revenue streams.

So, when we talk about deals, we’re talking about deals with fans, your team, and the businesspeople external to your fans and your team.

Making Deals with Fans

The way you do business with your fans sets the tone for your entire public persona, and your career in general.

Huge bands that herd fans in like cattle, charge enormous ticket fees and generally exploit the people who love the music most… well, we’d like to say they get what’s coming to them. Incredibly, there is very little you can do to alienate a music fan — it’s a testament to the power of music. It’s also why the RIAA and Price think they can get away with suing their own customers.

Suffice to say that once you make a fan, you have most of the power in the relationship. Copyright gives you the right to let fans access your music freely, or to charge them the market value, which for decades has been fixed by a cartel of corporations. You earn money by exploiting the copyright, but in reality you’re also exploiting the fan. It’s not a very ethical solution to musicians making money, but the invention of the recording made it the dominant business model: force fans to pay to play.

We increasingly live in a “play to pay” model, where you need to be heard to make a fan, and making a fan — not moving a unit or collecting a royalty — is what gets you paid. An opportunity to be heard is an opportunity to be paid, not the other way around.

Ask yourself, “What kinds of deals do I want to make with my fans?”

More musicians are discovering that pay-what-you-want and crowdfunding models are the way fans want to deal with bands. Fans want your music, and the point of making music is to share it. Putting a paywall around your song creates what economists call a “deadweight loss“.

Oversimplified, if you charge your fans $1/track to download your music, and that is the only way they can access it, a certain percentage who want it will pay that $1. A certain percentage who want it won’t pay. Whether they can’t afford it or they want to save their money for a show ticket instead of enriching Apple and SONY for serving up a tiny digital file.

In the scenario where fans are forced to pay for access to music because musicians and corporations have a monopoly over it, a deadweight loss is created. In this paradigm, the rightsholders (the labels) try to price music in such a way that everyone who wants it can get it. For those who can’t afford it, would otherwise download it for free, or otherwise won’t pay for it, rightsholders now have ad-supported streaming and internet radio. For those who want to pay the minimum and get the maximum, we have subscription-based, on-demand streaming. And so on.

We have never lived in a world where there was only one way to access music. Free music has always existed because music itself is free. Don’t confuse copyright with music. We use copyright to control access for profit.

The best competitor to free is convenience.

Convenience may sound like a superfluous reason to pay for access to music. Don’t fans buy music because they love the artist and the music? Yes, of course. Fans want to support the artists they love. It’s not just common human decency. Fans know intuitively that without their support, the artists they love will stop making the music they love. Hell, they might stop anyway because bands break up all the time. Better make the most of this moment and put your everything into their music so they can put their everything into it.

It’s a profound relationship, this artist-fan dynamic. Incidentally, this is also why the idea of being angry with fans for freely sharing your music (calling it “stealing”) is about the worst attitude a modern musician can have.

There have always been ways to access music for free, whether it was copying sheet music with a fountain pen or downloading an MP3 from a server in Russia. The exploitation model hinges on making free access inconvenient. But the only way to make free access impossible is to never release the song in the first place. The next best thing is to make free access extremely inconvenient, and the recording industry used its legal and financial might to control the law and market around music for a century.

Napster changed all that. Because the industry failed to anticipate the impact made by broadband, MP3s, P2P technology and the popularization of the PC, it became more convenient to freely access music than to go into a store and pay for it. Way more convenient.

After suing fans and shutting down innovative tech companies instead of partnering with them, the industry was still hemorrhaging. So, the labels got together and licensed their music to streaming platforms to stop the bleeding. This move was ironic because it was basically monetizing what Napster did over a decade ago.

Why hadn’t they done it a decade ago? They wanted total market control, and it took a decade to come to grips with the technology — a decade during which the consumer electronics industry engulfed the music business not unlike radio engulfing the recording business in the early 20th century.

They also needed to make free access to music utterly inconvenient through litigation, legislation, DRM, malware, file spoofing… every dirty trick in the book. This is how you treat your fans?

The Big 5 labels became the Big 4 and then the Big 3. Three corporations monopolizing the right to monopolize the rights to music.

These three labels now control roughly 2/3 of the rights to the word’s music. They mandate the default business model for all musicians: exploitation. Each segment of the music industry is similarly controlled by a handful of practical monopolies, including radio, TV, royalty collection and ticket sales, to name a few. In some cases, such as SirusXM, there is a literal, government-backed monopoly (and some of the worst fan exploitation you’ve seen).

What does all this have to do with making deals with fans?

Understand that you are doing business on other people’s terms when you make access to your music inconvenient.

You always hear musicians saying, “If you want to make your music available free, fine. But musicians should have the choice whether they make their music available free or not.”

That’s our point. For the first time, musicians have a choice.

Our advice: Deal with fans differently. Don’t exploit them, and don’t make access to your music inconvenient for them. This is what we mean when we say the deal you make with fans sets the tone for all the other deals you make.

In a world where fans were demanding CDs, we would never suggest giving free access to your music. That’s not today’s world. Today, fans are demanding free access to music. Even the handful of corporations that control the music business have realized this, and put their full support behind streaming. They regained market control by making ad-supported or nearly-free access to music more convenient than non-ad-supported, absolutely free access. They took care of the deadweight loss.

“Free access” does not mean “no revenue.” The most common question we hear day in and day out is, “How are musicians supposed to make money when fans can get it for free?”

The answer is, “They have always been able to get it for free. The only thing that changed is the convenience in doing so. The answer is not to make what the fan wants more inconvenient. The answer is to embrace what the fan wants, and pursue other opportunities for value like crowdfunding, direct fan interaction, tipping, licensing, sponsorship.”

The new ways of making money require a bit of technical savvy, but in what line of work is that not true these days? When industries change, when business models evolve, those who do business should be expected to adapt, not to use their financial and legal might to protect an anachronistic and unethical model of exploitation.

You can be part of the change if you embrace this move from exploitation to patronage. And that starts with the deal you make with your fans.

Dealing with Fans

In addition to the grand “deal” you make with fans in regards to how you’re going to share your music with them, you also have to deal with them individually. The live show is the place where this happens most powerfully, although social media is where this happens most regularly. Developing relationships with fans in these two venues should be a cornerstone of your overall strategy.

Being active and engaging on social networks is massively important. We won’t get deep into social media strategy right now — it’s a big topic in and of itself — but you should at least have it on your radar. Older musicians who haven’t aggregated their fan base under the tent of Facebook, Twitter, or another social platform need to start Googling “social media of musicians” right now. Digital native musicians will have a more natural time relating to their fans.

The note I want to make, which flows into the next section, is to emphasize real-world networking. There are so many reasons why meeting and interacting with your fans in person can only result in awesomeness:

• You never know when a fan might become a team member, or contribute something of real value to your band, just because they like your music. At the very least, they’re going to market your music by spreading it by word of mouth. If they feel like they know you personally, they’re much more likely to do so.
• Fans will give you useful feedback and criticism in person, especially about the performance. At the very least, it will make you feel good to get so many compliments. Also pay attention to any criticisms or suggestions — you don’t have to follow what a fan says, but you should be a good listener and have an open mind. Your music and your business will benefit.
• Interacting with your fans will help you understand your target market so you can better reach out and find avenues for greater exposure. Talks to fans and find out what websites they visit, what other bands they like, what hobbies they have… all of this info can be used to reach new fans.
• On a DIY or budget tour, you’ll be sleeping on a lot of your fans’ floors and couches. Any band who’s been on this kind of tour knows how important it is to socialize with as many fans as possible! The trend of ‘living room shows’ also continues to pick up steam, with average fans becoming small venue operators, and packing the place. You’ll be consistently surprised with how far fans are willing to go for you.

So, don’t be shy. Meet as many fans as you can at each of your shows. Meet them before you get on stage. Meet them as you’re breaking equipment down. Meet them at the merch table. Meet them at the bar, at the pizza place, outside the venue, backstage, down the street… just meet, meet, meet.

Who Does It?

When we talk about networking, we’re usually talking about meeting new people who can advance our business and music goals. While every fan you have certainly falls into that category, you’re going to need business partners to grow your opportunities to earn revenue and sustain them over the long haul.

DIY (do-it-yourself) is kind of a misleading term. It’s rare that anyone achieves anything completely by themselves. You’re always using other people to help you accomplish your goals. DIY is more of an attitude that you’ll take control of the situation yourself, rather than literally doing every single task personally.

That’s why DIWO (do-it-with-others) is picking up steam as a buzzword. It’s probably just as silly as DIY. Of course you’re going to ‘do it with others’, and it starts by ‘doing it yourself’. Over time, you will network with team members and third parties to do it with others (while still doing a big part all by yourself). Once you’ve established equitable relationships with team members and third parties, you can move on to having others do it for you (HODIFY?)

At the end of the day, the buck stops with you. Your music is the epicenter of value in the enterprise that is your music business. It’s time to start meeting people who can help grow your enterprise.

Networking

How do you find other team members and third parties to work with? The good news is that these people have never been more accessible. Through social media (especially Twitter and LinkedIn) you can contact many people you would normally not have access to.

Of course, this also means that people are more bombarded with requests on a minute-by-minute basis. And when your job is to field many requests — as in the case of many potential music business partners — walls are put up specifically to weed out the amateur requests that are a waste of time and energy to sift through.

Libraries of books have been written about networking, and it’s far beyond the scope of this series. The golden rule is this: don’t just randomly send people stuff. I’ve seen so many bands do this it makes me want to puke. The people you’re spamming get 100 random MP3s every day, do you really want to be #101?

Understand the role of value in meeting people, especially people more successful than you. People want to get to know you if that relationship presents value. In a perfect world they see the potential or actual value in your music. In reality, you’re going to have to be much more creative than that. Clearly communicate the value of what you’re proposing to the person you’re trying to network with.

Another quick tip: Personal recommendations are worth their weight in gold. The most effective way to be introduced to someone you don’t know is to get to know someone who knows them. You don’t even have to be introduced, you can just randomly contact someone and say “I know so-and-so” and that automatically qualifies you unlike anything else. This why being social, networking with fans, the sound person, the other bands and even the janitor is super-important. You never know who knows who, and the bartender could be one degree away from your dream manager.

Your Team

The concept of “the team” is well-tread territory for any musician who’s read an “Everything You Need to Know About the Music Business” book. Your priorities in finding team members all depends on what type of musical life you want to live. Here is a menu:

• Manager – Much of this series has been about managing yourself by understanding the music business, then using that understanding to create value around your music to attract a manager. Musicians without managers don’t often think of themselves as the de facto managers, and by now you now why this is unsustainable. Managers are rare and getting rarer as self-managed bands at smaller scales become more common. Good managers are even more rare. Ideally you want someone who has demonstrated some success with a band that shares similarities with yours. If you don’t know where to start, just make a list of bands that are a bit more successful than yours and figure out who their managers are. You can also enlist business- or tech-savvy friends and fans to manage all or part of your business, if you trust them and their abilities. Remember, you are always the manager, it’s just a question of whether you spend all of your time managing, or whether you delegate those tasks to a manager. Some bands have one manager for business and one manager for operations. The bottom line is “manager” is not a black-and-white term, and you should be resourceful in figuring out who to hire. Remember, you’re looking to hire a manager, but they are only going to want to take the job if they see value or potential value in your music.
• Booking Agent – You need one of these to have a great tour. They’re easier to get in touch with and more plentiful than managers, but again, they want to see value in your music. To them, that means packing venues and growing audiences. You’re looking for a booking agent on your level — if you’re just getting friends and family to show up to shows, you probably don’t need a booking agent. The second you’re able to draw a decent crowd, ask all the bands you know for references and demonstrate your value by committing to play a big show for free, or a little show where you can draw big and look great. You get what you give.
• Promoter – The promoter and the booking agent know each other really well. The promoter produces and markets the show and the talent. You will deal with many promoters before you have a booking agent who can deal with them for you. Promoters also work at venues in-house on shows that don’t have any external promoters. Promoters can be shady, making you pay to play and stiffing you on guarantees. Others are super-friendly and will go out of pocket to make sure a band has gas money. Promoters are easy to find by tracing them back off the marketing material they disseminate.
• Venue Owner – Knowing the venue owner is a way to trump both the promoter and booking agent. It’s like being teacher’s pet. If you can swing it, why not get to know the venue owner?
• Sound Guy/Gal – Don’t be that musician who treats the sound engineer like just another dude or dudette at the club. They will make or break your performance. They’re probably a musician like you and have connections. Make nice. Tip them if you have a good show and will be back, or before the show if you need to have awesome sound.
• Music Supervisor – The music supervisor places music in TV shows, on the radio, in video games… you name it. They are the gatekeepers for the coveted synch license, one of the best paydays available to the professional musician. Musicians who share a personal relationship with even a single music supervisor working on a popular film or show can make enough money to base their entire career around that relationship. As you can imagine, they put up tall walls and rely on a careful process of quality control so they are personally listening to only the most qualified candidates are heard by the decisionmaker. Don’t expect to go directly to the supervisor first, find some minions and build some buzz that can be tied to the show, film, or other musical decisions the supervisor has made in the past. If you draw interest, you may have to be a wily negotiator to maximize your return, especially if you are a lesser-known act.
• Studio Genius – In the beginning you won’t be able to afford to pay to enter a studio, which would be a huge bummer 15 years ago. Lucky for you, home recording has never been cheaper or more professional-sounding right out of the box. However, you’ll quickly learn how difficult it is to get beyond demo quality without dedicating a lot of time to learning audio engineering and mixing. If you’re into that, by all means, get into it and develop a great skill that can diversify your revenue and keep you in the music world. Everyone else needs to find a friend with some knowhow and some real microphones and recording gear. Whether on trade or paid, you’re going to want someone who’s as dedicated to recording as you are to songwriting and performing.
• PR Agent – This person knows how to push your record or tour to media to get maximum press exposure. Worth the money if you can afford it.
• Artist – If your band doesn’t have an artist in it, or if your sense of design and style is less than professional, find an artist to work with. They can be an illustrator, photographer, videographer, sculptor — you want to find someone who is as dedicated to the world of visual art as you are to musical art. It’s the most powerful way to amplify and enhance the subjective qualities of your work, outside of the music itself.
• Web Genius – Having someone who knows their way around web design can be an enormous asset. Many bands feel websites are less important because of all the people congregating on social networks. This actually makes them more important. The best thing to share on a social network is a piece of content featured on your website. From there, visitors can buy stuff directly from your band, listen to all your music, sign up for your email list… your official website is where the most value can be generated. Don’t discount the power of knowing a talented geek.
• Lawyer – Most musicians won’t need a lawyer until there’s a contract in front of them. That can happen quickly, though, so you ought to at least have someone in mind. Any old lawyer is better than none, but ideally you can find one who’s negotiated contracts for musicians. They’re super-expensive so the only time you want to call them is when you need help with something you’re gonna make a bunch of money with.
• Accountant – When you start making thousands of dollars in income from music, you’re going to want an accountant that has worked with musicians before. Nobody wants to think or talk about taxes, and I’m no exception. Every small business owner needs an accountant they can lean on during tax time.
• Musician Coach – We saved the best for last (and I’m not just saying that because I’m a musician coach… no, really.) The role of a music coach is to be your personal business and management consultant. For many bands who lack management or self-manage, music coaches help bridge the art/business divide by giving strategic advice and motivation for musicians to accomplish their goals. In the final part of the series, Part 8: Coaching, we’ll dive into the coaching resources that are available for musicians who are ready to fully commit to building a sustainable musical life for themselves by establishing a business around their music. See you then!

Bonus Video: Deals

So, you might have noticed that I talked a lot about networking and very little about actually making deals. That’s because I feel like deals come naturally from setting goals and pursuing networking, two topics we already covered.

I want to add one piece of advice, and no one puts it better than the immensely successful Irv Gotti. He’s talking about negotiating a record deal, but this advice can apply to any deal you do in life:

I see so many musicians that are paralyzed. They’re either so afraid of the negatives on making a deal that they don’t make any, or they’re so eager to take the deal they sign away their lives.

Gotti’s advice? Take the deal. Know you’re going to get screwed. Work your ass off to create more value around your music. When the next deal comes around, you’ll be in a commanding position to renegotiate the terms.

Our advice? Before you move from self-management to signing a deal, get a coach.