Jed Carlson Industry Insider

THE RECORD-LABEL MONOPOLY IS BROKEN; NOW WHAT?
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According to ReverbNation''s Jed Carlson, differentiation is the key to standing out among the multitude of musical artists on the Web.

In a world where fans can get music from anywhere in the world within moments and musicians are competing with bands all over the globe, it can be hard to break through. It usually starts with putting music up on the Web, but what should a musician do from there? Is it possible to turn a casual listener into a fan? And how can musicians turn that fan into a paying customer? To answer these types of questions, we turned to Jed Carlson, founder of the website ReverbNation. Although not a musician himself, Carlson''s business and marketing background has helped him devise helpful strategies for using the many tools and websites available to connect musicians with their fans.

How has the Internet changed music promotion and marketing? 
I think fundamentally it has leveled the playing field. The Internet has made global local. Bands can easily develop a fan base in Japan while sitting at home in North Carolina. I''ve asked a lot of local bands around here about what they think of the fact that they can now easily develop fans all over the world. Their immediate response is, “It''s the greatest thing in the world.” But then I ask them, “What do you think about the fact that bands from all over the world can take the attention of your local fans in North Carolina away from you?” And they always say, “We didn''t think of it that way.” This is neither good nor bad, it just is. It just changes what musicians have to do to break through.

Powerful marketing tools like the ones we offer at ReverbNation are now available to pretty much everyone. Compare this to the old model, where the struggle was to get into the record-label pipeline. If you could just break into that monopoly, you could win and get noticed all over. But now, everyone can run a sophisticated marketing department for their small business thanks to the Internet. Congratulations to all the musicians out there who wanted to break the monopoly! It''s broken. Now everybody is in the same boat and there are a lot of people.

You just hit on one of the latest complaints by musicians: There are too many musicians now fighting for attention.
Yeah, I think that there''s a lot more noise now than ever. And I think that is thanks to all of the tools and services and technologies that are now available to everybody. At the very least, the old record-label monopoly system was a filter. Whether you think that filter was good or bad is up to you, but it was a filter nonetheless. And I suspect the number of bands and music in the world is only going to grow.

To break through, you need to do more than just write good music. You need to have a good strategy and understand how to market and promote. That''s how you become successful today. Part of that strategy is to develop a pipeline of fan relationships. And that''s what we mean when we talk about the marketing funnel.

What is that? 
The marketing funnel is a good way to understand that not all of your listeners are fans, and not all fans are customers. At the top of the funnel are the people who are exposed to your music; they''re just listeners. They''ve stumbled on you through the Web, came to a show via a friend, et cetera. You will have a lot of these. However, listeners are not fans. Your goal should be to convert them into fans. This is done through your music, creating a memorable experience, and giving general listeners a reason to take the time to engage with you and your music. As you start converting listeners into fans, the funnel narrows. Fans can become customers. (You''ll have more fans than customers.) And at the narrowest part of your funnel, some fans become promoters for the band. That is the ultimate: getting people to promote you and your music through word of mouth, the Web, the social nets, email, instant messaging.

How do you advise artists to effectively use social-media tools to build a following?
Use them with a purpose in mind. I think that''s the missing link for most artists. They don''t think strategically first. For example, consider MySpace: MySpace is like having a free billboard on a superhighway where there''s millions of cars driving by every single day. But you can use ReverbNation tools to develop a little driveway underneath it, a cul de sac at the end of it, or an off-ramp so that people can pull over and actually deliver value for you such as joining your mailing list, which MySpace isn''t set up for. The same applies to Facebook, Twitter, and all the social nets: Understand what they''re good at and how to best use them in that context to get them into the funnel.

Now that the playing field is level and crowded, how do bands stand out? 
It comes down to one thing: differentiation. When I talk to musicians, my advice to them is to make yourself stand out. Deliver great experiences for your fans. For example, when you play live, make it something people are going to talk about at the water cooler the next day. The jam band provides some of the best models. Phish, Widespread Panic, and the Grateful Dead—I don''t think they knew it at the time, but with CDs as a dead revenue source, these type of bands always focused on things beyond the CD. They peddled their merch, tickets, experience, and bundled packages. They gave the gift of an experience and they created word of mouth. Word of mouth is the most powerful marketing on the planet—and it''s free.

How do you foresee musicians making money in the future? 
I think the future of revenue in music for most bands is monetizing the experience musicians generate. I''ll never forget this particular bottle of wine because my wife and I drank it when we got engaged, but I otherwise wouldn''t remember that brand. Music is a context for everyone''s life, creating that experience and selling that memorabilia piece of it to the über-fans, that''s important. Bands that are starting out have got to create that water-cooler experience. Bands that have fans need to use the advanced techniques to harvest that fan base.

Beyond this, there are other big opportunities such as licensing and brand sponsorship. There''s been a paradigm shift when it comes to the marriage between brands/entertainment properties and bands/music. I think the reason that they have never been well connected with independent musicians is because there has never been a way to facilitate those relationships in a low-cost fashion. Just the legal expenses of licensing a song into a commercial merits staying away from independent music because you want the most bang for your buck. So you are going to pick a popular band that is going to move the needle. But that''s changed.

I think the Internet enables matchmaking at a grand scale and at low cost that can sort of open the door for indie music that otherwise would not have had access to these kinds of opportunities. We''ve already been helping with this. For example, in 2009, we started a program called Sponsored Songs with Microsoft Windows. Microsoft essentially underwrote a free song giveaway from 1,000 artists over a three-month period. They paid the artists $0.50 apiece for every song they could give away. These artists presented their music on a Microsoft-branded page and their MP3s have a Microsoft advertisement embedded in the digital album cover art. So when you play the song on your iPod, you see the ad come up and a “brought to you by your friends at Windows” kind of thing.

So it''s not just about live shows then? 
No, it''s about the experience. The music, CDs, packaging, your website, videos, your newsletters—all of it. There''s no denying that for a band just starting out, live performances are critical. It''s a great way to connect to listeners and convert them to fans and customers. But you can do this on the Web, as well. My point is that a big reach is something you can buy; word of mouth is something you can''t. When you know you''ve got an experience that can keep your fan pipeline full and growing, you have a business that anyone would want to invest in.

Randy Chertkow and Jason Feehan are authors of The Indie Band Survival Guide: The Complete Manual for the Do-It-Yourself Musician and The D.I.Y. Music Manual, and founders of the open and free musician resource IndieGuide.com.