Music and Finances: Don’t follow the pack

Our instinct when we are doing something new is to find people that have done it already and ask their opinion. In some situations, that actually works. But you certainly need to be careful who you ask.

Take the example of recording CDs. In 2008, we have these stats:

115,000 projects produced
6,000 had sales > 1,000
1,500 had sales > 10,000
110 had sales > 250,000

What this means is that over 95% of CD projects lose money. Only 1% of those projects had enough sales where someone (hopefully the artist) made a reasonable amount of money. And 1/10th of 1% of those projects were home runs.

Let’s call that the good news. The bad news is this: I can assure you that these numbers are way worse in 2013.

Remember these stats the next time you ask someone in the music industry about producing or marketing a CD for you. Unless you are very lucky, you are more likely to get valuable advice from a turnip. The music industry is not just failing; they are failing in spectacular fashion.

If you want to do music professionally, I would not tell you to intentionally do the opposite of what the music industry is doing. But on the other hand, that would be safer than marching in lockstep with them.

Don’t get me wrong. I have many friends in the industry. Many of them are better musicians than me. I respect what they do. I ask their opinions about music.

But I don’t ask too many of them for business advice…

In many cases, I have just gone in the opposite direction. While most musicians are trying to produce music more inexpensively, my projects have progressively gotten more expensive. While the entire industry has tried to hold a $15 price on CDs, I have run $5 sales and done free downloads of CDs.

And while most independent musicians are actively trying to get publishing and distribution deals, I have not pursued them. I am not opposed to that, but I see the potential problems too. I have a distributor in Asia and that works fine. But on the other hand, I have had a contract offer on my desk for a few months for distribution here in the US into all the Christian bookstores and catalogs and I have been slow to sign it.

The reason I am so comfortable going against the mainstream is because I am an entrepreneur at heart and have a lot of confidence (sometimes false confidence) in my business intuition. And one of the things that you learn quickly in business is that if you are like everyone else, you fail.

As an example, note the failure rate of restaurants. Here in Atlanta, I am always amazed that people think they can successfully open a “home-cooking” (I.e. fried food) restaurant even there are already fifty of them selling the exact same food within 10 miles. What is the success rate of those restaurants? It has to be less than 5%.

A great book that discusses this perspective is Blue Ocean Strategy. The idea is this: to be successful, you need to be in a different place than your competitors. You need different products and you need new marketing strategies.

Or to put in music terms, let everyone else fight it out with unsuccessful attempts to market music projects. Go in a different direction; be lonely. If you don’t feel a little lonely where you are, the chances are you are not thinking right.

Don’t get the wrong idea. I have made plenty of mistakes–several lifetime’s worth in fact. But one of the big reasons I am still in music after ten years is that I have done it differently than almost everyone else. I highly recommend it.