From Independent Musician to Music Retailer – By The Numbers

Why is it that eyes start to gloss over when I mention the term “conversion ratio”?

Is it the word “ratio” that brings back ugly memories of grade school arithmetic? Are you trying to avoid being called upon because you don’t know the answer? It’s simple division! Whatever the reason, if you’re going to take your band website and music career more seriously, we need to talk conversions.  So let’s start with some basics;

• If the venue says you need to sell 30 tickets and you sold 10, your conversion ratio was 33%.
• If the venue holds 500 people and only 200 people show up,  simple division tells us that the conversion was 40%.
• If 200 people came to your last show and 10 bought t-shirts, your t-shirt conversion ration was 5%.

Now, if you received 1,000 visitors to your website last month and 10 people bought a CD, your conversion ratio was  1%.

The only question left to answer is that good or bad?  I’ll answer that shortly, but  if you don’t actually know how many unique visitors you had to your website last month;  that would be bad.  You need to learn about website analytics, but I’ll save that topic for another day, maybe.  Email me if you would like to see an introduction to band website analytics.

Now. Take a look at this story by Author Bryan Eisenberg, posted on grokdotcom.com, about the BEST online retailers and their conversion rates.  What you’ll quickly see is that the very BEST online retailers, like Amazon, LL Bean and Office Depot all see conversion ratios which average around the 20% mark – for December 2008 at least.  In plain terms, that means for every 100 visitors who come to those website, 20 visitors will actually make purchases.  While this is very helpful information, I would remind everyone that these companies are the cream of the collective crop, in the midst of prime shopping season, and most have been selling online for over 10 years. There are a lot of other details about average ticket prices, number of items, time online and page views, most of which we’ll ignore to keep this lesson simple.  If nothing else, the story above illustrates that Amazon is perfecting a way to turn visitors into buyers which directly benefits anyone attempting to sell their books, DVDs or MUSIC using that channel!

One more VERY, VERY, VERY important topic related to selling music on Amazon, or anywhere else for that matter:  This link will show you the top 100 selling mp3 albums for 2008 on Amazon.  Before You Click – care to guess who beat out Coldplay for the number one position?  I’ll give you a hint; It was an album that was also given away for free and it wasn’t Radiohead (they were #11 on the list).  Furthermore, it was a 36 track INSTRUMENTAL album… Congrats to Trent Reznor for continuing to lead by example, that you can do great things to reach your audience and still take home the $$ to keep the lights on at the studio. Nine Inch Nails’ Ghosts I-IV was the number one SELLING digital album for Amazon during 2008. Giving away music is a way to increase your sales, but again, I digress…

So what does that “conversion rate” mean to you as an independent musician/band attempting to sell some of your merchandise, CDs or digital downloads through your website?  What’s a reasonable target for conversion. My straight answer; 10%.

If your website gets 500 unique visitors each month (just 17 visitors a day) and 10% of those 500 people converted  (bought something) and finished the process spending an average of $12 for each transaction, that total ($12 x 50 people) would equate to $600 in monthly revenue.  What did your website score in extra income last month?  Finally, are you pusing all of your social media traffic from Twitter, Facebook and MySpace back to your band website?  Using the same conversion target of 10% a band with a website getting 5,000 visitors per month would be pulling down $6,000 in sales.

I realize that selling music, tickets and merchandise is not everything that music is about. I get that.  But money does provide the fuel for further future creativity.  In other words, if your music isn’t selling now you probably will not have the money to fix the van or promote the shows or afford the postage for media press kits that will get you more airplay and interviews.

SOME money is necessary to keep the wheels going round and round, and that allows you to do what you love.

-pjc

Please contribute to this website by posting your comments, questions and real-world examples below. Comments without links back to your band/music website or social page will not be approved for publishing.  Spammers and sploggers should not waste their time either. “Move along people, nothing to see here.”

Bands Get Lucky – 75% of Active Music Buyers have Social Media Pages

Earlier this week, Ars Technica featured a brief summary of a recent study conducted by the Pew Internet and American Life project.  While you can read both of these summaries by clicking the links, this study demonstrates an important point for musicians and bands using social media networks for promotion; You are hitting the target!

During my days in the radio and music business, I had heard repeatedly that the music you listen to between the ages of 15-24 will be the music you listen to for the rest of your life.  If you are in your thirties or forties or older now, and you look at your music collection, do you find that to be true?  Odds are that you are not buying as much or listening to as much NEW music as what you did during those years.  I think 80% of us would admit that the music we enjoyed during high school, college and our early adult years is likely to be the music we will take to the grave with us.  When they put my stinky body in the ground, I want two songs played, one by The National that just came out in 2008 and one by Bob Seger that came out  when I was 15.

This dual study, surveying nearly 5,000 people,  shows that 75% of people between the ages of 18-24 and 57% of people between the ages of 25-34 have social network profiles (MySpace, Facebook and Twitter being at the top of the list). The take home here, for all you musicians, is that is THE core music loving/listening/buying audience. MySpace is popular with music lovers and the youngsters because those two “demographics” are usually one in the same.

In a prior music news post this week I mentioned how Facebook’s traffic trend is significantly better than MySpace’s.  But the other reality is that MySpace still has more users and those users are, on average younger than the current Facebook crowd.  Again, the suggestion is not that you should pick just one, but that you should be aware of the trends and get your music to where the music loving/buying/touring fans actually are.  Establishing important connections to people in this age group today will mean many years of support as you both age together.  Need proof?  Go see the Stones or Bruce Springsteen live.  This study is very positive news for those of you already making the connections on all the social networks.

-pjc

Your comments below are HIGHLY appreciated, but please be sure to include a URL to your website or social network page.  Any Comments submitted without a connection to a legitimate website or page will not be approved.  And spammers and sploggers can suck my cancerous nut – wherever in hell that might be.

Facebook Traffic Surpasses MySpace – Music Services Proposed

Within the past week, two very important stories have broken regarding Facebook that independent musicians and bands should be aware of. These two emerging trends should clearly point out the importance of having a Facebook presence in maintaining a social connection to you and for your music.

Brian Solis, big thinker, co-founder of the Social Media Club and author a great book called Now is Gone, was the first to report on the fact that, for the first time ever, traffic to Facebook surpassed MySpace this past December.

In his blog post from this past Tuesday, Mr. Solis reveals that the popularity of social network, Facebook, reached 2.18% of all Internet visits on this past Christmas Eve. While this could have been the season to wish you and yours a holly, jolly seasons greetings, it was also a more ominous sign for long time social front runner MySpace. While the traffic to MySpace is not yet even close to an exodus from their 76 million users, this chart on Compete shows that the trend is not certainly not making very positive gains over their accomplishments in 2007. It actually shows MySpace.com traffic down nearly 10%. Has MySpace run out of gas? How many new friends have you added in the past six months? What new innovations have you been excited about that have you drawn you or your friends back to MySpace?

This is the point when you say, “Yeah, but Facebook doesn’t get my music heard.” This morning’s post by TechCrunch’s Micheal Arrington, called How Warner Music Killed Facebook Music, is a must read. This post provides some very important behind-the-scenes details of the efforts that this highly popular social network in taking on in order to get music into the lives of their 55 million users. While there are already several Facebook music apps, obviously a solution provided by the network itself will gain much greater acceptance over plug-ins and strap-ons.  Or is that strap-on and plug in?

This morale of this short story, and the reason for highlighting these two new Facebook trends, is to remind independent musicians and bands of one VERY important element. Social Networks need people and keeping people happy these days is not an easy job – ask any retailer. Your task is to follow those people who are likely interested in you and your music. Capture your friends, fans and followers by getting email addresses and zip/postal codes. If you cannot reach out and touch your tribe with a simple email message, then you are relying on technology that is not as social or as beneficial as you might believe. If MySpace, Twitter OR Facebook closed down tomorrow, what tangible information do you have on your following?  This is an important question and one that will likely require action from you and your band mates.

-pjc

Music Purchases Surge to 1.5 Billion in 2008!

Yahoo! is reporting the 2008 Nielsen/SoundScan music sales numbers for the music industry.  In a world full of record unemployment, reduced consumption, crashing stock markets, housing market declines and war, is it really any surprise that the world is turning to music for comfort?  Yes, music purchases INCREASED 10.5% in 2008 versus 2007 according to this report.

The link above will provide the spreadsheet view of these statistics, but if you want the Top 5  points about this recording breaking music sales years, here they are in no particular order for your consumption:

1. Digital Albums OUTSOLD Physical Albums sold over the internet by over TWICE as much (65.8M vs 27.5M). The general trend is that the online sales of physical albums (CDs mostly) was down 8.6% over 2007, while Digital Albums sales reached a new record in 2008 and was up 32% over 2007.   Bottom line is, if you had your new CD and the same new album digitally on Amazon, the average here is stating that you were likely to sell more than TWICE as many digital vs. physical online.

2.  One bright spot in the physical sales stats here was good old VINYL. The report states the vinyl album sales nearly doubled from the 1m purchases during 2007 to 1.8M in 2008.  These are PURCHAES, not sales volumes.  Maybe that limited edition, signed and numbered idea has merit after all (and profit too). The top selling vinyl album in 2008 was Radiohead’s In Rainbows which sold 25,800 copies. A distant second was The Beatles Abbey Road with 16,000 copies.

3.  This report is focused on the 1.5 billion music purchases – not sales.  The vast majority of those purchases?  Digital Music Tracks equated for over 1,070,000,000 purchases during 2008, which set a new record and grew 27% over the 844M purchases in 2007. The top selling digital album for 2008 was Coldplay’s Viva La Vida which sold 617,000 times with Jack Johnson’s Sleep Through the Static a distant second with 325,000 digital album purchases.

4.  Nielsen uses three ways to categorize Albums based upon its age; Current, Catalog and Deep Catalog. We will not spend time here in this summary to get into all the details, but we mainly want to convey this; Of the three categories for DIGITAL albums, the one with the strongest growth during 2008 was Deep Catalog, up 41% over 2007.  Current Digital  Albums were up 27% and Catalog Digital Albums were up 37%.   I think this clearly conveys that its not just the new “current” music that is being purchased digitally. Digital albums grew to represent 15% of total album sales in 2008, after representing 10% in 2007 and just 5.5in 2006.

5. The Digital field gets wider:

• 2005: only two songs sold more than 1 million digital copies.
• 2006: 22 songs sold more than 1 million digital copies.
• 2007 : 41 songs sold more than 1 million digital copies.
• 2008: 71 songs sold more than 1 million digital copies.

With Apple’s recent decision to remove DRM copy-protection from iTunes tracks, it’s not hard to predict over 100 tracks will sell more than 1 million copies during 2009.  Will yours be one of them?

Finally, I find it odd that the Nielsen “factoids” section goes to lengths to mention that Metallica’s Death Magnet was the number one selling Internet Album (a physical disc being sold by an online store) with 144,000 units sold. But FAIL to mention that they sold more digital copies of the same album (158,000) but Metallica was at the bottom of that top 10 digital album chart.  Why is that newsworthy or “Factoid” worthy to Neilsen?

-pjc

Wall Street Journal Explains the Social Music Success of Bon Iver

Late in December 2008, the WSJ posted an important and useful story about Wisconsinite Justin Vernon and the road from north woods recording obscurity to having record labels chasing him for deals.  Beyond a great story for aspiring music artists, there are some excellent resources listed in the article as well including TuneCore.com, CDBaby.com and SonicBids.com others.

The WSJ story concludes with some wisdom about the Internet causing the equivalent of the French Revolution for the old music industry.

Wall Street Journal Article: Musician Finds a Following Online, written by Shelly Banjo & Kelly K. Spors

-pjc

First Post – News, Trends and Events for the NEW Music Business

Just watching the news events of the collapsing old music industry could be a website by itself.  As opposed to dancing while the empire burns, we would rather help construct the new industry that uses technology to connect independent musicians to their fans, friends and followers.  This News category will help document the new foundation being built for the music business of the future.

-pjc