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Interview with PANOS PANAY, CEO of Sonicbids - Jul 5, 2010

“You can’t think of an audience as a big amorphous mass of people, you have to think of them as individuals.”

picture By connecting artists to opportunities – whether they be gigs, licensing or consumer brand deals – Sonicbids has become a vital weapon in the arsenal of a new independent artist culture that are using such internet tools to carve out careers on their own terms. This “artistic middle class”, as Sonicbids CEO Panos Panay calls it, are proving there is now a rich middle ground between a label deal and total obscurity.

Panay talks to HitQuarters about why you must treat a music career as you would a business, offers a damning assessment of 360 deals and identifies the key foundation stones to any self-sufficient artist career …

Can you outline the main function of Sonicbids?

Sonicbids’ main purpose in life is to make it easy for bands to book gigs. We are a matchmaking site between artists who perform music and anybody out there who’s looking to book that music or license that music.

The rise of SonicBids seems to have coincided with the increasing rude health of live music …

The live music industry has more than doubled in the past ten years, from about 10 billion dollars to 20 billion dollars, whereas recorded music sales have actually halved.

And what was the actual original inspiration behind it?

I was an agent for years before I started Sonicbids. I used to book a lot of mostly established jazz artists - people like Sonny Rollins, Chick Corea, Pat Metheny - and in the late 90s we used to have this rule that unless somebody made 3,000 dollars a night we couldn’t take him on as a client, because they weren’t really making 10% commission, which is not a lot of money.

So I thought, “Well, where is everybody else going?” I knew it was extremely difficult for artists to go and connect with music promoters, especially if you didn’t have an agent.

So the vision has always been to create a central place on the web where any band, regardless of what music they play or what language they speak, is going to connect with any opportunity out there.

I’ve always felt that if you took out the communication inefficiencies that existed in the pre-Internet world then it would be easy for every band on the planet to get a gig, connect with the right promoter, and for every promoter to find the right band to book. Sonicbids was launched with that premise.

I launched it with very little money - about $50,000 of start-up capital – and when the site launched it did very, very little. Today we have about 250,000 bands that use Sonicbids and over 21,000 promoters. So, the site has grown tremendously over the past few years.

You’ve said that it was while reading the book ‘Blur: The Speed of Change in the Connected Economy’ that the idea for Sonicbids came to you. What was it in that book that inspired you?

The book talked about how the Internet would effectively blur the role between buyers and sellers, and that because of speed in which people could connect costs would drop. That’s what really gave me the idea.

One chapter in the book that really resonated with me was one that talked about David Bowie, and how he was selling bonds to raise money that were secure ties against his publishing catalogue.

It talked about how artists would be able to sell a share of their future earnings and finance their art by taking themselves public. It was a pretty radical statement and still is.

How does Sonicbids actually benefit its users?

Artists join, they create a profile that we call the Electronic Press Kit (EPK™), with photos, music, video … information structured in a way for a promoter to be able to quickly review it and determine if a band is of interest to them.

One of the main pain points a promoter has is to be able to zip through what is sometimes hundreds or thousands of incoming applications from artists who want to perform at a festival or a club or just about any venue. We make it easy for both sides.

Artists can search and easily find festivals or clubs or other kinds of opportunities that apply to them.

At the other end, promoters can log into their accounts, see a list of all the different bands that are applying, easily review them, and determine whether they’re interested in them and then notify them.

A big benefit for artists is that they’re in the know about what is going on out there. We save them a lot of time and a lot of money from having to send CVs or having to use a different system every time they apply to something.

We’re common language for all these different people to connect to one another.

It’s not just artists connecting with gig promoters on Sonicbids but also consumer brands, which you’ve said are playing an increasingly strong role in the discovery of new music by using it to promote their wares. Have you got any good examples of how Sonicbids has offered artists exposure through consumer brands?

A year ago Gap said, “We’re celebrating our 40th anniversary, and we want to do a cool programme that drives store traffic on a day in the middle of August, a fairly slow day of the year.

So, we came up with a concept where the managers of 850 Gap stores around North America used Sonicbids to find and book 850 acoustic bands, they all played at the exact same time. The bands Twittered, Facebooked and MySpaced about the event and took pictures and shared them with friends. People walking into gap stores who were very pleasantly surprised that there was a band playing there, Twittered and Facebooked about these events.

This whole programme generated about 800 million media impressions for Gap, and the bands got a gig, exposure and promotional support of a brand they normally wouldn’t have access to.

Gap was able to leverage independent music and spend just a fraction of the money they would have spend on a normal ad campaign by tapping into the relationships that these bands have with their fans, and driving store traffic, and increasing media awareness about a campaign they had.

This is an example of a brand using independent music to accomplish its objectives while at the same time giving a sizable number of bands the chance to perform and develop a new audience. Some of the bands we talked to afterwards said, “I already have offers for two or three other gigs because of this.”

Besides live music, what are the other key revenue streams for artists seeking to support themselves with their music?

The way that artists make money for me are live music, licensing, performance royalties …

We just did a deal with Sound Exchange here in America, and we distributed over 4 million dollars of payments to artists that they had earned from the performances online, and that they didn’t even know they’ve earned.

I also think that merchandise sales and sponsorships from consumer brands are ways that artists will make a living.

I don’t believe that recorded music will be a substantial revenue generator for artists in the next few years - for catalogue artists it’s going to be there, but not for new artists.

You’ve even said yourself that the monetary value of music will likely soon be zero …

A lot of people forget the history of the music business. In the 20s, 30s, 40s and even up until about Elvis Presley, nobody really made any money selling recorded music. Recorded music was a tool to heighten awareness about an artist and about a tour that the artist was on. Up until the 50s, Frank Sinatra made a lot more money performing live than he ever made from selling records. So, I think we’re going back to that.

If you have a good plan you can leverage recorded music – not music but recorded music - in other ways. It’s the same thing with a business.

Google offers its main product entirely free although it arguably costs billions of dollars to build and maintain that product. It also makes about 20 billion dollars a year by leveraging that audience and that product in another way. If Google charge for its search engine it would probably make a lot of money, but maybe nowhere close to the amount of money it makes today.

I view it the exact same way with artists. Everybody is up in arms about the fact that you should be paying for recorded music. Well, that is just a business model that we all learned to abide by because we grew up in a very different era, but who says that you can’t make money other ways? Maybe it’s developing the biggest audience on the planet so you can go and get a consumer brand to sponsor you. I don’t know. I think this is a time for great entrepreneurs to step in and figure all this stuff out.

But as artists are not by their nature the most practical of individuals shouldn’t they be focusing on their art and getting someone else to do their marketing for them?

If you want to play in the 21st century music industry, it’s just not going to cut it saying, “I’m just an artist that plays music and don’t want to market myself.” For every one of you there’s another ten that are very eager.

I’m a believer that an artist today has to be savvy just like me as a business person. I have to be savvy about online media and have to participate in it.

People say to me, “Why shouldn’t I get an agent?” Well, when do you decide that you want somebody else to clean your house? [laughs] When you’re so damn busy and your time is worth a lot more money than what you’re paying for somebody else to clean your home. And it’s a lot later than most people think. The artist is responsible for themselves first and foremost.

So where should the artist begin?

I will tell an artist the same thing that I tell somebody who wants to start a business. Having a vision and an outline of where you want to go and how you want to get there and where you’re going to invest your energy, is important, it gives you clarity.

Educating yourself about the industry and learning as much as you can about how to market yourself is also important.

If you’re looking to make at least some money out of playing music then it’s a business, and if you want to be in business and you have to learn how to plan it and learn about the environment you play in.

This all pre-supposes that you’re good. I’m not going to say, “Get in your bedroom and practise.” That’s a given.

So rather than bombarding labels with demo mp3s and clocking up thousands of MySpace and Facebook friends, what areas should they be focusing on?

I think that creating a meaningful fan base and learning how to develop it is the most important thing they have to do.

A meaningful fan base means you have strong connections with them, they are followers of you and you interact with them, and treat them as your customers in the same way that a business has customers.

You can’t think of an audience as a big amorphous mass of people, you have to think of them as individuals. And I believe that you start incrementally - you start locally and you build from there.

What Internet tools should they be taking advantage of?

When I look at the traditional role that a label used to play, I break it down into four pieces.

Production - making music, writing - distribution, promotion, and then helping you with professional connections.

Almost every laptop today comes with music tools that can rival any big studio from the 1980s.

When it comes to distribution, there’s many aggregators that can help you get your music up on different services like iTunes and eMusic, and these services can be companies like Tunecore, CD Baby - there’s many of them in both US and Europe.

When it comes to promotion, if you’re an artist you have to understand how to use Facebook and Twitter to your advantage. They are not fads - they’re new ways of connecting with people. It’s all in the service of creating a distinct identity and creating a narrative, and these are tools for you to get that story out there.

Clearly when it comes to professional connections I will talk about Sonicbids as being another site that people should use.

There’s also a lot of sites that help you gauge where your fans are concentrated. Next Big Sound gives you a pretty good overview of where your MySpace, Facebook, Twitter followers are located, which enables you to do things like book tours. Another company called Jango enables you to pinpoint airplay based on where fans are located.

I would start first and foremost with making my music, distributing my music using these platforms, creating meaningful relationships using Facebook and Twitter and maybe MySpace, and then going out there and booking gigs with a site like Sonicbids. I think if you have these four bases covered, it’s a pretty good start.

Going one step further, the licensing process is something that you’re also involved in at Sonicbids – can you explain how it works?

MTV, for example, has used Sonicbids on several locations from music for their reality shows.

There’s a show called ‘Real World’ and another one called ‘The Hills’, and they were looking for music for particular episodes that had a particular mood. So they put up what we call a ‘listing’ on Sonicbids.

They solicited applications from artists who were able to review the description of the scenery, and the music that MTV was looking for, and then the music supervisors from MTV identified the artists that they were looking for and negotiated directly with the artists.

Sometimes the licensing fee in itself is not very big, but then with the performance royalties and the exposure they get by being in a programme that’s broadcast in several hundred countries then it is a big deal.

We also have a movie right now from Universal Pictures called ‘Scott Pilgrim vs. The World’ that’s coming out in August. Universal Pictures wanted to generate a buzz about the movie and so posted on Sonicbids looking for music. They licensed music from eight bands and also put the videos of these bands on the DVD release.

Ten years ago these players – Universal Pictures and MTV - would have called their agent friends or their record label friends and made those deals. Today they’re instead realising the power of this emerging class of artists, and they’re reaching out to them through Sonicbids.

Besides being a source of income, how else can licensing benefit artists?

I think more so than just giving them a check for $1,000 or $2,000, giving them a promotional muscle is even more important. If there’s one thing these brands do very well it’s know how to reach an audience. So they can act as good partners for a lot of young artists in terms of getting their music out there in a creative way.

What things do artists need to first think about before blindly jumping into a licensing deal that they may later regret?

I would make sure that whatever programme I’m entering I understand the terms of the deal - what I’m giving up for it and what they’ll be doing exactly. To some degree you are being used in somebody else’s game, and that’s okay as long as you understand how you’re going to use them for your game.

There are so many iffy programmes out there that brands have. Giving you a $2,000 cheque is a very different proposition than saying we’re a brand that has 500 stores around the world, and will put your CD in every one of those stores, and in our ad campaigns.

What are the biggest mistakes artists make in terms of how they try to exploit these various revenue streams?

Not having a strategy of how you’re going to make money is the biggest mistake.

If you don’t have a big picture vision of how you will make money, then it’s very easy and very dangerous to fall into this trap where you’re giving away everything for free, and if you give everything away for free then it means that you are free, you’re valueless.

Understanding how to strategically build a fan base by giving some things away for free and spending your energy in developing this fan base is important, but then you have to have a broader understanding of, “If I’m looking to make this as a business, how will I make the money?

It may be that your strategy is do hundreds of gigs for free to target music supervisors, because your want them to pay you to have your song in their commercials, for example.

Sonicbids is directed towards artists managing their own career opportunities so what do you think about 360˚ deals where record labels conversely take charge of all an artist’s revenue streams?

I don’t like them at all. If you want to find out the future of 360˚ deals, look at Motown in the late 60s. Motown was the pioneer of a 360˚ deal - this is not a novel concept, it’s existed for years.

If you were Marvin Gaye or Stevie Wonder and signed to Motown in the late 60s, they owned your likeness, your touring, publishing, record royalties, made the record deal, told you what to wear, they told you how to walk … It made for great entertainment and clearly produced a lot of great songs but if you look at every one of those artists, what happened? Sooner or later they said, “I’m not going to go on the road for 200 shows because you tell me so. I’m an artist! I’m an independent entity. And I’m not going to put out the tenth album in five years because you tell me so. I’m a creative person!” Eventually all these artists left.

My feeling with 360˚ deals is they benefit no one. It’s a nice press release, and maybe if you’re a very large artist, you’ll make a big chunk of money upfront, but sooner or later the entity that advances you that money is going to want to recoup. So, how do they recoup it? They’re going to tell you, “You have to put out another record, you have to go on the road …” There’s two things we know about creativity: you can’t force it and you can’t really control it.

You’ve described the group of artists that are taking advantage of the changes in the industry and realising they have to be entrepreneurial as the ‘Artistic Middle Class’. Can you define this group for us?

It’s an expanding group of artists that are not relying on others to do it for them, they feel empowered, they are leveraging the Internet to its fullest and taking charge of their own careers.

It is also an economic thing as well. These are not necessarily multimillionaires but on the other hand they’re also artists who are able to make a reasonable amount of money by performing their original music.

Do you have any examples?

There is a young artist I know in America called Rachael Sage. Over the past six, seven years, she has slowly but surely created a career entirely on her own terms by touring, showcasing, and by using Twitter in an intelligent way to get her fans to comment on her shows and sometimes even participate in the creative process.

I hate to say the word, but she has a ‘brand’. She has a very distinct look and a very distinct type of music as well.

So the whole package just feels very original and very authentic. It doesn’t feel when she’s connecting through Twitter or when she’s on stage or when I’m listening to her songs that there’s any incongruity between those three.

I like the approach that she has taken, which is a combination of both mastering the old skool way of touring and incrementally building a fan base, and constantly putting out new music, engaging your fans, but also of using new tools like Twitter and Facebook to sustain those connections outside of the normal time when you’re performing. You perform in front of your fans once and that’s a two-hour connection. You connect with them through Twitter and you probably get the chance to connect with them several times a day.

There is also Imogen Heap, an artist out of England who’s engaged with her fans in helping structure the content of her album and songs.

You seem to have a knack of seeing the positive opportunities in an era when record companies have only seen doom and gloom; have you been tapped up by any big record companies for your visionary outlook?

I would never work for a label in a million years – I’d rather work for the devil in hell [laughs].

There’s a very famous management thinker from Austria called Peter Drucker who lived for most of his life in America. He said that if you want to see if an industry has a future, look at college graduates and see where they want to be. If they want to work in that industry, that industry has a bright future. If they don’t, then it’s time to get out. When I was a kid graduating from college, all my friends wanted to work at record labels.

Today, we live in Boston where I think there’s the largest concentration of universities on the planet and I don’t think I’ve met a single kid in the past five years that has come up to me and said, “Hey, do you know anybody at Warner Brothers or Universal, because I really want to work there?”

I don’t believe labels are going away. I think they’re going to become primarily keepers of catalogues. So, as long as there’s a Beatles catalogue, there will probably be EMI in one capacity or another.

What other ways do you want to break ground in the music industry in the future?

If we’re successful we will have a lasting legacy as a business that helps create this new class of artists where it’s no longer about people either living in obscurity and poverty or signing with a record label – that’s what it used to be.

Finally, as we are in the midst of the world cup, do you think there are lessons to be learned from the branding of football?

I think artists can learn a lot from football. When I was a kid no football club had sponsorship on their shirts. Liverpool was the first club to break the rules and put Hitachi on its football shirt. In those days football clubs made money primarily by selling tickets. There was no TV revenue, no sponsor revenue, no replica shirts revenue. The only way you made money as a club was to put sponsorship on your shirt.

Then TV came in, then gradually football became a lot more globalised to the point where right now the income from people paying to go and see the actual game is miniscule compared to the money that, say, Real Madrid makes from TV revenue and selling shirts. There are potentially fans out there obsessed with Real Madrid but have never even gone to a single match at the Bernabéu.

I look at it the same as with music. There may be fans that will never buy a record from a band but still buy stuff from them and contribute to them. Who knew that you can make more money selling football shirts than selling tickets to a game? Well, it’s the same with music.

Interviewed by Kimbel Bouwman

Next week: Our new regular feature on artists carving out careers on their own terms kicks off with an interview with rising star Skewby, hip-hop's hope for 2010

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