THOM  MCKERCHER  Director,  Classics  and  Jazz  Universal  Music  Canada  

 RANDY  BARNARD  

Consultant  to  Orchestras  Canada    

December  18,  2014    14:30  –  15:30  

Digital  Strategies  101  Taking  Your  Master  Recording    to  the  Commercial  Market  

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Agenda  

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1.  1.  Welcome  –  Katherine  Carleton  

2.  2.  Building  Out  the  Business  Case  Template  –  Randy  Barnard  

           EXPENSES    a)  The  Master  Recording    b)  Manufacturing    c)  Design    d)  Rights              (Artwork,  Talent,  Publishing)    e)  Marketing    f)    Distribution    g)  Administration    

 

                 3.  National  &  International  Market  &  Sales  Overview  –  Thom  McKercher  &  Randy  Barnard    -­‐  Physical  Sales  (  on-­‐line,  off-­‐stage,  Brick  and  Mortar  )    -­‐  Digital  Sales  (  downloads,  streaming  )    -­‐  Interesting  Facts    

 

                 4.    Questions    

                 5.    Next  Steps  –  including  Webinar  #  3  TAFELMUSIK  MEDIA  –  A  CASE  STUDY  

           REVENUES    a)  Physical  Distribution    b)  Digital  Distribution    c)  Donor,  Patron,  Government  Funding    d)  Crowd  Funding    e)  Broadcasting    f)  Synchronization    

Polling  Question  

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Does  your  orchestra  currently  have  plans  to  produce  a  full  length  audio  recording  ?  

EXPENSES  –  Master  Recording  Overview  Chart  Based  on  CFM  Agreements  

Introduced  at  WEBINAR  #  1  Creating  the  Master  Recording    

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EXPENSES  –  Master  Recording  

 

Chart  Below  Representative  of  the  Most  Common  CFM  Contract  LIVE  RECORDING  +  PATCH  (SOBRLA)  

What  kind  of  recording  are  we  anticipating  to  sell  …  because  it  makes  a  difference  ?  

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In  general  there  are  three  kinds  of  ‘classical’  recordings  to  consider,  AND  they  are  listed  in  order  of  what  is  the  most  challenging  to  sell.    1)      CORE  CLASSICAL  –  REPERTOIRE  DRIVEN      

Tends  to  driven  by  traditional  mainstay  repertoire  as    orchestras  re-­‐interpret  the  ‘masters’  driven  (usually)  by    new  artistic  direction  within  your  organization,  by  example,    the  recent  release  the  Beethoven  symphonies  with  Kent    Nagano  and  the  Orchestre  symphonique  de  Montreal.      Tafelmusik  Baroque  Orchestra  is  also  completing  a  Beethoven  cycle.      

NOTE  :    Although  this  is  the  most  difficult  kind  of  recording  to  sell  given  the  competition,  it  is  actually  what  we  will  be  basing  our  business  plan  on  today,  because  the  recording  of  standard  repertoire  satisfies  many  of  the  objectives  of  the  artistic  director  and  the  tastes  of  consumers  at  the  local  level.  It  is  also  the  cheapest  to  produce  given  the  lack  of  ‘star’  and  very  high  music  rental  &  copyright  fees.    

What  kind  of  recording  are  we  anticipating  to  sell  …  because  it  makes  a  difference  ?  

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2.      CORE  CLASSICAL  -­‐  ARTIST  DRIVEN    

Aligning  your  orchestra  with  an  outstanding  Canadian  artist,  especially  one  that  tours  extensively,  is  a  very  good  idea.    The  likes  of  Isabel  Bayrakdarian,  or  James  Ehnes,  or  Angela  Hewitt  are  recent  examples  of  this  kind  of  partnership.        3.      CROSSOVER    

As  we  will  discuss  later  in  the  presentation,  crossover  classical  dominates  the  charts  with  the  likes  of  the  Piano  Guys,  Groban,  Bocelli,  Rieu  and  Il  Divo.    This  is  a  challenging  area  for  orchestras  to  consider  as  there  has  to  be  a  compelling  connection  the  orchestra  has  with  ‘popular’  music  and  associated  ‘stars’.      

EXPENSES

After  the  recording  session  …  

Manufacturing  –  Physical  &  Digital  

Design  &  Packaging  

Rights  –  Artwork,  Talent,  Publishing    

Marketing  –  Traditional  &  Social  

Distribution  –  Physical  &  Digital    

Administration    

EXPENSES  –  Manufacturing  

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FOR  OUR  PURPOSES  TODAY,  ASSUMPTION  IS  $1.00  PER  UNIT  MANUFACTURED.  

EXPENSES  –  Digital  Conversions  

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EXPENSES  –  Design  &  Packaging  FOR  OUR  PURPOSES  TODAY,  ASSUMPTION  IS  A  ONE  TIME  EXPENSE  OF  $145.  

FOR  OUR  PURPOSES  TODAY,  ASSUMPTION  IS  A  ONE  TIME  EXPENSE  OF  $500.  

EXPENSES  –  Rights  &  Royalties  

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ARTWORK    

If  not  in  the  public  domain,  rights  fees  owed  to  the  artist  or  to  the  institution  than  owns  the  artwork,  usually  an  art  gallery  or  library.        BOOKLET  NOTES    

Booklet  notes  will  also  require  a  fee  to  be  paid  to  the  writer  and  that  too  may  have  additional  conditions  applied  for  further  use.        TALENT  ROYALTIES    

Royalty  payments  to  musicians  required  based  on  sales  of  the  recording.    Fees  can  vary  depending  on  original  contract,  but  your  organization  must  be  aware  of  them  and  also  the  administrative  process  to  monitor  and  pay,  the  latter  can  be  complicated.      

FOR  OUR  PURPOSES  TODAY,  ASSUMPTION  IS  THERE  IS  A  10  %  PER  UNIT    ROYALTY  OWED  TO  COVER  OFF  ARTWORK,  BOOKLET  NOTES  AND  TALENT.  

       

EXPENSES  –  Rights  &  Royalties  

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MECHANICAL  ROYALTIES      Paid  to  the  copyright  holder  for  music  that  is  not  in  the  public  domain    (50  years  after  death  of  composer)  …  BEWARE  …  also  includes  librettist  and  arrangers.    

English  Canada,  the  primary  institution  to  administer  these  rights  is  the  CMRRA  (Canadian  Music  Reproduction  Rights  Agency)    

Quebec,  SODRAC  (the  Society  for  the  Reproduction  of  Authors,  Composers  and  Publishers  in  Canada).        

Fee  for  mechanical  licenses  is  8.3  cents  for  the  first  five  minutes  and  1.66  cents  for  every  minute  thereafter.    If  your  70  minute  recording  is  not  in  the  public  domain,  you  would  owe  $1.08  for  every  unit  sold.    

Mechanical  royalties  are  usually  a  cost  to  the  label  that  the  recording  appears  on,  but  this  need  clarity  from  the  beginning  so  responsibility  does  not  land  in  the  orchestra’s  lap.      

FOR  OUR  PURPOSES  TODAY,  THE  MUSIC  IS  IN  THE  PUBLIC  DOMAIN,    THEREFORE  NO  MECHANICAL  LICENSE  OR  PAYMENT  IS  REQUIRED.    

Connect,  Communicate,  Build  Relationships  13  

-­‐   Identify  your  target  audience  

-­‐   Create  relevant  content  that  will  optimized  the  customer  experience  

-­‐   Select  channels  for  delivery  including  traditional  print,  radio,  TV,  Email  and/or  Direct  Mail  AND  newer  social  media  /  online  digital  platforms    

-­‐   Develop  a  variety  of  marketing  materials  for  the  selected  channels  

-­‐   Test  messages  and  then  measure  results.  

EXPENSES  –  Marketing  

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EXPENSES  –  Marketing  Selling  core  classical  music  recordings  is  a  challenge.        Overall  classical  sales  make  up  about  5  %  of  the  overall  market.        Because  the  profit  margins  are    slim  to  none,  the  media  buy    needs  to  be  frugal  and  focused.        Today,  we  are  not  here  to  decide    where  your  buy  should  be  directed.      You  know  your  internal  budgets  and    resources  and  historically  where  you    have  enjoyed  success  in  promoting    content  or  services.                  

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EXPENSES  –  Marketing      

Analyze  the  options  carefully  and  make  final  decisions  based  upon  which  promotional  channels  appeal  to  your  target  audience.      

If  not  obvious,  piggy  back  the  promotion  of  recordings  on  the  traditional  media  and  on-­‐line  marketing  that  you  are  doing  to  put  bums  in  seats.      

If  the  consumer  is  interested  in  coming  to  your  concerts,  one  hopes  they  will  also  want  to  buy  your  recordings.              

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EXPENSES  –  Marketing  

       

Focus  on  specific  target  consumer  and  budget  your  marketing  spend  on  the  area  or  areas  which  will  garner  the  greatest  return.        There  are  three  primary  areas  of  sales  for  physical  product          -­‐  Orchestra  off  stage  sales  

 -­‐  On-­‐Line  retail  sales  with  distributor    -­‐  Brick  &  Mortar  retail  sales  with  distributor  

   There  are  three  primary  areas  of  sales  for  digital  content      

 -­‐  Downloads  on  your  own  website,  usually  third  party  administered    -­‐  Downloads  on  another  platform    -­‐  Streaming  on  another  platform  

   

FOR  OUR  PURPOSES  TODAY,  ASSUMPTION  IS  A  $1.00  PER  UNIT  SPEND    

EXPENSES  –  Distribution  

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WHAT  CAN  YOUR  ORGANIZATION  EXPECT  OF  THE  DISTRIBUTOR  ?      LENGTH  OF  CONTRACTS  –  usually  a  minimum  of  three  years  with  automatic  three  year  renewal  option      DISTRIBUTION  FEES  –  varies  dependent  upon  services  offered,  but  can  be  anywhere  from  25  %  to  40  %  of  net  profits      DISTRIBUTION  SERVICES  –  pick,  pack  &  ship,  inventory  control,  return  services,  labour  costs,  monthly  and  annual  reporting      SALES  SOLICITATION  -­‐  publish  new  release  guide,  salesperson  commission,  sales  reps  to  brick  &  mortar  and  e  commerce  accounts,  business  development  opportunities      TERRITORY  –  usually  worldwide,  but  can  be  different  distributors  for  different  territories  

EXPENSES  –  Distribution  

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WHAT  CAN  YOUR  ORGANIZATION  EXPECT  OF  THE  DISTRIBUTOR  ?    ROYALTIES  –  both  mechanical  and  artist  royalties  are  usually  the  responsibility  of  the    label,  but  distributors  often  will  have  value  added  services  tend  to  royalties  for  a  fee.      MARKETING    -­‐  writing  of  press  releases,  press  kits,  promo  copies  to  media,  radio  promotion,  podcasts,  eCards,  etc.        MANUFACTURING  OPTIONS  -­‐  often  the  larger  distribution  corporations  (Naxos,  Universal,  Sony,  etc.  will  offer  manufacturing  services  for  fee).        DIGITAL  DISTRIBUTION  OPTIONS  –  usually  worldwide,  and  usually  around  20  %  fee  given  there  is  no  physical  product  to  consider.    Provide  digital  storage,  digital  encoding,  digital  delivery,  labour  costs,  digital  sales  reports        FOR  OUR  PURPOSES  TODAY  -­‐  PHYSICAL  DISTRIBUTION  COMMISSION  =    35  %                                                                                                                        -­‐  DIGITAL          DISTRIBUITON  COMMISSION  =  30  %  

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PHYSICAL  DISTRIBUTION    ARTISTS  &  ORCHESTRA  WEBSITES      ARTISTS  &  ORCHESTRA  OFF-­‐STAGE  SALES  

ON-­‐LINE  RETAILERS  -­‐  amazon.ca,  arkivmusic.com,  classicsonline.com,  etc.  

RECORD  LABELS    -­‐  Harmonia  Mundi  -­‐  Chandos    -­‐  ATMA  -­‐  Analekta  -­‐  Marquis  -­‐  Tafelmusic  Media  

DISTRIBUTORS  -­‐  Universal  -­‐  Sony  -­‐  Naxos  -­‐  Select  

     

BRICK  &  MORTAR  STORES    

           NATIONAL  -­‐  HMV,  Chapters/Indigo    

           INDEPENDENT    -­‐  L’Atelier  Grigorian  –  Toronto    -­‐  McNally  Robinson  –  Winnipeg  &  Regina    -­‐  Gramophone  –  Edmonton    -­‐  Sikoras  –  Vancouver    -­‐  Archambault  &  Renaud  Brey  –  Montreal  &  Quebec  

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WHY  DIGITAL  ?    In classical music sales, physical goods still dominate the marketplace by some 65%. This has everything to do with the ‘older’ demograph that still demands quality sound and actually having the ‘package’ in hand. So, why bother to even think about digital ? Consider : -  because it’s still the future -  because it’s low risk and low investment (no manufacturing, inventory, etc.) -  because it offers wider international distribution -  because it connects to social networking promotion and marketing -  because it satisfies and supports an important digital agenda to export Canadian content to the city, the province, the country and the ‘world’ -  because it allows sampling of content for potential clients (sync rights & music supervisors) -  because it’s still the future

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DIGITAL  DISTRIBUTION    ARTISTS  &  ORCHESTRA  WEBSITES    

ON-­‐LINE  DIGITAL  DOWNLOADS  -­‐  amazon.ca,  arkivmusic.com,  classicsonline.com,  etc.  

RECORD  LABELS  DOWNLOADS  -­‐  Harmonia  Mundi  -­‐  Chandos    -­‐  ATMA  -­‐  Analekta  -­‐  Marquis  -­‐  Tafelmusik  Media  

DISTRIBUTORS  DOWNLOADS  -­‐  Universal  -­‐  Sony  -­‐  Naxos  -­‐  Select  

     

STREAMING  SERVICES  IN  CANADA    

-­‐  SONGZA  (curated,  most-­‐used  with  3  million  users  in  Canada,  Free  (ad-­‐supported)  

-­‐  GOOGLE  PLAY  MUSIC  (curated/machine,  $9.99/m)  -­‐  DEEZER  (curated/machine,  $4.99  web  $9.99  mobile)  -­‐  GALAXIE  DIGITAL  (cable  access,  $4.99/m,  $39.00/y)  -­‐  RDIO  (curated/machine,  $4.99/m  web,  $9.99  mobile)  -­‐  SPOTIFY  (machine,  $9.99/m)  -­‐  SONY  PLAYSTATION  ($4.99  PS  3,  $9.99  PS4)  -­‐  XBOX  MUSIC  ($9.99/m)  -­‐  CBC  MUSIC  (machine,  40  stations,  Free)  

 

   

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*  Digital content distribution Warehouses (iTunes, amazon, etc.) Aggregators ( The Orchard, IODA, Iris, CD Baby, etc.) Jukeboxes (E cast, Touch Tunes, etc.) Kiosks (download burn CDRs, inlays, booklets, etc ) Peer to Peer (KaZaA, Grokster, iMesh, LimeWire, Gnutella, eDonkey)

*  Online music distribution Podcasting Artist Download Sites Community Download Sites Social Networking Sites (Facebook, YouTube, Twitter, etc.)

*  Buying music online Online Retail (arkivmusic.com, classicsonline.com, amazon,ca, etc.)

*  Digital music broadcasting

Digital Radio (DAB) Satellite Radio (Serius, XM) Satellite, Cable, and Terrestrial TV

Internet Radio *  Media centre cable services

Diversify    CD  &  Digital    Distribution  

Potential    …  We  have  yet  to  explore  many  available  distribution  channels.  

EXPENSES  –  Administration  

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DO  NOT  UNDERESTIMATE  the  time  it  takes  to  commission  and  produce  a  recording,  take  that  recording  to  a  commercial  market  and  then  monitor  promotional  and  sales  reports  to  file  any  associated  royalties.        Consider  in  advance  how  you  will  inventory  product,  and  who  will  be  the  person  responsible  to  leas  with  manufacturers,  labels,  distributors,  rights  and  royalties  organizations,  talent  organizations,  and  orchestra  and  board  members,  to  name  a  few  who  need  to  be  in  loop.        It  ALWAYS  takes  more  time  and  resources  than  you  would  have  imagined.      

FOR  OUR  PURPOSES  TODAY,    THERE  IS  THE  ASSIGNMENT  OF    A  PROJECT  MANAGER  AT  A  COST  OF  $1,000,  OFFICE  SUPPORT    

FEES  OF  $500  AND  MISC.  COSTS  OF  $500.  

EXPENSES = ASSUMPTIONS

Marketing  –  Traditional  &  Social  

Distribution  –  Physical  &  Digital    

Administration    

Rights  –  Artwork,  Talent,  Publishing    

Design  &  Packaging  

Manufacturing  –  Digital  Conversions  

=  10  %  per  unit      

=  $  500.00  one  time  

=  $  145.00  one  time  

=  $  1.00  per  unit  

=    35  %  commission  

=    30  %  commission  Distribution  –  Physical  &  Digital    

=    $  2,000  

Manufacturing  –  Physical   =  $  1.00  per  unit    

Audio  Master  Recording   =  $  26,000    

Polling  Question  

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Does  your  orchestra  have  a  good  sense  of  what  their  target  audience  is  and  how  to  engage  them  ?  

REVENUES  After  the  recording  session  …  

Physical  Distribution  

Digital  Distribution  

Donor,  Patron,  Government      

Crowd  Funding    

Synchronization    

Broadcasts      

REVENUES  

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STEP  NUMBER  1  :    SALES  TARGETS  NEED  TO  BE  SET    

In  order  to  figure  out  what  revenues  are  to  be  coming  in,    your  organization  needs  to  determine  what  the  target  number  is  for  sales  based  on  your  target  audience.        

For  our  purposes  today,  we  are  targeting  an  overall  physical  CD  and  full  album  digital  download  total  of  2000  units.        

This  is  ambitious  for  a  core  classical  title,  with  1000  units  sold  at  retail  considered  a  very  good  seller,  BUT  with  the  addition  of  off-­‐stage  sales,  it  is  also  a  reasonable  target  if  you  are  to  enjoy  any  kind  of  return  on  your  investment.    

We  will  go  through  the  various  revenues  streams  based  on  this  target  and  put  the  numbers  into  a  spreadsheet.  

REVENUES  –  Off  Stage  &  Distributor  

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HOW  MUCH  DOES  A  CORE  CLASSICAL  SINGLE  CD  SELL  FOR  ?    RETAIL    Physical  $18.00  (  usually  between  $14.99  -­‐  $22.99  )  

         Digital        $9.99  

 OFF  STAGE  $20.00      

REVENUES  –  Off  Stage  &  Distributor  

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WHAT  ARE  THE  DOLLAR  REVENUE  FIGURES  WE  WILL  USE  TODAY  ?      

PHYSICAL    

         -­‐  @  $20  :  OFF  STAGE  -­‐  usual  price  point  that  concert-­‐buyers  will  pay  and                                  there  is  usually  no  distributor  fee  

                     NOTE:    a)  Often  there  is  a  ‘volunteer’  commissions  to  sell  CDs  10  -­‐  15  %  

                                                                                   b)  Don’t  forget  any  HST  implications  in  your  calculations    

                       -­‐  @  $12  :    ON-­‐LINE  RETAIL  –  consumer  pays  $18,  but  retail  usually  needs  40  %          mark  up  to  sell  the  CD.  

                           -­‐  @  $12    :  B  &  MORTOR  RETAIL  –  consumer  pays  $18,  but  retail  usually  needs          

                                                                                   40  %    mark  up  to  sell  the  CD.    

ALSO  A  FURTHER  35  %  COMMISSION  WILL  BE  ADMINISTERED                                                                                  TO  THE  DISTRIBUTOR  WHO  SHIPS  THE  CD  TO  RETAIL.  

 -­‐       

REVENUES  –  Off  Stage  &  Distributor  

30  

WHAT  ARE  THE  DOLLAR  REVENUE  FIGURES  WE  WILL  USE  TODAY  ?    

 DIGITAL  

 

-­‐  @  $10  :  YOUR  WEBSITE  DOWNLOAD    

-­‐  @  $10  :  OTHER  WEBSITE  DOWNLOAD  

ALSO  A  FURTHER  30  %  COMMISSION  (iTunes)  WILL  BE  ADMINISTERED    TO  THE  DISTRIBUTOR  WHO  SHIPS  THE  CD  TO  RETAIL.  

 

REVENUES  –  Off  Stage  &  Distributor  

31  

TARGETS  for  three  primary  areas  of  sales  for  physical  product      

-­‐  1000  UNITS  @  $20  :  Orchestra  off  stage  sales  

-­‐  500    UNITS  @  $12    :  On-­‐Line  retail  sales    

-­‐   300    UNITS  @  $12    :  B  &  M  retail  sales        TARGETS  for  three  primary  areas  of  sales  for  digital  content    

-­‐  100    UNITS  @  $10  :  Downloads  on  your  own  website  -­‐  100    UNITS  @  $10  :  Downloads  on  another  platform    -­‐        0              UNITS    @  $0    :  Streaming  on  another  platform    

         2000  UNITS  TOTAL        

NOTE:    Digital  streaming  is  fast  becoming  the  primary  choice  for  digital  content    listening,  however  as  it  is  subscriber  based,  and  varies  widely  from  FREE  to  PAY,  it  is  currently  difficult  to  include  in  the  business  plan  numbers.    Consider  any  revenues  from  streaming  as  GRAVY.      

REVENUES  –  Crowd  Funding  

32  

 

The  practice  of  funding  a  project  or  venture  by  raising  monetary  contributions  from  a  large  number  of  people,  typically  via  the  internet.    Could  be  focused  on  a  service,  project,  cause,  investment  or  experience.    The  crowdfunding  model  is  fueled  by  three  types  of  actors:  the  project  initiator  who  proposes  the  idea  and/or  project  to  be  funded;  individuals  or  groups  who  support  the  idea;  and  a  moderating  organization  (the  "platform")  that  brings  the  parties  together  to  launch  the  idea.    In  2013,  the  crowdfunding  industry  grew  to  be  over  $5.1  billion  worldwide.      WIKIPEDIA  

REVENUES  –  Crowd  Funding  

33  FOR  THE  PURPOSES  OF  TODAY,  ASSUMPTION  IS  CROWDFUNDING  GENERATED  $2,000  

REVENUES  –  Donor,  Patron,  Government  

34  

DONOR  and  PATRON  FUNDING    

Solicit  your  audience,  board  members,  corporate  sponsors,  trusts,  etc.  to  assist  in  raising  funds  specifically  for  recording.          

GOVERNMENT  FUNDING    

Check  out  the  various  grants  and  loans  available  through  local,  provincial  and  federal  music  recording  programmes.          

At  the  federal  level,  the  two  most  influential  funding  organizations  are:  for        -­‐  English  Canada      FACTOR    Foundation  Assisting  Canadian  Talent  on  Recordings      -­‐  Quebec                                  MUSICACTION      

The  Canada  Council  for  the  Arts  also  offers  grants  and  prizes  for  the  production  of  recordings.  

FOR  THE  PURPOSES  OF  TODAY,  ASSUMPTION  IS  FACTOR  FUNDING  OF  $  5,000  

FOR  THE  PURPOSES  OF  TODAY,  ASSUMPTION  IS  DONOR,  PATRON  FUNDS  OF  $  5,000  

REVENUES  –  Broadcasts  

35  

Revenue  generated  from  broadcasts  is  a  bit  of  a  stretch,  but  in  the  longer  term  it  is  entirely  possible  that  as  orchestras  become  their  own  producer,  or  at  minimum  own  the  rights  to  the  master  recording,  will  be  able  to  license  their  music  content  to  broadcasters  locally,  nationally  and  internationally.    In  fact,  the  CBC  is  currently  promoting  the  idea,  that  is  licensing  live  concerts  from  orchestras  for  both  CBC  Radio  2  and  cbcmusic.ca.    There  is  also  licensing  experience  in  the  US  with  Minnesota  Public  Radio,  Radio  Canada  International  and  National  Public  Radio.          

REVENUES  –  Broadcasts  

36  

Post  your  audio  and  video  material  on  your  website  and  set  up  a  YouTube  Channel.      This  is  NOT    big  money  opportunity,  rather  one  that  expands  your  organization’s  brand  to  larger  audiences,  locally  and  internationally.          At  a  somewhat  higher  level,  check  out  THE  BERLIN  PHILHARMONIC  DIGITAL  CONCERT  HALL.    For  approximately  $500  a  year,  you  can  enjoy  high  definition  video  and  audio  of  the  Berlin  Philharmonic  both  live  and  from  their  exhaustive  archives.  

FOR  THE  PURPOSES  OF  TODAY,  ASSUMPTION  IS  $  0.00  FUNDS  GENERATED.  

37

Greater  Potential  …  Fully  functioning  digital  concert  hall  Broadcasts  LIVE  

38

Broadcasts    (Archival)  

Currently  …  video  and  audio  content  is  limited,  living  on  external                            sites,  and  out-­‐of-­‐date  when  it  hits  the  air  waves.  

Revenues  –  Synchronization  

39  

WHAT  IS  SYNC  LICENSING    Sync  licensing,  or  “Synchronization,”  refers  to  the  use  of  music  in  films,  TV  shows,  commercials,  video  games,  presentations,  YouTube  videos,  or  anything  else  where  music  is  “synced”  to  moving  images.    When  music  is  licensed  for  sync,  a  fee  is  paid  to  the  songwriter/publisher  for  the  usage  of  the  underlying  composition,  AND  to  the  copyrighter  owner  of  the  master  recording  for  the  use  of  the  track.    

Revenues  –  Synchronization  

40  

FILM  /  VIDEO      

Licensing  your  recording  for  TV  shows,  movies,  YouTube  and  more,  has  the  potential  to  generate  new  revenue  streams  for  all  the  music  you  create.    

YOUTUBE  POTENTIAL      

100  hours  of  video  is  uploaded  to  YouTube  every  minute.  That’s  nearly  16  years  of  video  uploaded  every  day.  Give  video  creators  the  option  of  using  YOUR  MUSIC  to  bring  their  next  project  to  life.  

FOR  THE  PURPOSES  OF  TODAY,  ASSUMPTION  IS  $  0.00  FUNDING  GENERATED.  

41

Sync  Rights  Sales   Currently  …  

REVENUES  =  ASSUMPTIONS  

Physical  Distribution  

Digital  Distribution  

Donor,  Patron,  Government      

Crowd  Funding    

Synchronization    

Broadcasts      

=  1800  UNITS    

=      200  UNITS        

=  $  0  

=  $  10,000    

=  $  2,000    

=  $  0    

Polling  Question  

43  

Is  your  orchestra  confident  it  has  the  necessary  knowledge  of  the  classical  music  market  locally  and  nationally  to  ensure  their  recording  will  compete    favourably  ?  

   

44

 THE  CHALLENGES  -­‐  A  CHANGED  LANDSCAPE      

CONSIDER  …  your  music  product  is  controlled  by  everyone  but  you  !      

-­‐   sales  of  core  classical  music  have  been  challenged  like  no  time  in  its  history  due  to  limited  availability  of  traditional  retail  and  distribution  channels  

-­‐   although  physical  distribution  of  goods  still  dominates  the  commercial  classical  marketplace  (60/40),  digital  distribution  options  will  dominate  in  the  long  term  and  artists  need  a  digital  strategy  to  succeed.    Overall  split  in  all  genres  in  Canada  this  year  is  52  %  digital  48  %  physical.    

-­‐   labels  and  distributors  no  longer  support  core  classical  commercial  orchestral  recordings  to  the  extent  they  once  did.  

-­‐   labels  delete  product  and  do  not  support  initiatives  for  repurposing  

-­‐   broadcasters  (CBC)  no  longer  support  core  classical  orchestral  broadcasts  to  the  extent  they  once  did  and  editorial  control  is  in  their  hands  

-­‐  the  definition  itself  of  what  classical  means  is  determined  by  the  music  sales  industry,  not  the  performer  and  by  extension,  artists  and  repertoire  are  determined  by  the  music  sales  industry,  not  the  performer.  

45

What is Classical Music ? (at least as currently defined by the ‘industry’)

46

What is Classical Music ? (at least as currently defined by the‘industry’)

As  you  may  have  noted  in  the  forgoing  slide,  the  chart,  so  called  CLASSICAL  MUSIC  CHART,    the  dominating  titles  are  crossover  acts  (The  Piano  Guys.  Groban,  Bocelli,  Rieu,  Il  Divo,  Lindsay  Stirling)    Also  doing  well  this  week  are  budget  packages  in  particular  and  not  surprisingly,  Christmas  titles.    And  …  the  core  more  successful  albums  tend  to  feature  the  artist  first,  repertoire  second  eg  Cecilia  Bartoli,  Lang  Lang,  Yo  Yo  Ma.  The  emphasis  is  selling  the  solo  artist  and  not  so  much  the  featured  orchestra.    Number  of  core  classical  albums  in  the  TOP  100  CHART  …  ‘  8  ’  

47

Core Classical in Canada ?

The  JUNO  submissions  for  the  category    LARGE  ENSEMBLE  or  LARGE  ENSEMBLE    WITH  SOLOIST  have  averaged  some  20    recordings  over  each  of  the  past  three  years.      

Two  core  classical  recordings  this  year  in  include  the  TSO’s  SHEHERAZADE  and  the  OSM’s  Beethoven  Symphonies  1  &  7.    

The  TSO  CD  has  sold  at  retail  approximately  100  units    (released  August  2014).    

The  OSM  CD  has  sold  at  retail  approximately  2300  units  (released  November  2014).    

Average  number  of  physical  sales  of  a  core  classical,  full  price,  single  CD:  200.    A  very  good  seller  is  considered  to  be  1,000  units.      

48

Core Classical Internationally ?

There  is  an  estimated  7000  new  core  classical  recordings  released  internationally  every  year.    Industry  split  between  digital  and  physical  revenue:  52  digital/48  physical.      Digital  Downloading  revenue:  Down  14%  over  2013      Digital  Streaming:  Just  getting  started  in  Canada.  We  are  4-­‐5  years  behind  the  Nordic  countries  and  3  years  behind  the  USA  due  to  confusion  over  Canada’s  copyright  laws.      Nordic  Countries:  85%  of  industry  revenue  is  generated  from  streaming.  Physical  product  only  sells  at  Christmas  and,  generally  speaking,  it  is  of  the  deluxe  collector  variety.  (Spotify,  which  is  the  industry  leader  in  streaming  originated  in  Sweden).              

49

The Opportunity … CREATE OUR OWN LANDSCAPE

Status Quo

Orchestra is hired by indie /major labels who own masters and who manufactures, markets and distributes physical and digital product.

*  do not own or control music content *  happens rarely in recent times and orchestra expected to deliver master tape free

Licensing of Masters to Other Labels Orchestra owns mastertape and licenses it to another label who manufactures, markets and

distributes physical and digital product.

* take control of our own music content * own / acquire the exclusive rights to license commercial and broadcast recordings * improved contractual agreements with broadcasters and labels * improved budgeting and business processes to allow sustainable recording schedules * improved integration of recording strategy into ‘pillars’ of activity

Media (Records Label)

Orchestra owns or has rights to mastertapes and launches own independent label and engages distributors directly.

* take control of our own music content * create our own music production company and distribution channels * own / acquire the exclusive rights to sell and distribute commercial and broadcast recordings

50

Benefits & Risks

Benefits Risks

Status Quo - no manufacturing & marketing costs - does not owns masters - less administrative support overall - no digital rights - least financial risk as label absorbs - less artistic control

expenses - less financial payback on investment

Orchestra Licensing - label takes risk of inventory - priority in label’s family - owns masters - less branding for Symphony Nova Scotia - less administrative support - less financial payback on investment

Orchestra Media (Label) - owns masters - financial risk highest - complete artistic control - unsold inventory - highest branding potential - upfront costs of creating label - complete marketing control - new business learning curve - complete scheduling control - higher administrative support - highest financial gross on investment

Polling  Question  

51  

Does  your  orchestra  currently  have  the  necessary  accounting  and  inventory  control  methods  in  place  to  support  recording  endeavours  ?  

The  Financial  Spreadsheet  

52  

OK  then  …  we  now  have  the  necessary  figures  concerning  sales  targets,  expenses  and  potential  revenues  to  build  our  financial  spreadsheet.    

A  reminder  this  spreadsheet  is  built  on  a  recording  with  a  20  member  orchestra  and  the  contract  rates  are  taken  from  LIVE  CONCERT  RECORDING  WITH  3  HOUR  PATCH.    

In  the  summary  spreadsheet  profit/loss  column  also  refers  to  40,  60,  80  and  100  member  orchestras.        AND  …  here  is  how  it  looks  !!  

Revenues  /  Expenses  Spreadsheet  

53  

Summary  Spreadsheet  

54  

ACTION  JAN  -­‐  MAR  15  

APR          15    

MAY  15  

JUN  15  

JUL  15  

AUG  15  

 

FINALIZE  STRATEGY  /  

BOARD  APPROVAL    

ADMINISTRATIVE  /  HR  SUPPORT    

CONTENT  /  RIGHTS  FINALIZE    

P  &  L  /  BUDGETING    FINALIZED    

LABEL  /  DISTRIBUTION  FINALIZED    

PACKAGING  DETAILS  -­‐ Booklet,  Design,  Translations,  etc.    

MANUFACTURING  DETAILS  

-­‐ Proofing  /  Deiivery  

DISTRIBUTION  DETAILS  -­‐ Fact/Release  Sheet  delivery  -­‐ Product  Delivery  

MARKETING  /  SALES  DETAILS  -­‐ Physical  &  Digital  Strategy    -­‐ Launch,  Mid,  Year  End  Milestones  -­‐ Mid  Term  Sales  Update  

-­‐ Year  End  Sales  Update  

LAUNCH  

     CRITICAL  PATH  (  2015  FALL  LAUNCH)  

DEC    14    

OCT  15  

NOV  15    

DEC  15  

SEP  15  

Polling  Question  

56  

Are  you  scared  yet  ?  

We  didn’t  go  through  this  exercise  to  ‘scare’  you,  but  it  is  extremely  important  to  understand  the  cost  implications,  the  time  and  the  concentrated  marketing  it  takes  to  bring  your  the  master  recording  to  a  very  competitive  and  ever  changing  market.    The  economics  of  a  stand  alone  recording  of  core  classical  music,  in  itself  perhaps    makes  little  sense.    However,  it  that  recording  is  part  of  an  overall  strategy  that  supports  other  activities  within  your  organization  –  audience  development,  outreach,  touring,  education,  training,  electronic  calling  card,  etc.  –  then  in  an  overall  ‘vision’,  it  could  make  perfect  sense.      

REJEAN  TREMBLAY  Tafelmusik  Baroque  Orchestra  

 RANDY  BARNARD  

Consultant  to  Orchestras  Canada    

January  22,  2015    14:30  –  15:30  

Digital  Strategies  101    

Tafelmusik  Media  –  A  Case  Study  Audio  &  Video  Recordings  &    

Website  Applications  Sales,  Marketing,  Promotion    

Agenda  

58  

The  Tafelmusik  Media  Story  (  at  least  until  now  )    

Musicians’  Contract:    Tafelmusik’s  unique  agreement  with  the  musicians  that  has  allowed  this  all  to  happen.          

Online  shop:  story  from  our  successful    Merch  table  during  concert  nights  to  the  creation  of  our  online  shop:  ·∙                    Responsive  design  for  more  accessibility  ·∙                    Physical  product:  mail  to  order  process,  cross-­‐selling  ·∙                    Digital  product:  MP3  +  high  quality  FLAC,  future  perspectives  for  high  quality  files  ·∙                  Affiliate  programmes:  how  to  make  bigger  commissions  through  itunes  and  Amazon.  ·∙                  Quick  segue  on  Amazon  to  create  more  relevant  items  in  our  shop  (books,  scores,  guest  artist  

 recordings,  etc)  ·∙                    Merchandise:  Not  directly  related  to  recordings  but  for  sure  plays  a  part  in  our  shop  and  creating  

 new  streams  of  revenue.  ·∙                    Marketing  plan  for  selling  online  recordings:  programme  relevant  and  seasonal  promotions.                            

 Recording    as  part  of  our  ongoing  business  plan.  The  long  tail.  ·∙                    Social  Media:    FB  shop  and  how  we  engage  our  audience  on  FB  and  Twitter  segue  to  Watch  &  Listen    

Watch  &  Listen/Youtube:  From  engagement  to  monetization.  ·∙                    Creation  and  launch  of  the  site:  a  few  words  on  how  the  system  is  powered  ·∙                    Youtube:  a  growing  online  audience  and  how  we  can  monetize  this  content  .                      Call  to  action  sales  messages  .  Revenue  through  third  party  advertising