I often make the comparison between running a startup and running a band. If you are an artist and you have some ambition to make it, you must run your band as you would run a startup business. Since the music industry is changing and artists now have the opportunity to keep more power into their own hands, artists with an entrepreneurial spirit can build a career on their own terms and make more autonomous decisions about how they share profit.
Last week, the post on Hypebot by Wesley Verhoeve explained how funding of technology startups works (distinguishing the different phases of bootstrapping and funding by business angels and venture capitalists) and how this could relate to new business models in the music industry. Incidentally, the last couple of days I had some thoughts about my own situation as a self-managing artist and member of the upcoming band Amatorski.
We are definitely a bootstrapping business. We self-released or debut CD (with 4 songs) and cut a promotion/distribution deal with a small independent label to get the album in the shops in Belgium and the Netherlands. After we got a lot of attention in the most important band contest of the country (Humo’s Rock Rally), our album was acclaimed by the people, our single ‘Come Home’ got a lot of airplay on national radio stations and became a bigger hit than we ever would have expected. We started working with an agent for the live gigs and we closed an interesting licensing deal for a television advertisement.
In this stage, however, we are ready for the next step. The logical old-fashioned choice would be to hire an experienced manager to help us decide about the future strategy, about international expansion, signing broader record deals, etc. Normally, a manager takes care of all the practical and business related stuff and enables the artist to focus on the music. However, that is not what I want to do as an entrepreneurial artist. I love to handle the administrative and strategic issues and to add my personal tech-oriented touch to it, one of the other band members focuses on tour management and someone else takes the artistic lead (writing new songs, etc.). On the other hand, I am still a bit of a newbie in the music industry and I would like to learn from people with more experience. In other words, for this new emerging class of artists like me, we should define a new relationship with experts in the industry.
I would like to call this new partner a music business angel. Business angels are people with previous experiences in running a business (most of the time they are not that young anymore) who earned a nice amount of cash and want to invest in young start-ups. Sometimes they call it ’smart money’. Of course, business angels are in it for the money, but also because they like the dynamic spirit of young entrepreneurs and new businesses. Most of them don’t just give a check, but want to be involved in the company, lend their advice and use their network to help the startup forward. However, the founders still run the business and the business angel acts more like a mentor.
I think there should be business angels in the music industry who are mentors for entrepreneurial artists. As an artist, you run your business yourself and you don’t outsource it to a traditional manager. However, you could use some ’smart money’. Even then, the ’smart’ part is the most important one: you want the benefit of working with people with experience and the right network. And of course, you can use some money to cover the expenses for recording and promotion or to offer an income for those self-managing artists who can’t have a day job, because they want to focus on their career. However, in many cases you don’t need that much funding, since nowadays, with cheaper recording possibilities and internet marketing, you can cut costs to a minimum. Maybe that is the reason why the major label scenario doesn’t work anymore for many artists. It is like being funded by a huge venture capital round in the first months of your startup. You get a lot of cash but you also lose much control. This is not the best situation for emerging artists. Lots of band will thrive far more better in a bootstrapping scenario or with some kind support from a nice music business angel.
