Multi-level marketing: A new radical online distribution model to Tell Your Friends

Social media is the way to go, it seems, as a tool to promote and market one’s music. With streaming platforms such as Youtube, many artistes have found fame online, with close to a million hits or subscribers on their Youtube channel. Most of them, however, have yet to have found fortune, or are still unable to monetize the strong support from social media. A proportion of these artistes still depend on performance fees to generate the bulk of their income, and not through the sales of their music. Tell My Friends (TMF), a new online music distribution model, aims to change all that, says CEO Mr Ben Looi, by providing tools for artistes to get people to go from interest to conversion.

At first, this writer thought that TMF was an online music store like iTunes, but on closer look, we couldn’t find anything that resembles a store on its website. So how is the music sold? Apparently, after an artiste or publisher inks the distribution deal with TMF, they are given unique links for each song that is being sold, and the client would have to market the link themselves by posting it on their own social networks such as blogs, websites and Facebook pages. Their fans will get to purchase the track by clicking on the link, and payment can be done via paypal or credit card. Buyers of the track will in turn, be given another unique link of their own, and if they share it on their social media networks and someone else buys the track from their link, the buyer now also earns a commission for sharing that link. 



Sounds like MLM (Multi-level marketing)? Yes it is. Then is it a scam? Well, during the interview, Ben openly admitted that he knows that MLM has had a bad name, and so he did his due diligence to ensure that his model is legal, and to clarify things further, he even went through the effort to state the distinction between a fraudulent MLM model and a legal one on his website. He also explains that TMF is simple, as you do not have to hit a minimum number of levels in order to get your credits.

We drilled into the ex-SAF officer on how he executed his mantra: “Consume digital products responsibly and get rewarded for it.”

Ben Looi, CEO of Tell My Friends Pte Ltd

Q: What exactly is the business model of Tell-My-Friends? How much does your company make from each sale of a song copy?

The business model is network marketing, also known by other terms such as direct selling and multi-level marketing. The twist is that it is integrated with social networking, hence a more appropriate term is social network marketing. Tell My Friends make 20% from each sale of a song copy.

Q: Who is your core target audience?

As a platform, we are targeting those who currently download stuff for free, either via torrents or illegal file-sharing. As for content, there really isn't a core target audience, because practically anyone, whether you are a social network user or a smartphone user, can be an audience. Tell My Friends is a platform to augment content owners' sales and marketing, so the core audience of our clients differ. For example, if an artiste that sings pop ballads, then the core audience for us would be working young adults. If it's Mandarin oldies, then the core audience will be retirees, housewives etc. If it's Christian worship songs, it would be Christians. The core audience depends on the content, not Tell My Friends.  We also target young people like teenagers and students by facilitating cash payment using prepaid cards.

Q: How did this concept come about? Why the MLM model? What is your company's vision and mission?

I've always enjoyed music, and I have great respect for those who chose to make music their livelihood. Believe me, it's not a very well-paying job, but the passion for the craft is what keeps most musicians going. I was wondering how can I help musicians make a living AND keep the passion, and a big pain point most musicians face is that of online piracy. It's a very pragmatic view if you ask any consumer  "Why would you pay for something when you can get it for free?" and the answer is obvious. The industry has tried to beat piracy using technology like DRM and we know that doesn't work, because anything that is encrypted can be decrypted. It then tried to fight based on price and convenience, driving prices down to the ground at $0.99 plus minimal clicks. That has some positive outcomes, but musicians aren't the ones making money - it's the megastores that does. Then they tried to use legislation and enforcement such as SOPA, which is totally against what the Internet is all about - freedom of choice and expression. Hence, I reframed the problem of piracy - not as a technological or enforcement issue - but as a behavioral problem. Working as a military psychologist for the past 2 years gave me the experience and insight that positive reinforcement of a desired behavior is more effective than punishing or negative reinforcement of an undesired behaviour. With that, I then needed to think of a way to sustain a reward system. After much research of various business models and laws, the solution was found in network marketing or MLM.  My company's vision is summed up as such: Help People. Save Music. Be Rewarded.

Q: How long has TMF started? What is the response so far? What kind of investment costs did you incur in setting up such a business? How long do you expect to break even?

We've started full-time for about 7 months, and we have broken even. The response is good, judging from the interest generated, and conversion is slowly happening. We are still in beat testing, and already we have 210 users and 394 paid downloads - and we haven't even started marketing yet. We will expect a spike in both numbers soon, as we begin our marketing efforts. The investment costs is confidential, but suffice to say we have been very prudent in getting things done with a limited budget and lots of innovation. And of course, goodwill from supporters of our vision.

Q: What is your current catalogue like? Are you working with major and independent labels?

We know we are very new, and no one has an idea of what we are doing! We have met up with a major label as well as industry bodies, and while the local HQ is interested, the inherent legacy corporate structure may not allow major labels to use us at the moment. The independent labels, however, have more autonomy, and are very keen to be on board. We now have mainly independent artistes, both local and overseas, mainly friends, and friends of friends, like Chen Huisi, Matthew Quek, Ko Sherman, Eric Chiryoku, Jai, Jessica Irawan, The Glad Stones, Phoebee Ong, Gilbert Baldoza, Nat Ho and Thomas Ong. The catalogue includes Chinese pop, New Age, English pop, Christian worship, classical, jazz, musicals, Malay pop, Japanese. We also have ebooks lined up.

Q: Could you explain more about the partnership with Music Galaxy Records and Music Publishers Singapore? How does the one-year blanket license work?

Music Galaxy Records is a subsidiary of Tell My Friends. We had to start a content creation arm so that there are songs to sell on Tell My Friends! When we started TMF, we spoke to local industry bodies and societies to understand about royalties and industrial practices. Music Publishers Singapore (MPS) is a society formed by music publishers like Sony ATV, Universal Music Publishers Group, EMI, Warner-Chappell, Touch Music and many more. We know that there are many local artistes who do very good covers of popular songs, but they do not know how to clear the rights to sell them online. Many pop songs on radio today are also covers, thanks to successful shows like Glee, American Idol, The Voice etc. There's always a fresh and new way to interpret the same song. We have made an arrangement through a license from MPS that any cover song submitted by independent artistes and labels will automatically be cleared for mechanical rights licensing as we will apportion the royalties due to publishers have claims to those songs.

Q: How can artists and writers benefit from this? 

Artistes can go ahead and record their songs, whether it's original or a cover version, and sell it via TMF as a one-stop service. The artistes will have the sound recording royalties if it is a cover song, and both sound recording and mechanical royalties if it's an original. Artistes and composers/writers can also collaborate to do a song, and work out an agreement between themselves what portion of the royalties they share, and let TMF know who to pay when the song is sold. It's that simple.

For a cover song, out of a dollar for royalties, a certain percentage goes to the owner of the sound recording, while the remaining is paid to MPS for the song royalty. This is a blanket rate, so the recording artiste will simply have to decide how much they want per song to set the final price of the track. Each song is uploaded by Tell My Friends so that we would have control and this is why we are taking the 20% commission to manage all this for the client. The distributor contact will have a list of songs that they want to sell as a client, and from there the tracking will be done by Tell My Friends to pay MPS. They would have to sign to declare that they are not the composer in the distribution contact. In this way, all administration is taken off artistes’ backs and settled by TMF.

Q: How do you compare yourself with other major online music stores like iTunes? How is your business model different? Ultimately, what does it mean for labels, publishers, artists and writers?

We are different from major online music stores in that we give buyers something that online music stores don't give - cash rewards. Online stores are very much single level market models built with convenience and low price as the selling point. For artistes, there is a fee involved in putting our music on those stores, and will be catalogued in a large, virtual store together with thousands of other artistes and products. Consumers can choose to go spend $0.99 on your song at the major store, or get it for free somewhere, somehow via torrents, or even via USB or email. 

Tell My Friends is not a store, as we do not sell music directly on our platform. We do, however, send out weekly newsletters as a catalogue of songs, and members can buy them. Now, here's where TMF makes the difference. Anyone who buys any song, ebook etc will have a unique link for each product, and you can share the link with your friends, via social networks, email, and even SMS and Whatsapp if you have a smartphone. For those who have a blog, you can even insert the link within your blog, and even create your own music store. Each time anyone buys the song from your link, you get a reward. Even if the person who bought from your link copies what you do and set up his own store, you will still get a reward when someone buys from his link - for up to 10 tiers. You can't do that with iTunes, can you?

What it means for labels is that, while labels generally own the sound recording rights to the song, the artistes under the label will also get a commission each time the song is sold, provided the first link is given to the artistes to seed the market. For example, if MGR paid for and produces a song, and therefore owns the rights of a song sung by Ben Looi, and because the first people to buy the song would be Ben's fans (assuming he has fans...hahaha), Ben earns a steam of commission, while the label earns royalties. It's a win-win for both.

Q: Are there any listing fees in the distribution contract?

TMF does not act like a retailer, so there are no upfront fees to list songs, but clients are required to take a consignment of at least 50 prepaid TopUp cards with a downpayment of 10% of RSP to be sold for a period of 3 months. The artistes can make $0.50 per card. They can also customize the Topup card with an additional $300 for the mould.

TopUp cards are priced at S$8 for 600 credits. 1 credit = US$0.01. Users can cash out via paypal or cheque. Clients would however have to accumulate a minimum of $15 before cashing out, and can only cash out commissions earned and not topped up.

TopUp Cards from Tell My Friends

Q: What if the artistes’ fanbase does not use Facebook?

TMF has put in a total of 320 social media platforms on which the links can be shared on, so even in a country like China which does not use Facebook, artistes are still able to reach out to that market through other popular local platforms like Weibo.

Q: According to your website, each song is selling for US$1.84. How did you arrive at this price?

No, the song price is not fixed for every song. It depends on what our clients set

as royalties. The principle is nothing less than 50% of retail price goes to royalties, so we first determine what our clients want as royalties for sound and mechanical rights.  Supposing our clients want $1. This would then form 50% of selling price before taxes and transaction fees. 30% or $0.60 will be allocated as commissions for buyers, spread over 10 tiers. The amount per tier is shown on every purchase page you land on selling each song. The remaining 20% goes to TMF for admin costs. So, in this example, the retail price, inclusive of taxes and transaction costs of about 13-15%, will be close to $2.30. Most of our clients set their royalties at about $0.90 to keep the final selling price inclusive of taxes and transaction costs below $2.

Q: Tell us more about the Secret Angel function in your website. Is it a direct donation? Why would consumers choose to donate in this way instead of directly to the charity of their choice? Will the donation be tax deductible for consumers? Do you charge any administrative fees for the donations? How is the charity cause increased the affiliation between the consumer and the artist? Is there supposed to be any deliberate connection?

We are finalising the MOU with a major charity entity who will be partnering us in this Secret Angel function, so the details can't be discussed at the moment, but suffice to say we are doing this as part of our vision - Help People. There will not be any affiliation between the consumer and the artiste under normal circumstances because the artiste is just selling his/her song. Whoever buys that song can choose to direct all future commissions from that purchase to the charity of choice, so it's not the artistes' call or decision to support the charity, but that of the consumer. However, if an artiste DOES want to support a charity through the sale of the song, he can direct TMF to apportion a certain percentage of royalties accrued to the beneficiary, and consumers who buy the song can choose to still keep their share of commissions for own use, or direct their portion of commission to ANOTHER charity. As to the other questions about whether it is tax-deductible and admin fees, we will have to wait till the MOU is signed, as these points are covered in the MOU.

Q: Your site claims that at least 50% of revenue goes back to royalties and about 30% of revenue to go back to consumers in the form of commissions. How do you intend to ensure transparency in reporting in terms of sales and donations?

Each purchase landing page has the breakdown of commissions at each tier. Each time you buy a song, it goes on to your Purchase History. When your link you share generates referral purchases, the commission earned is displayed for each song. Clicking on it will show the breakdown of commissions, i.e., how many and who bought the song that earned you $0.21, $0.11 $0.05 etc etc. The identities of the buyers are partially masked for confidentiality. As for donations, whenever someone donates HIS level to charity, the purchase landing page will highlight the respective tier of commission with an indication of which charity is receiving that share. On the Secret Angel list of charities, it will also show the amount raised and how many "secret Angels" each charity has.

In terms of accounting, we can arrange to have a credit note be given every three months or even every month to the artiste or publisher.

Q: Tell us more about yourself and who makes up the team at TMF. How did you get yourself involved into the music business and why?

I served in the Singapore Armed Forces for 13 years before calling it a day to start Tell My Friends. In my 13 years as an Army officer I've served in various capacities, ranging from direct command in the Infantry, law enforcement as a Military Police, doctrine and capability development for homeland defence, training officer cadets in OCS, and as a defence psychologist. I'm currently the Ops Officer of an Infantry Brigade in NS. The prospect of doing something totally different, challenging and never attempted before was the change I needed, because the notion of staying on for another 13 years in the same environment is not for me. The TMF team is growing day to day, and I guess it's the vision that attracts the right people to my team. We are entirely self-funded at the moment, and we are able to sustain the business to profitability because everyone in the team contributes and value adds. Pearly, my sister, takes care of business development for TMF and our subsidiary music label, Music Galaxy Records (MGR). Huisi manages the production of music that MGR produces, Chris takes care of the technical development, overseeing and coordinating with my vendors who do the programming. Andy markets Tell My Friends to international artistes to put their content with us, and a few friends who are helping out with the user experience design and other stuff to make us look pretty. Justin is taking care of the PR, and we work with an IP lawyer as well as a patent lawyer for the legal mumbo jumbo stuff. We are currently developing an arrangement with a music marketing manager in the Netherlands to cover Europe and a few potential partners to bring Tell My Friends to the Philippines, Malaysia, and Taiwan.  We got involved in the music business because music is very important to everyone - it represents the soul of life, and we all need music to be with us all the time - to celebrate life's finest moments, and to comfort and sooth the pain and sorrows. We need to keep music alive.

Q: How much do you think digital sales would make up the music market in the next three to five years in Singapore? How about in Asia?

Increasingly with smartphones, personal media devices and other gadgets converging, products will be consumed in the digital form - videos, books, music. Singapore is a small market with high computer literacy, online banking and credit card subscription, which is not representative of other Asian markets. Digital sales will increase at least 10 to 20% year on year in Singapore if piracy wasn't so rampant. That said, there isn't really a music industry in Singapore today, although there is a vibrant music scene. Most major labels have moved operations to Malaysia as the local market is many times bigger than Singapore. Digital sales in countries like Malaysia, Indonesia, Philippines still has not been significant as credit card subscription is low. For example, 70% of mobile phone users in Malaysia and Indonesia are on prepaid plans, unlike Singapore where most are on postpaid plans. Cash will continue to be the preferred payment method regionally, and unless you have a complementary system other than just Paypal and online banking, people will continue to buy music in its physical form of a CD, go home and rip it to digital format, and since it's already ripped, they might as well share it with friends.

-------------------

Ben is optimistic on the potential success of this model. His target is to have five major artistes to be on the catalogue by the end of the year, and as long as he has some success stories, he’s confident that the floodgates will open.

“It’s a chicken and egg thing, currently I have no customer base, and no content, it’s just a platform. So now it’s a matter of building content and getting buy in from artistes. It’s a challenge but I love the challenge because it’s something so new. So far the response has been positive, and people have been keen in coming in, like Nat Ho, who recorded the song with us. I need content. I tried talking to some labels, but because I’m so new, so nobody wants to bother with me, so I created a label to create content. We actually commission songs for private investors. Songs are intellectual property and we sell the intellectual property. We, as a label, get the singer, band, audio engineer and producer to create the recording. Because the investor bears the financial risk of paying everything upfront, they own the intellectual property for 70 years. They are actually creating jobs. Roughly we are selling the package for about $15,000, and the royalties generated will all be returned to the investor. MPS still gets paid if it’s a cover song.

Eventually, how I measure the success of TMF would be to enable at least one artist from Singapore to make it big overseas.”

This entrepreneur has big dreams for local artistes, and we hope that he makes it big too.

How to increase your revenue? "Write more songs!" says Synthpop duo, Cosmic Armchair

If you're an artiste and/ or composer who is looking to increase your revenue, one of the most important things you have to do is to expand your catalogue quickly so that your fans can buy more of your music. Sounds simple enough? Sure, but some musicians find this even a challenge because they have to juggle so many other jobs in between writing, like marketing, teaching, performing etc.

We hear from Cosmic Ben, one half of a synthpop band, Cosmic Armchair, on the challenges and opportunities he faces as a musician.

Q: Being a synthpop act based in Singapore, how does it make it any easier or harder to sell or market your music?

The most popular music genres in this region are the non-English pop ones, so we are definitely a minority interest in Singapore. So we've been happy that there is a small but growing group of friends and fans in Singapore that continues to enjoy our music and support our gigs.

From another point of view, we are pretty unique because there aren't many synthpop duos in this region. That also helps us stand out in the international synthpop and electronic pop scene, which is where our larger audience is.

Q: What are your distribution points, online and offline? Which of them bring the most revenue to you? Any other income sources?

Most of our digital sales have come through iTunes US and UK and Bandcamp http://cosmicarmchair.bandcamp.com/, with a small percentage through Amazon MP3. We have a very small revenue from streaming on Spotify.

Our physical CD is available in Singapore only at The Esplanade Store, and sales were highest when we performed at The Esplanade Concourse for BayBeats. We hope this will happen again when we perform at the same place on 29 and 31 August.

We also sell our physical CD through our website www.cosmicarmchair.com, and even shipped one to a fan in Russia!

Our other source of revenue is performance fees. At this point in time, we're still in the start up phase so the proportions of each revenue stream are still evolving, and we're still open to other opportunities such as providing songs for TV, film or advertisements. Currently, our largest customers are venue operators, so performance fees make up the bulk of our income. In fact, the ratio of performance fees to CD and digital sales is about 10:1. So what we strive to do is to reach the tipping point where consumers become our bigger customer base, and that’s when CD and digital sales will make up a higher percentage of income, and we would also be able to sell other products like merchandise as an additional revenue stream.

Q: You are a tutor (at the NUS Electronic Music Lab), a band and you even have your own label (Stratos Entertainment). Share with us what are some of challenges and synergies of holding several hats in the music industry.

Working with the Electronic Music Lab has always been a passion for us and we actually first met at the Lab. That social element is a big synergy because we meet new and talented electronic musicians every year. Over the years, we've collaborated with various musicians, producers and engineers that we met through the Lab.

On the other hand, teaching at the Lab is also a challenge because it takes time which could be spent working on Cosmic Armchair songs, so it's a balancing act.

Q: What are some of the future developmental plans you have for Stratos and for Cosmic Armchair? Do you plan to increase the stable of artists under your arm?

We want Cosmic Armchair to reach as wide an audience as possible not just in Singapore but around the world. Currently, our presence in Youtube is still rather weak; ideally we should be putting out one video per month. Besides our Facebook, Twitter and YouTube outreach, we aim to play at international music festivals, and we're open to foreign gigs like the one we played in Nospace Gallery, Bangkok. 

Stratos Entertainment's main artist will continue to be Cosmic Armchair, and we'll grow organically if we find other artists that we can work with.

Q: What do you think of the future of the music industry in Singapore and in Asia? How do you think artists like yourselves should look to increasing your revenue and making their music careers sustainable?

The music industry in Singapore is not confined to Singapore. Our home is here, our friends and family are here, but we can also reach the much larger international audience.

Just these few years we've seen an increase in the number of US and Canadian independent bands touring Asia. Even though they're relatively obscure, they can fill 1,000-seat venues in Singapore because their music has reached fans here through YouTube and other channels. In the same way, we Asian artists should be able to find our pockets of 1,000 fans in cities all over the world, if we take our business seriously and promote it actively.

But all the social media in the world only works if the music is good. There is no magic bullet to success. If we want our songs to reach wider audiences, increase revenue, and support sustainable careers, the most important thing we need to do is to keep on writing, recording and performing good music. Right now, one of our biggest challenge is to have more material churned out more quickly, because the more material we have, the more income we can make because there will be more products for our fans to buy.

About Cosmic Armchair

Cosmic Armchair is a synthpop / electronic pop duo based in Singapore. Cosmic Jane (singer / songwriter) and Cosmic Ben (producer / arranger) have been compared by fans and critics alike to Goldfrapp, Depeche Mode and Chicane. Their CD "A Second Look" is available at The Esplanade Store and their songs are available for download on iTunes, Amazon MP3, BandCamp and more. For more details, photos, video and music, visit www.cosmicarmchair.com

Their next live performance will be held on 31 August 2012, 715pm at The Esplanade Concourse.

Upcoming event: Singapore Music Dialogue on 8 Sept 2012

The full transcript from Stuart Johnston's opening remarks at the Forum in Jan:

"Back in the 70s, living next to the USA, Canada has long-suffered an inferiority complex. So Canadians for some reason always seem the need to be validated. We can have tremendously successful people in Canada but it doesn’t matter unless they make it in the USA. We have tremendous talent in the cities of Canada, but they have to make it in LA, NY, Nashville, be big around the world; and then they come home to become successful. Back in the 70s, we could not hear Canadian music on the radio. There were a handful of great music industry professionals in the independent sector in Canada and they decided that they needed to take matters in their own hands. And there is strength in numbers, thats why associations, that's why industries can become very powerful - they can literally move mountains.

So they were up against broadcasters, music producers, record companies that were controlling the product, controlling what was being played and of course, if it was a successful American or British act, thats what was being played on the radio. Sure, great music but we liked to hear some of our own stuff. So they formed an association to primarily become advocates for that sector. So the association went to the government and lobbied quite hard for regulations that resulted in that Canadian content rules. It started off at 20% (and its now mandated that broadcaster must play 35% Canadian music). Once approved, this wasn’t an overnight success. The association members then looked at each other and noticed that there wasn’t enough catalogue of decent quality. So the rules came in first and then the association suggested funding support and raise the music industry to provide the level of financial resources and tax structure to support Artists, managers and labels. So there were funding opportunities that came up such as broadcasters were mandated to put a percentage of their gross revenues and 6% of license fees into a fund that then got pumped back into Canadian-owned, Canadian Artists. The funding support for the association went across all areas such as production, videos, marketing, promotion, touring, showcases, etc.

And this is why we saw such as explosion of great acts in the 70s and 80s because there was this foundation of support that would not have happened if the industry didn’t take it upon themselves to speak with one voice and say this is what we need to be successful. Thats the legacy."

Hence why SGMUSO was born.

During the last interview with Graham Perkins, the brainchild behind the Singapore Music Society gave his advice to local musicians: The world is your "Chilli Crab". Come 8 Sept, he is organizing a free dialogue session for everyone to come together to discuss how the Society should improve the local music scene. Some of the issues on the agenda include:

Skills - Education programs in the areas of Artistry, Business and Production
Advocacy - Digital, Media and Live Performance Related Programs
Opportunities - Overseas events

For details of the event, click here.

Looking forward to it. See you there.

COMPASS CEO says, "It's almost impossible to monetize music from new media."

During the 90-minute interview with Dr Edmund Lam, CEO of The Composers and Authors Society of Singapore (COMPASS), he was candid and forthcoming. As much as one hopes that a successful and more equitable business model will eventually emerge to monetize music in the new media age, he has seen a fair share of hopefuls that came and left the market, and what remains now are existing models that are still require improvement in many areas.

"It's almost impossible to monetize music from new media," he says. "But what new media has done is to provide more access for consumers to discover different types of music, which will encourage more artists to come to Singapore for live performances. New media has also helped artists save on marketing costs.”

                                         Dr Edmund Lam, CEO of COMPASS

Indeed, how artists and publishers earn their keep has continuously been a challenge, and Dr Lam shares how COMPASS, playing the role of Singapore’s sole copyright administrator, has evolved over time. He also talks about what he thinks will be the future of the music industry in Singapore.

Q: Based on COMPASS’s experience, what have been the best sources of royalties and other revenue in the 1980s, 1990s, 2000s? Has this changed over the years?

The bulk of the current copyright law is based on the 1989 Copyright Act and prior to (that) was the Imperial Copyright Act dated back in 1911. When the Copyright Act in 1989 was passed, COMPASS started around the same period, although we had not started administration then. Prior to that there was the Performing Rights Society, a subsidiary of the Performing Rights Society in UK has been operating here for a number of years based on the Imperial Copyright Act, but that Act granted limited rights to music writers. It was only applicable to situations where live music was performed; so the British Agency only licensed pubs, nightclubs and the like. But the new Copyright Act was a fundamental change, because overnight, it granted a number rights to creators and our composers, and that gave us a room to start our business and COMPASS commenced operations in 1991.

One of the most important rights then was the Broadcast right, which upset the radio and TV stations because they had to pay royalties to COMPASS, so there was a Copyright Tribunal. Under the Copyright law, there is a provisional section that allows a dispute between a collective management organization like COMPASS and the user to have the tariff arbitrated. And that was the first Copyright Tribunal hearing. Unfortunately, the decision from the Copyright Tribunal hearing in 1991 did not grant us attractive rates for traditional broadcast, but that was how we started our operations, and the revenue comes from TV and radio stations, which provided an unprecedented source of revenue. Back then, the users were upset, but over the years, we built up a very good relationship with the radio and TV stations and they do play a part: we sponsor programs and we jointly organize programs to promote the music industry. So the relationship has changed quite dramatically over the years. Now, traditional media understand and appreciate the need to compensate music writers for using the intellectual property of the songs, because without those songs, they wouldn’t have existed.

Resolving with the major broadcast stations was a major establishment in the 1990s; and the other was the licensing of live concerts, and the breakthrough came only in 1993 when Michael Jackson had a big concert for 3 nights at the National Stadium. Tickets were priced at over a hundred dollars each. The organizers of the concert refused to pay because he claimed that Michael Jackson had granted him all (musical) rights, and because of that dispute we had another major case heard at the Tribunal, which was covered by the media daily. It was a tough fight, but COMPASS won at the end of the day. The Tribunal agreed to the rate we have established at 2.5% of gross ticket sales, which translated to quite a sum for the Michael Jackson concert, estimating to be about over a million dollars. After this case, revenue flows included those from live concerts. After Michael Jackson’s concert, there was also a booming trend in live concerts, and even today, live concerts by major artists are on the rise, and this source of revenue has not diminished over the years. (Revenue from) broadcasting has also not declined over the years, but they faced competition from cable TV, which has also become our major source of income since 1995-6.

Traditional broadcast (radio and TV), live concerts and cable TV have become major revenues of COMPASS until today. In addition, the other major revenue source is from the entertainment industry – we managed to penetrate nightclubs, karaoke operators (karaoke is something probably only common in Asia), and so composers who compose songs that people like to sing in karaoke will earn more royalties.

In the late 1990s-2000s, there was a rise of the popularity of ringtones. COMPASS does not normally administer mechanical rights (reproduction rights) of a musical work. COMPASS started off with performing rights (i.e. broadcast rights/ live performance rights), and in the olden days of CD printing, COMPASS has historically not been involved in that line of business. The publishers themselves administer that particular right. So a composer will assign the musical rights to the Society but he will negotiate with the publishers to have his or her work to be recorded in a CD (sound recording) and this mechanical right is being administered by the publisher themselves, which was then licensed to the music labels for retail sales. But as we grow more established, we started to represent more independent writers who assigned those rights to us to administer. There was a short boom in ringtone, however the collections were not that attractive, because a ringtone supplier needed two licenses: one from COMPASS, which is a Communication right that we grant to them (when a ringtone supplier communicates to a handphone user, he requires this license from COMPASS). On the other hand, after the phone user receives the signal and makes a copy of it, that copy requires a reproduction right and requires a license from the publishers, and COMPASS does not have all the rights in this area. Some service providers took advantage of the confusion and did not pay the royalties. So although the ringtone business was doing very well (selling $1 each at its peak), we could only charge about 6-7 cents against a dollar, which translated into about $1-2 million of royalties out of a $20-30 million dollar ringtone business in Singapore. We didn’t manage to get much out of it because of the confusion, but in the end we all came together, because the publishers realized that it would be better to do it collectively, for the convenience of users. But by the time we got our act together, the ringtone business already went down. So the music industry was a little slow, and we couldn’t see the opportunity in time and was unable to catch up with trends quickly.

Q: What were some of the business models that worked or did not work for the music industry and why?

Similarly, for new upcoming business models, there’s some disunity amongst the different stakeholders in the industry, but hopefully we can get our act together to license the music to service providers. However, we realize it’s quite a challenging business because the Singaporean consumer does not purchase on a song-by-song basis. Consumers do not bite when you offer them $1 or $0.80 per song, as compared with markets in US, Japan and Australia.

One of them that failed was Soundbuzz, as the per-download model did not take off in Singapore. The telcos had the upperhand because they owned the platforms.  So some of them wanted a 50% margin if music was to be retailed through their platforms. Later, when the buffet-styled eat-all-you-can models was launched, it took off but in the process, music has become worthless. Nokia’s Comes With Music (product bundling model) also pulled out, because music has become too cheap and in the end we all don’t make any money.

The iTunes music service is not available in Singapore yet, but even if they launched it here, it will be very challenging for it to sustain because from the experience of the Nokia’s Come with Music business model, they used music not to make money but to use music to sell the phones. After they launched the service, Singaporeans downloaded several millions of songs but only for that small amount of money.

I think it is almost impossible to monetize music from new media. But what new media has done is to provide more access for consumers to discover different types of music, which will encourage more artists to come to Singapore for live performances. New media has also helped artists save on marketing costs. If you look at it broadly, artists can now promote their works more easily through YouTube and digital media. I observe that the cost of marketing Lady Gaga would be lower than marketing the Beatles, because with digital media, overnight, everyone will know about Lady Gaga, say in South Korea whereas in the past it would have taken months. Everything that happens now is instant and news spreads instantly. Marketing through new media is very massive and cheap. The labels and recording industry don’t benefit from all this, it’s more of the concert promoters and artistes themselves who are actually making the money now.

People are spending on music in a different way. People are willing to spend money on concerts to have a live experience and you’ll see the same artists coming back. One concert ticket is over a hundred dollars, and that, in the past, is worth 6-7 CD albums a years, so an average person is definitely spending more in music. Executives spend more time in bars, and more at karaoke sessions to have some kind of musical experience, as compared to previously.

Q: Could you elaborate more about COMPASS’s partnership with Youtube?

The license granted to YouTube is based on revenue collected from advertising. YouTube is also a place for our members to promote their works. More importantly, our license with Singapore YouTube allows the setting up of a Singapore domain. That’s the main motivation. We want YouTube to have a Singapore domain so we can track what kind of music and videos that Singaporeans or people in Singapore are viewing.

Q: What do you think would be the future of the music industry be like in Singapore?

In recent years, Opennet, the new generation of broadband, has started to roll out. It allows high quality streaming, which will connect our TV to all other devices in our homes. Once this is established, there are many services that can be provided to consumers. With Opennet, I could see changes in entertainment such as Xbox. Currently there are still limitations to Xbox with regards to the number of simultaneous multi-players because of limitations of bandwidth, but with Opennet, it will change the whole entertainment business. When you watch a football match, the resolution will be extremely clear. That will transform Singapore. Not many countries will have this – optical fibre. So I would see that the next kind of devices, such as the mobile phone, will be used as the interface to Internet TVs. Internet TV has not really picked up yet, but I think it will pick up after everyone has access to optical fibre broadband, and with that you can place your phone as a remote control to view YouTube on TV. That is already possible now, but currently it is still quite a cumbersome process to set up. In future, consumers will access their music through this platform, and probably people will watch programs and music using Opennet. It will be a revolution and change everything. Traditional broadcast media will be under threat, and so will cable TV. I believe that is the future.

Q: Geographically, which markets have the most potential?

Mainland China. It is a challenging market, but they would have to use a different model. They no longer make money through selling music, but once you establish a name in China, you can find other ways to milk the market. You can probably have many live performances. Just recently, I read that Eric Moo is making a lot of money, as every day he is performing at different places for those in their 40s and grew up with his music and can afford ticket prices. So he’s not doing new music but making money from all his old music. Artists can make money through touring and advertising. China has a population of 1.3billion people, and once you get an advertising right of a product, that would be more than enough for one album.

As for touring, I was told one cycle could last 4-5 years, given the number of cities and provinces that they could cover. Market size is still very important. Despite weak IP enforcement, there is still money to be made, albeit in other ways (e.g appearance fees). And so if CCTV invites you to be on their Chinese New Year show, you’d better not ask for money, because everyone will be fighting to get on it and the bargaining power will be different. Once you do an appearance like that, the chances of clinching a product endorsement deal are very high. And that’s how the industry will be involved, rather than through recorded music. Recording good music is still important, but the revenue cannot be from the sales of music.

About COMPASS

The Composers and Authors Society of Singapore (COMPASS) is an organisation created to protect and promote the copyright interests of composers, authors* (and their heir) and publishers of musical works and their related lyrics. COMPASS is a non-profit public company which administers the public performance, broadcast, diffusion and reproduction rights in music and musical associated literary works on behalf of its members. COMPASS deals specifically with music copyright and the usage of musical works.

For more information about COMPASS, visit www.compass.org.sg

17^th COMPASS Awards

The 17th COMPASS Awards Presentation will be held on 8 July 2012, 7pm at Marina Bay Sands, Sands Grand Ballroom. Event is exclusive to members.

Perkins' advice to local artists: The World Is Your "Chilli Crab"

Perhaps one of the biggest challenges that Singaporean artists face are themselves. The country's small footprint in the global music industry, may have indirectly left an indelilble mark on the mindsets of local artists, and Graham Perkins, President of the newly set up Singapore Music Society, advises that they should try to avoid falling into the "trap of thinking small and feeling insignificant".

Graham Perkins at Digital Matters Conference

Q: What are the biggest challenges that local artists face today?

GP: I think that there are three major challenges for artists in Singapore. Firstly, to succeed in Singapore alone, is not enough. The world is the Oyster (or to put into context, the Chilli Crab) for local artists. It has often been said at many international music conferences (Music Matters included) that the next big thing can come from anywhere in the world. However, its important to get it right at home before an artist explores overseas opportunities. Singapore provides a great sandbox, to hone skills in artistry and performance to better prepare for exposure overseas. As Malcolm Gladwell says in his book, “The Outliers”,one of Gladwell’s theory is that “it takes roughly 10,000 hours of hard practice in a chosen field to become a master in that field”. Artists can see their activities at home as a major part of their 10,000 hours towards becoming great.

Secondly, there is a clear lack of exposure for local artists. With the danger of the “living in a glasshouse” syndrome, it's extremely hard for our artists to break the glass.There is only so much that happens within Singapore that can help provide the window to the world. Sure events like Music Matters will help, and we do have many visits from international artists playing here, but we don’t get the Marvin Gaye feeling of knowing “What’s Going On”.

I do think however, that this is where the government can play a part in helping artists visit other countries to feel the vibe of successful music cities, and associate with other music folk. However, visitors to overseas markets, need to be initially armed with their digital devices or notebooks, not their guitars or microphones. Being immersed within international music ecosystems, listen, connect and collaborate with others, helps to build aspiration, inspiration and more importantly, support the feeling of hope that many artists have. This will help build an artist's opportunity to prepare for export.

Thirdly, the nation’s multi-cultural, multi-racial, multi-ethnic and multi-language society, potentially creates dividing lines that seem to permeate the music industry. Singapore arguably struggles with its identity and music should not be driven by this conflict. At the utmost, Music is the greater good and should transcend all these boundaries. Now I do not think that this image is actually created by artists, but more by external advocates who try to promote Singapore music styles and have a lack of knowledge to how music impacts the listener. Music is emotive and its our emotions that are at the heart of every decision we make in life. Sure, language is key to written and verbal communication but music is already its own language and the key for humanity.

Q: What are some of the biggest revenue streams for local artists?

GP: The obvious revenue streams are the traditional forms of music consumption through recording and live performances. But its clear that digital consumption has made an impact towards revenues of value. Furthermore, the lack of willingness by consumers to want to pay for art, continues to dent revenues.

Personally, I’m more excited and interested to look at how new trans-media streams can provide new opportunities and revenues as its something quite close to my heart at Rune Entertainment.

Q: How has the change in the music industry landscape affected relationships between artists and labels?

GP: These days the artist potentially is in a much stronger position.This is because the artist can get closer to their fans, develop their brandand put together great sounds even in their bedroom. I think the major labels know this and are looking at ways to change their approach and relationship with their repertoire.

Q: What kind of opportunities are there for Singaporean artists?

GP: Humongous if only artists can dream big, develop their brand and build confidence to approach international markets and new platforms for music.

Q: How can artists be discovered, groomed and developed into exportable representations in other markets?

GP: There are many ways artists can be discovered. In my view, it's important to get things right at home first. Its important that each artist explores the markets it wants to approach before it goes in blindly. Of course a main vehicle is Digital as the world has become so much more connected. An artist can create huge interest if it cleverly builds the right connections.

As to grooming and development, there really isn’t any success stories here in Singapore. Sadly, the music industry is not seen as a career choice for many due to a lack of opportunity which creates skepticism. Furthermore, education does not induce a creative nature or provide the right experience to allow creativity to flourish. I’ve seen many examples overseas (Canada, UK, USA) in which various entities provide fantastic development vehicles and success has been achieved.

Q: What is the Singapore Music Society and whatare your future plans to increase "capability, advocacy and opportunities" in Singapore's music industry? Any targets in the short and long run?

GP: The wider development of an industry can take many years so it's better to be pragmatic. I would rather focus on getting it right, than right now, and not to look for quick wins. Of course, there are various activities we can provide in the areas of education, lobbying and business opportunities, and myself and the Executive Committee will be rolling out a strategy for themembers of the Society in due course.

One area of importance is to get the nation to realise that great music can come from this isle. This can be enhanced if we simply focus on the greater good of promoting great music, not “Singaporean” or “local” music. It's given that music from here is from Singapore but advocacy is created when artists are good at what they do. It also enables a chance for the Society to drive “a land of cool” which is one of the main reasons why people like music.

Following on from a successful forum in January, we will be getting heavily involved in this year’s Music Matters for our launch. With the support of Music Matters and e2i (Employment and EmployabilityInstitute) we will be providing complimentary conference passes to 130 of our 240 members. We will be conducting five, up-close and personal Mentor Master classes and inviting all conference delegates to the Singapore Matters Cocktails. In addition to this year’s MusicMatters Live Festival, there will be 11 acts from Singapore along side many artists from nations around the world. To support digital consumption, we have partnered Singtel to provide an opportunity for acts from Singapore to have their music available on the AMPed platform.

I have a lot of work to do at the Society and I’m up for the challenge!

About Graham Perkins

Co-CEO Rune Entertainment and President Singapore Music Society

Growing up during the hippy era, Graham quickly got the bug to get out of school and pick up his guitar and play. Graham came to Asia in 1996 and has had the pleasure to continue his creative approach to life working at Adobe, Apple, MTV and Republic Polytechnic. In 2008 Graham became the Co-CEO for the trans-media studio, Rune Entertainment and continues to consult for the Singapore Government in the areas of Creative Industry skills development.

Graham has more recently set up the Singapore Music Society and as President, is helping to develop quality, advocacy andopportunities for the Singapore music industry.

About Singapore Music Society

The Singapore Music Society is a non-profit entity that supports artistry, business and production by developing skills, advocacy and opportunities. We transcend music genres, cultural and language boundaries and support the growth of the music industry both home and away.