Well, to make up for my long absence this week I have a really cool interview with Lee Parsons, the CEO of the digital distribution service Ditto Music, we talked both about the company and about his views on the future of digital music distribution. So here’s the interview, I hope you enjoy it!
Interview with Lee Parsons from Ditto Music
AL: Andrea Leonelli
LP: Lee Parsons
AL: I’m really happy to welcome to the show this week Lee Parsons from the Digital Distribution service Ditto music. First of all for this episode I would like to talk on one side about Ditto music and on the other about your recent travels to various digital music events. I would also like to explore your position on the future of music online and on the role of the musician as well as that of the distributor. I’d like to start with Ditto music, so tell me a little bit about your background and how you started out.
LP: Me and my brother were both in a band and this is probably five or six years ago. We got management and publishing really early on and also got a deal quite early on and we ended up doing our first ever gig at the Sony building in London at a massive showcase, full of people and with our management there as well. I remember our management asking us how many gigs we had done up to then and we said that was the first. And it just went downhill from there really. It was probably the worse gig I’ve ever been to and unfortunately I was part of the gig so that wasn’t great. We just didn’t get it, we did gigs with Razorlight and a lot of other bands but we never claimed our PRS back as no-one had told us what the PRS was. We made so many classic mistakes going forward and by the time we’d learnt what we were supposed to be doing our career was over. But what happened was that we wanted to put our single out since after all the work we’d done we had a large fan-base waiting to buy the song. So we looked at how to set up a record label and that took us three to four months because you have to go through Company’s House for the company and then you have to register your CAT codes through the database. It was really complicated and we knew nothing about it at the time since we were musicians. Then in terms of distribution we went to our local shop and they said we couldn’t put it in a shop until we had a record label. We said we did have a record label but they said they couldn’t take us since we did not have enough content. So we decided to forget the shops and started looking into digital, this was about four years ago when it was still early days for digital. iTunes would not take our content as they said we didn’t have enough to warrant having an account with them. So we used a site called Whip It at the time (it has actually gone bankrupt now, they were friends of ours). So we put the track out through Whip It and it got to number 80 in the charts due to the fans we already had and that’s pretty much it, that was the end of our career. But what we did realize was that we had a system in place now so that any band could come to us and we could release their music within a day. We could put them out on our record label, put them on pre-release, we could get them SMS codes and release the music. We started getting more catalogue and deals in place with companies like iTunes, we now have deals with 400 to 500 services. In January 2007 we released the first ever unsigned artist into the Top 40, they are actually in the Guinness book of records as the first artist ever to get into the top 40 just on digital sales. So if you think back to three years ago the major labels still didn’t see this change, while we realized it cost us nothing to put a digital release out and we didn’t have to print the CDs. We were still working out of our bedroom at the time but we were in The Times, The Telegraph, BBC1 and we had another seven top 40s that year with unsigned bands. Since then it’s just grown and grown, we have about 15,000 artists with some massive names, we have two offices in the UK and we are about to launch an office in the US. What I do for the most part is travel around talking about the music industry and how we can help unsigned artist. Even though we are a business and one of our goals is to make money me and my brother come from a band background so the main objective for us is to open new doors for bands that weren’t there when we released our music.
AL: And in terms of the technology that the company uses, who do you rely on to build your back-end infrastructure?
LP: We have English staff and also an office in Romania – you know what it’s like with a technology company, you build something and then the next month you have to change it. You have to keep progressing at everything you do so that’s a really important part of our business.
AL: You have hundreds partners now. How do you start the process of building a new relationship with a partner and when do you know whether a partner is someone that can deliver in terms of sales or streams or when something is bound not to turn out?
LP: A lot of partnerships are relationships and I’m sure they are thinking the same thing looking at me, wondering how they can be sure that I can deliver good content and we can work with them. The longer you are around the larger the network you build. We are the only distributor to have a monthly We7 Presents slot so every month we get to put an artist on the front page of We7. That comes from the fact that three years ago I volunteered to go and talk on a panel at Manchester University and Steve Purdham, the founder of We7 was there. We kept bumping into each other in different panels and we just sat down and we tried to work out what we could do for unsigned bands. Instead of taking all unsigned content into We7 we decided it was better to find a way to promote just one band and give it a bit of a push, since as well as being promoted on the site they also get paid per stream, so when a band gets a We7 Presents slots they often also make a few thousand pounds out of it as well. Partnerships are based on your reputation, your networking skills and your honor as well. If people trust you then they will always do business with you.
AL: How’s your relationship with Apple? I know you recently set up a 24 hours promise with iTunes and that caused a bit of a tiff with Tunecore. How did that come about and how did you manage to guarantee that?
LP: A few of the distributors found out at the same time that Apple had upgraded their software as the same time as we did so that releases instead of taking four or five weeks to go live were going live really fast so we thought: we can literally get something on iTunes in a few minutes but there’s a chance that it won’t be in a few minutes so we decided to say 24 hours to make sure that it gets there. At the moment, working with iTunes, we know that their technology is the same as everyone else’s, it could change, so 99.9% of our content goes out within 24 hours but we still can’t really guarantee it because it’s not fair to iTunes or the artist. If you look at it though it’s still a massive advancement in technology and it really does make a lot of difference to people’s careers. If someone had told me back when I had the band that I could put a single on iTunes within a day I’d have bitten their hand off but unfortunately it took us six months. I really think the way this is progressing is going to help unsigned artists more than signed artists. Signed artists have got their promo all sorted but every now and again you’ll get an artist on X-Factor or Britain’s got Talent where they need to have the single out the next day and we can do that now, it’s amazing.
AL: People talk about conversation all the time and they talk about how unsigned artists need to keep a conversation going with the fans. It seems like this is a great way for artists to monetize that relationship really quickly. If somebody decided to release a single each week that would be feasible now whilst before it would have required a lot of planning.
LP: Exactly, because you never know when you’re going to get a spike in sales. Every new and again you’ll have an artist in the top ten of iTunes and you think: why is that? And then you find out that they got a synch deal with someone – which is something that we also help out with – it’s been played in a program in America and suddenly everyone has gone out to buy it. If they hadn’t been on iTunes that would have been totally missed so it’s an amazing leap forward in technology.
AL: Recently you have taken part in a Music Metrics panel at the Leadership Music Digital Summit in Nashville. I wanted to ask you about that panel in terms of charts versus metrics. There you made a comment on the fact that people need to look at metrics to find out future trends rather than charts that report on what has already happened. What’s your stance on this issue?
LP: There’s quite a lot to talk about here. I looked at metrics as they are really important, I did the panel with a guy called Eric Garland who runs a company called Big Champagne. They have a chart called the Ultimate Chart with which they cover social presence as well as torrent downloads. They then compile this data into a single chart. When they started they got a lot of criticism from the labels because this chart was very similar to the normal chart, but what did they expect? Obviously social trends equal the normal chart. We had a lot of top 40 singles and a lot of these artists went on to have a lot of success but a couple of them got into the top 40 and didn’t have the media presence to back it up. What I think this is saying to people now is: charts are important, but they are all based on your media presence. You really need to monitor not how many Facebook hits you’re getting but who’s coming to your Facebook, not how many tweets you write on Twitter but who’s re-tweeting them and who’s interested. If you go to Tesco everything is lined up for you to buy and they have a map of who you are and follow you around the store. Same with Facebook, the ads on Facebook are not randomly suggested to you they are down to your age, your location and your interests. There are now companies like HootSuite where you can monitor who is tweeting about you and what kind of person they are. In terms metrics there are three things that artists can do for free. First thing would be to implement a small survey for the visitors of their site. Most artists give away a free MP3. When you give away the free MP3 obviously you’d want to get their email address but also a few questions out, find out how they got onto your site, what other kinds of music they like, what they thought about your artwork… Don’t be too intrusive but try and find out a little bit of extra information about these people so that you can draw up a map of who’s actually listening to your music and work out how to sell to them. It may be that they don’t want to buy your music but you can find out what town they’re in for example. Another point is that if you sell someone else’s music through your website a lot of times that will sell better than your own music. This is because recommendation from someone else is a lot stronger than recommendation for your own material. So look at other people’s fan bases and affiliate because that’s what all businesses do. Business is all about affiliation and the music industry is no different. For free you can also use Google alerts, all you need to do is to sign up to Google Alerts to find out when people have mentioned your band and then follow that along. These are all free tools. There are also paid tools like HootSuite but these are really simple things that the bands need to try and implement as fast as possible.
AL: I was on a panel recently where we were talking about the effects of social media and which social network artists should use. I am a big believer in the fact that a social network is only as good as the kind of people who are using it and as relevant as the music that the band is making. So MySpace will only work for some bands and Facebook will only work for other bands. What is your viewpoint on this also in terms of the artists that you have on Ditto: is there a social network that is now prevalent in helping artists?
LP: I think at the moment there isn’t a main social network. MySpace used to be the main social network for artists. Now there are loads for example Soundcloud, Bandcamp and even Spotify is classed as a social network since people can send music to each other and recommend music. I would recommend a band to be on as many of these as they can. People always say: I haven’t made much money from Spotify. But if you take the revenue from Spotify and you add it with that from iTunes, Grooveshark, Bandcamp you can start to build a decent portfolio of income. It is an open-ended question as it comes down to what works best for you.
AL: Picking up on the point of subscription services do you think that they will amount to substantial revenues for artists at some point and which factors do you think might allow that to happen? At the moment even people who run these services admit that they don’t see themselves as becoming a major revenue source.
LP: Unfortunately that’s going to stay as it is at the moment. The main difference between an unsigned artist and a signed artist is that the signed artist will have already come to a deal with Spotify through their label. What unsigned artists don’t get is that advance from the label. Obviously sites like Spotify and We7 will have to start paying that advance money back so that’s a big dent out of their profits. What I’d like to see happening is for the PRS to step forward and start paying out more money. I know that the PRS has a lot of income and has millions of pounds each year that are unclaimed and probably go back to the major labels – it would be great if they could work out a way to share that with the rest of the artists. I can’t see that happening anytime soon but we are constantly putting pressure on them to get them to come forward with that.
AL: I wanted to talk about free versus paid, because naturally Ditto is a company that distributes music on services that are monetized in one way or another. Do you think free is an inevitability or do you think people will keep wanting to pay for music?
LP: Hypebot quoted me as saying “Music is Free” and that’s the end of the argument. But what I really meant to say is that if I’m in a band and you want my music I know that you can go and get it for free. But that does not mean that you are going to get it for free. If you like me as a brand I know you will go and purchase it. Also artists now sell a number of other things on their sites like for example dinner with the band, private concerts etc. The last thing any of us wants to do is to go on another panel and talk about piracy, that argument is gone and completely stone dead. Forget that and work out how to create new revenue streams. I know that if you’re a fan of my band and we have music on iTunes you’ll buy it on iTunes if we developed a relationship. If someone downloads it for free instead then you as the artist need to make sure that the track that person download has the right information and maybe lyrics in the metadata and try and get that person to buy something else from you.
AL: So basically what you mean is that “Music is Free” is a statement of fact, any half-successful band will have their tracks ending up on bittorrent. What the bands have to do is then work in order to get people to want to buy the music or whatever else they are selling.
LP: Because people are good, as far as I can tell a high percentage of people will always buy music even though they can get it for free. Artists just need to develop a good relationship with their fans. I had this argument on a panel a few weeks ago. A guy was just fascinated by his music getting torrented thousands of times and everyone was saying that they would love for their music to get torrented thousands of times. Another guy in the room said that his band has the music free on the website but also does a vinyl, a limited edition CD, distributes on iTunes and said that they actually make quite a lot of money even if the fans could get the music for free. If you have your music on every single service you have lots of small pockets of money that build up. These bands are not moping around complaining about people pirating the music.
AL: What do you think about the structure of the Music Industry? Will it drag on being as it is for quite a number of years from now both in terms of formats (digital or physical) and in terms of its structure or do you think that change will be quite sudden?
LP: If you actually look at the rate at which the music industry has been changing over the past three years you’ll see that three years ago digital singles weren’t even chart eligible. Also if you look at how EMI has declined with people suddenly out of jobs I think that it’s going to happen sooner rather than later. What we definitely do know is that the old model is dead so we need to try and make something cool out of the new model. That’s why I love what I do for a living in my company helping loads of artists release music. This opportunity wouldn’t have been around four years ago but it is now and because I’m keeping ahead of the game and try to keep up with trends we always will be around and able to offer people new services.
AL: In terms of helping artists achieve what they are setting out to do: now there’s the artist and there’s you as the digital Distributor. Some independent artists though they don’t have enough time to deal with everything on the promotional side of things – in this case who do you think is the best person to help them. Is it a PR person or Management?
LP: its kind-of a never-ending question. If you get the right PR guy it’s the right PR guy, if you have the right manager it’s the right manager, but 9 out of 10 times it’s the wrong people and really the best thing they can do is to do it themselves. There are no shortcuts, we used to do a lot of PR for bands and we still do but not at a professional level because three years ago there were only a few unsigned artists releasing every week but now we do up to 500 releases per week and you can’t feasibly generate interest for all these people. When a label or anyone really looks at you as an artist they are going to go straight to your social media and check your presence. There’s no real shortcut around that since you can’t buy Facebook followers or twitter followers. If you can build up 100 real fans on Facebook that is more important than having 50,000 fans on MySpace. Once you have all that in place then start looking for the right PR person or maybe the right manager but there’s no shortcut to it.
AL: And finally I want to end with the hardest question: where do you see Ditto being in five years’ time?
LP: It’s an exciting question because who knows what’s going to happen. All I know at the moment is that I’m going to go off to the States in January and then I’ll be going to Australia to look at their market. The digital distribution for me is in place now, it’s a great service for artists but it’s done so I want to move forward to offer artists opportunities that they didn’t already have be it Television or Radio opportunities. We claim PRS now through our partners and we help creating licensing and synch opportunities. If you sign up with Ditto today you get daily updates with synch reports and we’ve had a lot of people getting their music into adverts and that’s something that came about because we were trying to work out new revenue streams. When you have a catalogue of thousands of tracks you want to use them, you don’t want them just sitting there but you want to get some value out of them. For me doing what we do now and spending time speaking about these issues helps me come up with new ideas from an unsigned point of view. The interview we did in Hypebot was great because most of the other people they interviewed were from major labels and five years ago a company like ours would not have been asked to take part. But now we are getting a lot more recognition and that’s great because it means that unsigned artists are getting a lot more recognition as well in the industry.
And thanks again to Lee for making it onto the show. I’m afraid that’s all for this week but I do hope you enjoyed the show, and this time around there’s even a transcript of the interview on the site so you can forward that on if you like. On www.digitalmusictrends.com you will find all the information you need on the show, if you want to get in touch either complete the Get in Touch form on the site or email firstname.lastname@example.org. You can follow the show on Soundcloud and Mixcloud and remember to follow me on twitter for the latest news on the show on twitter.com/digimusictrends
Have a great week and ’till next time!