Country Music Grows With Social Networking Sites

5/14/2008 Bobby Reed Social networking Web sites, devoted to hosting interactions among members, were once like metaphorical lakes, each stocked with similar fish. Today, these sites have become virtual oceans, filled with millions of species, small recreational boats and massive supertankers. The popularity of these sites has increased so quickly and dramatically that it's impossible to say exactly how many total users they draw. The numbers are bigger than many people would suspect, though, and they grow every day. According to a report published in June 2007 by Forrester Research, the two most popular social networking sites - www.MySpace.com and www.Facebook.com - have more than 63 million U.S. visitors each month. A report that aired in 2008 on PBS' Frontline stated that the number of members for the two sites combined has reached a staggering 160 million. With numbers like these, it follows that many commercial entities consider it essential to maintain a presence on these sites and others. The lesson has certainly not escaped the Country Music industry, as suggested by the Top 15 acts on the Billboard Hot Country Songs chart for Feb. 2, 2008 - each of whom has a MySpace page. "Two key things about Country Music are the relatability of the artist and access to the artist," said Heather McBee, VP, Digital Business, Sony BMG Nashville. "That's the great thing about social networking sites: They give fans the opportunity to connect and interact with the artist." Certainly that's true for Kenny Chesney, whose fans have streamed more than 25 million song plays on his MySpace page and Taylor Swift, whose MySpace streams have topped 40 million. And while their numbers may be smaller, this online connection is even more important to artists who haven't yet started selling out stadium shows. A case in point is Chuck Wicks, who scored a major hit with "Stealing Cinderella," from his debut album on RCA Records, Starting Now. "What we're doing with the social networking sites is giving fans a chance to experience more of Chuck as an artist," said McBee. "People who go to his MySpace page can learn more about him, hear his music, see interviews, read his blog and experience a behind-the-scenes look at the making of a music video. Chuck has been very involved with what goes on at his site. He invests in communicating with his fans." Artists' pages on MySpace are increasingly offering various ways to purchase music. Some artists provide links to iTunes or to their own online store. Others offer downloads for sale. The company Snocap, launched in 2002 by Napster founder Shawn Fanning and his partners, facilitates such transactions by adding a "store" onto the artist's MySpace page, with earnings divided according to arrangements made between the artists, their label and Snocap. Among the artists who have gone this route are Clint Black, Little Big Town, Gillian Welch and Chris Cagle, who sells downloads of entire albums at his MySpace page. Also in the game is www.imeem.com, a San Francisco-based networking site that boasts more than 20 million unique users each month. More important, as far as the music industry is concerned, imeem has transformed the online landscape by negotiating licensing deals with all four major record label groups (EMI Music Group, Sony BMG Music Entertainment, Universal Music Group and Warner Music Group) as well as thousands of independent labels. These arrangements allow imeem to offer free, on-demand streaming of the label's entire music and video catalogs, in exchange for which music companies receive a share of imeem's advertising revenue. Beyond providing a central location where users can listen to entire songs and watch videos, imeem also facilitates online sales. If a user wants to download a track, imeem provides links to Amazon and iTunes, where the track can be purchased. Universal Music Group inked its deal with imeem in December 2007. "imeem has developed an innovative way to make our artists' music a central park of the social networking experience," explained Doug Morris, Chairman/CEO, UMG. "More importantly, they've done so the right way, by working with UMG to provide an exciting musical experience for consumers, while ensuring that our artists are compensated fairly for use of their works." Like most social networking sites, imeem is free to join and highly interactive, with users being able to upload songs and videos, create custom playlists and share photos and blogs. In January, imeem announced a partnership with MTV Networks to offer video clips and episodes. This allows imeem users to view and share clips from CMT, MTV, VH1, Nickelodeon, Comedy Central and more. The site has featured artists in unique online events, including exclusive listening parties and recorded introductions to imeem playlists. Faith Hill, Blake Shelton and The Wreckers are among the acts who have participated thus far. Executives at imeem feel they've devised a system where everyone involved - the artist, the label, the advertiser and the consumer - is a winner. "The ad-supported model is a totally new business model and revenue stream for the music industry," said Steve Jang, Chief Marketing Officer and Head of Business Development, imeem. "In essence, we're harnessing the user's attention. It's the overall experience on imeem that we're monetizing. We created a revenue-sharing model where we share roughly half of our advertising revenue with the content owners. Labels and artists promote themselves in a colorful way on imeem. Advertisers come to create brand awareness and real engagement with our users. Then the advertising revenue is split with the content owners. The idea is, 'Hey, let's work together and I'll share with you what I make.' That's a fundamental human concept. People just get that." The imeem advertising revenue-sharing program is available to a variety of content owners - unknown songwriters as well as major companies. The number of streamed plays is tracked, so that payments are made in proportion to a song's popularity. The imeem experience also helps deter unauthorized downloads of digital music files. "Piracy flourishes when it's easier than the alternative that the industry is offering," said James McQuivey, a media and technology analyst at Forrester Research, who studies the music industry. "And imeem is now offering an incredibly easy alternative. They compete successfully with piracy. Not only is [the imeem site] easy to use and satisfying, but it appeals particularly to the exact age demographic that is so fond of piracy." Although the gap is shrinking, a significant difference remains between the use of social networking sites by younger (Generation Y) consumers and baby boomers. According to Forrester Research, 80 percent of young adults (ages 18-21) in the United States use these sites, compared to only 30 percent of adults ages 18 and older. Among youthful users (ages 12-21) who visit social networking sites daily, more than 40 percent said that they listened to music the last time they visited such a site; about 25 percent said that they watched a video. People in general are devoting more and more of their free time to Internet activities. As a result, ad revenues for the Web are predicted to skyrocket. A study by the Internet market researcher www.eMarketer.com predicts that worldwide spending on social network advertising will reach $2.9 billion in 2009, up from $1.2 billion in 2007. "About $70 billion is spent on television advertising in the U.S. every year, compared to about $24 billion that people spend on DVDs every year," McQuivey noted. "So in television, advertisers spend nearly three times what consumers do to buy their own videos. When it comes to Internet-delivered content, there's going to be a similar ratio, meaning that advertisers will spend more money to reach people through music experiences like imeem or Internet radio than there will be by people buying their own music directly online." Sony BMG's McGee, whose professional Web experience dates back to 1996, knows how important it is to adapt. "The challenging balance is to try to stay ahead of the users while following them at the same time," she said. "We're trying to be in the right place at the right time."