In this episode, we chat with Arlo Enemark. Arlo is the head of Noisehive at Xelon Entertainment. He has seen a lot of development in the music industry from CD’s to streaming services and shares insight on the adaptable nature of the music industry, particularly through COVID. We also chat about the streaming model and Arlo shares some great tips on how artists can market themselves in this day and age.

 

Thanks so much for coming on, man. Music industry, very, surely one of the most challenging environments prior to COVID with so many streaming services, and it was very hard to make a dollar and then COVID came. That is a challenging year. How have you seen it affect the industry as a whole?

Well, for us, we’re used to turbulence, so I’ve been working at Xelon or about 10 years. And when I started our main revenue was CD’s. And since then it’s been digital downloads, it’s been ringtones at a time and now it’s quite firmly streaming. But in 10 years for your main revenue source to change significantly three times, not a lot of industries have to go through that. So the music industry is definitely adaptable by its nature. And more and more, I think the independent labels who we look after, are able to adapt faster because they’re that small ship, that small operation that can make the change quickly rather than the ocean liner, which takes a long time to turn around. Independent music and independent labels seem to be able to have what it takes to make the adaptations needed. 

 

Yeah, yeah in a very dynamic environment. And obviously, COVID-19 has really heavily affected the live music industry. Have you seen much correlation between what’s happened there with restrictions and social distancing and everything and what’s happening with streaming and everything else online and the music industry? Has there been much of a correlation? Have you experienced a spike? A drop?

Yeah, you’d call it an inverse relationship I suppose. People can’t go out to hear music, they will stream more at home. The inverse of that is because we deal with recordings. People come to us with a record they want to put out and we put it on all the services. Plus, we can also collect royalties on those recordings for when the tracks have been played live publicly. So if a DJ’s played them, if they’ve been played in shops, if they’ve been played around, there are collection societies all over the world and we can find that money for our clients and get it back. So the public side of the recording revenue is down because people aren’t going to gigs, going to bars, hearing the DJs and those agencies aren’t taking their royalties from those venues because venues aren’t open. So that money is certainly down. The live gigs obviously completely wiped out, in most places anyway. So it’s more the end user consumption of music that has increased and that’s been solid. And the people who have done the best are the ones that have an existing catalogue that have a fair bit of music that people can dive into. You know, if you’re riding high on a single, you’re unlikely to do any better during COVID than you were prior. But if you’ve got a decent catalogue. The catalogues seem to be getting a bit of a workout now, which is nice.

 

Okay, that’s interesting. Interesting to hear about that, like you said, that inverse relationship. Do you think that with the industry in a bit of a state of flux in the live space and then, yeah, surgence in some areas of streaming, not so much in others, do you think that there’s going to be any big changes for the industry as a whole coming out of COVID? I mean, we’re so lucky specifically in Australia in that COVID-19 is relatively under control. Do you see big step changes or new ways of operating for the industry at all? 

Well, the live music industry is going to go through some amazing things. It’s not my field, so I can only speculate on what they’ll be doing. But I imagine Australia and New Zealand having an interdependent relationship with lots of acts touring both those countries. I’d imagine even the Pacific, which has been largely unaffected, joining us in some kind of free movement zone over the next coming years. And maybe there’ll be more sort of like tropical holiday festivals with Australian and Kiwi acts and that kind of thing. Because, of course, there’s limitations to travel for Australians anyway. So maybe the kind of the Fyre Festival ideal of having a tropical holiday and having a great festival, maybe those things are going to become a reality.

Yeah, there’s a really cool one in Fiji called Your Paradise, which is run out of Australia. I’ve been to that a couple of times. It’s excellent. It’s only 600 odd people that go to this gig and it’s it’s a week and it’s yeah, it’s super cool. It’s very much Australian dance music oriented. So something like that I can imagine will be up and running in no time, assuming they can have no problem getting the cash together. But international touring is going to be down. 

Look, when it first struck, we noticed a significant drop off in the numbers. I didn’t think that was going to last and what we hypothesised that that was, was people getting out of the patterns and their routines. People were maybe used to streaming in the car on their way to work, maybe streaming in the office. And then when they started working from home, it wasn’t as easy to kind of be in the routine of when you listen to music and have that routine. So there was a drop. But then as we got used to the new set up, the numbers started increasing. So as far as releasing music goes, the biggest difference we’re seeing is that acts that have a large touring element to their release cycle, meaning they like to put out an album and then tour heavy around that, those acts have often decided to put off releasing a major work or album because it’s harder for them to support it. Whereas other acts that are maybe a little bit more production based, and that even includes dance music stuff, even though the clubs aren’t open, they might be more likely to throw out a fair few singles and just kind of keep doing it because maybe they got a little bit more time in the studio, or whatever it is. So it’s certainly changed what’s being released, but you won’t be able to put off that album forever. And music is often, kind of like trying to sell cream cakes at a bakery. Like they don’t just stay on the shelf for a long time right. There’s fads, there’s fashion, there’s relevance, there’s like, what you’re singing about might not be as culturally relevant. The issues that a songwriter might have sung about in January are going to be vastly different to the issues that we have today.

 

Actually, just on that, that’s probably a really good segway into, I wanted to just talk a little bit about, because we’re obviously a marketing agency and we do a lot of marketing with corporate clients and businesses that are looking to commercialise and things like that. We specialise in digital and what we talk to businesses about is authenticity and putting the what we call the user, putting the user first and giving and giving and giving and giving in terms of value before you present a product for sale or ask for a sale or an email or anything like that. And it’s almost about trying to create cultural relevance for brands, trying to get them, think like creative people, think like artists and things like that. How, I’m really interested to understand, to use your terminology, the inverse or the flip of that, how should an artist go about marketing themselves in today’s day and age? Like, is there a template, a recipe that you’re comfortable sharing? Is there an approach that artists should really consider? Because it seems so brutally cutthroat how to cut through? It’s so challenging.

I think this is a big part of what I do with mentoring artists and speaking to artists around Noisehive. I’ve also got my own musical project. I also manage an artist as well. So these discussions are super relevant to me. What is really hard to get your head around as an artist is the dramatic shift in changing of consumption of music. Once the streaming model came in and that’s not even really fair to blame it on the streaming model because the streaming model was a response to piracy and what piracy offered was that a consumer could look up an artist or a song and have access to that, listen to it straight away without a payment threshold in front of them. So once that payment threshold came down and piracy knocked that down, streaming just legitimised that system of being on the lookout for music and hear it straight away. Once that payment threshold came down, the whole ecosystem was completely different. 

One of the other things that was happening, is that when you sold a record or a CD or a type or a digital download, you were selling a lifetime license to the consumer to listen to that piece of work. So they could listen to that album a hundred million times or however long, put it on repeat all the way through, and they were fully covered by a license to do that and that money was paid up front. Whereas with the streaming model, it’s paid off over time. So the way that affects a musician is that rather than being a sugar spike at the front when that initial sale is made and you engage with the client, they pay you the money and then you don’t have to talk to them again because it paid for a lifetime license to listen to your record. It’s moved from that sugar spike model to a model where they make their revenue over time. So as long as the artist has a relationship with their audience, as long as the artist has significance to their audience, they’ll keep generating revenue. So it’s a really different model. And all our folklore is based around this 20th century model of how to make a career in music, which is go backwards, don’t make any money, don’t even probably even record maybe do a demo or something. And then some Englishman in a pinstripe suit is going to rock up to a gig and say, “I don’t know what I’m doing here, but that’s a number one record.” And then you break through and then you’re rich and famous and it comes to you in this sugar spike lump. And it’s just not true for so many reasons. One is that the cost of recording music has come down so much that you don’t need those pinstriped suits to get you to make a record. And two is that there’s no sugar spike of lifetime licences at the front when the record comes out. The record makes revenue as it continues to be played. So the whole dynamic is different. And the way we talk about it now with artists is they don’t break anymore, they build. So don’t treat every record you put out like it’s this thing that has to get you into the big time. What every release that you put out has to do is, support the audience that is there already listening to you, relate to them, connect with them and build on it so that next time you put a record, you’ve got a larger audience that you can do that with as well. So the whole idea is now it’s a, much like you would grow a YouTube channel or something along those lines.

When you try to build a following as a musician. It’s about forming relationships with people, connecting with people and building that base. And then that base, the flipside of that is that they’ll pay you for your music for up to 70 years after you die. It’s your superannuation and it’s not something you can get sacked from. So the flip side of that is, if you go to a really nice relationship with your artist, with your fan base, a really nice sized fan base, and you can connect with them and you make music that resonates with them, it’s important to them, that it connects with key moments in their life, then they’ll listen to you forever and you can potentially have revenue off that for a long time.

Cooper: That’s a refreshing way to look at it, because you hear so many people rubbishing on streaming. Streaming ruined everything. You can’t make any money. And I’m sure the money is not the same. And I’m sure it’s a lot of work to make it. But it’s a really refreshing take to know that ultimately it’s just it’s a different model that you need to operate in.

Yeah, look, I have a different take on that, and it’s because I suppose I’m a little bit fascinated by economics and those kind of powers and those kind of systems. When you look at what matters as far as an industry goes, as far as revenue and that kind of thing, the sort of the unit price isn’t super significant. What it is, is it’s the demand and turnover that that industry can make. So in around 1999 – 2000, the music industry peaked and then it sort of fell off a cliff. And for 15 years it went down and down and down and down and down and down, down, down and down. And this is gross, what you would call sales. So gross music revenue. And it went down for 15 years continuously. And during that time iPods came out, iTunes came out. They tried a few things to help fight the piracy scourge. But it didn’t get beaten until the streaming model came in; Spotify, Apple Music, Tidal, the subscription services, where someone could put in $10 – 12 a month and they could have access to the world’s supply of music. And then it was just big data’s job to make sure that people got paid. Once that happened, we’re on five years of increased revenue now. So our fifth year in a row, the industry has been growing. So streaming, not only is it not the problem, it’s very much the saviour of an issue that we had that was crucial. Now, that’s if you look at it as gross industry revenue. Now, if you try to break that up into artists and go how much money does an artist make? And you were to compare an artist now in streaming compared to an artist in 2010 or 2000, then the individual artists on average makes less, but I’ll suggest that the reason why that is, is because there’s so many more artists now. There’s just a lot more artists. It’s become cheaper to put records out. We’re not, like in 2000, getting a gold record of getting a platinum record was literally trucking tons and tons of plastic into people’s homes that would eventually get thrown in the bin. It’s like actual madness compared to what it is now where people can connect with people and can find it and they can listen to listen to you on their own device. And so it was a very, very expensive thing making a hit record back in the day or even just making a record at all. And after a little while, it would get deleted. Like deleted is what we call when an album got discontinued. So someone wanted to get your album from a shop and they couldn’t even get it anymore because it’s been discontinued. That’s so different to this model now where you can make music that people can listen to for the rest of their lives. So music is a lot cheaper to make. There’s a whole lot more artists. The revenue is going up because of streaming. If you want something to point your finger at as to why artists aren’t making the money that they used to, it’s because there are so many more artists. And I personally, I think that’s a bad thing. I think that’s a great thing. 

 

Absolutely. That’s very refreshing. I haven’t thought of it like that before. I wanted to sort of ask you just about how digital has evolved the industry, but you really summarised that very well there. Can you just maybe just sort of close off, can you just explain Noisehive, I know we were talking before we started recording just the Noisehive concept and how it attaches to Xelon. 

Yeah okay excellent. So Xelon has been around as a distributor for record labels for about 12 years and we dealt primarily with the Australian dance music labels. They would come to us with their records and we put them out on all the platforms. So it would go on iTunes, Spotify and Beatport for the DJ’s and dozens and dozens and dozens of platforms worldwide. We then collect up the revenue, issue a statement and say this is how much money you’ve made that quarter and we take a commission of that. Now because we’re commission based, when someone came to us and said, oh, look, here’s this record that my band recorded in the early 80’s and it’s not on any digital platforms, we’d like to get it on. Itt was really hard for us to kind of give the tender love and care to the smaller clients, because being a commission model, it was very hard to justify the time on those kind of small bets. So Noisehive was started with the concept that we still believe very much in a commission model. The commission model means that we do our best to make sure that the records do well because we’ve got that incentive for the records to do well. And it also means that we’re very responsive. We don’t leave emails unread. We get things happening because if things aren’t going well, we make less money, frankly. So that was super important. But we needed an option that we could essentially offer out to anybody if they came to us and they wanted to put a record out. So with Noisehive, essentially, we just put a sign up fee at the front and created a website where people could deliver their record so they can sign their agreement to us on the website, they can create their profile, they can deliver the record to us for the website. Then we get that delivery, we still listen to the music, we still have a very hands on approach, we’ll still email and communicate with the artist and that kind of thing. But we’ve covered a few hours of our time right at the front so that we can help develop that act to a place where they need to be to be literate enough to understand the new model, the distribution model, when their statements are coming, what the standards are for the recording of their artwork and all that kind of thing. So Noisehive was launched at the start of last year and it’s been fantastic. We’ve got a whole bunch of acts from sort of hip hop to violin music to country, to lots of metal, rock, pop, whatever, all sorts of cool stuff. And it’s all artist run labels. Some of them have a few different artists on their label, but they’re all sort of small independent labels. But we can still give them the same power that they would have with a major label kind of distribution. 

Cooper: Okay yeah, very cool. It’s sort of really a complement to the streaming era. You’re really opening what your expertise, your IP, your core USP’s, your opening that up to a broader market and it’s really bringing the ability to distribute and promote music to the masses. That larger pool of artists that you’re talking about.

Hmm. Yeah. And it’s something that’s really exciting because amazing little things happen when putting out a lot of records by a lot of personalities. You know, we’ve had little things picked up to be like in a Netflix series or to be used in different places. And it really happens because we’re supporting those artists to be the best version of themself or at least make it smooth enough so that they can spend all their energy and time on making the music and making their identity and doing the creative stuff that A) that they want to do and B) that they’re good at. The more that we can kind of take control of that and be supportive of them, then the more opportunities are going to come.