Category Archives: Blog

We love you Nashville, but we’re taking an easterly detour. Today we’re pleased to announce we’re helping lead the Knoxville Entrepreneur Center’s MediaWorks digital media accelerator, an intensive 12-week program to help Knoxville’s most innovative startups develop their products, business models, marketing plans, and pitches.

Startups interested in participating can submit their applications through April 23 at knoxec.com

Watch out, Rocky Top, here we come.

Full press release:

April 9, 2014
FOR IMMEDIATE RELEASE

CONTACT: Jonathan Sexton – JS@knoxec.net

KNOXVILLE ENTREPRENEUR CENTER ANNOUNCES ‘MEDIAWORKS’, A BUSINESS ACCELERATOR FOR DIGITAL MEDIA STARTUPS

KNOXVILLE, Tenn. – The Knoxville Entrepreneur Center is excited to introduce MediaWorks, the center’s inaugural digital media accelerator.

MediaWorks is a selective, highly immersive instructional and mentorship driven program for startups in the digital media sector, which includes digital video, augmented reality, digital signage, digital audio, or digital art. Ten startups will be selected to participate in the MediaWorks program, which will guide these early stage companies through customer discovery, product development, market identification, business development, growth strategy, and seeking to connect the participants with potential strategic and financial partners.

MediaWorks participants will be mentored by a team that includes industry leaders, investors and veterans of the media and startup world, and led through the accelerator by principals of Back Porch Group, a digital media think tank based in Nashville. BPG’s collective resume includes work for Google, Disney, Microsoft, Warner Bros. Records, and a broad array of startups and consulting clients in the Digital Media + Tech Space.

The goal of MediaWorks is to showcase a thriving digital media startup community in East Tennessee, and represents a key element in KEC’s ongoing drive to highlight the region’s leadership in technology, digital media and media content creation.

“MediaWorks provides a great opportunity for some of the most talented and experienced people from the media industry to collaborate with the next generation of media innovators and visionaries,” said Jonathan Sexton, KEC’s entrepreneur in residence.

“Back Porch Group is delighted to be leading MediaWorks in its mission to cement Tennessee’s growing reputation as a digital media leader and a center of entrepreneurship and innovation,” says Shawn Yeager, Back Porch Group partner.

Applications for the MediaWorks program will be accepted from April 9th-23rd at the center, located on Market Square, or online at www.knoxec.com. The program kicks off May 8 and will run for 12 weeks, culminating in a demo day event in early July.

For more information about MediaWorks, please visit www.knoxec.com.

About Back Porch Group: Back Porch Group is a think tank that offers insight, connections and development to creators and disruptive companies building the new music industry. Our approach: break it, change it, make it matter. We tear apart and test ideas, transform them into fundable, viable businesses, and successfully bring products to market.

We’re building a better music industry one idea at a time. More info at: http://backporchgroup.com

About Knoxville Entrepreneur Center: KEC is the front door for entrepreneurs starting a business in East Tennessee. KEC is committed to connecting Entrepreneurs with Mentors, Investors, and the Critical Resources they need to accelerate the launch of startup businesses.

Endorsee, one of our portfolio companies, had its coming out two weeks ago today at the NAMM show in Anaheim. It was my first NAMM proper, having attended Summer NAMM last year. We spent our time introducing the product to over a dozen music equipment companies in one-on-one meetings. During these meetings and our time on the show floor, I watched, listened and learned a lot from my cofounders, NAMM veterans themselves, and the companies we spoke with.

For those, like me, who’ve spent their careers in technology, it’s easy to get caught up in the pace and approach of the industry. To spend days focused on lofty things like business models, user experience, growth hacking, customer development and traction. To operate under the belief that speed wins, and every dollar shaved off your burn rate or slide from your pitch deck is a competitive edge.

In tech, it’s the game we choose to play, and we learn to play it well if we wish to succeed.

The music business, on the other hand, is playing a long game (whether by choice or necessity is a topic for another day.) This becomes even more evident at NAMM. Here’s what I relearned at this year’s show.

Relationships are how it gets done.

In the land of conversation rates and user acquisition, it’s easy to lose sight of actual human beings. Making our rounds at NAMM, I saw time and time again people who’d been doing business together for decades slow down, take time for long handshakes or hugs and have thoughtful conversations. They were paying as much respect to their relationships as the deals they were doing.

Craftsmanship matters.

With an increasing focus on experience over features and functions, the tech industry is beginning to learn this lesson. The app economy, in particular, has increased our focus. Even so, we spend much of our days in documents and data. Getting your hands on a gorgeous, handmade guitar or even a single wooden drum stick made with care is a viscerally different experience.

Putting your hands on a great product – there’s nothing like it.

Passion carries the day.

Passion for instruments, playing and performance – making music. This is when I saw people at their best at NAMM. Watch a kid or an old-timer pick up an instrument they admire to play a few perfect notes, and you’ll see the same thing in their faces: pure joy.

In that moment, they aren’t doing it for personal gain or a business win. They’re doing it because it’s their passion, and it’s priceless.

Lasting change comes in its own time.

Reading through the program guide and studying the show floor, I couldn’t help but think that as a microcosm of the music business, NAMM is simply behind the times. But that was my highly subjective view as a technologist and early adopter. The more accurate view and crucial lesson I must always remember is this: industries are made of people, and people change when ready, not simply because more advanced technology is available.

On our recent 2014 predictions episode of Conversely, I stated that I believe crowdfunding is about to see its demise. I realize this is a risky prediction – in some ways, my livelihood depends on crowdfunding – but I stand by it.

John Cantu, Director of Marketing over at Good Time Inc. rightfully called me out on this, pointing to his recent success with a new album by Ellie Holcomb. So I wrote him this email to clarify:

Hey John,

Thanks for listening to the podcast. I’ll take the blame for predicting the death of crowdfunding….. and I don’t think your project is an anomaly.

I’ve run successful projects, in both music and film, on both Kickstarter and PledgeMusic, and I’ve even consulted directly for PledgeMusic in the past. I also have a very high profile PledgeMusic campaign on my horizon (watch out for it in the next couple months). Still, I think crowdfunding’s time has come and gone, at least as far as crowdfunding is concerned.

I think there’s a distinction to be made between preordering and crowdfunding, and it’s a subtle one. Preordering is as old as time, and isn’t going anywhere anytime soon. Crowdfunding, as a fundraising tool, is, in my opinion, becoming less and less viable for independent artists.

As such, it’s worth pointing out that your project has support. The trend I’m seeing on most crowdfunding platforms is toward big-name artists, established fan bases, and projects with marketing/promotion muscle behind them, and I think that makes it harder for DIY artists to raise large goals – not because bigger names are siphoning off fans, but because they’re siphoning off resources. Kickstarter prefers to promote established artists, because it helps bolster the Kickstarter brand. This leaves DIY artists in the dust.

I probably should have clarified on the podcast that crowdfunding is becoming harder for DIY artists, specifically. But then again, what’s a DIY artist these days anyways?

Also interesting, and worth discussion, is that Ellie Holdcomb’s [my spelling error] project is religious in nature. While there’s some precedent for Christian projects (Mercyland was hugely successful, for example), I’d love to dig up some stats about the performance of those projects, and more specifically about the ability of churches and other communities to pitch in when it comes to promoting them.

Congrats on your success with Ellie, and thanks again for listening!

In summary, I don’t think crowdfunding is going to disappear. I do, however, think that the crowdfunding craze for DIY artists has seen its time. Preordering and direct-to-fan is here to stay, and I’d argue it’s been here for as long as artists have banged on drums.

Tech invests in talent in the form of developers, engineers, and marketers, then retains them through compensation and stock options. Music invests in talent in the form of artists and retains them through complex legal agreements.

Tech produces a product and sells a license to it, historically as “packaged” software, but increasingly as a service. Music sells recordings, largely in the form of physical product and downloads, but actually just licenses it. Both are moving rapidly from ownership to access. The former embraces it, while the latter is conflicted, to say the least.

Tech employs customer discovery and development in order to find the ones who’ll buy. Music markets to large demographic swaths based on previous product sales.

Music has always been about “user experience.” Tech has only recently discovered that it should too.

Tech builds platforms and components with an eye to reusability and longevity. Music builds hits and sometimes brands.

Tech is free market. Music is semi-regulated.

Tech is West coast code. Music is East coast code.

Tech (read: consumer apps) have a shelf life measured in months and shrinking. For Music, it has always been so.

Music has numerous revenue streams on which to build. Tech has license fees or subscriptions and sometimes service and support.

Tech product is directly and inextricably connected to the company that makes it. Music (read: labels and publishers) has almost no direct connection to consumers.

Tech embraces “release early and often.” With few exceptions, Music releases only finished, polished product.

Tech was once all need, but has become equal parts want. Music has always been want, but is striving to be need.

We founded Back Porch Group to tackle the big problems in the music business. Our mission to break it, change it, and make it matter manifests itself in every aspect of our work. Lately we’ve been working with a lot of great companies in Nashville and beyond, but in order to really truly make good on our promises, we’ve dedicated part of our time to building businesses from the ground up.

That’s why we launched Bandposters.

Big problem: artists spend too much time doing stuff other than making music. No, seriously, this is a huge problem. Major.

And it’s not just artists either. Managers, promoters, venues, agents – they all spend to much time doing the menial tasks, and one of those tasks is designing, printing, and shipping posters. We should know: we’re artists and managers ourselves.

Bandposters fixes that: design, print, and ship posters to every gig on your tour in two minutes or less. $15 per gig. Simple as that.

You see, posters are hard.

Whoahoooo there tiger, you wait one minute. You’re telling me this, of all things, is what you chose to solve?

Yep. That’s exactly what we’re saying.

Consider this:

• Designing posters is typically done with Photoshop by a trained designer. Assuming you have the skills to do it, it’s going to cost you several hours of time. If your Photoshop skills are limited to cropping, resizing, and meme-building, well you’ll probably have to fork over your hard earned cash to a designer.
• Printing posters is a pain in the ass. Seriously, when was the last time you visited a copy center? Between outdated equipment, disgruntled employees, improper paper choices, crummy prints, and $1.79 per sheet for full color, well, you’ve got a recipe for an extremely unhappy afternoon.
• Shipping posters sucks even more than printing them. Rolling, packing, taping, finding the addresses of the venues, scrawling those addresses with a Sharpie, adding stamps, buying stamps, waiting in line at the post office. Pardon the pun, but that’s why it’s called going postal.

And let’s not forget about cost: dollars, time, sweat. Papercuts suck. Seriously, you don’t want one of those on your fretting fingers.

We believe artist’s need one less thing to worry about. And we hope you find that is exactly what Bandposters can help you with.

I’ve mentioned it a few times before: I prefer Rdio to Spotify (what’s a Rhapsody?). I’ve expounded upon this in the past, and now, even a few years on, Spotify has done little to win me over (more in another post). But as I began testing the two at some length over the past couple days, head-to-head usage left me with one very important thought: Rdio wins at design, and that matters.

Today Rdio launched a pretty cool feature that lets me queue up a radio station based on my listening habits They’ve had similar features before, but the new “Me FM” feature is not just functional, but beautiful. Moreover, it highlights something that I find very important, and that is unified interfaces among platforms.

Both Rdio and Spotify have interfaces built for iPhone, iOS, web, and desktop, but Rdio’s apps look and feel the same on every platform (I don’t have an Android device to test with). Spotify takes odd design queues from each platform independently, and ultimately lose a lot of the coherence that makes the Rdio experience so pretty. (And don’t even get me started on how annoying it is that my Spotify queue isn’t synced across devices, or that I can’t pick up immediately where another device is already playing.)

Here are Spotify’s interfaces:

And here are the Rdio interfaces:

Now I’m not a designer, nor do I have the expertise to critique these designs based on their aesthetics, usability features, accessibility, or whatnot.

What I can do is tell you that, for whatever reason, the Rdio design makes me feel better listening to music.

Experience, design, these things matter, and in my opinion they make or break the success of software, at least when comparing two similarly featured products. The devil is most certainly in the details.

Nashville boasts an economy among the strongest in the country, a cultural experience that’s captured the hearts of critics and connoisseurs, and an entrepreneurial community that is attracting upstarts at a record pace. Combined with an unparalleled creative community, Nashville is ready to shine.

Moreover, we believe Music City has an opportunity to become the next hub of music technology.

Why Nashville?

All of Back Porch Group’s partners came or returned to Nashville because of the unique opportunity we saw to help build the next music business, and to build it here. I returned after 15 years away in Toronto, the Valley and Chicago. Brian came back after over 25 years in LA. Mike practically fled LA for our fair city. We’re as bullish on this place as it gets.

The highly competitive cost of living, warm climate and natural beauty, a rich heritage of creativity and a bone-deep love of music all make us love this city. And those are just the perks.

What makes Nashville a natural hub of music tech is as much by-the-numbers as from-the-heart. Here are a few:

• Forbes ranked Nashville tops in job growth, second only to San Francisco
• Nashville bested Seattle and San Francisco and came in just behind Austin on Forbes’ Best Places for Business and Careers list
• Under30CEO ranks Nashville fifth, just behind New York City, on its list of Best Cities for Young Entrepreneurs
• Money magazine noted Nashville as one of the top next generation startup cities, suggesting that entrepreneurs “forget Silicon Valley, and try Boulder or Nashville instead.”

And as great as these accolades are, they don’t capture the opportunity that Nashville’s creative community offers. Musicians, photographers, filmmakers and artists of all types are everywhere in this city. Spend a few days in East Nashville or on Music Row, and you’ll find the city teeming with makers and creative collaboration. While the Nashville Chamber is working to complete its latest economic impact study, in 2006 there were over 19,000 people involved in music production alone in Nashville.

On the startup front, Jumpstart Foundry, where I serve as a mentor, the Nashville Entrepreneur Center, and StartupTN, are each making capital and significant experience and expertise available to a wave of entrepreneurs.

Is there still work to do?

Absolutely. Here’s where we need to keep plowing ahead.

Talent: Attracting top developers, and – more than that – great hackers is one of our biggest challenges. From Nashville Technology Council to Nashville Software School, numerous groups are focused on growing great developers locally, which is important. But we can do more to tell the story of why talented developers and experienced hackers should start their next music tech company here. And they should.

Money: There’s a tremendous amount of money in this town, but most of it is on the sidelines when it comes to tech investing. While healthcare and life sciences command attention and dollars, tech-savvy VC and angel funding falls well short of demand.

Culture: Old guard thinking and good ole boy networks hold sway over much of the business community in music and beyond. Risk tolerance is comparatively low, and (mostly) outdated views of Nashville and southern cultural weigh on our image.

The good news: this is all changing, and more of us show up daily hell-bent on accelerating this change.

From a position of economic strength, to a great quality of life, a music and creative community like no other, and a startup ecosystem in overdrive, the future of Nashville is very bright. To look out five to ten years and see Music City as a thriving hub of music tech is easier than ever.

We’re banking on it.

Update on July 30: The Nashville Area Chamber of Commerce and Music City Music Council released their report [PDF] on July 29th. The study found the Nashville music industry responsible for over 56,000 jobs, a $5.5 billion contribution to the local economy, and a total economic impact on the Nashville area of over $10 billion. More analysis of the report can be found at The Atlantic Cities.

It was 1993, and I had just spent $500,000 of a major corporation’s money on songwriter/artist advances. The finance department called a meeting to discuss balances. I was new in Corporate America, and had never been to an actual finance meeting. I was mortified.

It seemed to me that the options were simple:  I had screwed up and was fired, or I was to be told I could have more money when I got this balance recouped. Neither was what happened.

Instead, I was asked a rapid-fire list of questions about an artist we’ll call “Jones”:

Finance: “Jones – 57K?”

Me: Justifying my creative decision and explaining how slowly music money comes in, I explained how “Jones” was doing exceptionally well for a new artist, and I thought we should keep at it. I told them about co-writing, producers and opportunities. I blathered on about image and talent and the unseen equity of intellectual property.

Finance: With a blank stare, “Jones – 57K. Are we getting it back this year or not?”

Me: “Probably not this year, but things looked excellent going into next year and beyond.”

You see where this is going.

Finance: “We don’t give a shit. Just tell us what percentage is coming back this year.”

Me: “None.”

Finance: “Fine! Smith – 96K?”

Rinse and repeat.

I had forever been changed by my introduction to the “write down”. I became somewhat addicted to this magical process. And as long as I had a “hit,” the rest was forgiven as a tax loss. How cool is that?

This brings us to a touchy but important topic that was referenced by Aimee Mann and written about on GigaOm. If it wasn’t for middlemen there would be no music business; the business is the middle. But the scruples of such characters have always been suspect.

To be fair and going back to the fifties, the A&R community and the surrounding execs are street smart and savvy. They are paid to hear hits. But as the business became more and more lucrative, the once simple business became complex. Companies were formed, and the corporate music business evolved.

Skip ahead thirty years… a massive financial expansion occurred with CDs. Then the scruples weren’t the problem anymore. It became a problem of actual business acumen. These guys weren’t very good at balancing the books. Almost none of them have been to business school, and fewer had business backgrounds.

At this point, the percentages of the take for record companies escalated at an alarming rate that was masked by the staggering sums of cash that were flowing in. That’s when, gradually, the cost of recording and promoting a record went through the roof and the companies started “charging back” the artist accounts for everything from lunches to private jets.

By charging back the costs of their day to day they could right off their bad creative choices as a tax loss. Clever, but devious. We were all on a complete holiday from responsibility. As long as we had a hit, we could do almost anything we wanted.

Now we have a business that is markedly smaller, but the existing generation of middlemen are still attempting to take the same usury cut that they have become accustomed, if not addicted, to. The business moved the risk back to musicians in the eighties. The musicians just didn’t see it. It was done with smoke and mirrors (or fruit and flowers).

So how do we go forward? Should the manager and agent get the same cut for responding to email that they got for six hours of phone calls? Should record companies get 88% of your gross income? Should PROs get 6-11% of your performance dollars?

Hell if I know. But I know they think they should. After all, it’s harder today than ever to break out and have a hit. When it comes to the contentious new revenue source, streaming, I don’t think any middle men should get a cut. Artists should be able register their work online and collect micropayments directly.

But then the current version of “new” was designed mostly by “old.”