Thursday, February 21, 2013

Why the WoodSongs Partner Program, Volunteer Crew ... and “Free” works:

I’m a musician.
I make my living touring and writing. But these days, an artist must have one hand on a guitar case and the other on a brief case. So, I decided to write about the one business principle I knew very well:

The American economy wasn’t built on money ... it was built on logical barter.

The music business, believe it or not, is a billion dollar global industry based on smart, logical barter.  The internet has created a worldwide economy generating several billions of dollars based on one simple word: Free. That word will cause the panties of most traditional, brick-and-mortar, business minded Ayn Rand-followers to bunch into a major economic wedgie. Here’s the truth: Barter is not free. When merged with capitalism, barter is the most effective form of economics.  ‘Free’ causes financial transactions to happen.

Need examples? Let’s look at Yahoo, AOL, Explorer, Google and Facebook.  They allow, no, they spend millions, trying to get the public to use them for free. FREE.  Why give their creation away for free?

Because … drum roll, please … loss makes money.

The business model is simple: the more people they can attract to their domain, the higher the odds are people will buy something. Whether it’s clicking on an ad link or responding to a pop-up ad, advertisers pay them dearly because of their audience. That's why I like Folk-Book, it's at least honest about what is happening. Free is the new business model of the global economy. Free works. But then it always has.

Consider your grocery store: Krogers buys milk at nearly $3 per gallon but sells it at a huge loss for $1.89. Why? If the board of directors looked simply at the profit-and-loss of the milk shelf they would have people fired. But they don’t because they are looking at the entire financial picture. Everyone needs milk and low priced milk draws customers into the store. Sure, they are losing money on milk ... but they put the milk in the far back corner of the store forcing customers to walk through a myriad of isles to get there. And what do they do as they journey through the store? Fill their carts with high profit items they didn’t realize they needed. The loss causes people to buy stuff.

That’s how loss makes money. Pepsi and Coke have done the same thing for decades. Anytime they have a new product, they set up a table at Krogers and what do they do? They give cups of it away for FREE. They call it “sampling.” Television networks have made billions by spending millions to get you to watch their channel … for free.

And, thus, the long standing business model of the music industry. An artist goes to a radio station for an interview, for FREE. The radio station is handed their new CD, for FREE. The radio station plays the song, for FREE. You tune in and hear the song, for FREE. Why? Because, eventually, if you hear a song for free long enough you’ll become a fan. If you’re a fan you’ll buy a ticket to the concert and buy the ding-dang album.

And that’s how FREE makes money. FREE is logical barter, and it works. FREE is the most powerful business model used to attract an audience. And where the audience goes, wallets follow.

WoodSongs was conceived, created and is broadcast as a global, free barter with the sole purpose of attracting the biggest audience possible. The crew works for free. I work for free. The engineers and stage crew work for free. Local hotels put up the artists for free. Local restaurants donate meals the day of the show. Highbridge Spring Water sends water for free. American Recordable Media burns and prints the CDs we send to radio for free. We give the show to WEKU and WUKY for free. The other 500+ radio stations get the show for free. American Forces Radio Network gets the show for free. Insight Communications gives us use of the TV cameras for free. We send the show to KET for free. Public television stations from coast to coast get the TV series for free. Heck, even most of the audience comes to the show for free.

The artists, whether Big Bad Voodoo Daddy, Exile, Peter Yarrow, Judy Collins, Norah Jones, Blind Boys of Alabama, or Emmylou Harris come for free. FREE.

Any why? Because WoodSongs has nearly two million listeners, that’s why. Two million wallets a week listen to the show, and a lot of them buy the CDs of the artists on our stage. Most travel and we invite two million people a week to come visit Lexington, Kentucky. We tell two million people a week how beautiful the Lyric Theatre is.

“Free” has huge financial value. “Free” turned Facebook into a billion dollar company. “Free,” saves Lexington tens of thousands of dollars a year in marketing costs and generates hundreds of thousands of dollars in income. I’ve turned over emails and letters to the Lexington Convention and Visitors Bureau from fans all over the world who visit Lexington because of WoodSongs. I recently read a letter from a family who used to watch us on PBS-TV in Oklahoma and moved to Lexington because of it. One of our crew members, Mim King, moved to Lexington from San Francisco because of WoodSongs.

Sent: Sat, Oct 27, 2012 8:57 pm
Subject: My life on woodsongs

Hi Michael,
I'm at home listening to Woodsongs and I can’t believe how closely tonights show is woven into my life: I am a native of Grand Rapids, MI. About 2 years ago I began listening to Woodsongs on Bluelake Public Radio and just over a year ago I decided to undertake a life adventure and moved to the beautiful city of Lexington, KY, home of Woodsongs and the heart of the bluegrass. Thank you so much for such terrific music to me wherever I live.

Joe Wynia>>>

This business model has tremendous value to our new home, the Lyric Theatre. That’s why they wanted WoodSongs there, that’s why they partnered with the show …  and the packed theatre on Monday nights show it was a smart decision. This was accomplished even though the Lyric had been struggling, unfairly, with a less than positive public perception problem. The general public perception of the Lyric was:

• it’s a “black” theatre  
• it’s in a bad neighborhood
• it has no parking  
• it’s not part of downtown.

The truth is the historic Lyric Theatre is a state-of-the-art, multi-cultural community facility. The truth is the neighborhood is wonderful, friendly, well lit and anxious to serve as a positive part of Lexington. The truth is there is plenty of parking for our fans at the Lyric, over 250 parking spots within a couple blocks. The truth is downtown has grown and so, yes, the Lyric is now “downtown.”

Another truth is that the Lyric wasn’t thriving as hoped. It opened a few years ago with great promise … and has struggled since. They had little on their schedule. It accelerated the perception that no one was using the Lyric, no one wanted to go there, no one cared. Well, our all-volunteer run project cares. Our audience cares.

During the first few weeks of WoodSongs, we attracted over 2,500 fans into the main hall of the Lyric Theatre. Ninety-nine percent of them have never set foot in this beautiful hall. To a person, all have been amazed that their perception of the Lyric was nothing like the very positive reality it proved to be. The public loves the Lyric. This happy and impressed audience will change the negative perceptions plaguing this beautiful venue and help nurse it back to health. “People in the seats” will protect the $7.5 million dollar investment the City entrusted to rebuild this hall. Whereas: a dark stage is a surefire recipe for disaster.

Our partnership with the Lyric leans heavily in the Lyric’s favor because, unlike WoodSongs, the theatre can turn this relationship into cash. WoodSongs is helping make the Lyric attractive to national and regional presenters, who will, in turn, rent the theatre. WoodSongs is helping readjust the public perception of the theatre so the presenters have a fair shot of attracting ticket buyers to the shows they book.

And like I said, barter is not free. It cost our show thousands of dollars we didn’t have to move into the Lyric, and at great risk. We had to somehow overcome the negetive public perception of the Lyric and still get the audience to show up. We had no guarentee this would happen. Even so, WoodSongs delivers an advertising package to the Lyric Theatre worth well over $750,000 a year. The Lyric gets this marketing package and our audience for free at a time when it needs it badly. WoodSongs brings a marketing and public relations bonanza to the Lyric they don’t have to pay for. I’m certainly not getting paid. Neither does anyone on our amazing crew.

WoodSongs is taking a dark, unused theatre on the night they are normally closed and turning it into a goldmine for Lexington by attracting tens of thousands of fans each year through the doors of this beautiful concert hall.

Free is good for the Lyric because where there is an audience, there are wallets. And where there are wallets, there are concert producers and event organizers that will fill the Lyric’s schedule all year long. Soon, the Lyric will be the most popular theatre in central Kentucky. I would even expect  some smart entrepreneurs to open up stores, coffee shops and cafes near the Lyric side of downtown, taking advantage of this audience and helping downtown grow in that direction.

This is a good thing. And only by establishing an audience around the Lyric Theatre will that happen. Oh, sure, there’s some grumbling. Often it is from traditional business folks who see the packed theatre just convinced WoodSongs is rolling in money. They are unaware that the majority of the audience comes FREE. They are called WoodSongs Partners and it is the smartest plan we have ever put in place to fill our theatre on a Monday night.

To them I offer this:

WoodSongs’ partnership with the Lyric and our WoodSongs Partners is the ultimate “value-for-value” barter. WoodSongs is the “Rearden metal” of downtown. Heck, even Ayn Rand would be proud. Our partnership is based on the same model that made Facebook and Google successful. It works for the City, the audience, the Lyric, the neighborhood, the show, the artists, the Commonwealth and our volunteer crew. WoodSongs is uniquely positioned to offer a partnership like this, and the Lyric is uniquely engineered to make this partnership practical for WoodSongs.

The real winner, ultimately, ends up being the City of Lexington.

To be clear, if the Lyric and the City follow through on the opportunities our audience offers, this audience will help protect the $7.5 million dollar investment the City spent to reopen this historic, legacy theatre. Our audience is helping make the Lyric viable and exciting again. Our audience is proving the Lyric needs to be, deserves to be, preserved, seen and used by the community.

This is why I believe in the value of volunteers, of musicians donating a concert to a school now and then, for artists to step up and meet their audience, even if it's free. Because it works. Every artist should be willing to "sample" their songs and performances, yes even for free. These are often called "benefits" or promotional appearances. If any artist gets lost in the tiny world of "no pay, no play" they will soon lose their audience, in turn their market, in turn their living. Artists should be consumed with reaching their audience, not getting paid. Ultimately, that is the most financially rewarding market plan because, once you find your audience, you are, in fact, set for life.

And stay tuned: If WoodSongs successfully converts to high-definition television while still at the Lyric Theatre, this formula will more than double in value. Imagine Lexington hosting a worldwide broadcast seen in over 125 million USA TV homes across North America from the stage of the beautiful Lyric Theatre in historic Lexington, Kentucky.

And THAT would be something to sing about.

Michael Johnathon
folk singer – log cabin dweller