Jun 24, 2015 · 7 minutes

Ryan Leslie had made it.

Five years after arriving to New York as a “broke kid” in 2003, the hip-hop/R&B artist scored a major record label deal with the Universal subsidiary, Motown. His debut album sold 180,000 copies which is quite the achievement, particularly for a largely unknown artist in the digital age.

This was how it was supposed to go down, Leslie and countless other aspiring musicians had been told -- how stars were born, how fortunes were forged. From  American Idol to the Grammys, this narrative of moving to the city, signing a major record deal, and releasing a Top Ten album is the kind of dream story the music industry’s been selling to kids ever since the dawn of recorded music.

But Leslie didn’t get rich. In fact despite posting impressive album sales, he never saw a dime of royalties -- the label took it all to pay back the $100,000 advance they spent to market and produce the album. Then things got even worse: His next album only sold 60,000 copies. This was not how it was supposed to go down.

With few financial rewards to show for his work and his star on the wane, he approached the record labels and asked: What happened?

“I really held my record company responsible,” Leslie told me onstage at Pandoland last week, “because I said, ‘Well, why wasn’t the marketing plan to actually market to the 180,000 people who we already converted with all the money we spent the first time around?' And they looked at me and said, 'Well we don’t know who those people are.'”

Unfortunately, Leslie’s is a far more common fate for musicians who ink a deal with the majors than the rags-to-riches rock star fairy tale the industry wants everyone to believe. What happened next, however, is where Leslie’s story diverges -- and where it becomes an enormously instructive tale for aspiring creatives.

Leslie went it alone, releasing his next album independent of major labels or even major platforms like iTunes. He only sold 12,000 copies this time, but netted $160,000 from these sales -- sales which he didn’t have to split with major labels or Apple or Spotify.

“180,000 records to 60,000 records was a complete flop for the biggest record company in the world,” Leslie said. “But 12,000 or 15,000 records, which equates to 40,000 concert tickets a year for me, that’s a better life than my parents were able to live.”

When all of the revenue he’s earned from album, concert ticket, and merchandise sales is added up, Leslie says he’s made $1 for every Twitter follower he has, amounting to over $560,000.

Of course, building a healthy fan-base then going it alone isn’t itself a guaranteed recipe for success. With his company Disruptive Multimedia (DMM) -- which recenty closed a $1 million seed round led by Ben Horowitz -- Leslie is giving artists the tools and insights that his major label, despite their millions of dollars and the huge cuts of artists’ royalty checks they take, could not.

For artists like 50 Cent and Talib Kweli who have worked with Leslie and DMM,  they  know who’s buying their album. They know these fans’ Twitter handles and in many case they know their phone numbers. And not because of insidious data-scraping schemes but because they simply ask. Hey, if your favorite artist asked for your phone number so she could text you the next time she's playing a concert in your town, you’d probably say yes, right?

“The simple question that Disruptive Multimedia asks is, how many of those people that are following you on social can you call if you need to?” Leslie says. “And so for me, of the 560,000 people who have followed me on Twitter, I know I can actually call 32,000 of them if I need to. So if Twitter shut down tomorrow, Facebook shut down tomorrow, Instagram shut down tomorrow, I can call 32,000 people and I also know... of the 32,000 people I can call, I know the difference between the ones that have spent money with me, and the ones that haven’t.”

These notions of “Engagement” and “building relationships” with users have become such familiar buzzwords that in some contexts they’ve lost all meaning. But Leslie explains convincingly why they’re so important to musicians -- both the ones who work with labels and the ones like Leslie who strike out alone.

“[If] a label comes in and gets your record to 25,000 spins a week, how many of those people are you building a real relationship with that you own? So of the people that love your single, if a million people buy your single, how many of those people can you actually call when you have a new project? If you have a very small percentage of those people that you call. you’re creating a very very very -- how shall I say -- dangerous dependency on the label. Because your only means of reaching those people again is if the record label spends how much it spend to get you to 25,000 spins.”

And as Leslie learned, it’s not likely that the label’s spending will continue at the pace that roped in those fans in the first place -- nor is it guaranteed that the label will spend that money wisely.

Tech companies have already discovered the power of user data. Facebook’s ad platform, which feeds off all the data we willingly give to the network everyday, is making money hand-over-fist.

But this data is arguably even more powerful for artists. And it’s also data that users are happy to give, when the product exists on an emotional continuum like music does. Getting the data into the hands of artists, empowering them to leverage that data, and in turn creating a richer experience for fans, is what Leslie is all about. And there’s no great mystery to creating better experiences for fans. It’s as simple this: When an artist enters a city to play a concert, she should be able to identify the fans in that city -- both the ones who have spent money on her work and those who haven’t -- and then push out a text to them explaining that she’s playing in town that night. And most crucially, this relationship should be managed and maintained directly between the artist and the fan, without intrusion from a label or a massive technology platform.

Here’s Leslie’s money quote from the chat, one of many that inspired spontaneous applause from the audience:

“There’s an incredible long tail of creators,” Leslie said, “and I’m interested in actually empowering that long tail of creators to be able to have long careers with groups of fans and audiences that are really engaged and want to spend money so that [artists] can continue to do what they do.”

It’s worth watching the entire video below, but here are the four most important takeaways for artists from Leslie’s chat:

 

  • Own your audience.  Don’t let a label or a tech company come between you and your listeners. Those listeners provide powerful pieces of data, but I’ve heard from industry sources that in some cases labels have pressured platforms like Spotify and Pandora to prevent artists from accessing it directly, forcing them to go through their label. But there’s no guarantee that the label will give this data up, and as we saw in Leslie’s case, it’s an even smaller guarantee that the label will know what to do with it.

  • The best way to make money is through fans who pay.  Sure, Spotify and Pandora pay out small royalty payments subsidized by advertisers. And labels will be happy to give you a big fat cash advance (just don’t be surprised when the label asks for it back and sucks you dry of whatever small cash amount you earned from royalties). But the most reliable form of income comes from fans, in the form of concert tickets and other more direct fan-artist transactions. “There’s not a capitalist interest on the part of the fans when they support my art. And I feel like with majors, there has to be a capitalist interest.”

  • Get paid, but don’t do it for the money. There’s no room for people in this business who lack passion. As Leslie explains, “When you’re passionate about something, the best is going to be demanded of you, not by the expectations of others, not by the expectations of your investors, not by the expectations of the market, but the best will be demanded of you by the bidding of your heart.”

Here's the full video:

[vimeo https://vimeo.com/131618564]