The New Music Business (same as the old one?)

I'm in New York right now getting ready to catch some shows for the CMJ music marathon. I always enjoy attending music conferences because it gives me a chance to get a sense of what's going on in the world of commercial music and how deals are happening.

I was speaking to a friend of mine who is a lawyer at a major entertainment firm here in New York. He was telling me about an act of his who is more successful than any other that is currently represented at the firm (which includes many Grammy winning and multi-platinum selling artists). The funny thing is, that this artist hasn't even toured outside of the southeast US. He is not signed to a label. He has just slowly built his following town by town.

He started by building his hometown market: a small Southern college town. He did this for a few months and eventually began selling out the largest venue in town. From there, he started playing in a few nearby towns. Word spread from there and he began getting bookings in towns farther and farther out. He is now selling out the House of Blues in Chicago and Minneapolis, grosses 100,000 a month in tour revenue. He makes over 20,000 a month on iTunes downloads. He has made over 1.4 million dollars in the last 8 months.

He has been approached by major labels, but has turned them down. Obviously, he is living the new music business dream. So my question was, how did he do this?

The answer is actually quite simple. He plays music that appeals to a very specific and easily defined audience. In addition to that, this audience has a tendency to tell their freinds in neighboring towns to come and check him out. And most importantly, he worked on one market, made it successful, and used that success to make the next place successful. He had word of mouth from nearby and trusted sources, and he appealed to people in a way that made them talk about him. He also plays music that is easy to sing along with, often talk about getting drunk and other topics that appeal to people who are hanging out at a bar.

Build up a local following
Make yourself into an act that people will talk about
Play songs that people will want to hear in a live setting and come back to see again
Keep building on that and then play in the next nearby town.
Have your fans tell their friends to come see you in that nearby town.
Repeat the last two steps.

This is pretty much how the music business has worked for the last 50 years.