The Internet, Music, Radio “Getting the most Bang for the Band or Buck”?
The Music Industry is changing and no one really knows how it’s all going to play out. This is not new news but considering that CD sales are down again for seemingly every major record label in the industry, it is still news. The music industry is paralyzed motionless still scratching it’s head (BAU). Record companies are recording losses to the tune of 3 Million a quarter. All the record labels are downsizing and trying to reduce operating expenses to maintain positive cash flow. Record labels are offering different kinds of deals to bands now trying make money by getting a larger peice of publishing, touring, and merchandise sales. These deals are being referred to as 360 or partial 360 deals. By offering these kinds of contracts the record labels hope they can still make a profit. Labels have to make a profit to continue to upfront national acts enough cash to get an album recorded, released, and tour on it. Getting a peice of all the action means the label still makes money. The labels hope. Bottom line for the unsigned band is, they will not see many Million dollar record contracts being thrown at them anymore.
Let’s don’t just pick on the labels though. Radio is struggling also. Radio is consolidating, and spreading out buying music venues and leveraging their websites as a resource to minimize their back sliding audience. They are trying convince advertisers there is a valuable audience that is still listening to Radio out there. For certain demographics or age groups I believe there still is a valuable audience. Not in the 12-30 years old market anymore. Consumers 30 and up seem to listen to the radio still. It hard to teach an old dog new tricks. However, young people in America have thrown out their radio’s and Jam Boxes and replaced them with I Pods and Cell Phones. Music file sharing in conjunction with Internet sites like Myspace and FaceBook have replaced radio all together. Most of the young people I have questioned say they never listen to the radio anymore. NEVER. The demographic is shrinking for young people in America and that is a fact.
Prince and Radio Head are giving away CD’s to promote live concerts and other merchandise sales. Big Bands can make more money on the shows and the merchandise without having to give any money to the Labels. Using the Web as the only form of distribution reduces cost dramatically and the whole world can buy your album on-line for a fee or for free. This seems to be the answer for big already established bands that have Name-Brand recognition.
Unknown regional acts struggle in this model. To give away CD’s and only profit from merchandise and touring will weed out the weak. Most unsigned bands are lucky to make $250 to $1000 per night playing live and a couple hundred in merchandise sales. Split that 4,5,6 ways and there is not much left. Try to save money while touring on this budget is difficult. An unsigned band still needs to record an album, pay for reproduction, and with any luck hire a producer. Let’s don’t forget the attorney, manager, business manager, PR company, and booking agent, web developer and graphic design.
The masters of the Internet and the Masters Internet Marketing are the one’s that will come out on top in this game. Bands being sponsored by more large corporations and utilizing cross marketing opportunities to get the most “bang for band or buck” will be another solution. I would not be surprised to see more companies like Starbucks forming their own labels and selling or giving away CD’s on-line or through existing retail chains to add a revenue stream, value to the franchise, and increase cross-marketing abilities. These sure are crazy times. I guess we will have to wait and see how it all unfolds.