The music industry’s recent challenges are well documented at this point – sales are down, piracy abounds and the business models of tomorrow are still being developed. But, amidst these challenges are new opportunities to develop fresh talent, new products and services, and provide a deeper connection with music consumers. Here are four key strategies that will help the industry prosper in the next decade.
NEW ALTERNATIVES TO RECORD LABEL FINANCING
Here’s an outdated notion that still hasn’t been dropped: Record labels are the only ones that can successfully finance artist development. The main reason we’re even talking about this in 2010 is that there has been a lack of innovation for alternatives. There are exceptions, of course. Artists have previously had albums privately financed, but these tend to be one-off investments as a stable infrastructure is not yet in place to fund a greater volume of these projects. Some artists have secured deals with brands, such as Groove Armada’s partnership with Bacardi. Over time, however, there needs to be more structure to alternative financing vehicles to fund musicians’ projects outside of the traditional record label system. Think venture capital for musicians, with an industry services industry to support these artist-owned projects. And alternatives have already began to emerge. As Billboard recently reported, some music publishers are venturing into recorded music. Expect more of these ventures in the future as the industry seeks alternatives to the status quo.
USE TICKETING TO DEEPEN THE RELATIONSHIP WITH FANS
Luckily, here’s an idea that’s almost a relic: Ticketing is just about selling tickets. Customers are demanding better service and companies are listening, as the ticketing business is hard at work improving the customer experience. It’s important that artists, managers and promoters use these ticketing companies’ technologies to foster better relationships with fans. Ticketmaster has already introduced improved price transparency during the buying process and has given a glimpse of a new check-out process that allows customers to add non-music items such as digital downloads, VIP parking and food and beverage items. Innovation is alive and well at competing companies as well, as new ticket-buying experiences are being developed. EventBrite, for example, makes finding and buying incredibly simple. TicketFly and others help venues integrate ticketing into their websites, allowing customers to discover a show and buy a ticket from one location. Veritix and others have created ways to make paperless tickets a seamless experience for concertgoers.
BETTER PRODUCTS WILL CONNECT
The content industry is becoming increasingly vocal in its calls for Congress to help push broadband service providers to help deal with online piracy. Their argument is a good one: Legal services deserve a fair chance in the marketplace, and competing with free places an unreasonable burden on attempts at new business models. And while that may be true, nobody should think government intervention alone will do the trick. Simply put, better and more exciting services are needed to draw consumers to the next generation of digital music. Legal alternatives have exists for years but few have failed to connect on a large scale. The days of middling stores and services need to end. Content owners don’t typically create and own those services – Vevo is an exception to the rule – but they do have the final say about which services and technologies ultimately make it to market. As a result, they are party to the mediocrity that has plagued the digital music marketplace. And they will be responsible for future failures of digital services to reach mainstream consumers and bring growth back to recorded music.
USE TOOLS AND ADVICE AVAILABLE TO PROSPER IN THE MIDDLE CLASS
A struggling artist who achieves success outside of the corporate machine – that’s a story you see every once in a while and it’s one we all want to buy in on. Unfortunately, the numbers paint a different picture. There is more competition for less consumer spending. There around about 100,000 albums released in a given year. About 5,000 of them will sell over 1,000 units in a year. Lower recorded music revenue has created more incentive to earn money from concerts and increased competition has put downward pressure on earnings potential. So, basically, the artist community’s middle class has grown but it is hard to argue it is better off than it used to be. The middle class could be in a better position, however, if there were more alternatives to financing and managing projects (see above). Although the market is difficult, there are ample tools for musicians to use to showcase their music, build a following and create a sustainable career. Ultimately the music is what matters, but the artists who best use the tools available to them and show creativity in reaching fans will stand the best chance of succeeding. For example, artists should use social networking services to encourage their fans to spread the word about news, music releases and concerts. Creative videos and innovative uses of existing services like Twitter can endear people to an artist. Follow best practices for email marketing and learn from the experts – the Internet and online bookstores are awash in sage advice. And perhaps most importantly, take advantage of the low costs of digital distribution by offering music in new, exciting ways. Give music away, put it on sale or bundle it with other items using popular direct-to-fan services such has Topspin, Bandcamp or Nimbit.
-- Glenn Peoples