How shorter, fan-tested collections are resuscitating the recorded-music business.
It’s the rare music sales success story: In resurrecting the EP, or “extended play,” a format comprising eight or fewer songs, record labels are moving enough units to build revenue for a baby act with a song on the rise, and could see even greater rewards once the “complete my album” mechanism is offered at various digital retailers like iTunes and Amazon.
Sales trends for the past few years point to the EP increasingly acting as a holdover, almost like putting an album on layaway. If you later include the songs from the EP on the full-length or the deluxe version, it’s a small economic investment to get fans to complete the collection. (EPs retail for between $3.99 and $7.99 on average, compared with $1.29 for a single and $9 to $13 for an album. The more tracks that are released, the better the deal is to complete an album -- or at least, that’s the theory.)
But Capitol Records executive vp Greg Thompson cautions that labels must spend the same amount on marketing and promotion for a hit song as they do for a hit album. “You still have to invest what you invest to break an artist. Those are fixed marketing costs,” he says. Indeed, the three majors invest most in developing, producing (budgets rarely break the $500,000 mark these days, but $30,000 a track for a top producer or mixer is not outside the norm) and marketing (radio adds can easily go for $300,000 a track) new acts. However, Ashley Burns, general manager of Capitol’s Virgin Records, agrees that a single and EP can help manage the A&R investment more efficiently. “Before, you put out the album and it’s sink or swim,” she notes. “With the EP, you can see what people are reacting to, which can guide you in how you finalize what’s on the album.”