Anti-Marketing Reinvents the Music Industry
You may have noticed that the music industry hasn’t exactly been doing well lately. Fans fail to see the value of purchased music when they can go online and download albums for free.
Smashing Pumpkins has released their music for free via website. Radiohead recently released its new album, In Rainbows, for whatever price you chose to pay. Nine Inch Nails uploads their music via torrents, offers free downloads and calls record companies thieves.
The business model is not only dead, it’s decaying. The Recording Industry Association of America was voted the Worst Company in America. Profit driven, traditional marketing campaigns are no longer effective for releasing music.
After signing with a label most bands only receive their signing bonus and never see any residual profits. In turn labels are looking for hits, the next big thing, and they can’t afford to be wrong. The entire industry survives on the top 10% of the bands they sign that become mega stars. When they do get it right they provide distribution, marketing, live touring schedules and press releases.
Anti-marketing is cutting the industry out of the equation while generating a buzz that provides all the before mentioned benefits of a label. It’s so intimate that everybody’s talking about it.
Technically speaking, bands could potentially earn more by developing a direct relationship with the community they foster than with the big check that’s cut when signing a deal. Perceived value can be leveraged with live performances, merchandise and donations.
This is an industry with fans that don’t want to be marketed to. They want to share. Why not just let them have their way?
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Connie T. said
am October 12 2007 @ 8:48 am
Haha, f**k the record companies and itunes! I am one who downloaded In Rainbows and was thrilled when I found out how Radiohead was releasing it. The band ended their contract with their last album, and were happy to not have a deadline with some record company hanging over their heads, not to mention the whole control issue over the art form. The band wanted to see how much people think music is worth and according to a poll by Paste Magazine, people apparently think it IS worth it: the majority of folks who downloaded it paid, the average amount falling between 2-10 pounds. Even 325 people out of 1484 who took the poll opted to purchase the box set for 40 pounds. Pretty awesome, I say.
Of course, this formula can work for a band like Radiohead who has a strong, established fan base. I’m not sure if smaller unknown bands could succeed with the same concept, they may be in more need of a record company to advertise and distribute their music, especially in the face of deplorable radio and “music” TV broadcasting.
Downside as a consumer: I love the idea of a packaged CD with a booklet. (Luckily Radiohead will be releasing one by early next year.) Also, MP3s can never replace CDs in terms of sound quality. Of course, I’m hoping they won’t charge 18 bucks for it, afterall, that is part of what’s killing the music industry. I once read in Rolling Stone that people stated they would stop downloading free music illegally and would buy CD’s again if they were more in the range of 10-12 dollars. Sounds like a fair deal to me…
Drew Smith said
am October 12 2007 @ 1:09 pm
@ Connie T. There’s an interesting new compressed music format out there called a “.flac” file, or “Free Lossless Audio Codec.”
Basically it’s the sound richness only achieved with Vinyl, in the convenience of digitized media. I have compared The White Stripes’ “Icky Thump” release from 2007 in both formats and personally feel the sound quality (on my computer, in my headphones, AND in my car) is better on this .flac format. While I don’t actually own the CD, I can’t really say if CD quality is better, but I’ve always been of the impression that .mp3 is equal in quality to music on a studio-made compact disc.
In regards to this article… SHWING! I am taking a course at Cal State Fullerton on Entertainment and Tourism studies, though I don’t know what the “Tourism” part of the class is…
Last week we had a guest speaker, DJ Khalil (who you can hear on Jay-Z’s latest album, G-Unit, 50 Cent, Dr. Dre’s upcoming album and various other artists such as Busta’ Rhymes and The Game will be releasing tracks by this producer).
DJ Khalil gave us the history of DJ Khalil and how he got signed to a contract working directly with Dr. Dre and his pantheon of producers who churn out nothing but beats day in and day out. He talked about how eventually he started getting recognition with Dre, then Jay-Z, and now that he’s been more or less “stamped” with their approval, he’s really starting to work in the industry. The problem, says Khalil, is that there isn’t much money in it. Firstly, if you sample any recordings, then you have to “clear” that original recording and pay that artist practically any amount they want as a part of your publishing percentage. The artist then gets his cut, and then you, the producer get yours. There’s other pieces of the pie being doled out to those involved, such as the studio, but the point he was trying to make was that with record sales pitifully low, and even if he, the producer, creates nothing but original tracks, he still isn’t going to make any money off anything less than a HUGE hit SINGLE.
Interestingly, the money, as Khalil said, is in this hit single concept. No longer are whole albums necessary. If you release one hit, kids start paying $2 per ringtone. Artists like 50 Cent and Soulja’ boy are making MILLIONS of dollars no ringtones alone.
And that’s just the ringtone revenue. I think you get the picture. Music models are changing drastically to reflect the “viral” nature of what’s popular online. Thomas Friedman, in his book “The World is Flat”, makes several references in various contexts to this new concept.
What it all boils down to though, as Jerad made clear in his blog, is that the producer and consumer of music have cutout the middle man, and this leaves them free to create and consume a superior product. Who doesn’t love that? Well I guess the RIAA…but on a long enough time-line I don’t think they’re going to last this one out.
Connie T. said
am October 12 2007 @ 2:33 pm
@Drew Smith: Thanks for the info on .flac, I’ll have to check that out. In regards to the mp3 quality, I stand corrected, they can be of CD quality as you stated, but it depends on the encoding (you probably already know that!).
The mp3s for the In Rainbows download were encoded at 160 kilobits per second, which is only half of CD sound quality. Of course, the download is available for free which makes it more difficult to complain, but I wonder if the sound quality shouldn’t be better, considering that the only other option right now is the pricey box set.
Jerad Kaliher said
am October 16 2007 @ 10:47 pm
@Connie T. and Drew Smith – I can’t agree with you both more. As you know I’ve never been a huge fan of music to begin with. It’s just so interesting to see where the industry is leading. I love the major shifts that will send ripples throughout other industries and media conglomerates.
I wonder if cinema and TV will catch on and keep market share with something other than interruption commercials and DRM-protected downloads?
Thank you both for your contribution to the discussion.