By Brian Swarth (@bswarth)
We here at Zemoga love music. We love writing about music. We love going to concerts. And we love talking about how digital has shaken up the industry – for the better. As Zemoga’s new client strategist/managing director of media & entertainment, I keep close tabs on the music industry, and help our clients find the best digital strategies to grow their business and promote their artists. But first, I need to set the stage for this dynamic and exciting turning point in music history.
Without a doubt, the music business is an entirely different animal today than it was just a decade ago. Case in point: in 1999, U.S. revenue of recorded music was $27B. By 2009 it had dropped to $17B. And 2010 provided very little to get excited about as CD purchases fell almost 13% and digital sales of singles were up only 1%. Although digital album sales increased by a solid 13% with 10M more units sold than the previous year, the gain wasn’t enough to offset the loss of 57M fewer CDs sold last year vs. 2009. Even touring, long considered a bright spot for the industry and artists themselves, was down 15% last year. And just when I thought things couldn’t get more bleak, I recently learned that Justin Bieber was nominated for two Grammys. Yes music lovers, it’s a lot to take in.
But now that we’ve gotten the Debbie Downer portion of this entry out of the way, here’s the good news: while these may be challenging times for record labels & the music industry, it’s actually a very promising and exciting time to be a musician. In fact, in the coming days, the industry itself may be taking cues from savvy and resourceful artists who are discovering new ways to gain exposure and ultimately generate revenue.
In a recent WSJ article, Damon Kulash of the Band OK Go explains how his band no longer relies on a traditional music label for investment and support. His band, like many others, are using corporate sponsorships to generate revenue and help fund the creation of their music videos, many of which have become viral sensations on YouTube. He argues that corporate sponsorships provide his band with the necessary investment and support of a traditional label, but without all of the restrictions and requirements.
While that may be one extreme example, the truth is, there are more ways than ever for music to reach an audience and generate profit. TV shows like Glee and American Idol have been incredibly useful to the music industry and music lovers alike. They consistently expose their audiences (often times, newer and younger audiences) to current and older artists. Journey’s “Don’t Stop Believing” and Leonard Cohen’s “Hallelujah” immediately come to mind. The proof is in the corresponding iTunes sales.
And speaking of iTunes, The Beatles finally entering the digital arena was an interesting case. In a previous post, we wondered whether it was too little, too late. Given the initial results, my sense is probably not. Apple reported that more than 450,000 copies of Beatles albums plus two million individual songs were sold during the first week their music went on sale. In fact, The Beatles Box Set, which costs $149, was No. 10 on Apple’s weekly iTunes top-10 list and Abbey Road is still hovering around the top 50. Even the greatest band of all time is finding ways to reach a new audience.
The metrics used to gauge success in this new world have changed too. Today, success is often measured by how many online impressions, mentions on social media sites, and overall engagement with a song and/or band. Take MTV’s Music Meter; a new online service that helps up-and-coming bands get exposure. Rather than relying on traditional metrics alone, like CD sales, this new tool ranks artists based on various metrics, such as social media buzz and streams on video sites.
Don’t get me wrong; album/song sales and downloads, as well as touring revenue, is still critical to the success of most bands. But the conversation is starting to shift.
So what do you think? Which artists or companies do you think provide examples that traditional labels can look to for success?
In the coming months, I’ll continue to discuss different ways that the media and entertainment industry is transitioning from a traditional analog world to an all-digital world and provide examples of some truly innovative approaches.