Bands Big And Small Finding New Business Models That Work

from the and-it-all-comes-together dept

There's been renewed interest in music industry business models now that we're seeing a number of top musicians experimenting with changing business models. The backlash to those early reports was somewhat amusing and seemed to fall into one of two camps. First, there were those who said that these business models would only work for big, well-known bands, despite plenty of evidence to the contrary. Then, there were those who would pick apart each business model to point out why that particular business model wouldn't work for other bands. One of the things that we've tried to do around here is make it clear that there no longer is just one business model that works -- but that there are many different business models that all are based around the idea of the music being free and then charging only for scarce goods. However, if we gave an example of bands making money off of concerts, people would say that some bands don't like to tour. If we gave an example of a band making money through merchandise, we'd hear that some bands don't want to sell merchandise. That's fine. The point is that there are lots of different business models, and bands can find the ones that work for them. Two articles that came out over the weekend help to highlight this.

The first is in the NY Times, and it talks about how big bands are embracing all kinds of new business models from having their music used in TV commercials to selling other related goods (beyond the typical t-shirts and CDs), such as branded drinks. The second article focuses on less well known bands, and how they're adopting all kinds of new business models that focus on getting fans to pay up. In fact, it mentions one band that appears to be using a close variation on the subscription fan club model we suggested years ago. What these two articles show, however, is that both big and small bands are learning there are all sorts of ways to make money in making music even if the music itself isn't where the money comes from. You provide the music to build up a fan base, which helps build up the value of lots of other things as well. It's nice to see more musicians recognizing this trend -- even if the RIAA continues to deny it.


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  1.  
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    Nick Dynice (profile), Oct 29th, 2007 @ 5:06pm

    Vinyl!

    Wired just did a post about the resurgence of vinyl.
    http://www.wired.com/entertainment/music/commentary/listeningpost/2007/10/listeningpost_1029

    Of course, this is off the radars of the majors because most new vinyl sales are re-issues, indies, and dance music.

    The vinyl experience is definitely a scarce good. CDs, not so much. The CD experience can be replaced with free MP3s, the no scarce good. If the majors and the RIAA really knew what they were doing, they would be pushing the vinyl resurgence and telling everyone to be DJs. Not that we need more DJs but it would give record companies the opportunity to....wait for it....sell records again!

    I copied the new Interpol album from my friend. I recently saw that a vinyl version comes with the CD and a 12-inch book artwork for about $20. That seems like it is worth the money.

     

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  2.  
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    scott parsons, Oct 29th, 2007 @ 5:10pm

    From small to big

    What I think will be the real test is when we see a small band using one of these new business models graduate to "stardom." While I don't think we need music megastars, I do think that it is important that there still be a track to big success for our rockstars, for no other reason that it would be nice to have our cultural ties stay strong.

    It could be just me but I love being able to talk about music with someone else and still be able to recognise at least some of the bands, and I could see a future where everyone has their own favourites and outside that fanclub the music is unknown. Not necessarily a bad thing, but I think it could be problematic.

     

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  3.  
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    The Swiss Cheese Monster, Oct 29th, 2007 @ 6:43pm

    Re: From small to big

    I think we can argue that these "new business models" are really older than we give them credit for.

    Metallica, for example, built its brand by tape trading when they got started. Ironic that they end up on the side that they are now when they benefited by people giving their music away.

    I'm sure if we look at how small names got big before the "industry" existed, we would find all kinds of ways that little performers (bands / individuals) managed to get popular.

     

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  4.  
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    Paul, Oct 29th, 2007 @ 7:06pm

    Internet Radio

    Should be 'given' the music by the bands. A mutually supporting relationship. An ideal place to broaden the fan base. The bands can then get their income from gigs and all the other products.

    RIAA, Performing Arts - go spin! Mid you, the lawyers are not going to be at all pleased ;-)

     

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  5.  
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    Evil Mike, Oct 29th, 2007 @ 7:32pm

    "lawyers are not going to be at all pleased ;-)"

    If 90% of all doctors died today, tomorrow would be a catastrophe.

    If 90% of all lawyers died... not so much

    (not mine, paraphrased from a comment on the Overcoming Bias blog )

     

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  6.  
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    Dolphin, Oct 29th, 2007 @ 9:03pm

    The NYT article is more about leveraging a brand, in this case the artist's brand. It does not mention whether or not Sting is distributing his music for free. Brand leveraging is nothing new. It doesn't support your argument.

     

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  7.  
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    A Musician, Oct 29th, 2007 @ 9:24pm

    Don't Hate Me

    Mike,
    Why are you such a hater and why do you hate musicians so much that you want to see the record industry destroyed?

     

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  8.  
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    Danny, Oct 29th, 2007 @ 9:32pm

    Re: Don't Hate Me

    You're kidding right? Mike (and a lot of the people here) don't want to see the record industry destroyed. We want to see the record industry come to their senses and for artists (the people the industry claims to represent) to get the money they deserve.

    The recording industry had more than enough time to take advantage of digital distribution and offer it in a way that would benefit themselves, the fans, and the artists.

     

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  9.  
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    Mike (profile), Oct 29th, 2007 @ 10:22pm

    Re:

    The NYT article is more about leveraging a brand, in this case the artist's brand. It does not mention whether or not Sting is distributing his music for free. Brand leveraging is nothing new. It doesn't support your argument.

    Huh? The whole point of my argument is that doing things like leveraging the brand is how you make money. It doesn't have to involve giving away free music. The point is that artists will realize that things like their brand will be worth *more* when they do give away free music... so the two play together very nicely. The crux of my argument isn't about the music being free. It's about the overall business models. So, yes, it very much does support my argument.

     

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  10.  
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    Mike (profile), Oct 29th, 2007 @ 10:23pm

    Re: Don't Hate Me

    Why are you such a hater and why do you hate musicians so much that you want to see the record industry destroyed?

    It's actually the complete opposite. I'm a huge fan of music and musicians. And, as I've made clear, the point of all this is to help them. To help them find the new business models by which they can make more money while having more music created and available for everyone. It's a win-win situation, except if your only business is selling plastic discs. Then you're in trouble unless you come up with a new business model.

     

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  11.  
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    M, Oct 29th, 2007 @ 10:35pm

    will it be too expensive?

    All these new business models are good, they help show what's possible and get bands and musicians more money and publicity. What I'm concerned about is that as the music starts to go for free, if I want get more involved, the costs of extras, like concerts or merchandise, will be much higher than they currently are.

    I can't see how this can be avoided, as if the music is sold cheaply or given away, money needs to be made somewhere else.

     

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  12.  
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    Mike (profile), Oct 29th, 2007 @ 11:00pm

    Re: will it be too expensive?

    What I'm concerned about is that as the music starts to go for free, if I want get more involved, the costs of extras, like concerts or merchandise, will be much higher than they currently are.

    Not necessarily at all. In fact, I'd argue it should be cheaper. That's because, if you're the artist and you use these things effectively, you'll have a much *larger* fanbase, so you'll have more economies of scale and be able to charge smaller amounts from larger groups of people...

    Either that, or you could start to offer different levels of service for different groups of fans.

     

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  13.  
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    nxrble, Oct 30th, 2007 @ 8:42am

    Re: Re: will it be too expensive?

    One of the best examples-and I don't know if you've used it-was Einst├╝rzende Neubauten's last couple albums. All driven by fan donations. For $40, you got webcasts of them in the studio, random rare downloads, and at the end a 100% artist-produced CD (with the option of opting another $30 I think for a DVD combo). I paid to basically "subscribe" to being a pseudo member in the background!
    Sure, the band is eclectic, but this is what they've been doing for a few years now to survive, as well as expand and even come here on tour in America. If EN can do it, other bands can and should look at how this would work for them.
    And I don't see how anything Mike has ever said has been anti-artist. Anti-fatcat maybe, not artist though. Jeeze...

     

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  14.  

    The Rock and Roll Star Has Died

    Whatever happened to the true rock star that only concerned himself with the music. It wasn't the money they would strive for, it was the rock and roll lifestyle.

    If you were popular, the money came, if not, you disbanded and tried again with another band.

    Now the bands have to be marketing experts. Free music and higher ticket sales is here to stay. The day the computer was able to copy and transfer music from CD's was the day the music industry as we know it died.

     

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  15.  
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    Anonymous Coward, Oct 30th, 2007 @ 7:24pm

    Re: The Rock and Roll Star Has Died

    The day the computer was able to copy and transfer music from CD's was the day the music industry as we know it died.
    I think you're confusing the "record" industry with the "music" industry. The music industry is doing fine. It's the record industry whose days may be numbered if they keep going like they have been.

     

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