Up-and-Coming Label Illustrates How to Sell Infinite Goods in the Internet Age

from the true-fans dept

The New York Times has an interesting profile of Fueled by Ramen, a record label that has managed to thrive at a time a lot of other labels are struggling. The label seems to be practicing several of the principles we’ve talked about here on Techdirt. First, they seem to understand that the secret to success for a band is to build up a core of serious fans. Fueled by Ramen encourages its bands to engage with their fans online, doing frequent blog posts and studio updates. And the label has apparently mastered the type of viral marketing that builds excitement among the most devoted fans. Second, it has kept expenses low. It produced Panic at the Disco’s debut album for just $18,000, allowing it to make its money back even if the album doesn’t sell hundreds of thousands of copies. Finally, it seems to understand that the real money is in using the music as a way to market the band, and to use the band’s popularity to sell scarce goods related to the band. For example, the label’s bands tour aggressively, and the label has “a merchandise company that sells band T-shirts at stores like Hot Topic, as well as on its Web site.” As the costs of music distribution continue to drop, it will be increasingly difficult to turn a profit on music itself. But people who recognize that the music is a way to build the band’s popularity in order to sell other stuff, for which marginal cost isn’t dropping toward zero, will do just fine. Fueled by Ramen is still largely in the CD-selling business, so they’re not all the way there yet, but their success at a time when more traditional labels are floundering suggests that they’re moving in the right direction.

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Comments on “Up-and-Coming Label Illustrates How to Sell Infinite Goods in the Internet Age”

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Rick (user link) says:

Not just labels....

I help manage a band that is re-forming after many years and we’ve been able to do it all on our own. While we do take marketing cues from labels like this, as well as TechDirt’s insight, the manufacturing and digital distribution is handled very well by Tunecore ( tunecore.com). We can even distribute CDs ourselves, via Amazon and CDBaby without having to deal with the obstacles the majors have put up.

I’m glad we dumped our label in the 90s, it wasn’t worth it for pennies per album sold. The industry is changing, for the better. The major labels can go to the same place they created and spend some time with their mentor, Satan.

Pitabred says:

Selling CD's

You seem to mention selling CD’s with disdain… some people still like having a physical disc. It may not be the majority of their profit, and it’s definitely not their only profit, but why should they NOT sell CD’s? It’s obvious people will pay for them. Even if they have the mp3’s, as long as they charge a fair price (and their site shows that they price around $10, which is really close to what I’d pay and consider a fair trade).

Mike (profile) says:

Re: Selling CD's

You seem to mention selling CD’s with disdain… some people still like having a physical disc.

I can’t speak for Tim, but I don’t think he actually he’s talking down about CDs. He’s saying that the focus of the company is still too CD-based, and hasn’t gone far enough into recognizing that it needs to be selling the overall experience of the band (which can include CDs).

Mike (profile) says:

Re: CDs

Techdirt people want CDs to disappear because they don’t fit into their infinite goods plan for musicians. That’s why you’ll see physical media being dissed all the time here.

Huh? Not at *all*. In fact, I’m a big fan of CDs and still buy them all the time.

CDs absolutely fit into the plan. They’re scarce goods, and you can sell scarce goods.

Mike (profile) says:

Re: CDs

So you are not against selling CDS? Man, I never. I always thought you were against selling music on CDs.

Why would I be against selling CDs? They’re a scarce good. I think it’s a perfectly good scarce good to sell, though, you should *also* be giving away just the music for free. But offer a compelling CD package to buy and many people will do that too.

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