by Mike Masnick

Filed Under:
business models, music

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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    Mike (profile), 29 Oct 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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