Just been reading an article that Copy Blogger regarding marketing.
The article is talking about such things as the recent Radiohead announcement that they will be releasing their album via the internet and allowing fans to decide how much they wish to pay for it.
By all means the marketing that Radiohead (and Prince in the past) is impeccable and has generated a lot of publicity (and potentially sales) for the new CD (how else would Radiohead have had so much press coverage on prime time media). But the article on Copy Blogger seems to make a few huge assumptions which they do not seem to back up what so ever.
Firstly they claim that
“But that’s okay, since bands make money on the backend (as is so common is more business models than you might think). Concerts and merchandise make bands wealthy, and the music is actually an attraction strategy.”
I can not and will not argue that yes merchandise can be a tremendous revenue maker for bands but claiming that concerts net bands a lot of money is purely ridiculous. Bands can be financed in 2 ways. Firstly the band can self finance a tour, they take up all expenses and cover and loses (or potential gains) the tour produces. The second is the record company finances the tour. If the record finances the tour they will either have this budgeted when they work out the royalty rate that the band get when they first sign a deal OR they will add the costs onto the bands balance (bands and artists have a balance with a record company, you may have heard of bands especially Madonna recently who get massive amounts of money when signing a record deal, the fact is this could be all she gets from the record deal as until this is got back from her % of CD sales the balance is in the red). If the record company finances the tour then if the tour at any time goes into the black the people who have to pay for it is the band themselves (unless a band holds a lot of weight they will struggle to convince a record company to bail them out).
Where bands do gain from touring is quite simple. When a band tours they start getting written about in magazines and of course get mentioned in the music press. This publicity is of course excellent for the bands, the more people see them or hear them mentioned the more the “Brand” is ingrained in their mind. For this reason the publicity generated by touring increases their album/single sales.
All too often the record companies are heralded as the bad guy (and yes in some cases they can be). But before you blame the record company for the high price you paid for a CD the other day consider that shops such as Virgin Megastore or Tower Records can but the latest albums for as little as £5 (a rough figure) they will then sell this CD on for as much as £18 (remember that the next time you go into an independent store and see they have undercut the local larger store even tho they pay as much as double the price the larger store paid). The reason such stores can get CD’s for the low price is because that the record companies in a sense are frightened of them. The last thing a record company wants is for the major retailers to boycott their label.
The music industry still heavily relies on CD sales (this includes all aspects of the industry). Even though the tide is changing to more online mediums it will still be some time before it overtakes CD distribution. Regardless of the delivery methods bands still need the record company for the time being. The record company do not just pay for the recordings and distribution, they also do the most important thing which is publicity. The more bands that do what Radiohead are doing the less the publicity will be in future which will of course result in less people knowing about it and in turn less revenue received from it so the problem will come back to how do you publicize the product.
Tags: 2 Ways, Assumptions, Backend, Blogger, Business Models, Cd Sales, Company Finances, Concerts, Madonna, Marketing, Massive Amounts, Money, New Cd, Press Coverage, Prime Time, Prince, Publicity, Radiohead, Royalty Rate, Time Media