Here’s a great article about the new marketing methods we’ll be seeing in 2008.? We will begin to see large scale experiments in subscription based music distribution and other models which eliminate a pay by the track model (such as Imeem).? The death of DRM may come this year, as three of the Big Four labels are already in the process of abandoning it.? There are rumors of deals in the works between major labels and ISPs (internet service providers) to offer unlimited downloads or more bandwidth, and we can expect to see multiple collectible versions of albums released.

As the shift in music sales hits overdrive into the digital realm, 2008 is shaping up to be the year the major labels begin to adapt to environment.? The big question left is: how will artists break into the big time?

Bottom Line:? The Big Four are finally entering the digital revolution.

A new idea has surfaced in the music business this year: giving away tons of free CDs. First Prince did it through UK newspapers, causing quite a stir in the industry. Now Big Head Todd and the Monsters are giving away 500,000 copies of their new album to radio stations and fans, splitting the cost with radio to get the copies out there. The albums will be available as giveaways from radio stations, and on the band’s site. The album is available as a free download for fans, and according to the BHTM site, the physical album is “Available SOON from our merchandise store for just $5 or FREE with any merchandise purchase of $15 or more.”

At first glance this appears to be another groundbreaking model for the industry. BHTM used to be on a major label, and has the industry recognition and viability as a touring outfit (they are preparing for a 60 city US tour as we speak) that comes with major label artist development and promotion.

Looking closer, even at dirt cheap prices (including postage), the investment here would be a minimum of $200,000. Apparently, fans are jumping at the bit to get the free album, a testament to the credibility of BHTM. But what does this action say for the rest of us in the industry? Although not as widely recognized as Prince or Radiohead (and few artists are), BHTM has the credibility and resources to launch this kind of campaign. For the rest of us who have not had major label development, access to create a quarter million in investment, tons of willing radio contacts, and the ability to book a viable 60 date US tour, this tactic may not be fruitful in the short term.

Based on the flopping CD sales over the holiday season, CDs are set to lose major amounts of retail shelf space next year, except in major retail outlets like Wal-Mart and Target. Consider that without retail shelf space, physical distributors will rapidly become obsolete. These days, selling 100,000 copies of a CD gets you high up on the charts. Give the sorry state of CD sales, it appears that musicians will need to have some kind of sure money maker (like touring) to buffer this kind of massive promo giveaway, unless one is willing to invest tens of thousands of dollars and ‘see what happens’.

So what about the horde of mid level musicians that don’t have the clout to give away half a million (or even ten thousand) CDs? It’s a brilliant marketing ploy, but without the ability to book a viable tour with sweet guarantees and juicy crowds or the guarantee of radio play it becomes a major loss leader in an industry that is rapidly losing revenue streams.

Giving away albums to generate buzz has become the modern equivalent of the single. Let the fans hear the music, and give them the opportunity to support the band live, or by buying merch or CDs. This tactic will drastically undercut the Big Four’s ability to set prices and control music distribution over 2008.

Bottom Line: It is beginning to appear that the only way to transform the music business is to devalue music and start again with a whole new model, where art is free and the money comes from something else.

The original article was in TheWeekDaily.com

I suggest you read the whole article yourself.? Here are a few of my favorite quotes, along with a bit of snappy patter:
“Ringtones, in fact, are now the fastest-growing source of music-industry revenue. “I find myself, when I’m signing a record deal now, asking, ‘Can this sell as a ringtone?’” said Steve Rifkind, president of SRC, a label affiliated with Universal.” - I’ll know I’ve made it when I’m #1 on Nokias…

“…seven years ago—an album would have to sell about 500,000 copies to reach No. 1. But Johnny Cash’s posthumous release last June reached the top of the Billboard charts after selling only 88,000 copies.” - The business model of major labels fails under these conditions.? Great news for indie labels though.

“The industry seems to have devoted most of its energy to largely futile efforts to prevent illegal downloading…big companies hunting and suing single moms and students has been a public-relations disaster. ”? - Is there anyone who doesn’t see this?

“The record industry has to find new ways of making money that do not depend on selling CDs for $16 apiece…the companies are devoting more resources to parts of the business that just a few years ago were mere afterthoughts or that didn’t even exist… some record-industry visionaries say the future won’t have much to do with making physical “records” at all.”? -? They knew all this ten years ago.

With every passing day, we see the continuing deterioration of the old guard.? The question becomes:? How will musicians make a living in the post major label environment?

The first official news has hit the wire. Radiohead has signed with ATO Records to distribute In Rainbows in the US, with a release date of January 1, 2008. XL Recordings is distributing the album in the UK.

Considering this morning’s post, I wanted to break the big news, as it was released today.

This has been all over the internet this morning. I was forwarded the link above, so TechConsumer gets the nod. Here’s the official statement from Radiohead regarding the recent sales reporting of In Rainbows, first reported by comScore Inc.

Let’s look at it from a different angle.

Consider that no one but the band’s organization has accurate sales totals, and they are not required to release those figures. While comScore may have a powerful system to approximate results, it’s still speculation. Fans don’t care how many albums the band sells, they’re buying it for the music. So why is the industry racing to release information that the ‘experiment’ is a ‘failure’, and why is the media scrambling to report sales totals for In Rainbows?

If In Rainbows proves to be a success (and I predict the band will make more money for themselves then they did on Kid A), then platinum artists don’t need major labels to promote them anymore. Major labels are scrambling to show the experiment doesn’t work to protect their interests. Their marketing machine propelled Radiohead to the spotlight, and now the band can generate media frenzy on their own. If this works for Radiohead, it can work for all artists with millions of loyal fans.

Thanks to the overwhelm of media coverage on the album, Radiohead doesn’t need to spend a penny on promotion if they choose. Once an artist reaches iconic status, they need no entity to propel their career, as long as the music is quality (and the reviews of In Rainbows are glowing). This kind of free publicity eliminates the need for huge marketing pushes. Without multi-platinum artists to buffer the bottom line, major labels are nothing more than upper-tier indie labels with massive back catalogs. Thus, the need to publicly show that the method doesn’t work. The reporting of In Rainbows isn’t about album sales or revenue, it’s about keeping mega-stars on major label rosters.

This story does not represent a shift in the music industry, it represents a shift for mega-artists. Once an artist has broken into international stardom, they no longer need the promotional muscle of major labels. The echo chamber of media almost guarantees releases from superstar artists will be plastered all over media outlets, with the hopes of generating readers, viewers, or web hits. The major label business model does not account for artists leaving the label after they are mega-stars. That’s where the major labels became major in the first place.

However, In Rainbows has little or no effect on the rest of the industry, as there are not many bands that can be compared to Radiohead in terms of success. For the 95% of artists that have not had a decade of major label development and promotion, Saul Williams‘ new release (produced by Trent Reznor) is the one to watch. Released with an option to buy or download at a lower bit rate, his sales figures are a measure of what is available for a mid level artist using this tactic. Of course, Saul Williams’ Q Score is much lower than Radiohead’s, so we haven’t heard much about this.

The story here isn’t Radiohead’s actions around In Rainbows, but rather the power they have to cause huge ripples in public conversation without the major label that broke them. Regardless of the amount of money made, In Rainbows shows that superstar acts can release an independent album and maintain their media spotlight.

The sales figures are a red herring for the real issue: Major labels have lost their ability to be the only avenue for mega-artists success, and these artists represent a huge part of their revenue.

Steve Albini speaks about DIY music promotion and bands operating in the music business.

Digital Music News bills itself as “the news and information authority for music industry and technology executives. Our readership is a … digital music executive audience representing … traditional labels, music subscription and download stores, online music stores, digital radio companies, P2P applications, legal services, portable mp3 player manufacturers, and micropayment firms, just to name a few”

So far, approximately 38% of fans have bought the new Radiohead album In Rainbows. Considering that Radiohead reaps 100% of the profits, they’re probably making more than they did before.

“According to the data, 17 percent [of fans] paid an average of $4 for the album, while 12 percent paid between $8 and $12…Radiohead sold well past one million units on the album.” If the numbers above are accurate reflections of what people are paying, the total rake for this album so far is a significant amount of money. And in short span of time.

“The result deflates the excitement surrounding the effort, heralded by many as a groundbreaking model. It also challenges the levels of loyalty that established bands can expect from longtime fans.” How does this deflate the model? If a million people buy an album they can get for free, doesn’t that show there’s still a demand? Apparently even when music is totally free people still choose to buy it. The only group of people disenfranchised by this development are major labels, who will be forced to abandon almost all artist development and marketing models in the face of this trend.

“Elsewhere, large numbers of fans continue to grab the album outside of the Radiohead website on free file-sharing networks, another unexpected development.” Unexpected? How can anyone who follows the current industry trends see file sharing as an unexpected development?

Kudos to Alexandra Osorio on having a detailed breakdown of the sales of In Rainbows. As far as the analysis goes, its obvious who their readership is when they call file sharing of In Rainbows unexpected.

Chris Anderson deserves a parade in his honor.

This brilliant post completely uncompresses the major label view of the music business with the actual music business.

“…it appears that every single part of the music industry except the sale of compact discs is up.

• Concerts and merchandise: UP (+4%)
• Digital tracks: UP (+46%)
• Ringtones: UP (+86% last year, but probably just single-digit percent this year)
• Licensing for commercials, TV shows, movies and videogames: UP (Warner Music saw licensing grow by about $20 million over the past year)
• Even vinyl singles (think DJs): UP (more than doubled in the UK)
• And, if you include the iPod in the music industry, as I’d argue a fair-minded analysis would: UP, UP, UP! (+31% this year)”

With statistical data to back up the claim, it’s clear that all the hoopla around the death of the music industry is a death cry form major labels. They could revamp their business models, and in fact they could have ten years ago when they knew this was coming. It’s as if these major companies have absolutely no relationship to reality.

The end of Chris’s article seems almost directed to this blog: “…for those who say that this avenue [giving away all music free] is only available to artists at the head of the curve…I’d point out that the other group poorly served by the labels are those at the bottom of the curve…”

As the major labels fail and become some new form of entertainment companies (most likely a clearinghouse for content or booking agencies), music will lose almost all of its value. Once we (the audience) are no longer pressured to buy, or told we are criminals for our actions, music will begin to regain its value.

While touring and swag are viable outlets for artists to generate revenue, the question becomes: where can smaller artists play, and is gigging still viable?

What is your take on the state of music sales, given this exciting and inspirational update on sales figures?

The future for musicians looks like more than just great recordings and live shows. The opportunities that the internet provides modern artists is available to everyone, and thus its potential is diluted. One powerful tool in creating buzz around your project or career is to get noticed. And one way to get noticed is to generate interest in who you are, and what you’re saying. in other words, creating and maintaining a conversation with your audience.

Pop culture can overwhelm us with the personal lives of famous people, and annoy us to no end with the antics of celebrities. Billboard has an excellent article on the effect of this kind of marketing on the careers of the ultra-famous. Keeping themselves in the public eye is a critical element to the careers of these top tier entertainers. Even bad press is good press for them.

For the independent artist, this same technique can yield different results. We can expand our scope and reach by generating attention for who we are, and what we have to say. Marketing a personality is nothing new. Here’s an article from Time Magazine in 1978, looking at the same methods and issues we are discussing today.

Once you have fulfilled your artistic vision, and you’re putting yourself out there, the make-or-break factor in success becomes notoriety. While having ten thousand friends on Myspace seems like a powerful promotional tool, does it really measure anything other than the number of people that landed on your page and clicked add me?

One of the most effective tools for creating a buzz for yourself, your project, and what you’re up to is blogging, and blogging often. If you are anything like me, you spend at least some of your week surfing the internet and consuming content. You have sites that you visit regularly. Consider that what keeps you coming back to a site is the steady stream of new and interesting content. Content that speaks to you.

A healthy career is grown through a fanbase. Radiohead, Nine Inch Nails, Prince, and Madonna are able to free themselves from major labels and even give away their music because their fans are loyal, and people are tuning in.

While it may seem like the forward momentum is slow, steady and regular content on your project webpage, blog, or social networking page is critical to bring people back. And the more time people spend on your sites, the more interested they will be in supporting your cause.

I am guilty of not providing a steady stream of information on my blogs at times, and it impacts my return traffic, and the hype around my own projects and Polyvibe. I am preparing to condense this blog with my personal blog, providing the same great content with half the work. Like Uncle Scrooge says, work smarter, not harder.

For any artist who is committed to bringing viability to their career, having a powerful voice, and keeping the conversation going are critical elements to success.

I invite you to comment on this post with your opinions. If the waters ripple, we’ll talk more about creating a cult of personality, the results people are seeing from this kind of grassroots marketing, and methodology that can be implemented to increase your results.

Having seen this post a couple days ago, I feel compelled to put my two bits into the future of albums. It is true that Prince gave his album away in a newspaper, and that Radiohead is breaking new ground with their latest album (for those of you living in a cave, you can choose how much you want to pay for the album).

Animosity toward major record companies is growing faster than US citizens contempt for their government (I’ll refrain from linking out to anything here). The entertainment industry is entering what is known as a paradigm shift. It’s a blessing that international acts who have sold tens of millions of albums are bucking the existing system, and thus speeding up its downfall. Once the major labels are gone (or reduced to distribution entities), a new paradigm for the music industry will emerge.

I’m going to speculate on two different future paradigms for the entertainment industry.
In the bleak future, there are almost no major studios, and there are only one or two companies making high end studio gear. In this future, albums are considered such a small part of an artist’s career that the effort and attention paid to them diminishes. A professional musician becomes someone who tours and sells merch exclusively, while the number of live venues and outlets for performance shrink exponentially (Have you heard what is happening in orchestras?). As internet streams and access to media continues to increase, the value of going to a live show also drops. In this future, there is zero market for music as a commodity. Almost all musicians become hobbyists, and only artists with marketing budgets to swamp the internet garner popularity. Most musicians will no longer believe that they can live their dreams, and less and less of us will be willing to take the risks that it takes to generate rampant success. In this future, acts like Metallica and Radiohead will continue to make money – their touring and merch machines can support a massive infrastructure.

While this future is depressing, it is not the future we are living into culturally. Major acts are taking actions now that will ensure that the market for music opens up, and are creating an environment where any artist can create success with dedication and commitment. In fact, going back to Radiohead (check out the comments on this article), fans are embracing the opportunity to support an artist, and are buying the album.

Depending on how you look at things now, you can say that albums sales are bottoming out, or you can say that the imbalance of major label influence is being removed from the sales figures.

The future we are actually living into (in my humble opinion) is one where albums sell, and fans want to buy music they love. Most of the animosity toward buying music has to do with pricing structures and that major labels take most of the money. Even though people can download anything they want for free, albums are still selling. While the value of albums may drop, the percentage going to artists will increase, balancing out the pot for artists (the only party that fans care about anyways). A billion downloads is not a coincidence. A la carte downloads are novel now, but just like a six pack is far cheaper than buying one can of soda, the value of buying an album will follow the same path.
We can look at the actions of multi-platinum artists as a litmus test for the music industry, but they do not represent most artists. Gauging the future of album sales on artists who have sold millions of albums is no different that gauging the future of album sales on major label methodology. The typical mid level artist has neither the resources nor the clout to write off the value of albums.

There will be a shift in the perceived value of music by fans, too. Once DRM goes away, and people stop trying to litigate file sharing away, audiences will begin to give up their resentment of buying music. With software, file sharing is also rampant. Yet software companies are selling enough units to stay in business.

People value things more when they buy them. A hard drive filled with downloaded music
will never go away (and is there any of us who have no mix tapes or downloaded songs?

While the current environment of corporate pressure raises hackles, audiences want great albums to listen to. We just don’t want to be told we’re criminals.

The future of music lies in respecting the choice of the audience. If people don’t want to buy an artists music, but they want to listen to it, more power to them. As long as they enjoy it. If people love music, they will buy it.

On a final note, we of the Polyvibe are putting our music out on p2p networks. Feel free to enjoy it. If you like what you hear, support the artists.

*The opinions expressed above are my own, and are intended to provide a perspective outside of mainstream music industry types. We are committed to creating a conversation about what is possible for the future of music outside of mainstream perspectives.