Future of Music: Marketing, Promotion & Artist Management Strategies in the New Music Business Industry


Have Radiohead and Nine Inch Nails paved the way to a music revolution with their donation-based business model? Is this the end of the record business as we know it? Perhaps this is true for major label artists as the Radiohead and Nine Inch Nail donation experiment has highlighted. Why include a middle man - the major label - when you can pocket all the profits yourself today at minimal costs?


Trent Reznor outlines the major problem with the old way of conducting business in the music industry: "Biggest wake-up calls of my career was when I saw a record contract. I said, 'Wait - you sell it for $18.98 and I make 80 cents? And I have to pay you back the money you lent me to make it and then you own it?"

This is a no-brainer for major artists who have a loyal, mass fan base that is evangelical in spreading and sharing their music. However the story is different for upcoming, new artists. They need to be innovative and possess the musical talent that will urge music lovers to take notice to an extent that they believe that it is their duty to alert their friends about the new music they discovered - a wave of viral distribution aided by a network of social music communities who enjoy sharing and recommending music to others with similar musical tastes.

Radiohead and Nine Inch Nails decided to remove the middle man from the equation and go directly to their music fans. In the past, going the traditional route would entail splitting profits in many pieces, leaving the band with a fraction of the profits. Why would an established band do that? The Radiohead and Nine Inch Nails donation-based business model has paved the way for established bands to make money now - not having to wait months to get paid - at a minimal cost. Their costs would be designing a website, adding a shopping cart with payment processing and incurring bandwidth and server costs for downloading their content in real-time to their fans.

The donation-based model is effective for established bands because they already have a mass following and there will always be a fan who would be willing to pay for their music. The question is what would one pay for an album that they want if given a chance to get it for free. There lies the answer to what an album should be sold for. Traditionally it has been sold for $9.99 as a paid download or $14.99 at a retail store. The Radiohead and Nine Inch Nails fans who opted to pay on average were willing to give about $4 to download the album. That is a far cry from the traditional pricing model which dictates that an album is priced between $9.99 and $14.99. Record labels watch out because this is an indication that the pricing on albums is not in unison with market demand and what a music fan perceives as the true value of an album.

According to the NIN band, 800,000 transactions generated $1.6 million in sales revenue in the first week of the "Ghosts I-IV" album's availability, despite the fact that the 36-song version of the album is widely available on torrent sites and file sharing P2P networks. Radiohead's "In Rainbows" generated approximately $6 million in revenues which went directly to the band, with 1,200,000 downloads.

Most fans in both cases chose not pay. From the band's perspective it was a win-win situation because in return for giving up a free album, the bands managed to obtain vital information about their fanbase - their email and a way to communicate directly with their fans. The band's would own their email list and could use it to cross-sell other items that perhaps fans would be willing to pay for. The beauty of "free" is all about user information. Why is Facebook worth what it is even though it does not turn in a profit? Myspace? They have millions of users and market data that other companies find of value. News Corp can advertise their new Fox movie releases on Myspace and generate revenues by using the social network as a tool to reach millions and cross sell their products. Imagine if artist's had Ticketmaster's email lists and could sell tickets directly to fans? Is Ticketmaster willing to give those email lists out to the band? It is the band's fans after all, right? This is the beauty of business and why giving free stuff out actually creates future value. When you grab their attention with your free giveaways offer them something scarce that they are willing to pay for. Perhaps a signed CD or an opportunity to be a part of your next record. Something unique and compelling will always stick to your fans. Who knows, those fans might become true superfans and help lead your promotional efforts. Kiss has an army of followers, why can't other bands have it too?

Can all independent artists adopt the donation-business model and be successful? For most bands, this model is not as effective if used alone. For any mass spread to occur and mass appeal, the music has to be virally contagious. That means others would have to spread your music on your behalf. In short, your music has to be exceptional and you must be talented at what you do. John Mayer is an example on how an indie artist grew to stardom as a result of his music. John Mayer decided to distribute all his music on P2P file sharing networks for free. Fans who downloaded it for free took notice and they started sharing it with other friends. The rest is history. John Mayer sells out all his shows and enjoys a successful career as a musician. His success has been credited to using the free model approach - the P2P networks. John Mayer is the epitomy of what it takes to succeed in today's new media marketplace. He actively connects with his fans and is followed by nearly 3 million fans on Twitter. He is not afraid to take risks and speak his mind. He is genuine, authentic and a savvy business-minded musician that understands that open communication with his fans is paramount. Not only are fans important, your business contacts are too. Make sure you learn how to network in the new music business / industry. After all, you are not an expert in everything and can not expect to do everything. In some cases, a middle man is needed. There is a fine line in regards to time management. Are you a musician or a business entrepreneur? You need to be both but delegation is necessary where you have weaknesses.


If an artist is that good and their music speaks for itself, the fans will come. Perhaps, they can too enjoy the mass appeal benefits of a Radiohead or a NIN. Everyone wants to be heard but given the total number of music out there today aided by the digital revolution, there is a lot of noise. They key to success is standing out and getting your music away from the noise to the prospective fan using innovative ways of distribution and marketing. Artists today are musicians first but the most successful ones are entrepreneurs as well. Make sure you prevent some of the biggest mistakes musicians, artists and bands make with their music career. Connect with the fans and then give the a compelling reasong to believe in you, your music and what you have to offer to them. Then provide them with a convenient, way to pay you for it. Build a marketing and promotional strategy to make money with your music, engage the market and connect with fans. Learn how to develop music strategies that foster innovation in business and creativity. Remove all barriers to entry, restrictions and give your fans what they want: you.

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