The dynamics of the music and entertainment industry have been challenged immensely over the last decade. Internet radio, subscription music sharing service and social media are essentially edging out traditional radio and music record purchases but on the other hand, these digital platforms can also be used to promote shows and tours in a modern way. These new tools offer artists, producers and others new ways to increase profits.
Here are five new ways music labels can capitalize on the digital revolution.
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1. Labels must focus on releasing the music they produce to the mass public as quickly and easily as possible.
When consumers have immediate access to music, the addictive aspect of it becomes easy. Producers should be open to signing deals with emerging social mediums to create a safer way to distribute their music for profit. Subsequent deals can provide a monetary increase for the label, artist and distribution site. Major international digital music services like iTunes, Spotify and Deezer, which have attracted 58 countries, more than double the estimate at the beginning of 2011, have already exhibited the value of music. If labels capitalize on other media, the possibilities of contribution to the bottom line are seemingly endless.
According to the IFPI’s 2012 Digital Music Report, digital music revenues are up eight per cent to $5.2 billion. This is a positive trend for an industry that has been so decimated by mass sharing technologies. Digital copies have become the standard in these fast paced times, and converting to a completely digital distribution platform can substantially decrease the label’s expenditures. A decrease in spending means an increase in profits.
2. Most listening occurs while traveling, so the ease of access for consumers on the move is vital.
The introduction of smartphones, tablets and advanced technology in cars has become a major influence on how consumers find and listen to music, and will become increasingly important as time rolls on. Automotive companies, for example, are beginning to conform to the Apple “takeover” by offering vehicles with Apple integration technology, but Apple is not the only company to make partnerships in this aspect. Pandora Media Inc. has already made 23 agreements with automakers and aftermarket suppliers to include their service in their respective products. Other subscription style music companies like Spotify and Mog could also make a deal as lucrative as this.
3. Utilizing subscription or rental business models rather than a purchase model is a smart way to combat music pirating and monitor the listening habits of consumers.
Spotify has begun using this concept, closely mirroring the way Netflix operates. Netflix made video rental easy by offering both streaming and hard copy rental. The trend has substantially shifted the notion of consumers purchasing DVDs, to consumers cheaply renting a DVD and returning it at the end of their desired use. With the introduction of smart televisions and cloud based streaming possibilities, the need to produce hard copies of movies and music will soon be a forgotten memory. Netflix also monitors what each specific movie a consumer views, and makes suggestions based on those viewing habits. After analyzing the listening habits of consumers, these subscription music companies can suggest listening options directly targeted to each individual.
4. The technology integrated with subscription-based music sharing companies can determine personalized music playlists that may take public radio’s throne as the number one choice for music discovery.
Music labels may fear that their music might not be discovered if consumers are no longer listening to mainstream radio, but subscription-based music sharing and social media are changing the way consumers stumble upon the latest tracks. As mentioned earlier, subscription-based music sharing companies have the ability to track and monitor each choice a consumer makes, which makes the possibility for directly targeting the consumers with music they are more apt to enjoy. This capability can create a more preferred method of music discovery that can dismantle the need for public radio music stations.
Music sharing companies partnering with Facebook allow the social media giant to publish the listening habits of one’s “friends,” which encourages sharing and discovery of new or forgotten music. This method of music discovery can be extremely effective due to consumers’ high rate of time spent on Facebook and other popular social medias.
5. Concert and event promotion through dominant websites like Facebook have increased awareness and interest for these two companies. Cross marketing efforts with music producers and entertainment promoters can increase ticket sales, creating a more profitable tour.
Live Nation Entertainment has a substantial advantage due to its 2010 merger with Ticketmaster, which expanded the company’s foothold in the music industry due to the massive influx of online ticket sales. Ticketmaster is now including links with Facebook that allows consumers to view if their Facebook friends have purchased tickets to the event, and even allows them to view where they will be sitting. AEG Live Launched their new ticketing website, but time will tell if they will adapt similar models and ideas.
The producers and promoters must continue to partner with social medias to encourage the spread of concert awareness within friend groups. The most effective promotions derive from direct interaction with consumers. Experiencing that direct interaction can cause a consumer to consciously or subconsciously create a loyalty to that particular brand, which results in repeat purchases. This method can easily become a fast, cheap and effective way of communication between sales forces and consumers.
Artists, labels and promoters have to realize the changing dynamic of the industry, and the incredible strides it has made over the past decade, and even more so within the last few years. This is only the beginning, and time can only tell what the future will bring, but for now, music producers must create their social media market to prevent any chances of failing in years to come.