The music industry could learn a lot from Madonna. As a star and brand, she has constantly evolved over a 25-year period and managed to keep fans entertained and sales buoyant.
Over a similar period, record sales have evolved from vinyl, to tape, to CD and now to digital formats. In the latest phase in the evolution of the music industry, bands are finding new and innovative ways to make their music available, particularly in the face of illegal downloading.
Take Guns N’ Roses, which is seeking an advertising agency to promote its long-awaited album, expected to be released next year (MW last week). The band might have the right idea going down the traditional route of trying to sell albums, but what will really benefit from an advertising campaign is the Guns N’ Roses brand, boosting back catalogue sales.
But the LA band, which has not released an album since The Spaghetti Incident in 1993, looks to have some catching up to do when compared to innovative strategies used by other bands.
Last year, Radiohead offered fans the opportunity to pay whatever they liked to download their new album, In Rainbows. In July last year, Prince gave away his album Planet Earth with the Mail on Sunday. Sir Paul McCartney signed a deal with a record label owned by Starbucks, which then sold his new album in its coffee shops.
Following Radiohead’s innovative push, lesser-known but well established rock act Nine Inch Nails released its album Ghosts I–IV as a free download from the band’s website. The album, which was released in May this year, was available in a variety of download options as well as in physical format as a CD or on vinyl.
Giving people several choices about how they wish to consume music is important for today’s music fans. Advertising agency Wieden & Kennedy managing director Neil Christie says: “Different people have different ways of buying music. Not everyone wants to shop at Amazon and not everyone wants to shop at Tesco.”
In October last year, Madonna led a new revolution by signing a recording and touring contract with concert promoter Live Nation. The £59m deal gave Live Nation rights to all the star’s music-related projects and ended her 25-year contract with Warner Music Group.
Madonna’s lead, as the first performer in Live Nation’s Artists division, was seen as a way to take advantage of new methods of music distribution. It is predicted that the division, which now also includes U2, Shakira, Jay-Z and Nickelback, will become a major rival to record label giants EMI, Sony BMG, Universal Music Group and Warner Music Group.
Despite talk of otherwise, the music business is still thriving – globally it was worth £11.3bn in 2007. The International Federation of the Phonographic Industry (IFPI), the industry’s international music body, says: “Music is now 24/7. People no longer need to shop between nine and six.”
Digital is playing an increasingly crucial role in music distribution, with almost a third of music sales globally now following digital routes. The IFPI says the pressing issue for artists is how to stand out in the digital arena.
New ways of making music available to consumers are continually being developed. Wieden & Kennedy is currently working on handset maker Nokia’s Comes with Music brand. The new service, which launches next year, will enable users of its music handsets free and unlimited downloads for 12 months. Nokia has already signed major record labels, including Universal Music Group and Sony BMG and independent labels are also starting to come on board.
Rival mobile company Sony Ericsson is also launching a music download service, PlayNowPlus, which is an extension to the handset maker’s PlayNow service where consumers can download music for 99p per track.
The BPI, the music industry body formerly known as the British Phonographic Industry, says that while there has been a “boom” in live tours as a revenue earner, that route cannot be used to break new acts.
And despite independent deals from larger acts like Madonna and Coldplay, the IFPI says record labels are still integral for smaller bands. The spokesman adds: “Record labels are transforming the way they work but they are not stopping. They are going into partnerships like merchandising.”
Brand partnerships are even replacing record labels in some cases. Groove Armada, for example, partnered with Bacardi-Martini in March to fund a four-track EP. Harvest Entertainment – an agency that links bands and brands – has signed a number of artists with the same thing in mind. The IFPI says: “Everyone from fast-food chains to coffee shops are trying to get into the market.”
The IFPI says that although there is some money for larger artists in live appearances, sponsorship and brand partnerships are becoming “an increasing part of a portfolio of new possibilities”.
Artists themselves, seeing their incomes from traditional record sales decline, and reluctance from record companies to stump up huge advances, are employing new tactics to make money.
These range from sales of broadcast rights and royalties through to deals that allow tracks to be used in computer games. When Metallica released its album in September this year, it was simultaneously available for download on the Guitar Hero game. As a result, sales of Metallica’s back catalogue soared. An industry source says: “Computer games give bands the opportunity to target the young gamers that might not otherwise have bought the music. It is even possible that the recent upswing in sales of older metal and rock is a result of Guitar Hero.”
Earlier this year, Activision, which publishes Guitar Hero, unveiled a game based entirely on rock band Aerosmith – a first for the games industry. Next year Activision plans to publish a game devoted to Metallica.
The evolution of channels and platforms available to the music industry looks set to continue. New business models are springing up and more effective ways of combating illegal downloads are being developed. Good news for the rock stars of tomorrow, who may not have to forgo the sex, drugs and rock ’n’ roll lifestyle after all.