The Year 2007: When The Music Business Broke, & Online Album Leaks, Bloggers, and Social Networking Prevailed (Part 1)

The year 2007 was a terrible year for the business of music, but a great year for the popularity and promotion of music! It was the year when The Music Business Broke and The CD Died, but Online Album Leaks, Bloggers, and Social Networking Prevailed creating an exceptionally popular demand in music than ever before!

It was the first year I saw Internet Album leaks result in improving CD sales as they were leaked weeks before their official releases and then CD sales shot up. Case in point were album releases by Talib Kweli, Kanye West, and Common Sense. All of the albums in which leaked on the net weeks before its Billboard debut, and all of which debuted at number 1 in their first week of sales. In addition, the music business finally gave up on the CD as the main source of revenue, and they moved to marketing ring tones which are more profitable. Overall – the Business of Music was smacked in the face in 2007 in terms of sales, but the consumers of music have never seen a more exciting time.

To add insult to injury, MTV recently wrote an excellent article on some of the negative trends that occurred in the music industry this year entitled “The Year the Music Industry Broke“. Included in the article was a timeline of things that occured in 2007 that adversely impacted the Industry. Specifically – they detailed the terrible decisions that were made to attack sites like Oinked and the petty lawsuits against peer to peer file sharers. In addition, they talked about the shift of artists who gave their albums out for free on the web and dropped their labels, as well as reviewing the poor decisions being made to control and regulate Internet Radio.

In the entire article – there was one common theme which was “Failure” and “Demise of The Old Music Industry”. Primarily because the seasoned veterans who run this business can not understand the Digital Era.

In this Editorial Style review, I will outline what strategies labels will need to embrace and employ to move from an Offline company to one that is Online! This is a first part of a 2 part series. With the first part outlining 3 New Opportunities Labels can take advantage of now to survive in the Digital Era.

3 Things Labels Can Do To Save Their Business in 2008.

#1 – Hire More Internet Savvy Executives & CEOs -

Get rid of the old and in with the New! Executives at labels in 2007 made some terrible decisions in 2007. From Universal’s reluctance to renegotiate their deal with iTunes and the start of their own store, to CEO of Universal Music Doug Morris’ disasterous interview with Wired Magazine.

Unfortunately – the seasoned veterans who sold millions of records 20 years ago are becoming far more irrelevant in the Digital Age. Although you will still need a seasoned music industry veteran, the music industry needs to make room for a new type of Executive. Perhaps labels need more internet savvy Savvy executives to really get it right. Just look at the founder of FaceBook Mark Zuckerberg who is just 23 years old and is already a billionare because he focused on embracing a world of Social Networking and the simple concept of Sharing rather than working against it.

Bottom line is that labels should value experience and tenure, but invest more in experienced technology professionals who have been sucessful in deploying online strategies in the Media and Entertainment space. The people in this business today are too focused on the accomplishments of 5 years ago so they can stay in position. Besides – especially in Hip Hop – it is all the same players (Russell, Diddy, Jay Z, 50 Cent, Dre, etc). Its time for new blood and get the new execs in!! Labels should fire the old school executives who can’t develop or support Digital strategies succesfully. Perhaps we can start with Doug Morris!

#2 – Spend More Marketing & Promotional Dollars on Internet Radio, Blogging, Podcasting, and File Sharing.

Just last week I had the opportunity to meet with 2 Major record companies regarding a new project I am involved with for a new recording artist. I could not help but notice that many of the folks in the room were not only great at what they did in promoting music over the radio and print medias, but all of them had very succesful track records in the past with Marketing a project. What was missing was the knowledge of deploying a more rigourous digital strategy to market music. A Majority of the plan and budget discussed was based on Terrestial Radio strategies, Street Promotion, Getting Spins, Mixtape Circuit strategy, and more traditional outlets of bringing new music to market.

When it came to Internet Marketing and Promotion – that was where EG Radio and myself came in. However, the monies being spent in this area accounted for less than 10% of the overall budget. Perhaps – it will be the other way around next year?
It is very apparent that today’s seasoned veterans in the music business concern themselves more with Nielson Soundscan numbers which track Terrestial FM Radio, and CD Sales. While these mediums can be still relevant, they are quickly declining! Yet – companies are spending large amounts of cash into these mediums. Recommendation #2 is for Record Labels to shift the amount of money they spend going into these traditional mediums and to allocate more money into promoting new music on Internet Radio, Blog Sites, Podcasting, and File Sharing – all of which – provide a means of tracking the popularity of the music.

Why not use PirateBay or any of the BitTorrent services to put an album out for 2 months prior to its official release to get a baseline of its Internet Popularity? Give it away at a lower bit rate for free – for a period of 3 weeks – and determine how many downloads it gets and compare that to comparable Internet Releases on BitTorrent. Just look at 50 Cent vs. Kanye West’s BitTorrent numbers prior to their official releases on September 11th, and you would of already known that Kanye was going to clearly outsell 50 Cent. Primarily because the BitTorrent numbers prior to their release were somewhere in the ball park of a 3 to 1 ratio. If a label were to Google the 2 Albums on the Internet, they would of saw that more people linked to Kanye’s Graduation Leak than that of 50 Cent’s. A great way to measure an albums potential success without paying Nielson or BDS services.

Why put your promotional dollars on payola for DJs when you have Internet Radio DJ’s wanting more to connect with the artist and will play them for nearly next to nothing. All the while – Internet Radio is still trackable. Just check out sites like RadioWaveMonitor.Com and Live365 who track not only what is played, but how many times its played and who is playing it.

Why spend money on print, when there are far more popular Blogs and Internet sites that have communities of consumers of music that when combined – reach more viewers than major publications like Vibe, and Rolling Stone Magazine?

I can only hope that industry veterans will finally see that the traditional investments made in promoting music will provide less of a return on investment, and in 2008 they should be willing to pay popular blogs, BitTorrent sites, and Internet Radio DJs for Advertisements on their web sites and more effective promotional campaigns. Paying 3 – 5 popular internet radio shows, and blogs on the internet will cost you about the same as a 1/2 page ad in the Vibe Magazine. The difference is that you have a better chance of reaching more people online than through print. It is time that labels take their promotional dollars online vs. the traditional mediums.

#3 – Create A Better Connection Between Artist & The Audience – Radio Head takes the award this year for dropping their label, and distributing their music in a Pay What You Want model. This slapped Music Execs in the face, while RadioHead still retained their fans, and proved to the world they could still sell music without a record label. Additionally, Madonna said it best when she ended her 25 year relationship with Warner Brothers this year. She went on to say – “For the first time in my career, the way that my music can reach my fans is unlimited.” She then stated that “The possibilities are endless. Who knows how my albums will be distributed in the future?”.

In addition to addressing the alternative ways to distribute music, labels will need to do a better job of creating a better connection between the artist and the audience. The red tape and restrictions associated with distributing music on the internet has forced several artists to realize that there has to be a better way to market music, and obviously the labels are not doing a good job at it.

One barrier that was removed by dropping the labels in both Madonna’s and RadioHead’s case – was that the relationship between the Artist and Consumer is much closer. The connection is established not only by making their music more easily available, but by making the experience an interactive one that creates a better connection between the artist and their fans. Just like RadioHead offered their fans a Pay What You Want Model, other artists can offer their fans to pick their next single off their web site.

Other strategies can include enabling producers to remix a song off the album by giving away the acappella version of their songs on an artist’s web site. Some other ways are to create a Social Community web site like Lindoro Entertainment/Universal Recording Artist Jimmy Flavorr. Jimmy is a Latin Hip Hop recording artist breaking into the business today. Through Jimmy Flavorr’s Social Community site – fans and industry contacts can chat with eachother, chat with Jimmy, rate his tracks, upload photos, music, and videos directly through his web site. This creates the ultimate experience for the fan, and even if your not a fan of Jimmy’s music – you will immediately appreciate the community he has going on his web site.

By creating a better connection, you create a community of consumers you increase your brand awareness and demand for a product. That demand will ultimately ultimately result in better sales of the product to the masses. However – the commitment to follow through on Social Campaigns must be present prior to the release of an album, as well as after the release.

So there are my 3 New Opportunities Labels can take advantage of now to survive in the Digital Era which can move them from an Offline Company to Online. Stay tuned for Part 2 of How the Music Industry can move from Offline to Online!















~ by jperez48 on December 17, 2007.

Posted in E.G Radio Editorial, Hip Hop Technology

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