Thursday, March 26, 2009

Breaking Conventional Wisdom

Edited by Secret Agent Michael Scarn






Over the past couple of years, the music industry is finding itself in a difficult position. With album sales dropping, an increase in illegal internet downloads, and the reemergence of cookie cutter music has hurt the music industry; only a few artists are doing well in the present state of major music industry. Coldplay is one of the bright spots of the industry with Vida La Vida selling over 7 million albums, which is rare these days. With the economic climate today, it’s rare to see many musicians have great album sales. Digital distribution via iTunes and other digital media markets have been another bright side but some people who would rather download music via a torrent or Limewire. So it’s no wonder that artists are breaking conventional wisdom by finding alternate ways to “Brick and Mortar” stores and digital download programs.

A few weeks ago, I watched a presentation on the Trent Reznor business model for his band Nine Inch Nails. The presenter showed the multiple tier business model for Nine Inch Nails’ album Ghosts I-IV. First tier was a the first part of the album (9 tracks) for free and progressive went up to five dollars (full album), ten dollars (2 discs), $75 (deluxe package blue-ray DVD etc.) and the final one, a $300 dollar 2500 copy limited edition signed by Trent Reznor and sold out in less than 30 hours. All of this was done without a record label. Ghosts I-IV was heavily download for free but did not affect record sells, Ghosts I-IV was the most download album on Amazon music service in 2008, which lead the success of Nine Inch Nails next album The Slip, which was also released for free and coincided with their 2008 tour date list, so he was hitting two birds with one stone.

To coincide with the Nine Inch Nails 2009 tour with Jane's Addiction, Trent Reznor last week released another free album called Ninja 2009 which had some tracks for each band involved in the tour. Also released on that day was the official tour dates (Atlanta, May 10!). So it’s a smart business model to connect with fans and gives some incentive to support the band when they release free material.

Another band that has tried a different business model was Radiohead and their release of In Rainbows. Instead of presenting their album with a system of tiers, they had fans pick their own price for the album, with some people spending 1 cent for the album, while others spent $10 or more. Some would say that was a bad thing, but when In Rainbows was released a few months later on CD Radiohead's album sales went up. Some fans bought both an mp3 version and the disc version. Radiohead's tour was very successful and In Rainbows was still a commercial and critical success, being nominated for several Grammy Awards.

This new business model and breaking from the norms of the record industry is not just for the big artists. Artists such as Luckie Street Tribune favorite Butch Walker sold his album via his website and iTunes with no major label support. Doing this also gives artists more freedom to create their style of music and connect with fans. However, in terms of declining music sales, I think the lack of innovation in the music industry has hurt it the most, not illegal downloads. I think business models such as Radiohead and Nine Inch Nails cut off some of the illegal aspects of digital music. Because it makes DRM and other protections obsolete. These business models may not be for everyone, but should be considered a good alternative to the conventional way of distributing music.

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