Tuesday, September 2, 2008

OnlineSpin: The Music Industry And Digital Media Continue To Confuse Each Other

Last week Cory wrote "Kids Deliver The Message Effectively."

Cat Wagman wrote in response, "I've seen how my ears perk up when the kids come on, especially when they're up close and personal on the wide-screen TV, which also makes them hard to ignore.

It hits my 'I Care' button, and I have listened to what they have to say, time and again -- though I haven't been prompted enough into taking any of the advertisers' desired action.

As a writer, I also appreciate your trend-spotting, and am cleaning the lenses of my observational glasses to see what I can find along the way. Thank you, Cory!!"

Liz Smith wrote, "The kids deliver AIG's message 'beautifully'?

If beautiful means having my ears up to my shoulders in a full-body cringe at the awkward and forced delivery of words they would never say.

The school bus ad is just about as inauthentic as it gets. Not buying that one at all.

At least E-trade's baby talks like a human (albeit at an advanced age), not a B-to-B memo."

Tuesday, September 2, 2008
The Music Industry And Digital Media Continue To Confuse Each Other
By Cory Treffiletti

This summer we've seen two very large contradictions in the ongoing war between digital media and the music industry -- and these two contradictions aren't making it any easier to understand what's going on, or how it will shape the future.

First off, let's recap the last few years. A quick history goes like this: Napster launches and signals the beginning of the end for old-fashioned record stores. Metallica battles Napster, no one wins. Record industry starts whining that CD sales are down, begins massive layoffs. New business models get tested, digital downloads become more commonplace. ITunes launches, becomes number-two music retailer in the U.S. Radiohead releases album online with "pay-what-you-will" pricing model. Nine Inch Nails gives away album online, follows it up with traditional sales.

That pretty much gets us to this past summer and my first apparent contradiction. The artist Lil' Wayne releases "Tha Carter III," which sells more than one million copies in its first week, the first time an artist has done so since 50 Cent in 2005. How did he accomplish this relatively unheard-of feat in today's rapidly declining marketplace? Simply put, how did Lil' Wayne become so popular? It's quite simple really: he gave away more than three albums worth of tracks over the previous two years, only barely becoming eclipsed for total prolificness by Ryan Adams two years earlier. Of course Ryan Adams pursued the same Chili-Pepperian model of "give it away now" but didn't have a pop crossover record when he released "Easy Tiger," an album I still consider to be one of the best of the last five years, because most of the work he released during that period of freedom was junk ("Jacksonville City Nights," "29 " and "Cold Roses" not included). Lil' Wayne recorded song after song and most of it was actually quite good, being distributed by mix tapes and being supported by true fans via social conversation and pass-along.

This model is a contradiction; it basically implies that if you give away enough solid music and build a buzz surrounding your work, when it comes time to release something of value to the masses, your fans will reward you for it! Who knew that giving away music would result in increased album sales? Lil' Wayne is possibly one of the best marketers of the last decade. He went from relative obscurity into superstardom by becoming the hardest-working man in rap, or any other genre.

That leaves us with the second contradiction: that an album needs to be online to see massive sales! Kid Rock hasn't had a huge hit in years, but his personality has kept him in the news. That was until late last year, when he released "Rock N Roll Jesus." The album sold only 170,000 copies in the first week, which was enough in late 2007 to garner a number one that week, but the true story comes from this summer's hot single "All Summer Long," which is a smash hit -- but the album and song are not available on iTunes. Kid Rock did very little marketing for the album compared to previous efforts, but the song is catchy and samples two wildly popular classic rock songs, immediately sounding familiar to anyone who hears it! By not being available on iTunes, he is bucking the trend that this number-two music retailer in the U.S. is essential to high sales. The Eagles did it last year by selling their album only at Wal-Mart, and AC/DC is about to do the same thing. Limiting distribution and not going with a digital distribution strategy seems to contradict everything that makes sense in digital media, doesn't it?

So what lessons can we learn here? The only lesson I see is that same old truism: the content matters! The product needs to be good and it needs to deliver on the promise it makes to the consumer. The promise that Lil' Wayne gave was that if you listened to him, you would get a quality piece of content! Kid Rock said that if you stick with him long enough, he can write a catchy song! Seriously though, the truth is that these don't prove anything yet -- except that you need to increase awareness and encourage trial. What it says to me is that artist development is still possible, and an audience can be created if you know whom to reach out to, and how to encourage them to give it a try. It says reach is important, but only if you create a quality product. It says that digital media is not the death, nor the savior, of the music industry!

It also says to me that a unique, smart business model is still set to come to the record industry -- definitely in the next year or so. Stay tuned for it!

Cory is president and managing partner for Catalyst SF.

Online Spin for Tuesday, September 2, 2008:

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