The other day, I had participated in a fascinating discussion about the state of bands and artists these days.

Specifically, about how the business model is unmistakeably transitioning from selling records to selling something else (and nobody seems to know what, exactly).

T-shirts, concerts, whatever you can think of. And the price range is changing too.

A lot of people seem to be thinking that this transition is not only inevitable, it’s a negative for bands, and it’s all because of the Internet.

While a lot of it probably IS due to the Internet (starting with Napster, through iTunes to Radiohead and so on), that’s only half the story.

Radiohead remix contest for NUDE
Creative Commons License photo credit: patrickwoodward

The problem artists USED to have is, it’s all controlled by the record company. They decide how big of a cut the band gets, where the band plays, how their music is marketed. A very corporate face to bands that are everything but.

In other words, the intimacy wasn’t really there. Joining a fan club for a quarterly newsletter would be about the best you could do as a fan.

And then… enter the Internet.

Even though a lot of the hubbub has settled, iTunes being the biggest record store in the world and all, the transition is still far from over.

iTunes Music Store
Creative Commons License photo credit: ?·?•? Peyman ?•?·?

Many artists are facing diminishing revenues and end up making more money from merchandising than records, and touring more than they’d honestly like to.

Even giants like Madonna are now bypassing the record company, at least to test different scenarios from what I can tell.

So what is the solution?

One resounding answer is: use what you now have thanks to the Internet, and were deprived of before: INTIMACY!

That’s right, actually use this fantastic channel to directly communicate with your fan base. There are so many ways to do it online.

Most of the time, traffic to site is not the problem if the band or artist is a popular one.

Instead, what you need is more products to offer! Such as:

  • Exclusive concert recordings (previously known as bootlegs, now prepared by the band itself)
  • Music videos (possibly, will take some re-imagining, possible mass customization etc.)
  • Personalized merchandising (e.g. Public Enemy has been great with this from the early 1990s)
  • ‘Kitchen sink’ type offerings (pre-loaded iPod with every song ever recorded)
  • Exclusive collector’s editions (signed by the band, possibly personalized)
  • Private events (high-end VIP invitations, etc.)
  • Branded outlets to fans (who wants a red U2 iPhone, with 10% going to charity <imaginary example>?)

Creative Commons License photo credit: Dan4th

Then, the whole landscape changes, and the stress of selling a record goes away (which doesn’t feel right for most artists to begin with).

It’s replaced by:

  • A singular minded community, a shared experience (a decidedly tribal feel to it)
  • Real-time communication (text messaging from gigs, reminders, Twitter, etc.)
  • Direct feedback from fans to whatever the artist does (never before available)
  • Personal nature of communication (an email from the lead singer is a powerful incentive to go to a concert, or buy a record, even without saying it outright)

In short:

  • Better, more direct, more intimate relationship to fan base
  • More products, more concentration on VIP type service (i.e. larger transactions)
  • Less stress to make a living as a musician (you’d be surprised!)

Granted; this is just the beginning.

But a new business model for musical acts is definitely in the birthing stages.

Give it a year or two, and I’ll bet we’ve seen the rebirth of the music industry.

So hold on tight, and try something new tomorrow! 🙂
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Comments to: New Online Business Model for Bands
  • November 20, 2008

    Definitely this will be the way for many bands in the future (or slightly prolonged present moment) 🙂

    The mind shift change isn’t that huge, but it’s giant leap in the eyes of many seasoned professionals. I mean, when CD’s came, most of vinyl folks were just dumbfounded. The same here, I guess.

    Thanks again. Keep ’em coming, Juho!

  • […] It’s time for the next installment in our series of timely industry analysis (see previous piece on the music industry). […]

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