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Marketing in the Music Industry.
Music has a great appeal and has billions of
hungry costumers.
Yet, Record Companies are now in great trouble.
In reality they are in a deep crisis situation
since 25 years ago. Just, now their situation
is worse than ever. How is that possible when
you have these unbelievable market opportunities?
The answer is simple: wrong marketing.
One big reason stems from the time of transition
between the vinyl and the CD, in the mid 80's.
Record Companies had set wrong price tags. CD's
were - and still are - too expensive. It was
foolish to set the price for a CD at $15-$20
- or 15-20 euro. At that point why not $1000
for one CD? This meant kicking away your costumers.
If the cartel of Record Companies had set the
price for a CD between $4-$5 they would have
sold 100 or 200 times more. Take a calculator
and just multiply to get the revenue results.
Record Companies Executives were just shortsighted
and made the wrong reasoning. And now it's too
late. Another big mistake was to push for CD's
full with 12-15 songs, of which only 3 songs
were good songs and the rest was just rubbish
to fill the CD. They should have pushed for
different formats. Singles - that in the old
times of vinyl records were highly successful
and selling by the millions - which could have
been easily priced at $1.50-$2.00 -, and CD's
with 3, 4 or 5 songs - which could have been
priced at $4-$5. More so, considering that the
industrial cost of the CD hardware is just $0.30.
Wrong was also the revenues distribution to
the composer, the performer, the record company
and the retail chain. Who really made the music
- the composer and the performer - just got
peanuts from each CD sold by the record company.
Utilizing this alternative marketing strategy
would have made Record Companies unbelievably
rich, and never facing a crisis.
Our point is further demonstrated today with
Apple iTunes. Until today iTunes has sold 3
billion songs. And this is just the beginning.
Typically, costumers purchase 1 single song
at $0.99, or in other cases 3 or 4 songs, spending
$3-$4. The reason is simple. Is called inspiration.
Musicians are creative persons. They can write
and play one great song, or in case of a time
of great creativity 3 or 4, and these are valuable
and appealing songs for their aficionado costumers.
If you pretend 12 or 15 songs from a band, you
can be sure that 9 or 12 of them will be just
rubbish. Not to mention the stress of weeks
and weeks of Recording Studio time with 48 tracks,
editing and post production.
Another big mistake of Record Companies from
the 80's onwards was to make the marketing of
Music as if Music was toothpaste or mayonnaise.
Let us explain. When in the 60's and 70's the
Rolling Stones, the Beatles, the Doors, Led
Zeppelin, Pink Floyd, King Crimson were making
their wonderful music, they were not following
marketing directives. They were not following
what the Marketing Executive was telling them
was pleasing the costumers.
They were simply making the music they were
liking.
And, simply, many people in the world were liking
their music.
So simple. Music is not toothpaste. Music is
not mayonnaise. Music is not a product. Music
is Art.
In the 80's the marketing approach of Record
Companies changed, they began using marketing
techniques which were standard in many other
industries, and began selling music as any other
typical mass product - toothpaste, soap and
mayonnaise -. It happened that the Marketing
Executives of the Record Companies began doing
survey research and market analyses and then
telling the musicians what would sell, what
was pleasing the costumers, and directing the
musicians how to make their music. That was
a foolish and gross mistake. It destroyed music
and destroyed the Record Companies business
too.
Music is a typical niche market, or, to put
it best, is a market with a largest number of
niches. And each niche has its music lovers,
its costumers and its peculiarities.
Music is Art and Music has to be considered
and treated by Record Companies Executives as
Art.
Therefore Marketing Executives have to step
back, and adopt a smarter marketing strategy.
Which is "let the band play and just stepback"
marketing strategy. The best marketing strategy
in Music is simple: Passion and Inspiration.
This should be the marketing drive in music.
The Rolling Stones, the Beatles, the Doors,
Led Zeppelin, Pink Floyd were highly successful
just because they were making great music, and
because there were many music lovers who were
liking it. Nothing more, nothing less.
What we now foresee in the Music business is
that Apple will do the next logical step, Apple
will develop iTunes from just the world leading
e-business music outlet to become a full service
Record Company. Steve Jobs will buy the agonizing
Record Companies - Warner Records, EMI, Sony-BMG,
Vivendi-Universal - for peanuts, replace them,
and make another big success, obtaining another
de-facto worldwide monopoly.
Marketing strategy is essential and every single
case has to be carefully considered and individually
tailored. Sometimes - as in the cited Ferrari
case and in the Music industry case - the best
marketing strategy is what appears to be a "no
marketing" strategy. In reality, is simply
a different kind of marketing strategy, more
refined, crafted at a higher level.
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