Artists support by a music label Music industry: wary alliance between art and business Publishers

Majors
Universal, Sony, Warner and EMI Commercially oriented and fully integrated

Independants (indies)
a few thousands Focussed on musical niches

Law and Custom in the industry

Mechanical Royalties Performance Royalties Synchronization Royalties

Music Label Revenue model

Contracts with an artist Pays the artist for touring, publicity etc and would incur recording costs Artist would receive 6-18% of the sales of the physical product after the label company had recouped its fixed costs. Major label albums needed about 1 million unit sales to break even

Led by the major labels and with the introduction of the Compact disc, the music industry flourished in the last half of the 20th century.

Standard digital format MP3 CDs could be ripped and transferred into digital files Retailers like Tower records, Musicland etc downsized and Walmart, bestbuy etc kept only bestseller records Piracy Problems: Napster Apples i-Tunes

By 2009, i-tunes was the single largest retailer of Music in the US

360 deals
Labels had the rights for revenue sharing from sources such as cocerts, fan clubs and merchandise

 Youtube, Myspace

Pandora, Spotify etc for online streaming of

music If you liked that, you may like this concept Marketing tools became so ubiquitous that some artists broke their contracts with the music labels and handled the business side of the industry themselves

Independent music label Led by Terry McBride, who was passionate about British and European music Sarah Mclachan

Teaming up of Sarah and Nettwerk Nettwerk built awareness about Sarah geographically, from one local market to another By the launch of her 4th album, she was a success story By the city-to city marketing, Nettwork got to know not only its retailers, but its fans as well

Terry McBride proposed a radical reshaping of the company The goal

Market to fans wherever they spent their time

Shift from Radio and television towards the web

Im more interested spending the time and money servicing the top 500 bloggers than MTV. My bet is that those bloggers will have more effect in the long run than MTV will. Im interested in the tribal leaders. TerryMcBride, Nettwerk

Nettwerk started exploring social media sites to involve in fan engagement Collapsed Copyright

Initially three different copyrights With this concept, all the rights required to license, sell and publish were housed in a simple structure

Long Tail Argument

Digitization enabled marketers to serve small pockets of demand far out on the tail of the sales, which had previously been less profitable

Nettwerk took advantage of brief awareness bumps (natural result of appearances, sponsorships, features on mainstream media, etc.) and made profit from transitory spikes in demand for niche music

Promoted the band during and after the bump and used various channels to help fans find the band

Television Placement Ad Placement Cause-related marketing Niche tastes Promotion

In 2009, music industry under extreme profit pressures start shedding artists that hit less than 100,000 unit sales Turbulence in the industry an opportunity for the experimentalists Polyphonic :

Advance of about $300,000 to new bands or bands dropped from their labels to manage all their expenses from recording to marketing and promotion Net revenues to be split 50:50 between artists and Polyphonic Artist to retain the ownership of copyright, Polyphonic would have the right to exploit the copyright during the term of contract

Adapting to technology accordingly and at the earliest, forms a factor for success

Understanding Consumer trends and buying behavior is elemental in a changing environment

Profit sharing between artists and labels should be done in a balanced manner to ensure long term collaboration and success