Five New Music Business Models
Posted by Steve Allen | Filed under SoGospelNews.com Articles
Retail music sales have declined steadily during the last nine years. Now the economy is in a major downturn and CD sales are slumping even more as consumers tighten their purse strings. Downloads are increasingly popular, but have yet to achieve revenue numbers equivalent to retail sales. On average only three percent of music on an iPod is purchased from the iTunes Music Store.
The industry is searching for a new business model. Here are five new methods of selling music that are currently being tested by many artists and labels.
Free Music
Many major music industry players hold the opinion that illegal downloads have been the culprit of falling revenue. Since illegal downloading is so prominent, many companies have embraced the concept by giving music to consumers at no cost. In many cases, free music is a loss-leader used promote other music related merchandise such as t-shirts and concert tickets. Pop artist, Prince, gave away a copy of his last album with the purchase of a British Sunday newspaper. This outraged music merchants, but Prince maintained that it was to promote his upcoming UK tour. As a result, every tour date sold out as soon as it went on sale.
SpiralFrog.com is experimenting with allowing users to download music for free after viewing advertising. Typically these type of sites have a revenue-sharing agreement with participating labels.
Pick Your Price
History was made when rock band Radiohead released their album with a voluntary price tag. The album was available for download and users then paid an amount equal to the value they perceived it was worth, including nothing at all.
Magnatune.com has built their business model around this technique. Albums carry a low minimum price and then users can express their appreciation for the music by optionally paying more. The minimum album cost is around $5 and users tend to purchase a higher quantity of music at this price.
Price Point = Demand
AmieStreet.com is based on a “pay by popularity” business model. All of the music on the site is free to begin with, however, the more a track gets downloaded, the higher the price goes up; the cap being $0.98. This contrasts iTunes model in which all tracks, regardless of popularity, are the same price.
Subscriptions
Subscription services have been around for several years. Rhapsody has come to the forefront of this business model. Users pay a regular monthly fee to access the extensive catalog of music. Music is played either through the company’s software or through a web browser. Songs can also be downloaded for $0.99.
Rhapsody is additionally available “on the go” for the user with their Rhapsody To Go service. The subscriber purchases a compatible MP3 player and loads it with songs from the Rhapsody catalog. Songs can be changed often as long the monthly membership is maintained.
Music Tax
The basic principal behind the music tax concept is that Internet service providers would charge a flat-rate fee as part of the Internet service plan in exchange for the right to download and share music. File sharing would decriminalized and the music industry would have a new stream of revenue. Many proponents are of the opinion that this would create revenue equal to or greater than CD sales 10 years ago.
Other variations of this concept could include a tax on digital audio players or direct taxation through the government.
Conclusion
Gospel music is one of the last genres to be affected by the changes happening in the larger mainstream music marketplace. The advantage to Gospel music being one of the last genres to be hit with digital revolution is that maybe a new business model will be developed and proven before Gospel music experiences the troubles that other genres have had in the past.
The demographic that primarily buys Gospel music is unlikely to illegally download their favorite quartet’s latest project. However, it is to the advantage of everyone to develop new techniques to market and distribute music. The Gospel music audience tends to regenerate itself every five to 10 years. That being said, the next generation will be familiar with advancing technology. By then, all of the companies that have tried with no success will have dwindled and the mainstream media outlets will become status quo. I believe it is a positive challenge for all of us to embrace the technological changes in the secular music and media industry. Not only for success, but for the possibility that a life could be changed via these unconventional outlets.
Tags: business model, downloads, ipod, music business, music tax, Rhapsody
thank's for the interesting information...