Feature Story

Rock 'n' Roll Goes Digital in Search of New Business Models

April 11, 2011

By Jason Deign

Brazzaville’s 2010 U.S. live dates had all the trappings of a classic rock ‘n’ roll tour: little sleep, long hours on the road, and a different venue or two every night. But instead of playing clubs and arenas, the indie rock band performed in fan’s homes.

Front man David Brown, a one-time saxophonist in Beck’s back up band who now lives in Barcelona, Spain, arranged the tour simply by reaching out to fans via his website. “This tour was really an experiment,” Brown says. The experiment paid off: Brazzaville gained a respectable income from the tour and reached new audiences across the U.S.

Brazzaville highlights a seismic shift in the music industry’s business model caused by the transition from high-margin record and CD sales to low-margin digital downloads. As a result, record companies can’t afford to back as many artists as before—instead of signing 10 acts, a record label might sign three, says Paul-Rene Albertini, a former Warner Music International boss.

So even though there’s less money in digital channels, today’s artists have no choice but to seek out and use new technologies to cultivate their audiences.

Luckily, there are lots of great digital technologies that offer many ways to connect directly to fans, including streaming platforms like Spotify and social media destination sites a la Facebook, direct investment vehicles like Sellaband and Pledgemusic, and social entertainment platform Cisco Eos.

Artists, if not labels, have always been quick to spot new ways of using technology to reach audiences.

Crowd funding

In the early 2000s, British band Arctic Monkeys notched up the fastest-selling debut album in the country’s history after a fan-based digital feeding frenzy that involved distributing free tracks over filesharing networks and the social networking site MySpace.

And Radiohead, widely viewed as one of the most influential bands of the last decade, took the industry by surprise by releasing the 2007 album In Rainbows as a pay-what-you-like digital download with no record company involvement.

Today such direct-to-fan interaction is a staple feature of the industry. Brown of Brazzaville is planning another living-room tour and hoping to “crowd fund” a new album through Kickstarter.com, a site that lets fans invest in creative projects.

Music labels are also beginning to latch onto this new way of thinking. Albertini’s new venture MyMajorCompany signs up promising bands, but gets fans to stump up GBP£100,000 (about USD$163,000) in seed money before it will record and promote their albums.

"The record labels are all over social media."

— David Atkinson, managing director, Space

The concept neatly gets around Albertini’s “seven that get left out” dilemma by asking fans to assume some of the risk originally shouldered by the label. And it has worked in France, where MyMajorCompany’s first artist, Grégoire, has sold more than a million albums. 

“The record labels are all over social media,” states David Atkinson, managing director of Space, a marketing agency that works closely with the music industry in the United Kingdom. “They are highlighting artists that might not be big for two or three years yet.”

The growth and importance of direct-to-consumer experiences to record labels can also be seen by the more than 80 artist sites -- including for artists such as Kid Rock, Aerosmith's Steven Tyler and Lupe Fiasco  -- launched on the Cisco Eos platform in the last 18 months.

Record companies

And make no mistake: record companies are still essential to the business, if only because the skills of the executives behind them can help newly-minted acts cut through the digital noise of thousands of hopefuls on the ‘net.

“The chances of making it without a major label are lower now than they were two years ago. The speed at which bands can accelerate into the cultural market is much quicker, but so is the decline,” Atkinson says. “Even U2 wouldn’t be able to get where they are on the back of two spluttering first albums nowadays. You have to have a good first album.”

What both labels and artists still have to do, however, is work out how to make a fair return on all these digital connections with fans. A few trends are emerging. “Licensing models and subscription models are coming up and overtaking retail models,” says Neil Allcock, a technology and media partner at Deloitte. “The reason that is a significant change is that if revenues come in a different way you have to come up with a way of sharing that money in an honest way.”

Jason Deign is a freelance writer located in Barcelona, Spain.

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