Appendix Q: Music Promotion

Transcription

1 Appendix Q: Music Promotion Print-music Integration Magazines are one promotion vehicle for music Magazines could insert cheap storage devices that can play audio clips as samplers Profits on one CD sale is $4.30/ unit would require ~2.5% positive response rate to promotion Question: Why is Industry concentration so high, considering that all physical production and distribution activities could be contracted out? 1

2 Scale advantages are those of promotion and distribution not of production and selection. Tours and Concerts Labels supported tours in the past, until music videos emerged as an effective alternative promotion. Advances may be recompable from that album. Guaranteeing access to the artist s future earnings raises the record company s incentive to promote the artist's t' first album. Promotion of one album generally has positive spillover effects for the artist s future and Source: previous Caves, Richard E. Creative albums Industries: Contracts Between Art and Commerce. Large part of promotion costs (as well as all recording costs) are recoupable from the artist s s royalties. 2

3 Video cassettes and Music Becomes vehicle for artist s promotion to music companies Then used for music videos on music channels(mtv etc) Creates promotional alternative to radio and tours Videos also sold to consumers Independent Music Firms Role is to identify and promote new styles and performers Artists give signings in stores, called in-stores Fans come to shops to get signings and buy album Creates press coverage that increases album sales also after event Try to get customers into stores Special and limited gift giveaways, such as t-shirts or candleholders, from stars at new CD release, especially around

4 Fans have to spend certain amount of money, such as $20, to get giveaway Aim to boost CD release, as many customers look at first sales and band wagon effect takes place Market segmentation with different marketing campaigns depending on target group Examples are urban or dance, club Urban contains for instance hip hop Especially street teams trying to hype new release Street teams come one weak before new release into town and distribute flyers or posters Before or during CD release stores give CD compilations away for free in case customer buys new CD Compilations often contain music from different artist, so that customers get aware of 4

5 Before the web had reached today s popularity, music marketing focused on radio, TV, such as MTV and reviews As web becomes more popular, new ways of marketing arise Source: MUSIC MARKETING GETS DIGITAL TUNE-UP, Financial Times 2006 Social networking websites become more and more important for music marketing MySpace.com is leading in that field with over 350,000 bands on its website in 2005 Source: I Screen, You Screen, The New York Times 2005 MySpace.com offers following functions Users can become friends with bands Communicating directly with bands, hired people respond to fans Users can share audio and video files Social networking sites good for music marketing as cheap interactive authentic Source: I Screen, You Screen, The New York Times 2005 Source: I Screen, You Screen, The New York Times

6 Labels use peer-to-peer platforms, that are known for piracy, to spread their advertisements E.g. Jay-Z and Coke infiltrated promotions in file-sharing systems Source: Record Labels Turn Piracy Into a Marketing Opportunity, Wall Street Journal 2006 In Sep M people were logged in peer-to-peer platform, YouTube in comparison 2 M, so that ad agencies are trying to target these systems Source: Record Labels Turn Piracy Into a Marketing Opportunity, Wall Street Journal 2006 By guaranteeing terms of access to the artist s future albums, it bolsters the record company s incentive to promote the artist's first album despite the high expected stiff ratio Promotion of one album generally has positive spillover effects for the artist s previous albums, and this is also internalized Large components of promotion costs (as well as all recording costs) are recoupable from the artist s royalties. Because each party to a royalty contract benefits from the other s promotional outlays, the label might even over-promote an album, relative to the outlay that would maximize parties combined profits 6

7 Music Videos as promotion tools Reduced need for tours But, tough to get videos placed on music video channels Promotional Copies: Distributed free to: Reviewers Radio stations Television stations This Business of Music, M. William Krasilovsky and Sidney Shemel, 2000, Pg. 26 This Business of Music, M. William Krasilovsky and Sidney Shemel, 2000, Pg. 21 & 24 Print reviews have limited influence: airplay on broadcast media is the key. Music co. call radio stations and encourage to play promotional copies 12,000 commercial radio stations in US Record companies focus on promotion to broadcasters. Strong incentive for broadcasters to auction off airplay to record companies: payola results - is a bribe paid in order to influence a gatekeeper s choice This Business of Music, M. William Krasilovsky and Sidney Shemel, 2000, Pg. 24 7