The Shapes of Things to Come
(01 Dec 03)
The record business as we know it is changing into something totally different. I'm going to describe what this means to you and why you should be really, really happy ...
Nobody's Buying What They're Told to Anymore
The Big Labels - The big labels are having a hard time selling CDs. They are panicking because they put a lot of cash into producing, marketing and promoting new releases and the masses aren't biting.
An associate of mine got signed to a record deal last year. The whole package cost the label about six hundred thousand big ones to produce and promote the whole thing and they have only sold about a thousand CDs so far. The music industry is getting nervous. Why do you think this is happening? The answer is simple: the Internet.
The Internet - The Internet has become the greatest sales tool since the radio. It offers you an inexpensive way to promote, distribute and market your own CDs and gives you the opportunity to make much more profit per CD than you ever could any other way.
There are millions of music lovers surfing the Web every day searching for music that they want to discover all by themselves. They don't want to be told what to listen to and buy anymore.
There will always be the mainstream market and Tower Records will stay on the street corner. But, let's face it: the Internet offers consumers many more choices, plus the option of listening before they buy anything. You can also browse for hours in your underwear without a clerk calling the cops.
Choices - A friend of mine who happens to be one of the greatest guitarists around (he'll get mad at me if I tell you who) and has also been signed to a major label for the last ten years just lost his contract.
As I said before, CDs aren't selling, so artists are losing their contracts right and left. He has the option of shopping around for another contract and could get one without a doubt, but he has decided to do the whole thing himself. His logic is this: he has a big fan base so he can still sell a bunch of CDs without a major label. Granted, he won't be able to sell as many as he could with a big company promoting every release, but he doesn't need to.
I'll tell you why. When he was releasing CDs signed to a major label, he was only making about 6% on every CD he sold. By releasing it himself, he makes more like 80% profit. The more CDs he makes and sells, the higher his profit margin will be. Even if he sells only half of what he has in the past, he'll still make much more money. A ton more.
Artistic Differences - Prince also did the same thing. The reason I can mention his name is because I don't personally know him. I never discussed this with him and I don't know the specific details (so forgive me if I am not completely accurate), but from what I understand the whole thing started because Prince, being the creative genius he is, wanted to release a lot more material on every CD than the record label wanted him to.
I guess the record label's logic is that, the more songs there are on the CD, the more packaging you need: more plastic, more paper. All these things cost more money and cut into their profit margin. Prince probably just wanted to release CDs that suited his artistic needs and at the same time gave his fans what he assumed they wanted, more Prince per CD.
Obviously they couldn't meet eye to eye. Since he already had an enormous fan base, he decided to do his own releases. Prince is a true pioneer. Record companies aren't in the game to create art; they are in it for money. They are very particular about what kind of songs you write, how many minutes each song is, and the order of the songs and the mix of the recording.
For these reasons, true artists have a hard time dealing with producers whom the label decides are best for them. If you don't want to be told what to do, doing it yourself is a great option. With the advent of the Internet, this is becoming an easier undertaking.
How to Promote Your CD
Gigs - This is an easy way to sell your CDs. Bring 'em to your gigs, set 'em up and just take cash on the spot. Or, leave some at the register so people can buy one on the way out. You may want to offer a cut to the club you are playing at. Make sure to mention your CDs during your set, and don't forget to point people to your site for information on your band and concert schedule.
Marketing - Without a major deal you will have a rough time selling CDs in stores. You won't have the money for promotion and distributors won't touch anything under five thousand units. If you want to get your CDs in some stores you will have to think of some different marketing strategies.
This is what I did. I went around to some small music schools. You know, the kind that are inside music stores. I offered them 25% on every sale. All they had to do is play the CD in the waiting room when people where waiting for their lessons. Without a doubt the students would ask whose CD was playing. When they found out they could buy it, a lot of them would. It is a "win win" situation for everyone involved and only sets me back 25% on each sale. To put it in a CD shop would set me back between 50% and 60% for distribution and the cut that the store takes.
I also pay the musicians on my CD a distribution charge of 25% on each CD that they personally sell. I don't mind letting them make a little money on the deal because, as I said before, I'm making enough profit on the CD to not care too much.
Another thing I did was tie up with an effect maker. HAO, a maker of great stomp boxes, asked me to record a CD demonstrating their distortion boxes. Rather than take money for my studio time, I offered my services for free in exchange for a few hundred CDs that I give away from my site or guitar9.com when anyone buys my new CD, "Prospects."
Try to figure out whom you can team up with as a marketing partner. How about a restaurant, car wash, veterinarian, or your local church.
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