Mark Pendolino

COM 538 – Digital Media Theories

Marketing Music Today:The Effect of New Media on the Marketing and Promotion of Musical Artists

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Agenda

• State of the Recording Industry• Marketing Techniques & Trends• Looking Ahead• Summary

Mark Pendolino

COM 538 – Digital Media Theories

State of the Recording Industry

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State of the Recording Industry

• Recording industry in state of flux– Sales down 13% in past two years

• Expected to decline 5 to 8% in 2003– Pursuit of copyright infringements hindered growth

• Failed to embrace technology• Seeking to recoup losses

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State of the Recording Industry

Figures from the Recording Industry Association of America, www.riaa.com

Recording Industry Value1989 - 2002

$0.0

$2,000.0

$4,000.0

$6,000.0

$8,000.0

$10,000.0

$12,000.0

$14,000.0

$16,000.0

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Year

To

tal U

S V

alu

e (i

n m

illio

ns)

Notes:

• The RIAA has increased individual unit prices by an average of $1 each year since 1998

• Units shipped have dropped over 100 million

• Units unaccounted for make up 25-30% of total units shipped

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State of the Recording Industry

• File sharing blamed for losses– Illegal CD copying– Napster, Kazaa, et. Al.

• Some believe file sharing will help sales– Jupiter Report

• Recent survey: 34% of file swappers say they spend more on music now than before file sharing

– Concept involves word of mouth / hype

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State of the Recording Industry

• Industry also facing competition– Further choices for consumer’s entertainment dollar

• DVD sales up 57% this year– Increasing number of independent record labels

• “Indie” labels more prevalent• Sales in direct competition with major labels

– Not affiliated with RIAA (Sub Pop, Matador, Integy)

– Artists bypassing record labels• Going straight to Web

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Discovery

SaleWorld Wide World Wide WebWeb

Marketing Techniques & Trends

• Web bypasses traditional channel in artist discovery

Artists

Record Companies

Distributors Retailers

Listeners

Radio

(Advertisers)

Sale

Discovery

From Music Marketing in the Age of Electronic Delivery, Whittle, 1998

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State of the Recording Industry

• Labels beginning to embrace technology– Firms adapting online services and relinquishing

“controlled” distribution channels• Universal Vivendi purchased Napster• Sony and Universal sold “Pressplay” to Roxio• Deals with iTunes

– Investing in marketing and new marketing technology

Mark Pendolino

COM 538 – Digital Media Theories

Marketing Techniques & Trends

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Marketing Techniques & Trends

• Investing in the artist and technology– Wind-Up Records

• Partnered with RealNetworks, Amazon.com, and Tower Records to offer exclusive streaming tracks

• Flood Internet with “Bogus” files– Online Labels

• CD Baby• Online record store that sells CDs by independent

musicians• Promotion for “unsigned” acts

– Jack Johnson

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Marketing Techniques & Trends

• Major labels partnering with online services– Online services help to promote new artists and

increase sales• AOL (Artist Discovery Network)• MSN• Yahoo! Launch

– Collaborative filtering through Internet radio

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Marketing Techniques & Trends

• New media methods– Creating hype

• Offering full album free• Changing set lists on Internet• Initial release of songs

– Offering more for consumer• Free paraphernalia when buying online

– T-shirts, stickers, DVDs

– Playing on other mediums• Videogames• Retail stores

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Marketing Techniques & Trends

• Product pairing– Combining artist with consumer product

• Sting and Jaguar• Missy Elliot and GAP• Run risk of losing credibility

• Multi-medium convergence– Rachel Farris and Coke lid campaign

Mark Pendolino

COM 538 – Digital Media Theories

Looking Ahead

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Looking Ahead

• Online marketing and promotion tools combined with traditional– Multi-pronged campaigns

16%

11%

31%

10%

8% 7%

7%

6%

4%

Word of Mouth

Gigs

Absentions

Mailing List

Nat'l/int'l Tour

PR to Media

Flyers

College Radio

Corp. Radio

From MusicDish Industry E-Journal’s survey question of most effective method of marketing music.http://musicdish.com

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Looking Ahead

• Emerging marketing methods– Flashmob

• Text-messaging groups• Hot in Europe

– Further medium divergence events– Live webcasts– Collaborative filtering

• Guides

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Looking Ahead

• Buying music online– Traditional retail outlets will shrink– Industry will restructure

• Give up distribution control• Focus on marketing and promotion technologies• Focus on content and artist development

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Looking Ahead

• Targeted market research a priority– Labels traditionally not good at targeted marketing– Data mining and consumer research will increase– Consumer becomes empowered

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Looking Ahead

• Music formats will change– CDs will phase out– MP3s or other standardized file format become

main product• Renders standard packaging obsolete

– Album length, cases, physical product

• Artists may focus primarily on singles• Purchasing outlets hold “filling” stations or kiosks• Portability

Mark Pendolino

COM 538 – Digital Media Theories

Summary

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Summary

• Recording industry will recover • New media technology has increased

exposure to new artists• New media technology provides extra tool

for marketing and promotion• Music packaging formats will evolve and

consumer will have more choice, more freedom

Mark Pendolino

COM 538 – Digital Media Theories

Questions