A New Paradigm for CDs - A Music and Advertising
By Mark Warlick, MusicDish.com
The music industry is clearly in a state of transition.
Some would say crisis. Over the last three years, CD sales have
decreased a total of 15%, according to some reports. Many industry
insiders believe that the decrease in sales is due to downloading.
There has also been a significant amount of industry consolidation
with companies of all sizes closing and merging. Clearly, the available
technology has surpassed the business model that the industry is
based upon. Therefore, the industry is challenged to revamp and
evolve its model midstream. A new idea is needed. It is said that
the Chinese symbol for "crisis" is "opportunity."
The race is on for the new idea that will be successful.
The fundamental change that I propose is to transform the CD into
am advertising platform in addition to a music delivery platform.
No need to get technologically cute, just use what is available.
The approach is similar to what music retail outlets have done.
Music retailers sell wall space, windows, display area space, end-caps
in order to increase the revenue streams. Anything that draws attention
to the CD by the retailer, is up for sale to the record company
CDs can be used in a similar manner. Consider utilizing
the packaging and label artwork to deliver advertising messages.
The message can be as simple as a website address and logo to a
concise call to action. Clearly, this opens up a new revenue stream
for the artist and the label. It creates the possibility to generate
revenue while the project is being developed, thereby, reducing
the label risk of the project.
Why it Makes Sense
There are several benefits to this new paradigm. For
the sponsor/advertiser, if gives them a new platform to be associated
with particular artists and genres. Because of the product lifetime
of the music packaging, the advertiser will make hundreds (even
thousands) of impressions on the same individual over years, possibly
decades. There is also the likelihood that the advertiser/sponsor
will get impressions while the CD is in the bins at the retailer.
Finally and most importantly, it is possible to target a specific
demographic using music. Urban hip-hop listeners are quite different
from Pop-Rock or Contemporary Jazz listeners for example.
There are benefits to the artists as well. Artists
can utilize their management team to obtain advertisers/sponsors
for the project. This can be true for the both independent and the
signed artist. Clearly, this opens another revenue stream for the
artists, and could reduce the amount that must be recouped. The
artist also has more leverage with a label if there are sponsors
in place before a project is initiated. Additionally, by creating
a relationship with the sponsor/advertiser while the project is
being completed, the artist can easily write songs that could be
used in the advertiser's TV and radio spots, thereby giving the
artist more spins and recognition with the public. The end result
will be more CD sales when songs are used for radio and TV.
There are also benefits to the record company. As
with the others, it is also a new revenue stream. It can reduce
the up front costs in developing a project, thereby reducing the
risk. The record company can sell advertising space based on the
number of units shipped or "in perpetuity." Additionally, the record
company can also sell advertising space for "catalog" CDs. Clearly,
this approach gives record companies the ability to create relationships
with any consumer company in existence.
Finally, the benefit for consumers is that this approach
could stabilize or reduce the cost of CDs from their current rates.
Because special offers could become available, consumers would benefit
from the synergy of music with other products and services.
Admittedly, this is an unusual idea and an unusual
approach to delivering an idea. However, what is important is to
find ways to create an economically healthy environment for creative
by the MusicDish
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It 2004 - Republished with Permission