Wednesday, October 17, 2007

Birthing Pains

Allen Johnston – The Music Specialist

I was told at a recent music conference by an executive from an independent distributor that he wishes the Internet would be destroyed because it hurts record sales so bad.

I have in recent times heard from a major market radio consultant that the Internet was responsible for the demise in listener ship at radio formats around the United States and it should be banned.

To both of these statements I say “It’s about time”, the one sided business practices and limited opportunities within the radio / record / store system should have ceased years ago.

Michael Harrison, publisher of the talk-radio magazine Talkers, told a group at the National Association of Broadcasters Radio Show that competing technologies -- like Internet, Wi-Fi, podcasts and cell phones -- would all but fill the niche they now occupy.
"These are dark times for terrestrial radio," Harrison said. "And most people in terrestrial radio are in denial of it."

The old record industry depended on radio airplay to sell records for record retailers, then they added MTV / BET to their record selling mix. This vicious cycle has finally started to erode, technology has made it easier for more creators of music and multi-media projects, and with this proliferation of new material came new avenues to listen and expose these creations. The new record industry has been birthed and the initial growing pains are now presenting themselves. Change can be embraced, fought or ignored, change can not be stopped, and today’s technology has brought many new revenue generating ideas to our industry.

To exist in a profit making position Radio will need to focus on its local sponsors and core community. Music will probably be the first thing that will leave the format as more and more stations will turn to talk and information radio. Genre specific radio has risen significantly already with the proliferation of Hispanic, sports, talk, Asian, Haitian; and other formats. It is not too difficult to envision that this type of audience targeted radio will become mainstream soon. Music is now available on a multitude of levels as proven by the data being collected today on Arbitrons PPM, and consumers are turning away from radio to hear this music by using many different devices.

Independent record retailers are fast becoming a thing of the past. These retailers have had to change their buying patterns and start carrying clothing, multi media accessories, and adult novelties based on their specific customer genre just to stay in business.

An example of positive genre specific business practices is the new deal announced between MUSICNET, the music unit of MEDIANET DIGITAL and LA CURACAO, a leading Hispanic mega retailer in the U.S. creating the first ever full-featured Hispanic focused digital music service.

MUSICNET with LA CURACAO partnering have created PASITO TUNES a Hispanic based fully customized digital music subscription service and download store, along with the ability to access users’ music collections both on PCs and portable devices. Users will have access to a bi-lingual online music destination with catalog from Latino music genres including Salsa, Meringue, Cumbia, Tex-Mex, Reggaeton, Bachata, Rancheras, Baladas, Spanish pop music and more.

CD, vinyl, and the almost extinct cassette sales are plummeting at a faster and faster rate every year. Digital sales ARE increasing however they are not nearly as bountiful as yesterday’s cd and vinyl sales once were. Record labels are now turning to different sources for their revenue.

The music business is no longer about promoting records, but it has changed into a licensing business.

UNIVERSAL MUSIC GROUP is trying to create a comprehensive subscription plan, called TOTALMUSIC, which would require buy-in from ISPs and mobile access providers. This is an interesting idea if the consumer doesn’t have to foot the bill; however we already know that the ISP will automatically increase monthly access charges in exchange for a subscription-based music plan.

The NATIONAL MUSIC PUBLISHERS ASSOCIATION has stepped up their efforts to shut down popular websites that publish lyrics to songs without their permission -- and are demanding that GOOGLE and YAHOO! remove all references to them in search results, reports THE NEW YORK POST.

The move against lyric sites comes because the publishing business is in the midst of rolling out OFFICIAL online-lyric offerings through such places as YAHOO! MUSIC and REAL NETWORKS' RHAPSODY, via deals with lyric aggregators GRACENOTE and LYRICFIND.

Since 2003, IODA has been at the forefront of digital independent music distribution marketing and technology. Now IODA is in the digital video distribution business, with content from a broad range of top-tier indie film production companies along with IODA's labels' catalog of music videos. Distribution outlets include movie download sites NetFlix and EZTakes, mobile outlets Groovemobile, Hudson, Jamba/Jamster, Mobile Streams, Rogers Canada and Musiwave, and music video purveyors Real Rhapsody, Muzu and Veoh.

WARNER MUSIC GROUP and CHRIS LIGHTY, Founder/CEO of VIOLATOR MANAGEMENT, have formed a joint venture to be known as BRAND ASSET GROUP. The group is designed to increase revenue by more aggressively managing artist brands from all genres and capitalize on the value of those brands through corporate sponsorships, strategic and integrated marketing campaigns and comprehensive brand extensions.

I will say it again. The music business is no longer about promoting records, but it has changed into a licensing business.

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