Since I was a kid, media formats have changed, and now yet another has come into the fold: digital. Consumers by the boatload are sold on this format’s convenience. They know the quality of the audio is less, they know they won’t get much in the way of artwork, but they also know that they can take their music with them pretty much anywhere. Convenience is a value driver not used since the days of the original “boom box,” and later the walkman, in music and related advertising. Mostly, quality has always been the focus. But, times have changed.

Record labels and musicians all over the world are interested in getting their music in people’s ears, and if customers are buying into a new format, you can be sure that record labels and musicians are going to try to accommodate. It’s the basics of business. But let’s look a little deeper into the business of it, and see what’s really happening.

A record label initially determines the margins on CD sales. There are a variety of ways to approach this – packaging, limited editions, bonus material, etc. In essence, there’s room to control the perceived value in the product. Then, whether the product is sold to a distributor, retail, or directly to consumers, pricing can be based on those value points, and with smart planning, can better ensure that costs are covered, and profits are made.

With selling digital, there is not this freedom. Sale prices are determined by the digital stores (iTunes, eMusic, etc.), and royalties are paid after their expenses, sometimes leaving as little as .20 per track to go to the record label or artist. At .20 per track, selling 10 songs will get you 2 bucks. Not a lot.

Now, you might be thinking, “yeah, but I won’t have all the production costs associated with making discs.” True, but you’re not without costs. You likely paid something to record the music, you likely have produced some other marketing material to drive sales of said music, and, perhaps most importantly, there is a value to the material that you have created, a value that should be compensated for. Are you going to be able to recoup your costs on .20 per track? Good luck.

Think creatively. I’m not saying that digital is bad or useless to record labels and musicians. It’s very important to provide products and services to your customers in a way that appeals to them. But, you have to do it smart. Taking a black and white stance will only exclude you from the benefits of the other.

(this post was originally published here.)


Great insight, as always, from Derek Sivers (founder of CDBaby.com), by way of Seth Godin’s new effort, The Dip.

These two men consistently challenge me to be more creative and innovative when fighting to survive in the music business.

Read it here.

Daniel’s post, Getting it from All Angles, reminded me of two separate conversations I’ve had with a young Milwaukee musician over the course of the last month. The first conversation boiled down to this person saying (and I paraphrase), “Music is all I’m good at. If I don’t make it as a musician, I don’t have anything else.” The second conversation consisted of the young musician telling me about a friend of his who recently got a well-paying job at AT&T hooking up wires or something. This got him thinking, and he came to this conclusion (again paraphrasing): “I want to tour while I’m young. I want to give music a shot. But if in 5 years we’re (his band) no where, then I’d like to at least have a well-paying job like the AT&T gig.”

As I discussed this From All Angles project with Jon over soup and sandwich, one thing that jumped out at us was the prevalence of my young musician friend’s mindset within the community of musicians. It’s all or nothing – do or die – and if bands don’t “get signed”, they are forced to succumb to the realm of “real jobs”. Goodbye telecaster, hello telephone company.

By relaying our experiences, as well as the experiences of others who pay the bills or simply find joy in music-related jobs and ventures, hopefully we can help people realize that if music is what keeps the heart beating, a life in and around music can still exist if Plan A fails. The music industry is as diverse and layered as any other industry. Recording, engineering, events, marketing, commercial songwriting…the list of potential directions is an extensive one.

Let’s take one last look at my young musician friend. He’s not a pro, but he finds a lot of enjoyment in recording and engineering, in the subtleties and nuances of sound. If he doesn’t “make it” as a musician in a rock band, would he be happier working his butt off to stay associated in someway with music – perhaps as a sound engineer – or plugging things into other things for a corporate conglomerate telephone company…just because they offer a pretty good salary? Go back and re-read Daniel’s post. I think the answer is clear.