The Selling of Media
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.
Now, send me an email and let’s talk about how to make your next disc drive more money your way.
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