FUTURE OF THE MUSIC INDUSTRY

360 Degree deals – why they won’t turn the music industry around?

What is a 360 degree business model?This is when the music companies take a cut from an artists merchandising and touring etc as well as music sales.

There is no benefit for the artist – before, the main source of income for bands was the touring and merchandise, but the 360 degree rule means the industry takes a big cut from this. Bands are better off producing (and distributing) their own music and hiring a dedicated promotional agency to handle the marketing and business side of things.

Any benefits?

You could argue that the 360 degree rule is a friendlier approach as it involves a management team working closely with the band. Although, this was the case for ‘You love her ‘cos she’s dead, which is a very small scale label. Therefore, it is easier to work with a band as there’s less to manage. If Sony were to adopt the 360 degree rule approach, would it be able to work closely with ALL of its artists? As it is such a huge company!

Sony BMG is one of top three companies involved within the music industry, dominating around 25% of sales within the US and 21% in the United Kingdom.

If this is really unfair on an artist, then the future of the 360 degree deal may die out. Music companies will need to think of ways to keep their artists happy in order for them to keep producing songs.

Here’s a typical breakdown of the 360-Degree Record Deal for new bands:

Label gets approx. 90-95% of record sales Label gets approx. 10% of touring income Label gets approx. 10% of merchandise income Label gets 9 cents publishing cut per song (or more, depending on media

distribution)

In just one year, the amount of income derived from other sources (such as live gigs, merchandising, advertising, digital licensing) has grown from £121.6m to £195m. This shows that the future business model of this industry might not be based on music sales alone. This shows people aren’t just consuming music, they’re putting themselves out there and supporting their band – rather than just sitting at home. We’re living in a society that is more into live performances than downloads alone.

-- Will illegal downloading actually stop? – You could download a song from an

unknown artist, which could lead to you purchasing one of their gig tickets, or

buying merchandise or even an album. The conclusion is that file sharing promotes bands in other ways and people end up contributing their money to the artist. People will pay for a band if they like it.

- File sharing may be bad news for big companies like Sony who have the contacts to market their artists on a large scale, but for independent artists it really helps to promote the name. Independent labels aren’t motivated by money, but by the music. Therefore, the satisfaction of the bands growing and developing is more rewarding than the profit (although this helps!!)

Illegal downloader’s: Pay £77 a year on their artistsLegal downloader’s: Pay £44 a year on their artistsSource from panorama BBC1

BIG COMPANIES LIKE SONY ARE TOO BUSY FOCUSING ON PUNISHING YOU FOR ILLEGAL DOWNLOADING, RATHER THAN WORKING WITH THE IDEA OF IT BEING A PROMOTION FOR AN ARTIST.

Joe’s intelligent paragraph:

If free music is made available on the internet by up and coming artists (on an independent record label) it can be a very good promotional tool, as no one will buy music from an artist they do not know. If there is an opportunity for someone to gain their music without paying for it, they are then more likely to buy the CD for ‘x’ amount of money by merchandise e.g. t-shirts, or pay for a ticket to a live show. A proportion of these go directly back to the artist.

Big national conglomerate company: Loses money when people file share (don’t need as much promotion) Independent: Use the file sharing as good publicity.

So for the future; is the music industry in the hands of the consumer? (2 techniques)

Media 1.0; this is when the media manipulates our thoughts through advertising. I.e. advertising cleaning products in daytime to target housewives that are more likely to be watching.

Media 2.0 – Sky plus, Facebook and BBCi player are just some of the examples of the technologies we have available to make it easier to watch our programmes when we want. As a nation, we’re almost becoming more in control of the media industry.

We are more in control of the music industry than ever because of these new technologies. For example, we can look up our favourite bands on Facebook ourselves.