Give away the music and sell the show
Chris Anderson
The Long Tail
January 28, 2007
The major labels are freaked out: CD sales are continuing their inexorable decline and iTunes sales aren't making up the difference [ http://www.msnbc.msn.com/id/16669376/ ]. Meanwhile, tens of thousands of artists are giving away their music for free on MySpace, their own websites and independent MP3 blogs. This puzzles the labels. Don't these bands want to make money from their art?
Many do, but they're just smarter than most music industry execs. They understand the difference between abundance and scarcity economics. Music as a digital product enjoys near-zero costs of production and distribution--classic abundance economics. When costs are near zero, you might as well make the price zero, too, something thousands of bands have figured out.
Meanwhile, the one thing that you can't digitize and distribute with full fidelity is a live show. That's scarcity economics. No wonder the average price for a ticket was $61 last year, up 8% [ http://www.pollstar.com/news/viewnews.pl?NewsID=7543 ]--in an era when digital products are commodities, there's a premium on experience. No surprise that bands are increasingly giving away their recorded music as marketing for their concerts, which offer something no MP3 can match.
Live performance is the fastest growing part of the music industry (up 16% in 2006 to a record $3.6 billion in North America [ http://www.pollstar.com/news/viewnews.pl?NewsID=7543 ] ) and with services such as SonicLiving [ http://sonicliving.com/hello ] (brilliantly described as a "digital-to-analog lifestyle converter") and TourFilter [ http://www.tourfilter.com/ ] that notify you when some band in your library is coming to town, that's only going to grow more.
So there's big money in live shows (92% of the Rolling Stones' revenues comes from performance, not recorded music). Sadly for the labels, they don't get any of it. No wonder they're so against free music. It only helps the bands (and consumers)!
Here, from Wired's music blog [ http://blog.wired.com/music/2007/01/rolling_stones_.html ], is a list of the top grossing touring bands of 2006.
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